Federal Education Programs Financial Management Practices

Transcription

1 Federal Education Programs Financial Management Practices Legal Structures for Federal Programs Statutes / Legislation Program Statues (NCLB, IDEA, Perkins) General Education Provisions Act (GEPA) Regulations Program Regulations Education Department General Administrative Regulations (EDGAR) Office of Management and Budget Circulars Guidance Non-Regulatory Guidance 1

2 Federal Grants Management Resources Program Guidance: Statutes Regulations Guidance General Education Provisions Act (GEPA): Education Department General Administrative Regulations (EDGAR): Federal Grants Management Resources Office of Management & Budget (OMB) Circulars: Circular A-87 principles for allowable costs Circular A-133 Compliance Supplement-audit 2

3 Federal Grants Management Resources Rules State and local agencies must demonstrate fiscal control and accounting procedures to ensure the proper disbursement of and accounting for federal funds. Section 76 of EDGAR Section 80 of EDGAR EDGAR Who or What is EDGAR? Education Department General Administrative Regulations (EDGAR) 3

4 Financial Management Requirements All grantees and sub grantees must implement the requirements and maintain systems that meet specific requirements of EDGAR. Time & Effort Reporting OMB Circular A-87 Compensation for Personnel Services If federal funds are used for salaries, then time distribution records are required. Must demonstrate - If employee paid with federal funds, then employee worked on that specific federal program/cost objective. 4

5 Time & Effort Reporting Who must participate? Any employee who is working on a federal program Not contractors All employees paid with federal funds Some employees paid with non-federal funds Time & Effort Reporting A-87: If employee works 100% on single cost objective Semi-Annual Certification Completed at least every six months Signed by a supervisor with knowledge or the employee After-the-fact record (dated) Accounts for the total activity for which employee was compensated Must coincide with one or more pay periods 5

6 Time & Effort Reporting A-87: If employee works 100% on single cost objective (continued) Semi-Annual Certification This is to certify that Abbey Denton has worked 100% of her time for the period July 1, 2011, through December 31, 2011, on Title IA Admin. Signature of employee: Date: Time & Effort Reporting A-87: If employee works 100% on single cost objective (continued) Blanket Semi-Annual Certification Single cost objective (semi-annual certification) Multiple employees Signed by supervisor with first-hand knowledge (principal) 6

7 Time & Effort Reporting A-87: If employee works on multiple cost objectives Personnel Activity Reports (PARs) After-the-fact record (dated) Accounts for the total activity for which employee compensated At least monthly (unless substitute system) Signed by the employee Must coincide with one or more pay periods Time & Effort Reporting A-87: PARs Personnel Activity Reports (PARs): Examples Monthly timecards that coincide with payroll records Schedule that coincides with payroll records (Schedules are appropriate for employees with routines that do not change, i.e. paraprofessionals) 7

8 Time & Effort Reporting What is a Cost Objective? A-87 Definition: A function, organizational subdivision, contract, grant or other cost activity for which cost data are needed and for which costs are incurred. Time & Effort Reporting Proper Financial Management Proper Financial Management Goes Beyond Record Keeping Need reconciliation between: programs that funded salaries, and programs on which employees actually worked 8

9 Time & Effort Reporting Proper Financial Management (continued) At beginning g of year, use budget estimates for salary allocations Initially, use budget estimates or other distribution percentages determined before the services are performed But these do not qualify as PARs! May be used for interim accounting purpose Compare budget estimates to actual data and make adjustments If difference between actual cost and budgeted cost is 10% or greater, then make budget adjustment quarterly If difference is less than 10%, then make adjustment annually Time & Effort Reporting Time Distribution System How to set up Time Distribution System: 1) Plan initial funding allocations well May use budget estimates for initial allocations Supervisors need to be on board 2) Develop written time distribution policies and procedures How to instructions for employees reporting vacation, travel, long-term leave Manual for fiscal side - Frequency of comparing estimates to actual costs, handling of deviations, monitoring of system Requirement for positive time reporting for staff paid with federal funds Training for employees on time distribution policies and procedures 9

