(#14) intersection of fiscal and program requirements
TRANSCRIPT
1
2
Intersection of Fiscal and Program Requirements
Larry FanningSchool Finance Specialist II
STATE OF ALASKA Department of Education &
Early Development [email protected]
3
Five Important Things to Know
1. Where to find Federal Education Grants Management Requirements.
2. What Conditions Must be Met by the LEA’s?
3. Costs.4. Contract Administration. 5. Internal Controls.
4
Where are the Federal Education Grants
Management Requirements? Program Rules: www.ed.gov
Statutes Regulations Guidance Letters Monitoring Reports
5
Governing Legal AuthoritiesFederal Law
Statutes -Programmatic & Administrative Programmatic (www.ed.gov)
NCLB Perkins
Administrative (General Cross-Cutting) Single Audit Act General Education Provisions Act (GEPA) straylight.law.cornell.edu/uscode/html/uscode20/usc_sup_01_20.ht
m
6
Regulations Code of Federal Regulations (CFR)
Education Dept Gen Admin Regs (EDGAR) Important Administrative Requirements that
apply to federal education fundswww.ed.gov/policy/fund/reg/edgarReg/edgar.html
OMB Circulars Uniform Administrative Requirements Cost Principles Audit Requirementshttp://www.whitehouse.gov/omb/circulars/index.html
7
What OMB Circulars Apply States, Local Governments, and Indian
Tribes A-87 Cost Principles (2 CFR Part 225)
http://www.whitehouse.gov/omb/fedreg/2005/083105_a87.pdf
A-102 Administrative Requirementshttp://www.whitehouse.gov/omb/circulars/a102/a102.html
A-133 Audits of State and Local Governmentshttp://www.whitehouse.gov/omb/circulars/a133/a133.html
Audit Tip: Grantees must comply with the cost principles in appropriate OMB Circular
8
Federal Education Grants Management Requirements
EDGAR Financial Management = 80.20 Equipment = 80.32 Procurement= 80.36
Important points For state-administrated programs, SEA’s and
LEAs must follow own laws and procedures For direct programs, EDGAR thresholds apply
to LEA’s
9
State-administered programs EDGAR 76 Subpart G “What are the Administrative Responsibilities
of the Subgrantees”-highlights: Compliance with statutes, regulations, state
plan, and applications 76.600 Subgrantee shall directly administer or
supervise the administration of each project 76.701
Fiscal control and fund accounting procedures that insure proper disbursement of and accounting of federal funds 76.702
10
Lifecycle concept: Budgeting and Expenditure
Application/budgets reviewed. After approval, funds are awarded.
Funds expended. Monitoring consistent with program, fiscal and admin requirements.
Application is submitted, funds budgeted consistent with program, fiscal and admin requirements
Budget and programmatic changes are approved
11
Lifecycle concept (cont’d) Changes
Budget Changes 10%
Program Changes Changes in scope or object Change in key personnel Contract with 3rd party to administrator program
Funds expended Consistent with rules (A-87, program rules, cash
management, procurement, inventory rules) Consistent with budget ( as internal control)
Monitoring/enforcement to ensure proper EXPENDITURE
12
State-administered programs EDGAR 76 Subpart G
When obligations are made EDGAR 76.707
13
(a) Acquisition of real or personal Property
(b) Personal services by and employee of state or subgrantee
(c) Personal services by a contractor who is not an employee of state or subgrantee
(d) Performance of work other than personal services
(e) Public utility
services (f) Travel (g) Rental of real or
personal property (h) A preagreement
cost that was properly approved by the State under the cost principles identified in CFR 74.171 and 80.22
(a) On the date on which the subgrantee makes a binding commitment to acquire the property
(b) When the services are
performed
(c) On the date on which the subgrantee makes a binding commitment to acquire the services
(d) On the date on which the
subgrantee makes a binding commitment to acquire the work
(e) When the subgrantee receives the service
(f) When travel is taken (g) When the subgrantee uses
the property
The obligation is made------- If obligation is for------------
EDGAR 76.707
14
State-administered programs EDGAR 76 Subpart G (cont)
When subgrantees may begin to obligate funds 76.708 (a)(2) “The date that the applicant
submits its application to the state in substantially approvable form.”
15
State-administered programs EDGAR 76 Subpart G Records 76.730
A subgrantee shall keep records that fully show:
The amounts of funds under the grant or subgrant
How the subgrantee uses the funds The total cost of the project The share of the cost provided form other
sources; and Other records to facilitate an effective
audit
16
Is it equipment?
Section 80.3 EDGAR Definitions.Equipment means tangible, non expendable,
personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
A grantee may use its own definition of equipment provided that such a definition would at least include all equipment defined above.
17
Fleshing out Equipment Equipment is defined as the organization’s
“capitalization policy,” or $5,000 whichever is less.
Capitalization means at what point an item is depreciated based on the useful life of the asset, versus being expensed at the time of acquisition.
Non-capital expenditures become classified as supplies or some object of expenditure other than equipment
Not the $5,000 prior approval threshold for federal funds
Ted Mueller, Director Indirect Cost Group, Office of Chief Financial Officer USDOE
EDGAR 80.32 Equipment (d) 18
Fleshing out Equipment Inventory
Property records must be maintained that include:
Description Serial number Who holds title ( who is it assigned to) Acquisition date Cost Percentage of Federal participation Ultimate disposition data
Physical inventory at least every two years
19
Fleshing out Equipment
District assigns computer to school, school assigns computer to teacher, teacher transfers, computer reassigned
Almost akin to evidence, the trail of equipment has to be documented
20
What About Supplies? Supplies are what equipment is not. Is inventory required?
