Financial and Grants Management 101 Basics

Financial and Grants Management 101 Basics
Bonnie Janicki Senior Grants Officer Office of Grants Management CNCS North Central Regional Training August 20-23, 2013 1 North Central Regional Training August 20-23, 2013 1

North Central Regional Training August 20-23, 2013
You need to know . . . The information in this workshop is based on CNCS and Federal laws, rules, and regulations; CNCS grant terms and provisions; and generally accepted accounting and financial principles and practices. Some state commissions, national grantees, or parent organizations may impose additional requirements. North Central Regional Training August 20-23, 2013

Opening Plenary Welcome . . . Introduction of trainer and CNCS staff Program types represented Senior Corps, AmeriCorps, SIF, NCB, 9/11, MLK Questions As we go ask clarifying questions and provide your experiences Questions at the end as time permits We will do a small group activity North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Workshop Flow North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 4

Workshop Objectives Review basic Corporation for National and Community Service facts Develop knowledge about effective financial and grants management Discuss challenges and opportunities for financial management growth Explore ways to enhance and improve current practices North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 5

National Service Grantees
Senior Corps Foster Grandparents, Senior Companion, RSVP AmeriCorps National Capacity Building Program Social Innovation Fund 9/11 Day of Service and Remembrance MLK Day of Service See Handout 1 North Central Regional Training August 20-23, 2013

Activity Basic Financial & Grants Management Terminology See Activity 1 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Effective Financial Management
Financial and Grants Management 101 Basics Effective Financial Management North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 8

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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 9

Regulations & Requirements
Financial and Grants Management 101 Basics Regulations & Requirements North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 10

Nat’l & Community Svc. Act of 1990 Serve America Act Code of Federal Regulations (CFR) OMB Circulars (part of CFR) State & Local Regulations Grant Provisions Certifications and Assurances Notice of Grant Award Proposal & Budget Notice Of Funding Opportunity North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 11 11

Grant Guidelines Federal Grant Guidelines Educational Institutions 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 of Federal funds in its fiscal year Locate Grants Management Circulars: North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 12 12

Basics of OMB Circulars
Financial and Grants Management 101 Basics Basics of OMB Circulars Cost Principles Allowable & Unallowable Costs Indirect Costs Administrative Requirements Accounting System Documentation requirements A-133 requirements Here are the key issues that are contained in the OMB Circulars – can people name others? North Central Regional Training August 20-23, 2013 2009 Financial & Grants Mgmt. Institute North Central Regional Training August 20-23, 2013 13 13 13

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 State and local = 43 identified Educational Institutions = 54 identified Non-profits = 52 identified Examples of Costs Identified: Advertising and public relations costs, Compensation for personal services, Memberships, subscriptions, and professional activity costs, Recruiting costs, Rental costs, Training and education costs & Travel costs North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 14 14

Allowable, Reasonable & Allocable
Financial and Grants Management 101 Basics 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 Important elements that are explicitly described in OMB Cost principles North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

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 Federal Grant Guidelines Educational Institutions 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 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 16 16

A-133 Audit Requirements Provide the standards for obtaining consistency and uniformity among Federal agencies for the audit of organizations expending Federal funds Apply to all organizations that expend $500,000 or more of Federal funds in that organization’s fiscal year North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 17 17

Accounting Systems North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 18

Efficient Accounting System Requirements
Financial and Grants Management 101 Basics 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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 19

Accounting System that properly segregates funds
Financial and Grants Management 101 Basics Accounting System that properly segregates funds Accounting System Department of Education Grant Grant 1 CNCS Grant Grant 2 Ford Foundation Grant Grant 3 NOT  North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Policies & Procedures North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 21

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 See Handout 2 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 22

Internal Controls North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 23

Why Have Internal Controls?
Financial and Grants Management 101 Basics 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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 24 24

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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Prohibited Activities
Financial and Grants Management 101 Basics Prohibited Activities North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 28

