Auditing of Grants Howie Barber Springfield Public School
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Presentation Overview Standards for Grants Most Common Grant
Management Rules Standard Process of Federal Grant Audits 2
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GRANT STANDARDS Office of Management and Budget Circulars (OMB)
A-87 3
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Seven Standards for Grants Financial Reporting Accounting
Records Internal Control Budget Control Allowable Cost Source
Documentation Cash Management 4
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GRANT MANAGEMENT RULES 5
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Legal Structure of Federal Programs Statutes Program statutes
(NCLB, IDEA, Perkins) General Education Provisions Act (GEPA)
Regulations Program-specific regulations Education Department
General Administrative Regulations (EDGAR) OMB Circulars Guidance
Non-Regulatory guidance, letters, press releases 6
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Where to Find Federal Education Grants Management Requirements
Program Rules: www.ed.govwww.ed.gov Statutes Regulations Guidance
General Education Provisions Act (GEPA):
http://www.law.cornell.edu/uscode/20/usc_sup_ 01_20_10_31.html
Education Department General Administrative Regulations (EDGAR):
http://www.ed.gov/policy/fund/reg/edgarReg/edg ar.html
http://www.ed.gov/policy/fund/reg/edgarReg/edg ar.html 7
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Where to Find Federal Education Grants Management Requirements
Office of Management & Budget (OMB) Circulars:
http://www.whitehouse.gov/omb/circulars
http://www.whitehouse.gov/omb/circulars Circular A-133 Compliance
Supplement (2009): http://www.whitehouse.gov/omb/circulars
_a133_compliance_09toc/ http://www.whitehouse.gov/omb/circulars
_a133_compliance_09toc/ 8
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Procedures How to determine if a cost is allowable Inventory
Management Time & Effort Supplement, Not to Supplant
Justification 9
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How to Determine if a Cost is Allowable Federal Cost Principles
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Helpful Questions to Ask to Determine if a Cost is Allowable Is
the proposed cost consistent with federal cost principles? Is the
proposed cost allowable under the relevant program? Is the proposed
cost consistent with an approved program plan and budget? Is the
proposed cost consistent with program specific fiscal rules? Is the
proposed cost consistent with EDGAR? 11
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Federal Cost Principles A-21 Educational Institutions A-87
State, Local, & Indian Tribal Governments A-122 Non-Profit
Organizations 48 CFR Part 31 For-Profit Organizations 12
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10 Basic Guidelines of Cost Principles All costs must be: o
Necessary o Reasonable o Allocable 13
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10 Basic Guidelines of Cost Principles In addition, all costs
must: Legal under state and local law Conform with federal law
& grant terms Consistently treated In accordance with Generally
Accepted Accounting Principles (GAAP) Not included as match Net of
Applicable credits Adequately documented 14
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Basic Guidelines: Necessary & Reasonable Must be necessary
for the performance or administration of the grant Must follow
sound business practices: Arms length bargaining (procurement
process) Follow federal, state and local laws Follow grant award
terms Fair market prices Act with prudence under the circumstances
No significant deviation from established prices 15
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Basic Guidelines: Allocable Can only charge in proportion to
the value received by the program Example: LEA purchases a computer
to use 50% in federal program and 50% in a state program Can only
charge half of the cost to the federal program 16
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Basic Guidelines: Allocable Practical aspects of allocable Can
I prove the program benefited? Can I prove other programs are not
benefiting? Ensuring only authorized use Incidental benefit 17
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Basic Guidelines Legal under state and local law If you cant do
it under state law, then you cant pay for it with federal funds
Conform with federal law and grant terms Consistent treatment Must
follow uniform policies that apply equally to federal and
non-federal activities Cannot charge direct costs to a program if
similar charges are indirect costs under state programs 18
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Basic Guidelines Net of applicable credits Examples: Purchase
discounts, rebates, allowances, recoveries, indemnities on losses,
insurance refunds, payment adjustments Adequately documented Amount
of funds under the grant How the funds are used Total cost of the
project Share of costs provided by other sources Records that show
compliance Records that show performance Other records to
facilitate and effective audit 19
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Inventory Management 20
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Inventory Management Different rules for equipment and supplies
Equipment Federal definition of equipment Tangible personal
property Useful life of more than one year Acquisition cost of
$5,000 or more State may use another definition as long as it
includes all property described above 21
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Equipment Section 80.32 of EDGAR Must have adequate controls in
place to account for: Location of equipment Custody of equipment
Security of equipment 22
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Equipment Property records Description, serial number or other
ID, title information, acquisition date, cost, percent of federal
participation, location, use and condition, and disposition (if
applicable) Physical inventory Must be performed at least every 2
years Many states require it yearly Control system to prevent loss,
damage and theft All incidents must be investigated 23
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Equipment Must protect against unauthorized use May use for
other projects as long as use is incidental and does not interfere
with authorized use When property is no longer needed, must follow
disposition rules: Transfer to another federal program Over $5,000
Keep or sell, but must pay a share based on the percentage of
federal ED participation at initial acquisition Under $5,000 May
keep, sell, or dispose of it with no obligation to ED 24
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Supplies Section 80.33 of EDGAR Supplies are everything else Do
not cost much money Used fairly quickly Examples: pens, paper,
toner, laptops EDGAR does not set out any specific tracking
requirements As a practical matter, ED expects sub grantees to
track all property purchased with federal funds, in order to prove
there has been an allocable benefit to the federal program 25
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Supplies Must maintain effective controls and accountability
system Must adequately safeguard all property Must assure it is
used solely for authorized purposes 26
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TIME & EFFORT REPORTING 27
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January 24, 2008 Documentation of Federal Money Time and Effort
Office of Management and Budget (OMB) Circular A-87 (5/10/04)
establishes standards for charging fair and appropriate employee
compensation to federal grants Two types of certification
Semi-Annual Certification funded from only one federal funding
source Monthly Report funded partially by federal funds
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January 24, 2008 Payroll Documentation vs. Time and Effort
Documentation Time and effort reporting shows how each employee
spent his/her compensated time written and certified,
after-the-fact documentation of how the time was spent Employee
compensation charged to federal grants must be supported by
documentation such as daily/weekly logs or calendars
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January 24, 2008 Semi-Annual Certification Works solely on a
federal grant Certification covers semi-annual period, i.e.
