1. YouthBuild Financial Management

2. DOL Requirements DOL adapted OMB Circular A -102 under 29 CFR Part 97 –States follow their own policies and procedures as long as they are consistent with federal requirements DOL adapted OMB Circular A-110 under 29 CFR Part 95 DOL continues to apply the requirements of 29 CFR Parts 95 and 97 until 2 CFR part 215 becomes final

3. Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations OMB CircularsDOL Regulations Nature of Grantee/Subgrantee Federal Audit Requirements Federal Cost Principles Uniform Administrative Requirements Uniform Administrative Requirements State/Local, & Indian Tribal Governments A-133 Revised 6/27/03 (effective 12/31/03) A-87 Revised 05/10/04 A-102 Amended 8/29/97 29 CFR Part 97.20 Institutions of Higher Education A-21 Revised 05/10/04 A-110 Amended 9/30/99 Republished as 2 CFR Part 215 5/11/04 29 CFR Part 95.21 Non-Profits A-122 Amended 05/10/04 Hospitals 45 CFR Part 74 For-Profits Per program or grant agreement 48 CFR Part 31 (FAR) Per program or grant agreement

4. All Financial Systems Must Adhere to 7 separate standards 1. Financial reporting –System must permit preparation of Federal financial reports –Must report accruals 2. Accounting records –Adequately identify grant funds Awards, obligations, assets, liabilities, income and expenditures –Supported by source documentation –Must be maintained in accordance with GAAP

5. Financial Standards 3. Internal controls –System to protect integrity of funds –Accountability for cash, property & other assets 4. Budget controls –Comparison of actual expenditures (outlays) to approved budget plan –Compliance with line item requirements –Prevents overspending

6. More Financial Standards 5. Allowable costs –Only allowable costs charged –Only allocable costs charged 6. Source documentation –Costs must trace to authorizing document –Proof that costs are allowable & allocable 7. Cash management –System to control cash assets

7. The Four Main Cost Principles OMB A-21 Educational Institutions OMB A-87 State/Local Governments and Indian Tribes OMB A-122 Non-profit Organizations 48 CFR 31 Contract Cost Principles and Procedures dealing with Commercial Organizations

8. Federal Cost Principles Purpose – provides that the Federal government bears its fair share of costs except where restricted or prohibited by law –Reasonable & Necessary “Prudent Person Rule” –Allocable Clearly benefit program Both direct & indirect costs

9. Factors Affecting Allowability of Costs Authorized or not prohibited Consistent with the Federal Rules & Circulars Consistent treatment –Across time & program lines –Direct & indirect costs

10. Allowability Not used as match –Unless specifically authorized Documented –Traceable to source documentation Consistent with GAAP –Accounting standards & treatment

11. Allowability Conform to limitations/exclusions contained in the cost principles Net of applicable credits

12. Allowable Costs Associated Real Property Costs –Rehabilitation of existing structure –Construction of building. Architectural Fees –Proportionate share On-site Training supervisor Construction Management

13. Allowable Costs Participant Costs –Payments for work related activities Davis-Bacon Act –Trainees Tools and Clothing –Stipends –Supportive Services –Benefit Costs

14. Allowable with Conditions Examples –Personal services –Advertising of program/grant only –Equipment (with prior approval) –Operating leases for real property –Memberships Prior Approval –Needed BEFORE incurring cost –May exist in grant agreement

15. Unallowable costs Acquisition cost for land and building Brokerage Fees Losses, fines & penalties Contingency reserves Donations and contributions

16. Unallowable Alcoholic beverages Goodwill Lobbying Legal expenses for prosecution of claims, ALJ audit appeals or civil actions Entertainment –Allowable for certain WIA Youth recreation activities

17. Direct and Indirect Costs Identify costs that are direct and indirect: Direct Costs – any costs that can be directly identified with a specific grant Indirect Costs – any costs shared among multiple programs for which a definitive amount can not be directly attributed to a specific grant Direct and indirect costs can be either administrative or program costs

18. Direct and Indirect Costs For example: Direct costs – Informational System costs for a specific grant: Administrative: all costs directly related to financial recording and reporting Program: all costs directly related to performance tracking and reporting Indirect costs – Equipment maintenance and operational costs for an office working with multiple programs Administrative: general office copiers and printers Program: motor vehicles used for transporting participants

19. Indirect Costs/Rate Costs that are not readily identified with a particular cost objective. May be defined as a % of base such as salaries but never the total federal grant award Always indirect but may include program costs

20. Limitations PL 109-234 –$172,200 Administrative Costs –15% Community and Public Facilities –10%

21. PL 109-234 Applies to all ETA appropriated funds –All grants, contracts and interagency agreements Limits salary and bonus payments to individuals Implementation guidance in TEGL 5-06