Prohibited Activities
Financial and Grants Management 101 Basics Prohibited Activities While charging time to the AmeriCorps program, accumulating service or training hours, or otherwise performing activities supported by the AmeriCorps program or the Corporation, staff and members may not engage in specific activities. (see 45 CFR § ) See Handout 3 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Documenting Expenses North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 30

Documenting Expenses Document, Document, Document Allowable Allocable Reasonable Consistently Applied Reasonable = A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allocable = A cost is allocable to a particular cost objective, such as a grant, contract, project, service, or other activity, in accordance with the relative benefits received. A cost is allocable to a Federal award if it is treated consistently with other costs incurred for the same purpose in like circumstances. Allowable = To be allowable under an award, costs must: (1) be reasonable, (2) conform to any limitations or exclusions set forth in the cost principles or in the grant award, (3) be consistent with policies and procedures that apply uniformly to both federally-financed and non federal financed activities, (4) be accorded consistent treatment, (5) be determined in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB), (6) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, and (7) be adequately documented. North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 31 31

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 See Handout 4 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Electronic Storage of Records - AmeriCorps Member Records
The electronic storage procedures and system must Provide for the safe-keeping and security of the records, including: Sufficient prevention of unauthorized alterations or erasures of records Effective security measures to ensure only authorized persons have access to records Adequate measures designed to prevent physical damage to records A system providing for back-up and recovery of records Provide for the easy retrieval of records in a timely fashion, including: Storage of the records in a physically accessible location Clear and accurate labeling of all records Storage of the records in a usable, readable format Where there is a requirement for a signature on a record, electronically stored records must include an image of the original signature Records without signatures, when required, are considered incomplete North Central Regional Training August 20-23, 2013

Key Documentation Issue
Financial and Grants Management 101 Basics Key Documentation Issue Salary Signed timesheets with supervisory approval Quarterly payroll returns (941) Payroll register Personnel file with salary/wage information Employment contract Cancelled checks Direct deposit schedule This is a common audit finding and site visit issue – timesheets documenting salary paid 2 CFR 220 [A-21] = educational institutions 2 CFR 225 [A-87] = state, local and Indian tribal governments 2 CFR 230 [A-122] = non-profits See Handout 5 North Central Regional Training August 20-23, 2013 34 North Central Regional Training August 20-23, 2013 34 34

Match North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 35

Project Costs The total allowable budget or expenditures incurred to operate the program and accomplish its objectives is divided into 2 sections: Federal Share Portion of budget or total expenditures paid for with CNCS funds Grantee Share aka: match Portion of total expenditures not paid for with CNCS funds Federal and Grantee Share funds must be treated consistently North Central Regional Training August 20-23, 2013 2009 Financial & Grants Mgmt. Institute North Central Regional Training August 20-23, 2013 36

Match: Documenting Cash and In-Kind
Sources of Match Contributions received by cash, check, electronic funds transfer, credit card, or payroll deduction Cash Contributions In-Kind Contributions Value of non-cash contributions May be in the form of real property, equipment, supplies, services, and other expendable property Approved Budget  Match Amount and Sources of Match Sources of Match Changed Significantly  Contact your Grants Officer North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Match: Documenting Cash and In-Kind
Finding Match Sources Cash: Donations Leases, sale of goods/services Local governments State appropriations Foundation grants or corporate contributions In-Kind Contributions: Value of donated services and/or donated goods    Labor  space  vehicles  training  supplies  equipment  services Senior Corps: Unclaimed volunteer reimbursements (i.e., mileage, meals, physicals) cannot be counted as match North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Using Other Federal Funds as Match
Budgeting Discuss your intent to use other Federal funds to match a CNCS grant with the other agency before submitting your application AmeriCorps – Serve America Act of 2009 requires grantees and subgrantees to report the amounts and sources of Federal funds used to carry out programs Report this on spreadsheet provided by CNCS October 2012 – report on eGrants FFR may be possible Document in your records whether in-kind contribution that obtained with Federal funds North Central Regional Training August 20-23, 2013