10 Time & Effort Reporting Time Distribution System (continued) 3) Train employees On mechanics of filling out form On which federal program cost objective they are working on Refresher training New employee training 4) Close supervision Supervisors should be aware of deviations of effort from initial budget estimates Be ready to redirect work of employee or adjust grant supporting salary Financial Management Requirements EDGAR Section 76 Eligibility to receive subgrants g y g Distribution of funds by formula or competitive Private faith-based organizations eligible to receive funds State consolidated grant application to ED Assurance statements Ability for the SEA to reallocate funds based on specific federal program 10

11 Financial Management Requirements EDGAR Section 76 (continued) LEA grant application and budget approved by the SEA prior to the issuance of a grant and the expenditure of funds Approval process SEA must provide a grant award that indicates the amount of the subgrant, obligation period and any requirements that apply to the specific federal program (scope and conditions) Consultation with and services for private school students Application guidelines for private schools Financial Management Requirements EDGAR Section 76 (continued) Calculation and approval of indirect cost rates (restricted) pp ( ) Coordination of the federal funds with other programs that serve the same populations Program evaluations and fiscal audits SEA and LEA reporting requirements 11

12 Financial Management Requirements Section 80 or EDGAR Specific regulations governing g three threshold systems: Financial Management Procurement Inventory Financial Management Requirements General Principles In general, the SEA and the LEA must implement controls over federal funds. ED looks to systems, not individuals, to ensure funds are spent appropriately. 12

13 Financial Management Definition-controlling and accounting for federal funds and assets Used to make informed programmatic decisions Used to substantiate and document expenditures Seven standards described in Section 80.20(b) of EDGAR Financial Management Seven Requirements: Financial Reporting p g Accounting Records Internal Control Budget Control Allowable Cost Source Documentation Cash Management 13

14 Financial Management Budget Controls Pre-award planning process and technical assistance - developing and approving budgets Communication between fiscal and program staff at the SEA and LEA levels Routine reconciliation to actual expenditures at the SEA and LEA levels Financial Management Allowable Cost Controls Program Regulations Formal procedures or statute relating to costs Guidelines for determining allowable costs (OMB Circular A-87, EDGAR) Access to helpful resources and program guidance 14

15 Financial Management Factors Affecting Allowability of Cost OMB Circular A-87 In order to be allowable, all costs must be: Necessary & Reasonable Cost must be needed for proper & efficient performance and administration of the Federal awards. Cost should not exceed that which would be incurred by a prudent person at the time a decision was made to incur the cost. Allocable A cost is allocable to a particular cost objective if the g/s involved are in accordance with relative benefits received. Allocability = proportionality Financial Management Factors Affecting Allowability of Cost OMB Circular A-87 (continued) Consistently Treated A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated as an indirect cost. Incurred in Accordance with GAAP Generally Accepted Accounting Principles Adequately Documented 15

16 Financial Management Factors Affecting Allowability of Cost OMB Circular A-87 (continued) Net of Applicable Credits Receipts or reduction of expenditure-type transactions that offset or reduce expense items allocable to Fed awards as direct or indirect costs Purchase discounts Rebates or allowances Recoveries or Indemnities on losses Insurance refunds or rebates Adjustments of overpayments Total the Actual Cost of the Item (Composition of Cost) Comprised of allowable Direct, plus allocable Indirect costs, less applicable credits Financial Management Obligation of Funds What Does It Mean to Obligate Funds? An Obligation is a transaction that requires payment LEAs must be able to relate all payments to a specific obligation Must occur during the grant s period of availability (So, know your period of availability!) Should be included in carryover calculations The SDE does not know what your carryover is! Documentation must be kept to substantiate obligations! 16

17 Financial Management Obligation of Funds (continued) When obligations are made: Financial Management Obligation of Funds (continued) In some programs, unobligated funds can be carried over from first year. Tydings Amendment Does not apply to all grants Allows extra year to obligate funds Under Tydings, funds are available for months 15 months under the grant award Plus 12 months Restricted to a 15% carryover for Title I Part A and Title II. 17

18 Financial Management Liquidation Liquidation settle an obligation by paying funds All obligations must be liquidated within 90 days after the end of the obligation period SEA may impose a shorter deadline on sub grantee Financial Management Change to GRA Reimbursement Request Procedure For all Title programs & IDEA part B: Requests should be made within 90 days of incurring expenses (at least quarterly) Requests made after 90 days will require documentation to substantiate them Making requests after 90 days could cause a delay in reimbursement Beginning October 1 st,

