Financial Management What you need to know…

Agenda Introductions Webinar logistics Financial management systems Uniform guidance – ‘Super circular’ Accounting system Policies and procedures Fiscal reporting Requirements for cash reimbursement requests Preparing for fiscal site visits Common IG audit findings Member support costs and grant drawdown Administrative costs Close outs Program income

Your Fiscal Team July Afable, Manager of Accounting & Finance 617-542-2544, x225 jafable@mass-service.org Steve Gallucci, CFO 617-542-2544, x227 sgallucci@mass-service.org

Financial Mgmt. Systems Uniform guidance – Super circular Key characteristics of highly effective financial management systems Required policies and procedures Suggested policies and procedures Policies and procedures and Form 990 Electronic storage

OMB Uniform Guidance – Super Circular 2 CFR Part 200 and 2 CFR Part 2205 Supersedes and streamlines OMB Circulars: A-21 A-110 A-87 A-122 A-89 A-102 A-133 A-50 Effective date 12-26-2014 – all federal awards made on or after this date Raises Single Audit threshold to $750,000 from $500,000 – for years ending 12-31-2015 or after Other changes… The following highlights some, but not all, of the important changes from past OMB Circulars. This list is not exhaustive and is not a substitute for reading and understanding the Uniform Guidance. §200.112. Conflict of Interest. Requires non-federal entities (recipients and sub-recipients) to disclose, in writing, potential conflicts of interest. This has been added to Grant Terms and Conditions. §200.113. Mandatory Disclosures. Requires non-federal entities to disclose, in writing, any violations of criminal law. Non-federal entities should review this section to ensure they understand their reporting obligations. §200.303 Internal Controls. Requires non-federal entities to establish and maintain effective internal controls over the award and ensure that the non-federal entity is managing the award in compliance with applicable federal statutes, regulations, and the terms and conditions of the award. §§200.317-200.326. Contracts must be procured in accordance with the procurement requirements in 2 CFR Part 200. Alternatively, nonprofit organizations and institutions of higher education may continue to comply with the Procurement Standards in OMB Circular A-110 for one additional fiscal year beginning after December 26, 2014. Such election must be specified in the non-federal entity’s documented policies and procedures. §200.331 Requirements for pass-through entities. Delineates the roles and responsibilities of those non-federal entities that further subaward federal funds. §200.414 Indirect Cost. Allows non-federal entities who have never had a negotiated indirect cost rate to utilize a de minimis indirect cost of 10% of Modified Total Direct Costs. Additionally, non-federal entities that do have an indirect cost rate may elect a one-time extension of their current indirect cost rate for up to four years. Guidance on how to select and calculate the de minimis rate will be published via application instructions and eGrants account maintenance directives. Note: The impact of §200.414 on indirect/administrative costs budgeted for AmeriCorps State and National programs is different than for other programs. AmeriCorps State and National programs should continue to follow application instruction guidance for calculating indirect costs/administrative costs (e.g., if opting for the fixed percentage method for indirect/administrative costs have a 5 percent maximum federal share and grantee match for administrative costs up to 10 percent of the sum of Sections I and II). §200.501. Audit Requirements. Raises the single audit threshold to $750,000; therefore, some non-federal entities that were required to conduct an A-133 audit in the past will no longer be required to do so. These non-federal entities will now be monitored under CNCS’s standard operating procedures for organizations that fall below the threshold.

OMB Uniform Guidance – Super Circular Internal Controls 200.303 These internal controls should be in compliance with guidance in ‘‘Standards for Internal Control in the Federal Government’’ (the Green Book) issued by the Comptroller General of the United States and the ‘‘Internal Control Integrated Framework’’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

OMB Uniform Guidance - Super Circular New Requirement to Record Your Indirect Cost Rate in eGrants Recipients must record the indirect cost rate method and rates which they will be using on their awards Use this link to access instructions on how to record your rate in eGrants http://www.nationalservice.gov/sites/default/files/resource/eGrants_Indirect_Cost_Rate_Instructions_Final.pdf There's also a handout with instructions on how to get rates into eGrants.

Accounting System In order to meet the CNCS reporting standards… Your Accounting System must be capable of: Distinguishing grant versus non-grant related expenditures Identifying costs by program year Identifying costs by budget category (chart of accounts) Differentiating between direct and indirect costs (administrative costs) Grant and non-grant expenditures can be controlled via the customer/job field in QuickBooks. Direct and indirect costs can be captured in the class field of QuickBooks.

Accounting System (cont.) Accounts for each award/grant separately Maintains Federal/non-Federal matching funds separately from grant funds Records in-kind contribution (which can be match funding) as both revenues and expenses Directly correlates to financial reports submitted to MSA, including Periodic Expense Report (PER) And… Written and followed polices and procedures Qualified and trained financial staff Effective communication between levels within finance department and between finance department and program department Cross training Succession planning Self assessment, continuous improvement Board and Finance Committee Active, knowledgeable, informed At a minimum, need a finance person on Finance Committee

Policies and Procedures Internal controls are emphasized in Uniform Guidance, and are part of our site visit. Description of transactions, especially training, is important. Consider prohibited transactions as well. See handouts

Policies and Procedures For cash draws, internal controls should ensure you are requesting the proper amount. For financial statements, policies should state what’s included and frequency of preparation.