Acceptable Match is . . . Cash and in-kind contributions are accepted as part of the grantee’s cost sharing or matching when contributions meet all of the following criteria: Are verifiable from the grantee's records Are necessary and reasonable for proper and efficient accomplishment of project or program objectives Are allowable under the applicable OMB cost principles 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 (allowable under program guidelines) Conform to other grant provisions or OMB Circulars Administrative Requirements North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Exception: Volunteer Match
Financial and Grants Management 101 Basics Exception: Volunteer Match Do not count as match - The value of direct community services performed by volunteers Do count as match - Services that contribute to organizational functions Count services such as accounting, legal, training of staff or participants that are elements of the grantee’s cost allocation plan North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Recording In-Kind Contributions
Match: Documenting Cash and In-Kind Recording In-Kind Contributions Maintain adequate documentation to support amounts claimed as match Maintain same documentation for both CNCS Federal share and for grantee’s share Documentation must meet same standards as other expenditures within organization Record donation and valuation of item in detail Enter into the General Ledger as income and expenditure Failure to enter match contributions into general ledger requires a formal explanatory policy and separate spread sheet accountability of receipt and use See Handout 6 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Why Record In-Kind in the General Ledger?
Match: Documenting Cash and In-Kind Why Record In-Kind in the General Ledger? Statement of Financial Accounting Standards (SFAS #116) sets the standard for non-profits: Contributed services are recognized in financial statements if services received: Create or enhance non-financial assets, or Require specialized skills, are provided by individuals possessing those skills, and would need to be purchased if not provided by donation. North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Recording In-Kind Contributions
Match: Documenting Cash and In-Kind Recording In-Kind Contributions Enter into the General Ledger as income and expenditure: Example: A local paint store donates a professional paint sprayer with a fair market value of $550.00 $ – 7250 In-Kind Expense Account (debit) $ – 5250 In-Kind Income Account (credit) North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Valuing In-Kind Contributions
Match: Documenting Cash and In-Kind Valuing In-Kind Contributions Use fair market price Consider what it would cost to obtain similar goods or services The donor must provide the value of the donation Review the donation letter or form to ensure the value is reasonable What is not an in-kind contribution? Discounts on memberships on “bulk memberships.” If an organization charges one price for individual memberships and another price for multiples, such as $100 for one person, $800 for ten people, the $200 “saved” because you have 10 people getting memberships you would have paid $1,000 for if you didn’t request all ten, is NOT an in-kind contribution. This is happening with dues to AmeriCorps alums. The IRS defines fair market value as the price that item would sell for on the open market North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Documenting In-Kind Contributions
Match: Documenting Cash and In-Kind Documenting In-Kind Contributions Document the basis for determining value of personal services, material, equipment, building, and land Obtain written acknowledgement from the donor to include: Name and signature of donor Date and location of donation Detailed description of contributed item or service Estimated value of contribution, how value was determined, who made the determination Whether the contribution was obtained with Federal funds *** Keep a copy of the receipt in your files *** If audited, a grantee may be required to provide supporting documentation of ALL donations, if not available during the audit North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Sample: In-Kind Contribution Form
Match: Documenting Cash and In-Kind Sample: In-Kind Contribution Form Does your In-Kind Form have all this information? See Handout 7 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Financial Reporting North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 48

Key Elements of Financial Reporting
Financial and Grants Management 101 Basics Key Elements of Financial Reporting Prepare all financial reports with information from the organization’s accounting system Review and reconcile the information to ensure accuracy prior to report submission Ensure files have the proper documentation to support all information reported in financial reports Submit all reports on time North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 49 49

