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U.S. Department of Housing and Urban Development

NSP Administrative Requirements

AAccountiing, RRecordk dkeepiingand Monitoring

June 17 2010June 17, 2010

U.S. Department of Housing and Urban Development • Community Planning and Development 1

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Welcome!

• Webinar Information

– All callers will be muted.

– To ask a question, click on the hand button and you will be recognized at the appropriate time We willwill be recognized at the appropriate time. We will allow for questions after each section and at the end of the session.

– We are not taking Chat questions.

– If you are only listening to the Audio portion of the If you are only listening to the Audio portion of the Webinar, you may email your question to [email protected].


mailto:[email protected]

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Speakers Today

Dionne Roberts Training & Development Associates, Inc.

William Woodring Training & Development Associates, Inc.

Paul Webster HUD


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This Session Covers

• Fi i l M t & A tiFinancial Management & Accounting

• Recordkeeping

• Monitoring


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NSP & Procurement



Financial Management& Accounting


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First the Context • All recipients of Federal grants must follow “UniformAll recipients of Federal grants must follow Uniform

Administrative Requirements”

– They set common rules or standards for running programs

– Issued in OMB Circulars and HUD regulations Issued in OMB Circulars and HUD regulations

• In addition, grantees must follow other OMB Circulars


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Applicability

Area of Program Management

State and Local Governments

Not-for-Profits

Uniform Administrative RequirementsRequirements

OMB Circular A-102

24 CFR Part 85

OMB Circular A-110

24 CFR Part 84

Cost Principles OMB Circular A-87

(2 CFR Part 225)

OMB Circular A-122

(2 CFR Part 230)


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Guidance on Financial Management

• Establish minimum standards for managing grants

– Control and account for funds, property, other assets (internal controls)

– Identify source and use of all Federal fundsIdentify source and use of all Federal funds (accounting system)

– Allow accurate, timely and complete financial reporting (budgets and reports)

– Minimize time in transfer of funds between Minimize time in transfer of funds between Federal government and grantee (cashmanagement)


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Internal Controls

• Combination of polices, procedures, job responsibilities, personnel and records that create accountability

• Ensures funds are used and managed properly


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Accounting System • Syystem of trackingg sources and uses of funds

or “fund accounting” -- method that groups resources into funds

• Ensures that program costs are

– Incurred for proper periodIncurred for proper period

– Actually paid

– Expended on eligible items

– Expended from appropriate grant

– Approved by appropriate officials


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Accounting System (cont’d)

• Accounting system should include

– Chart of accounts

– Cash receipts journal

C h di b j – Cash disbursementts journal

– Payroll journal

– General ledger

l


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Example: Fund Accounting

CDBG HOME NSP General

Fund Fees Total

Revenue –Grants

–Appropriations

–Collections

Total Revenue

Expenses –Projects/Activities

–Administration

Total Expensesp

Excess Revenue

12U.S. Department of Housing and Urban Development • Community Planning and Development

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Budgets

• Records that compare and control expenditures

– Keep records on budgeted amounts

– Compare obligations and expenditures to planned budgets and accomplishmentsplanned budgets and accomplishments

– Report deviations from budgets and plan

• Ensures that grantee performs and is held accountable for results


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OMB Cost Principles • Cost pprincipples referenced in Financial

Management Standards

• Three components further explained in two separate OMB Circulars

– Cost allowabilityCost allowability

– Cost reasonableness

– Cost allocation


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Determining Costs • Costs are onlyy eliggible if theyy

– Are associated with an eligible client

– Pay for eligible activities

– Are delineated in grantee application

– Have adequate source documentation

– Meet OMB standards for being

• Allowable

R bl • Reasonable

• Allocable


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Cost Allowability

• In general, cost must be

– Necessary and reasonable

– Allocable to program

– AAuthth oriizedd or nott prohibithibitedd

– Conform to rules and requirements

– Not charged to any other program


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Cost Allowability (cont’d) • Refer to list of allowed costs in OMB Circular

– Discusses what’s allowed and what’s not allowed

– Specifies circumstances

Off l– Offers examples

• For grantees, 43 selected items of cost


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Cost Reasonableness

• Costs charged to Federal award must be necessary, reasonable and directly related to the grant

• Look at following

– Whether cost is ordinary and necessary

– Market prices for comparable goods and services

– Benefit to individuals involved Benefit to individuals involved

• Significant deviations from established practices of grantee may present “unreasonable” cost


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Cost Allocation • A cost is allocable to HUD program ifp g

– Treated consistently with other similar costs

– Incurred specifically for program

– Benefits program or can be distributed b d bl ti based on a reasonable proportion

– Necessary to operations


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Direct and Indirect Costs

• Direct costs can be identified with specific program or activity

• Indirect costs are incurred for common/joint purpose benefiting more than one program or activity

– Administrative salaries

– Accounting expenses

– Facility maintenance Facility maintenance


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Recordkeeping


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Time Requirements

• Documents have to be kept for 3 years from the date of submission of final expenditure report

– Financial records

– Supporting documentsSupporting documents

– Statistical records

– All other records pertinent to an award


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Exceptions to 3-year Rule

• If any litigation, claim, or audit is started before the expiration of the 3-year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved and final action takenresolved and final action taken.

