Financial Reporting Presentation (PPT)

Financial Grants Management, Reporting and Accountability Anthony DeColli, Sr. Grants Specialist

Corland Forrester, MBI Consulting

Corporation Grantee Financial Accountability Seminar July 2007

Session Objectives

Understanding federal regulations

Learning the HHS PaymentManagement System

Preparing cash management reports


6 Thinking Hats of Grant Financial Management From Edward de Bono “six thinking hats”

Auditor

Accountant

Bookkeeper

Grants Officer

Executive Director or Manager

The Public Citizen


ReportsFinancial Records

Budget Allowable Costs

FSR

269-A

PSC

272

Trial Balance

Work Statements

Ledger

Journals

Source

Document

Program

Authorized

OMB

Circulars

GMO

Determined

Tailoring the

Budget

Clarifying Objectives

Reviewing the

Budget


Summary of Relevant OMB Circulars

Educational Institutions

Non- Profit Organizations

State & Local Governments

Uniform Administrative Requirements

45 CFR 2543 & Circular No. A- 110

45 CFR 2543 & Circular No. A- 110

45 CFR 2541 & Circular No. A-102

Cost Principles

Circular No. A -21

Circular No. A-122

Circular No. A-87

AuditsCircular No. A-133

Circular No. A-133

Circular No. A-133

http://www.whitehouse.gov/omb/grants/grants_circulars.html


Allowable

Conforms to any limitations or exclusions set forth in the OMB Cost Principle circulars or in the award as to types or amount of cost items.

Is determined in accordance with generally accepted accounting principles (GAAP).


Allocable

A cost is allocable to a particular cost objective in a grant, contract, project, service, or other activity, in accordance with the relative benefits received.

A cost is allocable to a Federal award if it is treated consistently with other costs incurred for the same purpose in similar circumstances.


Reasonable

A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs.


Necessary

The cost is of a type generally recognized as ordinary and necessary for the operation of the organization or the performance of the award.


Consistent

Is consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization.


Standards of Allowability

Reasonable Allocable Authorized and legal Limits on costs Consistent Treatment

Accounting Principles Not Double Charged Net of applicable credits Documented Cost Accounting Standards.


Determining Allowability

If the Item is in the approved budget and project description, then it is (Necessary)

If the item has gone through the Procurement Decision-Making Process or meets the OMB standards then it is (Reasonable)

If the item has links to the financial system and cost objective then it is (Allocable)

Necessary Reasonable Allocable = Allowable


4 Causes of Questioned Costs

Unallowable Undocumented Unreasonable Unapproved

Timing and Use of Federal Funds


HHS/PMS as a Disbursing Agent

PMS was developed to create a central system that is capable of paying most Federal assistance grants, block grants, and contracts. The system serves as the fiscal intermediary between awarding agencies and the recipients of grants and some types of contracts, with particular emphasis on: Expediting the flow of cash between the Federal

government and recipients; Transmitting recipient disbursement data back to the

awarding agencies; and Managing cash flow advances to grant recipients.



Purpose of Cash Management

Cash management is the stewardship or proper use of an entity’s cash resources. It serves as the means to keep an organization functioning by making the best use of cash or liquid resources of the organization.


The Function of Cash Management

To eliminate idle cash balances. Every dollar held as cash rather than used to augment revenues or decrease expenditures represents a lost opportunity. Minimizing idle cash balances requires accurate information about expected receipts and likely disbursements.

To deposit collections timely. Having funds in-hand is better than having accounts receivable. The cash is easier to convert immediately into value or goods. A receivable, an item to be converted in the future, often is subject to a transaction delay or a depreciation of value. Once funds are due, they should be converted to cash-in-hand immediately and deposited as soon as possible.

To properly time disbursements. Some payments must be made on a specified date. For such payments, there is no cash management decision. For other payments, discretion in timing is possible.


