Financial & Grants Management 101 2014 Project Director Training & Annual Meeting

Financial & Grants Management 101

2014 Project Director Training & Annual Meeting

Session Objectives Review grants management regulations Develop knowledge about effective

financial and grants management Discuss the challenges of documenting

grant costs Explore ways to enhance and improve

current practices


Testing Your Knowledge

Please take a few minutes to complete this quiz


See Activity 1

Effective Financial and Grants Management

2014 Project Director Training & Annual Meeting 4

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


Effective Financial &

GrantsManagement

1. Regulations & Requirements

2.Financial Management Principles

3. Policies & Procedures

4. Internal Controls

5. Administrative Costs

6. Documenting Expenses

7. Match

8. Reporting &Budgeting

9. Audits & Site Visits

10. Grant Closeout


7

Grant Regulations & Requirements


Nat’l & Community Svc. Act of 1990

Serve America Act

Code of Federal Regulations (CFR)

OMB Super Circular

State & Local Regulations

Notice Of Funding Opportunity

Notice of Grant Award

Proposal & Budget

Grant ProvisionsCertifications and Assurances

What is the OMB Super Circular?The Super Circular provides guidance and requirements relevant to Federal grants in 3 major areas: Administrative Requirements

Accounting System Documentation requirements

Cost Principles Allowable & Unallowable Costs Indirect Costs

A-133 requirements 2014 Project Director Training & Annual Meeting

See Handout 1

Administrative Requirements – Subparts C & D 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


Administrative Requirements – Subparts C & D

Examples of Topics: Pre-award costs Standards for Financial and Program

Management Property Standards Procurement Standards Cost sharing or matching Program income


Cost Principles Requirements – Subpart E Provide guidance to determine the allowable costs

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 65 Selected Items of Cost


Cost Principles Requirements – Subpart E

Examples of Selected Items of Cost: Advertising and public relations costs Compensation for personal services Memberships, subscriptions, and professional

activity costs Recruiting costs Rental costs Training and education costs Travel costs


A-133 Audit Requirements – Subpart F Provide the standards for obtaining

consistency and uniformity among Federal agencies for the audit of organizations expending Federal funds

Apply to all organizations that expend $750,000 or more of Federal funds in a fiscal year (12/26/2014 effective date)


CNCS Grant Provisions Are issued by CNCS with the Notice of Grant Award Are the guiding principles for CNCS-funded grants and

cooperative agreements Contain program and financial guidelines Are binding on the grantee and subgrantee in the same

manner The order of precedence if inconsistencies exists is:

1. Notice of Grant Award

2. AmeriCorps Special Provisions

3. General Provisions

4. Approved Grant Application


CNCS Grant Provision Requirements

Examples of items in the Provisions: Member Recruitment, Selection, and Exit Living Allowances, Other In-Service Benefits, and Taxes Member Records and Confidentiality Budget and Programmatic Changes Reporting Requirements Responsibilities under Grant Administration Financial Management Standards Program Income Safety


Basics of the AmeriCorps Regulations Program Requirements Member Eligibility Member Management Items

Contract, grievance procedures, evaluations Living Allowance & Insurance Benefits Hours

Allowable/Unallowable Activities


Financial Management Principles


Allowable - What does it Mean?To be allowable under a grant, costs must:

Be necessary and reasonable for the performance of the award Be allocable Conform to limitations or exclusions Be consistent with policies and procedures that apply uniformly

to both federally-financed and other activities of the non-Federal entity

Be given consistent treatment [Direct = Direct and Indirect = Indirect] Be in accordance with Generally Accepted Accounting

Principles (GAAP) Not be included as a cost or used to meet matching

requirements of any other federally-financed program Be adequately documented


Example – Allowable? The Program Director of BEST AmeriCorps program

decided to host a very important meeting at his home and serve beer and pizza hoping that everyone would attend.

The purpose of the meeting was to discuss changes in the new CNCS Grant Provisions that affected the program.

