north central national service training august 20 – 22, 2013 financial management

North Central National Service TrainingAugust 20 – 22, 2013

Financial Management

You need to know . . . Use of program regulations, NGA, terms and conditions,

and operations manuals (CNCS)

OMB Circulars

www.whitehouse.gov/omb/circulars/index.html

Use of Generally Accepted Accounting Principles (GAAP)

Communication between program and fiscal staff North Central National Service Training August

20 – 22, 2013

Welcome . . . Introduction of trainer

Program types represented Senior Corps: RSVP, FGP, SCP

Questions As we go . . . ask clarifying questions and provide

your experiences

North Central National Service Training August 20 – 22, 2013

Contacts Grants Management Specialist States

Sheila [email protected] 215-964-6320

IL, IN, WI, NE (MI- FGP-SCP)

Jeffrey [email protected]

MN, ND, SD, OH, IA (MI-RSVP – VISTA)

Anthony DeColli (Senior Grants Officer)[email protected] 215-964-6311

Available for all North Central States when GMS is out.


mailto:[email protected]



1. Regulatory

Requirements

2. Written

Policies &

Procedures

3. Efficient Accounting System

4. Internal Controls

5. Budget Controls

6. Documentation of expenses

7. Matching Requirements & In-kind Contributions

8. Managing Cash

9. Time & Activity Documentation

10.

Reporting

&

Closeouts

EFFECTIVE

FINANCIAL

MANAGEMENT


Key Characteristics of Organizations with

Highly Effective Financial Management:

Written and followed policies and procedures Qualified and trained financial staff Effective communications Succession planning and cross-training Self-assessment and continuous improvement Active, knowledgeable and informed Board and finance

committee


Regulations and Requirements


Federal Regulations

Federal Grant Guidelines

UniversitiesStates, Local, Indian Tribal Governments

Non-Profits Hospitals

Administrative Requirements

§ 45 CFR 2543§ 2 CFR 215 (formerly

A-110)

§ 45 CFR 2541 OMB A-102

§ 45 CFR 2543§ 2 CFR 215 (formerly A-110)

§ 45 CFR 2543§ 2 CFR 215 (formerly A-110)

Cost Principles § 2 CFR 220 (formerly A-21)

§ 2 CFR 225 (formerly A-87)

§ 2 CFR 230 (formerly A-122)

§ 45 CFR 74 (HHS regulations)

Audit Requirements *

OMB A-133 OMB A-133 OMB A-133 OMB 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 yearLocate Grants Management Circulars: www.whitehouse.gov/omb/grants_circulars/


Basics of OMB Circulars• Cost Principles

Allowable & Unallowable Costs Indirect Costs

• Administrative Requirements Accounting System Documentation requirements

• A-133 requirements


Cost Principles

• Provide guidance to determine the allowable costs that can be incurred by organizations under Federal grants

• Designed so that Federal awards bear their fair share of costs

• Provide guidance about reimbursement requirements

• Provide uniform standards of allowability and allocation

• Encourage consistency of treatment of costs

• Includes guidance on 54 selected items of costNorth Central National Service Training August 20 – 22, 2013

Allowable, Reasonable & Allocable

Allowable –A cost within award limitations consistent, documented, reasonable & allocable

Reasonable - A cost that does not exceed what a prudent person would do under the circumstances at the time the decision Allocable - Treated consistently with other costs incurred for the same purpose in like circumstances and benefits the award and can be distributed proportionally to the benefits received


Administrative Requirements

• Provide consistency and uniformity among Federal agencies in the management of grants and cooperative agreements

• Require all Federal agencies to issue a grants management common rule to adopt government-wide terms and conditions


Policies and Procedures


Policies & Procedures

• Policies and procedures are a set of written documents that describe an organization's policies for operation – “what is to be done” the procedures necessary to fulfill the policies – “how it is to be completed”

• All staff must be familiar with these documents

• Documents must be kept up-to-date

• Documents should explain the rationale and include principal transactions and completed forms

• Documents must incorporate Federal and CNCS grant regulations and provisions


LEAVE POLICY


Leave Policy Many FGP/SCP sponsors provide Leave. It is allowable to award leave to FGP/SCP volunteers as long

as: o Leave paid with CNCS funding does not “cross” grant

cycles. i.e. No Carry-Over of unspent leave.o Leave paid in subsequent years DOES NOT appear on the

budget (either as Fed or Non-Fed Match).o Requires tracking leave across grant periods… this may

be too cumbersome for most grantees…


Leave Policy Cont. Leave is a great way to reward/recognize volunteers

and retain their service. It is allowable to utilize stipend funds to pay for leave

which occurs in the same grant year. The best way to deal with unspent leave is to do an end

of year pay-out of all unused time. By doing a pay-out you expend all grant funds in the

same period they were awarded.


