A Review of Federal Financial Management and Reporting Definitions June 13th, 2011 2:00 - 3:00 p.m.

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Office of Grants Management Presenter Judi Fisher Division Chief Office of Grants Management

Importance of financial reporting Fiduciary responsibility Tremendous need Scarcity of resources Need for consistent financial reporting

Need for consistent financial reporting Impacts: ETA’s financial credibility Future funding availability Over-reporting obligations can lead to funds being returned Under-reporting expenditures can lead to funds being returned

Purpose of TEGL Impact Definitions Examples

Background: Cash Disbursements Tracked in Real Time Used by ETA as proxy for status of usage of funds Grantee reports validate accuracy of ETA’s data

Background: Cash Disbursement Inconsistencies: Delay of PMS Drawdowns Advances to subrecipients Disbursements on state level reports vs. disbursements on local level reports Timing: last day of reporting period

Background: Cash Disbursements Reported disbursements should reflect only those made from Federal cash received

Background: Expenditures Accrual reporting required Better determination of actual costs of a program at a particular point in time Reporting varies based on types of accounting systems used Many accruals, particularly at subrecipient level, not being reported

Background: Obligations Data provide expanded picture of how funds are being utilized Accurate tracking leads to good grant management Over-reporting of obligations can result in loss of funds

Definition: Cash Disbursement The sum of actual cash disbursements for direct charges for goods and services, the amount of cash paid out for indirect expenses charged to the grant, and the amount of cash advances and payments made to subrecipients and subcontractors.

Examples: Cash Disbursement Federal level: Online transfers to grantees through HHS PMS Federal Disbursement = cash receipt on grantee financial report Governed by Uniform Administrative Requirements Grantee level: transfer of cash to a subgrantee, vendor, or other payee, either by check, voucher, or an electronic transfer Formula state level reports: Disbursement = Electronic transfer to local area Formula local level reports: Disbursement = local area payment to subrecipient or other organization or payments for their own costs

Charges incurred during a given period for: Definitions: Accrued Expenditure Charges incurred during a given period for: Goods or other tangible property received Services performed by employees, contractors, sub-grantees, subcontractors, and other payees Other amounts becoming owed under programs for which no current services or performance is required

Definitions: Expenditures Sometimes referred to as outlays In general, charges made to the project or program in support of its authorized activities Required to be reported on an accrual basis

Whether or not a cash payment is made Accrued Expenditures Total accrued expenditures = Costs for goods and services received Whether or not a cash payment is made

Accrued Expenditures If using cash basis, must also have a method to track and report on an accrual bases Usually accrual worksheets Not every accrual accounting system captures all accrued expenditures. May also need to develop worksheets to capture additional accruals that must be reported i.e. Training received by not yet invoiced

Examples: Accrued Expenditures All costs of goods and services received and paid for Salaries and benefits earned for work performed or leave taken (whether or not payroll checks issued) Costs of services received by clients/participants (i.e. child care, transportation) for which grantee has legal requirement to pay Cost of training received by enrolled participants

Examples: Accrued Expenditures Tuition Tuition often billed months after training received. Therefore cost of tuition is accrued even though not billed Tuition is specific exception to prohibition of paying for services before received (Comptroller General) Full cost of tuition for current semester can be expensed up front when paid in advance or it can be accrued as participant receives training. Provides more realistic assessment of actual costs incurred for training

Definitions: What is an obligation? 29 CFR 97.3 Orders placed, contracts and subgrants awarded, goods and services received during a given period Payment during the same or future period Legal commitment to pay Occurs at time services rendered Before services rendered where binding agreement exists “Definite and certain” – Comptroller General

Examples: Obligations Subgrant agreements Purchase orders Cash disbursements

Obligation vs. Encumbrance But what about… Projected staff time? Future rent payments? Future or projected training? Individual Training Accounts (ITAs)? Items budgeted during period of grant award?

What is an encumbrance? An anticipated expenditure or funds restricted for anticipated expenditures Projected costs due in a current or future period Is not be paid in advance of actual work Expenditure is not definite or certain No legal liability to pay Not reported to ETA

Example: Projected Training Costs Are NOT obligations Do not meet definition in 29 CFR 97.3 of definite and certain Do not constitute a legal liability Comptroller General Decision B-148283 – period covered by pre-payment only extends to current period participant is registered and attending classes

Examples: Individual Training Accounts NOT an obligation at the time issued to participant. Equivalent to budgeted limit for training Commitment to participant, but not legal commitment until participant registers for classes Amount of ITAs for which enrollments have not occurred are encumbrances

Only current expenditure and the cancellation penalty are obligations Examples: Leases Entire amount NOT an obligation – rent payments contingent on occupancy Only current expenditure and the cancellation penalty are obligations

Why is this important? Directly affects funding availability Over-reported and unliquidated obligations may have funding authority expire Funds returned to U.S. Treasury Appearance is that program did not require all the funds previously appropriated

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Online Training: Resources Intro to Financial Reporting https://www.workforce3one.org/view/30009147581 41611670 Financial Management Principles https://www.workforce3one.org/view/30009148317 58578573

Online Training: Resources List of additional financial and administrative online training in TEN 39-09 and 49-08 http://wdr.doleta.gov/directives/attach/TEN/ten2008 /TEN49-08.pdf http://wdr.doleta.gov/directives/attach/TEN/ten2009 /ten39-09.pdf

Comprehensive One-Stop Financial Management Technical Assistance Guide Resources Comprehensive One-Stop Financial Management Technical Assistance Guide http://www.doleta.gov/grants/pdf/FinalTAG_Aug ust_02.pdf

ETA Advisories and Training and Employment Guidance Letters: Resources ETA Advisories and Training and Employment Guidance Letters: http://wdr.doleta.gov/directives/

For additional Information or Assistance Questions following the webinar can be directed to: Fiscal.Policy@dol.gov Prime Grantees can contact their Federal Projects Officer Contact info for ETA’s Regional Offices: http://www.doleta.gov/regions/regoffices/Pages/eta_def ault.cfm?CFID=74077411&CFTOKEN=29351484 Subrecipients should contact the prime grantee to request technical assistance.

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