Harris County Community Services Harris County Community Services DepartmentDepartment

FINANCE ACCOUNTING FINANCE ACCOUNTING SECTIONSECTION

LaKenya Wilson LaKenya Wilson - Grant Accounting Manager- Grant Accounting Manager

Andrea Thomas Andrea Thomas – Senior Grant Accountant– Senior Grant Accountant

David Picazo - David Picazo - Grant AccountantGrant Accountant

HUD Rule Citations Nonprofits:

24 CFR Part 576 - Governing regulations42 U.S.C. 11375 - Matching requirements24 CFR Part 84 - Procurement2 CFR Part 215 (A-110) - Uniform Admin. Requirements2 CFR Part 230 (A-122) - Cost PrinciplesOMB Circular A-133 - Audits

and…and…

Please don’t forgetPlease don’t forget YOUR GRANT AGREEMENTYOUR GRANT AGREEMENT with Harris County.with Harris County.

Financial Mgmt. System Requirements

Financial management systems are required to meet certain standards. Your financial systems must be able to:

– Control & account for funds, property & other assets

– Identifies source & application of funds– Allows for accurate, complete & timely

reporting– Minimize the time between expending funds and

seeking reimbursements from CSD

Internal ControlsWhat are internal controls?

Internal controls are those measures taken by the organization for the purpose of:

(1) Protecting resources against waste, fraud, and inefficiency by helping detect and prevent errors and/or abuses;

(2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of

the organization.

Internal Controls Effective controls provide reasonable assurance regarding

the accomplishment of established objectives. An effective internal control system generally consists of five components:

o Control Environment – Management integrityo Risk Assessment – Does management plan and think about the

possibility of errors within certain activitieso Control Activities – Has management employed policies and

procedures designed to prevent certain errorso Information and Communication – Has management received

feedback or reports as to the effectiveness of a procedure and has that information been communicated to involved individuals

o Monitoring – Is there an independent verification function or internal audit function, or does management routinely spot check compliance with procedures

Internal Control System

More specific examples and elements:

– Organizational chart that provides clear definition of functional areas within your organization

– Written delineation of job duties– Accounting policy & procedures– Separation of duties– Hiring policies– Control over assets & documents– Reconciliation of records

Internal Controls for Budgeting

Compare & control expenditures– Keep records on budgeted amounts– Compare obligations & expenditures to planned

budgets & accomplishments– Report deviations from budgets & forecasts

Accounting Records

Accounting system should include:

– Chart of accounts– Cash receipts journal– Cash disbursements journal– Payroll journal– General ledger

Source documentation required (match/leverage included)– All expenditures must be supported by the appropriate source

documentation: copies of canceled checks, invoices, purchase orders, receipts, time distribution reports, bank statements, etc.

Also, ensure that program costs were:– Expended on eligible items– Incurred for the proper period– Approved by appropriate officials– Actually paid

Accounting Records (Cont’d)

Record Retention– ESG records must be kept for 5 years after

program year in which activity was funded: effectively 6 years

– Recipients of federal funds are also responsible for proper recordkeeping and retention. Records should be sufficient to establish an audit trail for all transactions involving federal funds. An audit trail for federal funds starts with the preparation of the grant application or contract proposal and should include records adequate to support statements in the application document.

Source documentation required for Homeless Prevention– copies of cancelled checks – lease agreements/deed of trusts with signatures– eviction notices – notices of termination

Financial Assistance is available to families who received eviction notices or utility service disconnect notice(s) if the following occurs: – Sudden reduction in income– Avoidance of eviction or utility termination– Reassurance of family’s ability to resume payments within reasonable

period of time– ESG funds are not supplanting funds for preexisting homelessness

prevention activities from other sources.

Accounting Records (Cont’d)

– Each ESG sub-recipient, other than a territory, must match the funding provided by CSD with an equal amount of funds from other sources.

– Matching funds must be related to expenditures occurring after the date of the grant award. Funds used to match a previous ESG grant may not be used to match a subsequent grant award.

42 U.S.C. 11375(a) contains match requirements

Match Requirements

Match Requirements (Cont’d)In general, matching funds provided may

include:– Amount of funds from other sources;– Salary paid to staff (not included in the award) to

carry out the project of the Grantee;– The value of any donated material or building, or of

any lease, calculated using a reasonable method to establish a fair market value;

– Time contributed by volunteers (currently determined at the rate of $5 per hour); and

– Through matching funds or voluntary efforts provided by any recipient or project sponsor.

