1. Financial Management Homeland Security Grant Program Michigan State Police Emergency Management and Homeland Security Division Ms. Penny Burger, Financial Manager Ms. Nancy Downs, Financial Support Unit Manager

2. http://www.michigan.gov/emhsd2 Improper Payments Proof of Payment Advances Accounts Payable Questions Overview

3. Improper Payments

4. Improper Payments Elimination and Recovery Act (IPERA) Enacted in 2002 as the Improper Payments Information Act (IPIA) as an effort to strengthen financial management controls so that Federal agencies could better detect and prevent improper payments and better ensure that taxpayer dollars are spent wisely and efficiently. The Improper Payments Elimination and Recovery Act (IPERA) was signed by the President and enacted as a public law (111-204) in July 2010 and officially amended IPIA requirements. http://www.michigan.gov/emhsd4

5. Improper Payments Elimination and Recovery Act (IPERA) (cont.) Provides more transparency and accountability of government. Commitment by the President to further reduce payment errors and eliminate waste, fraud and abuse in Federal programs. Enacted with aggressive goal set by the President to reduce government-wide improper payments by $50 billion and to recapture at least $2 billion in actual improper payments within the first two years. http://www.michigan.gov/emhsd5

6. Improper Payments Elimination and Recovery Act (IPERA) (cont.) The objective of the IPERA is to enhance the accuracy and integrity of federal payments. More specifically: ○ Validate that a Program’s processes, procedures and controls are sound, thereby increasing Program credibility. ○ Elevate a Program’s awareness of risk areas within its processes for increased focus. http://www.michigan.gov/emhsd6

7. Improper Payments Elimination and Recovery Act (IPERA) (cont.) Objectives of the IPERA (cont.) ○ Identify targeted areas in which increased training or improved policies, processes and procedures need to be developed to improve Program efficiency and effectiveness. ○ Grantees must comply with all regulations (e.g. 44CFR and 2CFR) and program guidance for payments. http://www.michigan.gov/emhsd7

8. Improper Payments Elimination and Recovery Act (IPERA) (cont.) IPERA applies to ALL federal departments and agencies and aims to further institutionalize efforts to eliminate improper payments. Federal agencies annually required to identify programs that are vulnerable to significant improper payments. Federal agencies must report to Congress steps being taken to reduce such (improper) payments. IPERA requires statistical sampling and testing on an annual basis. Expands the use of Payment Recapture Audits by all Federal agencies to recover funds. http://www.michigan.gov/emhsd8

9. Payment Recapture Audits Mechanism for detecting and recapturing payment errors. Effective payment recapture audits are investigations in which specialized auditors (often private sector, not state audit staff) using cutting-edge technology and tools to scrutinize government payments and then find and reclaim taxpayer funds made in error or gained through fraud. http://www.michigan.gov/emhsd9

10. Payment Recapture Audits (cont.) Private sector auditors that conduct payment recapture audits are compensated based on the amount of improper payments they identify that are then reclaimed (i.e. they are paid on a contingency basis on the amounts actually recovered) and therefore have incentive to find and recapture overpayment errors. State auditors are not considered private sector auditors. http://www.michigan.gov/emhsd10

11. Complying With the IPERA Expenditures must be properly documented, allowable, reasonable, allocable and obligated within the period of performance and otherwise eligible under award terms and conditions. FEMA contractors must comply with all regulations. Payments that are ultimately determined to be improper will be subject to recoupment. http://www.michigan.gov/emhsd11

12. Improper Payments Defined An improper payment includes any payment that was made to an ineligible recipient or for an ineligible service, duplicate payments, payments for services not received, and payments that are for the incorrect amount. When an agency’s review is unable to determine whether payment was proper as a result of insufficient or lack of documentation, this payment must also be considered an error. http://www.michigan.gov/emhsd12

13. Proof of Payment

14. Sufficient Proof of Payment External document verifying the outlay of funds: ○ Copy of canceled check ○ Computer-generated report from a financial institution showing outlay of funds ○ Bank Statement ○ Detailed receipt indicating item or service purchased, date and method of payment. Internal source documents are not sufficient to prove outlay of funds. http://www.michigan.gov/emhsd14

15. Sufficient Proof of Payment Effective immediately, any reimbursement requests submitted to EMHSD that do not have sufficient proof of payment attached will not be processed until sufficient proof of payment has been submitted and received by the appropriate EMHSD Analyst. http://www.michigan.gov/emhsd15

16. Documentation for Payroll Reimbursement Requests Sufficient proof of payment documentation to accompany EMD-055 payroll reimbursements would include the following: ○ Copy of Payroll Ledger, which includes employee name, pay date, amount paid and check number. ○ Copy of actual pay stubs for employees proving that payment was made and when. Timecards for employees are NOT sufficient proof of payment and will ONLY be accepted as supporting documentation that accompanies proof that payment was actually made to the employee as stated above. Copy of approved AAF and required attachments. http://www.michigan.gov/emhsd16