Efficient Accounting

System


Efficient Accounting System Requirements

• Distinguish grant verses non-grant related expenses

• Identify costs by program year & budget category

• Differentiate between direct and indirect costs

• Account for each award/grant separately

• Record in-kind contribution as both revenue & expense

• Provide management with financial reports at both the summary or detailed levels that will compare outlays with budget amounts

• Correlate financial reports submitted to CNCS directly to accounting information and supporting documentsNorth Central National Service Training August

20 – 22, 2013

Internal Controls


Why Have Internal Controls?

• Improve accountability to constituents CNCS, trustees, funders, public

• Help organization achieve performance & budget targets

• Improve reliability of financial reporting• Improve compliance with laws & regulations• Prevent loss of resources & public assets• Prevent loss of public trust• Reduce legal liability


Who is Responsible?Everyone within the organization has some role in internal controls roles vary depending upon level of responsibility:

Executives establish the presence of integrity, ethics, competence and a positive control environment

Directors and department heads have oversight responsibility for internal controls within their units

Managers and supervisory personnel are responsible for executing control policies and procedures at the detail level within their specific unit

Each individual within a unit is to be cognizant of proper internal control procedures associated with their specific job responsibilitiesNorth Central National Service Training August

20 – 22, 2013

A Good Control Environment Includes

Positive “atmosphere” in the work environment

Existence of a code of conduct and code of ethics

Written job descriptions

Timely/appropriate communications with Board

Written policies to hire, train, promote and compensate employees

Safeguards for employees related to whistle-blowing

A clear chain of command

Clear, written delegations of authority & responsibilitiesNorth Central National Service Training August 20 – 22, 2013

A Good Control Environment Includes (cont’d)

Written policies, procedures and processes

Adequate review process for financial transactions, financial reports, budgets, etc.

Adequate cash management procedures (e.g., monthly bank reconciliations by supervisory personnel)

System to track participants’ & employees’ activities

System to follow up on problems to ensure resolution


Prohibited Activities

While charging time to the Senior Corps program, accumulating Service, or training hours, or otherwise performing activities supported by the Senior Corps Program, or CNCS, staff and volunteers may not engage in the following activities:


Prohibited Activities Cont.Examples :

Political activities

Non-displacement of employed workers

Compensation for service.

Labor and anti-labor activity

Fair labor standards

Nondiscrimination

Religious activities

Nepotism.


Budget Controls


Grant Budget Preparation

Who should be Involved?

The budget process should be a team effort that includes: Board of Directors Executive Director Program/Project Director Program/Project Staff Fiscal Staff


Grant Budgets Preparation

Follow instructions in NOFO/NOFA

Organize narrative to fit budget categories on budget form or proposal

Provide adequate descriptions and calculations to support amounts

Ensure budget aligns with the application narrative

80:20 Direct Benefit Ratio (FGP & SCP)

Section II Subtotal ÷ CNCS Award AmountNorth Central National Service Training August

20 – 22, 2013


Qualities of an Effective Budget

Realistic

Consistent with organizational objectives

Flexible (amendable if conditions are not as expected)

Consistent with Corporation goals



Don’t forget…

Staff positionsSpace, utilities, supplies, telephoneMedical and liability insuranceUniforms and trainingTransportationEvaluations


Salaries & Wages Documentation

For most Senior Corps Grantees, the salaries & Benefits section is one of the largest expense categories, if not the largest.

It is critical to document properly…

But documentation will differ from organization to organization.


Grant Budget Preparation Organize narrative to fit categories on budget form

Provide adequate descriptions and calculations to support amounts

Group related items (e.g., Staff salaries should be grouped with staff benefits, FICA, etc.)

Compare the final costs to the narrative to ensure they make sense


Examples of Unallowable Costs

Lobbying Fines and penalties Expenses not necessary to meet program objectives Entertainment, alcohol Costs that would constitute waste, fraud and abuse Unreasonable costs from a “prudent person”

perspective Costs with no logical basis for allocating to your

program



Excess Column• Use of the Excess Column

• Track total project costs• Fundraising


Budget: Final Review Checklist Is there adequate explanation for budget items? Are all projected costs in the budget allowable? Have the appropriate fringe and indirect cost rates been used? Do

you have an updated copy to send with your Application? Is the budget realistic, reasonable, credible, and aligned with

program goals? Is the budget within the VSY limit for Fixed Grants? Is your A-133 up to date in the Federal Audit Clearing House or

990 in GuideStar? Is your organization's information up to date with the System for

Award Management (www.SAM.gov)?


http://www.sam.gov/

SummaryBudgeting: The Road Map to Success

Bumps Along the Road

Preventive and Regular Maintenance Check-ups

Keep You in theDriver Seat

Know the Rulesof the Road

DriveDefensively

Are We There Yet?

