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Financial Management. You need to know . . . Use of program regulations, NGA, terms and conditions, and operations manuals (CNCS) OMB Circulars www.whitehouse.gov/omb/circulars/index.html Use of Generally Accepted Accounting Principles (GAAP) Communication between program and fiscal staff.

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Financial management

Financial Management

North Central National Service Training

August 20 – 22, 2013


You need to know

You need to know . . .

  • Use of program regulations, NGA, terms and conditions, and operations manuals (CNCS)

  • OMB Circulars

    www.whitehouse.gov/omb/circulars/index.html

  • Use of Generally Accepted Accounting Principles (GAAP)

  • Communication between program and fiscal staff

North Central National Service Training August 20 – 22, 2013


Welcome

Welcome . . .

  • Introduction of trainer

  • Program types represented

    • Senior Corps: RSVP, FGP, SCP

  • Questions

    • As we go . . . ask clarifying questions and provide your experiences

North Central National Service Training August 20 – 22, 2013


Contacts

Contacts

North Central National Service Training August 20 – 22, 2013


Financial management

North Central National Service Training August 20 – 22, 2013


Financial management

1. Regulatory Requirements

10. Reporting & Closeouts

2. Written Policies & Procedures

9. Time & Activity Documentation

Efficient Accounting System

EFFECTIVE

FINANCIAL

MANAGEMENT

8. Managing Cash

4. Internal Controls

5. Budget Controls

  • 7. Matching Requirements & In-kind Contributions

6. Documentation of expenses

North Central National Service Training August 20 – 22, 2013


Key characteristics of organizations with highly effective financial management

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 National Service Training August 20 – 22, 2013


Regulations and requirements

Regulations and Requirements

North Central National Service Training August 20 – 22, 2013


Federal regulations

Federal Regulations

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

Locate Grants Management Circulars: www.whitehouse.gov/omb/grants_circulars/

North Central National Service Training August 20 – 22, 2013


Basics of omb circulars

Basics of OMB Circulars

  • Cost Principles

    • Allowable & Unallowable Costs

    • Indirect Costs

  • Administrative Requirements

    • Accounting System

    • Documentation requirements

  • A-133 requirements

North Central National Service Training August 20 – 22, 2013


Cost principles

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

North Central National Service Training August 20 – 22, 2013


Allowable reasonable allocable

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

North Central National Service Training August 20 – 22, 2013


Administrative requirements

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

North Central National Service Training August 20 – 22, 2013


Policies and procedures

Policies and Procedures

North Central National Service Training August 20 – 22, 2013


Policies procedures

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

North Central National Service Training August 20 – 22, 2013


Financial management

LEAVE POLICY

North Central National Service Training August 20 – 22, 2013


Leave policy

Leave Policy

  • Many FGP/SCP sponsors provide Leave.

  • It is allowable to award leave to FGP/SCP volunteers as long as:

    • Leave paid with CNCS funding does not “cross” grant cycles. i.e. No Carry-Over of unspent leave.

    • Leave paid in subsequent years DOES NOTappear on the budget (either as Fed or Non-Fed Match).

    • Requires tracking leave across grant periods… this may be too cumbersome for most grantees…

North Central National Service Training August 20 – 22, 2013


Leave policy cont

Leave Policy Cont.

  • Leave is a great way to reward/recognize volunteers and retain their service.

  • It is allowable to utilize stipend funds to pay for leave which occurs in the same grant year.

  • The best way to deal with unspent leave is to do an end of year pay-out of all unused time.

  • By doing a pay-out you expend all grant funds in the same period they were awarded.

North Central National Service Training August 20 – 22, 2013


Efficient accounting system

Efficient Accounting System

North Central National Service Training August 20 – 22, 2013


Efficient accounting system requirements

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 National Service Training August 20 – 22, 2013


Financial management

Internal Controls

North Central National Service Training August 20 – 22, 2013


Why have internal controls

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 National Service Training August 20 – 22, 2013


Who is responsible

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 National Service Training August 20 – 22, 2013


A good control environment includes

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 National Service Training August 20 – 22, 2013


A good control environment includes cont d

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 National Service Training August 20 – 22, 2013


Prohibited activities

Prohibited Activities

While charging time to the Senior Corps program, accumulating Service, or training hours, or otherwise performing activities supported by the Senior Corps Program, or CNCS, staff and volunteers may not engage in the following activities:

North Central National Service Training August 20 – 22, 2013


Prohibited activities cont

Prohibited Activities Cont.