19 Procurement Procedures General General procurement procedures are found in EDGAR and some are found in the individual federal program statute State Follow State s procurement procedures State Board Policy 8200 Purchasing Policies and Procedures Manual Procurement Procedures Consider purchases based on the following considerations Allowable by the specific program Reasonable Necessary for the administration and/or implementation of the grant Review all proposed purchases to avoid unnecessary or duplicative items Surplus property Structure procurement to obtain most economical purchase Intergovernmental agreement for common goods or services Lease vs. purchase Conduct all transactions with full and open competition be cognizant of conflict of interest 19

20 Procurement Procedures Contracted Services Contract should include clearly defined deliverables and terms Description of services to be performed or goods to be delivered Description of dates when services will be performed or goods delivered Description of locations where services will be performed or goods delivered Description of number of students/teachers/etc. to be served (if applicable) Remedies for breach of contract-sanctions and penalties Termination procedures Compliance with federal statues see 80.36(i)(3-6) of EDGAR Reporting procedures (if applicable) Requirements pertaining to copyrights Procurement Procedures Contracted Services (continued) Must have written invoice from the individual or company contracted Description of services performed or goods delivered Description of dates services were performed or goods delivered Description of location services were performed or goods delivered Description of students/teachers/etc. served (if applicable) Invoice should be reviewed & approved before payment Segregation of duties/expenditures Documented approvals 20

21 Inventory Management Inventory Items Inventory items purchased with federal funds are divided into three categories: Real Property Equipment Supplies Inventory Management Equipment Inventory vs. Internal Control Equipment Inventory EDGAR requires an inventory for equipment Internal Control Inventory not required for supplies However, ED determined that an adequate internal control system must include a process for labeling and locating property purchased with federal funds 21

22 Inventory Management Equipment Federal Definition of Equipment Tangible propertyp Useful life of more than one year Acquisition cost of $5,000 or more State may use another definition as long as it includes all property described above Supplies Small cost items Consumed quickly ED expects sub grantees to track all property purchased with federal funds, in order to prove there has been a benefit to the federal program. Inventory Management Non-Equipment Inventory Practical help for tracking non-equipment items: Small and attractive item list Conduct risk assessment to identify items susceptible to loss Implement specific measures to control such items Certain pre-defined assets (technology equipment) 22

23 Inventory Management Equipment Inventory Equipment inventory updated annually a description of the property a serial number or other identification number the acquisition date and cost of the property the percentage of federal participation in the cost of the property the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property Physical inventory Must be performed at least every 2 years Indicate signature of individual(s) Inventory Management Equipment Inventory (continued) Must protect against unauthorized use When property is no longer needed, must follow disposition rules: Transfer to another federal program Over $5,000 Keep or sell, but must pay a share based on the percentage of federal ED participation at initial acquisition Under $5,000 May keep, sell, or dispose of it with no obligation to ED 23

24 Inventory Management Internal Controls Must have adequate controls in place to account for: Location of equipment - assure that it is used solely for authorized purposes Custody of equipment - maintain effective control and accountability Security of equipment - adequately safeguard all property Inventory Management Direct & Indirect Costs What are Direct Costs? Direct costs are specific! Costs that can be identified specifically with a particular final cost objective: Compensation to employees for time worked specific to the performance of Federal awards Cost of materials acquired, consumed, or expended specifically for the purpose of the awards Equipment & other approved capital expenditures Travel expenses incurred specifically to carry out the award 24

25 Inventory Management Direct & Indirect Costs (continued) What are Indirect Costs? Costs incurred for a common or joint purpose benefiting more than one cost objective Not readily assignable to the cost objectives specifically benefited, without effort disproportionate to the results achieved Anything not a Direct Cost! Closing Thoughts EFFICIENCY IS DOING THE THING RIGHT. EFFECTIVENESS IS DOING THE RIGHT THING. - Peter F. Drucker 25

26 Contacts Abbey Denton Federal Grants Specialist Idaho State Department of Education Division of Federal Programs Lester Wyer Funding and Accountability Coordinator Idaho State Department of Education Division of Federal Programs Special Education