FEDERAL FISCAL MONITORING UPDATES

Transcription

1 FEDERAL FISCAL MONITORING UPDATES HOW TO STAY IN COMPLIANCE 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 1

2 YOUR PRESENTER Roger Hingorani, Director, Federal Fiscal Monitoring Division, Texas Education Agency years of auditing/accounting experience 15 years with TEA managing audits, investigations, reviews and other monitoring activities related to administration of public funds awarded to school districts, charter schools, ESC and non-profit entities 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 2

3 RESULTS OF MONITORING REVIEWS Conducted 57 Desk and Onsite Reviews: 44 of those reviewed had at lest one FINDING 32 had FINDINGS WITH QUESTIONED COSTS $563, of TOTAL QUESTIONED COSTS IDENTIFIED $ in QUESTIONED COSTS resolved through CORRECTIVE ACTIONS 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 3

4 RESULTS OF SINGLE AUDITS Reviewed 651single audit Reports 28 Management Decision Letters issued $157,411 in total questioned costs collected 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 4

5 LEARNING OBJECTIVES Interpret the annual risk assessment process Define risk management and internal controls Outline subrecipient monitoring process Identify common findings 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 5

6 ANNUAL RISK ASSESSMENT All pass-through entities must: evaluate each subrecipient s risk of noncompliance with federal statutes, regulations, and terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring /10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 6

7 RISK ASSESSMENT FACTORS Results of single audit Results of federal agency monitoring Funding level from all sources Financial stability Ability to manage grant funds or history of managing grant funds Recently organized or reorganized/new personnel History of performance on grant objectives Progress on corrective actions from single audits and monitoring Prior experience with the same or similar awards 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 7

8 RISK FACTORS FOR Risk Indicators used to determine the risk levels Each risk indicator is weighted individually Total score determines the final risk level LEA can access its risk assessment level through the GFFC Reports and Data Collections Secure application 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 8

9 SINGLE AUDIT SUBMISSIONS Effect on Risk Assessment: TEA: Submission date 150 days after the end of the fiscal year with your annual financial report. FAC: Within the earlier of the 30 calendar days after the receipt of the auditors report or 9 months after the end of the audit period. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 9

10 WHAT RISK LEVELS ARE ASSIGNED? Risk Levels Low Medium High 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 10

11 RISK BASED MONITORING Use risk assessment to determine appropriate monitoring, including: Differentiated Grant Negotiation based on risk level: Organizations with a high risk level are subject to a more stringent grant negotiation review than those with a low risk level Which grantees to monitor What level of detail to use to monitor grantees at different levels of risk Which program requirements to monitor 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 11

12 SPECIFIC CONDITIONS TEA may designate subrecipients as high-risk grantees and impose specific conditions.(2 CFR , 2 CFR ) TEA may also place specific conditions on individual awards without high-risk grantee designation.(2 CFR ) 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 12

13 SUBRECIPIENT MONITORING Financial Management System: Internal Controls Budgetary Controls Financial Reporting Accounting Records (Source Documentation) Compliance with applicable requirements Expenditures of Program funds 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 13

14 EMPHASIS ON INTERNAL CONTROLS Written policies and procedures are the foundation of internal controls for managing federal funds Who should be involved? Fiscal AND Program staff Use team approach to capture entire grant process Adoption by the board or governing body 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 14

15 POLICIES AND PROCEDURES Written policies and procedures required BY EDGAR: Cash Management Procedures (b)(6) & Allowability Procedures (b)(7) Conflicts of Interest Policy (c) Procurement Procedures (c) Method for Conducting Technical Evaluations of Proposals and Selecting Recipients (d)(3) Travel Policy (b) 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 15

16 POLICIES AND PROCEDURES Review all federal, state and local rules and regulations when developing or updating your policies and procedures. What is the most restrictive rule? Remember, apply the most restrictive federal, state or local rule 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 16

17 POLICIES AND PROCEDURES Most common finding/observation is that Policies & Procedures: a) Are incomplete b) Don t exist c) Are outdated d) Are simply not being implemented 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 17

18 BUDGETARY CONTROLS Planning for Budget Allocate and adjust appropriations in financial records to match planning amounts, final amount and carry over amount approved by TEA Appropriate funds for set asides Use of encumbrances Know when to amend budget 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 18

19 BUDGETARY CONTROLS Is a budget amendment required? Adding a class object code previously not budgeted YES Increase or decrease the amount of funds currently approved in a class/object code on the Program Budget Summary by more than 20% NO Increase the CEIS budget by 5% YES 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 19

20 RESERVED FUNDS Appropriate Funds for set asides for Title I, Part A (Schedule PS 3101) Districtwide Parent and Family Engagement Activities Title I, Part A, Services to Eligible Private School Students, Not Including Administration Preschool Programs Administration of Title I, Part A, Programs (including administration of Title I, Part A, programs for eligible private school students and students at facilities for neglected and delinquent) Districtwide Professional Development Activities Services to Homeless Students Services to Students Residing in Local Facilities for the Neglected Services to Students Residing in Local Facilities for the Delinquent Foster care 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 20

21 RESERVED FUNDS (NEW) Monitoring of Equitable Services: Form 3099 of the FY ESSA Consolidated Federal Grant application. Review of supporting documentation to determine total eligible low-income students from participating Title I attendance areas. Review consultation documentation Review delivery of services Review of Financial Records Administration costs applied for PNP services. Consolidation of other ESSA funds Pooling of funds to provide services Inventory of equipment purchased with PNP funds 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 21

22 RESERVED FUNDS Appropriate Funds for set asides from IDEA-B Coordinated Early Intervening Services (CEIS) Private Nonprofit School Participation (PNP) (No changes from FY ) 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 22

