FINANCIAL MANAGEMENT SUMMER TRAINING FFY2012

1. FINANCIAL MANAGEMENTSUMMER TRAINING FFY2012 Sponsoring Organizations of Child and Adult Care Sites Summer 2012

2. FINANCIAL MANAGEMENT AGENDA CACFP Financial Review Process • Federal Financial Management Requirements • DPI Financial Management Requirements • Accounting System • FFY2013 Budget • Nonprofit Food Service Financial Report • DPI CACFP Financial Review • And other CACFP financial reviews • Will you pass a DPI Financial Review?

3. Frequently Used Terms • Agency: The organization name on the CACFP Application. Same as the name on the federal tax-exempt status (non-profit) or the legal name of the agency (for-profit). • Child and Adult Care Food Program (CACFP): Federally funded program through USDA and administered in WI by the Department of Public Instruction. Provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”. • Voluntary Program (except for Head Starts) • Performance based reimbursement • Reimbursement received after the fact. • Documentation maintained to support meals were actually served to eligible children

4. Frequently Used Terms • Sponsoring Organization (SO): an agency with more than one participating site. Any combination of Child Care, Adult Care, Emergency Shelter and/or At-risk or Outside of School Hour approved site. • Affiliated: Sites are the same legal entity as the agency; same organization. • Unaffiliated: Sites have no affiliation with the Sponsoring Organization; different owner/board of directors. • Nonprofit Food Service Financial Report (NPFS): DPI form required from ALL participating agencies (for-profit and non-profit) that is used to report actual food program expenditures and earned food program revenue on a quarterly basis.

5. Child and Adult Care Food Program IS NOT “Free” money Funding for personal expenses To purchase soda/coffee for teachers, non-healthy and/or not enough food and snacks for participants Entitlement Program For the disorganized IS • Federally Funded • Passed through DPI • a FOOD Program • Healthy meals to eligible participants • Voluntary Program • Except in Head Start • Heavily Administered • Detailed program requirements.

6. FEDERAL FINANCIAL MANAGEMENT REQUIREMENTS

7. Federal Requirements FINANCIAL VIABILITY • Appropriate practices for recruiting facilities [7 CFR § 226.6(b)(2)(vii)(A)(1)] • Financial Resources to Administer Program on a daily basis [7 CFR § 226.6(b)(2)(vii)(A)(2)] • Other Sources of funding • During interruptions in program payments • Fiscal claims against the agency • Unallowable program costs • Documentation: • Financial Statements • Audit Reports • Budgets [7 CFR § 226.6(b)(2)(vii)(A)(3)] • Costs must be necessary, reasonable, allowable and appropriately documented.

8. Federal Requirements Nonprofit Food Service • Cannot make a profit on Federal food program • No more than 3 month operating balance per program year • Documentation to support actual costs • Must have other source of income • Costs Not Covered • Temporary interruptions in program payments • Unallowable program costs

9. Nonprofit Food Service Operation • CACFP is like a separate nonprofit business within your business • Must show how you spend CACFP reimbursement in an allowable way • Required for ALL types of agencies even for-profits

10. DPI FINANCIAL MANAGEMENT REQUIREMENTS

11. DPI FINANCIAL MANAGEMENT REQUIREMENTS Measurements of Financial Viability 1. Accounting System • In compliance with GAAP 2. Approved Budget • Amended Budget 3. Incurred Costs (Actual Costs) • Reported quarterly on the Nonprofit Food Service Financial Report

12. Accounting System • Cash/Accrual/Modified Accrual • Cash System: Recognizes revenues and costs when cash is received and bills are paid. • Accrual System: Recognizes revenues and costs when incurred and uses payable and receivables. • Modified Accrual System: Certain expenses are reported on an accrual basis. • Compliance with Generally Accepted Accounting Principles (GAAP) • Rules for the accounting of costs and revenues • Resource: http://www.fasab.gov/accepted.html or Ask your staff Accountant • Items should not be purchased with CASH. • Financial Reports • General Ledger / Check Register • Profit/Loss Statement • Balance Sheet • Co-mingled CACFP funds with Agency funds • Method of separation (ie. independent account codes) • Approved allocation plan for shared costs

13. Accounting System • Consistent with all programs • Written Procedures • Process of Payments, Deposit of funds and Payroll • Single Audit Reports (non-profits only) • A-133 report required if expend over $500,000/year in federal dollars (non-profits only) • Single Audit Clearinghouse http://harvester.census.gov/sac/index.html • Less than $500,000 - Annual report/review from outside party should be conducted annually. • Copy sent to DPI within 9 months from end of agency’s FY if CACFP is major program. • For-profits: Compliance review by outside accountant • Annual Report • Should be completed when Federal taxes are completed. • Good resource: www.irs.gov