Timing of Draws

Funds are intended to be available when needed. Draws should match timing of allowable

program expenditures. Funds can be drawn as needed:

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


Grantee Responsibilities

Execute grants. Maintain minimum federal cash on hand by

requesting funds from the Payment Management System only for immediate disbursement.

Report cash disbursements to the Payment Management System.

Maintain accurate accounting records.


Ease of Access Brings Responsibility

Document each draw to show compliance with Federal regulations

BeCareful

Draw

additional funds to

overcome shortfalls

elsewhere in the

organization

And MostImportantly


Potential Problems

Invalid Payment Due Date- The payment due date should be the next business day (unless you warehouse your payments) The payment date cannot be a banking holiday or a weekend.

Potential Duplicate Payment Request – After making the required system checks like the date, account number, payment due date etc… PMS may suspect a duplicate payment; if so, they will ask to verify.

Insufficient Funds – PMS checks to see if there is enough funds to cover your request… if not, you will receive an error message.

No Bank Account – one or more sub-accounts selected does not have an associated bank account within PMS.

Different Bank Account – you will receive an error message if the sub-accounts involved with your payment request have different bank accounts.

Agency Restrictions - The awarding agency puts a hold on disbursements due to non-compliance of regulations.


PMS-272 Schedules

PMS 272 – an overview of the status of the account which contains data by PMS to the recipient.

PMS 272-A – shows the award authorization and prior cumulative disbursements reported against individual awards.

PMS 272-B – shows the detail of total cash accountability reflected in PMS and a reconciliation report where the recipient can report advance payment problems.


PMS-272 Schedules (continued) PMS 272-C – provides a mechanism for the

recipient to report problems with PMS data and know action will be taken.

PMS 272-E – shows advances and cash accountability by major program.

PMS 272-F – lists authorizations that have been posted, but the starting date has not arrived

PMS 272-G - Lists all awards posted that have become inactive.


Monitoring Expenditure of Funds

Report expenditure of the funds drawn each quarter on Form 272.

Track expenditures during the life of a project on Form 272.

Reflect total expenditures upon closeout. Support data in Form 272 within your accounting

system.


272 Reports

The 272 should be submitted beginning with the ending of the first quarter in which funds are drawn down and for every quarter thereafter throughout the life of the grant.


272 Timing

The previous quarters data will remain online until the new data is uploaded at PMS.

The electronically transmitted 272 is normally processed after the end of a quarter.

After verification, the data is loaded into the 272 server.


272 Passwords

The electronic 272 password is not the same as your PMS/Smartlink password.

After three (3) incorrect tries, your password will be locked.

You must call the DPM Account Liaison to have it unlocked.


272 Certifications

It is no longer necessary to send the entire report. Only the certification page is required. The certification page must have an original

signature by the “certifying officer”.


272 reports and Cash on Hand

You are required to calculate your cash on hand balance – PMS does not calculate it for you.

You should be cognizant of your cash on hand balance prior to certifying your report.

Entering you cash on hand end of period amount on line 5 will only be accepted if your report is balanced.

The 272 report cannot be submitted out of balance.


272 and notifications

PMS broadcasts reminders and special announcements to PMS users via e-mail.

Each quarter you will receive an e-mail alerting you that the PSC272 is available and the dates the reports are due.

You must have a valid and active e-mail address.


Financial Status Reports

Rules and Regulations


Reporting Requirements Provisions

“Grantee shall submit semi-annual cumulative financial status report, summarizing expenditures during the reporting period in eGrants.”

Code of Federal Regulations 45 CFR 2543.52

Requires recipients of federal funds to use the Form 269 or Form 269A to report the status of funds.

Financial Status Reports

1. Preparation2. Completion3. Submission


Types of FSRs

Interim FSR An Interim FSR is a financial report that covers a period

within a longer budget period (i.e., monthly, quarterly, or semi-annually).

Annual FSR An Annual FSR is a financial report that typically covers a

one-year period. Final FSR

A Final FSR is a financial report prepared at closeout that covers the entire project period of the grant.


Financial Status Reports - Definitions Financial Statements

Written report of the financial condition of an entity.

