How to Draft compliant Policies and Procedures

1. How to Draft compliant Policies and Procedures Brette Kaplan Wurzburg, Esq. Erin Auerbach, Esq. bwurzbrug@bruman.com eauerbach@bruman.com Brustein & Manasevit, PLLC Spring Forum 2015

2. Agenda • Why policies and procedures are important • Logistics • Suggested Sections • Rules and Requirements • Best Practices • What to do with completed policies and procedures Brustein & Manasevit, PLLC

3. Why? Why? Brustein & Manasevit, PLLC

4. Single Audits • Auditors ask about policies and procedures • Some tests specifically require written policies and procedures Brustein & Manasevit, PLLC

5. Monitoring • Policies and procedures are evidence of compliance under all program monitoring tools Brustein & Manasevit, PLLC

6. Staff Changes and Transitions • Training tool • Maintain consistency Brustein & Manasevit, PLLC

7. Uniform Grant Guidance • Emphasis on internal controls • Written policies and procedures are required! • Written Cash Management Procedure - § 200.302(b)(6) & § 200.305 • Written Allowability Procedures - § 200.302(b)(7) • Written Conflicts of Interest Policy - § 200.318(c) • Written Procurement Procedures - § 200.319(c) • Written Method for Conducting Technical Evaluations of Proposals and Selecting Recipients - § 200.320(d)(3) • Written Travel Policy - § 200.474(b) Brustein & Manasevit, PLLC

8. The Road to Compliance Brustein & Manasevit, PLLC

9. Policies v. Procedures Policies – goals for your organization Procedures – steps to achieve your goals Brustein & Manasevit, PLLC

10. Logistics • What is the process? • Review existing policies and procedures • Develop questions • Schedule interviews with relevant staff • Gather information on actual practices • Draft policies and procedures • Review internally with appropriate staff • Revise • Formally adopt and implement • Train staff Annually review and revise!

11. Where to start? • Determine goal • Internal or for subgrantees? • Grant specific or cross cutting? • Create a team – include both fiscal and programmatic personnel (very important) • Create a table of contents • Assign subjects • Create timeline for completion Brustein & Manasevit, PLLC

12. Where to start? • Existing documentation • Memos • Emails • Forms • Job descriptions • Directly from the source – the staff member(s) that perform the tasks related to the policies and procedures you are creating Brustein & Manasevit, PLLC

13. Things to consider: Buy-in from those who will be using the policies and procedures Review for accuracy, completeness and compliance Adoption by board or other governing body Brustein & Manasevit, PLLC

14. Resources • Uniform Grant Guidance • OMB Circulars • Education Department General Administrative Regulations (EDGAR) • Authorizing statute • Program regulations • Program guidance • State and agency rules, regulations, policies and procedures

15. Suggested Sections • Organization, Structure and Function • Grant Application Process • Financial Management System • Procurement • Inventory/Property Management • Time and Effort • Record Keeping/Record Retention • Monitoring • Audit Resolution • Programmatic Fiscal Requirements • Programmatic Requirements • Travel

16. Organization, Structure and Function Brustein & Manasevit, PLLC

17. Organization, Structure and Function • Organization Chart • Offices • Sections • Divisions • Job Descriptions & Responsibilities • Outside entities with grant administration responsibilities • MOU/MOA

18. Best Practices • Include information about all offices, sections, divisions or employees that have responsibility for grant administration • Procurement, inventory, cash management • Describe any entities outside of the agency that have grant administration responsibilities • Correctional facilities, secondary/postsecondary agency, partner agency • MOU/MOA between the grantee and outside agency Brustein & Manasevit, PLLC

19. Grant Application Process Brustein & Manasevit, PLLC

20. Grant Application Process • State-Administered Grant vs. Direct Grant • Decisions regarding what grants to apply for • Determining organizational capacity to run a compliant program • Approvals and Authorizations • After the grant is awarded Brustein & Manasevit, PLLC

21. Grant Application Process • If Pass-Through Entity: • Discuss how subgrantees apply for grants • Responsible for risk analysis prior to issuing award! (Uniform Grant Guidance) Brustein & Manasevit, PLLC

22. Best Practices • Standardize how the agency determines which grants to apply for and the application process itself • Whether or not formal acceptance is required, meet with appropriate parties to be certain you want to accept the grant • Make acceptance a conscious act. Circumstances may have changed between submission of application and notice of award • Grant team meetings Brustein & Manasevit, PLLC

23. Financial Management System Brustein & Manasevit, PLLC

24. Financial Management System • 2 CFR § 200.302(b) • Identification of Awards (NEW) • Financial Reporting • Accounting Records (Source Docs) • Internal Control • Budget Control • **Written Cash Management Procedures (NEW) • **Written Allowability Procedures (NEW) Brustein & Manasevit, PLLC

25. Written Cash Management Procedures • NEW: Written Cash Management Procedures to implement requirements of § 200.305 Payment Brustein & Manasevit, PLLC

26. Written Allowability Procedures • NEW: Written procedures for determining allowability • In accordance with Subpart E – Cost Principles & terms and conditions of federal award

27. Written AllowabilityProcedures • Not a restatement of Subpart E • But a GPS through grant development and budget process • Training tool for employees Brustein & Manasevit, PLLC