Policies and Procedures and Form 990

Electronic Storage

Electronic Storage

Electronic Storage During site visits, we have found that orgs that use electronic timesheets that not complaint. Please check with PO for guidelines.

Electronic Storage from Uniform Guidance §200.335   Methods for collection, transmission and storage of information. In accordance with the May 2013 Executive Order on Making Open and Machine Readable the New Default for Government Information, the Federal awarding agency and the non-Federal entity should, whenever practicable, collect, transmit, and store Federal award-related information in open and machine readable formats rather than in closed formats or on paper. The Federal awarding agency or pass-through entity must always provide or accept paper versions of Federal award-related information to and from the non-Federal entity upon request. If paper copies are submitted, the Federal awarding agency or pass-through entity must not require more than an original and two copies. When original records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided that they are subject to periodic quality control reviews, provide reasonable safeguards against alteration, and remain readable. No longer will require original signature page

Fiscal Reporting Quarterly Due Dates October 14, 2016 (15-16 AND 16-17 through Sept. 30) January 13 (through December 31) April 14 (through March 31) July 14 (through June 30) October 13, 2016 (16-17 AND 17-18 through Sept. 30) Email PER Excel document with individual worksheets updated through the required date Reports must be sent in by the due dates, no exceptions MSA also is required to file reports with CNCS Note that TWO separate reports are due in October If 15-16 program ends before September do not include those expenses on new 16-17 report – they should only be on the 15-16 report The report is simply an emailed version of the PER document with all individual PERs through the required date

Reimbursement and Reporting Key Terms & Definitions Cover Sheet/Request for Cash Reimbursement Cover Page Budget Summary Worksheet Periodic Expense Report (PER) Backup/Supporting Documentation General ledger report that clearly supports PER Actual documentation acceptable if there are only a few transactions Federal Financial Report (FFR) MSA submits this report, aggregating information from the PERS PER is the individual report for the period as well as what we call the whole excel document Backup/supporting documentation – usually a general ledger is best Note that FFRs are required from subgrantees as part of periodic closeouts.

Reimbursement Request Process At least quarterly At minimum, request funds 30 days after submission of PER (except for July 15) Encouraged to request more frequently Payments made via check or electronic fund transfer (EFT) EFT requires small transaction fee deducted from reimbursement Contact July to discuss/choose EFT Must be within 30 days – except July which must include the report AND request together

Reimbursement Request Process Accurate reimbursement received by the15th processed by the 30th; received by the 30th processed by the 15th Inaccurate reimbursements returned by PO for revision and will be resubmitted for processing in the next reimbursement cycle MSA adheres to 15 day processing timeline to account for staff capacity, time off, etc. MSA does not advance funds Note the turnaround time – we may be able to process faster than 15 days, but this is the maximum time. Inaccurate/incomplete reimbursements will not be considered “submitted” until they are accurate/complete and therefore may delay payment timeline

Reimbursement Request Documents Complete reimbursement request includes: Cover sheet with signature (electronic okay) Budget summary worksheet printout PER printout for current request Also email PER to your Program Officer at MSA General ledger, reconciliation report, other backup documentation Individual member hours to date/accountability log Your PO likely will send the log Reimbursements will not be processed until all components are received Do not retroactively change individual PERs after reimbursement was paid PD signature/initials is their explicit confirmation that the employee hours were worked. Remember that we need member tally logs electronically, and your PO will be checking to make sure hour requirements are being met. PO’s will not submit requests for processing until all materials – including member hour updates – are received Given our capacity and the multiple programs we are supporting at once we cannot be responsible for tracking down their missing/unsubmitted items In addition to the hard copy of the PER (budget summary and the worksheet for the period) they also need to send the PER electronically. In addition to indicating and signing off the number of hours on the cover page, they need to submit an actual member hour tally for the period. In case of staff turnover, it’s the subgrantee’s responsibility to train new staff on these requirements. However, we will be happy to help answer questions so that the workflow continues. We’ll be paying to attention to how programs are staying on track with matching funds this year.    Finance and the PO will monitor reimbursements, and will contact you if the grant funds and match funds off by more than 10%.  We’ll want to know whether there are issues with the match funds and what adjustments may be necessary. If new information comes to light, file a supplemental PER.

COVER SHEET All fields in the cover sheet are linked to the PER. Make sure you change the reimbursement period!

