Managing Government Grants: Do The Right Thing!

1. Managing Government Grants:Do The Right Thing! Session 1: July 29, 2014 2p-3p GETTING SPEEDY GRANT PAYMENT & KEEPING THE MONEY!

2. Welcome, Introductions & • Ground Rules • Keep your phone on mute please • Be ready for polling questions • Feel free to e-send questions during presentation • The only silly question is the one not asked! • You are all safe with us! We truly have seen it all! 

3. General Government Contract Assumptions Here • Awards assumed to be reimbursement based • Requests for payment or “draws on award” presumed being submitted to a government agency, subject to processing effort and after-the-fact audit ability • Award payments can and will be requested to be repaid if noncompliance is found • You may be new at this… or maybe not • Goals here: timely payment which is kept!

4. Focus of Today: Design of Your Grant Financial System

5. Being Effective Means: Be Proactive • Meet your Bookkeeper, Fiscal Officer, Controller, CFO – whatever you call them. • Include them upfront! • Here’s what they feel like when you or your management team leaves surprises in the budget proposal submitted with grant request

6. Being Effective Means: Be Proactive • Design your accounting system & process to “get” (capture) the necessary information upfront • Consider chart of accounts • Consider – expense? Or asset” Capture both! • Also capture grant/funder (QB-Class) • Use ALWAYS (bills, aje’s)

7. “Who Does That?” • Executive Director PLUS • Program Manager PLUS • Fiscal Officer/Controller/CFO PLUS • You! • You get together, talk it through, plan it, do this with each such grant & follow the plan(s)!

8. Being Effective Means: Be Proactive • We understand many such grants are “continuations” of prior contracts. But..make NO assumptions! • Each authorizing person must be able to “code” • From start, each such person must be knowledgeable of: • the portion of expense that may be allowable/covered, • the work they hire, through vendors & contractors , & • what other expenses/costs are covered.

9. Being Effective Means: Be Proactive • Make sure the FULL team knows and obtains before check(s) are cut: • what paperwork is needed to prove services were provided/fulfilled, inspected, as specified • what documentation is needed to support their “allowable” nature

10. Being Effective Means: Be Proactive • As time & work progress, Finance is receiving originals of vendor bills, with proof of vendor’s “compliance,” with transactions properly coded on their face • All of Finance Team knows same – so they can review and record transactions as indicated, which is correct!AND THEY RECORD IT LIKE THAT!

11. Work of ‘humans’ is usually the largest covered cost • Their coverage is ALL a function of how they spend their time/effort • What criteria must be met to ensure “allowable cost”? • Bid? RFQ? RFP? • Equal Opportunity? • Contractor = licensed? Bonded? insured? W/C? • Independent?

12. Financial Architecture of NPO • For non-accountants: • Account means, think row • Funder/Program/Grant, think column • Create as much detail as needed to properly capture what reporting is needed • Truly, you must “Begin with the end in mind.”

13. Sample CDC Coding  • Construction contractor expense: • Supplies expense: • Professional contractor expense: • (On p&l) Program expense – Construction expense; Funder/Grant – Project 2014-B • Associated with proper vendor • (On p&l) Program expense – Supplies expense; Funder/Grant- Project 2014-B • Associated with proper vendor • (On p&l) Program expense – Professional expense; Funder/Grant – Project 2014-B • Associated with proper vendor

14. Sample CDC Coding  • Construction contractor expense: • Supplies expense: • Professional contractor expense: • Program expense • Vendor name only used to “cut check” • No fund/grant associated • Supplies expense • No vendor name associated • No fund/grant associated • Professional expense • No vendor name associated • No fund/grant associated

15. During each month… • Obtain bills, code them properly on their face • Make necessary copies during “single touch” • Make sure employee & supervisor approves each timesheet – with original signature • Make sure information on deliverables (inspections, lien waiver, etc.) are gathered, attached • File consistently

16. POLL! • Whose payment request process tells the entire story on its face? • __ “Mine! Ours!” • __ No! – things change too fast around here, we prepare this stuff when draw request is prepared… • __ What’s a payment request process?