Additional Requirements

Additional financial rules apply:

– Cost Principles– Audits (OMB A-133)– Procurement standards

Cost PrinciplesRequirements can be found in 2 CFR Part 230 (OMB Circular A-122)Three components to cost principles & Questions to Ask before incurring costs:– Cost reasonableness

Is the amount being claimed necessary and reasonable? a.k.a. (the prudent person test).

– Cost allowability Is the amount allowable under circulars and regulations?

– Cost allocationCan the amount be reasonably and accurately allocated to the

program?

Cost Reasonableness

Costs charged to ESG must be necessary, reasonable & directly related to the grant.

Look at:– Whether cost is ordinary & necessary– Market prices for comparable goods/services– Individuals involved

Cost Allowability

In general, costs must be:– Statutorily allowed– Authorized or not expressly prohibited by

regulations– Conform to & consistent with rules &

requirements– Not charged to any other program

Cost Allocation

A cost is allocable to the program if it is:– Treated consistently with other similar costs– Incurred specifically for the program– Benefits program or can be distributed based on a

reasonable proportionOR

– Necessary to operations

Direct & Indirect CostsDirect costs can be identified with a specific program or activity.

Indirect costs are incurred for common/joint purpose benefiting more than one program or activity– Administrative salaries– Accounting expenses– Facility maintenance

Audits

– Federal programs are subject to review or audit

– When spending $500,000.00 or more in “Federal awards” per year, specific rules apply

– Grantees & Sub-recipients must adhere to OMB Circular A-133

Procurement RulesSub-recipients must adhere to Federal procurement rules in 24 CFR Part 84 when purchasing:

– Services– Supplies & materials– Equipment

Procurement policies must be in place

Must follow written procedures & document compliance

Important NoticePlease be advised that “DIRECT

DEPOSIT” is available.

Financial Forms– Financial resources are available on the following

websites:http://www.csd.hctx.net/

http://www.hud.gov/

– As a “rule of thumb” As a “rule of thumb” GREENGREEN and and WHITEWHITE = = GOGO & & PINKPINK, , GREYGREY and and YELLOWYELLOW = = NONO!!!!

– Please refer to the Sub-recipient Accounting Procedures Manuals provided.

– Also, failure to update the current invoice with any previous adjustments may postpone payment by AT LEASTAT LEAST 2 weeks!!

Technical AssistancePlease don’t hesitate to seek Technical

Assistance, if necessary!

FINANCE MONITORING FINANCE MONITORING SECTIONSECTION

Vladimir Petsev Vladimir Petsev – Finance Monitoring Manager– Finance Monitoring Manager

StevenSteven DimayugaDimayuga – Finance Monitor – Finance Monitor

PeterPeter BroussardBroussard – Finance Monitor – Finance Monitor

Harris County Community Services Harris County Community Services DepartmentDepartment

Financial MonitoringWhen Does the Monitoring Process Start?

“It starts at the beginning”

CSD’s grant accountants and financial monitoring staff review the terms and details of the agreement and approved budgets at the start-up of your grant. This gives us a chance to plan our monitoring efforts and to see “what” and “how” your organization will deliver your ESG services.

Financial MonitoringWhat Are The Types of Monitoring?

1. Desk Reviews – This is an on-going process through the lifespan of the grant. It entails:

A. A review of expenses for allowability, proper cost allocation, and a comparison to those expenses to the budget which are listed in the Financial Reporting portion of your monthly reimbursement requests.

B. A review of your annual audit by monitoring staff and the County Auditor’s Office. (note): You should receive a notification letter issued by the Co. Auditor’s requesting a copy of your audit.

Financial MonitoringWhat Are The Types of Monitoring?

2. On-site Monitoring Visits – You may expect CSD to perform an annual and/or periodic visit ( when deemed necessary) as well as follow up visits to check on the progress of correcting noted concerns and/or findings.

Additionally, CSD’s Financial Monitoring section performs detailed testing & collection of source documentation in order to perform match verification during and near the program year end.

Financial MonitoringWhat and How We Conduct Financial Monitoring for On-Site

VisitsFirst, you’ll get a “Notification Letter”.

During the onsite visit we will:

1. Conduct an entrance conference, test and review compliance with Federal Regulations.

2. Review your Internal Controls Systems.

3. Review and verify eligibility of your match.

4. Based on sample testing, perform a detailed verification and determine the eligibility of expenditures you claimed.

5. Lastly, you’ll get a Monitoring Results Letter.

Financial MonitoringTechnical Assistance

If you need help….we are always available upon your request.

We can provide:

– Resources and Templates

– Sample policies and procedures

– Knowledge and experience. And if we don’t know the answers to your questions, we’ll find them out for you.

Questions and Answers