B5 financial management and federal compliance hand-out


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B5 financial management and federal compliance hand-out

  1. 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 BeyondBuilding Rural Communities through CHDOs Page 1
  2. 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 • MonitoringHousing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 2
  3. 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….Housing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 3
  4. 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 criticalHousing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 4
  5. 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 reportHousing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 5
  6. 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 HousingHousing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 6
  7. 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‐110Housing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 7
  8. 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 DebarmentHousing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 8
  9. 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?Housing Assistance Council Financial Management for CHDOs: From Basics and BeyondBuilding Rural Communities through CHDOs Page 9