1. Presented by Doug Goodman, OCFO Field Operations Manager
LBNL Financial Management General Overview, Core Principles, Key Concepts, and Best Lab Practices
Presented by
Doug Goodman, OCFO Field Operations Manager

2. Table of Contents Topic Page # Course Objectives 3
Office of Chief Financial Officer (OCFO) – Key Information
Resource Stewardship & “The 10 Financial Commandments”
Budgeting, Funding, and Cost Concepts and Processes
Funds Control Concepts and Best Practices
Accounting Concepts and Processes
Procurement & Property Management Concepts and Processes
Financial Information Systems Concepts
Travel and Conference Services – Key Information

3. Training Objectives
Provide an overview of Berkeley Lab financial management
Provide financial management core principles and key concepts, and why they are important
Become familiar with and embrace funds control best practices at the Berkeley Lab

4. OCFO Organization

5. OCFO - Lead Organizational Contacts
The OCFO’s senior leadership team is comprised of:
Jeffrey Fernandez, Chief Financial Officer, ext – 5547,
Cynthia Jones, CFO Administrator, ext – 4242,
Anil More´, Operations Manager, ext – 5254,
Linda Wuy, Business Manager, ext – 7418,
Minh Agon Huebner, Budget Officer, ext – 5293,
Jeanne Kissel, Controller, ext – 5957,
Derrol Hammer, Procurement & Property Mgr, ext – 6019,
Jeff Weiner, Sponsored Projects Officer, ext – 7143,
Chuck Axthelm, Business Systems Analysis Mgr, ext- 4461,
Doug Goodman, Field Operations Manager, ext – 7632,
The CFO’s website is:

6. OCFO – Financial Policies and Procedures
The Lab’s website for its financial policies and procedures manual can be found at:
The site is designed to provide an authoritative guide and information source that will serve as the basis for financial accountability, compliance, sound business practices, and effective financial decisions at the Lab
Lab’s Financial Policies and Procedures manager is Michele Mock and she can be contacted at ext – 2415 or
This manual can also be accessed through the Lab’s Regulations and Procedure Manual (RPM), the Lab’s official manual for its administrative and operational policies and procedures. The RPM’s website is: http//

7. Financial Management Starts with Stewardship
Webster’s on Stewardship:
“It’s the careful and responsible management of something entrusted to one's care”
The concept of stewardship is at the very heart of how we view financial management at the Laboratory - it’s everyone responsibility!
Y – towards the front

8. The Lab’s 10 Financial Commandments
Core financial management principles that ethically guide actions and behavior --- they are located on the OCFO website
1. Don’t spend dollars you don’t have -- Funding must be in UC Contract 31, not just in the Approved Funding Program (AFP) or contract award
2. Spend funding only on the purpose for which it is intended
3. Don’t mix funding sources for projects without documented rationale
Do not charge research costs to an indirect budget (except for LDRD); e.g., overhead, organization burden, recharges
Have a causal-beneficial relationship between the cost elements of an indirect budget and its corresponding distribution base.

9. The Lab’s 10 Financial Commandments (Cont’d)
Maintain consistency in cost distribution over time
Use Full Cost Recovery – No subsidies
Record all costs of a project in the accounting period for which services were performed or goods delivered (includes accruing for all appropriate costs in the correct period of performance to that project)
Transfer costs only if necessary, appropriate, fully documented and justified (as outlined in the LBNL Resource Adjustment Policy)
Comply with DOE funding categories and related thresholds (colors of money)
$50K for Capital Equipment, $5M for General Plant Project (GPP), and $2M for Major Item of Equipment (MIE)

10. Critical Elements of a Budget
Identifies Project Manager/PI and funding source
Description of work scope and deliverables
Resource requirements and cost details
Time dimension
Period of performance
Phases of work/resource level fluctuations
Budget assumptions documented
Budget Formulation

11. Direct vs. Indirect Costs
Direct costs are specifically identifiable with a particular project
Indirect costs those that are not defined as a Direct cost
Under similar circumstances, the same type of costs can not be treated as a direct cost in one area and as an indirect cost in another area
Indirect Budgets

