L O U I S I A N A S TAT E S U P E R I N T E N D E N T O F E D U C AT I O N J O H N W H I T E

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Louisiana Department of EducationFederal Fiscal Monitoring

LASBO Fall WorkshopNovember 7, 2012

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Federal Fiscal Monitoring Review

Overall Objectives

• Assess internal controls for Federal Programs

• Verify the completeness, accuracy, validity, and allowability of financial information for budgeted costs claimed and reimbursed on Federal Programs

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Fiscal Monitoring Selection Process

Subrecipients selected from risk based audit plan

Districts are monitored at least once every five years

Charters schools are monitored within 3 years of opening and then at least once every 5 years.

Other entities are monitored as they expend grant funds and at least every 5 years if applicable

Subrecipients with material findings may be audited more frequently.

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Scheduling

Business Official contacted to schedule fieldwork including• Dates of fieldwork• Fiscal year(s) to be monitored• Federal Programs to be examined• Documentation required for review

Confirmation letter with documentation list mailed to Business Official

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Subrecipient Preparation

Business Official should coordinate plans for the fiscal monitoring with personnel involved: 1. Business office personnel2. Federal Program personnel3. Human Resource personnel4. School personnel

Required Documentation for Desk and Field Audits

Instructional document is provided with confirmation letter

Documentation should be available for review at the beginning of fieldwork or desk audit

Should be organized (see instructional)

Contact LDOE staff with any questions about required documentation

Required Documentation

Audit Review Process Instructional Document

• Cover Page and List of Personnel ContactsSection A - Policies and Procedures

A-1 Chart of AccountsA-2 Fixed Asset PolicyA-3 Travel PolicyA-4 Procurement PolicyA-5 Salary Schedule Schedule

Section B – Documents to support reimbursed costs

Internal Control Fiscal Monitoring Tool

Purpose:Examine Internal Controls for current fiscal year• Disseminated yearly to all LEAs• Results requested during Fiscal Monitoring

ICFMT completed by Business Officialso Ensure that internal controls are uniformly applied to all

programso Use as a guide for future monitoring and to request technical

assistance

Object Codes Examined

• Salaries (Object Code 100) and Related Benefits (Object Code 200)

• Purchased Professional and Technical Services (Object Code 300)

• Purchased Property Services (Object Code 400)

• Other Purchased Services (Object Code 500)

• Supplies (Object Code 600)

• Property (Object Code 700)

• Other Objects (Object Code 800)

• Other Uses of Funds (Object Code 900)

• Indirect Cost

Salaries and Related Benefits

Documentation Required:• Program Staffing List by federal program • Payroll• OMB A-87 Cost Certifications and/or PARs• Stipend Pay• Substitute Pay• Personnel files for each federal employee.

Program Staffing Lists

Should include:• Program name & CFDA number• Employee name and identification number• Employee position• Beginning and ending staffing dates• Work location of employee

Payroll

Should include:• Program name and fund number• Employee name and identification number• Employee position• Pay and benefits for each period in fiscal year by type

of pay (e.g. regular pay, stipend pay, insurance, retirement)

• Work location of employee

OMB A-87 Cost Certification Forms

Should include• Employee name & identification number• Position and Work location(s)• Program & CFDA number• Time period • Signature of employee and/or supervisor• Date completed

Required completion period• Semi-annual or monthly

Stipends and Substitutes

Stipends• Stipend pay amount• Sign-in sheets• Agendas• Time period • Workshop, Meeting,

etc.• Signature of employee

and/or supervisor• OMB A-87 Statement

Substitutes• Substitute pay amount• Sub education level• Sign-in sheets, logs• Time period

Personnel Files

Should include• Employee name and identification number• Employee position• Pay rate and benefits for each employee• Certification & degree level (if applicable)• Years of service

Do not include evaluations or other personnel actions.

Purchased Professional and Technical Services

Documentation required:• Purchase requisitions for services• Purchase order for services• Contracts for services• Vendor invoice• Sign-In sheets• Subrecipient cancelled check

Contracts may substitute for a purchase order for expenditures in this Object Code.

Purchased Property Services

Documentation Required:• Purchase requisitions for property services• Purchase order for property services• Contracts for property services• Vendor invoice• Subrecipient cancelled check

Contracts may substitute for a purchase order for expenditures in this Object Code.

Other Purchased Services

Documentation Required:• Purchase requisitions for other purchased services• Purchase order for other purchased services• Subrecipient’s Travel Policy & supporting documentation

for employee travel• Vendor invoice• Subrecipient cancelled check

Employee Travel Reimbursement

Follow the Travel Policy that covers the period being audited.− Board adopted policy− If no board adopted policy, then follow State of Louisiana

PPM # 49.− All employee travel costs being reimbursed must have

documentation to substantiate them which may include: Travel authorizations, reimbursement forms, agendas, sign-

in sheets, registrations, certificates, receipts, etc.

