1. MODULE 8 MONITORING INDIANA HPRP Training 1

2. Role of Independent Financial Monitors 2 IHCDA is retaining an independent accounting firm to monitor its sub recipients under the HPRP. They will be conducting on-site monitoring of program documentation and procedures. IHCDA will allocate specific accounting staff for the HPRP, who will be in direct contact with each sub recipient about procedures and required documentation.

3. Monitoring of Sub-Recipients HUD requires that grantees (State of Indiana) engage in remote and onsite monitoring of sub- recipients Factors to examine include:  Adequate financial management systems  Appropriate qualifications required for staff and auditors  Adequate time distribution records if employees are on multiple grants  Appropriate policies and procedures to prevent conflicts of interest  Retain records for a period of at least 4 years 3

4. Monitoring of Sub-Recipients (2) Additional monitoring factors:  Adequate systems to track sub-recipient property  A-133 Audits completed for all sub-recipients receiving $500,000 or more in federal funds  Audits reviewed by grantee  Grantee uses appropriate risk assessment process to select sub- grantees for on-site monitoring  Use of program income for program related purposes only  If funds are provided by advances:  Ensure that funds provided are not in excess of immediate needs  Funds are timely disbursed by sub-recipient  Funds used solely for eligible program purposes  Monitoring results communicated on a timely basis to sub-recipients 4

5. Monitoring of Financial Management Budget established and tracked by eligible activity Adequate source documentation maintained for expenditures (invoices, contracts, purchase orders, etc.) Organization chart showing actual lines of responsibility Segregation of duties to reduce opportunities for someone to perpetrate or conceal errors or irregularities Internal controls adequate to prepare financial statements that are fairly presented and in compliance with GAAP Draw downs match official accounting records of sub- recipients 5

6. Monitoring of Financial Management (2) Sub-recipient’s audits confirm adequacy of internal accounting and control systems  audit costs are allowable as administrative fee 6

7. Common Monitoring Findings Lack of internal controls Staffing or financial assistance expenditures not supported by documentation Reported and charged costs do not agree with financial records Staffing costs not supported by time sheets 7

8. Basic Principles of Allowable Costs Eligible: by HUD regulation/notice and consistent with sub- grantee agreement Reasonable: consistent with what others would pay for the same thing Allocable: can be attributed to specific grant and activity Documented: written documentation to support expenditure 8

9. Remote Monitoring Includes: Timely and accurate invoices Adequate documentation to back-up invoices Pace of spending is within expectations Billing matches approved activities Billing matches progress reports Timely and accurate performance and outcome reporting Audit reports received from sponsor and reviewed by grantee 9

10. On-Site Monitoring Includes 10 Set financial management monitoring priorities, based on prior or current concerns, audit findings, etc. Verify that adequate financial policies & procedures in place Verify that internal cash controls are in place Verify adequate tracking of grant and activity-level spending Check for timesheet-type documentation for all personnel costs, inc. administrative staff

11. Adequate Documentation for HPRP Expenditures Beneficiary is eligible to receive HPRP assistance  Income  Homeless  At risk of homelessness Personnel costs are supported by documentation of staff activity Assistance provided to program beneficiaries meets program requirements  Time limits  Rent reasonableness  Units meet HQS and Lead Based Paint requirements All payments have been made to 3 rd parties 11

12. Procurement and Property Controls Written procurement policies  Prevent conflicts of interest  Allow for open, competitive procurements Property controls  Inventoried at least every other year  Equipment description  Serial number, model number, and/or other identification numbers  Source of equipment including award number  Acquisition date and cost  Location and condition of equipment and date information reported  Unit acquisition cost 12

13. IHCDA Requirements 13 HPRP funds be deposited in a separate bank account into which IHCDA may deposit. Financial controls including segregation of duties, dual check signatures and use of a recognized computerized accounting system must be in place