12. What is an Indirect Budget?
An Indirect Budget is a means of allocating costs which benefit multiple projects, examples include:
HR centers
Janitorial services
Payroll
Types of indirect budget at LBNL
Overheads
Institutional (e.g., G&A, LDRD, IGPP, etc)
Divisional (e.g., Org. Burdens)
Recharges/Service centers (e.g., Procurement charge, Telecom, Fleet, CSO, etc)
Indirect Budgets

13. Elements of an Indirect Rate Calculation
An Indirect budget rate calculation consists of the three steps:
Identifying the cost pool (budget)
Identifying the allocation base
Calculating the rate
Example:
Fleet budget (GSA vehicle lease, fuel costs, fleet management, etc.) = $1,343,000
Base: number of miles driven = 695,555 mi
FY07 Fleet recharge rate = $1.93/mi
Indirect Budgets

14. LBNL Allocation Hierarchy
Indirect Budgets
DECEMBER 2006

15. Reporting Purposes: Direct Costs
Costs that are specifically identifiable with a particular project.
Labor (salaries & benefits)
Materials, Subcontracts, Procured Services,& Travel
Service center charges (e.g., CSO, Shop, Electricity, Telecom, Procurement and Travel burdens)
Indirect Budgets

16. Effort Measures Headcount Effort Hours Work Months (WM)
Full Time Equivalents (FTE)
Effort Costs

17. Cost of Labor - Overview
The total cost of labor of an LBNL employee to an activity depends on
Compensation rate
Employee classification/Payroll burden rate
Time reported in LETS
Charged to a work project
Charged to a leave project/account
Organization code
Project ID (proxy for source/use of funds)
Effort Costs

18. Cost of Labor Is More Than Salary
Indirect allocations are added to an employee’s salary
Check the LBNL Rate Handbook on the CFO web site for current rates
Rates can change during a year
Most rate changes are retroactive to beginning of fiscal year
Rate Handbook can be found at the following website: http//
Rate Handbook also contains various labor price-outs based on type of funding (e.g., DOE, WFO) used
Effort Costs

19. Why the Federal Budget is Important to Lab
U.S. Department of Energy (DOE) provides ~80% of LBNL’s annual funding
DOE is funded through the Federal Government’s Annual Appropriations process
The Flow of $$$...Congress DOE LBNL
Decisions made during the process determine how much funding DOE receives – the more the better!
How the money DOE receives is to be spent is also determined in the process (earmarks, limitations, etc.)
DOE Budget & Funding

20. Passage of an Appropriations Bill… in Pictures
subcommittee
hearings
FULL
subcommittee
hearings
FULL
DOE Budget & Funding
Conference Committee
In a perfect world – enactment on Oct 1

21. Federal Budget Cycle
The Federal budget is passed into law each year by Congress and is signed by the President - until UC Contract 31 is modified, you do not have funds to spend!
FY 2008 Prior Year (PY)
FY 2009 Current Year (CY)
FY 2010 Budget Year (BY)
Congressional Resolution
Congressional Appropriation
Allocation
DOE Allotment
Contract 31 Modification
OMB Apportionment
LBNL Approved Funding Program
LBNL Budget Request
March
DOE Review & Consolidation
September
OMB Recommendation
December
President’s Budget
January
October
Chicago Operations/BSO obligation
OMB approtionnment = OMB divides up appropriations to agencies
Removed (DOE Perspective)
Agency allotment = DOE distributes its funding to its agents (allotee holders), for us its in Chicago Operations Office using the Advice of Allotment and the Approved Funding Program (AFP)
Chicago Ops modifies Contract 31 by adding or subtracting funding according to the AFP and WAS
BSO Contract Officer executes the modification by his/her signature

22. Impact of a Continuing Resolution (CR)
A CONTINUING RESOLUTION is legislation enacted by Congress to provide budget authority for federal agencies to continue operating if the fiscal year ends without a new appropriation in place --- no new program/project starts
A CR or multiple CR increments are strong possibilities at the start of any Fiscal Year
Instead of receiving annual funding “up-front”, under a CR, funding is received in increments based on the prior year or the lower of House or Senate mark funding level
Under a CR we are still responsible for managing costs within funding control levels (9 digit B&R)
DOE Budget & Funding

