1. Grant Financial Management
Oklahoma Airport Operators Association
Susan Johnson, Financial & Audit Program Manager, FAA
Kathy Franklin Program Manager, FAA
Slide 1 Good afternoon.
Welcome to the session on Grant Financial Management.
I am Susan Johnson and I will be presenting with Kathy Franklin.
I will explain the requirements for areas of Grant Financial Management, and Kathy will provide the application of these requirements in the grant program.
April 30, 2018

2. Grant Financial Management
AIP Audits
AIP Handbook Requirements
System for Award Management (SAM)
Grant Payment Policy/Delphi
The areas of Grant Financial Management we will cover today include:
AIP Audits,
AIP Handbook Requirements,
System for Award Management SAM, and the Grant Payment Policy with Delphi applications.

3. AIP Audits DOT/OIG Audits IPERA KPMG for DOT/OIG Audits
Financial Statement Audits
There are 3 main types of audits of the AIP program that involve the sponsors, and they are
DOT/OIG audits, IPERA Audits, and Financial Statement Audits.
The OIG audits are targeted at specific functional areas of the AIP program, and review mainly for effectiveness and efficiency of FAA oversight actions of the program.
The IPERA audits are looking specifically for improper payments.
Financial Statement Audits go beyond the IPERA audits, and ensure the internal controls in FAA correctly administer the grant program.

4. DOT/OIG Audits
Audit
Reviewed grant disbursements & implementation of eInvoicing
Ensure FAA is providing adequate oversite
Visited Sponsors to review supporting grant payment documentation
During 2017 the OIG visited selected locations in Oklahoma as part of the ongoing audit of Grant Disbursements and Implementation of eInvoicing.
The OIG’s audit objective was to ensure FAA is providing adequate oversight of AIP grant funding. To do this, the OIG wanted to 1) assess whether AIP grant payments are supported and valid, and 2) evaluate FAA’s implementation of eInvoicing in AIP.
The main thing to remember about OIG audits is that they are auditing FAA. They are verifying that we did our job. In order for them to make this validation, they review supporting documentation for the grant payments to see if there is something that was done in error on the grants. Since FAA does not have all the supporting documentation, they must visit the sponsors and review selected documentation.
The OIG will only take action on the sponsor if there is evidence of fraud by the sponsor. As long as there is no fraud, the OIG is looking for errors or mistakes that they can show FAA that we are not doing a sufficient job in providing adequate oversight.
This audit is still ongoing, and we do not have any required actions to take, yet. There will most likely be changes made somewhere, but don’t know what or when.

5. DOT/OIG Audits 2005 Audit Audit of the Airport Improvement Program
Observed potential misuse of AIP Funds
Concluded lack of FAA risk-based oversite increase risk of misused of funds
Result: 2007 Program Guidance Letter
Established 3 sponsor risk levels
Established criteria to determine risk level
Defined minimum grant documentation
Historically, the OIG audits have resulted in changes to the way we handle the AIP program in some form or fashion.
In 2005 there was an audit of the AIP program that observed a potential misuse of AIP funds and concluded that this was due to the lack of an FAA risk-based approach to oversight. What this means is there are not enough personnel resources in FAA to identify misuse of funds and a new risk based approach is needed since we cannot increase staffing level.
As a result, we issued new guidance that established the 3 tier sponsor risk levels and defined minimum grant documentation for each risk level.

6. DOT/OIG Audits FY 2011 Improper Payments in AIP Program
Found Over $13 million of improper AIP payments
Work insufficiently documented
Ineligible or unallowable services
Incorrect amounts or duplicate payments
FY 2013 ARRA Lessons Learned
Found Over $1.4 million of improper AIP payments
Unapproved services payments
Ineligible expenses
Payments billed to wrong grant
Result: 2013 Program Guidance Letter
Updated & Finalized Risk Model Policy
There have been 2 more audits of the AIP program by the OIG that have found similar problems.
The FY 2011 audit found that Work was insufficiently documented, Ineligible or unallowable services were paid for with AIP, and incorrect amounts and duplicate payments were paid with AIP, totaling over $13 million.
The FY 2013 audit found payments were made for unapproved services, for ineligible expenses, and payments were billed to the wrong grant, totaling over $1.4 million.
These audits resulted in an updated risk model policy in Program Guidance Letter
The change from this guidance that affects the sponsors is the specific information that is required for the Invoice Summary required to be attached to each pay request.
1) work summary, 2) vendor names, 3) dates of service 4) billed amounts, 5) applicable payment dates, 6) calculation of federal share.

