silc-net presents financial management presentation to the

1111

Financial Management

Presentation to the PennsylvaniaSILC

Presented by:

Melissa Glisson & Tim Glisson

August 24-25, 2010

SILC-NET Presents

22SILCSILC--NET at ILRUNET at ILRU 22

Overview of Materials

&

Agenda

Session Two


OPERATIONALIZING EFFECTIVE

SILCs - Manual

Ch.1 – SILC Duties & Responsibilities

Ch.2 – Managing SILC Finances

Appendix A – RSA Responses to NCIL


FINANCIAL MANAGEMENT for

CILs - Manual

Ch 2: Accounting Basics &

Regulatory Requirements

Ch 4: Financial Statements

Ch 6: Internal Controls

Ch 10: Fiscal Oversight

Ch 11: Independent Audit

Ch 13: Board’s Role in Fundraising


FINANCIAL MANAGEMENT for

CILs – Manual, cont’d.

Appendix A - M

– Financial Statements

– Accounting Procedures Manual

– Cost Allocation Plan

– Conflict of Interest Policies

– Staff Time Sheets & more…

SILCSILCSILCSILC


Session Seven

General Fiscal Requirements

& Management


Fiscal Terms

Program Income

Income received by the grantee directlygenerated by the supported activity or earnedas a result of the grant.

Award

Financial assistance that provides support toFinancial assistance that provides support toaccomplish a public purpose (i.e. grants).accomplish a public purpose (i.e. grants).


Fiscal Terms I

Direct Cost

Cost expenses that can be identified specificallywith a particular cost objective.

Indirect Cost

Expenses for common or organization wideobjectives that cannot be assigned to or readilyidentified with a specific grant award.


Fiscal Terms II

Accrual Basis of Accounting

Record revenues when earned &expenses when they result in liabilities.

Internal Controls

Policies for proper record keeping &

minimizing theft, fraud, and mistakes.


Fiscal Terms III

Allocable

- Costs distributed to multiple awards &benefits account charged in proportionto benefit provided. Benefit award &other work.

Allowable

- Costs that are not otherwise prohibitedfrom recovery by state law, regulation,or grant guidelines.


Fiscal Terms IV

Pass-through Funds

Funding awarded to a recipient organization(CIL) and then, awarded to another entityresulting in a sub-recipient.

Pass-through Entity

A non-Federal entity that provides a Federalaward to a sub-recipient entity to carry out aFederal program. Must monitor subawards toensure audit compliance.

(OMB A-110)


Fiscal Terms V

GAAP (Generally AcceptedAccounting Principles)

The basis of all accounting; used to prepare,present, and report financial statements.

FASB (Financial AccountingStandards Board)

The highest authority establishing GAAP fororganizations.

13131313

Fiscal Terms, cont’d. 6

Cognizant Federal Agency

The Federal agency that provides thepredominant amount of direct Federalawards. Assigned by the Office ofManagement and Budget; CILs often DOE.

SILCSILC--NET at ILRUNET at ILRU

1414

Financial Management Standards

Regulatory Guidelines

Best Practices

&

Accounting Principles


15151515

“The applicant will practicesound fiscal management “

Rehab. ActSec. 725 Standards & Assurances


Financial Management Standards I

16161616

Financial Management StandardsII

Transparency

&

Accountability

ARE KEY !


17171717

Financial Management StandardsIII

Systems Must Provide:

Accurate

Current

&

Complete Disclosure(OMB A – 110)


18181818

Financial Management StandardsIV

3 Objectives of Financial Management

Effective & Efficient Operations- You

Reliable Financial Reporting- Public

Regulatory Compliance- Law


19191919

Financial Management StandardsV

Clear Paper Trail (74.22)

Allows auditors and federal reviewer(s) tofollow money from its point of award to:

- Receipt of Cash

- Drawdowns

- Expenditures

- Cash after Expenses


20202020

Financial Management StandardsVI

Source Documentation A-110

Documentation shows:

- expenses (all)

- justification (i.e. travel; Part B activity)

- funding source


21212121

Financial Management StandardsVII

Internal Controls

Policies to ensure federal fundssafeguarded

Separation of duties (priority control) forapproving purchases, check signing,checks & balances

Conflict of interest

Independent Audit…and more.


