October 7, 2003 1

Key Elements of Financial Management

Presented by:

Kris Tecce ktecce@walkerllp.com 877-363-9300

October 7, 2003 2

Learning Objectives

Increase knowledge of the CNCS and WV Commission grants management processes

Increase awareness of grant provisions and OMB regulatory requirements of CNCS grants

Increase aptitude for incorporating effective financial management practices

Increase understanding of the interconnection of fiscal and program management

October 7, 2003 3

Regulatory Requirements

October 7, 2003 4

Regulatory Requirements Regulatory Requirements Provide the

Provide the Guidance and Foundation for Guidance & Foundation For Your

Your Financial Management Systems Financial Management Systems

AWARD LETTER

AMERICORPS PROVISIONS

STATE REQUIREMENTS

OMB CIRCULAR REQUIREMENTS

PROGRAM

October 7, 2003 5

Determination of Acceptability of Costs

Conditions in award letter Provisions OMB Circulars Program Applicability

Allocable Allowable Reasonable Necessary

October 7, 2003 6

Recipients are responsible for: Managing and monitoring each project,

program, sub-award, function or activity supported by the award

Effective control over and accountability for all funds, property, and other assets.

Comparing outlays with budget amounts for each award

Budget analysis and explanation of cost overruns or high unit cost

Office of Management and Budget OMB Requirements

October 7, 2003 7

Uniform Administrative Requirements

Sets standards for obtaining consistency and uniformity among Federal agencies in managing grants and cooperative agreements

Pre-award requirements Post-award requirements for financial and program

management Property standards Procurement standards Reports and records Close-outs

October 7, 2003 8

Cost Principles

Establishes cost principles and standards for federal funds

Circular establishes principles and standards to provide a uniform approach for determining costs and to promote effective program delivery, efficiency, and is designed to ensure that the Federal government gets its fair share of costs.

October 7, 2003 9

OMB Circular A-133 Audit Audit A-133 audits must be performed annually, if

Your organizations expends $500,000 or more of federal funds in your fiscal year (for fiscal years ending after 12/31/03)

The Audit must be performed by an independent certified public accountant

The cost of audit should be included as part of administrative costs and not a direct cost to any grant

October 7, 2003 10

Summary of Relevant OMB Circulars

Educational Institutions

Non-Profit Organizations

State & Local and Indian Tribal Governments

Uniform Administrative Requirements

Circular No. A-110 Circular No. A-110 Circular No. A-102

Cost Principles Circular No. A-21 Circular No. A-122 Circular No. A-87

Audits

Circular No. A-133 Circular No. A-133 Circular No. A-133

Http://www.whitehouse. gov/OMB/circulars/index.html

October 7, 2003 11

CNCS Grant Provisions

Guiding principles for Grant Activities

Contain both Program and Fiscal guidelines Should be read by and available for both Program

and Financial staff Should be distributed to all sub-grantees CNCS revises and updates Grant Provisions

annually

October 7, 2003 12

Match and

In-Kind Donations

October 7, 2003 13

Attempting to influence legislation. Organizing or engaging in protests, petitions,

boycotts, or strikes. Assisting, promoting or deterring union

organizing. Impairing existing contracts for services or

collective bargaining agreements. Engaging in partisan political activities or other

activities designed to influence the outcome of an election to any public office.

Participating in, or endorsing, events or activities that are likely to include advocacy for or against political parties, political platforms, political candidates, proposed legislation, or elected officials.

CNCS Prohibited Program Activities

October 7, 2003 14

Engaging in religious instruction; conducting worship services; providing instruction as part of a Program that includes mandatory religious instruction or worship; constructing or operating facilities devoted to religious instruction or worship; maintaining facilities primarily or inherently devoted to religious instruction or worship; or engaging in any form of religious proselytization.

h. Providing a direct benefit to: A for-profit entity; A labor union; A partisan political organization; An organization engaged in the religious activities described in the

preceding subclause, unless Grant funds are not used to support the religious activities; or

A nonprofit entity that fails to comply with the restrictions contained in section 501(c) (3) of U.S. Code Title 26.

i. Voter registration drives by AmeriCorps members is an unacceptable service activity.

