Federal Financial Management Requirements

1. Federal Financial Management Requirements An overview

2. Standards • Necessary and reasonable • Sound business practices • Prudent person principle • Allocable • Only charge costs that clearly BENEFIT grant • Proper allocation methods • Authorized or not prohibited • Federal, State, or local laws

3. More Standards • Consistent treatment • Across all programs • Year to year • Both indirect and direct • Not used for matching requirements • Unless specifically authorized • Conform to ETA grant exclusions & limitations • Specific unallowable costs • Administrative cost limitation

4. And more….. • Adequately documented • Traceable to source documentation • Consistent with GAAP • Source documentation • Evidence of authority to incur cost • Demonstrate actual amount • Receipts for goods • Subcontractor invoices • Time sheets for staff costs (payroll records)

5. Internal Controls • System to safeguard integrity of funds • Accounting system • Timely recording of expenditures • Qualified personnel • Limited access to records • Separation of duties • Dual signatures for checks • Reconciliations by different staff • Timesheets and payroll approvals

6. Budget Controls • Accounting records need to track to budget categories • Linking spreadsheets or chart of accounts • Spending according to quarterly budget estimates • Spending within approved line items • Monitor costs and make adjustments • Indication of potential modification needs

7. Obligation • Amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or future period • Defined in 29 CFR Parts 97 & 95

8. Unliquidated Obligation • The amount of obligations incurred for which an expenditure has not been recorded. • goods and services ordered but not received.)

9. Accrued Expenditure • Charges incurred by a grantee during a given period requiring a provision of funds for: • (i) goods and tangible property received • (ii) services performed by employees, subgrantees, subcontractors, etc. • (iii) other amounts becoming owed for which no current services or performance is due

10. Outlays • Same as expenditure • Cash payments • For reporting purposes • Cash payments + accruals for goods and services received but not yet paid

11. Examples • Obligation • Subcontract for training services • Purchase order for equipment • Unliquidated Obligation • Purchase order not yet filled • Accrued Expenditure • Equipment received, but not invoiced or paid

12. Chart of Accounts • Numerical Listing or Codes • General Ledger/Books of Account • Identify Costs in Books of Account • Report Financial Results of Operations • Accumulate & Track Costs • Source of Funds • Program Activities or Cost Categories • Interim & Final Cost Objectives

13. Cost Classification • Process used to distribute costs • Assign allowable costs to cost objectives • Costs Assigned • Direct Charge • Allocation • General ledger or books of account

14. Classification System • Required by GAAP • Trace Costs from Federally required reports • To books of account & • To source documentation

15. Cost Classification Process

16. Cost Categories • Only 2 Cost Categories • Administration • Program Activities • Reporting categories • Vary by grant • Classify within books of account • Classify through linking spreadsheets

17. Reporting Categories • Program Income • Both earnings and expenditures • Non-federal costs {Sec. 185 (f)(2)} • AKA “Stand-in” costs • No match required for Earmark grants • Both must be traceable to books of account

18. Administrative Limits • Contained in Grant Agreement • Not to exceed 10% of grant award • Unless negotiated to max of 15% • Documentation Required • Subject to Grant Officer Approval • Measured at conclusion of grant period

19. WIA Definition • 20 CFR 667.220(a) • Not related to direct services • Either to clients or employers • List of specific functions • Unlike traditional definitions • Applies to all Title I programs • Including Earmark grants

20. Administrative Functions • Overall general administrative functions • Accounting, financial, cash management • Procurement • Property management • Personnel management • Payroll • Coordinating resolution of findings • Audit, monitoring, investigations

21. Administrative Functions • General administrative functions • Audit functions • General legal services • Developing systems and procedures • Includes information systems • Required for administrative functions • Monitoring of administrative functions

22. Administrative Costs • Goods & services • Required for administrative functions • Travel costs • Carry out administrative activities • Related to overall management • Awards for administrative functions • Payroll service for staff

23. Administrative CostsInformation Technology • Costs of information systems • Related to administrative functions • Accounting & payroll systems • Procurement & purchasing systems • Costs include • Purchase, development & operation

24. Program CostsInformation Technology • Tracking/monitoring participant & performance information • Employment statistics • Performance & cost information • Eligible providers of training services • Youth & education activities • If both program & admin---ALLOCATE

25. Indirect costs • Traditionally administrative costs • For WIA—may be administrative or program costs • Process to determine proportion for reporting • Addressed in next workshop • Use of linking spreadsheet for reporting

26. Other Guidance • Job Title vs. Job Function • Costs follow job function, NOT title • Multiple functions must be allocated • Subrecipient level classification • Use of contract proposals or invoicing • Function of the award

27. Program Income • Additional revenues for the grant • Earned as a result of grant activity • Earned because of grant • 29 CFR 97.25 – Governmental Grantees • 29 CFR 95.24 – Non-governmental Grantees

28. More Program Income • Addition method required - WIA • 20 CFR 667.200(a)(5) • Reported on SF 269 • Expenditure within a grant period • ETA does not reduce grant awards • Addition method always applies • Both revenues and expenditures identified in books of account

29. Uses of Program Income • No administrative cost limitation • Allowable activities • Allowable costs and proper classification • Included in the scope of audit • Other administrative rules apply • Sanctions for misuse

30. Financial Reports • SF-269 • Standard for all Federal grants • Quarterly expenditure report • Due: 30 days after quarter end • Electronic reporting system

31. Where do I find the data for reports? • Accounting System • Cash Basis • Accrual Basis • Accrual worksheet(s) • Subgrantee reports

32. Subrecipient Reporting • Direct Grant recipient must establish reporting requirements • Comply with Federal requirements • May impose additional requirements • Monitor subrecipient financial activity

33. Common Reporting Elements • Identifying information • Funding year & period covered by report • Total Federal Outlays (expenditures) • Accrual basis • Cumulative by each year of appropriation • Refunds, Rebates, etc. • Any receipt that reduces Federal Outlays

34. Common Elements • Recipient share of net outlays for allowable program activities • Program income • Addition method required • Reported in Section 10, lines r-t • Indirect costs • Reported in Section 11 • Administrative costs identified in comments section (section 12)

35. Status of Funds Section • Federal Unliquidated Obligations • Total Federal Obligations • Net Federal Outlays • Total Federal Funds Authorized for this Funding Period • Unobligated Balance of Federal Funds

36. Web-based Reporting • Program-specific software with required data elements • Grantees provided: • Passwords (data entry) • PINs (data certification) • Embedded data entry instructions

37. Password & PIN Information • Individuals responsible for on-line reporting & report certification must be identified • Instructions contained in grant award transmittal letter

38. Steps in electronic reporting • Select Report Form • Select/Verify Grant Number • Select Reporting Quarter • Report Header Information

39. Report Status Types

40. Finalizing reports • 2 Ways to Save the Report • Enter PIN and submit • Submit • Confirmation provided by system • Certified • Report Status Updated

41. Report Revisions • Grantee may revise until data “locked” • Select appropriate FY/PY & reporting quarter • Explain in comments section • Same process for review & acceptance by ETA

42. “Locking” • 2 consecutive quarters • “FPO Accepted” • LOCKED from revisions • Data available • Read-only • Example • Quarter ending 9/30 is “FPO Accepted” • Quarter ending 6/30 is “LOCKED”

43. Common Problems • Compliance with Edit Checks • Local internet provider difficulties • Difficult to access EIMS at peak times

44. QUESTIONS????