Financial Management Rules and Regulations

1. Financial Management Rules and Regulations John Isaacson, Chief Grants Processing Branch California Emergency Management Agency (916) 845-8644 John.Isaacson@calema.ca.gov

2. The objective of this presentation is to help you understand… • What the Federal rules and regulations are, and how to remain in compliance with them; • What you can expect Cal EMA staff to review during a site/monitoring visit; and • How you can assist in that process. Always know that we are here to help your organization maintain compliance, and with proper preparation you can help eliminate problems.

3. Topics of Discussion • Advance of Funds • Procurements • Sole Source Requests • Source Documentation • Records Retention • Federal Transparency Act of 2006 • Avoiding Pitfalls (findings)

4. Advance of Funds Sub-grantees may request a cash advance if the funds will be: • Expended within 120 days of receipt (PSIC is 30 days). • Deposited in an interest-bearing account, and the interest earned must be tracked. • Unexpended funds must be returned to Cal EMA. • Interest earned over $100/year must be returned to Cal EMA on a quarterly basis. CFR Title 44, Section 13.21 (c) and OMB Circular A-133 Compliance Supplement, Part 4, Section III (c).

5. Procurements Sub-grantees must have written policies and procedures for the procurement of goods and services to be followed and measured in accordance with applicable Federal Rules and Regulations. CFR Title 44, Section 13.36 • (follow most restrictive policy)

6. Procurement Methods • Small Purchase; • Formal Advertising / Sealed Bid; • Competitive Proposals; and • Noncompetitive Proposals.

7. Small Purchases • A simple and informal method for purchasing supplies, services or other goods that cost less than $100,000. • Price or rate quotations must be obtained from an adequate number of qualified sources. CFR Title 44, Section 13.36 (d)(1) • (document a minimum of two quotes)

8. Formal Ad / Sealed Bids • Invitation for Bids (IFB’s) are publicly advertised and a firm-fix-priced contract (lump sum or unit price) is awarded to the lowest, responsible bidder. CFR Title 44, Section 13.36 (d)(2) • (document a minimum of two bids)

9. Competitive Proposals • Request for Proposals (RFP’s) are publicly advertised and identify all evaluation factors and importance. • Proposals solicited from and adequate number of qualified sources. • Awards made to responsible firm whose proposal is most advantageous. CFR Title 44, Section 13.36 (d)(3)

10. Noncompetitive Proposals • Solicitation from only one source, or competition deemed to be inadequate (Sole Source Procurement). • Only allowed when the award of a contract is infeasible under the Small Purchase, IFB, or RFP process. • Requires prior approval from Cal EMA. CFR Title 44, Section 13.36 (d)(4)

11. Sole Source Procurement • Explain why the item or service is only available from one source. • Describe how a public exigency or emergency will not permit a delay resulting from a competitive solicitation. • Describe the solicitation process that resulted in inadequate competition. • Provide your cost analysis that determined costs are reasonable.

12. Source Documentation • Accounting records must be supported by such source documentation as cancelled checks, paid bills, payroll records, signed time and attendance sheets, purchase orders, invoices, delivery receipts, contract and sub-grant award documents, etc. CFR Title 44, Section 13.20 (b)(6)

13. Source Documentation (cont.) • Sub-grantees may be required to provide copies of source documents prior to receiving a reimbursement from Cal EMA. • (highlight the total cost) • (show your calculations) • (attach an excel spreadsheet)

14. Records Retention • All supporting documentation pertaining to the administrative, programmatic and financial management of the grant must be retained for at least THREE YEARS following: 1. Cal EMA’s letter closing out the Federal/State Grant Award, and 2. subgrantee’s resolution of any monitoring or audit findings. CFR Title 44, Section 13.42 (c)

15. Records Retention (cont.) Sub-grantees must maintain sufficient records to detail the significant history of a procurement. These records must include, but are not limited to: • Procurement method rationale; • Selection of contract type; • Contractor selection or rejection; • Proof of debarment verification; and • Basis for the contract price. CFR Title 44, Section 13.36 (b)(9)

