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Grants Management & Compliance for Dummies : Grants Management & Compliance for Dummies Krista Schumacher, Director Grant Development Tulsa Community College kschumacher@tulsacc.edu 918-595-7922 National Grants Management Annual Training Conference April 26-2006 – Washington, DC – www.ngma.org


Disclaimer : Disclaimer This presentation is for informational purposes only. The presenter is not liable for actions taken based solely on the information covered in this session. It is advisable to seek legal counsel when dealing with matters involving the federal government In other words – I am learning right along with you. . . 


Quote of the Day : Quote of the Day “Compliance has become a term of art in federally funded activities.” -- Council on Governmental Relations


Yes, we must do what we say. . . : Yes, we must do what we say. . . Grants are contractually binding agreements If you break any part of the contract, you’ve broken your word (and possibly the law) If you break the law, all kinds of horrible things can happen to you The media loves negative news Grants are contractually binding agreements If you break any part of the contract, you’ve…


Challenges of Grants Management : Challenges of Grants Management What is working well at your organization? What needs to be changed? What are your biggest concerns re: compliance?


Initial Topics for this Session : Initial Topics for this Session Direct grants vs cooperative agreements Sub-recipients vs. sub-contractors Supplementing vs. supplanting Spending plans Cost Principles Uniform Administrative Requirements Reporting requirements Prior approval


Topics (cont) : Topics (cont) Equipment Indirect Matching Program Income Time and Effort reporting Grant closeout Single audit (A-133) Evaluating grants management practices Resources


What Grants Compliance Management Is : What Grants Compliance Management Is A collaborative team approach by all vested departments of the institution Grant Development Office Accouting Office (Comptroller) Grants Accountant Human Resources Project Staff


What Grants Compliance Management Is Not : What Grants Compliance Management Is Not An effort placed solely on the shoulders of one individual or one department Grant Development Office Grants Accountant or Office Program Director An “enigma” the organization perceives as having no relation to securing new funds “Someone else’s” responsibility


Levels of Non-Compliance : Levels of Non-Compliance Fraud Intentional non-compliance Ignoring the rules because don’t apply to us Substandard performance Served 100 vs 200 participants as stated in grant Unintentional non-compliance Ignorance of regulations and obligations Detrimental reliance EDGAR 75.900


Obstacles to Grants Compliance : Obstacles to Grants Compliance Inadequate resources Staff training, professional development Poorly defined roles and responsibilities Nonexistent or outdated policies and procedures related to federal grants management Poor management systems Poor conception of the importance of grants compliance and internal controls


Hierarchy of Grant Requirements : Hierarchy of Grant Requirements Which do we follow? Authorizing legislation Program regulations Code of Federal Regulations (CFR) OMB Circulars Approved proposal


Public Law 106-107 : Public Law 106-107 Federal Financial Assistance Management Improvement Act Nov. 1999 -- authorized by Congress “To improve the effectiveness and performance of Federal financial assistance programs, simplify Federal financial assistance and reporting requirements, and improve the delivery of services to the public.”


PL 106-107 : PL 106-107 Changes these cost principles: A-21 (higher ed) becomes 2 CFR 220 A-87 (governments) becomes 2 CFR 225 A-122 (non-profits) becomes 2 CFR 230 Changes these administrative regulations: A-110 (higher ed and nonprofits) becomes 2 CFR 215 A-102 appears to remain A-102


Direct Grants and Cooperative Agreements : Direct Grants and Cooperative Agreements Direct Grants Funding for programs that “support or stimulate a public purpose” and are awarded directly to an entity (and subsequently to a sub-contractor or sub-recipient) with limited federal programmatic oversight. Cooperative Agreements Same as direct grants but include significant oversight from the federal agency for program implementation.


Discretionary vs. Mandatory Grants : Discretionary vs. Mandatory Grants Discretionary Funds for which institutions compete to establish projects Demonstration, research, training, service delivery, construction, scholarships/fellowships Mandatory Funding provide on the basis of a formula Also known as entitlement grants Typically awarded to states, who sub-award funds


Sub-recipient vs. Sub-contractor : Sub-recipient vs. Sub-contractor Sub-contractor Fiscal agent contracts with recipient organization to do work related to a grant program and be funded with grant funds Both entities benefit Sub-recipient Recipient is primary beneficiary


Sub-recipient vs. Sub-contractor (cont) : Sub-recipient vs. Sub-contractor (cont) When not the fiscal agent, which regulations are followed? Sub-recipient Recipient institution’s regulations Sub-contractor Fiscal agent’s regulations


Supplementing vs. Supplanting : Supplementing vs. Supplanting Supplement “something that completes or makes an addition” Supplant “to take the place of and serve as a substitute” “Thou shall supplement and not supplant” OR “Supplementing good; Supplanting bad”


Supplementing vs. Supplanting (cont) : Supplementing vs. Supplanting (cont) Supplementing or Supplanting? A position currently exists at a college and is paid with general funds. The position is “moved” from the general fund account to the federal Perkins account. A new Spanish- and English-speaking advisor is added to the Counseling and Testing office to serve Hispanic students. Position is paid from Title V (HSI) funds.


