Financial Grants Management, Reporting and Accountability

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Financial Grants Management, Reporting and
Accountability

• Anthony DeColli, Sr. Grants Specialist
• Corland Forrester, MBI Consulting

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Session Objectives
Understanding federal regulations
Preparing cash management reports
Learning the HHS Payment Management System
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6 Thinking Hats of Grant Financial Management
From Edward de Bono six thinking hats

• Auditor
• Accountant
• Bookkeeper
• Grants Officer
• Executive Director or Manager
• The Public Citizen

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Financial Records
Allowable Costs
Budget
Reports
Trial Balance
Tailoring the Budget
Program Authorized
FSR 269-A
Work Statements
Clarifying Objectives
OMB Circulars
Ledger
PSC 272
Reviewing the Budget
Journals
GMO Determined
Source Document
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Summary of Relevant OMB Circulars
http//www.whitehouse.gov/omb/grants/grants_circul
ars.html
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Allowable

• Conforms to any limitations or exclusions set
  forth in the OMB Cost Principle circulars or in
  the award as to types or amount of cost items.
• Is determined in accordance with generally
  accepted accounting principles (GAAP).

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Allocable

• A cost is allocable to a particular cost
  objective in a grant, contract, project, service,
  or other activity, in accordance with the
  relative benefits received.
• A cost is allocable to a Federal award if it is
  treated consistently with other costs incurred
  for the same purpose in similar circumstances.

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Reasonable

• A cost is reasonable if, in its nature or
  amount, it does not exceed that which would be
  incurred by a prudent person under the
  circumstances prevailing at the time the decision
  was made to incur the costs.

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Necessary

• The cost is of a type generally recognized as
  ordinary and necessary for the operation of the
  organization or the performance of the award.

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Consistent

• Is consistent with policies and procedures
  that apply uniformly to both federally-financed
  and other activities of the organization.

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Standards of Allowability

• Reasonable
• Allocable
• Authorized and legal
• Limits on costs
• Consistent Treatment

• Accounting Principles
• Not Double Charged
• Net of applicable credits
• Documented
• Cost Accounting Standards.

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Determining Allowability

• If the Item is in the approved budget and project
  description, then it is (Necessary)
• If the item has gone through the Procurement
  Decision-Making Process or meets the OMB
  standards then it is (Reasonable)
• If the item has links to the financial system and
  cost objective then it is (Allocable)
• Necessary Reasonable Allocable Allowable

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4 Causes of Questioned Costs

• Unallowable
• Undocumented
• Unreasonable
• Unapproved

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Timing and Use of Federal Funds
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HHS/PMS as a Disbursing Agent

• PMS was developed to create a central system that
  is capable of paying most Federal assistance
  grants, block grants, and contracts. The system
  serves as the fiscal intermediary between
  awarding agencies and the recipients of grants
  and some types of contracts, with particular
  emphasis on
• Expediting the flow of cash between the Federal
  government and recipients
• Transmitting recipient disbursement data back to
  the awarding agencies and
• Managing cash flow advances to grant recipients.

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Purpose of Cash Management

• Cash management is the stewardship or proper use
  of an entitys cash resources. It serves as the
  means to keep an organization functioning by
  making the best use of cash or liquid resources
  of the organization.

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The Function of Cash Management

• To eliminate idle cash balances. Every dollar
  held as cash rather than used to augment revenues
  or decrease expenditures represents a lost
  opportunity. Minimizing idle cash balances
  requires accurate information about expected
  receipts and likely disbursements.
• To deposit collections timely. Having funds
  in-hand is better than having accounts
  receivable. The cash is easier to convert
  immediately into value or goods. A receivable, an
  item to be converted in the future, often is
  subject to a transaction delay or a depreciation
  of value. Once funds are due, they should be
  converted to cash-in-hand immediately and
  deposited as soon as possible.
• To properly time disbursements. Some payments
  must be made on a specified date. For such
  payments, there is no cash management decision.
  For other payments, discretion in timing is
  possible.

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Timing of Draws

• Funds are intended to be available when needed.
• Draws should match timing of allowable
• program expenditures.
• Funds can be drawn as needed
• Example Payroll to cover salaries and allocable
  payroll taxes based on time charged to the
  Federally-funded program

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Grantee Responsibilities

• Execute grants.
• Maintain minimum federal cash on hand by
  requesting funds from the Payment Management
  System only for immediate disbursement.
• Report cash disbursements to the Payment
  Management System.
• Maintain accurate accounting records.

