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Omni Circular Key Area #4: Financial Management Controls The Key Component to Federal Grants

Omni Circular Key Area #4: Financial Management Controls The Key Component to Federal Grants. By Michael Brustein, Esq. mbrustein@bruman.com Brustein & Manasevit, PLLC Spring Forum 2014. Performance Metrics Risk Management Augmented Pass-Through Responsibilities

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Omni Circular Key Area #4: Financial Management Controls The Key Component to Federal Grants

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  1. Omni Circular Key Area #4:Financial Management ControlsThe Key Component to Federal Grants By Michael Brustein, Esq. mbrustein@bruman.com Brustein & Manasevit, PLLC Spring Forum 2014

  2. Performance Metrics • Risk Management • Augmented Pass-Through Responsibilities • Emphasis on Immediate Corrective Action • Cooperative Audit Resolution Quick Overview of Major Themes: BRUSTEIN & MANASEVIT, PLLC

  3. All oversight will examine financial management controls: • OIG Audit • Single Audit • Federal Program Monitoring • “Pass Through” Monitoring WHY?? BRUSTEIN & MANASEVIT, PLLC

  4. New Risk Assessment Will be Based on Financial Management Controls BRUSTEIN & MANASEVIT, PLLC

  5. The more attention paid to financial management controls, fewer headaches down the road!!! BRUSTEIN & MANASEVIT, PLLC

  6. Crosswork Between 34 CFR 80.20 (b) and CFR 200.302(b) 2 CFR 200.302 (b) Identification of Awards Financial Reporting Accounting Records (Source Docs) Internal Control Budget Control Written Cash Management Procedures Written Allowability Procedures 34 CFR 80.20 (b) • Financial Reporting • Accounting Records • Internal Control • Budget Control • Allowable Cost • Source Documentation • Cash Management BRUSTEIN & MANASEVIT, PLLC

  7. All federal “awards” received and expended • The name of the federal “program” • Identification # of award • CFDA Title and Number • Federal Award I.D. # • Fiscal Year of Award • Federal Agency • Pass-Through (If S/A) 1) Identification of Awards (New) BRUSTEIN & MANASEVIT, PLLC

  8. New shift to OMB approved performance metrics 2) Financial Reporting BRUSTEIN & MANASEVIT, PLLC

  9. Accurate, current, complete disclosure of financial results of each award • (Old) in accord with the financial reporting requirements of the grant • (New) in accord with 200.327 and 200.328 • 200.327 – Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly • 200.328 – Non-federal entity must submit performance reports at intervals required by federal agency or pass through. Annual performance reports due 90 days after reporting period; Quarterly performance reports due 30 days after reporting period 2) Financial Reporting (cont.) BRUSTEIN & MANASEVIT, PLLC

  10. Performance Metrics: • Compare actual accomplishments to objectives (quantify to extent possible) • Reasons goals were not met if appropriate • Additional pertinent information (e.g. analysis and explanation of cost overruns, high unit costs) 2) Financial Reporting (cont.) BRUSTEIN & MANASEVIT, PLLC

  11. Significant developments • Problems, delays. Adverse conditions that would impair ability to meet objective of the award • Favorable developments. Finishing sooner or at less cost 2) Financial Reporting (cont.) BRUSTEIN & MANASEVIT, PLLC

  12. OMB Allows ED to waive “performance metrics” not required • How will ED reconcile performance metrics with accountability / performance indicators of ESEA, IDEA, CTE, AEFLA 2) Financial Reporting (Cont.) BRUSTEIN & MANASEVIT, PLLC

  13. Combines 80.20 (b)(2) and 80.20 (b)(6) • Source Documentation on: • Federal Awards • Authorizations • Obligations • Unobligated balances • Assets • Expenditures • Income • Interest (New) • Eliminated liabilities 3) Accounting Records (Source Documentation) BRUSTEIN & MANASEVIT, PLLC

  14. Essentially same as 80.20 (b) (3) • Effective control over and accountability for: • All funds • Property • Other assets • Must adequately safeguard all assets • Use assets solely for authorized purpose 4) Internal Control BRUSTEIN & MANASEVIT, PLLC

  15. Cross reference 200.303 (New) • Internal controls “should” be in compliance with Comptroller General’s “Standard for Internal Control Integrated Framework” and “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (see attachment) 4) Internal Control 200.303 (cont.) BRUSTEIN & MANASEVIT, PLLC

  16. Comply with federal statutes, regs, terms of the award • Evaluate and monitor compliance • Take prompt action when instances of noncompliance are identified • Safeguard protected personally identifiable information 4) Internal Control 200.303 (cont.) BRUSTEIN & MANASEVIT, PLLC

  17. Same as 80.20 (b)(4) • Comparison of expenditures with budget amounts for each award 5) Budget Control BRUSTEIN & MANASEVIT, PLLC

  18. Written Procedures to implement the requirements of 200.305 6) Written Cash Management Procedures (New) BRUSTEIN & MANASEVIT, PLLC

  19. For states, payments are governed by Treasury – State CMIA agreements 31 CFR Part 205 • No Change 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  20. For all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation) 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  21. Written procedures must describe whether non-federal entity uses: • Advance Payments (preferred) • Limited to minimum amounts needed to meet immediate cash needs • Reimbursement • Pass-through must make payment within 30 calendar days after receipt of the billing • Working Capital Advance • The pass-through determines that the nonfederal entity lacks sufficient working capital Allows advance payment to cover estimated disbursement needs for initial period 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  22. Non-federal entity must use existing resources before requesting an advance: program income, refunds, rebates, interest earned 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  23. Payments must not be withheld from non-federal entities unless finding of noncompliance debt to the U.S., or non-federal entity is withholding payment to a vendor to assure satisfactory completion of work 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  24. Advances must be maintained in insured accounts • Pass-through cannot require separate depository accounts • Accounts must be interest bearing unless: • Aggregate federal awards under $120,000 • Account not expected to earn in excess of $500 per year • Bank require minimum balance so high, that such account not feasible 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  25. Interest earned must be remitted annually to HHS • Interest amounts up to $500 may be retained by non-federal entity for administrative purposes 6) Written Cash Management Procedures (cont.) BRUSTEIN & MANASEVIT, PLLC

  26. Written procedures for determining allowability of costs in accord with Subpart E – Cost Principles (see p. 78639 – 78662) 7) Written Allowability Procedures (New) BRUSTEIN & MANASEVIT, PLLC

  27. Not a restatement of Subpart E • But a GPS through grant development and budget process • Training tool for employees 7) Written Allowability Procedures (Cont.) BRUSTEIN & MANASEVIT, PLLC

  28. This presentation is intended solely to provide general information and does not constitute legal advice or a legal service.  This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct.  Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC.  You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. BRUSTEIN & MANASEVIT, PLLC

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