1. Financial and Grants Management Institute - March 18-20, 20081 Documenting Cash and In-Kind Match

2. Financial and Grants Management Institute - March 18-20, 20082 Session Objectives 1.Understand allowable, allocable, necessary & reasonable costs 2.Gather and retain proper documentation 3.Learn about types and examples of match

3. Financial and Grants Management Institute - March 18-20, 20083 Total allowable budget or expenditures incurred to operate the program and accomplish its objectives Portion of budget or expenditures paid for with Federal funds (CNCS) Portion of total expenditures not paid for with CNCS funds Project Costs Federal Share Grantee Share aka: match Talking Technical: Definitions to Know

4. Financial and Grants Management Institute - March 18-20, 20084 Gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the award Value of non-cash contributions provided by non-Federal third parties May be in the form of real property, equipment, supplies, services, and other expendable property Program Income In-Kind Contributions More Technical Talk

5. Financial and Grants Management Institute - March 18-20, 20085 Cost Principle Requirements: OMB Circular A-21: Cost Principles for Educational Institutions OMB Circular A-87: Cost Principles for State, Local, and Indian Tribal Governments OMB Circular A-122: Cost Principles for Non-Profit Organizations Administrative Requirements: OMB Circular A-102: Grants and Cooperative Agreements with State and Local Governments (CNCS: § 45 CFR 2541) OMB Circular A-110: Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (CNCS: § 45 CFR 2543) Audit Requirements: OMB Circular A-133 : Audits of States, Local Governments, and Non- Profit Organizations OMB Circulars: www.whitehouse.gov/omb/grants/grants_circulars.htmlwww.whitehouse.gov/omb/grants/grants_circulars.html CNCS Regulations: www.nationalservice.gov/about/role_impact/history.aspwww.nationalservice.gov/about/role_impact/history.asp What Weve Always Known About OMB Requirements

6. Financial and Grants Management Institute - March 18-20, 20086 Federal Grant Guidelines Universities States, Local, Indian Tribal Governments Non-ProfitsHospitals Administrative Requirements § 45 CFR 2543 § 2 CFR 215 (formerly A-110) § 45 CFR 2541 A-102 § 45 CFR 2543 § 2 CFR 215 (formerly A-110) § 45 CFR 2543 § 2 CFR 215 (formerly A-110) 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 * A-133 Notes: CFR = Code of Federal Regulations * = Organization is subject to A-133 if it expends more than $500,000 in Federal funds in its fiscal year Effective May 11, 2004 and August 31, 2005 Revised Grant Guidelines

7. Financial and Grants Management Institute - March 18-20, 20087 To be allowable under a grant, costs must: Be reasonable and allocable for the performance of the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply to both federally-financed and other activities of the organization Be given consistent treatment Be in accordance with Generally Accepted Accounting Principles (GAAP) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program Be adequately documented Cost Principle Requirements Allowability of Project Costs

8. Financial and Grants Management Institute - March 18-20, 20088 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 Conform to other grant provisions or OMB Circulars Administrative Requirements Grantee Share or Match

9. Financial and Grants Management Institute - March 18-20, 20089 Allowable Reasonable Allocable Consistently Applied Document, Document, Document Defining Documentation

10. Financial and Grants Management Institute - March 18-20, 200810 To be allowable under a grant, costs must: Be reasonable and allocable for the performance of the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply to both federally-financed and other activities of the organization Be given consistent treatment Be in accordance with Generally Accepted Accounting Principles (GAAP) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program Be adequately documented Allowable - What does it Mean?

11. Financial and Grants Management Institute - March 18-20, 200811 A cost is reasonable if: It does not exceed what a prudent person would do under the circumstances at the time the decision was made to incur the cost Consideration should be given to: – Whether the cost is ordinary and necessary for the operations of the organization – The restraints or requirements imposed by generally accepted sound business practices – Whether the individuals concerned acted with prudence – Significant deviations from established practices which may unjustifiably increase the award costs Reasonable - What Does it Mean?

12. Financial and Grants Management Institute - March 18-20, 200812 A cost is allocable: Based on its relative benefits received If it is treated consistently with other costs incurred for the same purpose in like circumstance and if it: – It is incurred specifically for the award – Benefits both the award and other work and can be distributed in reasonable proportion to the benefits received or – Is necessary to the overall operation of the organization Any cost allocable to a particular award may not be shifted to other Federal awards to overcome funding deficiencies, or to avoid restrictions imposed by law or by the terms of the award Allocable - What Does it Mean?

