1. FINANCIAL MANAGEMENT SUMMER TRAINING FFY2011 Sponsors and Independent Child and Adult Care Centers CACFP Summer Training - 2011

2. FINANCIAL MANAGEMENT AGENDA Federal Financial Management Requirements DPI Financial Management Requirements – Accounting System – Budget – Nonprofit Food Service Financial Report DPI Detailed Financial Review – Other CACFP financial reviews 2

3. 3 Frequently Used Terms Agency: The organization name on the CACFP Application. Same as the name on the federal tax-exempt status (non- profit) or the legal name of the agency (for-profit). Child and Adult Care Food Program (CACFP): Federally funded program through USDA and administered in WI by the Department of Public Instruction. Provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”.  Nonprofit Food Service Financial Report (NPFS): DPI form required from all participating agencies (for-profit and non- profit) that is used to report actual food program expenditures and earned food program reven ue. Annually = Independent and Quarterly = Sponsors.

4. 4 Frequently Used Terms (cont.) United States Department of Agriculture (USDA): The federal branch of government that oversees and regulates the CACFP administered to State Agencies. Department of Public Instruction (DPI): The Department in the State of WI that administers the CACFP to participating institutions. Institution: A licensed center that contracts with the DPI to administer the CACFP to it’s enrolled participants. Also referred to as an “Agency”. Two types: – Independent: One site participating in the CACFP. – Sponsoring Organization (SO): Two or more sites participating in the CACFP. Affiliated - same legal entity as the Institution/Agency. Unaffiliated – no affiliation with Sponsor – SO must be non-profit

5. Child and Adult Care Food Program IS Federally Funded – Passed through DPI a FOOD Program Healthy meals to eligible participants Optional Program – Except in Head Start Heavily Administered – Detailed program requirements. IS NOT “Free” money Funding for personal expenses To purchase soda/coffee for teachers, non-healthy and/or not enough food and snacks for participants Entitlement Program For the disorganized 5

6. FEDERAL FINANCIAL MANAGEMENT REQUIREMENTS 6

7. 7 FINANCIAL VIABILITY Appropriate practices for recruiting facilities. [7 CFR 226.6(b)(2)(vii)(A)(1)] Adequate financial resources to operate the CACFP on a daily basis. [7 CFR 226.6(b)(2)(vii)(A)(2)] – Other Sources of funding During interruptions in program payments Fiscal claims against the agency Unallowable program costs Documentation: – Financial Statements – Audit Reports Budgets [7 CFR 226.6(b)(2)(vii)(A)(3)] – Costs must be necessary, reasonable, allowable and appropriately documented.

8. 8 Nonprofit Food Service [7 CFR 226.6(e)(13)] CACFP funds used solely for operation of food service for enrolled participants. Cannot make a profit on Federal food program No more than 3 month operating balance per program year Documentation to support actual costs Must have other source of income – Costs Not Covered – Temporary interruptions in program payments – Unallowable program costs

9. Nonprofit Food Service Operation CACFP is like a separate nonprofit business within your business Must show how you spend CACFP reimbursement in an allowable way Required for ALL types of agency’s even for-profits

10. DPI FINANCIAL MANAGEMENT REQUIREMENTS 10

11. 11 MEASUREMENTS OF FINANCIAL VIABILITY 1.Accounting System Does your agency have one? If so is it in compliance to GAAP? 2.Approved Budget Amended Budget 3.Incurred Costs (Actual Costs) Reported annually (Independent) and Quarterly (Sponsors) on the Nonprofit Food Service Financial Report

12. 12 Accounting System Cash/Accrual/Modified Accrual – Cash System: Recognizes revenues and costs when cash is received and bills are paid. – Accrual System: Recognizes revenues and costs when costs are incurred and uses a payable and receivable system. – Modified Accrual System: Certain expenses are reported on an accrual basis. Compliance with Generally Accepted Accounting Principles (GAAP) – Rules for the accounting of costs and revenues – Resource: http://www.fasab.gov/accepted.html or Ask your staff Accountanthttp://www.fasab.gov/accepted.html – Items should not be purchased with CASH. Financial Reports – General Ledger / Check Register – Profit/Loss Statement – Balance Sheet Co-mingled CACFP funds with Agency funds – Method of separation (ie. independent account codes) – Approved allocation plan for shared costs