Budget Summary

PER

Supporting Documentation We need a summary that ties this up to the GL

Fiscal Site Visits Purpose FSV is not an audit MSA is responsible for ensuring the fiscal integrity of organizations funded Ensure proper internal controls, systems and safeguards exist around the financial operations of an AmeriCorps program FSV is not an audit We review current systems and make recommendations on how to strengthen the systems Limited transaction testing – randomly chosen reimbursement request. FSV 1/3 of portfolio each year Goal is to have each subgrantee have one FSV in a three year cycle May be more often if- we identify issues need for training

Fiscal Site Visits (cont.) Includes, but not limited to: Review of organization's internal control structure Review of prior audit reports and management letters Review of progress made from any prior audit and management letter finding(s) Review of recent request for reimbursement including all support documentation Grant and match

Fiscal Site Visits (cont.) Likely areas for review Member benefits Living allowance stipends Cash match Committed Collected In kind contributions Insurance Human resources/payroll documentation  Is healthcare offered, and are there signed waivers? Are taxes properly withheld from stipends?

Fiscal Site Visits (cont.) Likely areas for review (cont.) Financial policies and procedures Cost allocations Program analysis Actual vs. Budget reports Program documentation – signed contract and provisions Staff charged to grant I-9 W-4 Timesheets Current wage authorization Appropriate job description Current personnel evaluation This is a key characteristic of a highly effective financial management system Wage changes must be documented in the employee’s files. We need to look at both member and employee timesheets – no allocation of members.

Fiscal Site Visits (cont.) Recurring Fiscal Findings Staff Files Incomplete or missing I-9s Missing job descriptions or contracts Missing properly completed payroll authorization forms Timesheets Missing Staff and member timesheets missing supervisory signoff Electronic timesheet systems that were not compliant Timesheets must show not only total time, but must provide a breakout of the allocations to each grant.

Member Support Costs According to the AC Provisions Regardless of member type: Stipends are not determined by the number of hours served, it’s a flat rate Stipends can only be paid while a member is serving Timesheets properly completed Signed by supervisor and member Service, training and fundraising hours segregated

Member Support Costs (cont.) Guidance from CNCS A member stipend stays the same for the duration of their service All members with the same position description must be paid identical stipends and receive the same benefits – travel, training Member stipends can not be pro-rated If a member starts late, the stipend cannot be increased Member stipends can not be paid in lump sums If members are suspended through a whole pay period they are not eligible for that stipend Members cannot perform other work for the organization There are specific provisions for employees starting late, so work with PO.

Grant Drawdown Commissions and AmeriCorps Programs sometimes do not spend all of their Federal money each year. Most of the unexpended funds are from Section II Member Support Costs and other costs associated with members (Health care, trainings, travel). Contact us early on – we’d like to work with you! It might be worthwhile to specifically speak to healthcare coverage. At the end of each year we talk about reemphasizing  the fact that we know they have to keep some there even for members who are un-enrolled, but can potentially make at least two amendments – one earlier on/mid-year, and a second later.  If we agree we should include this, I think one of us on the Program team can easily step in to emphasize if that makes the most sense. 

Grant Drawdown (cont.) Section I – Program Costs Reconcile budgeted amount with year to date expenses Forecast projected expenditures File amendment with Program Officer Section II – Member Costs Start program year with full enrollment Fill slots vacated by members who served less than 30% of their hours Convert Member Slots – FT to PT Specific rules for slot conversions and filling vacated slots. – see PO

Grant Drawdown (cont.) Budget Amendments Contact your AmeriCorps Program Officer before initiating a budget amendment The sooner you contact us, the more likely we can help Amendments over 10% take longer to process All provisions still apply to budget amendments Include justification with budget amendment Your PO can provide assistance. Budget amendments are subject to review Budget amendments can be rejected Especially if it will require CNCS approval

Section III: Admin. Costs A fixed percentage of Section I + Section II designed for administrative costs Composed of Corporation Fixed Amount (this is yours) Commission Fixed Amount (this is MSA’s) 2% Allows MSA to provide training and support. The only way to draw down all of Section III is to draw down all of Section I and Section II

Section III - Calculations (I + II) x .0316 + (I + II) x .0211 = 5% of total grant Our fee comes out before the funds are given to you. No need to calculate.

Grant Close Out Process MSA checks total funds drawn down for program and compares to final program FFR/PER MSA sends close out letter/instructions with forms to programs and amounts drawn down Program completes forms and reconciles its total draw down with MSA amount provided Program submits documentation to MSA within 30 days MSA aggregates all programs and submits one package to CNCS A grant is officially closed by CNCS out when it is over MSA may ask for periodic closeouts during the program. This process at CNCS documents: Total Funds drawn down Sub-grantee certification Residual equipment & supply inventory Refunds as necessary Usually due to variances between accrued and actual expenses. The process usually take 6-9 months

Program Income Definition Revenue earned as a direct result of activities funded under the grant Program income must be used for the purposes of the grant incurred during the project period Program income on hand must be used to defray eligible program costs before requesting funds Discuss with PO if you have program income