22222222

Everyone Needs The Basics

Board of Directors

Executive Director & Fiscal Staff

Leadership Team

Staff

Financial Management StandardsVIII


23232323

Efficient Accounting System

User & System Friendly

Meets Needs of Agency

GAAP

Financial Management StandardsIX


24242424

Financial Management StandardsX

Contract & Grants Management

Reporting

– Accurate & Timely

Oversight

– Internal (administrator)

– External


25252525

Standards Summary

Four

Money Matters


26262626

Standards Summary I

1. Federal funds ONLY for expendituresand activities described in goals &objectives of approved contract.

2. Fiscal control & accounting proceduresmust ensure proper disbursement of,and accounting for, federal funds.


27272727

Standards Summary II

3. When In Doubt…

Check It Out

….Get it in Writing!!


28282828

Standards Summary III

4. Relationships are Critical!

Make Them

Maintain Them

Use Them


29292929

Policies Procedures ManualModel

Accounting & Financial

Policies & Procedures

Manual


30303030

Policies Procedures ManualModel II. Board Roles & Responsibilities

II. Accounting Procedures

Chart of Accounts

Income & Expenses

Banking Procedures

III. Financial Management

Revenue & Expense Classification

Budget Management

Purchasing PoliciesSILCSILC--NET at ILRUNET at ILRU

31313131

Policies Procedures ManualModel II

IV. Financial Reporting

Annual Budget

Contract Requirements & Audit

V. Payroll Policies

Independent Contractors

Personnel Policies


32323232

Session Eight

Regulatory

Agencies Overview


33333333

Regulatory Agencies Overview

“The Act” The Rehabilitation Act

CFR Code of Federal Regulations

EDGAR Education DepartmentGeneral AdministrativeRegulations

OMB Office of Management & Budget

FASB Financial Accounting StandardBoard


34343434

“TheAct”

EDGAR

34 CFR

OMB Circulars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB116 - 117

EDGAR

34 CFR

OMBCirculars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB & GAAP

TheAct

Regulatory Agencies Pyramid -Overview


35353535

Purpose: To empower individuals withdisabilities

1973 - Enacted

1977 – IL Regulations Authorized

1992 - Reauthorized

1998 – Absorbed into WorkforceInvestment Act – Title IV


The Rehabilitation Act Timeline

36363636

The Rehabilitation Act Titles

Title I – Vocational Rehab Services

Title II – Research & Training

Title III – Professional Development &Special Projects

Title IV – Nat’l Council on Disabilities

Title V – Rights & Advocacy

Title VI – Employment Opportunity

Title VII – Independent Living Services


37373737

Code of Federal Regulations(CFR) Overview

Text of federal agency regulationorganized (codified) in a singlepublication.

50 Titles - broad subjects of FederalRegulations – Education 34th.


38383838

CFR Overview, cont’d.

Independent Living Regulations

Title 34 CFR Sections 364; 365; & 366


39393939

Education Department General

Administrative Regulations (EDGAR)

Overview

Contains regulations for administeringdiscretionary & formula grants awardedby D.O.E.

Regulations in Title 34 of CFR, parts 74-99; collectively known as “EDGAR.”


40404040

Part 74 – Uniform AdministrativeRequirements

Part 75 – Federal Grant Programs

Part 77 – Federal Grant Definitions

Part 82 – Lobbying & Advocacy for E.D.Grantees


EDGAR Parts 74, 75, 77, & 82Overview

41414141

Ensure federal grants managed properly &

according to applicable laws & regulations

Publishes daily circulars

Part of Executive Office of President of U.S.


Office of Management & Budget(OMB) Overview

42424242

A – 110 Uniform AdministrativeRequirements

A – 122 Cost Principles

A – 133 Independent Audits


OMB Circulars Overview

43434343

The Financial Accounting Standards Board

(FASB) a private, not-for-profit organization. Primary

purpose - develop generally accepted accounting

principles (GAAP) in the public's interest (U.S.)

The Securities Exchange Commission (SEC)designated the FASB responsible for setting accountingstandards for public companies in the U.S.


