PROTOCOLS FOR AUDITING OF GRANTS Howard Barber, CPA, MCPPO School Business Administrator Greenfield...

PROTOCOLS FOR AUDITING OF

GRANTS

Howard Barber, CPA, MCPPO

School Business Administrator

Greenfield Public Schools

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GRANT MANAGEMENT

RULES

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LEGAL STRUCTURE OF FEDERAL PROGRAMS

Statutes Program statutes (NCLB, IDEA, Perkins) General Education Provisions Act (GEPA)

Regulations Program-specific regulations Education Department General Administrative Regulations (EDGAR -

updated)

OMB Circulars

Guidance Non-Regulatory guidance, letters, press releases

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WHERE TO FIND FEDERAL EDUCATION GRANTS MANAGEMENT REQUIREMENTS

Program Rules: www.ed.govStatutesRegulationsGuidanceUS Code Chapter 30 - General

Education Provisions Act (GEPA):

http://www.law.cornell.edu/uscode/20/usc_sup_01_20_10_31.html

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http://www.ed.gov/



WHERE TO FIND FEDERAL EDUCATION GRANTS MANAGEMENT REQUIREMENTS

Office of Management & Budget (OMB) Circulars:

http://www.whitehourse.gov/omb/circulars

Education Department General Administrative Regulations (EDGAR): http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html

U.S. Government Publishing Office (GPO):Electronic Code of Federal Regulations http://www.ecfr.gov

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http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html

http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html

CHANGES T

O EDGAR, N

EW

EDGAR R

ULES

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PRIOR RULES (INCORPORATED INTO THE NEW EDGAR)

A-21 – Cost Rules – Rules – IHEs

A-87 – Cost Rules – State / Local Gov’t

A-122 – Cost Rules – Nonprofit

A-102 – Administrative Rules State / Local Gov’t

A-110 – Administrative Rules IHEs

A-133 – Audit Rules

Included now in Title 2 Part 200 – Cost/Administrative/Audit Rules 7

EFFECTIVE DATES

December 26, 2014 – Direct Grants from ED

July 1, 2015 – State Administered Programs

July 1, 2016 – Procurement Rules (One Year

Grace Period)

Indirect Cost Rates When Due For Renegotiation

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EDGAR - THE NEW 2 CFR PART 200

Subpart A – Definitions

Subpart B – General Provisions

Subpart C – Pre Award Requirements

Subpart D – Post Award Requirements

Subpart E – Cost Principles

Subpart F – Audit Requirements

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1.Focus on Outcomes

2.Performance Metrics

3.Risk Assessments

4.Financial Management Policies

5.Equipment Use

6. Micro Purchases

7. Corrective Action

8. Family Friendly Policies

9. False Claims Certifications

10.Audit Thresholds

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THE MAJOR CHANGES IN FEDERAL GRANTS MANAGEMENT

MAJOR CHANGES (CONT.)

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Part 200 has a MAJOR emphasis on strengthening accountability by improving policies that protect against waste, fraud and abuse

SEVEN (7) FINANCIAL MANAGEMENT CONTROLS TO BE REVIEWED AND MANAGED

CHANGES FROM PRIOR MANAGEMENT RULES 80.20(B) , NOW IDENTIFIED UNDER CFR 200 (B)

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FINANCIAL MANAGEMENT RULES200.302(B)

P R I O R R U L E 8 0 . 2 0 ( B )

1.Financial Reporting

2.Accounting Records

3.Internal Control

4.Budget Control

5.Allowable Cost

6.Source Documentation

7.Cash Management

2 C F R 2 0 0 . 3 0 2 ( B )

1. Identification of Awards (NEW)

2.Financial Reporting

3.Accounting Records (Source Docs)

4. Internal Control

5.Budget Control

6.Written Cash Management Procedures (NEW)

7.Written Allowability Procedures (NEW)

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1) IDENTIFICATION OF AWARDS200.302(B)(1)

All federal “awards” received and expended

The name of the federal “program”

Identification # of award CFDA Title and Number Federal Award I.D. # Fiscal Year of Award Federal Agency Pass-Through (If S/A)

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CONFLICT OF INTEREST (CONT.)200.318(C)(1)

Must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors/ subcontractors.

However, may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value.

Standards of conduct must include disciplinary actions applies for violations.

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2) FINANCIAL REPORTING200.302(B)(2)

Accurate, current, complete disclosure of financial results of each award in accordance with 200.327 and 200.328.

200.327 – Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly

200.328 – Non federal entity must submit performance reports at intervals required by federal agency or pass through.