Spending Plan : Spending Plan Same concept as work plan Outlines timeframe for spending budget Avoids fourth quarter “frantic” spending What procedures does college have regarding grant spending, i.e. No requisitions (except travel) accepted less than four weeks prior to end of grant fiscal year)


Cost Principles : Cost Principles Define how federal funds should be spent A-21 to 2 CFR 220 Allowable Generally Accepted Accounting Principles (GAAP) Allocable Chargeable to cost objective in accordance with benefits received Reasonable Prudent person test Necessary


Uniform Administrative Requirements : Uniform Administrative Requirements Standards and procedures for acceptable financial and management systems A-110 to 2 CFR 215 Financial system requirements Property management requirements Report and record requirements Termination and enforcement of awards


Reporting Requirements : Reporting Requirements PL 106-107 Consolidate federal financial reporting forms May create government-wide standard progress reporting form Program reporting requirements (2 CFR 215) Comparison of actual accomplishments vs. stated Calculation of “cost per unit of output” if applicable Reasons why goals and objectives not met Other info, i.e. explanation of cost overruns


Financial Reporting Requirements : Financial Reporting Requirements SF (Standard Form) 269 Financial Status Report long form SF269A (short form) Use if no program income SF 272 Federal Cash Transactions Report Required if draw down cash advances


Reporting Requirements (cont) : Reporting Requirements (cont)


Prior Approval : Prior Approval 2 CFR 215.25 and 2 CFR 220 What to consider when determining need for prior approval – Construction vs. non-construction grant Type of fiscal recipient (to determine which circulars to follow) Administrative regulations Cost principles For expenditures requiring prior approval


Prior Approval (cont) : Prior Approval (cont) One-time extensions do not require prior approval HOWEVER, must send notification and reasons needed to program officer no later than 10 days prior to end of grant cycle Extension not allowed simply to finish spending funds if all objectives are met Carryover funds do not require prior approval Consider institutional policy re: carryover


Equipment : Equipment Records Procurement records, etc. Inventory Physical count every two years Every year if feds own equipment Protect Prevent damage / loss Insurance Maintain Repairs / maintenance


Equipment (cont) : Equipment (cont) Disposition No obligation to govt if they approve the following Use for original grant purposes Use for another federal grant Pay feds their percent share of fair market value if Keep for other purposes Sell Feds owe institution its share if Return to feds or another grantee Long story short – get disposition instructions from the feds


Facilities and Administrative Costs (a.k.a. Indirect) : Facilities and Administrative Costs (a.k.a. Indirect) Costs incurred for common or joint objectives and cannot be identified readily and specifically with a particular program or activity. Costs must be treated consistently as direct or indirect


Indirect Costs (cont) : Indirect Costs (cont) If no indirect cost rate, can use cost allocation method Charge what would normally be indirect costs equitably to each grant Downside???? MESSY!!


Indirect Costs and EDGAR : Indirect Costs and EDGAR EDGAR 75.560(b) “A grantee must have a current indirect cost rate agreement to charge indirect costs to a grant” EDGAR 75.562(d) “A grantee using the training rate of 8% is required to have documentation available for audit that shows its indirect cost rate is at least 8%.” “Training” projects include TRIO and other service-related grants


Indirect Costs and EDGAR (cont) : Indirect Costs and EDGAR (cont) HHS will not negotiate with a college that only needs an indirect rate to collect the DOEd 8%. Education Department allows grantees to complete the OMB A-21 indirect short form, have verified by independent accounting authority, and retain on file. http://rates.psc.gov/fms/dca/shortform1.pdf


Matching Contributions : Matching Contributions Regardless of whether the grant program requires it or not, if matching contributions are indicated and reflected in the budget, the college must document they were provided. Examples of match: Cash In-kind Program income (where allowed) Unrecovered indirect (where allowed)


Matching (cont) : Matching (cont) Verification of matching contributions How is the college valuing donated: Office space? Classroom space? See 34 CFR 74.23 Use of copier or fax machines? See uniform administrative requirements Budgeting for matching funds How is this done at your college?