Supplies

Documentation Required:• Purchase requisitions for supplies• Purchase order for supplies• Vendor invoice• Subrecipient cancelled check

Food purchases and employee reimbursements need documentation for the corresponding activity.

Late fees, interest service charges, finance charges, taxes and alcohol are not allowable.

Property

Documentation Required:• Purchase requisitions for property• Purchase order for property• Vendor invoice• Subrecipient cancelled check• Fixed asset policy• Fixed asset list

Fixed Asset List

• Maintained by Business Office (for all programs Federal and state)

• Updated on a regular basis• Reconciled to purchases at least once every two years• Cost should follow most restrictive of Federal, State or LEA

definition of capitalization threshold− Federal (Code of Federal Regulations)- $5,000.00− State (LAUGH) - $5,000.00− LEA (Fixed Asset Policy) – TBD by LEA

Fixed Asset List should include:

• Fixed asset description• Serial number • Tag number• Date purchased• Acquisition cost• Location• Fund that purchased fixed asset• Disposition date (if applicable)DESK audit may require photo copies of fixed asset with appropriate tag, number, etc. shown.

Indirect Cost

Approved indirect cost rate applied to object codes 100 thru 600.

Approved and Derived rates maintained in eGMS for applicable programs.

Approved indirect cost rate restricted on some programs. Not allowed on some federal programs. (e.g. Carl Perkins)

Other Objects

Debt Service and MiscellaneousAmounts paid for goods and services not otherwise classified in other object codes

Supporting documentation is the same as if reported in the previous Object Codes.

Other Uses of Funds

Used to classify transactions that are not properly recorded as expenditures to the LEA, but require control and reporting by the school district.

• Supporting documentation is the same as if reported in the previous Object Codes.

Issues for all Object Codes

Costs should be charged to Object Codes based on the revised Louisiana Accounting and Uniform Governmental Handbook (LAUGH)

Costs in object codes 300 thru 700 and 800 must be paid before being included on the Request for Funds.

Salaries (Object Code 100) and Related Benefits (Object Code 200) costs may be claimed for reimbursement 2 weeks in advance.

Issues for all Object Codes

Quality controls should be instituted at subrecipient level to ensure accuracy of reimbursement request

Project Completion Reports should be completed and submitted for all closed programs.

Adjustments, if needed, should be made on subsequent Requests for Funds based on actual amounts.

Adjustments should be clearly identified on requests

Common Audit Findings

Reporting Errors - Software reporting340 Purchased Tech Service – software support services442 Rental of Equipment – leasing or renting equipment530 Communications – data communication services to

establish or maintain computer-based communication, networking, and internet services

615 Supplies – Supplies that are typically used in conjunction with technology related hardware or software; downloaded and off the shelf735 Technology Software – educational software that exceed

capitalization threshold of $5,000

Common Audit Findings

OMB A-87 Time and Effort CertificationsSemi – Annual Cost Certification

Personnel Activity Reports (PARs)

1. Forms are not completed2. Form completed incorrectly3. Wrong type of form used

New guidance available to help with these records.

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OMB A-87 Cost Certifications:An Overview

LASBO Fall Workshop November 7, 2012

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Time Distribution Requirements

Time and effort reporting is important in ensuring that Federal program funds are used to pay only for the proportionate share of personnel costs.

If Federal funds are used for salaries -“time and effort records” must be kept.

• Applies to all employees who are paid with Federal funds

• Must demonstrate that employees paid with Federal funds actually worked on the specific grant activities

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Time and Effort RecordsThe type of record an employee must maintain depends on the number of cost objectives on which an employee works.

The time and effort record must include:

• Employee name & position

• Job title

• Program & CFDA number

• Time period

• Signature of employee and/or supervisor

• Date completed

• When trying to determine which type of cost certification should be used, the determining factor is the number of cost objectives on which the employee works, NOT the number of sources supporting the employee’s salary.

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Single Cost Objective

Semi-Annual Certification

• Employees who work on a single cost objective must certify that they worked (after-the-fact) solely on the cost objective from which they were paid for the period covered by the certification.

• Must be signed by the supervisory official having firsthand knowledge of the work performed by the employee. Employee signature optional.

• May be prepared for each individual employee or prepared as a blanket certification (multiple employees working 100% on the same Federal program for the same supervisory official having firsthand knowledge of the work performed for these employees).