7. Re-Occurring Audits IPERA Audits Financial Statement Audits
Testing occurs every year for 5 DOT grant programs.
FY2016 FAA AIP was in compliance with IPERA.
Financial Statement Audits
Resulted in PGL for Letter of Credit oversight
IPERA – Improper Payments Elimination and Recovery Act
Happens every year at the same time May/June.
Encourages the elimination of payment errors, waste, fraud, and abuse in Federal programs.
There are 5 grant programs included in the Department of Transportation testing with AIP being 1 of the 5.
IPERA is testing for any payment that was not correct. If the amount is wrong, costs ineligible, draw made on the wrong grant, over draw and repayment required.
In FY 2016, FAA AIP was in compliance with IPERA.
Financial Statement Audits
Test the internal controls in FAA and identify weaknesses that require improved oversight, and review all aspects of the grant process from grant application, grant agreement, Delphi invoice summary reports, risk assessments, and close out documentation.
Financial statement audits have also resulted in new or updated procedures for grant and financial oversight requirements.
Program Guidance Letter was developed in response to audit findings, and outlined improved oversight requirements of airport sponsors on Letter of Credit that have been incorporated into the Delphi requirements.
The financial statement audits also contributed to the Program Guidance Letter concerning the risk assessment requirements.

8. AIP Handbook Requirements
Chapter 3 Projects Eligible for Funding
Allowable Costs
Necessary Costs
Reasonable Costs
Chapter 5 Section 6 Grant Payments
Financial Payment Policy
ADO Requirements
Handbook requirements
Chapter 3 of the AIP handbook discusses funding AIP projects. The chapter discusses that for projects that are eligible and justified, the costs must be allowable.
The allow-ability of the costs are defined by law, are spelled out by cost category.
Costs must also be necessary to accomplish the project.
Costs must be reasonable, and are determined reasonable by cost or price analysis.
Chapter 5 Section 6 provides the requirements for grant payments. This section of the handbook is supplemented by the Financial Payment Policy that contains procedural application for grant payments. The ADO may also have additional requirements for processing grant payments to ensure sufficient oversight.

9. AIP Handbook Requirements
Costs Must Be Reasonable
Pre-grant: Sponsor must perform a cost analysis for every procurement
Land Acquisition: Appraisal and review appraisal
Construction/equipment: Engineer’s estimate and competitive bids
Professional services: IFE, record of negotiation and signed contract
Change Orders: Cost analysis and justification

10. AIP Handbook Requirements
Open Grant Period
Quarterly Reports
Annual SF271 and SF425
DELPHI Payment Reviews

11. AIP Handbook Requirements
Grant Closeout
Final SF 271, SF 425 and Distribution of Costs and Credits Form
Change Orders and Amendment Requests
Were funds spent consistent with Grant Agreement?

12. System for Award Management
Integrated Award Environment (IAE)
Includes 10 IAE Systems
Main data base for anyone who does business with the federal government
SAM is one of 10 systems currently managed by GSA in one database called the Integrated Award Environment IAE.
The IAE manages 10 federal information technology systems that enable searching and applying for federal awards as well as registration capabilities in order to engage in the grant process.
The IAE also manages the Federal Service Desk that assists users in several of the systems, so if you need help, call the Federal Service Desk.

13. GSA is currently in the process of updating the SAM web page, and they are calling it Beta SAM.
The new web page will be more user friendly, and easier to navigate for grant information.

14. System for Award Management
Must have an active registration to have a federal grant. It’s free!
Is sponsor’s DUNS Number current? When does it expire?
Does the DUNS Number on the grant application match FAA records?

15. Grant Payment Policy
AIP Grant Payment and Sponsor Financial Reporting Policy published Dec & updated Jan. 2, 2016
Establishes requirements for submitting, reviewing and approving payment requests
Available at the FAA website:
The grant payment policy establishes requirements for submitting, reviewing, and approving payment requests for FAA grant payments.
The current version was updated January 2016 to incorporate references to 2 CFR 200 and remove the references to 49 CFR Part 18.
The current version is available on the faa.gov website.

