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Documenting Cash and In-Kind Match. Session Objectives. Understand allowable, allocable, necessary & reasonable costs Gather and retain proper documentation Learn about types and examples of match. Talking Technical: Definitions to Know.

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documenting cash and in kind match

Documenting Cash and In-Kind Match

Financial and Grants Management Institute - March 18-20, 2008

session objectives
Session Objectives
  • Understand allowable, allocable, necessary & reasonable costs
  • Gather and retain proper documentation
  • Learn about types and examples of match

Financial and Grants Management Institute - March 18-20, 2008

talking technical definitions to know
Talking Technical: Definitions to Know

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

Financial and Grants Management Institute - March 18-20, 2008

more technical talk
More Technical Talk
  • 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

Financial and Grants Management Institute - March 18-20, 2008

what we ve always known about omb requirements
What We’ve Always Known About OMB Requirements

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.html

CNCS Regulations:www.nationalservice.gov/about/role_impact/history.asp

Financial and Grants Management Institute - March 18-20, 2008

revised grant guidelines
Revised Grant Guidelines

Effective May 11, 2004 and August 31, 2005

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

Financial and Grants Management Institute - March 18-20, 2008

allowability of project costs
Allowability of Project Costs

Cost Principle Requirements

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

Financial and Grants Management Institute - March 18-20, 2008

grantee share or match
Grantee Share or Match

Administrative Requirements

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

Financial and Grants Management Institute - March 18-20, 2008

defining documentation
Defining Documentation
  • Allowable
  • Reasonable
  • Allocable
  • Consistently Applied

Document, Document, Document

Financial and Grants Management Institute - March 18-20, 2008

allowable what does it mean
Allowable - What does it Mean?

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

Financial and Grants Management Institute - March 18-20, 2008

reasonable what does it mean
Reasonable - What Does it Mean?

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

Financial and Grants Management Institute - March 18-20, 2008

allocable what does it mean
Allocable - What Does it Mean?

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

Financial and Grants Management Institute - March 18-20, 2008

consistent what does it mean
Consistent - What Does it Mean?

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 organization’s 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 organization’s non-Federally-sponsored activities

Financial and Grants Management Institute - March 18-20, 2008

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

See Forms Collection

Financial and Grants Management Institute - March 18-20, 2008

defining source documentation
Defining Source Documentation

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

Financial and Grants Management Institute - March 18-20, 2008

documentation examples
Documentation Examples

Salary

Benefits

Travel

Supplies

Contract &

Consultant

Training

Evaluation

Member Costs

Admin

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation
Identifying Documentation
  • 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

Financial and Grants Management Institute - March 18-20, 2008

time activity reporting summary
Time & Activity Reporting Summary

All salaries and wages charged to grants must be supported by signed time & attendance records, i.e., timesheets

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]

Financial and Grants Management Institute - March 18-20, 2008

time activity reporting state local and indian tribal governments
Time & Activity Reporting: State, Local, and Indian Tribal Governments

§ 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:

  • 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

Financial and Grants Management Institute - March 18-20, 2008

time activity reporting educational institutions
Time & Activity Reporting: Educational Institutions

§ 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:

  • 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

* Check with your Accounting Department for your college or university requirements

Financial and Grants Management Institute - March 18-20, 2008

time activity reporting non profit organizations
Time & Activity Reporting:Non-Profit Organizations

§ 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

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation1
Identifying Documentation
  • 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

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation2
Identifying Documentation

Travel

  • Authorization/reimbursement requests
  • Paid invoices and receipts
  • Per diem rates (applicable for area)
  • Mileage calculation
  • Reconciliation of advances to payments

Travel costs must not exceed charges normally allowed by the organization in its regular operations based on the organization’s written travel policy

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation3
Identifying Documentation
  • Purchase orders
  • Packing slips
  • Paid receipts and invoices
  • Donated Supplies, i.e., in-kind donations

Supplies

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation4
Identifying Documentation
  • Purchase orders
  • Signed agreements
  • Paid invoices and receipts