13. 13 Accounting System Consistent with all programs Written Procedures – Process of Payments, Deposit of funds and Payroll Single Audit Reports (non-profits only) – A-133 report required if expend over $500,000/year in federal dollars (non- profits only) Single Audit Clearinghouse http://harvester.census.gov/sac/index.htmlhttp://harvester.census.gov/sac/index.html – Less than $500,000 - Annual report/review from outside party should be conducted annually. – Copy sent to DPI within 9 months from end of agency’s FY if CACFP is major program. For-profits: Compliance review by outside accountant – Annual Report – Should be completed when Federal taxes are completed. – Good resource: www.irs.govwww.irs.gov

14. 14 Accounting System Summary DPI Requirements: n CACFP vs. Other agency activities n Operational and Administrative Costs n Support NPFS reports submitted to SA n Consistent with other agency operations

15. Accounting Systems Acceptable Center credit card Center checking account Charge Account at local store Invoice or COD – Food delivery vendor Unacceptable Cash – Including cash-back Third party checks Food Stamps 15 * Information per GAAP

16. 16 CACFP BUDGET Budget Summary submitted with online application Projection – – “Road Map” of Upcoming Program Year – All Expenses Allowable, Reasonable, in accordance to FNS Instruction – All Revenue Available CACFP Meal Reimbursement CACFP Cash-in-lieu reimbursement Interest earned on CACFP funds and/or other FS income “Other” Non-CACFP Income – Unfunded/Unallowable Costs – SA Overclaims – Interruption in Program Payments – Ex. Child Care Fees, Tuition, Headstart, W-2, Donations

17. 17 Review Online CACFP Budget

18. 18 FFY2012 CACFP Application/Budget Available online at: http://fns.dpi.wi.gov/fns_cacfpapps Click on first dot point: “CACFP Internet Application Manual” – Instructions for online application FFY2012 Online Application (second dot point) Renewing – all material will carry-over just make updates and submit a new online budget summary. All NEW Sponsoring Organizations must submit a completed Attachment G.

19. 19 Project Food Program Costs & Revenue – Costs: Regardless if paid with CACFP reimbursement How much will it cost your agency to administer the food program from October 1, 2011 – September 30, 2012 – Revenue: All sources and amounts available to fund food program expenses. Not covered Unallowable Pay Overclaims Costs not approved are unallowable – Cannot be funded with CACFP funds FFY2012 Budget

20. 20 What do I put in my budget?

21. 21 Administrative & Operational Costs Administrative Monitoring Claim – Compiling – Submitting – Reconciling Accounting / Bookkeeping Operational Kitchen – Meals Preparation Delivery – Menus – Purchasing / Vended Meals

22. 22 Frequent Allowable CACFP Costs (lists are not all inclusive) Allowable Food (consumable) Kitchen Supplies/Nonfood Contract / Vended Meals Food Program Personnel – Admin & Operational Audit Services – CACFP Portion Employee CACFP Travel – e.g. Grocery shopping, DPI training Equipment Purchase/Rental

23. Food Costs Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants At least 50% of budget – For healthy, reimbursable meals at least ½ of reimbursement on food costs. 23

24. Food Supplies Consumable food products used to create menu items served to program participants. Costs can include delivery costs. Taxes must be paid with non-CACFP funds (tax-exempt). Report on the Food Supplies/Food Costs line on budget and NPFS. 24

25. Food Vendors Outside food service, not related to agency. Contract approved with DPI Provide all CACFP components. Report as Contracted Services on CACFP Budget and Financial Report 25

26. Contracted/Vended Meals Costs of purchased, prepared meals are contracted service costs Contract must be signed prior to beginning date (contracted service) The vendor must keep production records (a record of quantity of food prepared) 26

27. Food Service Labor All wages, salaries, employee benefits, and the share of the employee taxes paid by the agency. 27

28. Operational Food Service Labor Menu planning – Production Records Food purchasing Cooking Serving the food Cleaning-up after the meal Meal Attendance 28

29. Food Service Labor is also… Time spent completing required records – HSIR and HSIS – Monthly claim – Financial reports Supervision of day-to-day food service operations These are Administrative costs 29

