Financial Management

1. Financial Management North Central National Service Training August 20 – 22, 2013

2. You need to know . . . • Use of program regulations, NGA, terms and conditions, and operations manuals (CNCS) • OMB Circulars www.whitehouse.gov/omb/circulars/index.html • Use of Generally Accepted Accounting Principles (GAAP) • Communication between program and fiscal staff North Central National Service Training August 20 – 22, 2013

3. Welcome . . . • Introduction of trainer • Program types represented • Senior Corps: RSVP, FGP, SCP • Questions • As we go . . . ask clarifying questions and provide your experiences North Central National Service Training August 20 – 22, 2013

4. Contacts North Central National Service Training August 20 – 22, 2013

5. North Central National Service Training August 20 – 22, 2013

6. 1. Regulatory Requirements 10. Reporting & Closeouts 2. Written Policies & Procedures 9. Time & Activity Documentation Efficient Accounting System EFFECTIVE FINANCIAL MANAGEMENT 8. Managing Cash 4. Internal Controls 5. Budget Controls • 7. Matching Requirements & In-kind Contributions 6. Documentation of expenses North Central National Service Training August 20 – 22, 2013

7. Key Characteristics of Organizations with Highly Effective Financial Management: • Written and followed policies and procedures • Qualified and trained financial staff • Effective communications • Succession planning and cross-training • Self-assessment and continuous improvement • Active, knowledgeable and informed Board and finance committee North Central National Service Training August 20 – 22, 2013

8. Regulations and Requirements North Central National Service Training August 20 – 22, 2013

9. Federal Regulations Notes: CFR = Code of Federal Regulations * = Organization is subject to A-133 if it expends more than $500,000 in Federal funds in its fiscal year Locate Grants Management Circulars: www.whitehouse.gov/omb/grants_circulars/ North Central National Service Training August 20 – 22, 2013

10. Basics of OMB Circulars • Cost Principles • Allowable & Unallowable Costs • Indirect Costs • Administrative Requirements • Accounting System • Documentation requirements • A-133 requirements North Central National Service Training August 20 – 22, 2013

11. Cost Principles • Provide guidance to determine the allowable costs that can be incurred by organizations under Federal grants • Designed so that Federal awards bear their fair share of costs • Provide guidance about reimbursement requirements • Provide uniform standards of allowability and allocation • Encourage consistency of treatment of costs • Includes guidance on 54 selected items of cost North Central National Service Training August 20 – 22, 2013

12. Allowable, Reasonable & Allocable Allowable –A cost within award limitations consistent, documented, reasonable & allocable Reasonable - A cost that does not exceed what a prudent person would do under the circumstances at the time the decision Allocable - Treated consistently with other costs incurred for the same purpose in like circumstances and benefits the award and can be distributed proportionally to the benefits received North Central National Service Training August 20 – 22, 2013

13. Administrative Requirements • Provide consistency and uniformity among Federal agencies in the management of grants and cooperative agreements • Require all Federal agencies to issue a grants management common rule to adopt government-wide terms and conditions North Central National Service Training August 20 – 22, 2013

14. Policies and Procedures North Central National Service Training August 20 – 22, 2013

15. Policies & Procedures • Policies and procedures are a set of written documents that describe an organization's policies for operation – “what is to be done” the procedures necessary to fulfill the policies – “how it is to be completed” • All staff must be familiar with these documents • Documents must be kept up-to-date • Documents should explain the rationale and include principal transactions and completed forms • Documents must incorporate Federal and CNCS grant regulations and provisions North Central National Service Training August 20 – 22, 2013

16. LEAVE POLICY North Central National Service Training August 20 – 22, 2013

17. Leave Policy • Many FGP/SCP sponsors provide Leave. • It is allowable to award leave to FGP/SCP volunteers as long as: • Leave paid with CNCS funding does not “cross” grant cycles. i.e. No Carry-Over of unspent leave. • Leave paid in subsequent years DOES NOTappear on the budget (either as Fed or Non-Fed Match). • Requires tracking leave across grant periods… this may be too cumbersome for most grantees… North Central National Service Training August 20 – 22, 2013

18. Leave Policy Cont. • Leave is a great way to reward/recognize volunteers and retain their service. • It is allowable to utilize stipend funds to pay for leave which occurs in the same grant year. • The best way to deal with unspent leave is to do an end of year pay-out of all unused time. • By doing a pay-out you expend all grant funds in the same period they were awarded. North Central National Service Training August 20 – 22, 2013