CNCS Prohibited Program Activities

October 7, 2003 15

WV Commission Cooperative Agreement

Commission approval for any changes

Reporting deadlines Nepotism not allowed MLK project required Add Commission to publicity Attend required training Sustainability plan

October 7, 2003 16

Policies & Procedures

October 7, 2003 17

Policies & Procedures

Documented Policies and Procedures are important because: They are the standards for the organization’s

operations They help in maintaining information that is crucial

to operations that would otherwise remain in employees’ “heads”

They help in orienting new employees and substitutes if the appropriate personnel are absent

October 7, 2003 18

Specific Policies & Procedures for CNCS

Organizations want to review current Policies & Procedures to ensure that activities required for CNCS are documented including:

Financial Reporting Cash draw-downs Budgeting Sub-grantee management

October 7, 2003 19

Documentation

October 7, 2003 20

Documentation Design a system to group grant activities and

documents. Include items such as: Grant letter, amendments and original grant

application Documents from sub-grantees Expenses/vendors, consultant agreements, etc. General correspondence Monthly financial reports (e.g., budget to actual)

October 7, 2003 21

Documentation Primary Goal

All expenditures should contain documentation (i.e., brief descriptions, agendas, reports etc.) that support why the transaction is allowable for AmeriCorps purposes

Accounting records should trace back to source documentation

October 7, 2003 22

Section I. A. Personnel Costs

Salary Signed timesheets with supervisory

approval Quarterly payroll returns (941) Payroll register Personnel file with salary/wage

information Employment contract Cancelled checks/Direct deposit schedule

October 7, 2003 23

Staff Activity Reporting Summary

All salaries and wages charged to AmeriCorps grants must be supported by signed Time & Attendance records except for: State, Local and Indian Tribal

governments must comply with OMB A-87 Educational Institutions must comply with

OMB A-21

October 7, 2003 24

OMB A-122 requirements of documentation for Activity reporting:

Must reflect an after-the-fact distribution of the employee actual activity

Must account for the total activity of each employee

Must be prepared at least monthly and should coincide with one or more pay periods

Must be signed by the employee

Time & Activity Reporting

October 7, 2003 25

Time & Activity Reporting Budget estimates do not qualify as

support for expenditure, except on an interim basis, provided that:

The estimates produce reasonable approximation of the actual activity performed

Quarterly comparison to actual activity is performed

Budget estimates are revised at least quarterly to reflect changed circumstances

October 7, 2003 26

B. Personal Fringe Benefits

Benefits – For budget there is an estimate calculated, however you must have supporting documentation for amounts charged to grants Insurance receipts Cost allocation plan Paid invoices

October 7, 2003 27

C.1 Staff Travel or C.2 Member Travel

Travel Travel authorization Paid travel-related receipts/invoices Per diem rates (applicable for region) Mileage calculation Travel reimbursement requests Reconciliation of advances to

payments

October 7, 2003 28

Equipment Maintenance Records

Description and funding source (including grant number)

Manufacturer serial number Title holder’s name and address Acquisition date and cost Percentage of Federal financial participation

Records should be maintained for all equipment in use and should include at a minimum:

October 7, 2003 29

E. Supplies

Paid invoices/receipts that clearly shows amounts

Cost allocation plan, if used to allocate expenses, that demonstrates consistency of treatment. Costs must be uniformly treated for both federally financed and other activities within organization

October 7, 2003 30

F. Contractual and Consultant Services

Payments to consultants services under this grant may not exceed $443 per day (exclusive of indirect expenses, travel, and supplies)

Grantee should retain consulting contract and invoices that support work provided.

October 7, 2003 31

G.1. Staff or G.2. Member Training

Training documentation Training agenda Course description and cost Sign-in sheet (if in-house) Consultant/Trainer agreement Paid invoices

October 7, 2003 32

H. Evaluation

Consultant agreement Paid invoices Evaluation results Other relevant documentation

October 7, 2003 33

Section II. Member Costs

Signed timesheets with supervisory approval

Quarterly payroll returns (941) Insurance receipts Payroll register

October 7, 2003 34

Section II. Matching

Grantees must match member living allowance in cash

Match must be at least 15% of the minimum living allowance

Living allowance paid in excess of minimum must be paid entirely from grantee share

October 7, 2003 35

AmeriCorps Members Eligibility Requirements

U.S. Citizen or Permanent Resident At least 17 years (16 if Youth Corps) High School diploma or GED or agree

to obtain one

October 7, 2003 36

Member Contracts

Amount of Living Allowance, method of Payment

Other Member Benefits Start and End Dates of Term Minimum Hours Prohibited Activities