Annual performance reports due 90 days after reporting period; Quarterly performance reports due 30 days after reporting period

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3) ACCOUNTING RECORDS 200.302(B)(3) Source Documentation Must Be Kept On:

1. Federal Awards2. Authorizations3. Obligations4. Unobligated balances5. Assets6. Expenditures7. Income8. Interest (New) (Eliminated liabilities)

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4) INTERNAL CONTROLS200.302(B)(4)

Effective control over and accountability for:1. All funds2. Property3. Other assets

Must adequately safeguard all assets

Use assets solely for authorized purpose managed and identified by the grant

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INTERNAL CONTROLS200.61

Internal controls means a process, implemented by a non-Federal entity, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:a. Effectiveness and efficiency of operations;b. Reliability of reporting for internal and external use; andc. Compliance with applicable laws and regulations.

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INTERNAL CONTROLS 200.303

a. Non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurances that the entity is managing the award in compliance with federal statutes, regs, and terms of the award.

Internal controls “should” be in compliance with: The U.S. Comptroller General’s Standard for Internal Control

Integrated Framework; and Internal Control Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO)

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INTERNAL CONTROLS (CONT.)200.303

b. Comply with Federal statutes, regs, and the terms and conditions of the Federal awards.

c. Evaluate and monitor the non-Federal entity's compliance with statutes, regs and the terms and conditions of Federal awards.

d. Take prompt action when instances of noncompliance are identified including in audit findings.

e. Take reasonable measures to safeguard protected personally identifiable info (PII) and other information designated or deemed sensitive

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5) BUDGET CONTROL200.302(5)

Comparison of expenditures with budget amounts for each award

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6) WRITTEN CASH MANAGEMENT PROCEDURES 200.302(6)

Written Procedures to implement the requirements of 200.305 (Payment)

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PAYMENT200.305 (A) AND (B)

For states, payments are governed by Treasury – State CMIA agreements 31 CFR Part 205

For all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation)

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PAYMENT (CONT.)200.305(B)(1)-(4) Written procedures must describe whether

non-federal entity uses:1) Advance Payments (preferred)

• Limited to minimum amounts needed to meet immediate cash needs

2) Reimbursement• Pass through must make payment within 30 calendar

days after receipt of the billing

3) Working Capital Advance• The pass through determines that the nonfederal entity

lacks sufficient working capital. Allows advance payment to cover estimated disbursement needs for initial period

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PAYMENT (CONT.)200.305(B)(7)-(8)

Advances must be maintained in insured accounts

Pass through cannot require separate depository accounts

Accounts must be interest bearing unless:1. Aggregate federal awards under $120,0002. Account not expected to earn in excess of $500 per year3. Bank require minimum balance so high, that such account not

feasible4. A foreign gov’t or banking system prohibits or precludes interest

bearing accounts.

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PAYMENT (CONT.)200.305(B)(9)

Interest amounts up to $500 may be retained by non federal entity for administrative purposes

Currently $100 for State and local Gov’ts Currently $250 for IHEs and Non-profits.

Interest earned must be remitted annually to HHS Payment Management System.

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7) WRITTEN ALLOWABILITY PROCEDURES200.302(B)(7)

Written procedures for determining allowability of costs in accordance with Subpart E – Cost Principles

Procedures cannot simply restate the Uniform Guidance Subpart E

Should explain the process used throughout the grant development and budget process Training tool and guide for employees

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SUBPART E – COST PRINCIPLES

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FACTORS AFFECTING ALLOWABILITY OF COSTS 200.403

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All Costs Must Be:1. Necessary, Reasonable and Allocable2. Conform with federal law & grant terms3. Consistent with state and local policies 4. Consistently treated5. In accordance with GAAP6. Not included as match7. Net of applicable credits 8. Adequately documented

REASONABLE 200.404

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Consideration must be given to:a. Whether cost is a type generally recognized as ordinary and necessary

for the operation of the non-Federal entity or the proper and efficient performance of the Federal award;

b. The restraints or requirements imposed such as: Arms length bargaining (hint: procurement processes); Federal, state and local laws; and Terms of the grant award.c. Market Prices for comparable goods or services in the

geographical area;d. Whether the individuals acted with prudence under the circumstances

considering their responsibilities; ande. No significant deviation from established prices.

ALLOCABLE 200.405

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A cost is allocable to a Federal award or cost objective if the goods or services involved are chargeable or assignable in accordance with relative benefits received.

