FINANCIAL MANAGEMENT SUMMER TRAINING FFY2012

1. FINANCIAL MANAGEMENTSUMMER TRAINING FFY2012 Independent Child and Adult Care Sites Summer 2012

2. FINANCIAL MANAGEMENT AGENDA CACFP Financial Review Process • Federal Financial Management Requirements • DPI Financial Management Requirements • Accounting System • FFY2013 Budget • Nonprofit Food Service Financial Report • DPI Detailed Financial Review • And other CACFP financial reviews • Will you pass a DPI Financial Review?

3. Frequently Used Terms • Agency: The organization name on the CACFP Application. Same as the name on the federal tax-exempt status (non-profit) or the legal name of the agency (for-profit). • Child and Adult Care Food Program (CACFP): Federally funded program through USDA and administered in WI by the Department of Public Instruction. Provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”. • Voluntary Program (except for Head Starts) • Performance based reimbursement • Reimbursement received after the fact. • Documentation maintained to support meals were actually served to eligible children

4. Frequently Used Terms • Independent Agency (Institution): An agency with one participating site. • Nonprofit Food Service Financial Report (NPFS): DPI form required from ALL participating agencies (for-profit and non-profit) that is used to report actual food program expenditures and earned food program revenue on an annual basis.

5. Child and Adult Care Food Program IS NOT “Free” money Funding for personal expenses To purchase soda/coffee for teachers, non-healthy and/or not enough food and snacks for participants Entitlement Program For the disorganized IS • Federally Funded • Passed through DPI • a FOOD Program • Healthy meals to eligible participants • Voluntary Program • Except in Head Start • Heavily Administered • Detailed program requirements.

6. FEDERAL FINANCIAL MANAGEMENT REQUIREMENTS

7. Federal Requirements FINANCIAL VIABILITY • Appropriate practices for recruiting facilities [7 CFR § 226.6(b)(2)(vii)(A)(1)] • Financial Resources to Administer Program on a daily basis [7 CFR § 226.6(b)(2)(vii)(A)(2)] • Other Sources of funding • During interruptions in program payments • Fiscal claims against the agency • Unallowable program costs • Documentation: • Financial Statements • Audit Reports • Budgets [7 CFR § 226.6(b)(2)(vii)(A)(3)] • Costs must be necessary, reasonable, allowable and appropriately documented.

8. Federal Requirements Nonprofit Food Service • Cannot make a profit on Federal food program • No more than 3 month operating balance per program year (with explanation) • Documentation to support actual costs • Must have other source of income • Costs Not Covered • Temporary interruptions in program payments • Unallowable program costs

9. Nonprofit Food Service Operation • CACFP is like a separate nonprofit business within your business • Must show how you spend CACFP reimbursement in an allowable way • Required for ALL types of agencies even for-profits

10. DPI FINANCIAL MANAGEMENT REQUIREMENTS

11. DPI FINANCIAL MANAGEMENT REQUIREMENTS Measurements of Financial Viability 1. Accounting System • Does your agency have one? • If so is it in compliance to GAAP? 2. Approved Budget • Amended Budget 3. Incurred Costs (Actual Costs) • Reported annually on the Nonprofit Food Service Financial Report

12. Accounting System • Cash/Accrual/Modified Accrual • Cash System: Recognizes revenues and costs when cash is received and bills are paid. • Accrual System: Recognizes revenues and costs when incurred and uses payable and receivables. • Modified Accrual System: Certain expenses are reported on an accrual basis. • Compliance with Generally Accepted Accounting Principles (GAAP) • Rules for the accounting of costs and revenues • Resource: http://www.fasab.gov/accepted.html or Ask your staff Accountant • Financial Reports • General Ledger / Check Register • Profit/Loss Statement • Balance Sheet • Co-mingled CACFP funds with Agency funds • Method of separation (ie. independent account codes) • Approved allocation plan for shared costs

13. Accounting System • Consistent with all programs • Written Procedures • Process of Payments, Deposit of funds and Payroll • Single Audit Reports (non-profits only) • A-133 report required if expend over $500,000/year in federal dollars (non-profits only) • Single Audit Clearinghouse http://harvester.census.gov/sac/index.html • Less than $500,000 - Annual report/review from outside party should be conducted annually. • Copy sent to DPI within 9 months from end of agency’s FY if CACFP is major program. • For-profits: Compliance review by outside accountant • Annual Report • Should be completed when Federal taxes are completed. • Good resource: www.irs.gov

