1. Financial & Grants Management 101 2014 Project Director Training & Annual Meeting

2. Session Objectives  Review grants management regulations  Develop knowledge about effective financial and grants management  Discuss the challenges of documenting grant costs  Explore ways to enhance and improve current practices 2014 Project Director Training & Annual Meeting

3. Testing Your Knowledge Please take a few minutes to complete this quiz 2014 Project Director Training & Annual Meeting See Activity 1

4. Effective Financial and Grants Management 2014 Project Director Training & Annual Meeting4

5. Key Characteristics of Organizations with Highly Effective Financial Management  Written and followed policies and procedures  Qualified and trained financial staff  Effective communications  Succession planning and cross-training  Self-assessment and continuous improvement  Active, knowledgeable and informed Board and finance committee 2014 Project Director Training & Annual Meeting

6. Effective Financial & Grants Management 1. Regulations & Requirements 2.Financial Management Principles 3. Policies & Procedures 4. Internal Controls 5. Administrative Costs 6. Documenting Expenses 7. Match 8. Reporting & Budgeting 9. Audits & Site Visits 10. Grant Closeout 2014 Project Director Training & Annual Meeting

7. 7 Grant Regulations & Requirements 2014 Project Director Training & Annual Meeting

8. Nat’l & Community Svc. Act of 1990 Serve America Act Code of Federal Regulations (CFR) OMB Super Circular State & Local Regulations Notice Of Funding Opportunity Notice of Grant Award Proposal & Budget Grant Provisions Certifications and Assurances

9. What is the OMB Super Circular? The Super Circular provides guidance and requirements relevant to Federal grants in 3 major areas:  Administrative Requirements Accounting System Documentation requirements  Cost Principles Allowable & Unallowable Costs Indirect Costs  A-133 requirements 2014 Project Director Training & Annual Meeting See Handout 1

10. Administrative Requirements – Subparts C & D  Provide consistency and uniformity among Federal agencies in the management of grants and cooperative agreements  Require all Federal agencies to issue a grants management common rule to adopt government- wide terms and conditions 2014 Project Director Training & Annual Meeting

11. Administrative Requirements – Subparts C & D Examples of Topics:  Pre-award costs  Standards for Financial and Program Management  Property Standards  Procurement Standards  Cost sharing or matching  Program income 2014 Project Director Training & Annual Meeting

12. Cost Principles Requirements – Subpart E  Provide guidance to determine the allowable costs incurred by organizations under Federal grants  Designed so that Federal awards bear their fair share of costs  Provide guidance about reimbursement requirements  Provide uniform standards of allowability and allocation  Encourage consistency of treatment of costs  Includes guidance on 65 Selected Items of Cost 2014 Project Director Training & Annual Meeting

13. Cost Principles Requirements – Subpart E Examples of Selected Items of Cost: Advertising and public relations costs Compensation for personal services Memberships, subscriptions, and professional activity costs Recruiting costs Rental costs Training and education costs Travel costs 2014 Project Director Training & Annual Meeting

14. A-133 Audit Requirements – Subpart F  Provide the standards for obtaining consistency and uniformity among Federal agencies for the audit of organizations expending Federal funds  Apply to all organizations that expend $750,000 or more of Federal funds in a fiscal year (12/26/2014 effective date) 2014 Project Director Training & Annual Meeting

15. CNCS Grant Provisions  Are issued by CNCS with the Notice of Grant Award  Are the guiding principles for CNCS-funded grants and cooperative agreements  Contain program and financial guidelines  Are binding on the grantee and subgrantee in the same manner  The order of precedence if inconsistencies exists is: 1. Notice of Grant Award 2. AmeriCorps Special Provisions 3. General Provisions 4. Approved Grant Application 2014 Project Director Training & Annual Meeting

16. CNCS Grant Provision Requirements Examples of items in the Provisions: Member Recruitment, Selection, and Exit Living Allowances, Other In-Service Benefits, and Taxes Member Records and Confidentiality Budget and Programmatic Changes Reporting Requirements Responsibilities under Grant Administration Financial Management Standards Program Income Safety 2014 Project Director Training & Annual Meeting

