Financial Management

1. Financial Management What you need to know…

2. Agenda • Introductions • Webinar logistics • Financial management systems • Uniform guidance – ‘Super circular’ • Accounting system • Policies and procedures • Fiscal reporting • Requirements for cash reimbursement requests • Preparing for fiscal site visits • Common IG audit findings • Member support costs and grant drawdown • Administrative costs • Close outs • Program income

3. Your Fiscal Team • July Afable, Manager of Accounting & Finance • 617-542-2544, x225 • jafable@mass-service.org • Steve Gallucciand Steve Burke • 617-542-2544, x227 • CFO@Mass-Service.org

4. Financial Mgmt. Systems • Code of Federal Regulations • www.ecfr.gov Title 2-Grants and agreements @Drop-down • Uniform guidance – Super circular • Key characteristics of highly effective financial management systems • Required policies and procedures • Suggested policies and procedures • Policies and procedures and Form 990 • Electronic storage • Record Retention Part 200-333

5. OMB Uniform Guidance – Super Circular Code of Federal Reg.’s @ www.ecfr.gov Title 2-Grants and Agreements (Revised January 1, 2017) • Supersedes and streamlines OMB Circulars: A-21 A-110 A-87 A-122 A-89 A-102 A-133 A-50 (specific sections) • Effective date: 12-26-2014-all federal awards made on or after this date • Raises Single Audit threshold to $750,000 from $500,000 – for years ending 12-31-2015 or after • Under Title 2 there are two Subtitles: • Subtitle A-OMB Guidance for Grants and Agreements • Subtitle B-OMB Regulations for Grants and Agreements We’ll be focusing on Subtitle A under which there are two Chapters: • Chapter I-OMB Government wide Guidance for Grants and Agreements • Chapter II-Office of Management and Budget Guidance

6. OMB Uniform Guidance – Super Circular • For today’s training we’ll focus on Chapter II-Office of Management and Budget Guidance • Chapter II-Office of Management and Budget Guidance has 299 Parts: • Part-200-Uniform administrative requirements, cost principles, and audit requirements for Federal awards • Part 201-299-Reserved {per CFR} • Part 200 has six (6) Subparts as follows: • Subpart A-Acronyms and Definitions {100 Sections} • Subpart B-General Provisions {14 Sections} • Subpart C-Pre-Federal Award Requirements and Contents of Federal Awards {14 Sections} • Subpart D-Post Federal Award Requirements {46 Sections} • Subpart E-Cost Principles {76 Sections} • Subpart F-Audit Requirements {21 Sections}

7. OMB Uniform Guidance – Super Circular • Focusing on “Post Federal Award Requirements under Subpart D-Sections 200.300-200.345-Standards for Financial and Program Management: • Some sections to cover: • 200.302-Financial Management • The financial management system of each non-federal entity must provide for the following: • (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which there were received. • (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirement set forth in 200.327 Financial reporting and 200.328 Monitoring and reporting program performance

8. OMB Uniform Guidance – Super Circular • (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation • (4)Effective control over and accountability for, all funds, property, and other assets. The non-federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. • (5) Comparison of expenditures with budgeted amounts for each Federal award • (6) Written procedures to implement the requirement of 200.305 payments. Time lapse of funding and expenditures

9. OMB Uniform Guidance – Super Circular • (7) Written procedures for determining the allowable costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal awards

10. OMB Uniform Guidance – Super Circular • Section: 200.303 Internal Controls • To establish and maintain effective Internal Controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. This includes adequate responses to audit findings and protection of personal information. Note Massachusetts reg.’s on protection of personal information reg.’s {www.mass.gov @ 201 CMR 17} • These internal controls should be in compliance with guidance in ‘‘Standards for Internal Control in the Federal Government’’ (the Green Book) issued by the Comptroller General of the United States and the ‘‘Internal Control Integrated Framework’’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

11. OMB Uniform Guidance – Super Circular • Section: 200.308 10% Rule-Cumulative cost transfers that exceed or are expected to exceed 10% of the total budget as last approved by the Federal awarding agency. Note MSA’s 2% rule as well • Section: 200.331 speaks to requirements for pass-thru entities and also speaks to sub-recipient requirements • Section: 200.333-200.337 speaks to record retention and access

12. OMB Uniform Guidance – Super Circular • Section: 200.338-200.342 speaks to remedies for non compliance with Federal Reg.’s • Section: 200.412-200.415 speaks to direct and indirect costs and Indirect Cost Rates • Section: 200.420-200.475 are General Provisions for Selected Items of Costs, i.e. Alcoholic beverages, and conference costs

