Financial & Grants Management 101 2014 Project Director Training & Annual Meeting
Dec 21, 2015
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
2014 Project Director Training & Annual Meeting
Testing Your Knowledge
Please take a few minutes to complete this quiz
2014 Project Director Training & Annual Meeting
See Activity 1
Effective Financial and Grants Management
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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
2014 Project Director Training & Annual Meeting
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
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Grant Regulations & Requirements
2014 Project Director Training & Annual Meeting
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
2014 Project Director Training & Annual Meeting
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
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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
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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
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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)
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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
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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
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Basics of the AmeriCorps Regulations Program Requirements Member Eligibility Member Management Items
Contract, grievance procedures, evaluations Living Allowance & Insurance Benefits Hours
Allowable/Unallowable Activities
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Financial Management Principles
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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
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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
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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
2014 Project Director Training & Annual Meeting
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
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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
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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
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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
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Accounting System that properly segregates funds
Department of Education Grant
AmeriCorps Grant
Ford Foundation Grant
Accounting System
Grant 1
Grant 2
Grant 3
NOT
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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
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Policies & Procedures
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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
2014 Project Director Training & Annual Meeting
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
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Administrative Costs
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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
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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
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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
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Administrative CostsWhat cannot be included as Indirect Costs?
≠ Bad debts ≠ Entertainment costs ≠ Fines and penalties ≠ Fundraising ≠ Interest on borrowed capital ≠ Lobbying ≠ Relocation Costs≠ Taxes
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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
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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
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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
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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
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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
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AllowableAllocable
ReasonableConsistently Applied
Document, Document, Document
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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
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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
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2014 Project Director Training & Annual Meeting
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
2014 Project Director Training & Annual Meeting
2014 Project Director Training & Annual Meeting
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
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Questions?