Examples:

Political activities

Non-displacement of employed workers

Compensation for service.

Labor and anti-labor activity

Fair labor standards

Nondiscrimination

Religious activities

Nepotism.

North Central National Service Training August 20 – 22, 2013


Budget controls

BudgetControls

North Central National Service Training August 20 – 22, 2013


Grant budget preparation

Grant Budget Preparation

Who should be Involved?

The budget process should be a team effort that includes:

  • Board of Directors

  • Executive Director

  • Program/Project Director

  • Program/Project Staff

  • Fiscal Staff

North Central National Service Training August 20 – 22, 2013


Grant budgets preparation

Grant Budgets Preparation

  • Followinstructionsin 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

    80:20 Direct Benefit Ratio (FGP & SCP)

    Section II Subtotal ÷ CNCS Award Amount

North Central National Service Training August 20 – 22, 2013


Grant budget preparation1

Grant Budget Preparation

  • Qualities of an Effective Budget

    • Realistic

    • Consistent with organizational objectives

    • Flexible (amendable if conditions are not as expected)

    • Consistent with Corporation goals

North Central National Service Training August 20 – 22, 2013


Grant budget preparation2

Grant Budget Preparation

Don’t forget…

  • Staff positions

  • Space, utilities, supplies, telephone

  • Medical and liability insurance

  • Uniforms and training

  • Transportation

  • Evaluations

North Central National Service Training August 20 – 22, 2013


Salaries wages documentation

Salaries & Wages Documentation

  • For most Senior Corps Grantees, the salaries & Benefits section is one of the largest expense categories, if not the largest.

  • It is critical to document properly…

  • But documentation will differ from organization to organization.

North Central National Service Training August 20 – 22, 2013


Grant budget preparation3

Grant Budget Preparation

  • Organize narrative to fit categories on budget form

  • Provide adequate descriptions and calculations to support amounts

  • Group related items (e.g., Staff salaries should be grouped with staff benefits, FICA, etc.)

  • Compare the final costs to the narrative to ensure they make sense

North Central National Service Training August 20 – 22, 2013


Examples of unallowable costs

Examples of Unallowable Costs

  • Lobbying

  • Fines and penalties

  • Expenses not necessary to meet program objectives

  • Entertainment, alcohol

  • Costs that would constitute waste, fraud and abuse

  • Unreasonable costs from a “prudent person” perspective

  • Costs with no logical basis for allocating to your program

North Central National Service Training August 20 – 22, 2013


Grant budget preparation4

Grant Budget Preparation

  • Excess Column

    • Use of the Excess Column

      • Track total project costs

      • Fundraising

North Central National Service Training August 20 – 22, 2013


Budget final review checklist

Budget: Final Review Checklist

  • Is there adequate explanation for budget items?

  • Are all projected costs in the budget allowable?

  • Have the appropriate fringe and indirect cost rates been used? Do you have an updated copy to send with your Application?

  • Is the budget realistic, reasonable, credible, and aligned with program goals?

  • Is the budget within the VSY limit for Fixed Grants?

  • Is your A-133 up to date in the Federal Audit Clearing House or 990 in GuideStar?

  • Is your organization's information up to date with the System for Award Management (www.SAM.gov)?

North Central National Service Training August 20 – 22, 2013


Summary budgeting the road map to success

SummaryBudgeting: The Road Map to Success

Where Are

We Going?

Know the Rules

of the Road

Preventive and Regular

Maintenance Check-ups

Keep You in the

Driver Seat

Are We There Yet?

Drive

Defensively

Bumps Along

the Road

North Central National Service Training August 20 – 22, 2013


Key budgeting tips

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 National Service Training August 20 – 22, 2013


Grant award

Grant Award

  • Notice of Grant Agreement (NGA)

  • Special Conditions

  • Grant Budget Amendments

  • Reporting

  • Terms and Conditions of Award

    • Prohibited Activities

North Central National Service Training August 20 – 22, 2013


Financial management

Documenting Expenses

North Central National Service Training August 20 – 22, 2013


Documentation basics

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

North Central National Service Training August 20 – 22, 2013


Financial management

Budget Management

North Central National Service Training August 20 – 22, 2013


Budget management

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

North Central National Service Training August 20 – 22, 2013


Budget revisions amendments

Budget Revisions/Amendments

  • You can move funds between line items without approval from CNCS when:

    1) The total cumulative fund transfer will not exceed 10% of the grant or $10,000

    • Does not apply to budgets of less than $100,000

      2) The transfers would not create a new line item

      3) Funds can be moved from “Volunteer Support” to “Volunteer Benefits” but not vice versa

    • FGP and SCP must still meet the direct benefit ratio

  • Although CNCS approval is not required when these conditions apply, it is a good practice to notify CNCS of any change to the budget.

