financial and grants management institute - march 18-20, 20081 documenting cash and in-kind match

Financial and Grants Management Institute - March 18-20, 2008 1

Documenting Cash and In-Kind

Match


Session Objectives

1. Understand allowable, allocable, necessary & reasonable costs

2. Gather and retain proper documentation

3. Learn about types and examples of match


Total allowable budget or expenditures incurred to operate the program and accomplish its objectives

Portion of budget or expenditures paid for with Federal funds (CNCS)

Portion of total expenditures not paid for with CNCS funds

Project Costs

Federal Share

Grantee Share

aka: match

Talking Technical: Definitions to Know


• Gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the award

• Value of non-cash contributions provided by non-Federal third parties

• May be in the form of real property, equipment, supplies, services, and other expendable property

ProgramIncome

In-KindContributions

More Technical Talk


Cost Principle Requirements:• OMB Circular A-21: Cost Principles for Educational Institutions• OMB Circular A-87: Cost Principles for State, Local, and Indian Tribal

Governments• OMB Circular A-122: Cost Principles for Non-Profit Organizations

Administrative Requirements:• OMB Circular A-102: Grants and Cooperative Agreements with State

and Local Governments (CNCS: § 45 CFR 2541)• OMB Circular A-110: Uniform Administrative Requirements for Grants

and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (CNCS: § 45 CFR 2543)

Audit Requirements:• OMB Circular A-133: Audits of States, Local Governments, and

Non-Profit Organizations

OMB Circulars: www.whitehouse.gov/omb/grants/grants_circulars.html CNCS Regulations: www.nationalservice.gov/about/role_impact/history.asp

What We’ve Always Known About OMB Requirements


Federal Grant

GuidelinesUniversities

States, Local, Indian

Tribal Governments

Non-Profits Hospitals

Administrative Requirements

§ 45 CFR 2543§ 2 CFR 215

(formerly A-110)

§ 45 CFR 2541A-102

§ 45 CFR 2543

§ 2 CFR 215 (formerly A-110)

§ 45 CFR 2543


Cost Principles




§ 45 CFR 74 (HHS

regulations)

Audit Requirement

s *A-133 A-133 A-133 A-133

Notes:CFR = Code of Federal Regulations* = Organization is subject to A-133 if it expends more than $500,000 in Federal funds in its fiscal year

Effective May 11, 2004 and August 31, 2005

Revised Grant Guidelines


To be allowable under a grant, costs must: Be reasonable and allocable for the performance of the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply to both

federally-financed and other activities of the organization Be given consistent treatment Be in accordance with Generally Accepted Accounting

Principles (GAAP) Not be included as a cost or used to meet cost sharing or

matching requirements of any other federally-financed program

Be adequately documented

Cost Principle Requirements

Allowability of Project Costs


Cash and in-kind contributions are accepted as part of the grantee’s cost sharing or matching when contributions meet all of the following criteria:

Are verifiable from the grantee's records Are necessary and reasonable for proper and efficient

accomplishment of project or program objectives Are allowable under the applicable OMB cost principles Are not paid by the Federal Government under another award,

except where authorized by Federal statute to be used for cost sharing or matching

Are provided for in the approved budget Conform to other grant provisions or OMB Circulars

Administrative Requirements

Grantee Share or Match


• Allowable• Reasonable• Allocable• Consistently Applied

Document, Document, Document

Defining Documentation


To be allowable under a grant, costs must: Be reasonable and allocable for the performance of

the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply

to both federally-financed and other activities of the organization

Be given consistent treatment Be in accordance with Generally Accepted Accounting

Principles (GAAP) Not be included as a cost or used to meet cost sharing

or matching requirements of any other federally-financed program

Be adequately documented

Allowable - What does it Mean?


A cost is reasonable if:• It does not exceed what a prudent person would do

under the circumstances at the time the decision was made to incur the cost

• Consideration should be given to:

– Whether the cost is ordinary and necessary for the operations of the organization

– The restraints or requirements imposed by generally accepted sound business practices

– Whether the individuals concerned acted with prudence

– Significant deviations from established practices which may unjustifiably increase the award costs

Reasonable - What Does it Mean?


A cost is allocable:• Based on its relative benefits received• If it is treated consistently with other costs incurred

for the same purpose in like circumstance and if it:– It is incurred specifically for the award

– Benefits both the award and other work and can be distributed in reasonable proportion to the benefits received or

– Is necessary to the overall operation of the organization

Any cost allocable to a particular award may not be shifted to other Federal awards

to overcome funding deficiencies, or to avoid restrictions imposed by law or by the

terms of the award

Allocable - What Does it Mean?