23. Managing Through a CR
Requires careful Divisional management and coordination with HQ Programs
What happens if you do not have enough funding?
Divisions are expected to spend their carryover, then stop work until additional funds arrive
Work for Others projects should be minimally affected by a Continuing Resolution
New starts are OK with a signed contract
Work closely with Federal Agencies other than DOE that may be affected – they would also be under a CR
DOE Budget & Funding

24. Direct (External) Funding Sources
Dept of Energy (DOE) Headquarters/ Office of Science (SC) – our largest funding sponsor
By Field Work Proposal (FWP) through federal budget development process
Work For Others (WFO) DOE
Integrated contractors
Other DOE Operations Offices
WFO Non-DOE
Federal agencies
Non-federal entities
Other Sources
Cooperative Research and Development Agreements (CRADAs)
Gifts
Licensing agreements (Royalties)
Contracting Supported Research (CSR)
DOE Budget & Funding

25. DOE Calls for Research Proposals
DOE: Annual Field Budget Submission (FBS) - March timeframe
DOE Order established DOE’s budget formulation process and overall framework for each stage of the DOE budget process. Submission includes project level budget & FTE requests for:
DOE (non-NNSA) programs – Office of Science (our largest sponsor), Fossil, EERE
Work for Others programs
Crosscut exhibits and schedules
National Nuclear Security Administration (NNSA): Planning, Programming, Budget, and Evaluation (PPBE) Process
NNSA’s process that directs their budget formulation and execution processes. PPBE was established to address those needs within NNSA that are unique from DOE’s. Each major NNSA program has a separate call for data
LBNL submissions include budget and FTEs for Non-Proliferation and National Security
“Off Cycle Calls”: Various Programmatic solicitations for Proposals throughout the Fiscal Year (FY)
Office of Science: “Funding Opportunities” via GRANTS.GOV
DOE Budget & Funding

26. DOE Work Authorization System
DOE Work Authorization System provides the DOE/Lab framework for the disbursement of funds
DOE Work Authorization System (WASs) statements include programmatic guidance memos
DOE Order 412.1A = Work Authorization Process
Chicago Operations Office will NOT fund without a WAS document in hand from the relevant DOE HQ Program Office (e.g. Office of Science, EERE)
Chicago Uses the Work Authorization Process

27. Budget and Reporting (B&R) Codes
B&R is an alpha-numeric code assigned by DOE to all funding sources (DOE accounts)
Associated with all funding and costs
Facilitates identification of funding/costs for specific research areas or projects on a DOE complex wide basis
Referenced in a Work Authorization Statement (WAS)
DOE Budget & Funding

28. Work for Others
Contract between LBNL or DOE and a Federal or Non-federal sponsor for contract R&D work to be performed by LBNL
A unique Laboratory capability
Work must fit within mission of LBNL
Cannot compete with private sector
All costs are recovered from the sponsor
Requires DOE approval
WFO

29. Authorities for Sponsored
Research at LBNL
Only Sponsored Projects Office (SPO) has authority to submit proposals and accept awards on behalf of LBNL
Delegation from UC through Lab Director
Principal Investigator (PI) does not have authority to submit proposals or accept awards
SPO website:
WFO

30. Have SPO Review the Solicitation
Before investing time and effort in a proposal, let SPO review the solicitation to determine LBNL’s eligibility
Three basic types of solicitations
U.S. Govt. – Request for Proposals (RFP’s)
U.S. Govt. – Other Solicitations (BAA’s, RA’s)
Non-Federal Solicitations
WFO

31. A systematic approach to ensure that:
What is Funds Control?
A systematic approach to ensure that:
Funds are expended solely for their authorized and/or appropriated purposes;
Obligations and costs are incurred within applicable time limits (e.g., funds are available before being obligated); and
Funds are obligated and expended within their authorized amounts.
Definition came from Rose’s policy work.

