B5 financial management and federal compliance p pt

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Financial management is the constant process of tracking progress towards financial objectives and safeguarding the financial assets of an organization. Financial management is important to grantees and project sponsors administering federal programs for several reasons: it helps organizations budget for activities; it promotes sound and efficient operation of organizations and their programs; it serves the need for accountability to funding agencies and beneficiaries of the program(s); and it is required by law. This workshop will provide practical recommendations on managing program budgets by illustrating examples of best practices and financial tools needed to manage grants and contracts effectively.

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B5 financial management and federal compliance p pt

  1. 1. Financial Management andFederal Compliance Issues for Nonprofit Organizations Sharpening Your Income and Allowance for thefor Rural CHDOs Determining Skills: Financial Management HOME Program Slide 1
  2. 2. Welcome Introductions so that we become familiar with your face. There are easel pads along the wall for you to answer a few questions about your organizations. Please take a minute to write in your answers if possible to the questions listed. Remember, our networking is important.
  3. 3. Housekeeping Please turn off your cell phone and electronic devices. Where are the restrooms and emergency exits? Evaluation forms will be distributed at the end of the training, if you will be leaving early let us know and we’ll provide you with an evaluation form at that time.
  4. 4. Anne Duffy, CPA Chief Financial OfficerVermont Housing & Conservation Board
  5. 5. Financial Management of Federal Funds• What you’ve agreed to do (compliance requirements)• How to make sure you do it (internal control systems)
  6. 6. Internal Controls5 Components of the Internal Control Structure• Control Environment• Risk Assessment• Control Activities• Information & Communication• Monitoring
  7. 7. Regulations - OMB (Office of Management & Budget)General compliance requirements come from these Circulars (and may be built into agency CFR’s): – OMB Circular A-110 Administrative Requirements – OMB Circular A-122 Cost Principles – OMB Circular A-133 Audit Requirements
  8. 8. OMB A-110 - Administrative Requirements1. Standards for Financial 6. Cash Management Management 7. Eligibility2. Activities & Costs allowed (OMB A-122) 8. Procurement3. Reporting standards4. Period of Availability of 9. Record retention Funds 10.Program income5. Matching 11.Plus more!
  9. 9. Best Practices• Involve appropriate staff • Pull together team at during application and inception of grant initial budget process – Communicate grant info (budgets, award,• Parallel systems across regs., etc.) grants (don’t reinvent the – Establish/review wheel for each grant) controls over grant (cost approvals, financial accounting & reporting) • Document, document, document….
  10. 10. The morale of the story is…• It’s not enough to get it right – you also need to have a system in place to get it right!• Dot your i’s, cross your t’s….• Document, document, document..
  11. 11. Carolyn BellRural Housing Service
  12. 12. Monitoring Section 523 GrantsWhat is RD’s responsibility• RD’s responsibility is to assist grantees to be successful and avoid fraud, waste and abuse• Quarterly Meetings/Reports• Note any issues discussed and work with contractors and grantees to resolve them• Maintain contact with grantees• Partnership and communication between grantees and RD is critical
  13. 13. Types of Audits• Performance Audits – look at specific requirements, measures or defined business practices. Agency can use these make improvements to program performance or reduce program costs• Financial Statement Audit – determine if organization’s financial statements correctly represent their financial position in accordance with Generally Accepted Accounting Principals (GAAP) – Single Audits under OMB Circular A-133
  14. 14. Audit Requirements for Section 523 Grants• In accordance with RD Instruction 1944-I – 7-CFR-3015, 3016, 3019• Annual Audits – due 90 days after end of grantee’s fiscal year, grant closeout or termination to include audit of a sampling of borrower loan funds – In accordance with Generally Accepted Government Auditing Standards (GAGAS) – OMB Circulars
  15. 15. Grant Close Out Closeout• Reports SF-425 Federal • Property Report – Financial Report Account of property acquired (Previously SF 269A- with TA funds Financial Status Report) • Records and Accounts • Due 90 days after completion of grant – Retain for 3 years• Performance Report a. Exhibit B –quarterly report
  16. 16. Section 533 Housing Preservation Grant overview provided by Bonnie Edwards-Jackson Finance and Loan Analyst Preservation and Direct Loan Division 202 690 0759 | bonnie.edwards@wdc.usda.gov Rural Housing Service, Multi-Family Housing
  17. 17. Section 533 Housing Preservation GrantObjectiveThe Section 533 Housing Preservation Grants Program funds are usedto renovate deteriorating homes and rental properties by persons whohave low and very low incomesEligibilityThe following are able to receive grants to repair these properties andbring them up to code: – Nonprofit organizations – Public bodies – Native American tribes Rural Housing Service, Multi-Family Housing
  18. 18. Section 533 Housing Preservation GrantFund uses: Rural Housing Service, Multi-Family Housing
  19. 19. Section 533 Housing Preservation GrantHPG Funds May Not Be Used To:Assist in the construction or completion of an addition or a new dwelling.Refinance any debt or obligation of the grantee or the individual homeownerGrantee Must Comply With The: Terms of the Grant Agreement Statement of Activities Budget Rural Housing Service, Multi-Family Housing
  20. 20. Dave Johnson, CPADixon Hughes Goodman LLP
  21. 21. Auditor’s Perspective• Internal Control Over Compliance• Rules for Compliance – 24 CFR 84 Not-for-profits – 24 CFR 85 State and Local Governments 24 CFR 84 is HUD’s adoptioncodification of Office of Management and Budgets Circular A-110
  22. 22. Auditor’s Perspective• How does auditor determine what rules to test for compliance and internal control over compliance? – Federal CFDA Number: Catalog of Federal Domestic Assistance. – CFDA – Contains detailed program descriptions for Federal Assistance Programs – Annual OMB Circular A-133 Compliance Supplement – Find applicable requirements for CFDA #
  23. 23. Auditor’s Perspective• Example Specific Program Compliance Requirements – Eligibility – Reporting • Financial • Performance • Special – Special Tests for Program
  24. 24. Auditor’s Perspective• Example of General Compliance Requirements – Activities Allowed or Unallowed – Allowable Costs/Cost Principles – Cash Management – Davis-Bacon Act – Equipment and Real Property Management – Matching, Level of Effort, Earmarking – Period of Availability of Federal Funds – Procurement and Suspension and Debarment
  25. 25. Auditor’s Perspective• Audit Tests are based upon General Compliance Requirements and Specific Requirements (Compliance Supplement) – Auditor must identify internal applicable internal controls over compliance. – Auditor must test effectiveness of internal controls over compliance – Auditor must test compliance.
  26. 26. Auditor’s Perspective - Conclusion – Audit Reports Provided by Audit Firm • General audit report on financial statements under both GAAS and GAGAS. • General report on internal control over federal financial assistance. • Specific report of internal control and compliance on federal programs tested. • Listing of findings with response from management. • Filing of Single Audit Submission with Clearinghouse – Emphasis: Internal Controls Over Compliance
  27. 27. Questions?

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