22. Who is covered? Individuals paid with ETA appropriated funds Direct recipients and all subrecipients Direct costs Costs paid through an Indirect Cost Rate Vendors are not subject to limitation

23. Sub-recipients & Vendors Sub-recipients & vendors can: –Receive funds directly from a Federal agency –Receive funds through a sub-award or pass- thru from a grantee Difference between sub-recipients & vendors is: –Critical in determination of applicable Federal grant management requirements & rules Sub-recipients must follow such rules & vendors do not

24. What is subject to limitation? Covered individuals –Anyone receiving wages or bonus payments from sub-recipients from ETA appropriations Salaries paid at a specific rate Bonus payments paid to the individual Exclusions –Fringe benefits –Non-monetary compensation such as a car

25. Salaries Wages paid to an individual in accordance with IRS instructions –Included in W-2 –Full Time RATE not exceed Executive Level II –2007 maximum is $168,000 –2008 maximum is $172,200 –Adjusted annually by OPM Expressed as annual or hourly amount Calendar year basis – IRS definition

26. Bonuses Included in IRS form W-2 –Reported as income on form 1040 Includes monetary awards, bonus payments, and monetary prizes Calendar year application – same as salaries Excludes non-monetary compensation and corporate profit

27. Profits and Profit Sharing Corporate profits paid on per share basis that have required investment are excluded Profit sharing, when part of personnel policies, as supplement to salary are included Sole proprietor or partnership –Income realized on Schedule C or E, IRS Form 1040

28. Other Considerations Salaries paid by multiple fund sources must be allocated and calculated accordingly Salaries paid through indirect cost rates must be calculated accordingly

29. Administrative Limitations 20 CFR 672.505(a) No more than 15% of grant award

30. Administration Costs (WIA Definition) 20 CFR 667.220 – applies to all grants and programs receiving WIA Title 1 funds Allocable portion of necessary and reasonable costs that are not related to direct provisions of workforce services Coordination of and provision of general administrative functions (continued)

31. Administration Costs (WIA Definition) Financial and cash management Procurement and purchasing Personnel and property management Payroll, audit and general legal services Oversight and monitoring activities Costs of information systems related to administrative functions

32. Administration Costs (WIA Definition)  Awards or contracts solely for the performance of administrative functions  i.e. a contract to a CPA firm to perform financial monitoring of subrecipients  Allocating costs of personnel who performs both administrative and program services such as:  Salaries for executive staff  Travel for program or administrative purposes

33. Administration Costs  Total expenditures equals  All program costs which includes:  All direct and indirect costs not defined as administrative expenditures Plus  All administrative costs which includes:  All direct and indirect costs identified as administrative expenditures

34. Community and Public Facilities Maximum 10% of grant award –Supervision and Training Costs –Rehabilitation or construction of public or community facilities

35. Budgets Standard Form (SF)-424A Initial and Modification

36. SF-424A  Standardized form  Approved by OMB  Used by all Federal agencies Handout

37. SF-424A Section A – Budget summary Section B – Budget categories Section C – Non-Federal resources Section D – Cash needs Section E – Future funding Section F – Other budget information

38. Keep Needs in Mind Administrative costs Program costs Direct costs Indirect costs Cost allocation plan

39. Section B – Budget Categories (a)Personnel(f)Contractual (b)Fringe Benefits(g)Construction (c)Travel(h)Other (d)Equipment(j)Indirect Costs (e)Supplies

40. YouthBuild Cost Items Which category? –Tools –Equipment –Construction Supplies –Construction –Architectural Fees

41. Budget Narrative Clearly written narrative Links appropriate resources to meet project objectives Budget in line with resources requested Qualifications of key staff sufficient to assure proper direction, management and completion of the project

42. Why Do We Track Costs? Is the grant “on-track” financially Is there a potential need for a modification Are costs proportionate to outcomes Is match generated as required Are budget controls in place and followed –Financial management standards

43. Budget Modification Submit to Grant Officer in writing Any changes to –Salaries –Fringe benefits –Indirect costs Changes to all other budget categories –Resulting in an increase or decrease by 20 percent or more

44. Budget Modification Complete the worksheets –Documents the need for change Revise the SF-424A –Reflects new totals –Incorporates all changes Revise the budget narrative Submit to the FPO

45. Resources Where to find the OMB Circulars and Code of Federal Regulations OMB Circulars: www.whitehouse.gov/omb/circulars/index.html 29 & 48 CFR: www.access.gpo.gov

46. Questions