13. OMB Uniform Guidance - Super Circular Note under the Indirect Cost Rate Sections: • New Requirement to Record Your Indirect Cost Rate in eGrants • Recipients must record the indirect cost rate method and rates which they will be using on their awards • Use this link to access instructions on how to record your rate in eGrants • http://www.nationalservice.gov/sites/default/files/resource/eGrants_Indirect_Cost_Rate_Instructions_Final.pdf

14. Accounting System In order to meet the CNCS reporting standards {Section 200.302} Your Accounting System must be capable of: • Identification in your accounts of all federal awards received and expenditures and identifying the federal program under which funds were paid and received. • Distinguishing grant versus non-grant related expenditures • Identifying costs by program year • Identifying costs by budget category (chart of accounts) and the timely comparison of actual vs budget • Differentiating between direct and indirect costs (administrative costs) • A system/process that tracks non-reimbursable costs that must not be charged to any federal grant • A system/process that provides adequate support for all funds requests to avoid improper payment findings

15. Accounting System (cont.) • Accounts for each award/grant separately • Maintains Federal/non-Federal matching funds {Chapter 200.306} separately from grant funds • Examples, State Funding and/or Volunteer Services • Records in-kind contribution (which can be match funding) as both revenues and expenses • Directly correlates to financial reports submitted to MSA, including Periodic Expense Report (PER) • As note on prior slide, Questioned Costs: • Costs in violation of Reg.’s • Costs not supported by adequate documentation • Costs that are unreasonable ..”prudent person test”

16. Policies and Procedures

17. Policies and Procedures

18. Policies and Procedures and Form 990

19. Electronic Storage

20. Electronic Storage

21. Electronic Storage

22. Electronic Storagefrom Uniform Guidance • §200.335   Methods for collection, transmission and storage of information. • In accordance with the May 2013 Executive Order on Making Open and Machine Readable the New Default for Government Information, the Federal awarding agency and the non-Federal entity should, whenever practicable, collect, transmit, and store Federal award-related information in open and machine readable formats rather than in closed formats or on paper. The Federal awarding agency or pass-through entity must always provide or accept paper versions of Federal award-related information to and from the non-Federal entity upon request. If paper copies are submitted, the Federal awarding agency or pass-through entity must not require more than an original and two copies. When original records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided that they are subject to periodic quality control reviews, provide reasonable safeguards against alteration, and remain readable.

23. Fiscal Reporting • Quarterly Due Dates • October 14, 2017 (16-17 AND 17-18 through Sept. 30) • January 13 (through December 31) • April 14 (through March 31) • July 14 (through June 30) • October 13, 2018 (17-18 AND 18-19 through Sept. 30) • Email PER Excel document with individual worksheets updated through the required date • Reports must be sent in by the due dates, no exceptions • MSA also is required to file reports with CNCS

24. Reimbursement and ReportingKey Terms & Definitions • Cover Sheet/Request for Cash Reimbursement Cover Page • Budget Summary Worksheet • Periodic Expense Report (PER) • Backup/Supporting Documentation • General ledger report that clearly supports PER • Actual documentation acceptable if there are only a few transactions • Federal Financial Report (FFR) • MSA submits this report, aggregating information from the PERS; 30 days after end of reporting period, and 90 days after annual reporting

25. Reimbursement Request Process • At least quarterly • At minimum, request funds 30 days after submission of PER (except for July 15) • Encouraged to request more frequently • Payments made via check or electronic fund transfer (EFT) • EFT requires small transaction fee deducted from reimbursement • Contact July to discuss/choose EFT

26. Reimbursement Request Process • Accurate reimbursement received by the 15th processed by the 30th; received by the 30th processed by the 15th • Inaccurate reimbursements returned by PO for revision and will be resubmitted for processing in the next reimbursement cycle • MSA adheres to 15 day processing timeline to account for staff capacity, time off, etc. • MSA does not advance funds

27. Reimbursement Request Documents • Complete reimbursement request includes (electronic okay): • Cover sheet with signature • Budget summary worksheet and the individual tab with expenses for the period • PER for current request (excel document) • General ledger, reconciliation report, other backup documentation • Individual member hours to date/hours tracking document • Your PO will send the PER and the hours tracking document templates at the beginning of the year • Reimbursements will not be processed until all components are received • Do not retroactively change individual PERs after reimbursement was paid

28. COVER SHEET

29. Budget Summary

30. PER

31. Supporting Documentation

32. Fiscal Site Visits • Purpose • MSA is responsible for ensuring the fiscal integrity of organizations funded • Ensure proper internal controls, systems and safeguards exist around the financial operations of an AmeriCorps program • FSV is not an audit • We review current systems and make recommendations on how to strengthen the systems • Limited transaction testing – randomly chosen reimbursement request.