14. Accounting System DPI Requirements: • CACFP vs. Other agency activities • Operational and Administrative Costs • Support NPFS reports submitted to SA • Consistent with other agency operations

15. Accounting Systems Acceptable • Center credit card • Center checking account • Charge Account at local store • Invoice or COD • Food delivery vendor Unacceptable • Cash • Including cash-back • Third party checks • Food Stamps * Information per GAAP

16. CACFP BUDGET • FFY2013 Budget Summary • Projection – • “Road Map” of Upcoming Program Year • All Expenses • Allowable, Reasonable, in accordance to FNS Instruction • All Revenue Available • CACFP Meal Reimbursement • CACFP Cash-in-lieu reimbursement • Interest earned on CACFP funds • “Other” Income • Unfunded/Unallowable Costs • SA Overclaims • Interruption in Program Payments • Ex. Child Care Fees, Tuition, Headstart, W-2, Donations

17. FFY2013 CACFP Application/Budget • Available online at: http://www.dpi.wi.gov/fns/cacfpapps.html • Part of online application. Must be updated every year. • Complete for projected food program costs for the 2013 program year (October 1, 2012 – September 30, 2013) • Do not record ACTUAL figures. • This is NOT your annual food service financial report that is due November 1.

18. FFY2013 Budget • Project Food Program Costs & Revenue • Costs: Regardless if paid with CACFP reimbursement • Must indicate on application which costs are directly paid with CACFP funds (YES) • How much will it cost your agency to administer the food program? • Revenue: All sources and amounts available to fund food program expenses. • Not covered • Unallowable • Pay Overclaims • Costs not approved are unallowable • Cannot be paid with CACFP funds

19. What do I put in my budget?

20. Frequent Allowable Costs(list is not all inclusive) Allowable • Food (consumable) • Kitchen Supplies/Nonfood • Contract / Vended Meals • Food Program Personnel • Admin & Operational • Audit Services • CACFP Portion • Employee Travel • e.g. Grocery shopping, DPI training • Equipment Purchase/Rental

21. Food Costs • Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants • Recommend at least 50% of budget • For healthy, reimbursable meals at least ½ of reimbursement should be used on food costs.

22. Food Supplies • Consumable food products used to create menu items served to program participants. • Costs can include delivery costs. • Taxes must be paid with non-CACFP funds (tax-exempt). • Report on the Food Supplies/Food Costs line on budget and NPFS.

23. Food Vendors • Outside food service, not related to agency. • Contract approved with DPI • Provide all CACFP components. • Report as “Other Food Service Costs” on CACFP Budget and Financial Report

24. Contracted/Vended Meals • Costs of purchased, prepared meals are contracted service costs • Contract must be signed prior to beginning date (contracted service) • The vendor must keep production records(a record of quantityof food prepared)

25. Food Service Labor All wages, salaries, employee benefits, and the share of the employee taxes paid by the agency.

26. Operational Food Service Labor • Menu planning • Production Records • Food purchasing • Cooking • Serving the food • Cleaning-up after the meal • Meal Attendance

27. Food Service Labor is also… • Time spent completing required records • HSIR and HSIS • Monthly claim • Financial reports • Supervision of day-to-day food service operations These are Administrative costs

28. Administrative Costs • CACFP Administrative Costs should never be higher then CACFP Operational Costs. • It should cost an agency more to prepare and serve the meals then doing the paperwork and monitoring of the program.

29. Additional Food Service Costs • Kitchen Equipment • Ask DPI if over $5,000 • Travel to/from Grocery Store • Must maintain mileage log • Non-profit: Purchase of gas for a personal vehicle is prohibited. Must use mileage reimbursement. • Club membership (i.e. Sam’s, Costco, etc.) • Only a percentage if purchasing office/center supplies. • Rent/Utilities (Only the Kitchen sq. footage %) • Not allowable if owned. These costs should never exceed food costs.