Financial Accounting StandardsBoard Overview

44444444

116 – Contributions

117 – Financial Statements


FASB Overview

45454545

“TheAct”

EDGAR

34 CFR

OMB Circulars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB116 - 117

EDGAR

34 CFR

OMBCirculars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB & GAAP

TheAct


Regulatory Agencies Pyramid,Revisited

46464646

Session Eleven

Important Used SILC

Fiscal Regulations


47474747

Regulatory Agencies

“CAN WE DO THAT ? ”

Where Do We Look?

&

Why or Why Not?


48484848

“TheAct”

EDGAR

34 CFR

OMB Circulars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB116 - 117

EDGAR

34 CFR

OMBCirculars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB & GAAP

TheAct


Regulatory Agencies – Order ofPrecedence

49494949

EDGAR

34 CFR

OMBCirculars

364 - 366

74, 75, 77, 82

A-110, A-122 & A-133

FASB & GAAP

State Law State LawTheAct


Order of Precedence, cont’d.

50505050

Title VII - Part B

Innovation & Expansion

Social Security Reinvestment Fund

Other Federal, State or Private


The Rehabilitation Act Sourcesof SILC Funding

51515151

Title VII – Part B

Section 713

“The State may use funds received underthis part to provide the resourcesdescribed in section 705 relating to theSILC.”


Sources of SILC Funding I

52525252

Innovation & Expansion Funds

Section 108 says Innovation & ExpansionFunds can be used for:

Innovative ways to expand andimprove VR, and

to support the SRC and SILC.


Sources of SILC Funding II

53535353

Social Security Reimbursement Funds

Section 108; States can use Social SecurityReimbursement Funds (SSRF) in support ofSILCs and IL services.


Sources of SILC Funding III

54545454

Part 74 – Uniform AdministrativeRequirements

Part 75 – Federal Grant Programs

Part 77 – Federal Grant Definitions

Part 82 – Lobbying & Advocacy forD.O.E. grantees


Education Department GeneralAdministrative Regulations

55555555

Uniform Administrative Requirements

Standards for Financial Management

Program Income Accounting

Written Procedures

OMB 122 Compliance

Record Retention

Required filingsSILCSILC--NET at ILRUNET at ILRU

EDGAR 74

56565656

Allowable Uses of Program Income

Used to further project or program

Used to finance non-Federal share

Deducted from total allowable costs


EDGAR 74 - I

57575757

Financial Management Systems must be:

Accurate

Current

Complete Disclosure


EDGAR 74 - II

58585858

Requires written procedures:

Reasonableness

Allocability (aka “Cost Allocation”)

Allowability


EDGAR 74 - III

59595959

Application Notice

Selection Procedures

Conflict of Interest

Use of Consultants


EDGAR 75

60606060

Grantees may not permit a person to makean administrative decision if;

they or family directly benefit

they are a public official

has family or business relationship with

the grantee

motivated by personal gain


EDGAR 75 - Conflict of Interest

61616161

Form 990 asks for written:

Conflict of Interest Policy

Procedures for identifying and dealingwith conflicts of interest.



62626262

No Using Federal $$$

to Lobby for Federal $$$!

EDGAR 82 places restrictions ongrantees against using Federal funds forinfluencing Federal officials or CongressPeople in connection with awardingFederal funds


EDGAR 82

63636363

Attempts to influence legislation

Attempts to influence legislators

Attempts to influence elections

Contributions to political parties

Formation of lobbying organizations

Says Federal $$s Can’t Pay for:


OMB A-122

64646464

provide assistance or advice to

legislators in response to a written

request

provide non-biased analysis

provide information about your own

agency

SILCs Can Advocate:


The Act

65656565

Direct Lobbying – state a position onlegislation

Grassroots Lobbying – “call to action”to influence legislation

SILC/non-profits Can Use a Portion ofnon-Federal $ For:


Internal Revenue Code (IRC)

66666666

“Substantial Part Test” – not more than 5%

501 (h) Election – Up to 20% of funds

How Much $$?:


IRC

67676767

A – 110 Uniform AdministrativeRequirements

A – 122 Cost Principles

A – 133 Independent Audits


OMB Circulars

68686868

Standards for Financial Management

Systems

Award payment

Cost Sharing or Matching

Procurement procedure

Financial reporting


OMB Circular A-110Uniform Administrative Requirements

69696969

Determine costs of the award so:

Grant is managed properly

Government bears its fair share

Money is spent legally


OMB Circular A-122Cost Principles

70707070

Allowable

Reasonable

Allocable


OMB Circular A-122Cost Principles I

71717171

Allocable & Allowable doesnot mean

Reimbursement!!

