Contract Staff Training Contract Management 2007

Introduction n Recipients of federal funds are responsible for ensuring that the funds are used in accordance with all program requirements. n Recipients are also responsible for determining the adequacy of performance of subrecipient agreement and procurement contracts and for taking appropriate action when performance problems arise.

n Federal regulations identify the allowable and expected corrective and remedial actions which should be taken when subrecipients do not comply with program requirements and/or meet performance standards. [e.g. 24 CFR for CDBG].

n Subrecipients are required to comply with all specific fund requirements, cross-cutting federal regulations, and applicable OMB Circulars. n The contract manager is responsible to oversee the work of subrecipients to assure that they are performing up to standard and are comply with all applicable regulations and requirements.

n Specific fund requirements are located in the federal regulations for that fund source. n Cross-cutting federal regulations are those which apply to any and all federally-funded activities. Examples include: – National Environmental Policy Act. – Prevailing Wage Laws… – Separation of Church and State. – Non-discrimination.

n OMB Circulars cover financial and administrative requirements..... Examples include: – Eligible costs. – Conflict of Interest. – Financial recordkeeping standards.

Progress Reports n All subrecipients are required to submit written progress reports. Most commonly these are submitted monthly or quarterly, depending on the project.

n The contract manager must review progress reports when they are received to assure that the project is progressing as expected, carrying out activities identified in the contract and serving the intended clients. n If the report indicates any problems, it is the responsibility of the contract manager to contact the subrecipient and resolve any issues.

n The contract manager must review the reports to make sure that the subrecipient is reporting the required data in the proper format. This will assure that information can be input into IDIS at the end of the year.

Requests for Payment n Federal funds are distributed on a reimbursement basis; therefore, subrecipients should submit Requests for Payment. Most commonly these are submitted monthly or quarterly. n The contract manager is responsible to review the Request for accuracy, to verify that all costs are eligible for reimbursement and that all required documentation is attached.

n Costs that are not eligible for reimbursement include: – Costs incurred before the start date or after the termination date of the contract. – Costs that are specifically prohibited by federal regulation and/or OMB Circular. – Costs that do not come under any of the categories identified in the contract. – Costs that do not appear necessary or reasonable to carry out the project.

n The contract manager must check the math on the billing, turn it in for processing. n Contract Number n Fiscal Year (FY) n Contracted Budget n Invoice Amount n Balance n Approved By n Date

n Requests for Payment should not be approved if subrecipients are significantly behind in submitting progress reports.

Risk Assessment n Prior to executing a contract or shortly thereafter, the contract manager should complete the Risk Assessment Checklist. This Risk Assessment is one of the criteria used to determine if a subrecipient should receive an on-site monitoring visit. n The Risk Assessment Checklist identifies some of the most common situations that could indicate problems within an agency.

n The Risk Assessment Checklist includes the following questions: n Is this the first time the agency has contracted with the City? n Is this a new activity for the agency? Has the agency successfully completed this activity in prior years? n Does the agency have any unresolved audit findings? Has the agency corrected any issues or findings from previous monitoring visits?

n Has the agency experienced recent turnover in staff responsible for conducting the City funded activity? n Has the agency consistently met performance goals in prior years activities? What is the amount of the contract? n Are reports and billings submitted in a timely manner? n Is there evidence that the agency is experiencing cash flow problems (e.g. requesting expedited reimbursements)?

n Is there other information available which may indicate a need for more frequent monitoring of the activity? If yes, explain. n Date of last comprehensive monitoring of this contract. n Record on the Monitoring Schedule that the Risk Assessment Checklist has been completed. [ i:Monitoring/Monitoring Schedule Excel document].

Desk Monitoring n As soon as is practicable (when at least one progress report and one request for reimbursement have been received), the contract manager should complete the Desk Monitoring Checklist. This Desk Monitoring also helps identify compliance problems and/or the need for an on-site monitoring visit.

n The Desk Monitoring Checklist identifies some of the most common situations that could indicate problems within an agency. The Desk Monitoring Checklist includes the following questions: – Progress Reports. n Are progress reports submitted in a timely manner and at the frequency specified in the contract?

n Do progress reports include all information required by the contract. n Does the information provided in the progress reports demonstrate that the project is being carried out within the Scope of Services of the contract? n Does it appear that the project will be completed on time? What % of project is complete? What percent of year has passed? n If income/demographic information on clients is required, does the information demonstrate that the program is serving the intended clientele?

n If performance measure reporting is required, does the information demonstrate that the program is meeting its performance objectives? – Draw Down Requests. n Are draw down requests submitted in a timely manner? n Are draw down requests complete (do they include all required documentation and is the math correct)? n Are any budget line items over expended? If yes, has the agency requested an adjustment to the budget line items?

n Do any draw down requests include any ineligible costs or costs which were not included in the contract budget? n Has the agency indicated any cash flow problems (e.g. requesting expedited payment)? – Other. n Are there any other federal or local regulations with which the project is required to comply? If yes, specify. Is documentation, demonstrating compliance, in the project file? n Have any potential problems been identified? If yes, specify. What steps will be taken to resolve these issues?

n Do any draw down requests include any ineligible costs or costs which were not included in the contract budget? n Has the agency indicated any cash flow problems (e.g. requesting expedited payment)? – Other. n Are there any other federal or local regulations with which the project is required to comply? If yes, specify. Is documentation, demonstrating compliance, in the project file?

n Have any potential problems been identified? If yes, specify. What steps will be taken to resolve these issues? n Record on the Monitoring Schedule that the Desk Monitoring Checklist has been completed. [ i:Monitoring/Monitoring Schedule Excel document].