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Single Cost Objective – New Guidance

A single cost objective is defined as either of the following:

• A function

• An organizational subdivision

• A contract

• A grant

• Any other activity for which cost data are needed and for which costs are incurred

Therefore, a single cost objective could be a (1) single function, (2) single grant, or a (3) single activity

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Single Cost Objective – New Guidance

The key to determining whether an employee is working on a single cost objective is whether the employee’s salary and wages can be supported in full from each of the Federal awards on which the employee is working, or from the Federal award alone if the employee’s salary is also paid with non-Federal funds.

For the following examples, assume that the uses of funds described in each example are allowable under the programs illustrated and there are no supplanting issues, etc.:

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Single Cost Objective – Example 1

An LEA supports a supplemental math teacher to serve low-achieving students with 50% Title I, Part A funds and 50% MFP.

• Teaching math to low-achieving students is a single cost objective because it can be fully supported under Title I, Part A.

• Even though the employee’s salary is supported by a Federal award and a non-Federal award, only a semi-annual certification is required.

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Single Cost Objective – Example 2

A teacher in a Title I school wide school is paid with local funds to teach first grade in the morning. To decrease the class size for reading, this same teacher is paid with Title I, Part A funds to teach a supplemental reading recovery class in the afternoon.Assumption: This teacher is not needed to provide the basic education program in the school wide program because the school has a sufficient number of first grade teachers to meet the requirements of ESEA.

• Even though this teacher’s salary is supported by both local funds and a Federal award and she/he conducts two different activities, both of his/her functions are fully supportable by Title I, Part A and the school wide program constitutes a single cost objective.

• Only a semi-annual certification is required.

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Single Cost Objective – Example 3

A preschool special education teacher is funded 50% with IDEA B and 50% with IDEA Preschool funds.

• Because teaching preschool special education is an allowable activity and could be fully supported under both IDEA B and IDEA Preschool, this teacher is performing a single cost objective.

• Even though this teacher’s salary is supported by two separate Federal awards, only a semi-annual certification is required.

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Single Cost Objective – Example 4

An LEA supports an elementary school teacher with local funds but pays him/her with Title I, Part A funds to provide after-school tutoring for low-achieving students.

• The teacher’s after-school tutoring is a single cost objective and only a semi-annual certification is required for the time worked in the after-school program supported by Title I, Part A funds.

• Although this teacher could not be paid with Title I, Part A funds to provide elementary education, the portion of his/her time spent on after-school tutoring is easily separated from his/her teaching position by his/her schedule.

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Multiple Cost Objectives

Monthly Certifications or Personnel Activity Reports (PAR)

• Employees who work on multiple cost objectives must certify after-the-fact that the distribution of the employee’s salary and wages reflect the actual activity of the employee.

• This certification must account for the total activity (100%) for which each employee is compensated, must be prepared at least monthly, must coincide with one or more pay periods, and must be signed and dated by the employee.

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Multiple Cost Objectives

Multiple cost objectives include instances of an employee working on:

• More than one Federal award

• A Federal award and a non-Federal award

• An indirect cost activity and a direct cost activity

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Multiple Cost Objectives New Guidance on Substitute System

State Educational Agencies (SEAs) are now authorized to approve one substitute system for allocating salaries and wages to Federal awards in place of PARs for all LEAs, in accordance with specific guidelines, as established by the U.S. Department of Education (USDE) and subject to approval of such system by the cognizant Federal agency.

• Such system could permit time and effort certification on a semi-annual basis instead of monthly for some situations.

• Easily implemented if the employee submitting their monthly PARs have schedules that do not change from week to week.

• The LDE is putting together a focus group and currently looking into establishing a substitute system.

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Reconcile to Payroll

Semi-annual certifications and Personnel Activity Reports must be reconciled back to the payroll.

• Semi-annual certifications must be reconciled semi-annually.

• Personnel Activity Reports (PARs) must be reconciled at least quarterly.

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Questions

Useful Internet Links-

Louisiana Department of Education (LAUGH)• http://www.louisianaschools.net/topics/laugh.html

Office of Management & Budget (Circulars)• http://www.whitehouse.gov/omb/circulars/

U.S. Department of Education (EDGAR)• http://www.gpoaccess.gov/cfr/index.html

Contact Information

FedAudit@la.govNakia Jason, Audit Supervisor, LDOE

− Email Nakia.Jason@la.govMarella Houghton, CPA, Audit Manager, LDOE

− Email Marella.Houghton@la.gov P.O. Box 940641201 N. Third St. Ste. 5-130Baton Rouge, Louisiana 70804-9064Telephone: (225) 342-8848Toll Free: 1-(877)-342-453-2721Fax: (225) 342-3523