Seminar on

1. Seminar on Advanced Financial Management Office of Justice Programs Office of the Chief Financial Officer

2. Welcome & Introductions

3. Introduction 1. Name/Title 2. Agency represented 3. Years in grants 4. Expectations

4. Learning Objectives • Purpose Financial Monitoring Review • Types of Financial Monitoring Reviews • Desk Reviews • On-Site Reviews • • How are desk and onsite reviews selected • Risk Assessment • • Performing a desk review • Preparing for and Performing an on-site review • Follow Up on Recommendations • Common Findings • Suggestions for mitigating Findings

5. Office of the Chief Financial Officer Leigh Benda Chief Financial Officer Vacant Deputy Chief Financial Officer Finance, Accounting and Analysis Division Grants Financial Management Division Financial Systems Support Division Management, Audit and Admin Team Strategic Planning and Performance Division Budget Formulation and Appropriation Division Budget Execution Division

6. Grants Financial Management Division (GFMD) Christal McNeil-Wright Associate Chief Financial Officer Vacant AssistantChief Financial Officer Financial Management Branch Evaluation and Oversight Branch

7. Financial Monitoring ReviewThe Preparation and Performance

8. Purpose of Financial Monitoring Review • Ensure grantee’s accounting system, policies and procedures, and financial records are adequate to administer federal funds; • Ensure grantee have the necessary Internal controls in place to safeguard against fraud, waste, and abuse; • Assess compliance with program and federal guidelines; • Provide technical assistance; and • Make recommendations for improvement.

9. Definitions • Limited Scope Review – a review of financial information, policies and procedures, and internal controls, to ensure validity and accuracy of reported information, and compliance with Federal Requirements. The process does not warrant an opinion.

10. Definitions (cont) • Audit-is an objective examination and evaluation of an entity’s financial statements and accompanying disclosures by an independent auditor.  The result of this examination is a report by the auditor, attesting to the fair presentation of the financial statements and related disclosure.  The process warrants an expression of an opinion.

11. Types of Financial Monitoring Reviews • Desk Review: • Monitoring review at desk • On-Site Review: • Monitoring review at grantee’s site

12. Risk Assessment • Develop a plan (annually). • The plan should identify the potential risk factors posed by the entire population of grants. • Utilized 38 attributes in FY2019. Factors may include: • New grantee; • Dollar amount of award; • Confidential/Matching funds; • Program income; • Timeliness of reports; • Subawards

13. Risk Assessment Tool Construct a weighted matrix to define the level of risk for each factor.

14. Risk Assessment Tool (cont) Each risk factor can be further evaluated for its relative importance.

15. Risk Assessment Tool (cont) • The final score is the result of multiplying the Risk score by the Importance score. • For example, an attribute designated as moderate-risk received a Risk score of (2) and an Importance score of (2) • The total score for that attribute would be (4).

16. Types of Desk Review • Standard • Enhanced • Restricted Drawdowns • Conference Costs

17. Standard Desk Review • Send a questionnaire form to FPOC to complete and return to OCFO for review • Financial Monitor will complete a Desk Review Checklist to ensure compliance with Federal regulations and program guidelines • Financial Monitor may contact the grantee for additional information or to remedy an issue, if needed • Grantee will receive an email indicating that the desk review is closed

18. Enhanced Desk Review • Request and review accounting records (i.e., general ledger, budget vs. actuals, selected policies & procedures, audit report, etc.) • Sample testing/source documentation from grantee • Select expenditure transactions for testing • Request supporting documentation • Review documentation • Grantee will receive an email indicating that the desk review is closed

19. Restricted Drawdown • Designated for high risk grantees • Evaluating the grantees monthly or quarterly request for funds • Sample testing/source documentation from grantee • Select expenditure transactions for testing • Request supporting documentation • Review documentation • Recommend amount of funds to be released • Final approval is with OAAM

20. Conference Costs • Excess cash review • Pre-Approval and post-event reporting • Sample testing/source documentation from grantee • Select expenditure transactions for testing • Request and review supporting documentation • Financial Monitor may contact the grantee for additional information or to remedy an issue, if needed • Grantee will receive an email indicating that the desk review is closed

21. Pre-Site Review • Coordinate dates with program offices • Confirm dates with grantee • Notify US Attorney’s Office • Send out confirmation letter to grantee (email & GMS) and request specific documents • Detailed General Ledger (G/L) accounts of all expenditures incurred as of a specified date (i.e., March 31, 20XX) for all grants - (preferably in excel format) • A summary of all expenditures incurred, as of a specified date, by approved budget categories or spending plan (preferably in excel format)

22. Pre-Site Review (cont) • Confirmation letter and request documents (cont) • Copy of most recent Single Audit Report • Policies and procedures • Chart of accounts (help to compare budget to actual) • Current Assets (10000 – 16999) • Property, Plant, and Equipment (17000 – 18999) • Current Liabilities (20020 – 24999) • Operating Revenues (30000 – 39999) • List of employees compensated with grant funds

23. Pre-Site Review (cont) • Confirmation letter and specific documents (cont) • Inventory list of equipment purchased with grant funds • List of conferences held funded with DOJ funds • List of sole source procurements with justifications and approvals • List of all subrecipients • Source of matching funds • Amount and source of program income • Agency’s organizational chart