• Records for real property and equipment acquired with Federal funds shall be retained for 3 years after final disposition.

• I di t t t l d t ll Indirect cost rate proposals and cost allocatiti on plans have separate requirements


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Monitoring


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Why Monitor?

• HUD reviews (monitors) grantees

– Annual review

– Issues with subrecipients and other entities will result in concerns or findings for granteewill result in concerns or findings for grantee

– If problems not resolved, sanctions may be imposed


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Grantee Responsibilities

• Grantees responsible for ensuring that subrecipients and other entities

– Comply with all applicable requirements

– Achieve their objectives within schedule andAchieve their objectives within schedule and budget

• Monitoring should offer ongoing support and assistance (TA)


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Monitoring Visit (cont’d)

• Step 1 Preparation

– Prepare for visit by brushing up on rules and reviewing materials (agreements, reports, audits)

• Step 2 Conducting visitStep 2 Conducting visit

– Send notice of date, scope and focus of review

– Hold entrance conference with chief official

– Document, gather and analyze information (use checklists and make notes)

– Hold exit conference to report results, hear reaction and form conclusions


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Monitoring Visit (cont’d)

• Step 3 Follow-up

– Send letter that both praises and raises finding/concerns

– Set deadlines for response or actionSet deadlines for response or action


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tion

Key Documents for Monitoring

• Regulations and notices

• Written agreement

• Forms/checklists

• SSubbrecipiientts andd other entititities iinfformai th

• Project files

• Payment requests/vouchers

• Past monitoring files Past monitoring files


ti

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HUD’s Monitoring Handbook • HUD’s Monitoringg Handbook,, Chappter 8 covers

NSP topics

• Offer best guidance for documenting compliance

– Grantees

S b i i t d th titi– Subrecipients and other entities

http://www.hud.gov/offices/cpd/library/monitoring/handbook.cfm


http://www.hud.gov/offices/cpd/library/monitoring

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Contents

ECONOMIC RECOVERY PROGRAMS

•CHAPTER 8 8-1 APPLICABILITY •8-2 REVIEW OBJECTIVES •8-3 MONITORING THE HOMELESSNESS PREVENTION AND RAPID RE-HOUSING PROGRAM (HPRP) •8-4 MONITORING THE NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP-1)•8 4 MONITORING THE NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP 1) •8-5 MONITORING THE NEIGHBORHOOD STABILIZATION PROGRAM 2 (NSP-2) •8-6 MONITORING THE COMMUNITY DEVELOPMENT BLOCK GRANT RECOVERY PROGRAM (CDBG-R)

31U.S. Department of Housing and Urban Development • Community Planning and Development

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Contents (cont’d)

EXHIBIT 8-10 Guide for Review of NSP-1 Program Progress

EXHIBIT 8-11 Guide for Review of NSP-1 National Objective of Benefit to Low-, Moderate-, and Middle-Income Persons

EXHIBIT 8-12 Guide for Review of NSP-1 Cooperative Agreements

EXHIBIT 8-13 Guide for Review of NSP-1 State Requirements

EXHIBIT 8-14 Guide for Review of NSP-1 Continued Affordability

EXHIBIT 8-15 Guide for Review of NSP-1 Eligible Use C: Establish Land Banks

EXHIBIT 8-16 Guide for Review of NSP-1 Fair Housing and Equal Opportunity Requirements

EXHIBIT 8-17 Guide for Review of NSP-2 Program Progress


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How to Use the Guide

• As monitor, complete during review

– Check-off items when evidence provided by subrecipients and other entities

• When being monitored When being monitored, use to prepareuse to prepare

– Self-check presence of file documentation

If a monitor can’t check “Yes” next to rule citation, it is a finding of non-compliance


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Corrective Actions

• 3 increasingly serious levels

• Low-level

– Identify problem and corrective action

Pl t t ith t / it i– Plan strategy with more reports/monitoring

• Moderate-level

– Restrict payments

– Disallow expenses or require repayment Disallow expenses or require repayment

– Impose probation


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Corrective Actions

• High-level

– Suspend organization

– Do not renew

– TTermiinatte acti tivitit y

– Initiate legal action


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Results

• End result of monitoring should foster

– Production/accountability

– Compliance with requirements

– RResponsiiveness tto communit ity needds

– Effective use of resources

– Good organizational performance


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