Can you prove the supply was: Reasonable and Necessary Allocable Allowable Legal
Can you prove use is consistent with funding source?
If monitored/audited can you locate the supply? It’s not the pencils, but the big ticket items
i.e. computers, bookshelves
21
Helpful Questions to Ask When Analyzing Costs Is the proposed cost consistent with
federal cost principles? Is the proposed cost allowable under
the relevant program? Is the proposed cost consistent with an
approved program plan and budget? Is the proposed cost consistent with
program specific fiscal rules? Is the proposed cost consistent with
EDGAR?
22
Helpful Questions to Ask When Analyzing Costs (cont)
Is the cost consistent with special conditions imposed on the grant?
If the news printed a story on the cost, how would you feel?
A-87, ATTACHMENT A, (C) 23
Basics-General Principles of Determining Costs
Costs Must Be: Necessary and Reasonable Allowable Allocable Legal
A-87, ATTACHMENT A, (C) 24
NECESSARY & REASONABLE COSTS Basics
• Must be necessary for the performance or administration of the grant
• Must follow sound business practices Arms length (hint: procurement process) Follow federal, state, and local laws Follow terms of grant award
Fair Market Prices Act with prudence under the circumstances No significant deviation from established
prices
A-87, ATTACHMENT A, (C) 25
BasicsNECESSARY & REASONABLE
(cont)
Practical aspects of “Necessary” Do I really need this
Surplus property/existing resources Is this the minimum amount I need to
spend to meet my need?
A-87, ATTACHMENT A, (C) 26
BasicsNECESSARY & REASONABLE
(cont)
Practical Aspects of “Reasonable” Is the expense targeted to valid
programmatic/administrative considerations?
Do I have the capacity to use what I am purchasing?
Did I pay a fair rate? Can I prove It? If I were asked to defend this purchase,
would I be comfortable? (If media ran story would I be embarrassed?)
A-87, ATTACHMENT A, (C) 27
BasicsALLOCABLE
Can only charge in proportion to the value received by the program.
Example: LEA purchases a computer to use 50% in the Title IV program and 50% in a state program-can only charge 50% to Title IV
A-87, ATTACHMENT A, (C) 28
BasicsAllocable (cont.)
Adequately Documented Amount of funds under grant How the funds are used Total cost of the project Share of costs provided by other sources Records show compliance Records show performance Other records to facilitate and effective
audit
29
BasicsAllocable (cont.)
Practical Aspects Can I prove the program benefited?
Can I prove other programs are not benefiting?
Ensuring only authorized use Is a provision for incidental benefit
30
BasicsPROGRAM ALLOWABLITY
In general two types of programs Specific rules regarding allowable costs
Title V Part A has 27 allowable uses by LEA’s
Flexible program- general criteria Title IA,
Eligible Students Purposes of the program
31
BasicsPROGRAM ALLOWABLITY
Prior Approval Prior approval is required for:
Budget changes 10% allowance in account, not grant award
amount Programmatic changes:
Change in scope of objective Change in key personnel Contract with 3rd party for administration
32
BasicsSupplement not Supplant
Can not use federal funds to pay for services, staff, programs, or materials that would have otherwise be paid with state or local funds
Designed to assure federal funds are paying for something “extra”
33
BasicsExamples of Allowable Cost
Controls Budget Controls
Strong pre-award planning Communication between fiscal and
program staff Routine reconciliation to actual
expenditures
34
BasicsExamples of Allowable Cost
Controls
Integrated financial management system Inventory Procurement Grants Accounting
35
ContractsSupported by Federal Funds All contracts supported by federal funds
must contain required provisions: Remedies for breach, sanctions, penalties Termination for cause and convience Compliance with federal statutes and executive
orders Reporting requirements Patent rights Copyrights Access by federal agency, Comptroller General
of US to records contractor Retention of records for 3 years after final
payment
36
ContractsSupported by Federal Funds
As a practical matter ( recent Focus by ED) Must have written contracts (purchase orders ok) Contract should include clearly defined
deliverables Description of services to be performed or goods
delivered Description of dates when services will be performed or
goods delivered Description of locations where services will be
performed or goods delivered Description of number of students/teachers/etc. to be
served (if applicable)
37
ContractsSupported by Federal
Funds
As a practical matter (cont) Through performance-based monitoring.
ED/SEA’s increasing likely to determine if contracting expenditure is “worthwhile”
Make sure to retain documents that demonstrate a contract was programmatically permissible and necessary, reasonable, allocable, and legal (and other applicable documents)
38
ContractsSupported by Federal Funds As a practical matter (cont)
Must have a written invoice Description of services performed Description of daters services were performed or
goods delivered Description of location services were performed
or goods delivered Description of students/teachers/etc. served (if
applicable) Invoice should be reviewed & approved
before payment Segregation of duties Documented approvals
39
General Principles of Control In general, must
implement controls over federal funds
ED looks to “systems,” not individuals, to ensure funds are spent appropriately
40
Five Important Things to Remember
1. Where to find Federal Education Grants Management Requirements.
2. What Conditions Must be Met by the LEA’s?
3. Costs.4. Contract Administration.5. Control Principles