Grantees must be consistent in assigning costs:• Whether a direct cost or an indirect cost

• Regardless of the source of funding, i.e., federally or non-federally sponsored activities, and

• Following written cost allocation plan, as applicable

Key wording in the cost principles:• Consistent with that paid for similar work in the

organization’s other activities

• Distributed to awards and other activities in a consistent pattern

• The organization must follow a consistent, equitable procedure

• Charges must be consistent with those normally allowed in like circumstances in the organization’s non-Federally-sponsored activities

Consistent - What Does it Mean?


Why Retain Documentation?

• To track incoming information

• To review information

• To provide historical evidence

• To provide evidence of accomplishments

• To prepare for an audit

See Forms Collection

Documentation Basics


Physical information: • Hard copy• Soft copy: CD, flash drive, server, microfilm

Source: • Internal source• External source

Benefits supports a value, cost, or performance criteria relative to the grant

Defining Source Documentation


Benefits

Training

Admin

Supplies

Evaluation

Contract &Consultant

Salary Travel

Member Costs

Documentation Examples


• Signed timesheets with supervisory approval

• Quarterly payroll returns (941)

• Payroll register

• Personnel file with salary/wage information

• Employment contract

• Cancelled checks

• Direct deposit schedule

Salary

Identifying Documentation


Exceptions:• State, Local and Indian Tribal

Governments must comply with requirements of § 2 CFR 225 [OMB A-87]

• Educational Institutions must comply with requirements of § 2 CFR 220 [OMB A-21]

All salaries and wages charged to grants must be supported by signed time & attendance records, i.e., timesheets

Time & Activity Reporting Summary


• The estimates produce reasonable approximation of the activity actually performed

• Quarterly comparison is performed of actual activity to budgeted estimates

• Budget estimates are revised at least quarterly to reflect changed circumstances

§ 2 CFR 225 (formerly A-87):Budget estimates determined before services are performed do not qualify as support for expenditure, except on an interim accounting basis, provided that:

Time & Activity Reporting: State, Local, and Indian Tribal

Governments


• The established policies of the institution * • Consistently applied• Provided that the charges for work performed

directly on sponsored agreements and for other work allocable as facilities and administrative (F&A) costs are determined and supported as defined in § 2 CFR 220

§ 2 CFR 220 (formerly A-21): Salaries, wages, and fringe benefits are allowable to the extent that the total compensation to individual employees conforms to:

* Check with your Accounting Department for your college or university requirements

Time & Activity Reporting: Educational Institutions


§ 2 CFR 230 (formerly A-122):Reports maintained by non-profit organizations:

Must reflect an after-the-fact determination of the employee actual activity (not budgeted)

Must account for the total activity of each employee

Must be signed by the employee or supervisor having first hand knowledge

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


Time & Activity Reporting:Non-Profit Organizations


• Insurance policy• Paid invoices and receipts• Claims made against the insurance• Cost allocation plan

Benefits

Fringe benefits are allowable, provided such costs are absorbed by all organization activities in proportion to the relative

amount of time or effort actually devoted



• Authorization/reimbursement requests• Paid invoices and receipts• Per diem rates (applicable for area)• Mileage calculation• Reconciliation of advances to payments

Travel

Travel costs must not exceed charges normally allowed by the organization in its

regular operations based on the organization’s written travel policy



• Purchase orders• Packing slips• Paid receipts and invoices• Donated Supplies, i.e., in-kind

donations

Supplies



• Purchase orders• Signed agreements• Paid invoices and receipts

Contract &Consultant

Maximum Allowed by CNCS for Consultant fee is $540 per day



• Agenda• Course description, cost• Sign-in sheet• Consultant/trainer agreement• Paid invoices and receipts

Training



• Purchase orders• Signed agreement/contract• Paid invoices and receipts• Final copy of the evaluation

report

Evaluation



• Member eligibility

• Signed member contract

• Member timesheets signed by both member and supervisor

• Documented pay system

• Signed midterm and end-of-year written member evaluations, depending on the member’s term

Member Costs



• Authorized in the budget– Cost must be identifiable to the

project

• Purchase orders• Paid invoices and receipts• Packing slip

Administrative



• Grant agreement with amendments• General correspondence • Reimbursement requests• Financial Status Reports• Federal Cash Transactions Reports• Budget vs. actual reports• Financial statements• Audits• General Ledger and supporting ledgers

General



Exercise

In-Kind or Not?