Because it was a business meeting he decided to charge the cost of the beer and pizza to the AmeriCorps grant, especially since he was providing the use of his home.

Allowable?2014 Project Director Training & Annual Meeting

Reasonable - What Does it Mean?A cost is reasonable if: Its nature & amount, 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 operation of the

organization, or the proper efficient performance of the award The restraints or requirements imposed by sound business practices,

arm’s-length bargaining, award conditions, and other laws Market prices for comparable goods/services for the geographic area Whether the individuals concerned acted with prudence Significant deviations from established practices and policies which

may unjustifiably increase the award costs


Example – Reasonable? BEST program needs 5 laptop computers for the program so that

participants can learn basic computer skills. When deciding on the model that would best suit its needs, the Program

Director received three price quotes on various models and two were within the same general price range of $650 - $700. However, one laptop appealed to him most – it met all of the necessary specifications plus being the “techie” he was it had many other “nice to have” features, such as built in webcam and mobile broadband, a 21” Hi-Def widescreen, and 8 built-in speakers and a subwoofer.

Although the basic models were adequate, the more appealing one was $2,999, on sale, and came in crimson red, the BEST program’s team color, so the Program Director ordered 5 of these laptop computers.

Reasonable?2014 Project Director Training & Annual Meeting

Allocable - What Does it Mean?A cost is allocable: If goods/services are chargeable based on its relative

benefits received; this standard is met if the cost: Is incurred specifically for the award; Benefits both the award and other work and can be distributed using

reasonable proportion methods; and Is necessary to the overall operation of the organization

All activities that benefit from indirect costs are appropriately allocated

Any cost allocable to a particular award may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions, or for other reasons

If a cost benefits 2 or more projects, the cost should be allocated based on the proportional benefit


Example – Allocable? When the crimson red laptops finally arrived, the

Program Director found that funds allocated for supplies for the BEST AmeriCorps program were fully expended.

Although the laptops were to be used only for the AmeriCorps program, BEST had another CNCS funded program through a Senior Corps program, so the Program Director told the accountant to charge the cost to the Senior Corps program since CNCS was also funding that program.

Allocable?2014 Project Director Training & Annual Meeting

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


Example – Consistently Applied? The BEST program was running low on office

supplies and postage stamps.

Since the Program Director couldn’t wait any longer for the office manager to provide the supplies, he purchased them and charged them to the BEST grant.

Consistently Applied?


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Efficient Accounting System


Financial Management System Must prepare reports required by general and program-

specific terms and conditions Distinguish grant verses non-grant related expenses

Identify Federal awards received & expended Accurate, current, and complete disclosure of the

financial results of each award Records that adequately identify the source and use of

funds Comparison of expenditures vs. budgeted amounts


Financial Management System 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 Correlate financial reports submitted to CNCS directly to

accounting information and supporting documents


Accounting System that properly segregates funds

Department of Education Grant

AmeriCorps Grant

Ford Foundation Grant

Accounting System

Grant 1

Grant 2

Grant 3

NOT


Segregate Financial Duties A fundamental element is the segregation of certain key duties The purpose is to prevent fraud and mismanagement

Prevent one person from having access to assets and responsibility for maintaining those assets

Ensure that no employee or group of employees be in a position to commit and conceal errors or fraud

In general, the principal duties to be segregated are: Custody of assets Authorization or approval of related transactions affecting those assets Recording or reporting of related transactions

See Handout 2


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


Super Circular: Policies & Procedures To minimize the time elapsing between the transfer of funds from the U.S. Treasury or

the pass-through entity; and for state, payment government by Treasury-State CMIA agreements

Determining the allowability of costs and the terms and conditions of the Federal award

Financial management system that meet the standards for fund control and accountability

Conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts

Organizational conflicts of interest Procurement transactions of goods and services Conducting technical evaluations of procurement proposals received and for selecting

recipients Compensation for personal services Relocation costs of employees Travel and reimbursement policies Equipment whether acquired in whole or in part under a Federal award2014 Project Director Training & Annual Meeting