23 FINANCIAL MANAGEMENT SYSTEM Accounting software Capture and retain financial data in the required format Examples Chart of accounts compliant with Financial Accountability System Resource Guide (FASRG) Detailed General ledgers Payroll journals 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 23

24 FINANCIAL MANAGEMENT SYSTEM Accounting Records Source documentation must be kept on Federal Awards Authorizations Obligations Unobligated balances Assets Expenditures Income Interest (new) 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 24

25 EXPENDITURES OF GRANT FUNDS All costs must be: Necessary, Reasonable, and Allocable Conform with federal law and grant terms Consistent with state and local policies Consistently treated In accordance with GAAP Not included as match Net of applicable credits Adequately documented 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 25

26 EXPENDITURES OF GRANT FUNDS General Procurement Standards: All nonfederal entities must have documented procurement procedures which reflect applicable Federal, State, and local laws and regulations (2 CFR (a)): Micro-purchase procedures Small purchase procedures Competitive sealed bids procedures Competitive proposals Noncompetitive proposals 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 26

27 MICRO-PURCHASE? Can the following purchases within the same month qualify as a Micro-purchase? ABC Inc. $ ABC Inc. $ ABC Inc. $ /10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 27

28 EXPENDITURES OF GRANT FUNDS Purchasing from Sole Source vendor must meet one of the following circumstances: Document that the item is available only from a single source. Document that there is a public exigency or emergency for the requirement that will not permit a delay resulting from competitive solicitation. Document that the federal awarding agency or pass-through entity expressly authorize noncompetitive proposals in response to a written request from the non-federal entity. Keep records showing that after solicitation of a number of sources, competition is determined inadequate. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 28

29 EXPENDITURES OF GRANT FUNDS Purchasing based on Noncompetitive Proposal from a Sole Source vendor : Is the letter from a vendor proclaiming itself as a sole source vendor for a particular product sufficient to proceed with a purchase? -NO 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 29

30 EXPENDITURES OF GRANT FUNDS Period of Performance (2 CFR ): Costs can be charged to your grant between the start and end dates listed on your NOGA. The only exception to this rule is if TEA has specifically authorized pre-award costs in writing. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 30

31 EXPENDITURES OF GRANT FUNDS You signed a contract on August 21, 2015 for a speaker to present at a professional development event hosted by your organization on September 21, The payment for the speaker is issued on October 1, The expense for the speaker is obligated on: a. September 21, 2015 b. August 21, 2015 c. When the encumbrance is entered into your financial management system. d. October 1, /10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 31

32 EXPENDITURES OF GRANT FUNDS Costs are allocable to the grant if: a. The cost of the goods or services is proportionate to the benefits received by the grant. b. At least 80% of the goods or services will directly benefit the grant. c. The goods or services, in any way, benefit the grant objectives. d. The cost of the goods or services was included in the budget proposal. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 32

33 EXPENDITURES OF GRANT FUNDS Suspension and Debarment : These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities Verification must be done by either: Checking SAM.gov; or Collecting a certification from the vendor; or 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 33

34 EXPENDITURES OF GRANT FUNDS Documentation examined for payroll costs: Payroll Journals Signed and dated job descriptions All approved payroll/salary authorization forms Current Certificates Time and Effort Reporting records for single cost objective or multiple cost objectives Substitute time and effort records (if applicable) Extra duty pay/stipend records 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 34

35 EXPENDITURES OF GRANT FUNDS Documentation examined for non-payroll costs: Detailed General Leger The original internal accounting record (e.g. approved purchase order form, etc.) The original and complete third-party document (i.e., billing statement, itemized receipt, itemized invoice, etc.) Procurement records based on the procurement method identified for selected transactions. Documentation supporting the verification that the vendor was not suspended or debarred. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 35

36 EXPENDITURES OF GRANT FUNDS Documentation examined for non-payroll costs: Executed agreement or contract, including exhibits, amendments, and other supporting documentation for any contracted service transaction. Travel authorization and reimbursement vouchers, including the supporting documentation (e.g., hotel billing statement, restaurant receipts, travel itineraries). If purchased through cooperative: A copy of your organization s agreement with each cooperative related to the applicable transactions. Documentation obtained from the cooperative demonstrating its compliance with EDGAR procurement requirements. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 36

37 QUESTIONED COSTS Examples of questioned cost (Non-Payroll): Lack of an Original and Complete third-party document (i.e., utility billing statement, itemized receipt, itemized invoice, etc.) Lack of Complete Internal Document authorizing purchases Funds obligated Outside of the Grant Period Procurement methods not followed for purchases Lack of executed agreement of contract with the vendor Cost not necessary or reasonable for the benefit of recipients 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 37

38 QUESTIONED COSTS Examples of questioned cost (Payroll): Lack of Time and Effort reporting documentation Cost not Allocated per Time and Effort records Funds obligated outside of the grant period Positions not Approved in the application Lack of Job Descriptions describing the duties/activities allowed under the program Lack of Salary Authorization to spend grant funds 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 38

39 PROPERTY STANDARDS Procedures for managing equipment must meet the following requirements: Property records Description, serial number or other ID, source of funding, title, acquisition date and cost, percent of federal participation, location, use and condition, and ultimate disposition date including sale price Physical inventory at least every two years Control system to prevent loss, damage, theft All incidents must be investigated Adequate maintenance procedures If authorized or required to sell property, proper sales procedures to ensure highest possible return. 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 39

40 USEFUL TEA LINKS Federal Fiscal Monitoring Division deral_fiscal_monitoring_division/ Annual Federal Fiscal Risk Assessment Administering Grant 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 40

41 Q & A 11/10/2017 Texas Education Agency, Federal Fiscal Monitoring Division 41