14. Accounting System DPI Requirements: • CACFP vs. Other agency activities • Operational and Administrative Costs • Support NPFS reports submitted to SA • Consistent with other agency operations

15. Accounting System Acceptable • Center credit card • Center checking account • Charge Account at local store • Invoice or COD • Formal purchasing procedures Unacceptable • Cash • Including cash-back & cash with-drawls, • Not Petty Cash • Third party checks • Food Stamps * Information per GAAP

16. CACFP BUDGET • FFY2013 Detailed Budget (Attachment G) • Projection – • “Road Map” of Upcoming Food Program Year • All Food Program Expenses • Allowable, Reasonable, in accordance to FNS Instruction • How much will it cost your agency to run the food program? • All Revenue Available • CACFP Meal Reimbursement • CACFP Cash-in-lieu reimbursement • Interest earned on CACFP funds • “Other” Income • Unfunded/Unallowable Costs • SA Overclaims • Interruption in Program Payments • Ex. Child Care Fees, Tuition, Headstart, W-2, Donations

17. Review FFY2013 CACFP Budget (Attachment G)

18. FFY2013 CACFP Budget (Attachment G) • Available online at: http://www.dpi.wi.gov/fns/cacfpapps.html • Click on “Attachment G: Budget for Sponsors of Affiliated Sites”. • Note: the Budget is a downloadable, Excel form that must be submitted electronically. • Download (Save) the budget form to YOURcomputer. • E-mail completed budget to Cari Muggenburg at DPI • E-mail: Must be sent by Authorized Rep. on contract • Acts as the signature

19. FFY2013 CACFP Budget (Attachment G) • Attachment G used to support figures entered on Online Application • Online application will not be approved without an approved Attachment G • May result in delay/non-receipt of reimbursement. • Approval will be received via e-mail to Authorized Representative • Include copy of approved budget. • Notify of online application approval. • Formal approval letter will also be sent via e-mail to AR. • Can submit claim when receive initial email from Cari Muggenburg. • Pending any unresolved issues

20. FFY2013 CACFP Budget • Project Food Program Costs & Revenue • Costs: Regardless if paid with CACFP reimbursement • How much will it cost your agency to administer the food program? • Will it be paid directly with CACFP funds? • Revenue: All sources and amounts available to fund food program expenses. • Not covered • Unallowable • Pay Overclaims • Costs not approved are unallowable • Cannot be funded with CACFP funds

21. What do I put in my budget?

22. Administrative Monitoring Claim Compiling Submitting Reconciling Accounting / Bookkeeping Operational Kitchen Meals Preparation Delivery Menus – Planning, Dietician Purchasing / Vended Meals Administrative & Operational Costs

23. Frequent Allowable Costs(lists are not all inclusive) Allowable • Food (consumable) • Kitchen Supplies (Nonfood) • Contract / Vended Meals • Food Program Personnel • Admin & Operational • Audit Services • CACFP Portion • Employee Travel • e.g. Grocery shopping, DPI training • Equipment Purchase/Rental

24. Food Costs • Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants • Recommend at least 50% of budget • For healthy, reimbursable meals at least ½ of reimbursement should be used on food costs.

25. Food Supplies • Consumable food products used to create menu items served to program participants. • Costs can include delivery costs. • Taxes must be paid with non-CACFP funds (tax-exempt). • Report on the Food Supplies/Food Costs line on budget and NPFS.

26. Food Vendors • Outside food service, not related to agency. • Copy of Contract to DPI • Provide all CACFP components. • Report as Contracted Services on CACFP Budget and Financial Report

27. Contracted/Vended Meals • Costs of purchased, prepared meals are contracted service costs • Contract must be signed prior to beginning date (contracted service) • The vendor must keep production records(a record of quantityof food prepared)

28. Food Service Labor All wages, salaries, employee benefits, and the share of the employee taxes paid by the agency.

29. Operational Food Service Labor • Menu planning • Production Records • Food purchasing • Cooking • Serving the food • Cleaning-up after the meal • Meal Attendance

30. Food Service Labor is also… • Time spent completing required records • HSIR and HSIS • Monthly claim • Financial reports • Supervision of day-to-day food service operations These are Administrative costs

31. Administrative Costs Sponsors: No more than 15% of CACFP meal reimbursement can be spent on administrative costs without State Agency waiver.