30. Administrative Costs Sponsors: No more than 15% of CACFP meal reimbursement can be spent on administrative costs without State Agency waiver. Independent Centers: Not an issue because CACFP meal reimbursement is usually spent on operational costs, any leftover should be less than 15%. 30

31. Administrative Costs CACFP Administrative Costs should never be higher then CACFP Operational Costs. – It should cost an agency more to prepare and serve the meals then doing the paperwork and monitoring of the program. 31

32. 32 Frequent Allowable CACFP Costs (list is not all inclusive) Allowable Food (consumable) Kitchen Supplies/Nonfood Contract / Vended Meals Food Program Personnel – Admin & Operational Audit Services – CACFP Portion Employee Travel – e.g. Grocery shopping, DPI training Equipment Purchase/Rental

33. 33 Frequent Unallowable CACFP Costs (lists are not all inclusive) Unallowable Bad Debts, Fines, Penalties Non food program food costs – Coffee, non-CACFP personnel meals (i.e. driver, maintenance, non-employee/family member) – Entertainment – “Family Night”, catering costs Purchase of food for personal use – Money received must be kept in food program account. Must have strict internal policy.

34. 34 Resources for Allowable/Unallowable Costs Guidance Memorandum #11 – Child Care: http://fns.dpi.wi.gov/fns_centermemoshttp://fns.dpi.wi.gov/fns_centermemos – Adult Care: http://fns.dpi.wi.gov/fns_adultmemoshttp://fns.dpi.wi.gov/fns_adultmemos – “Standards for Allowable Costs” User friendly, searchable, Excel reference FNS Instruction 796-2 (rev. 3) – Electronic copy available on our website. – Derived from OMB Circulars and Federal Regulations. – USDA website for OMB Circulars: http://www.fns.usda.gov/fm/FeaturedAreas_menus/FA_Ref erence.htmlttp://www.fns.usda.gov/fm/FeaturedAreas_menus/FA_Ref erence.htm

35. STRETCH TIME 35 Stretch your mind, body and CACFP dollars

36. 36 How am I going to pay for this program?

37. CACFP Reimbursement CACFP Reimbursement is based upon: – Number of meals you serve – Eligibility of the participants The funds you receive will not cover all of your allowable FP costs. 37

38. Remember! The CACFP funds are replacing funds you are now spending 38

39. Other Source of Income 39 CACFP is part of your overall organization. Funds received to run organization must also be available to fund CACFP costs not covered by reimbursement. Examples: Headstart, Tuition, W-2, Fundraising, Private Donations Food Stamps is not another source of income for the center. Report projected Source and Amount on Budget

40. Best use of your CACFP Reimbursement Plan, budget, and organize the funds available will help you to maximize your CACFP reimbursement. 40 No planning, using funds on non- program needs, no accountability of funds spent will result in loss of funding and/or participation

41. 41 All Food Program Costs Paid with CACFP Reimbursement must have received PRIOR DPI approval

42. 42 I need to change my budget!

43. 43 Amending Budgets DPI Policy: CACFP funds can only be used for approved food program line items on annual budget. Notify DPI of any budget omissions. When in doubt contact DPI for approval.

44. 44 How would DPI know what I spent my CACFP reimbursement on? Review of NPFS Reports On-Site Financial Reviews

45. 45 Nonprofit Food Service Financial Report (NPFS) Form PI-1463 (Independent) and PI-1463-A (Sponsors) Report of all ACTUAL CACFP expenditures during the reporting period. Costs should equal expenditures charged to food service program plus any additional expenses covered with non-CACFP funds. Amounts must be supported by actual documentation – NO ESTIMATES Forms can be found under Guidance Memo 11

46. 46 All Food Program Costs: Actual Expenditures – Not Estimates Support Documentation Only report CACFP % – Shared costs Amount net credits Allowable and Approved – FNS 796-2 (rev.3) – CACFP Budget Nonprofit Food Service Financial Report (NPFS)

47. 47 Nonprofit Food Service Financial Report (NPFS) CACFP revenue should be reported using the accrual method (as earned, not received). Additional program income must be reported (e.g. interest income, rebates) Additional non-program income must be reported – Total Costs less Program income = non-program income

