Presents... Understanding and Complying with Objectives Obtain information to determine if applying for governmental grants is appropriate for your organization Obtain understanding of internal controls and compliance requirements surrounding governmental grants Obtain information about audit requirements if subject to the Single Audit Act 1
Applying For/Accepting Grants Do services fit with your mission? Understand any special requirements of the grant Perform a cost/benefit analysis Are all costs covered by the grant? Direct costs Indirect costs (audits, mileage, additional utilities, fringe benefits, additional accountants, overtime, additional space) Personnel needs Publications Governing Federal OMB Circular A-133 (Audits of States, Local Governments and Non-Profit Organizations) Proposed revisions A-133 Compliance Supplement OMB Circular A-122 (Cost Principles for Non- Profit Organizations) 2
Publications Governing Federal OMB Circular A-110 (Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations) [Proposal to combine A-110 w/a-102] www.whitehouse.gov/omb/circulars_default State of Texas Uniform Grant Management Standards May fall under federal guidelines Understanding Government Grants Obtain complete understanding of grant agreement May include references to other catalogs, on-line information, etc. Contact granting agency about ambiguities, questions Request answers and clarifications in writing 3
Understanding Government Grants Know the source of the funds Can be difficult to determine Most grants originate at the federal level and are passed through to other governments or non-profits Can determine if a Single Audit is required Questions to ask granting agency: Where did the grantor get the funds? What is the source of the funds? Is there a CFDA #? Understanding Government Grants When a Single Audit is required Federal Expenditures exceed $500,000 during your fiscal year [Proposal to raise this to $750,000.] Based upon the reimbursable costs that are incurred, not necessarily what you actual received or the total cost of the program State Expenditures exceed $500,000 City No requirement Complying with Internal control requirements Auditee responsibilities: Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs. 4
Complying with Internal control structure Control Environment Risk Assessment Control Activities Information and communication Monitoring Complying with 14 Activities allowed or unallowed Allowable costs Cash management Davis-Bacon Act Eligibility Equipment and real property management Matching, level of effort and/or earmarking Complying with Period of availability of federal funds Procurement, suspension and debarment Program income Real property acquisition/relocation assistance Reporting Sub-recipient monitoring Special tests and provisions Proposal to limit the # of compliance requirements tested 5
Activities allowed or unallowed Usually dictated by the grant; represents services or program paid for by the grant Allowable costs Governed by Circular A-122, Cost Principles Some costs are never allowed (i.e. alcohol, lobbying) Usually represent the costs outlines in your budget Allowable costs Indirect cost allocation plan Actual costs not estimates or bids Net of credits Relates to proper period Salaries Actual time worked on grant evidenced by time sheets Cash management Cost reimbursement grant Draw-downs (or advances) Interest bearing bank accounts Time restraints on how quickly funds must be spent Davis-Bacon Act Using federal funds for building or construction 6
Eligibility Can be very specific or general Dictated by the grant or part of the grant prepared by NPO Part IV of Compliance Supplement provides information on eligibility Equipment and real property management Governed by Circular A-110 Assets must be segregated in the accounting records and identified as being purchased with federal funds Physical inventory must be taken every 2 years Equipment must be used for that program or other federally funded programs Equipment should be tagged Must have internal controls to safeguard equipment Certain rules apply re: disposal of equipment Matching Some grants require you to secure matching funds Usually have stipulations of what can qualify for the match Funds from other federal sources no Volunteer services maybe Restricted contribution for another use - no 7
Level of effort Requirements for a specified level of service to be provided from period to period, (b) a specified level of expenditures to be maintained from period to period and (c) Federal funds to supplement and not supplant non-federal funding of services. Earmarking Costs or people served having certain characteristics must be a certain percentage, commonly certain types of demographic or location Specify minimum and/or maximum amount or percentage to be used for certain activities or participants receiving services Period of availability of federal funds If funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the granting agency Costs incurred before or after the period of availability cannot be charged to the grant 8
Procurement, suspension and debarment Procurement Must have written policies No conflict of interest Provides for free and open competition (usually through bidding process) Document price analysis Costs > $100,000 other provisions Proposal to increase this to $150,000 Suspension and Debarment Grant recipients are prohibited from doing business with vendors or enter into contracts if they have been suspended or debarred by the federal government To determine, check System for Award Management https://www.sam.gov Check before using a new vendor, signing a new/renewing contract, then once a year Do for every vendor Document the process Program income Amounts charged to individuals to participate in the program May be required or prohibited Record in separate GL account Usually must be used to support the program from which it was collected May be used to as part of the match or could be excluded 9
Real property acquisition/relocation assistance Usually only applies to other governments, such as in imminent domain situations Reporting Financial Usually done monthly Required to receive reimbursement Draw-downs-submit showing funds were spent Reporting Financial Can be cash or accrual basis Usually have specific deadlines Certain format may be prescribed, may do on-line Detail of expenses from GL Copies of cancelled checks Review of reports for accuracy and timely filing Programmatic Informing grantor of accomplishments, number of people served, types of services received, statistics Often done monthly, quarterly, annual reports Must have system in place to track information required by grantor Review of reports for accuracy and timely filing Records retention Usually 3 years from date of submission of the final expenditure report Maintain originals 10
Sub-recipient monitoring Vendor vs. sub-recipient relationship Responsibilities Inform of CFDA#, title, award name, amount, year Advise of federal requirements, provisions of grant agreements, provisions imposed by pass-through entity Monitor activities to sufficiently ensure that grant funds are used in accordance with grant provisions and that performance goals are met Sub-recipient monitoring Responsibilities Should have a formal monitoring plan Review underlying documentation of supporting costs, units of service, eligibility determination, cash management procedures, procurement, suspension/debarment, achievement of performance goals Follow-up if any deficiencies or non-compliance is noted during monitoring Sub-recipient monitoring Responsibilities Ensure that sub-recipients expending > $500,000 comply with Single Audit Act. Obtain copy of their audit; review for findings; issue management decision on audit findings; ensure sub-recipient takes timely and appropriate corrective action Consider whether audit findings require adjustment to your records (# of eligible persons served; unallowed costs should reduce revenue) 11
American Recovery and Reinvestment Act (ARRA) More stringent reporting requirements More likely to be subject to Single Audit Must Buy American Common Issues Data Collection Form not filed timely Key controls not in place Employees time not tracked SAM website not verified Misunderstanding of vendor vs. subrecipient relationship Sub-recipients not monitored properly Eligibility not documented Understanding and Complying with Questions?? THANK YOU! 12