13. Financial and Grants Management Institute - March 18-20, 200813 Grantees must be consistent in assigning costs: Whether a direct cost or an indirect cost Regardless of the source of funding, i.e., federally or non- federally sponsored activities, and Following written cost allocation plan, as applicable Key wording in the cost principles: Consistent with that paid for similar work in the organizations other activities Distributed to awards and other activities in a consistent pattern The organization must follow a consistent, equitable procedure Charges must be consistent with those normally allowed in like circumstances in the organizations non-Federally-sponsored activities Consistent - What Does it Mean?

14. Financial and Grants Management Institute - March 18-20, 200814 Why Retain Documentation? To track incoming information To review information To provide historical evidence To provide evidence of accomplishments To prepare for an audit See Forms Collection Documentation Basics

15. Financial and Grants Management Institute - March 18-20, 200815 Physical information: Hard copy Soft copy: CD, flash drive, server, microfilm Source: Internal source External source Benefits supports a value, cost, or performance criteria relative to the grant Defining Source Documentation

16. Financial and Grants Management Institute - March 18-20, 200816 Benefits Training Admin Supplies Evaluation Contract & Consultant SalaryTravel Member Costs Documentation Examples

17. Financial and Grants Management Institute - March 18-20, 200817 Signed timesheets with supervisory approval Quarterly payroll returns (941) Payroll register Personnel file with salary/wage information Employment contract Cancelled checks Direct deposit schedule Salary Identifying Documentation

18. Financial and Grants Management Institute - March 18-20, 200818 Exceptions: State, Local and Indian Tribal Governments must comply with requirements of § 2 CFR 225 [OMB A-87] Educational Institutions must comply with requirements of § 2 CFR 220 [OMB A-21] All salaries and wages charged to grants must be supported by signed time & attendance records, i.e., timesheets Time & Activity Reporting Summary

19. Financial and Grants Management Institute - March 18-20, 200819 The estimates produce reasonable approximation of the activity actually performed Quarterly comparison is performed of actual activity to budgeted estimates Budget estimates are revised at least quarterly to reflect changed circumstances § 2 CFR 225 (formerly A-87): Budget estimates determined before services are performed do not qualify as support for expenditure, except on an interim accounting basis, provided that: Time & Activity Reporting: State, Local, and Indian Tribal Governments

20. Financial and Grants Management Institute - March 18-20, 200820 The established policies of the institution * Consistently applied Provided that the charges for work performed directly on sponsored agreements and for other work allocable as facilities and administrative (F&A) costs are determined and supported as defined in § 2 CFR 220 § 2 CFR 220 (formerly A-21): Salaries, wages, and fringe benefits are allowable to the extent that the total compensation to individual employees conforms to: * Check with your Accounting Department for your college or university requirements Time & Activity Reporting: Educational Institutions

21. Financial and Grants Management Institute - March 18-20, 200821 § 2 CFR 230 (formerly A-122): Reports maintained by non-profit organizations: Must reflect an after-the-fact determination of the employee actual activity (not budgeted) Must account for the total activity of each employee Must be signed by the employee or supervisor having first hand knowledge Must be prepared at least monthly and must coincide with one or more pay periods See Forms Collection Time & Activity Reporting: Non-Profit Organizations

22. Financial and Grants Management Institute - March 18-20, 200822 Insurance policy Paid invoices and receipts Claims made against the insurance Cost allocation plan Benefits Fringe benefits are allowable, provided such costs are absorbed by all organization activities in proportion to the relative amount of time or effort actually devoted Identifying Documentation

23. Financial and Grants Management Institute - March 18-20, 200823 Authorization/reimbursement requests Paid invoices and receipts Per diem rates (applicable for area) Mileage calculation Reconciliation of advances to payments Travel Travel costs must not exceed charges normally allowed by the organization in its regular operations based on the organizations written travel policy Identifying Documentation

24. Financial and Grants Management Institute - March 18-20, 200824 Purchase orders Packing slips Paid receipts and invoices Donated Supplies, i.e., in-kind donations Supplies Identifying Documentation

25. Financial and Grants Management Institute - March 18-20, 200825 Purchase orders Signed agreements Paid invoices and receipts Contract & Consultant Maximum Allowed by CNCS for Consultant fee is $540 per day Identifying Documentation

26. Financial and Grants Management Institute - March 18-20, 200826 Agenda Course description, cost Sign-in sheet Consultant/trainer agreement Paid invoices and receipts Training Identifying Documentation