33. Fiscal Site Visits (cont.) • Includes, but not limited to: • Review of organization's internal control structure • Review of prior audit reports and management letters • Review of progress made from any prior audit and management letter finding(s) • Review of recent request for reimbursement including all support documentation • Grant and match

34. Fiscal Site Visits (cont.) • Likely areas for review • Member benefits • Living allowance stipends • Cash match • Committed • Collected • In kind contributions • Insurance • Human resources/payroll documentation

35. Fiscal Site Visits (cont.) • Likely areas for review (cont.) • Financial policies and procedures • Cost allocations • Program analysis • Actual vs. Budget reports • Program documentation – signed contract and provisions • Staff charged to grant • I-9 • W-4 • Timesheets • Current wage authorization • Appropriate job description • Current personnel evaluation • This is a key characteristic of a highly effective financial management system

36. Fiscal Site Visits (cont.) • Recurring Fiscal Findings • Staff Files • Incomplete or missing I-9s • Missing job descriptions or contracts • Missing properly completed payroll authorization forms • Timesheets • Missing • Staff and member timesheets missing supervisory signoff • Electronic timesheet systems that were not compliant

37. Member Support Costs According to the AC Provisions • Regardless of member type: • Stipends are not determined by the number of hours served, it’s a flat rate • Stipends can only be paid while a member is serving • Timesheets properly completed • Signed by supervisor and member • Service, training and fundraising hours segregated

38. Member Support Costs (cont.) • Guidance from CNCS • A member stipend stays the same for the duration of their service • All members with the same position description must be paid identical stipends and receive the same benefits – travel, training • Member stipends can not be pro-rated • If a member starts late, the stipend cannot be increased • Member stipends can not be paid in lump sums • If members are suspended through a whole pay period they are not eligible for that stipend • Members cannot perform other work for the organization

39. Grant Drawdown • Commissions and AmeriCorps Programs sometimes do not spend all of their Federal money each year. • Most of the unexpended funds are from Section II Member Support Costs and other costs associated with members (Health care, trainings, travel).

40. Section I – Program Costs Reconcile budgeted amount with year to date expenses Forecast projected expenditures File amendment with Program Officer Grant Drawdown (cont.) • Section II – Member Costs • Start program year with full enrollment • Fill slots vacated by members who served less than 30% of their hours • Convert Member Slots – FT to PT

41. Grant Drawdown (cont.) • Budget Amendments • Contact your AmeriCorps Program Officer before initiating a budget amendment • The sooner you contact us, the more likely we can help • Amendments over 10% take longer to process • All provisions still apply to budget amendments • Include justification with budget amendment • Your PO can provide assistance. • Budget amendments are subject to review • Budget amendments can be rejected

42. Code of Federal Regulations-Two Definitions • Unliquidated Obligations • For financial reports prepared on a cash basis, obligations incurred by the non-federal entity that have not been paid (liquidated). For reports prepared on an accrual basis, these are obligations incurred by the non-federal entity for which an expenditure has not been recorded. • Unobligated Balance • The amount of funds under a Federal award that the non-federal entity has not obligated. The amount is computed by subtracting the cumulative amount of the non-Federal entity’s unliquidated obligations and the expenditures of funds under the Federal award from the cumulative amount of the funds that the Federal awarding agency or pass-thru entity authorized the non-Federal entity to obligate.

43. Section III: Admin. Costs • A fixed percentage of Section I + Section II designed for administrative costs • Composed of • Corporation Fixed Amount (this is yours) • Commission Fixed Amount (this is MSA’s) 2% • Allows MSA to provide training and support. • The only way to draw down all of Section III is to draw down all of Section I and Section II

44. Section III - Calculations

45. A grant is officially closed by CNCS out when all applicable administrative actions and all required work of the Federal awards have been completed, i.e. the end of the performance period MSA may ask for periodic closeouts during the program. This process at CNCS documents: Total Funds drawn down Sub-grantee certification Residual equipment & supply inventory Refunds as necessary Usually due to variances between accrued and actual expenses. Grant Close Out Process • MSA checks total funds drawn down in the PMS for program and compares to final program FFR/PER • MSA sends close out letter/instructions with forms to programs and amounts drawn down • Program completes forms and reconciles its ‘total draw down with MSA’s amount provided • Program submits documentation to MSA within 30 days • MSA aggregates all programs and submits one package to CNCS • MSA must submit all required financial, performance and equipment reports within ninety calendar days of the completion of the award.

46. Program Income • Definition • Revenue earned as a direct result of activities funded under the grant • Program income must be used for the purposes of the grant incurred during the project period • Program income on hand must be used to defray eligible program costs before requesting funds