16. Grant Payment Policy Section 3: Payment Request Frequency
Section 4: Authorized Payment Requesters
Section 5: Documentation Requirements
Section 7: Improper Payment Actions
Section 9: Financial Reporting
Sponsors must make pay requests that correspond to the physical progress of the project.
This is typically monthly or quarterly, and will vary by project type.
The ADO may also request more frequent pay requests for specific oversight of the project.
Sponsors are not limited to the number of authorized pay requesters. We recommend that sponsors know who is authorized, and have more than one person authorized to make draw downs in Delphi.
Documentation Requirements

17. Grant Payment Policy
Section 5: Pay Request Supporting Documentation Requirements
Grant Payment Risk Level
Nominal, Moderate or Elevated
Supporting Documentation
Invoice Summary
Do not need the SF-271
All Pay requests must have an attachment in Delphi.
FAA is currently working with DOT to enable Delphi to not process the pay request if there is no attachment.
The documentation requirements vary by risk level; nominal, moderate, and elevated. The higher you go, the more documentation is required.
Nominal sponsors only need to attach the invoice summary. The SF-271 is not sufficient. The SF-271 does not contain all of the information that is required. Refer back to the Audit responses where we developed improved procedures for grant payment review.

18. Grant Payment Policy
Invoice Summary must have Contractor Name, Date of Invoice, Invoice #, Billed amount, breakout of AIP and non-AIP costs, worksite name, summary of services/materials billed.
This incorporates the required review from the audits discussed earlier.

19. Grant Payment Policy Section 3: Payment Request Frequency
Section 4: Authorized Payment Requesters
Section 5: Payment Request Supporting Documentation Requirements
Section 7: Improper Payment Actions
Section 9: Financial Reporting
Section 7 Improper Payment Actions
There are 2 common errors encountered with Delphi, the sponsor drew down 100% rather than the 90%, or the draw was made on the wrong grant.
If a sponsor discovers that an incorrect amount/improper amount was inadvertently drawn down, then a credit memo must be processed to off set the incorrect amount. Once the credit memo is entered into Delphi, the sponsor has 29 days to make a subsequent draw that exceeds the credit amount. If it is at the end of the grant, the funds must be returned to accounting and returned to the grant.

20. Grant Payment Policy Section 9: Financial Reporting
SF-425 Federal Financial Report submitted annually & closeout
SF-271 Outlay Report & Request for Reimbursement for Construction Projects submitted annually & closeout
Section 9 Financial reporting
The SF-425 and 271 are only required to be submitted annually and at closeout.

21. Slide 21 Delphi Desktop User Manual
DOT Delphi eInvoicing Training Materials
Linked to the FAA AIP Grant Payments website

22. Grant Payment Policy/DELPHI
Risk Assessments
Conducted a minimum of every 3 years
AIP Grant Oversight Sponsor Risk Assessment Checklist sent Feb./Mar. 2018
PM’s completed Risk Assessment Questionnaire
Performance on grant payments
Bidding practices
Compliance with grant assurances
Sponsor’s expertise in grant/project management
Determines Sponsor’s Risk Level

23. Grant Payment Policy/DELPHI
Quarterly Payment Reviews
One payment per sponsor
Is an invoice summary attached?
Does the summary match the request?
Is the request consistent with project’s progress?
Do the costs appear allowable and reasonable?
If no to any question, PM will provide feedback to sponsor.

24. Grant Payment Policy/DELPHI
Final Payment Review
All payment requests are manual approval within the final 10% of AIP grant amount.
Review all the elements in Quarterly Review.
Review all financial documents.
Ensure costs are consistent with grant agreement
Does final request match financial documents?

25. Grant Financial Management
AIP Audits
Check the law and guidance are being followed
Provide feedback on how to improve
AIP Handbook Requirements
Costs must be reasonable
Payments consistent with Grant Agreement
Grant Payment Policy/Delphi
Risk Based Approach
Well documented payments consistent with project progress

26. Questions?