1. Audit-Readiness Workshop

2. Role of the fiscal agent
Ensures all commitments made in the application are fulfilled
Ensures that all expenditures are allowable and that match contribution is met
Submits all required reports
Ensures that all sub-awardees perform and adhere to all audit requirements
Ensures that sub-awardees are not disbarred by checking - exact name and tax identification number is needed

3. Auditors…..what do they look for?
Evidence that the institution's financial management system has adequate internal controls (ensures that no one person has complete control over all aspects of a financial transaction)
Evidence that you are doing what you said you were going to do in your approved application and revisions (achieving the outcomes, goals and objectives)
That expenditures made are allowable

4. Auditors…..what do they look for?
That your performance report data is accurate and reliable
Evidence that statutory and regulatory requirements have been met (for example, the matching funds requirement)
Evidence of compliance with Uniform Grant Guidelines (super-circular) – 2 CFR 200

5. What if I am audited? What should I have on hand?
A copy of the grant award notification (GAN) and approved application
Request for Applications (RFA) and corresponding specifications
Approvals in writing for requested revisions
Terms and conditions articles
Organizational chart showing positions of the project within the structure of the institution

6. What if I am audited? What should I have on hand?
List of all project staff and a position description for each
The recent edition of agency guidelines and the Super-Circular (UGG)
Written policies and procedures for
The drawdown and disbursement of federal funds that avoid excess cash balances and assure adequate controls (checks and balances)
Personnel

7. What if I am audited? What should I have on hand?
List of equipment purchased and location
Copies of all materials produced by the project
List of participants served by grant year or cohort, whichever corresponds to the program design
All performance reports submitted to the funding agency
Documentation of participants’ progress, delivery of program services or outcomes achieved

8. What if I am audited? What should I have on hand?
OMB circular A-133, Audits of States, Local Governments, and Non-Profit Organizations
Program statutes and regulations
Program/college policies and procedures manuals
Annual personnel statements – original signatures in blue ink completed after-the-fact

9. Single Audit Act
Non-Federal entities that expend $750,000 or more in a year in federal awards shall have a single or program-specific audit conducted for that year in accordance with the provisions of this part.

10. Costs – How do I know if they’re allowable?
Allowable – they must conform to any limitations or exclusions set forth in these cost principles or in the sponsored agreement as to types or amounts of cost items
Allocable – the process of assigning a cost, or a group of costs, to one or more cost objective, in reasonable and realistic proportion to the benefit provided
Reasonable – a cost that would be incurred by a prudent person

11. Costs – How do I know if they’re allowable?
They must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances
Check grant award and grant terms and conditions for possible exceptions
When in doubt, contact program officer

12. Audit-Readiness Resources
Education Department General Administrative Regulations (EDGAR) can be found on-line at
Office of Management and Budget Uniform Grant Guidance (UGG)
2 CFR 200

13. What are the Expanded Authorities?
Legislation providing greater autonomy to grantees - applies to most federal grants
Pre-award costs
Time extensions
Budget transfers
Carryover

14. Pre-award Costs
No prior approval is required for pre-award costs incurred up to 90 days before the budget period begins
Includes both new and non-competing continuation awards
Applicant should have some reasonable expectation that it will receive a grant
Expenditures are incurred at the applicant’s own risk
Funds are not available for drawdown until the budget period begins
Cannot be used to pay for cost over-runs from previous year
Prior approval is required for pre-award costs incurred more than 90 days before start of the budget period

15. Time extensions
One-time extension of the project period for up to one year without prior approval
Grantee sends written notification of planned extension to assigned program officer no later than 10 days before end of project period. Notice includes:
Supporting reasons for extension
Revised expiration date
Cannot be merely for the purpose of exhausting unexpended funds
Cannot require the need for additional federal funds
Cannot change the scope or objectives of the project

16. Budget Transfers
No prior approval is required for many budget transfers
Check applicable 2 CFR 200 for specific expenditures requiring prior approval
Changes in EDGAR still requiring prior approval:
Changes in project scope or objectives
Changes in a key person specified in the award document

17. Budget Transfers
The absence for more than 3 months or a 25% reduction in time of the approved project director
The need for additional federal funds
The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa, if approval is required by the Secretary
The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense

18. Budget Transfers
Unless described in the application and funded in the approved award, the sub-award, transfer or contracting out of any work under an award. This provision does not apply to the purchase of supplies, material, equipment, or general support services.
No other prior approval requirements for specific items are imposed unless a deviation has been approved by OMB

19. Carryover
Unexpended funds are carried over from one budget period to the next without prior approval
Program Officer may require a written statement describing how unexpended funds will be used
When: At the time of funding decision
New funds may be reduced under certain circumstances
Unexpended funds may be used for any allowable cost that falls within the approved project scope
Not just for finishing uncompleted activities from the previous budget period

20. General Provisions for Selected Items of Cost Cost Principles for Educational Institutions
Advertising and public relations costs – allowable with restrictions
Advisory councils - allowable as a direct cost where authorized by the federal awarding agency
Alcoholic beverages – unallowable
Alumni activities – unallowable
Audit costs - the costs of audits required by, and performed in accordance with, the Single Audit Act - allowable

21. General Provisions for Selected Items of Cost
Bad debts – unallowable
Bonding costs – allowable with restrictions
Commencement and convocation costs – unallowable
Communication costs (including telephone and postage) – allowable
Compensation for personal services
Employees of the organization - allowable to the extent that the total compensation to individual employees conforms to the established policies of the institution and provided that the charges correspond with work performed directly on the sponsored agreement