Program Income : Program Income If not used as match -- Deductive Method Program income reduced from total funds provided by federal government i.e. Federal funds are supplanted with program income Typically used for non-research awards (default) Additive Method Program income added to total project budget to supplement funds Typically used for research awards (default)


Time and Effort Reporting : Time and Effort Reporting After-the-fact Statement of effort, not attendance Staff working on multiple cost objectives submit monthly Signed by employee and supervisor Staff working on one cost objective submit semi-annually Effort must match job description


Time and Effort (cont) : Time and Effort (cont) Employees are paid according to time worked, not time allocated Depending on payroll system, may have to perform after-the-fact salary adjustments Matching personnel Submit report Monthly or semi-annually


Time and Effort (cont) : Time and Effort (cont) Sample time and effort form that tracks personnel in-kind contributions at meetings http://www.sinclair.edu/departments/grants/pub/in_kind_contribution_work_sheet.xls


Grant Closeout : Grant Closeout Final reports submitted Settle accounts Unexpended advances Interest (excess) Program income Other settlements per grant terms


Grant Closeout (cont) : Grant Closeout (cont) Federal closeout Property disposition Intellectual property disposition Final payment Records retention Maintained for three years after final grant reports submitted Don’t keep after the required time


Single Audit (A-133) : Single Audit (A-133) $500,000 threshold Recommended to rotate auditors every 2 yrs Find auditors who know federal regulations No “findings” does not mean good auditors “Choosing an External Auditor” www.auditforum.org


Single Audit (cont) : Single Audit (cont) Auditors should examine federal funding from standpoint of ALL regulations, i.e. Matching documentation Time and effort documentation Internal procedures Written federal funds management procedures Indirect cost verification


Single Audit (cont) : Single Audit (cont) Auditors are not required to review ALL federal funding streams as outlined in A-133 Type A vs. Type B programs Type A programs expend the largest amount of federal funds (see next slide) Typically federal student financial aid for higher ed If Type A programs significantly impact determination of other Type A programs, remove from calculation but keep as Type A program


Single Audit (cont) : Single Audit (cont) Determination of whether Type B should be Type A program Exceed larger of $300,000 or more than 3% of total federal expenditures if expend less than $100 million in federal funds (minimum definition for Type A program) College can request auditors review grants that may be Type B programs or auditors can suggest to review


Evaluating Grants Management at Your Organization : Evaluating Grants Management at Your Organization Self-evaluation Corrective action plan Council on Government Relations (COGR) good resource (see Resources) Appropriate staffing Roles and responsibilities clearly defined Remember – NO ONE PERSON OR DEPARTMENT CAN DO IT ALL.


Evaluating Grants Management (cont) : Evaluating Grants Management (cont) What policies (formal or informal ways of doing business) or situations can you think of at your college that could be a “finding”? What will you do when you return to correct these issues?


Grants Management Monitoring : Grants Management Monitoring Conduct self-evaluations at least annually, paying attention to the following -- Standards Statutes Program regulations Terms and conditions Administrative regulations Cost principles Internal policies


Grants Monitoring (cont) : Grants Monitoring (cont) Compliance Determine what to evaluate, i.e. Time and effort reporting system Matching verification Particular programs, i.e. Perkins, Title III, TRIO, etc. Examine identified areas Identify issues Develop corrective action plan


Grant Monitoring (cont) : Grant Monitoring (cont) Procedures Observation Sample records Interviews Independent reviews Internal auditing Use spreadsheet to track number of problems


Grants Management Handbook : Grants Management Handbook Absolutely essential Every institution that handles federal funds should have one Covers everything grant directors, accountants and developers need to know to keep the college out of trouble with the feds


Grants Mgmt Handbook Resources : Grants Mgmt Handbook Resources Maricopa CC http://www.maricopa.edu/resdev/grants/Grants%20Management%20Handbook.DOC Valencia Community College Contact Liz Gombash Hawkeye Community College http://www.hawkeyecollege.edu/grants/printit.aspx Southwestern Community College http://www.southwest.cc.nc.us/grants/Grantshandboo.pdf


Resources and References : Resources and References Federal Grants Management Workshop Brustein &Manasevit Attorneys at Law www.bruman.com Michael Brustein Susan Kelley Liz Gombash Management Concepts www.managementconcepts.com Grants Management Recipient Track Core courses


Resources and References : Resources and References University of Idaho http://www.educ.uidaho.edu/triotraining/ TRIO Compliance-Based Project Management conferences National Council of University Research Administrators (NCURA) www.ncura.edu Council on Government Relations www.cogr.edu “Managing Externally Funded Programs at Colleges and Universities: A Guideline to Good Management Practices” http://www.cogr.edu/docs/Managing.pdf


Resources for Single Audits : Resources for Single Audits Government Accounting Standards “Yellow Book” www.gao.gov/govaud/ybk01.htm IGNet www.ignet.gov/ Searchable Single Audit Clearinghouse http://harvester.census.gov/sac/ Searchable