19. Efficient Accounting System North Central National Service Training August 20 – 22, 2013

20. Efficient Accounting System Requirements • Distinguish grant verses non-grant related expenses • Identify costs by program year & budget category • Differentiate between direct and indirect costs • Account for each award/grant separately • Record in-kind contribution as both revenue & expense • Provide management with financial reports at both the summary or detailed levels that will compare outlays with budget amounts • Correlate financial reports submitted to CNCS directly to accounting information and supporting documents North Central National Service Training August 20 – 22, 2013

21. Internal Controls North Central National Service Training August 20 – 22, 2013

22. Why Have Internal Controls? • Improve accountability to constituents CNCS, trustees, funders, public • Help organization achieve performance & budget targets • Improve reliability of financial reporting • Improve compliance with laws & regulations • Prevent loss of resources & public assets • Prevent loss of public trust • Reduce legal liability North Central National Service Training August 20 – 22, 2013

23. Who is Responsible? • Everyone within the organization has some role in internal controls roles vary depending upon level of responsibility: • Executives establish the presence of integrity, ethics, competence and a positive control environment • Directors and department heads have oversight responsibility for internal controls within their units • Managers and supervisory personnel are responsible for executing control policies and procedures at the detail level within their specific unit • Each individual within a unit is to be cognizant of proper internal control procedures associated with their specific job responsibilities North Central National Service Training August 20 – 22, 2013

24. A Good Control Environment Includes • Positive “atmosphere” in the work environment • Existence of a code of conduct and code of ethics • Written job descriptions • Timely/appropriate communications with Board • Written policies to hire, train, promote and compensate employees • Safeguards for employees related to whistle-blowing • A clear chain of command • Clear, written delegations of authority & responsibilities North Central National Service Training August 20 – 22, 2013

25. A Good Control Environment Includes (cont’d) • Written policies, procedures and processes • Adequate review process for financial transactions, financial reports, budgets, etc. • Adequate cash management procedures (e.g., monthly bank reconciliations by supervisory personnel) • System to track participants’ & employees’ activities • System to follow up on problems to ensure resolution North Central National Service Training August 20 – 22, 2013

26. Prohibited Activities While charging time to the Senior Corps program, accumulating Service, or training hours, or otherwise performing activities supported by the Senior Corps Program, or CNCS, staff and volunteers may not engage in the following activities: North Central National Service Training August 20 – 22, 2013

27. Prohibited Activities Cont. Examples: Political activities Non-displacement of employed workers Compensation for service. Labor and anti-labor activity Fair labor standards Nondiscrimination Religious activities Nepotism. North Central National Service Training August 20 – 22, 2013

28. BudgetControls North Central National Service Training August 20 – 22, 2013

29. Grant Budget Preparation Who should be Involved? The budget process should be a team effort that includes: • Board of Directors • Executive Director • Program/Project Director • Program/Project Staff • Fiscal Staff North Central National Service Training August 20 – 22, 2013

30. Grant Budgets Preparation • Followinstructionsin NOFO/NOFA • Organize narrative to fit budget categories on budget form or proposal • Provide adequate descriptions and calculations to support amounts • Ensure budget aligns with the application narrative 80:20 Direct Benefit Ratio (FGP & SCP) Section II Subtotal ÷ CNCS Award Amount North Central National Service Training August 20 – 22, 2013

31. Grant Budget Preparation • Qualities of an Effective Budget • Realistic • Consistent with organizational objectives • Flexible (amendable if conditions are not as expected) • Consistent with Corporation goals North Central National Service Training August 20 – 22, 2013

32. Grant Budget Preparation Don’t forget… • Staff positions • Space, utilities, supplies, telephone • Medical and liability insurance • Uniforms and training • Transportation • Evaluations North Central National Service Training August 20 – 22, 2013

33. Salaries & Wages Documentation • For most Senior Corps Grantees, the salaries & Benefits section is one of the largest expense categories, if not the largest. • It is critical to document properly… • But documentation will differ from organization to organization. North Central National Service Training August 20 – 22, 2013

34. Grant Budget Preparation • Organize narrative to fit categories on budget form • Provide adequate descriptions and calculations to support amounts • Group related items (e.g., Staff salaries should be grouped with staff benefits, FICA, etc.) • Compare the final costs to the narrative to ensure they make sense North Central National Service Training August 20 – 22, 2013