AmeriCorpsMatch Requirements


New 2008 Match RequirementsSingle Overall Minimum Match

• 24% for the first 3 years of funding, and thereafter annually increases to 50% by Year 10

• Applies to 2008 new, recompete, and continuation applicants• No requirements on cash or in-kind amounts, at this time• Must still request approval to use other federal funds as

match• Must still meet minimum member living allowance• Will use standard Federal FSR starting in 2008

2008 Clarification Period• Between March 24 to April 28, 2008 applicants may revise

budgets to reflect new match requirements, if desired

AmeriCorps Match Requirements


§ 45 CFR 2521.60(a) – Regulatory Match:• Grantees must meet minimum requirements as

shown in table below up to 50% overall match • $1 dollar for every CNCS $1 - by year 10

Year 1

Year 2

Year 3

Year 4

Year 5

Yea

r6

Year 7

Year 8

Year 9

Year

10

Overall Minimum Share

24%

24%

24%

26%

30%

34%

38%

42%

46%

50%Note: Pre-existing grantees as of September 2005 were

deemed to be in Year 3 for matching purposes.

Therefore, long term grantees would be in Year 5 based on the above chart.

Examining “Overall Match” Requirement


Finding, Recording,Valuing &

Documenting Match


Finding MatchCash:

• Donations• Non-Federal income• Local governments• State appropriations• Foundation grants or

corporate contributions

In-Kind Contributions:• Value of donated services and/or donated goods

Labor space vehicles

training supplies equipment

Government-wide, with few rare exceptions, Grantees cannot use other Federal funds as match


Do not count as match -

• The value of direct community services performed by volunteers

Do count as match -

• Services that contribute to organizational functions

• Count services such as accounting, training of staff or members that are elements of the grantee’s cost allocation plan

Exception: Volunteer Match


• Maintain adequate documentation to support amounts claimed as match

• Maintain same documentation for both CNCS Federal share and for grantee’s share

• Documentation must meet same standards as other expenditures

• Record donation and valuation of item in detail

• Enter into the general ledger as income and expenditure

• Failure to enter match contributions into general ledger requires a formal explanatory policy and separate spread sheet accountability of receipt and use

Recording In-Kind Contributions


Statement of Financial Accounting Standards (SFAS #116) sets the standard:

• Contributed services are recognized in financial statements if services received:– Create or enhance non-financial assets,

or – Require specialized skills, are provided by

individuals possessing those skills, and would need to be purchased if not provided by donation.

Why Record In-Kind in the General Ledger?


Enter into the general ledger as income and expenditure:

Example:A local paint store donates a professional paint sprayer with a fair market value of $550.00

$550.00 – 7250 In-Kind Expense Account (debit) $550.00 – 5250 In-Kind Income Account (credit)

Recording In-Kind Contributions


• Use fair market price

• Consider what it would cost to obtain similar good or service

• Value of donation should be placed by the donor

• Review donation letter or form to ensure the value is reasonable

Valuing In-Kind Contributions

The IRS defines fair market value as the price that item would sell for

on the open market.


Document in-kind contributions to show:• What service or goods were obtained• Why transaction is allowable for grant

purposes• The value of the contribution• How it is traced back to source

documentation

If audited, a grantee may be required to obtain full supporting documentation from all

donors, if not available during the audit.

Documenting In-Kind Contributions


1. Document the basis for determining value of personal services, material, equipment, building, and land

2. Obtain written acknowledgement of the contribution including:

Name and signature of donor Date and Location of donation Detailed description of item/service Estimated value of contribution, how value

was determined, who made the determination

Was the contribution obtained with Federal funds

*** Keep a copy of the receipt in your files ***

Documenting In-Kind Contributions


The ABCD Tutoring Program 1299 N Main Street, Suite 110, Great City, Good State 00000-1234, (800) 555-1212, Fax 321-1234

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


Sample 1: In-Kind Contribution Form



Sample 2: In-Kind Contribution Form


• In 2007, the IRS changed the Form 990

• Revised Form 990 must be used for reporting year in 2009

• NEW Schedule M, Non-Cash Contributions:

– Requires organizations to report the aggregate of $25,000 of 24 specific categories of non-cash property an organization receives

– May require organizations to implement new recordkeeping practices

IRS Form 990 andIn-Kind Contributions

See the revised Form 990: www.irs.gov/charities


Common Audit Findings Related to

Cash & In-Kind Match



1. Familiarize all staff with cash and in-kind match documentation requirements

2. Establish documentation for expenditure requirements to ensure costs are: reasonable, necessary, allocable, allowable, and adhere to grant guidelines

3. Ensure supporting documentation relates directly to approved program funded by the CNCS grant

4. Maintain proper records and establish a written record retention policy

Take it Home!

financial and grants management institute - march 18-20, 20081 documenting cash and in-kind match

Documents

grants management institute

omb requirements

applicable omb cost

matching requirements

documentation slide

grantee s cost sharing

inkind match slide

examples of match slide