Incurred specifically for the award; Benefits both award and other work and can be distributed in proportions that

may be approximated using reasonable methods; and Necessary to the overall operation of the entity and assignable to the award in

accordance with this Part.

Can only charge in proportion to the value received by the program

Example: Agency purchases a computer to use 50% on the Federal grant program and 50% on a state program – can only charge half the cost to the grant.

FACTORS AFFECTING ALLOWABILITY OF COSTS (CONT.)200.403(G)

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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 that show compliance

and performance Other records to facilitate an

effective audit (see 76.730 page 68)

PRIOR WRITTEN APPROVAL 200.407

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In order to avoid subsequent disallowance:Non-Federal entity may seek prior written approval of cognizant agency (for indirect cost rate) or Federal awarding agency in advance of the incurrence of special or unusual costs

DIRECT V. INDIRECT COSTS 200.413(C)

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Salaries of administrative and clerical staff should be treated as “indirect” unless all of following are met:1. Such services are integral to the activity2. Individuals can be specifically identified with

the activity3. Such costs are explicitly included in the

budget4. Costs not also recovered as indirect

COLLECTION OF UNALLOWABLE COSTS200.410

Payments made for costs determined to be unallowable by either the Federal awarding agency or pass-through must be refunded (including interest) to the Federal government in accordance with instructions from the Federal agency that determined the costs are unallowable.

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TIME AND EFFORT DOCUMENTATION

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WHO MUST KEEP TIME AND EFFORT?

200.430(I)(1) AND (I)(4)

All employees whose salaries are: Paid in whole or in part with federal funds; and Used to meet a match/cost share requirement.

NOT contractors!

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DOCUMENTATION FOR PERSONNEL EXPENSES200.430(I)

Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed.

How staff demonstrate allocability If employee paid with federal funds, then must

show that the employee worked on that specific federal program cost objective 200.403(a)

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CERTIFICATION TYPES:

SEMI -ANNUAL CERT IF ICAT IONS

If an employee works on a single cost objective: After the fact Account for the total

activity Signed by employee or

supervisor Every six months (at

least twice a year)

PERSONNEL ACT IV ITY REPORTS (PAR)

If an employee works on multiple cost objectives: After the fact Account for total

activity Signed by employee Prepared at least

monthly and coincide with one or more pay periods 40

DOCUMENTATION FOR PERSONNEL EXPENSES (CONT.)200.430(I)(1)

These records MUST:1. Be supported by a system of internal

controls which provides reasonable assurance charges are accurate, allowable and properly allocated;

2. Be incorporated into official records;3. Reasonably reflect total activity for which

employee is compensated;Not to exceed 100%

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DOCUMENTATION FOR PERSONNEL EXPENSES (CONT.)200.430(I)(1)

4. Encompass all activities (federal and non-federal);

5. Comply with established accounting polices and practices; and

6. Support distribution among specific activities or cost objectives.

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RECONCILIATION200.430(I)(1)(VIII)(C)

All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.

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PROPE

RTY

MANAGEMENT

EQ

UI P

ME

NT

AN

D S

UP

PL I E

S

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EQUIPMENT 200.33

Equipment: tangible, nonexpendible, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

Grantee may also use its own definition of equipment as long as the definition would at least include all equipment defined above.

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EQUIPMENT PROCEDURES200.313 (D)

Procedures for managing equipment must meet the following requirements:

1. Property records2. Physical inventory at least every two years3. Control system to prevent loss, damage, theft

All incident must be investigated

4. Adequate maintenance procedures5. If authorized or required to sell property, proper sales

procedures to ensure highest possible return.

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DISPOSITION OF EQUIPMENT 200.313(E)

When property is no longer needed in any current or previously Federally-funded supported activity, entity must follow disposition rules:

Nonfederal entity must request disposition instructions from the federal awarding agency if required by the terms of the grant.

Otherwise, may be retained, sold or otherwise disposed as follows: Over $5,000 – pay federal share

If equipment is sold: Federal awarding agency may permit non-Federal entity to deduct and retain $500 or 10% of the proceeds for selling and handling instructions.

Under $5,000 – no accountability (still must formally dispose)

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SUPPLIES 200.94All tangible personal property other than

equipment

Computing devices are supplies, if less than $5,000

Computing devices 200.20 Machines used to acquire, store, analyze, process,

public data and other information electronically Includes accessories for printing, transmitting and

receiving or storing electronic information

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DISPOSITION OF SUPPLIES200.314

If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federal award, must compensate the federal government for its share.