17. Basics of the AmeriCorps Regulations  Program Requirements  Member Eligibility  Member Management Items Contract, grievance procedures, evaluations Living Allowance & Insurance Benefits Hours  Allowable/Unallowable Activities 2014 Project Director Training & Annual Meeting

18. Financial Management Principles 2014 Project Director Training & Annual Meeting

19. Allowable - What does it Mean? To be allowable under a grant, costs must:  Be necessary and reasonable for the performance of the award  Be allocable  Conform to limitations or exclusions  Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity  Be given consistent treatment [ Direct = Direct and Indirect = Indirect]  Be in accordance with Generally Accepted Accounting Principles (GAAP)  Not be included as a cost or used to meet matching requirements of any other federally-financed program  Be adequately documented 2014 Project Director Training & Annual Meeting

20. Example – Allowable?  The Program Director of BEST AmeriCorps program decided to host a very important meeting at his home and serve beer and pizza hoping that everyone would attend.  The purpose of the meeting was to discuss changes in the new CNCS Grant Provisions that affected the program.  Because it was a business meeting he decided to charge the cost of the beer and pizza to the AmeriCorps grant, especially since he was providing the use of his home. Allowable? 2014 Project Director Training & Annual Meeting

21. Reasonable - What Does it Mean? A cost is reasonable if:  Its nature & amount, does not exceed what a prudent person would do under the circumstances at the time the decision was made to incur the cost  Consideration should be given to: Whether the cost is ordinary and necessary for the operation of the organization, or the proper efficient performance of the award The restraints or requirements imposed by sound business practices, arm’s-length bargaining, award conditions, and other laws Market prices for comparable goods/services for the geographic area Whether the individuals concerned acted with prudence Significant deviations from established practices and policies which may unjustifiably increase the award costs 2014 Project Director Training & Annual Meeting

22. Example – Reasonable?  BEST program needs 5 laptop computers for the program so that participants can learn basic computer skills.  When deciding on the model that would best suit its needs, the Program Director received three price quotes on various models and two were within the same general price range of $650 - $700. However, one laptop appealed to him most – it met all of the necessary specifications plus being the “techie” he was it had many other “nice to have” features, such as built in webcam and mobile broadband, a 21” Hi-Def widescreen, and 8 built-in speakers and a subwoofer.  Although the basic models were adequate, the more appealing one was $2,999, on sale, and came in crimson red, the BEST program’s team color, so the Program Director ordered 5 of these laptop computers. Reasonable? 2014 Project Director Training & Annual Meeting

23. Allocable - What Does it Mean? A cost is allocable:  If goods/services are chargeable based on its relative benefits received; this standard is met if the cost: Is incurred specifically for the award; Benefits both the award and other work and can be distributed using reasonable proportion methods; and Is necessary to the overall operation of the organization  All activities that benefit from indirect costs are appropriately allocated  Any cost allocable to a particular award may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions, or for other reasons  If a cost benefits 2 or more projects, the cost should be allocated based on the proportional benefit 2014 Project Director Training & Annual Meeting

24. Example – Allocable?  When the crimson red laptops finally arrived, the Program Director found that funds allocated for supplies for the BEST AmeriCorps program were fully expended.  Although the laptops were to be used only for the AmeriCorps program, BEST had another CNCS funded program through a Senior Corps program, so the Program Director told the accountant to charge the cost to the Senior Corps program since CNCS was also funding that program. Allocable? 2014 Project Director Training & Annual Meeting

25. Consistent - What Does it Mean? Grantees must be consistent in assigning costs:  Whether a direct cost or an indirect cost  Regardless of the source of funding, i.e., federally or non-federally sponsored activities, and  Following written cost allocation plan, as applicable Key wording in the cost principles:  Consistent with that paid for similar work in the organization’s other activities  Distributed to awards and other activities in a consistent pattern  The organization must follow a consistent, equitable procedure  Charges must be consistent with those normally allowed in like circumstances in the organization’s non-Federally-sponsored activities 2014 Project Director Training & Annual Meeting

