Financial Management: Cash Management

1. Financial Management: Cash Management

2. Cash Management: Overview • Budget Process • Funds Requests • Internal Procedures • Drawing Down Funds from MDE • Final Expenditure Reports

3. Cash Management: Regulations • OMB Circular A-87, Cost Principles for State, Local and Tribal Governments • OMB Circular A-133, Compliance Supplement. (March 2008) • EDGAR, Sub Part C, §76.707: When Obligations are made. • EDGAR, Sub Part C, §80.21: Payment

4. Cash Management:Definitions and Terms • Cash Management System: • MDE system that manages the cash disbursement of federal and state pass-through grants • EDGAR: • Education Department General Administrative Regulations. Regulations that contain important administrative requirements that apply to federal education funds

5. Cash Management: Definitions and Terms • Final Expenditure Reports (FERs): FERs close projects by reporting that funds have been expended and are in compliance with the aproved budget. This report is due as soon as the LEA has spent project funds, but no later than 60 days after the termination of the project. 

6. Cash Management: Definitions and Terms • OMB-Circular A-87: Cost Principles for State, Local, and Indian Tribal Governments. Source of the basic threshold standards that must be present for a cost to be payable with federal funds

7. Cash Management: Definitions and Terms • ReimbursementThe preferred method of payment for federal grant expenses

8. Cash Management: Content • LEAs records agree with MDE approved budget • Funds Requests • Funds are requested on a regular basis

9. Funds Deposit • All funds are deposited promptly • The person performing the cash receipts function: • Does not sign checks • Does not reconcile bank accounts or maintain non-cash accounting records

10. Bank Reconciliation • Bank statements are received directly (and unopened) by the person responsible for bank reconciliation • Bank statements are reconciled at least monthly • Paid checks are examines for date, name, cancellation, and endorsements

11. Handling of Vouchers (and Grant Alignment) • Vouchers are identified by grant, number, date, and expense classification • Checks include supportive documentation when being submitted for signature • Supportive documents are canceled to prevent reuse

12. Handling of Vouchers (and Grant Alignment) • Invoices or vouchers are approved in advance by authorized officials. • Voided checks are properly canceled and retained • Blank checks are secured

13. Cash Payable Policy/Practice • Drawing cash payable to “cash” or “bearer” is prohibited • There are established procedures that prevent checks from being issued on an oral authority • Employees are prohibited from having custody of any unrecorded cash or negotiable instruments of the LEA

14. Program Income • LEA has written policies and procedures on the receipt and obligation/ expenditure of program income • The policies and procedures assure that program income is obligated properly, and during the required period • Two different people are assigned the responsibility for the receipt and obligation of program income funds

15. Final Expenditure Reporting • FERS are filed on time • FERS should equal the cumulative total of the funds requested • FERS for less than approved amounts will result in recovery of excess funds

16. Budget Process • The LEA operating budget reflects sufficient non-federal funds to match the federal funds during the grant period, if required by the grant • The responsibility for budget preparation is defined at all organizational levels

17. Budget Process • The LEA has an operating budget for each of its grants • Line item costs for the grant award are consistent with the MDE approved budget for the grant

18. Budget Process • The LEA does not exceed the grant established threshold for moving expenditures between functions • All expenditures recorded in a function were approved by the MDE program office

19. Assets • The LEA has written procedures and controls in place to protect assets acquired with grant funds

20. LEA Match • If the federal grant requires local match, the LEA operating budget reflects sufficient non-federal funds to match the federal funds during the grant period for the fiscal years under review

21. Inventory Procedure • All equipment purchased with grant funds is properly tagged and inventoried • Equipment records are maintained • A physical inventory is taken at least annually and reconciled with the equipment records

22. Inventory Procedure • The LEA has adequate maintenance procedures that keep the equipment in good condition • An inventory control system exists that protects against loss, damage, or theft of equipment and required investigation of such

23. Disposition of Equipment • The LEA has procedures for the disposition of equipment • Equipment that is purchased with grant funds shall be disposed of according to federal criteria

24. Cash Management:Critical Elements • Funds Deposit • Bank Reconciliation • Vouchers • Cash Payable Policies/Procedures • Program Income • Final Expenditure Reporting

25. Cash Management:Critical Elements • Budget Process • Assets • LEA Match • Inventory Procedure • Disposition of Equipment

26. Cash Management: FAQs • What day(s) of the week are grant payments processed? Tuesday and Thursday • Food & Nutrition Services/Fiscal Reporting System payments are processed on what day(s) ? Wednesday

27. Cash Management: FAQs • When will my payment arrive? Electronic Fund Transfers (EFTs) within two to three days; Paper warrants within three to five days

28. Cash Management: FAQs • I saved my request for funds and have not received the money The recipient must also certify final expenditures for payment to be processed • I am not able to access the CMS The certifier for a recipient must complete a CMS Security Access form and fax to MDE

29. Cash Management: FAQs • What are the steps for certifying a Final Expenditure Report? You must save, post, and certify your final report • Where do I find what a payment is for? Go to Viewing Data, then to Payment Ledger, and enter your requested date in the Disbursement Date field. Select the date and this will display payment details

30. Cash Management: Other Resources • CMS Training • Deputy Superintendent Memoranda • NEW MDE Cash Management System (September 13,2006 • Required Change in Federal Cash Advance Procedures May 29, 2007) • Three-Day Cash Advance (Oct. 21, 2008)

31. Cash Management: Other Resources • MDE Federal Fiscal Review, Local Education (LEA) Review Tool

32. Cash Management: For More Information Contacts: • CMS: Debbie Roberts, MDE robertsd4@michigan.gov • MDE: Specific Program Office • ISD:

33. Resources

34. Resources All resources identified in this Professional Development module are available on: Michigan LearnPort www.learnport.org Collaboration Center Community Room LEA Financial Management Resources

35. Committee Membership

36. MDE/MAISA Monitoring and Compliance Committee • Becky Rocho, Calhoun ISD, (269) 781-5141 rochob@calhounisd.org • Patty Cantú, MDE, Office of Career and Technical Education, (517) 373-3373 cantup@michigan.gov • Mary Ann Chartrand, MDE, Grants Coordination and School Support, (517) 373-8862 chartrandm@michigan.gov • Terri Lynn Giannola, MDE, Office of Career and Technical Education, (517) 373-4670 giannolat@michigan.gov

37. Cash Management Subcommittee • Stan Kogut – ISD Chair Ingham ISD (517) 244-1214; skogut@inghamisd.org • Louis Burgess – MDE Co-Chair MDE – Grants Coordination and School Support (517) 335-3672; burgessl@michigan.gov • Craig Thurman - MDE Co-Chair MDE – Financial Management (517) 373-2810; thurmanc@michigan.gov • Tom Armstrong Wexford-Missaukee ISD (231) 876-2312; tarmstrong@wmisd.org