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SUPPLE

MENT, N

OT TO

SUPPLA

NT

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EXAMPLE (INCLUDED IN HANDOUTS)

Non-Recurring Supplemental Pay Worksheet

Not to be used for Professional

Development Workshops

School: Director/Principal:

Activity:

Funding: (This GL Account code must be obtained from (District Finance Dept) ORG: OBJ: PROJ:

Date:

Posting #:

These two fields to be filled in by (District) Finance Dept: RQ Code: Non RQ Cd:

*** NOTE: Employee Social Security Numbers may NOT be entered on this form.

Date 1 Date 2 Date 3 Date 4 Date 5 Date 6 Date 7

Empl ID Employee Name Rate Total

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

TOTAL: $0.00 51

JUSTI

FICAT

IONS

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EXAMPLE 1

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Federal Funds Expense Justification FormThis form must be attached to all federally funded expense requests including requisitions,Permission to be Absent from Duties form, Workshop/Supplemental payroll postingsand all job postings. *This form is not to be used for Magnet expense requests*

Department/School:

Requisition Number (if applicable):

Posting Number (if applicable):

Please complete the required information below with as much detail as possible:

1.) Is this expense necessary in order improve students' academic achievement? Please explain.

2.) Is the decision to expend these funds beneficial to the program in a way I can prove? Please explain.

3.) Do I have documentation supporting the need of this expense within my program? Please explain.

Please note: Federal funds are available to supplement, not supplant and therefore cannot be used to purchase textbooks or materials that are a requirement for the curriculum. Purchasing of food items or office supplies using

federal funds can only be used for student achievement or parental involvement.

Director/Principal Date

QUESTIONS

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STANDARD G

RANT AUDIT

REQUIR

EMEN

TS

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AUDIT REQUIREMENTS § 200.501

(a)Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.

(b) Single audit. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single audit conducted in accordance with §200.514 Scope of audit except when it elects to have a program-specific audit conducted in accordance with paragraph (c) of this section.

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AUDIT REQUIREMENTS § 200.501 - CONT(c) Program-specific audit election. When an auditee expends

Federal awards under only one Federal program (excluding R&D) and the Federal program's statutes, regulations, or the terms and conditions of the Federal award do not require a financial statement audit of the auditee, the auditee may elect to have a program-specific audit conducted in accordance with §200.507 Program-specific audits.

A program-specific audit may not be elected for R&D unless all of the Federal awards expended were received from the same Federal agency, or the same Federal agency and the same pass-through entity, and that Federal agency, or pass-through entity in the case of a subrecipient, approves in advance a program-specific audit.

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REQUIREMENTS § 200.501 - CONT

(d) Exemption when Federal awards expended are less than $750,000. A non-Federal entity that expends less than $750,000 during the non-Federal entity's fiscal year in Federal awards is exempt from Federal audit requirements for that year, except as noted in §200.503 Relation to other audit requirements, but records must be available for review or audit by appropriate officials of the Federal agency, pass-through entity, and Government Accountability Office (GAO).

(e) Federally Funded Research and Development Centers (FFRDC). Management of an auditee that owns or operates a FFRDC may elect to treat the FFRDC as a separate entity for purposes of this part.

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(f) Sub-recipients and Contractors. An auditee may simultaneously be a recipient, a sub-recipient, and a contractor. Federal awards expended as a recipient or a sub-recipient are subject to audit under this part. The payments received for goods or services provided as a contractor are not Federal awards.

Section §200.330 Sub-recipient and contractor determinations sets forth the considerations in determining whether payments constitute a Federal award or a payment for goods or services provided as a contractor.

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(g) Compliance responsibility for contractors. In most cases, the auditee's compliance responsibility for contractors is only to ensure that the procurement, receipt, and payment for goods and services comply with Federal statutes, regulations, and the terms and conditions of Federal awards.

Federal award compliance requirements normally do not pass through to contractors. However, the auditee is responsible for ensuring compliance for procurement transactions which are structured such that the contractor is responsible for program compliance or the contractor's records must be reviewed to determine program compliance;

When these procurement transactions relate to a major program, the scope of the audit must include determining whether these transactions are in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards.

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(h) For-profit sub-recipient. Since this part does not apply to for-profit sub-recipients, the pass-through entity is responsible for establishing requirements, as necessary, to ensure compliance by for-profit sub-recipients. The agreement with the for-profit sub-recipient must describe applicable compliance requirements and the for-profit sub-recipient's compliance responsibility. Methods to ensure compliance for Federal awards made to for-profit sub-recipients may include pre-award audits, monitoring during the agreement, and post-award audits. See also §200.331 Requirements for pass-through entities.