October 7, 2003 37

Member Contracts (continued)

Expectations for Member Behavior Rules for Termination, Suspension,

Disciplinary Action Drug-Free Workplace Act

Requirements Grievance Procedures

October 7, 2003 38

Prohibited Activities May Not Be Performed In The Course of Duties

Grantee should have a plan to ensure members do not participate in prohibited activities

Lobbying Activities Political Activities Religious Activities Advocacy Activities Fundraising Activities

October 7, 2003 39

Member Time sheets

Identify eligible activities Separate service and training

hours Ensure accuracy Member and supervisor signatures

October 7, 2003 40

National Service Trust Forms

Enrollment forms Exit Forms Change of term WBRS timesheets

Member Files

Overview of set-up & Organization

October 7, 2003 42

Section III. Administrative Costs Option A – Organization using the Corporation

Fixed Percentage Method Indirect costs can be up to 5% of Corporation share, and

match in grantee share cannot exceed 10% These rates can be used with out supporting

documentation.

Option B – Organization has Federally Approved Indirect Cost Plan Use of indirect rate

Calculations done using supporting rate Documentation supporting amounts used in calculating

rate Calculations to support amounts reported on Periodic

Expense Report (PER)

October 7, 2003 43

Administrative Costs Include General expenses related to the overall administration

of an organization that receives Corporation funds

Administrative Costs includes items such as: Accounting, financial, auditing, contracting or

general legal services Internal evaluation (except for programs) General liability insurance that project the

organization (Not solely related to a program)

October 7, 2003 44

Administrative Costs

Do not include items such as: Allowable direct charges for Members (living

allowance, insurance payments made on Members behalf)

Costs for staff who train, place or supervise Members or directly benefit programs

Independent evaluations of programs Facility costs that primarily support programs

October 7, 2003 45

Records Retention Retain all financial records:

3 years from date of submission of final Financial Status Report

If there is an on-going audit: 3 years from final audit resolution

It’s a good idea to retained Member Records for seven years, which is the length of time they have to use their educations award

October 7, 2003 46

Accounting

October 7, 2003 47

Efficient Accounting System

System must be capable of: Distinguishing grant verses non-

grant related expenditures Identifying costs by program year Identifying costs by budget

category Differentiating between direct and

indirect costs (administrative costs)

October 7, 2003 48

Efficient Accounting System

• An Efficient Accounting System (Continued):

Maintains Federal/non-Federal matching funds separately from grant funds

Records in-kind contribution as both revenues and expenses

Allows management to easily obtain financial reports at both the summary or detailed levels

Accounting information and documents should correlate to financial reports submitted to CNCS

October 7, 2003 49

Accounting system that Does not segregate funds

Department of Education Matching Grant

AmeriCorps CNCS Grant

Ford Foundation Matching Grant

Accounting System

October 7, 2003 50

Accounting system that properly segregates funds

Department of Education Matching Grant

AmeriCorps CNCS Grant

Ford Foundation Matching Grant

Accounting System

Grant 1

Grant 2

Grant 3

October 7, 2003 51

Budgets & Controls

October 7, 2003 52

Budget Controls

A properly approved budget is: A financial blueprint to help an

organization meet its goals and objectives

A tool to help ensure an organization is meeting matching requirements

An Organization should: Periodically review budget to actual

expenses Assure budget changes are properly

approved

October 7, 2003 53

Budget Controls - continued

AmeriCorps program must obtain prior approval for any changes to their approved budget.

Budget line item changes should be submitted in writing

October 7, 2003 54

Budget Amendments

Written request to Commission Approval in writing from Commission Commission program officer requests

change through CNCS prog. officer Egrants personnel makes amendment

October 7, 2003 55

Match & In-kind Documentation

October 7, 2003 56

Must be verifiable from recipient records Must not be included as contribution for other

federally-assisted program Must be necessary and reasonable for

accomplishing program objectives Must be allowable according to cost principles

(OMB Circulars) Match for Member Support Costs must not

come from Federal funds (except healthcare)

Criteria for Matching AmeriCorps Funding

October 7, 2003 57

Recording and Reporting In-Kind Contributions

In-kind contributions documentation have same standards as other expenditures

In-kind contributions must be entered into the general ledger and WBRS in order to be recognized as match In-kind contributions should be recorded

as both a revenue and expense

October 7, 2003 58

Documenting In-Kind Contributions Received

Document the basis for determining the value of personal services, material, equipment, building, and land. Give the donor a receipt signed by donor which includes:

* Name of donor

* Date of donation

* Description of item/service

* Estimated value

Keep a copy of the receipt in your files.