17. Documentation for Travel Reimbursement Requests Sufficient proof of payment documentation to accompany EMD-057 travel reimbursements would include the following: Copy of paid invoice and proof payment was made (i.e. airfare, hotel billing). Google, Yahoo map outlining total miles driven to substantiate mileage reimbursement request. Copies of receipts for actual expenses, such as parking, tolls, ground transportation, and lodging. Receipts for meals do not need to be sent to EMHSD, but must be retained at the local jurisdiction for audit and review as necessary. Meal reimbursements must not exceed established state approved rates or local rates, whichever is less. Copy of approved AAF and required attachments. http://www.michigan.gov/emhsd17

18. Documentation for Equipment Reimbursement Requests Sufficient proof of payment documentation to accompany EMD-056 for equipment reimbursements would include the following: Copy of paid invoice. Information that must be on the invoice copy includes: ○ Approval to pay invoice including date of approval. ○ Initials or signature of individual approving invoice to pay. ○ Date payment was made and check number. ○ Initials or signature of individual making payment of invoice. Proof of payment (canceled check, etc.) Copy of approved AAF and required attachments. EHP approval if required. http://www.michigan.gov/emhsd18

19. Documentation for Supply/Other Reimbursement Requests Sufficient proof of payment documentation to accompany EMD-056 supply/other reimbursements would include the following: Copy of paid invoice. Information that must be on the invoice copy includes: ○ Approval to pay invoice including date of approval. ○ Initials or signature of individual approving invoice to pay. ○ Date payment was made and check number. ○ Initials or signature of individual making payment of invoice. Proof of payment (canceled check, etc.) Copy of approved AAF and required attachments. http://www.michigan.gov/emhsd19

20. Advances

21. http://www.michigan.gov/emhsd21 Subgrantee may request an advance for $25,000 or more; Subgrantee must submit letter, approved purchase orders, and approved AAF form; Subgrantee must place advanced funds in an interest-bearing account; Subgrantee may keep interest up to $100 per year for administrative expenses for all federal grant funds combined. Advances

22. http://www.michigan.gov/emhsd22 Advances (cont.) Subgrantee must notify EMHSD quarterly, in writing, of any interest earned over $100 Subgrantee must send EMHSD a check payable to the State of Michigan for any interest earned over $100 Interest received by EMHSD is returned to the federal government Advances cannot be outstanding for more than 120 days

23. http://www.michigan.gov/emhsd23 Advances (cont.) All invoices and proof of payment must be dated within 120 days of the advanced payment issue date When advance purchases are completed, subgrantee must submit: ○ Reimbursement Coversheet (EMD-054) ○ Copy of supporting paid invoices ○ Copy of cancelled checks ○ Detail forms (if necessary) ○ Copy of approved AAF ○ A check for unused portion of advance made payable to the State of Michigan

24. Accounts Payable

25. http://www.michigan.gov/emhsd25 Accounts Payable Transaction that takes place at the end of a fiscal year. State of Michigan’s fiscal year is October 1 through September 30. Ensures that money spent in one fiscal year for goods and/or services is reimbursed with funds for that same fiscal year. (Required in accordance with Generally Accepted Accounting Principles (GAAP).)

26. http://www.michigan.gov/emhsd26 If goods/services were received on or before September 30, but the invoice was not received, an accounts payable must be established. If the invoice for the goods/services was received and payment made to the vendor, but a reimbursement request cannot be completed and submitted to EMHSD before the requested deadline, an accounts payable must be established. Accounts Payable (cont.)

27. http://www.michigan.gov/emhsd27 Examples of Payables Previously ordered equipment arrives on September 30, but invoice has not been received yet. The contractor performed services during the month of September, but won’t send a bill until the middle of October. Invoices were paid on September 30, but a reimbursement request cannot be completed, approved, and submitted before the year-end deadline that EMHSD has given.

28. http://www.michigan.gov/emhsd28 Establishing Accounts Payable Complete Payables Estimate form sent by EMHSD Financial ○ Complete separate Payable Estimate forms for each grant. ○ Attach documentation that supports the estimated payable, such as invoice copy, shipping receiver, or billing estimate. ○ Fax or mail completed package to EMHSD Financial Section on or before deadline.

29. http://www.michigan.gov/emhsd29 If Payables Are Not Established In order to make payments greater than $10,000 for old fiscal years without a payable, EMHSD is required to obtain special permission from the State Budget Office (SBO) before payment can be made. This delays processing. Continued requests of the SBO to make these special approvals has raised questions in the accounting practices regarding local programs at EMHSD, resulting in longer than usual delays. Average approval time by SBO this fiscal year has been three months.

30. http://www.michigan.gov/emhsd30 Do not complete one reimbursement packet for both payable and new year expenditures on the same form, even if they are the same grant. ○ Payable – expenses incurred through September 30 that have been established at EMHSD ○ Current year – expenses incurred beginning October 1 Submit reimbursement requests for payables no later than December 31 st. Reimbursing a Payable

31. http://www.michigan.gov/emhsd31 Questions?

32. http://www.michigan.gov/emhsd32 Contact Information Ms. Sandy Long, Analyst Phone: (517) 333-4286 Email: LongS7@Michigan.gov Ms. Carla Richardson, Analyst Phone: (517) 335-6461 Email: RichardsonC6@Michigan.gov Ms. Nancy Downs, Financial Support Unit Manager Phone: (517) 336-6609 Email:DownsN@Michigan.gov Ms. Penny Burger, Financial Manager Phone: (517) 333-5046 Email: BurgerP@Michigan.gov