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KEY POINTS OF AUDITS:

(1)200.504 Frequency of audits – required Annually

(2) 200.511 Audit findings follow-up;

The auditee is responsible for follow-up and corrective action on all audit findings. As part of this responsibility, the auditee must prepare a summary schedule of prior audit findings. The auditee must also prepare a corrective action plan for current year audit findings.

(3) 200.512 Report submission;

The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period.

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(4) 200.515 Audit reporting;

An opinion (or disclaimer of opinion) as to whether the financial statements are presented fairly in all material respects in accordance with generally accepted accounting principles and an opinion (or disclaimer of opinion) as to whether the schedule of expenditures of Federal awards is fairly stated in all material respects in relation to the financial statements as a whole.

(5) 200.516 Audit findings;

Audit findings reported. The auditor must report audit findings in a schedule of findings and questioned costs.

(6) 200.517 Audit documentation;

The Retention of audit documentation - The auditor must retain audit documentation and reports for a minimum of three years after the date of issuance of the auditor’s report(s) to the auditee, unless the auditor is notified in writing by the cognizant agency for audit, oversight agency for audit, cognizant agency for indirect costs, or pass-through entity to extend the retention period.. 63


(6) 200.517 Audit documentation (CONT);

When the auditor is aware that the Federal agency, passthrough entity, or auditee is contesting an audit finding, the auditor must contact the parties contesting the audit finding for guidance prior to destruction of the audit documentation and reports

(7) 200.521 Management decision;

An The management decision must clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. If the auditee has not completed corrective action, a timetable for follow-up should be given.

Prior to issuing the management decision, the Federal agency or pass-through entity may request additional information or documentation from the auditee, including a request for auditor assurance related to the documentation, as a way of mitigating disallowed costs.

The management decision should describe any appeal process available to the auditee. While not required, the Federal agency or pass-through entity may also issue a management decision on findings relating to the financial statements which are required to be reported in accordance with GAGAS.

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QUESTIONS??

?

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HELPF

UL HIN

TS

TO S

TANDARD

GRANT AUDIT

S

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BASIC RULE:

Grantee and Sub-grantees are responsible for obtaining audits in accordance with the Single Act Audit Amendment of 1996 (31 U.S.C. 7501-7505) and revised OMB Circular A-133

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WHO CAN AUDIT A GRANT?

The audits shall be made by an independent auditor in accordance with Generally Accepted Government Auditing Standards (GAGAS) covering financial audits.

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GRANT AUDIT CHECKLIST

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GRANT APPLICATION

Is the Standard Contract Form and Application for Program Grants containing:

Fund CodeProgram NameProject duration (Start and expiration dates)Total Amount RequestedBudget NarrativeAllocation with Expenditure Justification

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GRANT AWARD & PAYMENT NOTIFICATIONS

E-mailed by

DESE Grants Management Payment

System

G-5 Department of Education

Grant Managements System

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REQUEST FOR FUNDS

Screen shots: DESE

Grants Management Payment System

E-mailed: G-3

Department of Education Grant Managements System

FINAL FINANCIAL REPORT

Form FR-1 Multiple copies may apply

Prior Fiscal Year Submitted Fiscal Year under Audit

Grant annual expenditure submission Available online Hardcopy in grant binders

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EMPLOYEE LISTING

Any compensation issued

Base pay

Additional pay

Stipends

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COMPARABILITY DOCUMENTATION

Without Federal Funding

Can staff be accounted for?

Can services be provided?

Similar to Oct 1 EPIMS Data

Identifies Poverty Levels

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ADDITIONAL INFORMATION

Expenditure / General ledger

Invoices and/or purchase orders

Payroll registers

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QUESTIONS??

?

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C O N T A C T I N F O R M A T I O N :

H O W A R D B A R B E R , C P A , M C P P O

S C H O O L B U S I N E S S A D M I N I S T R A T O R

G R E E N F I E L D P U B L I C S C H O O L S

1 4 1 D A V I S S T R E E T

G R E E N F I E L D , M A 0 1 3 0 1

P H : 4 1 3 - 7 7 2 - 1 3 1 4

F A X : 4 1 3 - 7 7 4 - 7 9 4 0

H O W B A R 1 @ G P S K 1 2 . O R G

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mailto:[email protected]

PROTOCOLS FOR AUDITING OF GRANTS Howard Barber, CPA, MCPPO School Business Administrator Greenfield...

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Transcript of PROTOCOLS FOR AUDITING OF GRANTS Howard Barber, CPA, MCPPO School Business Administrator Greenfield...