26. Example – Consistently Applied?  The BEST program was running low on office supplies and postage stamps.  Since the Program Director couldn’t wait any longer for the office manager to provide the supplies, he purchased them and charged them to the BEST grant. Consistently Applied? 2014 Project Director Training & Annual Meeting

27. 27 Efficient Accounting System 2014 Project Director Training & Annual Meeting

28. Financial Management System  Must prepare reports required by general and program- specific terms and conditions Distinguish grant verses non-grant related expenses  Identify Federal awards received & expended  Accurate, current, and complete disclosure of the financial results of each award  Records that adequately identify the source and use of funds  Comparison of expenditures vs. budgeted amounts 2014 Project Director Training & Annual Meeting

29. Financial Management System  Identify costs by program year & budget category  Differentiate between direct and indirect costs  Account for each award/grant separately  Record in-kind contribution as both revenue & expense  Correlate financial reports submitted to CNCS directly to accounting information and supporting documents 2014 Project Director Training & Annual Meeting

30. Accounting System that properly segregates funds Department of Education Grant AmeriCorps Grant Ford Foundation Grant Accounting System Grant 1 Grant 2 Grant 3 NOT  2014 Project Director Training & Annual Meeting

31. Segregate Financial Duties  A fundamental element is the segregation of certain key duties  The purpose is to prevent fraud and mismanagement Prevent one person from having access to assets and responsibility for maintaining those assets Ensure that no employee or group of employees be in a position to commit and conceal errors or fraud  In general, the principal duties to be segregated are: Custody of assets Authorization or approval of related transactions affecting those assets Recording or reporting of related transactions See Handout 2 2014 Project Director Training & Annual Meeting

32. Policies & Procedures 2014 Project Director Training & Annual Meeting

33. Policies & Procedures  Policies and procedures are a set of written documents that describe an organization's Policies for operation – “what is to be done” The procedures necessary to fulfill the policies – “how it is to be completed”  All staff must be familiar with these documents  Documents must be kept up-to-date  Documents should explain the rationale and include principal transactions and completed forms  Documents must incorporate Federal and CNCS grant regulations and provisions 2014 Project Director Training & Annual Meeting

34. Super Circular: Policies & Procedures  To minimize the time elapsing between the transfer of funds from the U.S. Treasury or the pass-through entity; and for state, payment government by Treasury-State CMIA agreements  Determining the allowability of costs and the terms and conditions of the Federal award  Financial management system that meet the standards for fund control and accountability  Conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts  Organizational conflicts of interest  Procurement transactions of goods and services  Conducting technical evaluations of procurement proposals received and for selecting recipients  Compensation for personal services  Relocation costs of employees  Travel and reimbursement policies  Equipment whether acquired in whole or in part under a Federal award 2014 Project Director Training & Annual Meeting

35. 35 Administrative Costs 2014 Project Director Training & Annual Meeting

36. Definitions  General expenses related to overall administration of an organization receiving CNCS funds  Expenses incurred for common or joint objectives and cannot be readily identifiable with a specific project or cost objective 2014 Project Director Training & Annual Meeting  Specific expenses related to the operations of a specific project Direct Costs Administrative (Indirect) Costs

37. What are Direct Costs?  Allowable, direct expenses for members, e.g., living allowances and insurance costs  Costs for staff who train, place, or supervise  Member’s benefit programs  Evaluations of programs  Supplies and Facility costs  Travel 2014 Project Director Training & Annual Meeting

38. What are Administrative Costs?  Accounting, auditing, contracting, budgeting, and general legal services  Facility occupancy costs, e.g., rent, utilities, insurance, taxes, and maintenance  General liability insurance that protects the organization (not directly related to a program)  Director’s and Officer’s liability insurance  Depreciation on building & equipment  Office Supplies  General & Administrative salaries & wages 2014 Project Director Training & Annual Meeting