27. Financial and Grants Management Institute - March 18-20, 200827 Purchase orders Signed agreement/contract Paid invoices and receipts Final copy of the evaluation report Evaluation Identifying Documentation

28. Financial and Grants Management Institute - March 18-20, 200828 Authorized in the budget –Cost must be identifiable to the project Purchase orders Paid invoices and receipts Packing slip Administrative Identifying Documentation

29. Financial and Grants Management Institute - March 18-20, 200829 Grant agreement with amendments General correspondence Reimbursement requests Financial Status Reports Federal Cash Transactions Reports Budget vs. actual reports Financial statements Audits General Ledger and supporting ledgers General Identifying Documentation

30. Financial and Grants Management Institute - March 18-20, 200830 Exercise In-Kind or Not?

31. Financial and Grants Management Institute - March 18-20, 200831 Learn & Serve America Match Requirements

32. Financial and Grants Management Institute - March 18-20, 200832 K-12: 1st Year: 10% of total funds 2nd Year: 20% of total funds 3rd Year: 30% of total funds 4th Year and after: 50% of total funds Higher Education: 50% of total funds State Education Agencies (SEA): 50% of total funds Learn & Serve America: Match Requirements

33. Financial and Grants Management Institute - March 18-20, 200833 Finding, Recording, Valuing & Documenting Match

34. Financial and Grants Management Institute - March 18-20, 200834 Finding Match Cash: Donations Non-Federal income 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 Government-wide, with few rare exceptions, Grantees cannot use other Federal funds as match

35. Financial and Grants Management Institute - March 18-20, 200835 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, training of staff or members that are elements of the grantees cost allocation plan Exception: Volunteer Match

36. Financial and Grants Management Institute - March 18-20, 200836 Maintain adequate documentation to support amounts claimed as match Maintain same documentation for both CNCS Federal share and for grantees share Documentation must meet same standards as other expenditures 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 Recording In-Kind Contributions

37. Financial and Grants Management Institute - March 18-20, 200837 Statement of Financial Accounting Standards (SFAS #116) sets the standard: 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. Why Record In-Kind in the General Ledger?

38. Financial and Grants Management Institute - March 18-20, 200838 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 $550.00 – 7250 In-Kind Expense Account (debit) $550.00 – 5250 In-Kind Income Account (credit) Recording In-Kind Contributions

39. Financial and Grants Management Institute - March 18-20, 200839 Use fair market price Consider what it would cost to obtain similar good or service Value of donation should be placed by the donor Review donation letter or form to ensure the value is reasonable Valuing In-Kind Contributions The IRS defines fair market value as the price that item would sell for on the open market.

40. Financial and Grants Management Institute - March 18-20, 200840 Document in-kind contributions to show: What service or goods were obtained Why transaction is allowable for grant purposes The value of the contribution How it is traced back to source documentation If audited, a grantee may be required to obtain full supporting documentation from all donors, if not available during the audit. Documenting In-Kind Contributions

41. Financial and Grants Management Institute - March 18-20, 200841 1.Document the basis for determining value of personal services, material, equipment, building, and land 2.Obtain written acknowledgement of the contribution including: Name and signature of donor Date and Location of donation Detailed description of item/service Estimated value of contribution, how value was determined, who made the determination Was the contribution obtained with Federal funds *** Keep a copy of the receipt in your files *** Documenting In-Kind Contributions

42. Financial and Grants Management Institute - March 18-20, 200842 See Forms Collection Sample 1: In-Kind Contribution Form

43. Financial and Grants Management Institute - March 18-20, 200843 See Forms Collection Sample 2: In-Kind Contribution Form

44. Financial and Grants Management Institute - March 18-20, 200844 In 2007, the IRS changed the Form 990 Revised Form 990 must be used for reporting year in 2009 NEW Schedule M, Non-Cash Contributions: –Requires organizations to report the aggregate of $25,000 of 24 specific categories of non-cash property an organization receives –May require organizations to implement new recordkeeping practices IRS Form 990 and In-Kind Contributions See the revised Form 990: www.irs.gov/charities

45. Financial and Grants Management Institute - March 18-20, 200845 Common Audit Findings Related to Cash & In-Kind Match See Forms Collection

46. Financial and Grants Management Institute - March 18-20, 200846 1.Familiarize all staff with cash and in-kind match documentation requirements 2.Establish documentation for expenditure requirements to ensure costs are: reasonable, necessary, allocable, allowable, and adhere to grant guidelines 3.Ensure supporting documentation relates directly to approved program funded by the CNCS grant 4.Maintain proper records and establish a written record retention policy Take it Home!