28. Cost Principles: “Factors Affecting Allowability of Costs” § 200.403 All Costs Must Be: • Necessary, Reasonable and Allocable • Conform with federal law & grant terms • Consistent with state and local policies • Consistently treated • In accordance with GAAP • Not included as match • Net of applicable credits (moved to § 200.406) • Adequately documented

29. Financial Management System • Can include Selected Items of Cost section for frequently asked about expenses • The Uniform Grant Guidance has 55 specific items of cost - § 200.420 Brustein & Manasevit, PLLC

30. Travel Costs • Uniform Grant Guidance § 200.474 • State Rules • Agency Rules • Documentation Required to be Maintained Brustein & Manasevit, PLLC

31. Best Practices • Include information on: • Your accounting system(s) • How budgets are loaded onto the system • Process for comparing budgets to expenditures • Process and authorizations for budget revisions • Period of performance and when obligations are made • Process for carryover • Incorporate state/agency requirements

32. Procurement Brustein & Manasevit, PLLC

33. Procurement • NEW: Uniform Grant Guidance -- All non-federal entities must have documented procurement procedures which reflect applicable Federal, State, and local laws and regulations. § 200.318(a). • Open competition • Conflict of Interest • Solicitation • Cost/Price Analysis • Vendor Selection • Required Contract Provisions • Contract Administration • Protest Procedures

34. Conflict of Interest Policy • Include: • Definition • Chain for reporting potential conflicts • Alternate if reporting to employee involved in potential conflict • Definitions and examples of nominal items • Recusal • Sanctions • Signed certification that employee received and understands conflicts policy • Training on policy Brustein & Manasevit, PLLC

35. Vendor Selection Process § 200.320 • Methods of procurement: • NEW: Micro-purchase • Small purchase procedures • Competitive sealed bids • Competitive proposals • Noncompetitive proposals Brustein & Manasevit, PLLC

36. (Changed) Non-federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of the contract Contract Administration § 200.318 Brustein & Manasevit, PLLC

37. Best Practices • Review breadth of conflict of interest policy • Separation of duties • Service contracts vs. Contracts for goods • Contract thresholds and process for entering into contracts within each threshold amount • State/agency requirements are often more restrictive then federal rules • Describe process to ensure that the terms of the contract are met Brustein & Manasevit, PLLC

38. Inventory & Property Management Brustein & Manasevit, PLLC

39. Inventory/Property Management • Uniform Grant Guidance § 200.313 • Property Classifications • Shared Use of Equipment • Inventory Procedure • Loss, Damage or Theft • Disposition Brustein & Manasevit, PLLC

40. Equipment and Supplies • Equipment – No change in definition § 200.33 • Anything that is not equipment is considered supplies § 200.94 • NEW: Computing devices • Machines used to acquire, store, analyze, process, public data and other information electronically • Includes accessories for printing, transmitting and receiving or storing electronic information • Computing devices are supplies if less than $5,000 • BUT…. Brustein & Manasevit, PLLC

41. Equipment and supplies • Regardless of cost, grantee must maintain effective control and “safeguard all assets and assure that they are used solely for authorized purposes.” • § 200.302(b)(4) Brustein & Manasevit, PLLC

42. Inventory/Property Management • Must have inventory management system • Property records • Description, serial number or other ID, title info, acquisition date, cost, percent of federal participation, location, use and condition, and ultimate disposition • Physical inventory • At least every two years • Control system to prevent loss, damage, theft • All incidents must be investigated Brustein & Manasevit, PLLC

43. Disposition-Equipment § 200.313 • When property no longer needed, must follow disposition rules: • Transfer to another federal program • Over $5,000 – pay federal share • Under $5,000 – no accountability • NEW: Non-federal entity must request disposition instructions from the federal awarding agency if required by the terms of the grant Brustein & Manasevit, PLLC

44. Best Practices • Define property classification and internals controls for each classification • Review inventory records to ensure all required categories are maintained • Policy regarding lost, stolen or damaged items • Clear disposition procedures Brustein & Manasevit, PLLC

45. Time and Effort Brustein & Manasevit, PLLC

46. Time and Effort • Uniform Grant Guidance • OMB Circular A-21, A-87, A-122 • Reconciliations Brustein & Manasevit, PLLC

47. “Standards for Documentation of Personnel Expenses” § 200.430 • NEW: Charges for salaries must be based on records that accurately reflectthe work performed • Must be supported by a system of internal controls which provides reasonable assurancecharges are accurate, allowable and properly allocated • Be incorporated into official records • Reasonably reflecttotal activity for which employee is compensated • Not to exceed 100% Brustein & Manasevit, PLLC

48. “Standards for Documentation of Personnel Expenses” § 200.430 • Encompass all activities (federal and non-federal) • Comply with established accounting polices and practices • Support distribution among specific activities or cost objectives Brustein & Manasevit, PLLC

49. “Standards for Documentation of Personnel Expenses” § 200.430 • NEW: If records meet the standards: the non-federal entity will NOT be required to provide additional support or documentation for the work performed § 200.430(i)(2) • BUT, if “records” of grantee do not meet new standards, ED may require PARs § 200.430(i)(8) • PARs are not defined!! Brustein & Manasevit, PLLC

50. Best Practices • Describe how effort is documented for: • Employees that work on one cost objective • Employees that work on multiple cost objectives • Describe process for: • Filling out the forms (include authorizations) • Turning in the forms • Reconciliations Brustein & Manasevit, PLLC