24. Pre-Site Review (cont) • Complete a pre-site visit review of documents currently in our systems (i.e., GMS, GPRS, etc.): • Federal Financial Reports (FFRs) • Progress Reports • Indirect Cost Agreements (if expired request a current copy while on site) • Application narrative • Budget and Budget narrative • Financial Clearance Memo (FCM) – (equivalent to OCFO letter)

25. Pre-Site Review (cont) • Complete a pre-site visit review of documents currently in other Federal systems (i.e., SAM, FAC, FSRS, etc.) • Single Audit compliance • Timeliness of audit submission • If not applicable, request certification from grantee justifying that they are exempt • SAM Registration • Not expired • FFATA Reporting • Check FSRS for a list of subawards reported by grantee

26. Pre-Site Review (cont) • Check list of subrecipients against what was reported in Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS)

27. Pre-Site Review (cont) • Complete a pre-site visit review of documents received from the grantee: • Adequacy of written policies and procedures • Accounting Procedures • Receipts and expenditures of grant funds • Process for submitting required reports • Request grant funds • Staff responsibilities • Cash management policy

28. Pre-Site Review (cont) • Adequacy of written policies and procedures (cont) • Payroll/Time and Attendance • Activity/time attendance reports • Actual hours vs Budget • Signed by the employee and approved by an authorized official

29. Pre-Site Review (cont) • Adequacy of written policies and procedures (cont) • Procurement Procedures • Specific steps to follow to purchase good and services • Approvals(i.e., consultant rate) • Purchase orders • Competition • Non competitive Proposals (Sole source) • Contract Administration • Monitor the actual contract and progress • Ensure products and/or services meet all requirements

30. Pre-Site Review (cont) • Adequacy of written policies and procedures (cont) • Travel Procedures • Authorizations and approvals • Lodging and per diem rates • Provisions for in-state and out-of-state travel • Travel vouchers • Note: No policy - must follow Federal Travel Regulation

31. Pre-Site Review (cont) • Adequacy of written policies and procedures (cont) • Non-Expendable Property and Equipment • Property records • A description of the item • Serial number • Cost (source of funding) • Acquisition date • Location of item • Physical inventory • Conduct at least once every two years • Disposition • $5000 or more, contact awarding agency

32. Pre-Site Review (cont) Reconciliation of Accounting Records vs FFRs

33. Pre-Site Review (cont) Reconciliation of Accounting Records vs. FFRs • Reconcile cumulative expenditures for a specified period for grant with cumulative expenditures reported on FFR • FFR does not reconcile to accounting records, the difference will be questioned

34. Pre-Site Review (cont) Cash Management Analysis Accounting Drawdowns records vs.

35. Pre-Site Review (cont) Budget vs Actual Expenditures

36. Pre-Site Review (cont) Budget vs Actual Expenditures • To Determine the Budget to Actuals for Personnel and Fringe: • Check to see which account codes belong to Personnel (Salary and Wages) • Account code for Personnel is 1000and Fringe Benefits is 1050 • Total all costs associated with the Personnel account codes • Personnel total is $180,000 • Total all costs associated with the Fringe account codes • Fringe Benefits total is $31,770

37. Pre-Site Review (cont) Budget vs. Actual Expenditures Budget to Actuals Table: $58,000 + $62,000 + $60,000 = 180,000 The Results:

38. Pre-Site Review (cont) Budget vs. Actual Expenditures Discretionary Grant

39. Pre-Site Review (cont) Budget vs Actual Expenditures Formula Grant

40. Pre-Site Review (cont) • Single Audit Report – Results of previous audits performed

41. Pre-Site Review (cont) • Single Audit Report • Whether a DOJ program was identified as a major program • Were there any findings • Cross cutting issues • Timely submission

42. Pre-Site Review (cont) • Select samples from detail general ledger transactions XYZ County

43. On-Site Review • Conduct Entrance Conference • Assess Internal Controls • Determine Adequacy of Financial Management System • Test and Analyze Expenditures • Conduct Exit Conference

44. On-Site Review (cont) Entrance conference • Discuss objectives of site visit with key personnel • Discuss concerns noted during the pre-site visit work

45. On-Site Review (cont) • Assess Internal Controls • A process implemented by a non-Federal entity, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: • Effectiveness and efficiency of operations; • Reliability of reporting for internal and external use; and • Compliance with applicable laws and regulations. • Necessary to prevent fraud, waste, and abuse

46. On-Site Review (cont) Basic Internal Control Principles

47. On-Site Review (cont) • Assess Internal Controls • Obtain understanding of controls through Inquiries/Interviews • Walkthroughs procedures with grantees • Verify existing controls

48. On-Site Review (cont) Adequacy of Financial Management Systems • Track grant expenditures separately by approved budget categories or purpose areas (i.e., program income, match, conference cost) • Grant funds should not be commingled with other funds • Ability to accurately produce required financial reports

49. On-Site Review (cont) Types of questioned costs • Unauthorized • Unsupported • Unreasonable • Unallowable

50. On-Site Review (cont) Budget Approved Budget