48. 48 Nonprofit Food Service Financial Report (NPFS) Due Dates Independent Annual Report – Reporting period: October 1 – September 30  Due Date: November 1 st  Submit via:  E-mail: cari.muggenburg@dpi.wi.govcari.muggenburg@dpi.wi.gov  Fax: (608) 267-0363  Regular Mail E-mail or call if need extension

49. 49 Nonprofit Food Service Financial Reports (NPFS) Due Dates Sponsoring Organization 1st Quarter – Reporting period: October 1 – December 31  Due Date: March 1 st 2 nd Quarter – Reporting period: January 1 – March 31  Due Date: June 1 st 3 rd Quarter – Reporting period: April 1 – June 30  Due Date: September 1 st 4 th Quarter – Reporting period: July 1 – September 30  Due Date: December 1st PI-1463-A (front page)

50. 50 State Agency (SA) USDA OIG CACFP Financial Reviews

51. 51 CACFP Financial Reviews SA Reviews (DPI) – Announced or Unannounced – Usually occur during a program review – Items to have available: Support documentation for NPFS for current and last FFY ALL support documentation for food program costs Bank statements/cancelled checks for food program funds General Ledger, allocation plan, P/L reports – Should be able to describe accounting system. How do you pay your bills? Where did CACFP funds go?

52. 52 CACFP Financial Reviews SA Reviews (continued) – Any non-food program/unallowable cost found to be paid with CACFP funds will be disallowed. May result in repayment to DPI. CACFP funds exceed CACFP costs = repayment to DPI Appeal-able Action – MUST BE ORGANIZED Be able to show and explain your organizations system USDA Reviews – Monitoring SA as part of Management Evaluation – SA will work with agency on Corrective Action (if needed)

53. 53 CACFP Financial Reviews OIG Audits – Office of Inspector General – “Report Card” on CACFP – Focus Audit on key elements or red flags Related party transactions (less than arms length) Purchase of property and/or real estate with federal funds Excessive growth in short time-span Contracted Services Disbarment from other Federal and State Programs – Result: DUNS Number requirement – track all federal grant recipients – http://www.fns.usda.gov/fm/documents/DUNS_general.htm http://www.fns.usda.gov/fm/documents/DUNS_general.htm – Reports go to Washington DC – http://www.usda.gov/oig/ http://www.usda.gov/oig/

54. Let’s Summarize… 54

55. Which are allowable food costs? Milk Beer & Liquor Personal Groceries Spices Bread Crab meat Soda Pop Rabbit Food Teacher Meals Refrigerator        55

56. Which are allowable nonfood/kitchen supplies? Dishes Milk Cups Arts/Crafts Supplies Toilet paper Cooking utensils Dishwashing detergent Paper towels used in the classrooms    56 Need to be separated from food supplies on receipts. 

57. What are some “Other” allowable CACFP expenses? Food Service labor – Operational Exp. Admin. Labor – Only CACFP % Vended Meals – Contracted Service Kitchen Equipment Gas for Vehicles – Only CACFP % Maintenance/Repairs – Only CACFP % 57 CACFP funds should always be spent on food and kitchen supplies FIRST   

58. What items should you retain to support your CACFP costs? Receipts Invoices Payroll (timesheets, paystubs, etc.) Checkbook/check register General Ledger CACFP Claim documentation Bank Statements A shoebox or garbage bag The number to your accountant 58 Retained for 4 years (3 yrs plus the current)  

59. 59 Resources Financial Management: Guidance Memo 11 – State agency Financial Management policy Child and Adult Care sites (Sponsors & Independent) Instructions Completion of NPFS Report(s) Allowable/Unallowable costs Fiscal Action Procedures FNS Instruction 796-2 (rev. 3) – Abbreviated version – Available Electronically – User Friendly – http://fns.dpi.wi.gov/fns_centermemos (under Guidance memo 11) http://fns.dpi.wi.gov/fns_centermemos

60. QUESTIONS 60

61. Contact Info 61 Cari Ann Muggenburg, Auditor Community Nutrition Programs Ph. 608-264-9551 E-mail: cari.muggenburg@dpi.wi.govcari.muggenburg@dpi.wi.gov

62. FINANCIAL MANAGEMENT SUMMER TRAINING FFY2011 Sponsors and Independent Child and Adult Care Centers CACFP Summer Training - 2011