…HMMM.


OMB Circular A-122Cost Principles II

72727272

Direct Costs

Can be identified specifically to a finalcost objective.

project

service

direct activity


OMB Circular A-122Cost Principles III


Costs are Allowable if:

Reasonable for the award’s performance

Adequately documented

Consistent

In accordance with GAAP

Conform to cost limitations / exclusions

Time frame appropriate to contract

OMB Circular A-122Cost Principles IV


Reasonable

Costs incurred with proper considerationof the circumstances prevailing at thetime.

OMB Circular A-122Cost Principles V


Considerations when making judgmentsabout reasonableness:

prevailing circumstances

ordinary and necessary

laws and contracts

responsible and prudent

OMB Circular A-122Cost Principles VI


Indirect Costs

Incurred for common cost objectives, notassigned to specific cost objectives.

OMB Circular A-122Cost Principles VII


Allocable

Consistent w/other costs &:

- Incurred specifically for award

- Benefits award & other work

- Distributed in reasonable proportion to benefitsor;

- Necessary to overall operation, not to a specificcost objective

OMB Circular A-122Cost Principles VIII


Cost Allocation Plan (CAP):

EDGAR 74.21 & OMB A-110, A-122 (approved

by Cognizant Agency)

- “Designed to provide that the FederalGovernment bear its fair share of the costsexcept where restricted or prohibited bylaw”

•Financial “blueprint “ for agency

OMB Circular A-122Cost Principles IX


Cost Allocation Plan (CAP):

Simplified (Indirect Cost Rate)

Special Indirect Cost Rate

Multiple

Direct- preferred method

* Model CAP Appendix G Financial Management Manual

OMB Circular A-122Cost Principles X


Section 725 of the Act.

Single Audit Act mandates audit for agencies

receiving $500,000 or more in federal funds.

Allowable expense for agencies required

(133.230).

Also EDGAR 34 CFR 74.26

OMB Circular A-133Independent Audits


Contributions

Pledges

Donor Conditions

Donor Restrictions

FASB 116Accounting Principles


Financial Position

Activities

Functional Expenses

Cash Flows

Financial Disclosures

FASB 117Financial Statements


Annual federal tax return form whichmust be filed

Failure to file penalties


Form 990


Annual grant performance status report tocognizant agency that helps to ensure:

Expenses are recorded

Funds are spent in the given grant

period

Form SF-269

SILCSILC--NET at ILRUNET at ILRU 8585

Document Parts/Title Web Address

IL Regs 34 CFR 364-366 http://www.gpoaccess.govEDGAR 34 CFR Parts 74, 75, 77, 82, http://www.ed.gov/policy/fund/reg/edgarReg/edgar.htmlOMBCirculars:A-110 Uniform Administrative

Requirementshttp://www.whitehouse.gov/search/site/A-110?filters=im_og_gid:10275

A-122 Cost Principles for NonprofitOrganizations,

http://www.whitehouse.gov/omb/fedreg/2005/083105_a122.pdf

A-133 Audits of States, LocalGovernments, and Non-ProfitOrganizations

http://www.whitehouse.gov/omb/circulars/a133/a133.pdf

Other:

FASB 116 Contributions http://www.gasb.org/pdf/fas116.pdfFASB 117 Financial Statements http://www.1800net.com/nprc/fasb117.html

Advocacy & Lobbying http://www.muridae.com/nporegulation/lobbying.htmlCost Allocation http://www.ed.gov/programs/cil/legislation.htmlIRS Form 990 http://www.irs.gov/pub/irs-pdf/f990.pdfIRS Form 269 http://www.irs.gov/pub/irs-utl/sf269-blank.pdf

IL Regs, EDGAR, OMB CircularsFASB, & More


Support for development of this training was provided bythe U.S. Department of Education, RehabilitationServices Administration under grant numberH132B070003-09. No official endorsement of theDepartment of Education should be inferred. Permissionis granted for duplication of any portion of thisPowerPoint presentation, providing that the followingcredit is given to the project: Developed as part ofthe SILC-NET, a program of the IL NET, anILRU/NCIL/APRIL National Training andTechnical Assistance Project.

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silc-net presents financial management presentation to the

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