22. General Provisions for Selected Items of Cost
Severance pay – allowable with restrictions
Defense and prosecution of criminal and civil proceedings and claims – allowable with strict restrictions
Depreciation and use allowances – allowable where needed, used and properly allocable to sponsored agreements
Donations and contributions – unallowable/not reimbursable, but may be used toward cost sharing (match) by recipient

23. General Provisions for Selected Items of Cost
Entertainment costs – unallowable
Equipment and other capital expenditures – allowable when approved in advance by the federal agency
Fines and penalties – unallowable except when incurred as a result of complying with requirements of the funding agency
Fundraising costs - unallowable

24. General Provisions for Selected Items of Cost
Goods or services for personal use – unallowable
Insurance and indemnification - costs of insurance required or approved, and maintained, pursuant to the sponsored agreement - allowable
Labor relations costs – allowable
Lobbying - unallowable

25. General Provisions for Selected Items of Cost
Materials and supplies necessary to carry out a sponsored agreement - allowable
Meetings and conferences, the primary purpose of which is the dissemination of technical information - allowable
Memberships, subscriptions and professional activity costs - costs of the institution’s membership in business, technical, and professional organizations are allowable; costs of the institution’s subscriptions to business, professional, and technical periodicals are also allowable

26. General Provisions for Selected Items of Cost
Professional service costs - costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the institution, are allowable when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government (i.e. grant writing fees)

27. General Provisions for Selected Items of Cost
Allowable when allocable to the sponsored agreement and approved in advance by the federal agency
Scholarships and student aid costs are allowable only when the purpose of the sponsored agreement is to provide training to selected participants and the charge is approved by the sponsoring agency

28. General Provisions for Selected Items of Cost
Student activity costs - unallowable, unless specifically provided for in the sponsored agreement
Training costs - the cost of training provided for employee development is allowable
Travel costs – allowable with restrictions

29. Direct Cost Allocation Principle
If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit
If proportions cannot be determined without undue effort or cost, then the costs may be allocated or transferred to benefited projects on any reasonable basis

30. Indirect Costs May be restricted by funding agency
Cost allocation study required
Approved indirect cost rate agreement from cognizant agency, the U.S. Department of Health and Human Services
AHC current rate is 45% of salary/wages
Unrecovered indirect may qualify as match

31. Principles for Matching Costs
Verifiable from the recipient's records
Are not included as contributions for any other federally-assisted project or program
Necessary and reasonable for proper and efficient accomplishment of project or program objectives
Are allowable under the applicable cost principles

32. Principles for Matching Costs
Are not paid by the Federal Government under another award, except where authorized by federal statute to be used for cost sharing or matching
Are provided for in the approved budget when required by the federal awarding agency

33. Principles for Matching Costs
Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior approval of the Federal awarding agency
Values of matching contributions determined according to cost principles in UGG

34. Program Income
Program income earned by projects financed in whole or in part with federal funds during the project period shall be retained by the recipient and used in one or more of the ways listed in the following: 
Added to funds committed to the project by the federal awarding agency and recipient and used to further eligible project or program objectives
Used to finance the non-federal share of the project or program

35. Program Income
Deducted from the total project or program allowable cost in determining the net allowable costs on which the federal share of costs is based **
In the event that the Federal awarding agency does not specify in its regulations or the terms and conditions of the award how program income is to be used, paragraph (b)(3) ** shall apply automatically to all projects or programs except research

36. Common Audit Exceptions
Missing A-133 audits
Improper travel – no documentation of purpose or person traveling
No or inadequate internal controls
No or inadequate financial recordkeeping – funds unaccounted for
No or inadequate documentation of client eligibility, services provided, or progress achieved

37. Common Audit Exceptions
Missing personnel statements
Poor record-keeping
Lack of documentation
Incorrect indirect cost rates
Unallowable expenses

38. Be Prepared! Be pro-active
Read and know your grant and all applicable regulations
Educate your staff and sub-awardees about grant responsibilities and the regulations they must follow
Develop a timeline that allows for the achievement of all outcomes and objectives within the required timeframe
Develop an evaluation plan or strategy so critical data can be collected from the beginning

39. Be Prepared! Record keeping Personnel statement at least annually
All items required in an audit (see ‘what should I have on hand?’ above)
All reports submitted
Detailed information on expenditures
Written approvals for revisions

40. Close-out
Process all remaining obligations for goods and services obtained within the grant period
Submit all required reports
Account for any real property acquired with federal funds
Formal closeout request may be required
Storage of grant records for five years

41. Disposition of Equipment at Closeout
Title to equipment acquired by a recipient with federal funds shall vest in the recipient, subject to the following conditions:
The recipient shall use the equipment in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by federal funds

42. Disposition of Equipment at Closeout
When no longer needed for the original project or program, the recipient shall use the equipment in connection with its other federally-sponsored activities, in the following order of priority:
(i) Activities sponsored by the federal awarding agency which funded the original project, then
(ii) activities sponsored by other federal awarding agencies

43. Disposition of Equipment at Closeout
When acquiring replacement equipment, the recipient may use the equipment to be replaced as trade-in or sell the equipment and use the proceeds to offset the costs of the replacement equipment subject to the approval of the Federal awarding agency
When the recipient no longer needs the equipment, if the current per unit fair market value is $5,000 or more, the recipient may retain the equipment for other uses provided that compensation is made to the original federal awarding agency or its successor

44. Supplies and Other Expendable Property at Closeout
Title to supplies and other expendable property shall vest in the recipient upon acquisition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federally-sponsored project or program, the recipient shall retain the supplies for use on non-federal sponsored activities or sell them, but shall, in either case, compensate the Federal Government for its share