1. Financial Management and
Federal Compliance Issues for
Nonprofit Organizations
Sharpening Your Skills: Financial Management for Rural CHDOs
Determining Income and Allowance for the HOME Program
Slide 1
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.
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.
Housing Assistance Council Financial Management for CHDOs: From Basics and Beyond
Building Rural Communities through CHDOs Page 1

2. Anne Duffy, CPA
Chief Financial Officer
Vermont Housing & Conservation Board
Financial Management of
Federal Funds
• What you’ve agreed to do (compliance requirements)
• How to make sure you do it (internal control systems)
Internal Controls
5 Components of the Internal Control Structure
• Control Environment
• Risk Assessment
• Control Activities
• Information & Communication
• Monitoring
Housing Assistance Council Financial Management for CHDOs: From Basics and Beyond
Building Rural Communities through CHDOs Page 2

3. 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
OMB A-110 - Administrative
Requirements
1. Standards for Financial 6. Cash Management
Management
7. Eligibility
2. Activities & Costs allowed
(OMB A-122) 8. Procurement
3. Reporting standards
4. Period of Availability of 9. Record retention
Funds
10.Program income
5. Matching
11.Plus more!
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….
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Building Rural Communities through CHDOs Page 3

4. 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..
Carolyn Bell
Rural Housing Service
Monitoring Section 523 Grants
What 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
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Building Rural Communities through CHDOs Page 4

5. 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
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
Grant Close Out
Closeout Reports
• SF-425 Federal Financial • Property Report – Account
Report (Previously SF 269A- of property acquired with TA
Financial Status Report) funds
• Due 90 days after • Records and Accounts –
completion of grant Retain for 3 years
• Performance Report
a. Exhibit B –quarterly
report
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Building Rural Communities through CHDOs Page 5

6. 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
Section 533 Housing Preservation Grant
Objective
The Section 533 Housing Preservation Grants Program funds are used
to renovate deteriorating homes and rental properties by persons who
have low and very low incomes
Eligibility
The following are able to receive grants to repair these properties and
bring them up to code:
– Nonprofit organizations
– Public bodies
– Native American tribes
Rural Housing Service, Multi-Family Housing
Section 533 Housing Preservation Grant
Fund uses:
Rural Housing Service, Multi-Family Housing
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Building Rural Communities through CHDOs Page 6

7. Section 533 Housing Preservation Grant
HPG 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 homeowner
Grantee Must Comply With The:
 Terms of the Grant Agreement
 Statement of Activities
 Budget
Rural Housing Service, Multi-Family Housing
Dave Johnson, CPA
Dixon Hughes Goodman LLP
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
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Building Rural Communities through CHDOs Page 7

8. 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 #
Auditor’s Perspective
• Example Specific Program Compliance Requirements
– Eligibility
– Reporting
• Financial
• Performance
• Special
– Special Tests for Program
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
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Building Rural Communities through CHDOs Page 8

9. 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.
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
Questions?
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Building Rural Communities through CHDOs Page 9