(September to January; February to June) Report identifies federal
grant as program Certification is signed and dated by employee and
their supervisor after the work has been completed
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January 24, 2008 Monthly Certification (Partially Federal
Funded Staff) Works on one or more federal grants and/or other
programs Prepared monthly Accounts for the total time for which the
employee is compensated (all hours worked) Reflects an
after-the-fact distribution of the actual work activity Signed by
the employee and their supervisor To be sent in by the 15 th of
every month
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SUPPLEMENT, NOT TO SUPPLANT 32
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Example (included in handouts) Non-Recurring Supplemental Pay
Worksheet Not to be used for Professional Development Workshops
School: Director/Principal: Activity: Funding: (This GL Account
code must be obtained from SPS Finance Dept) ORG: OBJ: PROJ: Date:
Posting #: These two fields to be filled in by SPS Finance Dept: RQ
Code: Non RQ Cd: *** NOTE: Employee Social Security Numbers may NOT
be entered on this form. Date 1Date 2Date 3Date 4Date 5Date 6Date 7
Empl IDEmployee Name RateTotal $0.00 TOTAL: $0.00 33
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JUSTIFICATIONS 34
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Example 1 35 Federal Funds Expense Justification Form This form
must be attached to all federally funded expense requests including
requisitions, Permission to be Absent from Duties form,
Workshop/Supplemental payroll postings and all job postings. *This
form is not to be used for Magnet expense requests*
Department/School: Requisition Number (if applicable): Posting
Number (if applicable): Please complete the required information
below with as much detail as possible: 1.) Is this expense
necessary in order improve students' academic achievement? Please
explain. 2.) Is the decision to expend these funds beneficial to
the program in a way I can prove? Please explain. 3.) Do I have
documentation supporting the need of this expense within my
program? Please explain. Please note: Federal funds are available
to supplement, not supplant and therefore cannot be used to
purchase text books or materials that are a requirement for the
curriculum. Purchasing of food items or office supplies using
federal funds can only be used for student achievement or parental
involvement. Director/PrincipalDate
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Example 2 Magnet Schools 36
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QUESTIONS 37
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STANDARD GRANT AUDIT REQUIREMENTS 38
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Basic Rule: Grantee and Sub-grantees are responsible for
obtaining audits in accordance with the Single Audit Act Amendment
of 1996 (31 U.S.C. 7501-7505) and revised OMB Circular A-133
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Who can audit a Grant? The audits shall be made by an
independent auditor in accordance with Generally Accepted
Government Auditing Standards (GAGAS) covering financial audits.
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Grant Audit Checklist 41
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Grant Application Is the Standard Contract Form and Application
for Program Grants containing: Fund Code Program Name Project
duration (Start and expiration dates) Total Amount Requested Budget
Narrative Allocation with Expenditure Justification 42
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Grant Amendments Form AM 1 30 Days prior to proposed change No
later than 30 days prior to expiration Justification mandatory
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Grant Award & Payment Notifications E-mailed by DESE Grants
Management Payment System G-5 Department of Education Grant
Managements System 44
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Request for Funds Screen shots: DESE Grants Management Payment
System E-mailed: G-5 Department of Education Grant Managements
System 45
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Final Financial Report Form FR-1 Multiple copies may apply
Prior Fiscal Year Submitted Fiscal Year under Audit Grant annual
expenditure submission Available online Hardcopy in grant binders
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Employee Listing Any compensation issued Base pay Additional
pay Stipends 47
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Needs Assessment Title I Needs Assessment Title I Reservation
Funds % of allocation (est. 25%) of grant funding Most At Risk
students Completed by Principals / Chief School Officers (CSO)
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Comparability Documentation Without Federal Funding Can staff
be accounted for? Can services be provided? Similar to Oct 1 EPIMS
Data Identifies Poverty Levels 49
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Additional information Expenditure / General ledger Invoices
and/or purchase orders Payroll registers 50
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QUESTIONS 51
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Contact Information: Howard Barber Senior Financial Analyst
Springfield Public Schools P.O. Box 1410 1550 Main Street
Springfield, MA 01102-1410 Ph: 413-787-7146 Fax: 413-787-6592
[email protected] 52