32. Why is Funds Control Important to the Lab?
Promotes ethical behavior and public trust in the scientific mission
Enables the Lab to operate in an open manner, with less intrusive external oversight pressure
Avoids unallowable costs, which means more funds going to research
Avoids negative audit exposure
Avoids negative press
Funds control violations of may result in UC have to prematurely re-compete Contract 31 with DOE
Avoids the individual being personally liable if performing responsibilities legally & appropriately

33. Legal and Administrative Requirements
LBNL has various legal and administrative requirements to ensure that we do not spend funds in excess of our Total Obligational Authority (Carryover + Budget Authority):
Anti Deficiency Act of 1885
Appropriations Law
DOE Directives
DOE Contract 31, Appendix B
Good Business Practices

34. Cost Allowability – Key Concepts
Reasonableness
Ordinary and necessary to conduct Lab business
Does not exceed what would be incurred by a prudent person in the conduct of competitive business
Compliant with UC Contract 31, sound business practices, applicable laws and regulations Y

35. Cost Allowability – Key Concepts
Allocability
Cost incurred specific to the cost objective
Benefits both the Project and other work, and cost can be distributed to them in a reasonable proportion to the benefits received
Is necessary to overall operation of Lab business Y

36. Allowability Isn’t Always Clear Cut
There is no “complete list” in UC Contract 31
There may be grey areas that require analysis and interpretation – ask for help when in doubt
Lab resources for guidance and assistance
Financial Policy and Training Office
Office of Contract Assurance
Budget Office
Controller’s Office

37. What is an Unallowable Cost?
Item or type of cost specifically identified or determined to be unallowable under an applicable law, regulation, or UC Contract 31
Unallowable costs can result in financial and/or criminal liabilities
Examples include: alcohol, contributions, entertainment, gifts, interest, lobbying, souvenirs, and food in most instances Y

38. How To Avoid Unallowable Costs
Take the cost allowability test:
Reasonable – ordinary and necessary to conduct Lab business, does not exceed what would be incurred by a prudent person in the conduct of competitive business, and compliant with UC Contract 31?
Allocable – charged to the correct project or cost pool?
Within dollar limits of UC Contract 31?
Compliant with UC Contract 31 terms?
Consistent with good business practices?
Back-up documentation – Y in binder

39. What is an “Unauthorized Commitment?”
Contractual agreement or commitment, written or oral, made by an individual who lacks sufficient authority to enter into them on behalf of the Lab
Examples of unauthorized commitments include:
Authorizing a vendor/subcontractor to perform work without written, delegated authority
Authorizing work that exceeds the total allowable cost or extends beyond the current term of a subcontract
Requesting or accepting materials or services from a vendor when a purchase order has not been awarded
M-Y

40. Time and Effort Reporting
It’s a high Lab priority to report time and effort in a timely, accurate, and complete manner
Compliance with Federal Law, Fair Labor Standards Act
Accurate and timely reporting of Project costs
Ensures employees are paid correctly & accurate leave taken
Employees report & certify their own time and effort
Supervisors approve their employees’ time & effort
Senior management is responsible for ensuring that time and effort reporting in their Division is properly managed

41. Signature Authority at LBNL Roles and Responsibilities
The Lab Director has ultimate responsibility
Per Standing Order of the Regents “UC Delegation of Authority”
In order for an employee to obtain signature authority (e.g., for financial transactions), approval from one of the following must be on file in OCFO:
Laboratory Director
Deputy Director
Associate Laboratory Director
Chief Financial Officer
Division Director
Department Head
Business Manager (or designee)

42. What Does Your Signature Ensure?
Understanding of transaction and your approval
Information, supporting documentation is complete and accurate
Allowable, reasonable, and justified
Allocable to project(s) being charged
Adequate funds at hand to cover expense
Awareness of your authority level ($ limit)
ETHICS and ACCOUNTABILITY

43. Funds Control - Best Practices

44. Funds Control Success = The Team
Funds Control depends on a cohesive division team:
Division Director
Department Head
Principal Investigator
Project Manager
Group Lead
Business Manager
Resource Manager
Resource Analyst
Field Operations Manager (provides advice & consultation services)
Funds Control is only as good as the Team

