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Developing and Managing Your Budget

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Presentation on theme: "Developing and Managing Your Budget"— Presentation transcript:

1 Developing and Managing Your Budget
Financial Management North Central National Service Training August 20 – 22, 2013 2012 Financial and Grants Management Institute

2 North Central National Service Training August 20 – 22, 2013
You need to know . . . Use of program regulations, NGA, terms and conditions, and operations manuals (CNCS) OMB Circulars Use of Generally Accepted Accounting Principles (GAAP) Communication between program and fiscal staff North Central National Service Training August 20 – 22, 2013

3 North Central National Service Training August 20 – 22, 2013
Opening Plenary 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 2012 Financial & Grants Mgmt. Institute

4 Financial and Grants Management 101 Basics
Contacts Grants Management Specialist States Sheila Mullin IL, IN, WI, NE (MI- FGP-SCP) Jeffrey Montgomery MN, ND, SD, OH, IA (MI-RSVP – VISTA) Anthony DeColli (Senior Grants Officer) Available for all North Central States when GMS is out. North Central National Service Training August 20 – 22, 2013 NCVS June 20, 2013 4

5 Financial and Grants Management 101 Basics
North Central National Service Training August 20 – 22, 2013 NCVS June 20, 2013 5

6 North Central National Service Training August 20 – 22, 2013
1. Regulatory Requirements 10. Reporting & Closeouts 2. Written Policies & Procedures 9. Time & Activity Documentation Efficient Accounting System EFFECTIVE FINANCIAL MANAGEMENT 8. Managing Cash 4. Internal Controls 5. Budget Controls ___________________________________________________________________________ 7. Matching Requirements & In-kind Contributions 6. Documentation of expenses North Central National Service Training August 20 – 22, 2013

7 North Central National Service Training August 20 – 22, 2013
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 North Central National Service Training August 20 – 22, 2013

8 Regulations and Requirements
North Central National Service Training August 20 – 22, 2013

9 States, Local, Indian Tribal Governments
Federal Regulations Federal Grant Guidelines Universities States, Local, Indian Tribal Governments Non-Profits Hospitals Administrative Requirements § 45 CFR 2543 § 2 CFR 215 (formerly A-110) § 45 CFR 2541 OMB A-102 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 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 Locate Grants Management Circulars: North Central National Service Training August 20 – 22, 2013

10 Basics of OMB Circulars
Developing and Managing Your Budget Basics of OMB Circulars Cost Principles Allowable & Unallowable Costs Indirect Costs Administrative Requirements Accounting System Documentation requirements A-133 requirements North Central National Service Training August 20 – 22, 2013 2012 Financial and Grants Management Institute 10

11 North Central National Service Training August 20 – 22, 2013
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 cost North Central National Service Training August 20 – 22, 2013

12 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 North Central National Service Training August 20 – 22, 2013

13 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 North Central National Service Training August 20 – 22, 2013

14 Policies and Procedures
North Central National Service Training August 20 – 22, 2013

15 North Central National Service Training August 20 – 22, 2013
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 North Central National Service Training August 20 – 22, 2013

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LEAVE POLICY North Central National Service Training August 20 – 22, 2013

17 North Central National Service Training August 20 – 22, 2013
Leave Policy Many FGP/SCP sponsors provide Leave. It is allowable to award leave to FGP/SCP volunteers as long as: Leave paid with CNCS funding does not “cross” grant cycles. i.e. No Carry-Over of unspent leave. Leave paid in subsequent years DOES NOT appear on the budget (either as Fed or Non-Fed Match). Requires tracking leave across grant periods… this may be too cumbersome for most grantees… North Central National Service Training August 20 – 22, 2013

18 North Central National Service Training August 20 – 22, 2013
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. North Central National Service Training August 20 – 22, 2013

19 Efficient Accounting System
North Central National Service Training August 20 – 22, 2013

20 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 documents North Central National Service Training August 20 – 22, 2013

21 North Central National Service Training August 20 – 22, 2013
Internal Controls North Central National Service Training August 20 – 22, 2013

22 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 North Central National Service Training August 20 – 22, 2013

23 North Central National Service Training August 20 – 22, 2013
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 responsibilities North Central National Service Training August 20 – 22, 2013

24 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 & responsibilities North Central National Service Training August 20 – 22, 2013

25 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 North Central National Service Training August 20 – 22, 2013

26 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: North Central National Service Training August 20 – 22, 2013

27 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. North Central National Service Training August 20 – 22, 2013

28 North Central National Service Training August 20 – 22, 2013
Questions & Answers North Central National Service Training August 20 – 22, 2013

29 North Central National Service Training August 20 – 22, 2013
Budget Controls North Central National Service Training August 20 – 22, 2013

30 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 North Central National Service Training August 20 – 22, 2013

31 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 Amount North Central National Service Training August 20 – 22, 2013

32 Grant Budget Preparation
Qualities of an Effective Budget Realistic Consistent with organizational objectives Flexible (amendable if conditions are not as expected) Consistent with Corporation goals Organize narrative to fit categories on budget form Provide adequate descriptions and calculations to support amounts Compare the final costs to the narrative to ensure they make sense North Central National Service Training August 20 – 22, 2013

33 Grant Budget Preparation
Don’t forget… Staff positions Space, utilities, supplies, telephone Medical and liability insurance Uniforms and training Transportation Evaluations North Central National Service Training August 20 – 22, 2013

34 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. North Central National Service Training August 20 – 22, 2013

35 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 North Central National Service Training August 20 – 22, 2013

36 Examples of Unallowable Costs
Developing and Managing Your Budget 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 North Central National Service Training August 20 – 22, 2013 2012 Financial and Grants Management Institute 36