Where Are We Going?


Key Budgeting Tips

Check to ensure that required match is met

Be strategic when allocating funds to CNCS or grantee share, some costs can be met with in-kind donations

Be aware of budget changes that require amendments

Identify In-kind donations prior to creating the budget


Grant Award

Notice of Grant Agreement (NGA) Special Conditions Grant Budget Amendments Reporting Terms and Conditions of Award

Prohibited Activities


Documenting Expenses


Documentation Basics

Why Retain Documentation?

• To track incoming information

• To review information

• To provide historical evidence

• To provide evidence of accomplishments

• To prepare for an audit

Establish a written record retention policy


Budget Management


Budget ManagementGrantees must obtain prior approval from CNCS for:

Subgrants or contracts not included in approved application and budget

Specific costs described in the Cost Principles For example: overtime pay, rearrangement and alteration costs,

and pre-award costs

Purchases of equipment over $5,000 using grant funds, unless specified in the approved application and budget

Cumulative or aggregate budget line items that amount to 10% or more of the total budget


Budget Revisions/Amendments You can move funds between line items without approval from

CNCS when:1) The total cumulative fund transfer will not exceed 10% of the

grant or $10,000 Does not apply to budgets of less than $100,000

2) The transfers would not create a new line item3) Funds can be moved from “Volunteer Support” to “Volunteer

Benefits” but not vice versa FGP and SCP must still meet the direct benefit ratio

Although CNCS approval is not required when these conditions apply, it is a good practice to notify CNCS of any change to the budget.


Budget Revisions

These revisions can be done any time during the approved budget period.

CNCS approval is required when you do not meet previously stated conditions.

Prevent major revisions and under spending by reviewing your budget each month.

1. Approval required by the FFMC

2. Do not assume approvals have been granted unless documented


Financial Reporting and Closeouts


Reporting RequirementsThe Federal Financial Report (FFR)- 6 month period- Cumulative over 3-year grant

The Program Progress Report (PPR) - Annual for all programs- Supplemental semi-annual for stipend Programs


Before You Begin

Gather the following reports:- Reports to support number of volunteers in reporting

period

- Reports to support number of hours in reporting period

- Financial report

- Additional Documents (ex. In Kind)


Source Documents(Invoices, Checks, Receipts, Timesheets, etc.)

Ensure proper and complete documentation in the files to support all information reported in the FFR.

All financial reports should be prepared with information that comes directly from the organization’s accounting system.

Conduct a review and reconciliation of the information to ensure accuracy prior to report submission.


FFR Screen Shots


Double Check the Figures

For example: RecognitionStipend hours match dollars spent


Federal Financial Report (FFR) VSYs (FGP and SCP only)

Cumulative hours for the budget period (common error) Cumulative hours ÷ 1044 = VSY Level Policy 850

Use of Prior Year Funds (Unallowable) Deobligation of funds

Late Reporting

Communication Extensions Consequences

Withholding of Funds Risk Status


Highlights: Fiscal Responsibility

Overall compliance with State and Federal regulations

Accurate, timely and complete financial reporting

Tracking of budget to actual expenses

Ensure key staff understand roles, responsibility, understand each other’s priorities and work together


Timing of Draws Funds are intended to be available when needed.

Maintain minimum Federal cash on hand by requesting funds from the Payment Management System only for immediate disbursement

Draws should match timing of allowable program expenditures.

Grantees may not draw funds in excess of their immediate needs

Funds can be drawn as needed: Example: Payroll to cover salaries and allocable payroll taxes

based on time charged to the Federally-funded program


Grant Closeout

Submission of final program and fiscal reports

FFR, 272, and draw down figures must reconcile

Property disposition


Questions?



Helpful LinksDescription Website Address

Financial and Grants Management Resources

https://www.nationalserviceresources.org/financial-and-grants-management

A-133 Federal Audit Clearinghouse https://harvester.census.gov/fac/

System For Award Management www.sam.gov (must be updated yearly)

Payment Management System at HHS

www.dpm.psc.gov

GuideStar www.guidestar.org

OMB Circulars www.whitehouse.gov/omb/circulars

Managing Senior Corps Grants http://www.nationalservice.gov/build-your-capacity/grants/managing-senior-corps-grants



https://harvester.census.gov/fac/

http://www.sam.gov/

http://www.dpm.psc.gov/

http://www.guidestar.org/

http://www.whitehouse.gov/omb/circulars

http://www.nationalservice.gov/build-your-capacity/grants/managing-senior-corps-grants

http://www.nationalservice.gov/build-your-capacity/grants/managing-senior-corps-grants