  • North Central National Service Training August 20 – 22, 2013


    Budget revisions

    Budget Revisions

    • These revisions can be done any time during the approved budget period.

    • CNCS approval is required when you do not meet previously stated conditions.

    • Prevent major revisions and under spending by reviewing your budget each month.

    • Approval required by the FFMC

    • Do not assume approvals have been granted unless documented

    North Central National Service Training August 20 – 22, 2013


    Financial reporting and closeouts

    Financial Reporting and Closeouts

    North Central National Service Training August 20 – 22, 2013


    Reporting requirements

    Reporting Requirements

    The Federal Financial Report (FFR)

    • 6 month period

    • Cumulative over 3-year grant

      The Program Progress Report (PPR)

    • Annual for all programs

    • Supplemental semi-annual for stipend Programs

    North Central National Service Training August 20 – 22, 2013


    Before you begin

    Before You Begin

    Gather the following reports:

    • Reports to support number of volunteers in reporting period

    • Reports to support number of hours in reporting period

    • Financial report

    • Additional Documents (ex. In Kind)

    North Central National Service Training August 20 – 22, 2013


    Source documents invoices checks receipts timesheets etc

    Source Documents(Invoices, Checks, Receipts, Timesheets, etc.)

    • Ensure proper and complete documentation in the files to support all information reported in the FFR.

    • All financial reports should be prepared with information that comes directly from the organization’s accounting system.

    • Conduct a review and reconciliation of the information to ensure accuracy prior to report submission.

    North Central National Service Training August 20 – 22, 2013


    Ffr screen shots

    FFR Screen Shots

    North Central National Service Training August 20 – 22, 2013


    Ffr screen shots1

    FFR Screen Shots

    North Central National Service Training August 20 – 22, 2013


    Ffr screen shots2

    FFR Screen Shots

    North Central National Service Training August 20 – 22, 2013


    Double check the figures

    Double Check the Figures

    For example:

    • Recognition

    • Stipend hours match dollars spent

    North Central National Service Training August 20 – 22, 2013


    Federal financial report ffr

    Federal Financial Report (FFR)

    • VSYs (FGP and SCP only)

      • Cumulative hours for the budget period (common error)

      • Cumulative hours ÷ 1044 = VSY Level

      • Policy 850

    • Use of Prior Year Funds (Unallowable)

      • Deobligation of funds

    • Late Reporting

      • Communication

      • Extensions

      • Consequences

        • Withholding of Funds

        • Risk Status

    North Central National Service Training August 20 – 22, 2013


    Federal financial report ffr1

    Federal Financial Report (FFR)

    • VSYs (FGP and SCP only)

      • Cumulative hours for the budget period (common error)

      • Cumulative hours ÷ 1044 = VSY Level

      • Policy 850

    • Use of Prior Year Funds (Unallowable)

      • Deobligation of funds

    • Late Reporting

      • Communication

      • Extensions

      • Consequences

        • Withholding of Funds

        • Risk Status

    North Central National Service Training August 20 – 22, 2013


    Highlights fiscal responsibility

    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

    North Central National Service Training August 20 – 22, 2013


    Timing of draws

    Timing of Draws

    • Funds are intended to be available when needed.

    • Maintain minimum Federal cash on hand by requesting funds from the Payment Management System only for immediate disbursement

    • Draws should match timing of allowable program expenditures.

    • Grantees may not draw funds in excess of their immediate needs

    • Funds can be drawn as needed:

      • Example: Payroll to cover salaries and allocable payroll taxes based on time charged to the Federally-funded program

    North Central National Service Training August 20 – 22, 2013


    Grant closeout

    Grant Closeout

    • Submission of final program and fiscal reports

    • FFR, 272, and draw down figures must reconcile

    • Property disposition

    North Central National Service Training August 20 – 22, 2013


    Questions

    Questions?

    North Central National Service Training August 20 – 22, 2013


    Helpful links

    Helpful Links

    North Central National Service Training August 20 – 22, 2013


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