39. Administrative Costs What cannot be included as Indirect Costs? ≠ Bad debts ≠ Entertainment costs ≠ Fines and penalties ≠ Fundraising ≠ Interest on borrowed capital ≠ Lobbying ≠ Relocation Costs ≠ Taxes 2014 Project Director Training & Annual Meeting

40. CNCS Limitation on Administrative Costs Administrative costs are limited by statute:  Costs cannot exceed 5% of total Corporation share  Grantees may charge up to 5% of the total CNCS funds expended, provided that the grantee’s administrative match does not exceed 10% of all direct costs 2014 Project Director Training & Annual Meeting Use the CNCS “fixed 5%” Option 1 Use a Federally negotiated indirect cost rate Option 2

41. Administrative Costs  Using the CNCS 5% Rate (45 CFR 2521.95 and 45 CFR 2540.110) Not subject to supporting cost documentation Unreimbursed indirect costs may be applied to meeting operational matching requirements  What does this mean for your AmeriCorps grant? Calculate up to 5% of CNCS share of direct expenses 2014 Project Director Training & Annual Meeting

42. Administrative Costs  Accounting Records? Record as expense and revenue  Expense = record when you incur the cost  Revenue = record when you bill Commission  Before Reimbursement: $$ Debit: Accounts Receivable – Indirect Cost Recovery $$ Credit: Revenue – Indirect Cost Recovery  After Reimbursement: $$ Debit: Checking Account (cash type) Account $$ Credit: Accounts Receivable – Indirect Cost Recovery 2014 Project Director Training & Annual Meeting

43. Administrative Costs  Reporting Must account for this on reports to Commission  Audits & the 5% Indirect Cost Recovery? “Not Auditable”? If the direct cost charged to CNCS is questioned, and deemed unallowable:  Must payback funds for disallowed direct costs  Must payback funds for indirect costs claimed based on the disallowed direct costs 2014 Project Director Training & Annual Meeting

44. Obtaining a Federally Negotiated Indirect Cost Rate  CNCS process Will issue guidance by the end of 2014  Using a Federally Negotiated Indirect Cost Rate Must maintain related supporting documentation for audit Charges are based on documented expenses 2014 Project Director Training & Annual Meeting

45. 45 Documenting Expenses 2014 Project Director Training & Annual Meeting

46. Allowable Allocable Reasonable Consistently Applied Document, Document, Document 2014 Project Director Training & Annual Meeting

47. Why Retain Documentation?  To track incoming information  To review information  To provide historical evidence  To provide evidence of accomplishments  To prepare for an audit Documentation Basics Establish a written record retention policy See Handout 3 2014 Project Director Training & Annual Meeting

48. Defining Source Documentation  Physical information: Hard copy Soft copy: CD, flash drive, server, microfilm  Source: Internal to the organization External sources  Benefits  supports a value, cost, or performance criteria relative to the grant 2014 Project Director Training & Annual Meeting

49. 49 Match 2014 Project Director Training & Annual Meeting

50. Project Costs The total allowable budget or expenditures incurred to operate the program and accomplish its objectives is divided into 2 sections: Federal Share Grantee Share aka: match Portion of total expenditures not paid for with CNCS funds Portion of budget or total expenditures paid for with CNCS funds Federal and Grantee Share funds must be treated consistently

51. Acceptable Match is... Cash and in-kind contributions are accepted as part of the grantee’s cost sharing or matching when contributions meet ALL of the following criteria: Are verifiable from the grantee's records Are not included as contributions for any other Federal award Are necessary and reasonable for accomplishment of project or program objectives Are allowable under the Cost Principles Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching Are provided for in the approved budget Conform to other provisions of the Super Circular 2014 Project Director Training & Annual Meeting

52. Do not count as match -  The value of direct community services performed by volunteers Do count as match -  Services that contribute to organizational functions  Count services such as accounting, legal, training of staff or participants that are elements of the grantee ’ s cost allocation plan Exception: Volunteer Match

53. 53 Questions? 2014 Project Director Training & Annual Meeting