8 Fiscal System Elements Financial Management SystemsRecordkeeping and ReportingProcurementCompensationCost PrinciplesFacilities and PropertyNon-federal ShareCost Allocation
9 Financial Management Systems 45 CFR 74.21 or 45 CFR 92.20 Accurate, current and complete disclosure of program finances.Records that adequately identify the source and application of funds.Effective control over and accountability for funds, property and program assets.Separation of fiscal dutiesBoard member with fiscal management or accounting expertiseAnnual Financial AuditComparison of actual outlays (amounts spent) with budgeted costs.Written procedures to minimize the time between drawdown and expenditure (payment) of costs and expenses.Written procedures for determining the reasonableness, allocability and allowability of costs (cost principles and the terms and conditions of the award).Accounting records supported by source documentation.
10 Recordkeeping and Reporting Personnel files.Volunteer files.Food service and menu records.USDA Nutrition Assistance ProgramsFacilities and equipment records.Property inventory and facilities recordsValid licenses and registrations required by Federal, State or local lawInsurance records.General liability, property, student accident, title insurance (facilities)Fiscal records.Status of grant funds (budget, projected and actual)Cost are reasonable, allocable and allowable (cost principles)Fiscal reports.Internal: Board, Policy Council (monthly), budgets, aged payablesExternal: Community, OHS, IRS, workers compensation, USDA
11 Procurement 45 CFR 74.42, or 45 CFR 92.36Written procurement procedure applicable to goods and services purchased.Complies with all Federal, State and local regulations: bid process, Davis-Bacon Act complianceIncludes written code of conduct for employees engaged in awarding or administering contracts: related parties, conflicts of interestContracts are accurate, complete, signed and up to date.Purchases of goods: supplies, equipment, vehiclesPersonal service contracts: nutrition consultant, mental health professionalDelegate agency agreements
12 CompensationCompensation for all employees meets the cost principle requirements: necessary, allocable and reasonable.Wages, benefits, bonus and incentivesExecutive Level II limitation is met ($179,700)Adequate records are available to support compensation.Time records for all non-exempt employeesPayroll records for all employeesPersonnel activity reportsCompensation costs for employees whose services benefit more than one program are property allocated.Compensation reporting (external) is timely, complete and accurate: IRS, state taxes, workers compensation, unemployment insurance.Future compensation benefit obligations are funded.
13 Cost Principles 2 CFR Part 220, 2 CFR Part 225 or 2 CFR Part 230 Written procurement procedures to determine that all expenses are allowable, necessary and allocable.Adequate documentation supports expenditure.Allowable:Reasonable for performance of the award (see below)Consistent with policies and procedures and treated consistentlyNot charged to another programAdequately documentedCost limitations and exclusions are followedReasonable: does not exceed what a prudent person would pay under similar circumstances at the time the decision was made.Generally recognized as ordinary and necessaryComplies with sound business practices: arms length transactionsPrudence was exercised in light of responsibilitiesFollows established practices and does not unjustifiably increase cost
14 Cost Principles (Continued) 2 CFR Part 220, 2 CFR Part 225 or 2 CFR Part 230 Allocable: A cost is allocable (can be charged) to a particular grant if it is charged in accordance with the benefit to the grant:The cost is incurred specifically (100%) for the charged grant, orThe cost benefits both the award and grant(s) and can be distributed between or among programs in reasonable proportion to the benefits received, orThe expense is necessary to the overall operation of the organization, although a direct relationship to any particular grant cannot be shown.Costs may not be shifted from one grant to another to cover deficiencies in funding or avoid restrictions.The cost principles also apply to costs and expenses which are charged in accordance with a cost allocation plan (shared costs) and to costs which are claimed as non-federal share.
15 Non-federal ShareThe grantee agency must provide 20 percent of the total costs of the Head Start program unless a waiver has been granted.For every federal Head Start dollar received the grantee must provide twenty-five cents (absent a waiver)Criteria for application for waiver (written) are lack of community resources, initial costs, unanticipated cost increases, major disaster and community impact (See ACF-PI-HS-12-02)Allowable non-federal share costs meet applicable cost principles: necessary, reasonable and prudent.Adequate documentation is required to support non-federal share costs.Except where specifically authorized by statute, other federal funds cannot be used as non-federal share.
16 Cost AllocationCost allocation is required when costs are shared by two or more programs.Includes costs shared between Head Start and Early Head StartIncludes costs shared between either Head Start or Early Head Start and programs or services from another funding sourceException is either Head Start or Early Head Start and its associated USDA Nutrition Assistance ProgramShared costs must be fairly allocated between or among the programs that benefit from those costs in accordance with a cost allocation plan.Grantees have the option to apply for a negotiated indirect cost rate or allocate indirect costs.Administrative costs (direct and/or indirect) cannot exceed 15% of the grantee’s overall Head Start grant.
17 Facilities and Property 45 CFR Part 1309, 45 CFR Part 74 or 45 CFR Part 92 Special requirements apply to all facilities which are purchased (initially or through mortgage payments), constructed or undergo major renovations using Head Start funds (in whole or in part).Special notices must be filed in the official (real property) records to protect federal funds used for facilities activities.Personal property (worth at least $5,000) must be included on a detailed inventory prepared every two years.Permission is required before a program can use any property purchased in whole or in part with Head Start funds as collateral for a loan, including lines of credit.Permission is required before any property worth $5,000 or more purchased in whole or in part with Head Start funds is sold or transferred.Detailed facilities and property records are required, including proof of insurance.
18 Virginia 2012 Monitoring Results No written procedures to determine reasonableness, allowability and allocability.Reporting to governing body and policy council.Credit card expenditures not includedUSDA meals and snacks not reportedTraining not provided to governing body and policy council for understanding and effective oversight.Inadequate equipment records.Repair, safety and security of materials, equipment and facilities.Failure to conduct criminal records checks.