Financial Statements include balance sheets, Income Statements, Statements of changes in net worth, statement of cash flows.

auditors issue opinions.

Financial Reports Details financial data. Can also be an itemized

accounting that shows how grant funds were used (categories of cost).

reviewed by grantors for the financial progress of the grant.

used as a monitoring tool.


Cash Basis vs. Accrual Basis

The main difference between accrual basis and cash basis accounting is the time at which income and expenses are recognized and recorded.

The cash basis method generally recognizes income when cash is received and expenses when bills are paid.

The accrual basis recognizes income when it is earned (the creation of assets such as accounts receivable) and expenses when they are incurred (the creation of liabilities such as accounts payable).


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

Complete – is all the information available?. Accurate – is all the information presented

correctly? Reliable – can you depend on or verify through

another source the validity of the document?


Uses of the FSR by CNCS Staff

Compliance requirement to monitor the financial progress of a grant.

To confirm match requirements are met. As a tool for risk assessment. As a tool for reviewing renewal grants.


FSR Time Frames

Reporting Period - (The time frame the report covers)

Budget Period - (Covers the budget time frame, usually a year)

Project Period - (Covers the life cycle of the grant)


What can go wrong with financial reporting?

Default eGrants reporting dates are incorrect – get this fixed immediately.

Late reporting – even with an extension, report is tracked as “late” – submit and revise, if necessary.

Paper SF 272 or 269 – it will be returned. Incorrect information:

Indicating total unobligated funds as unliquidated obligations.

Indicating cash when using accrual-based accounting system. Failing to report cumulative data.

Illogical reporting: Zero reported as unliquidated obligations. Total federal funds greater than amount awarded. Amounts reported do not reconcile with the amounts reported

to the Payment Management System on the SF 272 (a/k/a, Federal Cash Transaction Report (FCTR); PMS 272; PSC 272).


What about special situation information?

Use the remarks block Identify report as preliminary, if applicable - provide projected date to amend report. Identify unusual numbers.

High or low obligated amounts relative to time elapsed. High or low unliquidated obligations.

Identify program income if generated. How much How was it applied

Additive Deductive Matching


Critical elements for financial reporting

Timely – Ensure all deadlines are met.

Accurate – Use accounting data that has been reviewed.

Complete – Reports should contain all pertinent information relating to reporting period.


Major Processes for Preparing the Financial Status Report

Ensure proper documentation in the files to support all information reported in the FSR.

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.


eGrants

CNCS System for submission and tracking of grant applications, financial status reports, progress reports, etc.

FSR reporting is completion of only 3 screens Identifying information Transaction entry Certification


Reporting Expenses

Before going into eGrants gather the correct information. Using a print out from your accounting system:

1. Get the total federal funds expended for the period

2. Gather all matching funds information3. Calculate unliquidated obligations


Reporting Volunteer Hours

Volunteer hours should be reported on a cumulative basis over the Budget year (the one year period) not the project period (the three year period)

For example

Year 1 1st FSR Jan – Jun 21,028 2nd FSR July- Dec (21,028 + 18,972) =

40,000 Year 2 & 3 beginning balance should be

zero

Questions

Electronic copies of this material can be found at The Resource Center

http://nationalserviceresources.org/

Search for Financial Accountability Seminar


!! PARTICIPANT NOTICES !!

CERTIFICATES FOR TRAINING: All participants who attend and complete three or more sessions of the Financial Accountability Seminars can pick up a certificate of participation Sunday afternoon, Monday or Tuesday morning.

CFO – OIG – OGM SUNDAY CLOSING PLENARY: Please attend the Plenary Session [Sunday 3:15 –Salon G] with Jerry Bridges, Carol Bates and Peg Rosenberry to hear about OIG audit plans, address issues that arose during the day and learn about upcoming changes in grants policy.

RESOURCE TABLE: Please take advantage of this opportunity to meet with and discuss your questions and concerns with our experts who include presenters and a special guest from the Division of Payment Management at HHS.