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Ease of Access Brings Responsibility
Be Careful

• Document each draw to show compliance with
  Federal regulations

Draw additional funds to overcome shortfalls
elsewhere in the organization
And Most Importantly
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Potential Problems

• Invalid Payment Due Date- The payment due date
  should be the next business day (unless you
  warehouse your payments) The payment date cannot
  be a banking holiday or a weekend.
• Potential Duplicate Payment Request After
  making the required system checks like the date,
  account number, payment due date etc PMS may
  suspect a duplicate payment if so, they will
  ask to verify.
• Insufficient Funds PMS checks to see if there
  is enough funds to cover your request if not,
  you will receive an error message.
• No Bank Account one or more sub-accounts
  selected does not have an associated bank account
  within PMS.
• Different Bank Account you will receive an
  error message if the sub-accounts involved with
  your payment request have different bank
  accounts.
• Agency Restrictions - The awarding agency puts
  a hold on disbursements due to non-compliance of
  regulations.

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PMS-272 Schedules

• PMS 272 an overview of the status of the
  account which contains data by PMS to the
  recipient.
• PMS 272-A shows the award authorization and
  prior cumulative disbursements reported against
  individual awards.
• PMS 272-B shows the detail of total cash
  accountability reflected in PMS and a
  reconciliation report where the recipient can
  report advance payment problems.

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PMS-272 Schedules (continued)

• PMS 272-C provides a mechanism for the
  recipient to report problems with PMS data and
  know action will be taken.
• PMS 272-E shows advances and cash
  accountability by major program.
• PMS 272-F lists authorizations that have been
  posted, but the starting date has not arrived
• PMS 272-G - Lists all awards posted that have
  become inactive.

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Monitoring Expenditure of Funds

• Report expenditure of the funds drawn each
  quarter on Form 272.
• Track expenditures during the life of a project
  on Form 272.
• Reflect total expenditures upon closeout.
• Support data in Form 272 within your accounting
  system.

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272 Reports

• The 272 should be submitted beginning with the
  ending of the first quarter in which funds are
  drawn down and for every quarter thereafter
  throughout the life of the grant.

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272 Timing

• The previous quarters data will remain online
  until the new data is uploaded at PMS.
• The electronically transmitted 272 is normally
  processed after the end of a quarter.
• After verification, the data is loaded into the
  272 server.

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272 Passwords

• The electronic 272 password is not the same as
  your PMS/Smartlink password.
• After three (3) incorrect tries, your password
  will be locked.
• You must call the DPM Account Liaison to have it
  unlocked.

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272 Certifications

• It is no longer necessary to send the entire
  report.
• Only the certification page is required.
• The certification page must have an original
  signature by the certifying officer.

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272 reports and Cash on Hand

• You are required to calculate your cash on hand
  balance PMS does not calculate it for you.
• You should be cognizant of your cash on hand
  balance prior to certifying your report.
• Entering you cash on hand end of period amount on
  line 5 will only be accepted if your report is
  balanced.
• The 272 report cannot be submitted out of balance.

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272 and notifications

• PMS broadcasts reminders and special
  announcements to PMS users via e-mail.
• Each quarter you will receive an e-mail alerting
  you that the PSC272 is available and the dates
  the reports are due.
• You must have a valid and active e-mail address.

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Financial Status Reports
Rules and Regulations
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Reporting Requirements

• Provisions
• Grantee shall submit semi-annual cumulative
  financial status report, summarizing expenditures
  during the reporting period in eGrants.
• Code of Federal Regulations
• 45 CFR 2543.52
• Requires recipients of federal funds to use the
  Form 269 or Form 269A to report the status of
  funds.

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Financial Status Reports

• Preparation
• Completion
• Submission

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Types of FSRs

• Interim FSR
• An Interim FSR is a financial report that covers
  a period within a longer budget period (i.e.,
  monthly, quarterly, or semi-annually).
• Annual FSR
• An Annual FSR is a financial report that
  typically covers a one-year period.
• Final FSR
• A Final FSR is a financial report prepared at
  closeout that covers the entire project period of
  the grant.

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Financial Status Reports - Definitions

• Financial Statements
• Written report of the financial condition of an
  entity.
• Financial Statements include balance sheets,
  Income Statements, Statements of changes in net
  worth, statement of cash flows.
• auditors issue opinions.