35. Examples of Unallowable Costs • Lobbying • Fines and penalties • Expenses not necessary to meet program objectives • Entertainment, alcohol • Costs that would constitute waste, fraud and abuse • Unreasonable costs from a “prudent person” perspective • Costs with no logical basis for allocating to your program North Central National Service Training August 20 – 22, 2013

36. Grant Budget Preparation • Excess Column • Use of the Excess Column • Track total project costs • Fundraising North Central National Service Training August 20 – 22, 2013

37. Budget: Final Review Checklist • Is there adequate explanation for budget items? • Are all projected costs in the budget allowable? • Have the appropriate fringe and indirect cost rates been used? Do you have an updated copy to send with your Application? • Is the budget realistic, reasonable, credible, and aligned with program goals? • Is the budget within the VSY limit for Fixed Grants? • Is your A-133 up to date in the Federal Audit Clearing House or 990 in GuideStar? • Is your organization's information up to date with the System for Award Management (www.SAM.gov)? North Central National Service Training August 20 – 22, 2013

38. SummaryBudgeting: The Road Map to Success Where Are We Going? Know the Rules of the Road Preventive and Regular Maintenance Check-ups Keep You in the Driver Seat Are We There Yet? Drive Defensively Bumps Along the Road North Central National Service Training August 20 – 22, 2013

39. Key Budgeting Tips • Check to ensure that required match is met • Be strategic when allocating funds to CNCS or grantee share, some costs can be met with in-kind donations • Be aware of budget changes that require amendments • Identify In-kind donations prior to creating the budget North Central National Service Training August 20 – 22, 2013

40. Grant Award • Notice of Grant Agreement (NGA) • Special Conditions • Grant Budget Amendments • Reporting • Terms and Conditions of Award • Prohibited Activities North Central National Service Training August 20 – 22, 2013

41. Documenting Expenses North Central National Service Training August 20 – 22, 2013

42. Documentation Basics Why Retain Documentation? • To track incoming information • To review information • To provide historical evidence • To provide evidence of accomplishments • To prepare for an audit • Establish a written record retention policy North Central National Service Training August 20 – 22, 2013

43. Budget Management North Central National Service Training August 20 – 22, 2013

44. Budget Management Grantees must obtain prior approval from CNCS for: • Subgrants or contracts not included in approved application and budget • Specific costs described in the Cost Principles • For example: overtime pay, rearrangement and alteration costs, and pre-award costs • Purchases of equipment over $5,000 using grant funds, unless specified in the approved application and budget • Cumulative or aggregate budget line items that amount to 10% or more of the total budget North Central National Service Training August 20 – 22, 2013

45. Budget Revisions/Amendments • You can move funds between line items without approval from CNCS when: 1) The total cumulative fund transfer will not exceed 10% of the grant or $10,000 • Does not apply to budgets of less than $100,000 2) The transfers would not create a new line item 3) Funds can be moved from “Volunteer Support” to “Volunteer Benefits” but not vice versa • FGP and SCP must still meet the direct benefit ratio • Although CNCS approval is not required when these conditions apply, it is a good practice to notify CNCS of any change to the budget. North Central National Service Training August 20 – 22, 2013

46. Budget Revisions • These revisions can be done any time during the approved budget period. • CNCS approval is required when you do not meet previously stated conditions. • Prevent major revisions and under spending by reviewing your budget each month. • Approval required by the FFMC • Do not assume approvals have been granted unless documented North Central National Service Training August 20 – 22, 2013

47. Financial Reporting and Closeouts North Central National Service Training August 20 – 22, 2013

48. Reporting Requirements The Federal Financial Report (FFR) • 6 month period • Cumulative over 3-year grant The Program Progress Report (PPR) • Annual for all programs • Supplemental semi-annual for stipend Programs North Central National Service Training August 20 – 22, 2013

49. Before You Begin Gather the following reports: • Reports to support number of volunteers in reporting period • Reports to support number of hours in reporting period • Financial report • Additional Documents (ex. In Kind) North Central National Service Training August 20 – 22, 2013

50. Source Documents(Invoices, Checks, Receipts, Timesheets, etc.) • Ensure proper and complete documentation in the files to support all information reported in the FFR. • All financial reports should be prepared with information that comes directly from the organization’s accounting system. • Conduct a review and reconciliation of the information to ensure accuracy prior to report submission. North Central National Service Training August 20 – 22, 2013