Contract &

Consultant

Maximum Allowed by CNCS for Consultant fee is $540 per day

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation5
Identifying Documentation
  • Agenda
  • Course description, cost
  • Sign-in sheet
  • Consultant/trainer agreement
  • Paid invoices and receipts

Training

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation6
Identifying Documentation
  • Purchase orders
  • Signed agreement/contract
  • Paid invoices and receipts
  • Final copy of the evaluation report

Evaluation

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation7
Identifying Documentation
  • Meal receipts
  • Uniforms invoices and receipts
  • Insurance invoices and receipts
  • Recognition invoices and receipts
  • Travel invoices and receipts
  • Physical examinations invoices and receipts

Volunteer

Costs

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation8
Identifying Documentation
  • Authorized in the budget
    • Cost must be identifiable to the project
  • Purchase orders
  • Paid invoices and receipts
  • Packing slip

Administrative

Financial and Grants Management Institute - March 18-20, 2008

identifying documentation9
Identifying Documentation
  • 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

Financial and Grants Management Institute - March 18-20, 2008

exercise
Exercise

In-Kind or Not?

Financial and Grants Management Institute - March 18-20, 2008

slide32

Senior Corps

Match Requirements

Financial and Grants Management Institute - March 18-20, 2008

senior corps match requirements
Senior Corps: Match Requirements

RSVP

  • 1st Year: 10% of total funds
  • 2nd Year: 20% of total funds
  • 3rd Year and after: 30% of total funds

Foster Grandparents Program and

Senior Companion Program

  • 10% of total funds
  • Volunteer expense match should not exceed 20% of total funds

Financial and Grants Management Institute - March 18-20, 2008

finding recording valuing documenting match
Finding, Recording,Valuing & Documenting Match

Financial and Grants Management Institute - March 18-20, 2008

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

Finding Match

Government-wide, with few rare exceptions,

Grantees cannot use other Federal funds as match

Financial and Grants Management Institute - March 18-20, 2008

exception volunteer match
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, training of staff or members that are elements of the grantee’s cost allocation plan

Financial and Grants Management Institute - March 18-20, 2008

recording in kind contributions
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
  • 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

Financial and Grants Management Institute - March 18-20, 2008

why record in kind in the general ledger
Why Record In-Kind in the General Ledger?

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.

Financial and Grants Management Institute - March 18-20, 2008

recording in kind contributions1
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

$550.00 – 7250 In-Kind Expense Account (debit)

$550.00 – 5250 In-Kind Income Account (credit)

Financial and Grants Management Institute - March 18-20, 2008

valuing in kind contributions
Valuing In-Kind Contributions
  • 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

The IRS defines fair market value as

the price that item would sell for

on the open market. 

Financial and Grants Management Institute - March 18-20, 2008

documenting in kind contributions
Documenting In-Kind Contributions

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.

Financial and Grants Management Institute - March 18-20, 2008

documenting in kind contributions1
Documenting In-Kind Contributions
  • Document the basis for determining value of personal services, material, equipment, building, and land
  • 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 ***

Financial and Grants Management Institute - March 18-20, 2008

sample 1 in kind contribution form
Sample 1: In-Kind Contribution Form

See Forms Collection

Financial and Grants Management Institute - March 18-20, 2008

sample 2 in kind contribution form
Sample 2: In-Kind Contribution Form

See Forms Collection

Financial and Grants Management Institute - March 18-20, 2008

irs form 990 and in kind contributions
IRS Form 990 andIn-Kind Contributions
  • 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

See the revised Form 990: www.irs.gov/charities

Financial and Grants Management Institute - March 18-20, 2008

common audit findings related to cash in kind match
Common Audit Findings Related to Cash & In-Kind Match

See Forms Collection

Financial and Grants Management Institute - March 18-20, 2008

take it home
Take it Home!
  • Familiarize all staff with cash and in-kind match documentation requirements
  • Establish documentation for expenditure requirements to ensure costs are: reasonable, necessary, allocable, allowable, and adhere to grant guidelines
  • Ensure supporting documentation relates directly to approved program funded by the CNCS grant
  • Maintain proper records and establish a written record retention policy

Financial and Grants Management Institute - March 18-20, 2008