October 7, 2003 59

Date of Contribution

Description of Contributed Item(s) or Service

Purpose for which

Contribution was made

Real or Approximate

Value of Contribution

How was Value

Determined(i.e. Actual,

Appraisal, Fair market value)

Who Made this Value

Determination

Was Contribution

Obtained with or Supported

by Federal Funds (If so,

indicate source)

Name of Contributing Organization/Agency/Business/Individual: ____________________________________

Address of Above Contributor: _______________________________________ Phone #: ________________________Printed/Typed Name of Contributor’s Authorized Signee: ________________________ Title: ________________________Signature of Authorized Signee: _____________________________________________ Date: ______________________________

In-Kind Contribution Form

The ABCD Tutoring Program

1299 N. Main Street, Suite 110, Great City, Good State 00000-1234, (800)555-1212 Fax: 321-1234

October 7, 2003 60

What-would-you-pay-if-it-was-not-donated?

Valuation of In-Kind Services

Fair market value=

October 7, 2003 61

Contributed Services Valuation - Examples

CONTRIBUTEDSERVICE

VALUED DOCUMENTATION

Professional or specializedservice (e.g. Attorney,Painter)

Normal rates consistentwith fair market value

Invoice denoting rate,hours and total cost

Employee of corporatesponsor or “related”organization

Hourly or daily rate,plus fringe benefit ratemultiplied by hours

Timesheet, payrollrecord with pay rateand

Volunteer Service thatenhance the entireorganization (not directlyrelated to program)

Minimum wage orvolunteer rate if known

Timesheet with hoursand rate

October 7, 2003 62

Financial Reporting

October 7, 2003 63

Financial Reporting

All Financial reports must be supported by the accounting system and should match the information in the general ledger.

Final financial status report is due within 90 days after the end of the grant and must be cumulative

Financial records must be retained for three years from the date of the submission of the final Financial Status Report (SF 269A)

October 7, 2003 64

Web Based Reporting System (WBRS)

Implications for Financial Reporting

Periodic Expense Report (PER) is an essential report in the WBRS: Must be completed to create Financial

Status Report (FSR) Should contain all program expenditures

(i.e. cash, accruals, journal entries, in-kind contributions)

Should be created utilizing source documentation from Accounting software

October 7, 2003 65

FINANCIAL INFORMATION FLOW

DocumentationTranslate to AccountingInformation (G/L)

Reported to CNCS

October 7, 2003 66

WBRS Implications for Funds Management

Financial Status Reports (FSR) FSR will be generated from PER

approved during the dates with in the designated period

Data is not submitted to the Corporation until saved as “approved”

Grantee must have PER’s with dates covering exact date range as on FSR

October 7, 2003 67

Internal Controls

October 7, 2003 68

Why Have Internal Controls?

Improve accountability to Constituents (Community, Board of Directors, CNCS, etc.)

Help organization achieve performance and budget targets

Improve reliability of financial reporting Improve compliance with laws, regulations Prevent loss of resources and public trust

October 7, 2003 69

Elements of Good Internal Controls

Documented policies and procedures Adequate review process for financial

reports and budgets Adequate cash management procedures

(e.g., monthly bank reconciliations) Physical safeguarding of assets System to track members’ & employees’

activities System to follow-up on problems identified

to ensure resolution

October 7, 2003 70

Common Findings

In an effort to learn from the past, we have summarized the common findings from the most recent Inspector General Audits

This also acts as a good wrap-up, reinforcing what we discussed today.

October 7, 2003 71

Common Audit Findings Lack of written policies and

procedures Lack of or insufficient documentation Accounting records do not identify

program costs Lack of supporting documentation for

required match Inadequate tracking of member hours Incomplete Member Records

October 7, 2003 72

Common Audit Findings

Lack of internal controls Lack of segregation of duties Lack of documentation to support

expenditures Inadequate supporting

documentation for distribution of staff hours between federal and other activities

October 7, 2003 73

Reflection

Discuss one thing that you learned or was reminded at today’s training

And/Or

How can you take something you learned today back to your office and implement it

October 7, 2003 74