17. Being Effective Means: Begin with the End in Mind • Ramping up means: • Make sure your Finance Leader reviews the proposal BEFORE it is submitted • Build in enough time to get right person (employee or contractor) • Make sure needed documentation is gathered before payment issued! • e.g. Bad 1099 examples

18. Being Effective Means: Begin with the End in Mind • Ramping up means: • What categories are covered? • How are vendors selected? • Who can spend? On what vendors? • Who receives the bills? • Who can approve the bills? • How is data entered into accounting system?

19. Being Effective Means: Begin with the End in Mind • Ramping up means: • Do ALL program staff know exactly what paperwork you need from them for the financial submission? • And for proof of allowable cost? • And for proof of deliverables generated? • All required documentation is obtained & filed at present time

20. Being Effective Means: Begin with the End in Mind • If I had a dollar for each time.. • A program manager came to me asking me for a report of all allowable costs – that they never told us about • Then I could fly all of you here for a free visit, hotel stay, food, drinks & fun THIS GUY THOUGHT HE COULD HANDLE IT TOO!

21. BUT, DO Start with the end in mind – Do NOT leave money on the table! Ramp up before hand, plan, perform & spend on time, across the contract period. Don’t gamble! Bad odds

22. POLL! • How many of you, at current organization or a previous one, have experienced a disallowance? • __ Yes! • __ No! • __ Like what?

23. Being Effective Means: Put 1st Things 1stPace Yourself • Make sure all necessary documentation is obtained NOW, as you go • Know exactly what is covered, when, get it now • Create checklists by month • Make copies when you are touching the transactions; touch once

24. Put 1st Things 1stPace Yourself • Getting copies of cancelled checks or other payment proof when receiving, processing & reconciling bank statements

25. POLL! • How many of your Finance Teams issue program management reports? • __ Yes – Monthly • __ Yes – on Request • __ No – they used to but no one looked at them • __ What are program reports?

26. POLL! • How many of you understand what you are reading when you look at a program report? • __ Yes – ME! • __ Yes – Kinda • __ Yes – when they go over them with me • __ No, that’s Finance’s job…

27. POLL! • How many of your organizations have a Program Committee of the Board that sees the reports? • __ Yes – Us! • __ Yes – we have a committee, but they don’t like financial reports • __ No, that’s Finance Committee’s job

28. Put 1st Things 1st Is it Working? • Review account & funder/grant/program coding with each processing period • Get reports at least monthly; are they working for you? • Don’t waste $ & time on unallowed costs • How often do you see Mr. Coyote actually eat?

29. Put 1st Things 1st Is it Working? • Prepare & submit the submissions promptly • Prepare request quickly, • Compare to costs incurred in Accounting System; make necessary adjustments • Processing by government offices already slow; don’t add to that misery with slow submissions

30. Put 1st Things 1st Is it Working? • How IS your financial reporting? • Monthly • Balance sheets • P&L vs budget • Cash flow statement • Key/significant programs reporting • Read? • Understood • Action items?

31. Put 1st Things 1st Is it Working? • Have you periodically pulled the backup to 3 to 5 material transactions and tested: • Do you have all the required documentation? • Does the documentation tell the story? • How is your system doing?

32. Put 1st Things 1st Is it Working? • What is the depth of your Finance Team? • Can they win the game? • How interactive is your auditor? • Have they interviewed staff? Conducted fraud interviews? Met with the upper management team to review the results? Met with the board – to review the audit & the management letter?

33. Put 1st Things 1st Is it Working? • What is the financial skill set of your upper management team? • What is the financial skill set of your board? • What is the financial skill set of your Finance Committee? • Is there a culture of healthy questioning?

34. Do The Right Thing! Means What? • Have the knowledge of what is right, proper according to the contract • Start it that way, end it that way • Follow through! • Do what is right, proper • Have proof that you did what was right & proper

35. Do The Right Thing! Means What? • But know this - You will be remembered for the last thing that you (& your CDC) did…

36. Wrap Up, Conclusion, Next Steps Contact your LISC Representative Joanne with confidential, off-line questions (joannemh@yourbeancounters.com) Upcoming programs!