35

Administrative Costs


Definitions

General expenses related to overall administration of an organization receiving CNCS funds

Expenses incurred for common or joint objectives and cannot be readily identifiable with a specific project or cost objective


Specific expenses related to the operations of a specific projectDirect Costs

Administrative

(Indirect)

Costs

What are Direct Costs? Allowable, direct expenses for members,

e.g., living allowances and insurance costs Costs for staff who train, place, or supervise Member’s benefit programs Evaluations of programs Supplies and Facility costs Travel


What are Administrative Costs? Accounting, auditing, contracting, budgeting, and

general legal services Facility occupancy costs, e.g., rent, utilities,

insurance, taxes, and maintenance General liability insurance that protects the

organization (not directly related to a program) Director’s and Officer’s liability insurance Depreciation on building & equipment Office Supplies General & Administrative salaries & wages


Administrative CostsWhat cannot be included as Indirect Costs?

≠ Bad debts ≠ Entertainment costs ≠ Fines and penalties ≠ Fundraising ≠ Interest on borrowed capital ≠ Lobbying ≠ Relocation Costs≠ Taxes


CNCS Limitation on Administrative Costs

Administrative costs are limited by statute: Costs cannot exceed 5% of total Corporation share Grantees may charge up to 5% of the total CNCS funds expended,

provided that the grantee’s administrative match does not exceed 10% of all direct costs


Use the CNCS “fixed 5%”Option 1

Use a Federally negotiated indirect cost rateOption 2

Administrative Costs Using the CNCS 5% Rate (45 CFR 2521.95 and 45

CFR 2540.110) Not subject to supporting cost documentation Unreimbursed indirect costs may be applied to meeting

operational matching requirements What does this mean for your AmeriCorps grant?

Calculate up to 5% of CNCS share of direct expenses


Administrative Costs Accounting Records?

Record as expense and revenue Expense = record when you incur the cost Revenue = record when you bill Commission

Before Reimbursement:$$ Debit: Accounts Receivable – Indirect Cost Recovery

$$ Credit: Revenue – Indirect Cost Recovery

After Reimbursement:$$ Debit: Checking Account (cash type) Account

$$ Credit: Accounts Receivable – Indirect Cost Recovery


Administrative Costs Reporting

Must account for this on reports to Commission

Audits & the 5% Indirect Cost Recovery? “Not Auditable”? If the direct cost charged to

CNCS is questioned, and deemed unallowable: Must payback funds for disallowed direct costs Must payback funds for indirect costs claimed based

on the disallowed direct costs


Obtaining a Federally Negotiated Indirect Cost Rate CNCS process

Will issue guidance by the end of 2014

Using a Federally Negotiated Indirect Cost Rate Must maintain related supporting documentation for audit Charges are based on documented expenses


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Documenting Expenses


AllowableAllocable

ReasonableConsistently Applied

Document, Document, Document


Why Retain Documentation? To track incoming information

To review information

To provide historical evidence

To provide evidence of accomplishments

To prepare for an audit

Documentation Basics

Establish a written record retention policy

See Handout 3


Defining Source Documentation Physical information:

Hard copy Soft copy: CD, flash drive, server, microfilm

Source: Internal to the organization External sources

Benefits supports a value, cost, or performance criteria relative to the grant


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Match



Project CostsThe total allowable budget or expenditures incurred to operate the program and accomplish its objectives is divided into 2 sections:

Federal Share

Grantee Share

aka: match

Portion of total expenditures not paid for with CNCS funds

Portion of budget or total expenditures paid for with CNCS funds

Federal and Grantee Share funds must be treated consistently

Acceptable Match is . . . 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 not included as contributions for any other Federal award Are necessary and reasonable for accomplishment of project or

program objectives Are allowable under the 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 provisions of the Super Circular



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, legal, training of staff or participants that are elements of the grantee’s cost allocation plan

Exception: Volunteer Match

2014 Project Director Training & Annual Meeting 53

Questions?