45. Funds Control Best Practices
What are the Critical Success Factors?
Communication
Effective, explicit, and continuous
Financial Reporting
Timely, accurate, and complete
Division review and monitoring
Timely accruals of costs
Proactive corrective action(s) taken
Sufficient checks & balances and internal controls

46. Funds Control Best Practices
What We Need to Communicate/Monitor
Financial summaries & details throughout the entire budget development and execution processes
Appropriate cost elements and the level of resources needed
A project’s financial performance conforms with existing Funding/Spend Plan
Identifying potential funds control problems and violations before they occur

47. What is Accounting?
Process of recording, classifying, reporting, and interpreting the financial data of an organization
Demonstrates financial position of organization’s operations
Must be objective, consistent, unbiased, and compliant with applicable regulations/laws
Accounting

48. What is GAAP? Generally Accepted Accounting Principles
A common set of accounting principles, standards, and procedures for financial accounting, recording and reporting
Lab is required to follow GAAP and it shapes our accounting policies and procedures
GAAP is recognized by authoritative bodies, such as:
Financial Accounting Standards Boards (FASB)
Federal Accounting Standards Advisory Board (FASAB)
Governmental Accounting Standards Board (GASB)
Accounting

49. What is a Balance Sheet?
Statement of financial position at a specific date
Contains three major sections:
Assets, Liabilities, and Equity
The accounting equation:
Assets = Liability + Equity
Accounting

50. What is an Income Statement?
Report showing revenue, expenses, and net income for a period of time
Operating results for the accounting period are reflected in equity / net position on the balance sheet
Accounting

51. What is a General Ledger?
Group of accounts that are used to prepare financial statements for a business
Usually grouped in the following order:
Assets 1000
Liabilities 2000
Equity 3000
Revenues 5000
Expenses 6000
Accounting

52. What the Heck is C-W-I-P?
CWIP = Construction Work in Progress
Holding account for property costs not yet ready to be placed in service
Costs remain in CWIP until completion of activities, which then initiates the capitalization and depreciation process
CWIP

53. CWIP Process
CWIP
PACE = Plant & Capital Equipment

54. What is Accrual Accounting?
Revenues are recognized in the period in which the service was performed, whether or not cash is actually received by the performer
Expenses are recognized and matched with the related revenues of the period, whether actually paid or not
Accounting

55. Major Steps in the Accounting Cycle
Analyze transactions   
      
Prepare journal entries
Post to general ledger 
Compile financial statements
Accounting

56. DOE Financial Reporting Systems
MARS – Management Analysis and Reporting System (a legacy system that is being phased out by DOE over time)
STARS – Standard Accounting & Reporting System
Accounting

57. Accounting Structures LBNL vs. DOE
MARS
STARS
General Ledger Accounts
Fund Type
B&R (Budget & Reporting)
Balance Sheet Code
Fund Type
B&R (Budget & Reporting)
Standard General Ledger
Fund Code
Program
Accounting
LBNL General Accounting must ensure accuracy

58. What does “Color of Money” Mean?
Attribute of project funding that restricts its use to specific kinds of activities such as equipment purchases, capital construction, operating expenses
Changing funding levels between Congressional “color of money” requires Congressional approval (reprogramming process)
Changing funding levels among DOE’s “color of money” for Operating funds only requires DOE approval (HQ program manager changes funding levels in WAS guidance letter). Y

59. Why is “Color of Money” Important?
The Lab’s financial statements must be accurate
It’s a heavily audited activity by external entities
Our funding must be used for its intended purpose
To avoid violating the Anti-Deficiency Act and various federal appropriations laws Y

60. Recent Capitalization Changes
Capital items/systems purchased or fabricated after October 1, 2005:
$50K is new dollar threshold – full cost of the item/system, including all of its indirect costs
Service life of item remains at 2 years or more
$5K threshold for property accountability does not change
Equipment purchased or fabricated before FY 2006 with a value of less than $50K and was previously considered capital equipment will not be written off Y