30. Frequent Unallowable Costs(list is not all inclusive) Unallowable • Bad Debts, Fines, Penalties • Non food program food costs • Coffee • Entertainment • Center Costs • Purchase of food for personal use • Money received must be kept in food program account. Must have strict internal policy.

31. All Food Program Costs Paid with CACFP Reimbursement must have received DPI approval

32. How am I going to pay for this Program?

33. CACFP Reimbursement • CACFP Reimbursement is based upon: • Number of meals you serve • Eligibility of the participants • The funds you receive will not cover all of yourallowable FP costs.

34. Remember! The CACFP funds are replacing funds you are now spending

35. Other Source of Income • CACFP is part of your overall organization. • Funds received to run organization must also be available to fund CACFP costs not covered by reimbursement. • Examples: Headstart, Tuition, W-2, Fundraising, Private Donations • Food Stamps is not another source of income for the center. • Report projected Source and Amount on Budget

36. Best use of your CACFP Reimbursement Plan, budget, and organizing the funds available will help you to maximize your CACFP reimbursement. No planning, using funds on non-program needs, no accountability of funds spent will result in loss of funding and/or participation

37. How would DPI know what I spent my CACFP reimbursement on? • Review of annual NPFS Report • On-Site Financial Reviews

38. Nonprofit Food Service Financial Report (NPFS) • Form PI-1463 • Annual (Independent) report of all ACTUAL CACFP expenditures. • Costs should equal expenditures charged to food service program plus any additional expenses covered with non-CAFP funds. • Amounts must be supported by actual documentation – NO ESTIMATES • Forms can be found under Guidance Memo 11

39. Nonprofit Food Service Financial Report (NPFS) All Food Program Costs: • Actual Expenditures • Not Estimates • Support Documentation • Only report CACFP % • Shared costs • Amount net credits • Allowable and Approved • FNS 796-2 (rev.3) • CACFP Budget

40. Nonprofit Food Service Financial Report (NPFS) • CACFP revenue should be reported using the accrual method (as earned, not received). • Additional program income must be reported (e.g. interest income, rebates) • Additional non-program income must be reported • Total Costs less Program income = non-program income

41. Nonprofit Food Service Financial Report (NPFS) Due Dates Independent • Annual Report • Reporting period: October 1 – September 30 • Due Date: November 1st • Submit via: • E-mail: cari.muggenburg@dpi.wi.gov • Fax: (608) 267-0363 • Regular Mail E-mail or call if need extension

42. CACFP Financial Reviews • State Agency (SA) • USDA • OIG

43. CACFP Financial Reviews • SA Reviews (DPI) • Announced (30 day notice) and Unannounced (Drop-in) • Items to have available: • Support documentation for NPFS for last and current FFY • ALL support documentation for food program costs pulled and ready for review • Bank statements/cancelled checks for food program funds • General Ledger, allocation plan, P/L reports • MUST BE ORGANIZED • Be able to show/explain your organization/accounting system • How do you pay your bills?

44. CACFP Financial Reviews • USDA Reviews • Monitoring SA as part of Management Evaluation • SA will work with agency on Corrective Action (if needed) • OIG (Office of Inspector General) Audits • “Report Card” on CACFP • Focus Audits and Data Gathering on key elements or red flags • Related party transactions (less than arms length) • Purchase of property and/or real estate • Excessive growth in short time-span • Contracted Services • Reports go to Washington DC (Congress) • http://www.usda.gov/oig/

45. EXERCISE: “The DPI Auditor”

46. Financial Management Resources • Guidance Memo 11 • State agency Financial Management policy Child and Adult Care sites (Sponsors & Independent) • Instructions Completion of NPFS Report(s) • Allowable/Unallowable costs • Fiscal Action Procedures • FNS Instruction 796-2 (rev. 3) • Available Electronically – User Friendly • Abbreviated version (GM #11 – Attachment 3) • 7 CFR 226, 2 CFR 230 & 225, FAR • Cari Ann Muggenburg • Phone: 608-264-9551 • E-mail: cari.muggenburg@dpi.wi.gov

47. Questions

48. FINANCIAL MANAGEMENTSUMMER TRAINING FFY2012 Independent Child and Adult Care Sites Summer 2012