32. Frequent Unallowable Costs(lists are not all inclusive) Unallowable • Bad Debts, Fines, Penalties, interest on credit cards • Non food program food costs • Example: Coffee, Entertainment • Purchase of food for personal use • Money received must be kept in food program account. Must have strict internal policy. • Costs of meals for non-CACFP personnel or non-employees • Example: Bus driver, Custodian • Must have policy and paid with non-CACFP funds.

33. Resources for Allowable/Unallowable Costs • Guidance Memorandum #11 • Child Care: http://dpi.wi.gov/fns/centermemos.html • Adult Care: http://dpi.wi.gov/fns/adultmemos.html • “Standards for Allowable Costs” • User friendly, searchable, Excel reference • FNS Instruction 796-2 (rev. 3) • Electronic copy available on our website under GM #11 • Derived from OMB Circulars and Regulations • http://www.whitehouse.gov/omb/circulars_default

34. How am I going to pay for this program?

35. CACFP Reimbursement • CACFP Reimbursement is based upon: • Number of meals you serve • Eligibility of the participants • The funds you receive will not cover all of yourallowable FP costs.

36. Remember! The CACFP funds are replacing funds you are now spending

37. Other Source of Income • CACFP is part of your overall organization. • Funds received to run organization must also be available to fund CACFP costs not covered by reimbursement. • Examples: Headstart, Tuition, W-2, Fundraising, Private Donations • Food Stamps is not another source of income for the center. • Report projected Source and Amount on Budget

38. Best use of your CACFP Reimbursement Plan, budget, and organizing the funds available will help you to maximize your CACFP reimbursement. No planning, using funds on non-program needs, no accountability of funds spent will result in loss of funding and/or participation

39. All Food Program Costs Paid with CACFP Reimbursement must have received PRIOR DPI approval

40. I need to change my budget!

41. Amending Budgets • DPI Policy: CACFP funds can only be used for approved food program line items on annual budget. • Notify DPI of any budget omissions. • When in doubt contact DPI for approval.

42. How would DPI know what I spent my CACFP reimbursement on? • Review of quarterly NPFS Report • On-Site Financial Reviews

43. Nonprofit Food Service Financial Report (NPFS) • Quarterly report of all ACTUAL CACFP expenditures. • Form PI-1463-A (SO of Affiliated) • Form PI-1463-C (SO of Unaffiliated) • Electronic, downloadable, Word version form • At end of program year, food program costs should equal expenditures charged to food service program plus any additional food program expenses covered with non-CAFP funds. Do allow carryover of no more than 3 months worth of reimbursement with explanation. • Amounts must be supported by actual documentation – NO ESTIMATES • Forms can be found under Guidance Memo 11

44. Nonprofit Food Service Financial Report (NPFS) All Food Program Costs: • Actual Expenditures • Not Estimates • Support Documentation • Only report CACFP % • Shared costs • Amount net credits • Allowable and Approved • FNS 796-2 (rev.3) • CACFP Budget

45. Nonprofit Food Service Financial Report (NPFS) • CACFP revenue should be reported using the accrual method (as earned, not received). • Additional program income must be reported (e.g. interest income, rebates) • Additional non-program income must be reported • Total Costs less Program income = non-program income

46. Nonprofit Food Service Financial Reports (NPFS) Due Dates Sponsoring Organization • 1st Quarter • Reporting period: October 1 – December 31 • Due Date: March 1st • 2nd Quarter • Reporting period: January 1 – March 31 • Due Date: June 1st • 3rd Quarter • Reporting period: April 1 – June 30 • Due Date: September 1st • 4th Quarter • Reporting period: July 1 – September 30 • Due Date: December 1st PI-1463-A (front page)

47. CACFP Financial Reviews • State Agency (SA) • USDA • OIG

48. CACFP Financial Reviews • SA Reviews (DPI) • Announced (30 day notice) and Unannounced (Drop-in) • Items to have available: • Support documentation for NPFS for last and current FFY • ALL support documentation for food program costs pulled and ready for review • Bank statements/cancelled checks for food program funds • General Ledger, allocation plan, P/L reports • MUST BE ORGANIZED • Be able to show/explain your organization/accounting system • How do you pay your bills?

49. CACFP Financial Reviews • USDA Reviews • Monitoring SA as part of Management Evaluation • SA will work with agency on Corrective Action (if needed) • OIG (Office of Inspector General) Audits • “Report Card” on CACFP • Focus Audits and Data Gathering on key elements or red flags • Related party transactions (less than arms length) • Purchase of property and/or real estate • Excessive growth in short time-span • Contracted Services • Reports go to Washington DC (Congress) • http://www.usda.gov/oig/

50. EXERCISE: “The DPI Auditor”