16. Common Guides, Bulletins, Laws & Regulations • Individual Federal and State Grant Guides and Public Laws http://www.dhs.gov/xfrstresp/standards, http://www.dhs.gov/xopnbiz/grants/ and http://www.calema.ca.gov/ • Information Bulletins - http://www.ojp.usdoj.gov/odp/docs/bulletins.htm • Grant Management Memos - http://www.calema.ca.gov/grants.html • California State Strategy - http://www.calema.ca.gov/pdf/2007_state_strategy.pdf • Homeland Security Presidential Directives - http://www.dhs.gov/xabout/laws/editorial_0607.shtm

17. OMB Circulars & Relocation • Administrative Requirements: • A-102: Grants & Cooperative Agreements w/State & Local Governments • A-110: Grants & Other Agreements with Institutions of Higher Education, Hospitals, & other Non-Profit Organizations [Relocated to 2 CFR, Part 215] • Costs Principles: • A-21: Educational Institutions [Relocated to 2 CFR, Part 220] • A-87: State, Local and Tribal Governments [Relocated to 2 CFR, Part 225] • A-122: Non-Profit Organizations [Relocated to 2 CFR, Part 230] • …and Contracts with Hospitals 45 CFR, Part 74 (Appx E)

18. OMB Circulars & Relocation - Cont Audit Requirements: • A-133: Audits of States, Local Governments and Non-Profit Organizations [Revised June 26, 2007 and Updated Compliance Supplement Part 4: DHS UASI & HS Clusters #97.008 (03/07) Additions: • A-123: Management’s Responsibility for Internal Control (Effective FY 2006) • OMB Guidance for Government wide Debarment & Suspension (Non-procurement)[Revised and issued under 2 CFR, Part 180] • OMB Circulars can be accessed at:http://www.whitehouse.gov/omb/circulars

19. Code of Federal Regulations • Title 2: Grants and Agreements [includes Relocated OMB Circulars] • Title 44: FEMA/DHS Rules and Regulations • Title 45: Appendix E Applicable to Research and Development Under Grants and Contracts With Hospitals CFR’s can be accessed at: http://www.gpoaccess.gov/cfr/index.html

20. Which Regulations Apply?

21. Federal Funds Accountability and Transparency Act • The primary goal of the “Transparency Act” is to increase transparency and improve the public’s access to information on federal spending. • Awards of +$25K after 10/01/2010, must be listed on the OMB web site. PL 110-252, Section 6202 (a)

22. FFATA (continued) Information to be reported to the OMB web site: • Name of grantee, or subgrantee, or subrecipient • Amount of federal award • Name of federal funding agency • CFDA Program Number • Award title (descriptive of the purpose of the funds) • Primary location of performance (city, state, and Cong. Dist.) • DUNS Number • Total compensation and names of top five executives*

23. FFATA (continued) *Report total compensation and names of top five executives if: • +80% annual gross revenues from Federal awards/contracts; and • +$25,000,000 in annual gross revenues from Federal awards; and • Executive compensation information not already available to the public through reporting to the SEC (Corporation) or IRS (NPO) FFATA information to be entered into OMB website (www.fsrs.gov) within 30 days after the end of the month in which the funds were obligated.

24. Clear Audit Trail - Reconciliation Equipment Item • Allowable/Applicable item • Seek Cal EMA authorization • Procure item w/proper coding • Receive item/inventory • Pay off Invoice • Seek Reimbursement from Cal EMA • Record Inventory of Property • Authorization • from Cal EMA 2. Procurement Process 3. Records/ Reporting

25. Subgrantee Monitoring & Oversight Subgrantees are responsible for monitoring all subrecipients, consultants, and contractors that benefits from Cal EMA grant funds. This scope includes, but is not limited to the follow areas of program administration: • M & A • OT/Backfill • Procurement • Equipment & Property Management • Compliance with A-133 monitoring

26. Common Findings Costs may become questionable if: • Unallowable, unnecessary or unreasonable • Improper debarment and suspension inclusion recording • They are for improperly procured acquisitions • Noncompliance with procurement standards • They are not supported by source documentation • Failure to obtain prior (Sole Source / EHP) approvals

27. Learning to Navigate • Contact program staff regularly to go over project costs, and to identify and prepare all required documents • Retention of Records • Amendments (Modifications) to Contracts • Advertisement • Three years after Cal EMA closeout / audit resolution • Know the specific program requirements • Know the Federal, State & Local do’s and don’ts • Follow the most restrictive policy • Read previous SV/Monitoring Reports • Document, document, and document