61. Project Completion
PI, Project Manager, Department Manager determines work scope is complete and financial close is requested
Resource Analyst checks for outstanding financial transactions
Labor
Procurement/Travel
Recharge
Other including outstanding sponsor payments
Project Closeout

62. Fiscal Year End Close LBNL uses accrual based accounting
Costs at fiscal year end represent all work, purchases, travel, etc. completed by September 30th of the current year
Different funding sources may have different year end reporting requirements/different fiscal year ends, however, the Lab’s is Sept 30th and we must accrue all costs for financial reporting purposes
Project Closeout

63. Procurement’s Role at LBNL
Support science – 40% of the Lab budget becomes a procurement
Compliance
Public trust
FAR/DEAR
Prime Contract requirements
Standard Practices (SPs)
Good Business Practice
Efficient processes to reduce transaction costs
Adequate controls that withstand audits
Procurement

64. Procurement Basics Three Types of Procurements at LBNL:
Purchase Order (Subcontracts, Blankets, IUTs, R&D, Construction, A&E, etc.)
Procurement Card (PCard)
eBuy
Procurement

65. Procurement Liaisons
Procurement Liaisons are available to assist Laboratory Divisions and staff with their procurement needs
Assist Divisions with strategic planning of acquisition workload
Develop contract strategies for critical and high-value procurements
Help resolve project-related issues
Answer questions on policies and procedures
Resolve questions and problems regarding procedures and requirements related to subject matter
Please feel free to contact our Liaisons for assistance (
Procurement

66. What do we mean by Property?
Personal Property at LBNL
is property of any kind…
EXCEPT
Real estate (land, buildings & equipment permanently affixed to buildings)
Records
Property

67. Personal Property Classifications
Controlled
Materials and equipment valued at ≥ $5,000
Sensitive
Property that is highly portable, easily converted to personal use, and is more susceptible to theft than other equipment
No minimum acquisition value. It includes:
Cameras (still, digital, video, TV, movie)
Personal Computers & peripherals
Printers, Scanners, Projectors
Recorders
Telephones (cellular, mobile) & 2-way Radios
Property

68. LBNL Financial Information Systems
Transaction processing
PeopleSoft FMS is the Lab’s core financial system for GL, AP, Procurement, eBuy, AR, funds control, etc…
Other sub-systems for time-keeping, service center recharges, and property feed transactions to FMS
Reports
Super-user real time reports/queries available in FMS
End user next day reports provided thru IRIS and the BLIS Reporting System (BRS)
Goal: Replace IRIS with the newer BRS

69. New Financial Info Systems Initiatives
Travel & Expense system (TREX) replaced GELCO (late spring 2008)
Budget Planning & Estimating System to replace Janus and Excel spreadsheets (late summer 2008)
Additional eBuy vendors (on-going)
New WFO proposal management system (est )
Events Data Base (spring 2008)

70. Goal: Improve Customer Service and Travel Efficiency
The Lab’s travel agency for air and hotel bookings are done through Carlson Travel – agent assisted or online reservation system (Cliqbook)
Policy & Compliance
Federal per diem limits per city– meals, lodging, mileage
Foreign travel approvals – DOE and State Department
Receipts required – lodging, airfare, rental car, registration fees, >$75 other
Submission of expense reports within 30 days of travel
PeopleSoft Travel Expense System
Ease of use with all electronic reimbursement reporting
Reduce expense/reimbursement cycle time
The Lab’s Travel Manager is Jaime Reyna, and he can be contacted at ext – 6012 or at
Goal: Improve Customer Service and Travel Efficiency

71. Conference Services
Provides a complete array of professional conference planning offerings and expertise designed to save time, effort, and money
From budgeting and site selection to catered foods and entertainment, this office assists with:
Facilities and Service Planning
Conference Information
On-Line Registration Services
Financial Administration
Meeting Management
The Lab’s Conference Services Planners are:
Jill Stark, and she can be contacted at ext – 5073 or
Laurie O’Brien, and she be contacted at ext – 7046 or