• Financial Reports
• Details financial data.
• Can also be an itemized accounting that shows how
  grant funds were used (categories of cost).
• reviewed by grantors for the financial progress
  of the grant.
• used as a monitoring tool.

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Cash Basis vs. Accrual Basis

• The main difference between accrual basis and
  cash basis accounting is the time at which income
  and expenses are recognized and recorded.
• The cash basis method generally recognizes
  income when cash is received and expenses when
  bills are paid.
• The accrual basis recognizes income when it is
  earned (the creation of assets such as accounts
  receivable) and expenses when they are incurred
  (the creation of liabilities such as accounts
  payable).

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Source Documents(Invoices, Checks, Receipts,
timesheets, etc..)

• Complete is all the information available?.
• Accurate is all the information presented
  correctly?
• Reliable can you depend on or verify through
  another source the validity of the document?

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Uses of the FSR by CNCS Staff

• Compliance requirement to monitor the financial
  progress of a grant.
• To confirm match requirements are met.
• As a tool for risk assessment.
• As a tool for reviewing renewal grants.

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FSR Time Frames

• Reporting Period - (The time frame the report
  covers)
• Budget Period - (Covers the budget time frame,
  usually a year)
• Project Period - (Covers the life cycle of the
  grant)

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What can go wrong with financial reporting?

• Default eGrants reporting dates are incorrect
  get this fixed immediately.
• Late reporting even with an extension, report
  is tracked as late submit and revise, if
  necessary.
• Paper SF 272 or 269 it will be returned.
• Incorrect information
• Indicating total unobligated funds as
  unliquidated obligations.
• Indicating cash when using accrual-based
  accounting system.
• Failing to report cumulative data.
• Illogical reporting
• Zero reported as unliquidated obligations.
• Total federal funds greater than amount awarded.
• Amounts reported do not reconcile with the
  amounts reported to the Payment Management System
  on the SF 272 (a/k/a, Federal Cash Transaction
  Report (FCTR) PMS 272 PSC 272).

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What about special situation information?

• Use the remarks block
• Identify report as preliminary, if applicable -
  provide projected date to amend report.
• Identify unusual numbers.
• High or low obligated amounts relative to time
  elapsed.
• High or low unliquidated obligations.
• Identify program income if generated.
• How much
• How was it applied
• Additive
• Deductive
• Matching

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Critical elements for financial reporting

• Timely Ensure all deadlines are met.
• Accurate Use accounting data that has been
  reviewed.
• Complete Reports should contain all pertinent
  information relating to reporting period.

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Major Processes for Preparing the Financial
Status Report

• Ensure proper documentation in the files to
  support all information reported in the FSR.
• All financial reports should be prepared with
  information that comes directly from the
  organizations accounting system.
• Conduct a review and reconciliation of the
  information to ensure accuracy prior to report
  submission.

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eGrants

• CNCS System for submission and tracking of grant
  applications, financial status reports, progress
  reports, etc.
• FSR reporting is completion of only 3 screens
• Identifying information
• Transaction entry
• Certification

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Reporting Expenses

• Before going into eGrants gather the correct
  information. Using a print out from your
  accounting system
• Get the total federal funds expended for the
  period
• Gather all matching funds information
• Calculate unliquidated obligations

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Reporting Volunteer Hours

• Volunteer hours should be reported on a
  cumulative basis over the Budget year (the one
  year period) not the project period (the three
  year period)
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• For example
• Year 1
• 1st FSR Jan Jun 21,028
• 2nd FSR July- Dec (21,028 18,972) 40,000
• Year 2  3  beginning balance should be zero
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Questions

• Electronic copies of this material can be found
  at The Resource Center
• http//nationalserviceresources.org/
• Search for Financial Accountability Seminar

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!! PARTICIPANT NOTICES !!

• CERTIFICATES FOR TRAINING All participants who
  attend and complete three or more sessions of the
  Financial Accountability Seminars can pick up a
  certificate of participation Sunday afternoon,
  Monday or Tuesday morning.
• CFO OIG OGM SUNDAY CLOSING PLENARY Please
  attend the Plenary Session Sunday 315 Salon
  G with Jerry Bridges, Carol Bates and Peg
  Rosenberry to hear about OIG audit plans, address
  issues that arose during the day and learn about
  upcoming changes in grants policy.
• RESOURCE TABLE Please take advantage of this
  opportunity to meet with and discuss your
  questions and concerns with our experts who
  include presenters and a special guest from the
  Division of Payment Management at HHS.