Site Monitoring n A minimum of 10% of your contracts must receive an on-site monitoring each year. n There are many types of records/activities that could be included in an on-site monitoring. Examples include: – Documentation of income eligibility and demographic information on clients. – Documentation of tracking of identified performance measures.

– Maintenance of equipment purchased with City funds. – Operation of the funded activity and, possibly, interviews with clients. – Financial records and documentation. – Compliance with applicable cross-cutting regulations (environmental reviews, lead-based paint documentation, tenant notification requirements, etc.).

n On-site monitoring must be documented and recorded. This means either completing the available checklists or writing a narrative report, which covers all appropriate items. n BHCD has prepared a series of On Site Monitoring Checklists which may be used in documenting monitoring visits.

– General Checklist. This form should be used for all BHCD contracts, regardless of fund source. It covers general issues that are applicable to all contracts. n Are the activities being undertaken by the agency consistent within the scope of work per the contract? n Is the scope of work being carried out in a timely manner (consistent with the timeline of the contract)?

n Is the agency tracking information on performance indicators identified in the contract? Are they meeting their performance goals? n Is the agency maintaining adequate records for the project, as required by the contract? n Are written progress reports submitted as required by the contract? n Do the project files include documentation of procurement procedures used to purchase goods and services and/or hire consultants?

n Did the agency purchase any non-disposable equipment with City funds? If yes, is it on site and in working order? Is it cared for in such a way as to adequately protect it from damage or theft? Are inventory records maintained documenting necessary information on the equipment? – Fund Source Checklist. There are Checklists for CDBG, HOME and HOPWA. – The CDBG Fund Checklist covers specific regulations associated with that fund source.

n Does the project, as implemented, meet the National Objective identified? If the National Objective is limited clientele, housing, or job creation and retention activities, are records maintained confirming that clients are income eligible? n Do records confirm that clients are income eligible and are they consistent with information provided in progress reports? Is required client demographic information being collected? Is information in files consistent with that provided in progress reports?

n Is the project, as implemented, carrying out an eligible activity? n Is the agency maintaining records for four years after completion of the contract, as required? n Is other required regulatory documentation maintained in the files? Which files were reviewed? n Are there applicable cross-cutting regulations? Which were reviewed? What were the results? n If equipment was purchased with CDBG funds, is it only being used for CDBG eligible activities? How was this determined?

n In addition to monitoring the program, a review of fiscal records and procedures is also needed. n For very large contracts (over $100,000), fiscal staff will conduct monitorings and contract managers should make arrangements for those reviews. n For smaller contracts, contract managers can conduct basic fiscal monitorings.

n There is a Small Contract Fiscal Monitoring Checklist. – Is the project operating within the contract budget? Are any budget line items over expended? – Are time records maintained for staff which distinguish between funded and non-funded programs?

– Are all time records signed by the staff person and authorized by a different person? – Has the most recently payment of payroll taxes been made? – Are files of all requests for payment, including back-up documentation and proof of payment, maintained? – Are accounting records maintained to distinguish between funded and non-funded programs and the various funding sources within funded programs?

– Are bank statements reconciled regularly? – Does the agency maintain a general ledger or journal? If not, how are records maintained? – If agency received an advance or receives program income, are records maintained to account for all funds. – Does the agency have adequate procedures for receipt and expenditure of funds to protect from loss or theft? – Does the agency maintain a written Conflict of Interest policy?

n Any on-site monitoring that includes a review of files and records should be followed up with a letter to the contractor. This letter should include: – When the visit took place and which agency staff participated. – What records and files were reviewed. – General results of the review.

– Statement of whether the project was found to be operating within the contract and applicable regulations (based on what was reviewed). – Identification of any Findings or Concerns and required follow-up actions. A time frame for the response should also be given.

n If any Findings or Concerns are identified, it is the responsibility of the contract manager to make sure that the subrecipient responds to the items and completes the required actions within the time allotted. n Once the subrecipient has completed all required actions, a letter should be sent to them advising that the items are closed.

n Record on the Monitoring Schedule that the On Site Monitoring has been completed, whether there were Findings and when they were closed. [ i:Monitoring/Monitoring Schedule Excel document].

Contract Amendments n Substantive/substantial changes to a contract must be made by amendment. These include such things as: – Changing the start and/or end dates of a contract. – Changing the dollar amount of the contract. – Making substantial changes to the scope of work, including number and/or types of clients served. – Changing the types of costs that could be covered by the contract.

n Minor changes to a contract may be made on the authority of the contract manager. These types of changes would include: – Shifting line item dollar amounts if they do not involve changing the total dollar amount or changing the types of costs covered by the contract. – Adjustments to the timeline that do not involve changing the completion date. – Minor changes to the projects activities or the number of clients served.

n Contract amendments are processed the same as contracts and must be entered into the Database. n Minor changes, not requiring an amendment, should be documented in writing in the project file ( s are fine).

IDIS Close-Out n At the end of each fiscal year, all projects must be entered in the database by the contract manager. – If the project is complete, it is Closed Out. In order to close out a project, the final report and billing must have been received and processed. Final information on clients and performance measures must be entered.

– If the project is not complete, it is Continued. This is a status report on the project as of the end of the fiscal year (June 30). The project may continue and will be Closed Out when it is completed. n Information input into the Close Out must be consistent with that entered into the Set Up (e.g. type of accomplishment, National Objective, Eligible Activity). If youre not sure, go back and look at the set-up. If the set- up is wrong, correct it.