Program Income Defined as “gross income received by the grantee directly generated by a grant supported activity, or earned only as the result of the grant agreement during the grant period” There are 2 alternatives to using program income: Additive – added to funds committed to the program and used to further program objectives Deductive – deducted from total allowable costs of the program to determine the net allowable costs for which the CNCS share is based Consult grant terms and conditions to determine deductive or additive alternative North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Budgeting North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 51

Budget Narrative Preparation
Financial and Grants Management 101 Basics Budget Narrative Preparation Review your program/projects goals and objectives Estimate the resources needed to achieve program/project goal, for example: Participants – members, volunteers Staff positions Space, utilities, supplies, telephone Medical and liability insurance Uniforms and training Transportation Evaluations North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 52

Financial and Grants Management 101 Basics Budget Narrative 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 North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 53

Financial and Grants Management 101 Basics Budget Narrative Preparation Allocate costs based on a consistent and documented cost allocation plan. Examples include: Level of effort: percentage of time spent on activity X salary Rent: total CNCS program space ÷ total host agency space Expenses: percentage of expenses for program versus total organization’s expenses North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 54

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 Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 55

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 Do not assume approvals have been granted unless documented Approval required by the OGM or FFMC North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 56

Close Out North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 57

Overview of the Close Out Process
Round Robin: Closing Out Your CNCS Grants Overview of the Close Out Process Grantee Responsibility: Complete grant close out within 90 days of the end of the project period Seek a no-cost extension from the OGM or FFMC for activities that will extend beyond the project period end dates As a subgrantee, you must go through your Commission, Parent, or other primary organization Senior Corps  no-cost extensions are rarity Must request 90 days prior to end of 3 year grant end ___________________________________________________________________________ North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Grantee Responsibilities
Complete the following steps: Pay outstanding obligations Closeout sub-grants Submit close out documents as necessary Enter final Federal Financial Report (FFR) in eGrants Return unobligated funds Ensure all final amounts are equal FFR in eGrants FFR in Payment Management System (PMS) Drawdown in PMS North Central Regional Training August 20-23, 2013

Reconciling the Grant Reconcile all expenditures and draw downs, so that funds expended are equal to funds disbursed and advanced If these reports do not reflect the same expenditure amounts the Corporation cannot close your grant until you make adjustments Final Drawdown FFR Reconcile North Central Regional Training August 20-23, 2013

Subsequent Audit CNCS retains right to conduct a subsequent audit or other review of a grant—close out does not change this right Notice of audit may extend the three year record retention requirement North Central Regional Training August 20-23, 2013

Retaining Records Retain all records for three years from submission of the final FFR Requirement is included in the CNCS Regulations North Central Regional Training August 20-23, 2013

Highlights: Program Responsibility
Financial and Grants Management 101 Basics Highlights: Program Responsibility Overall compliance with CNCS and program specific regulations Training, monitoring and oversight of subgrantee or participant compliance Accurate, timely and complete program and performance reporting Ensure key staff understand roles, responsibility, understand each other’s priorities and work together In addition to financial requirements there are very important programmatic principles that participants should understand. North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Highlights: Fiscal Responsibility
Financial and Grants Management 101 Basics 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 Here are the key issues to be aware of, ensure understanding and clarity of participants as this is a fundamental basis of the session North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013

Helpful Links Description Website Address Corporation for National and Community Service A-133 Federal Audit Clearinghouse harvester.census.gov/sac/dissem/simpleqry.html Excluded Parties List System Payment Management System at HHS GuideStar OMB Circulars CNCS eGrants Gateway egrants.cns.gov/espan/main/login.jsp North Central Regional Training August 20-23, 2013 North Central Regional Training August 20-23, 2013 65

Questions? Open Wrap Up Evaluation
North Central Regional Training August 20-23, 2013

For More Information Contact your CNCS Grants Officer or call your Grants Officer Visit the Resource Center Online tools and training North Central Regional Training August 20-23, 2013

Financial and Grants Management 101 Basics

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