37 Grant Budget Preparation
Excess Column Use of the Excess Column Track total project costs Fundraising North Central National Service Training August 20 – 22, 2013

38 Budget: Final Review Checklist
Developing and Managing Your Budget 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)? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ North Central National Service Training August 20 – 22, 2013 2012 Financial and Grants Management Institute 38

39 Summary Budgeting: The Road Map to Success
Where Are We Going? Know the Rules of the Road Preventive and Regular Maintenance Check-ups Keep You in the Driver Seat Are We There Yet? ___________________________________________________________________________ Drive Defensively Bumps Along the Road North Central National Service Training August 20 – 22, 2013

40 North Central National Service Training August 20 – 22, 2013
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 North Central National Service Training August 20 – 22, 2013

41 North Central National Service Training August 20 – 22, 2013
Grant Award Notice of Grant Agreement (NGA) Special Conditions Grant Budget Amendments Reporting Terms and Conditions of Award Prohibited Activities NGA- Explain what it is and need to review carefully, drawing down funds is acceptance of terms and conditions of grant Special condition Indirect cost rate CCR registration Grant Budget Amendments North Central National Service Training August 20 – 22, 2013

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Documenting Expenses North Central National Service Training August 20 – 22, 2013

43 North Central National Service Training August 20 – 22, 2013
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 North Central National Service Training August 20 – 22, 2013

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Budget Management North Central National Service Training August 20 – 22, 2013

45 North Central National Service Training August 20 – 22, 2013
Budget Management Grantees 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 North Central National Service Training August 20 – 22, 2013

46 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 item 3) 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. North Central National Service Training August 20 – 22, 2013

47 North Central National Service Training August 20 – 22, 2013
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. Approval required by the FFMC Do not assume approvals have been granted unless documented North Central National Service Training August 20 – 22, 2013

48 Financial Reporting and Closeouts
North Central National Service Training August 20 – 22, 2013

49 Reporting Requirements
The 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 The Federal Financial Report, also referred to as the FFR provides CNCS data on project expenditures every 6 months. The “This Period” Fields refer to the previous 6 month period, and the “Cumulative” Fields refer to the entire 3-year performance period of your grant cycle. The Program Progress Report (PPR) is submitted annually for all programs. Additionally, because it is important to track the volunteer service year attainment (vsy) and direct benefit ratio (dbr) FGP and SCP projects complete a supplemental PPR to report volunteer numbers and hours served. North Central National Service Training August 20 – 22, 2013

50 North Central National Service Training August 20 – 22, 2013
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) We recommend that you collect these items before starting your FFR. You can’t complete the report unless you have the expenditures and records. It would be best if you and a member of your fiscal department completed the FFR together. Some names for these reports include: -Chart of Accounts -VSY tracking sheet -Financial Reports -Accounts payable/receivable -In-Kind donation records North Central National Service Training August 20 – 22, 2013

51 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. North Central National Service Training August 20 – 22, 2013

52 North Central National Service Training August 20 – 22, 2013
FFR Screen Shots The un-liquidated balance field does not have to be completed at the 6 month report Negative un-obligated balance Grantee cannot expend more federal funds than awarded North Central National Service Training August 20 – 22, 2013

53 North Central National Service Training August 20 – 22, 2013
FFR Screen Shots Report Type Grantees will specify whether report is quarterly, semi-annual, annual, or final Total Recipient Share Required eGrants will calculate field based on overall match percentage approved on grantee’s budget If total federal funds authorized is reduced, field will automatically adjust in proportion to overall approved match percentage. Remaining Recipient Share to be Provided Calculation based on the difference between Total Recipient Share Required and Recipient Share of Expenditures If Recipient Share of Expenditures exceeds Total Recipient Share Required, the field will be zero Remarks Field expanded to allow more space for grantees to supply comments or other information to CNCS. North Central National Service Training August 20 – 22, 2013

54 North Central National Service Training August 20 – 22, 2013
FFR Screen Shots If you are the authorized representative, please make sure you are aware of all information being submitted and ensure that they are accurate. North Central National Service Training August 20 – 22, 2013

55 Double Check the Figures
For example: Recognition Stipend hours match dollars spent Make sure your figures are accurate. Again, have all your reports with you when you begin the report. When you review the documents provided by your fiscal department or finance person, be sure to check the figures against the program information that you have. Make sure all program expenditures were reported to your fiscal department to reconcile before you begin to report on your FFR. For example, if you hosted a recognition in the 6 month period, are there costs included on the report that show the in-kind or donations that you received? For FGP/SCP, look at the stipend payment line and divide the amount by $2.65 – do the hours match the hours you have? North Central National Service Training August 20 – 22, 2013

56 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 North Central National Service Training August 20 – 22, 2013

57 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 North Central National Service Training August 20 – 22, 2013

58 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 North Central National Service Training August 20 – 22, 2013

59 North Central National Service Training August 20 – 22, 2013
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 North Central National Service Training August 20 – 22, 2013

60 North Central National Service Training August 20 – 22, 2013
Grant Closeout Submission of final program and fiscal reports FFR, 272, and draw down figures must reconcile Property disposition All figures should be reconciled to the penny drawdowns, reported expenditures and final FFR North Central National Service Training August 20 – 22, 2013

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Questions? North Central National Service Training August 20 – 22, 2013

62 Financial and Grants Management 101 Basics
Helpful Links Description 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 (must be updated yearly) Payment Management System at HHS GuideStar OMB Circulars Managing Senior Corps Grants North Central National Service Training August 20 – 22, 2013 NCVS June 20, 2013 62


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