Reimbursement Manual for Pass Through Grants

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DNR Office of Management and Budget Services

REIMBURSEMENT MANUAL FOR PASS THROUGH GRANTS

Topics to be Covered

Introduction

System Requirements (Q & A)

Project Reimbursement (Q & A)

Forms

Documentation

Work Plans/Reports

Documentation Kept on File (Q & A)

Land Acquisition Reporting Requirements (Q & A)

Materials and Services (Q & A)

Accounting, Documentation, and Record Reconciliation (Q & A)

Thoughts from an Auditor (Q & A)

Contact Information

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Introduction

The DNR Grants Unit provides contract management services related to all pass-through grant projects. Contract management ensures oversight of reimbursement for project deliverables and meets the requirements of all state laws and policies including the Department of Administration’s Grants Management procedures.

The reimbursement manual was developed to help grantees administer the Pass-Through Appropriation and to provide instructions on how to obtain reimbursements for eligible project expenses.

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Introduction (continued...)4

The manual is based on federal and state laws, and policies and procedures of the Office of Grants Management (OGM) and the Minnesota Department of Natural Resources’ Office of Management and Budget Services. The Reimbursement Manual can be found on our website at:

DNR Pass-Through Grants Website

For questions regarding the grant agreement, including reimbursement requests, please contact the State’s Authorized Representative or your assigned Grants Specialist.

http://www.dnr.state.mn.us/grants/passthrough/index.html

Electronic Funds Transfer

SWIFT e-Supplier Portal

System Requirements5

Electronic Funds Transfer

The preferred and most efficient method of payment is an

electronic funds transfer (EFT) directly into the grantee’s

designated bank account. Once a payment is made to the

grantee, it generally takes 2-3 business days for the funds to

appear in the grantee’s account.

To set up the EFT payment process, contact the

Minnesota Management and Budget (MMB) EFT Hotline at

651-201-8106

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SWIFT Supplier Portal

Every company and organization doing business with the state is considered a vendor.

In order to receive or view payments or invoices, every vendor, whether current, new or prospective, will need to register online with MMB

To use the Supplier portal, every vendor needs a vendor ID number

To register, go to the Supplier portal and click on “Vendor Registration Link”

SWIFT Website

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http://supplier.swift.state.mn.us/

Vendor Resources are available at SWIFT Vendor Resources Website

MMB helpline (651) 201-8106 orEFT Helpline Email Address

SWIFT e-Supplier Portal8

http://www.mmb.state.mn.us/vendorresources

mailto:[email protected]

SWIFT e-Supplier Portal Q & A9

Questions

Project Reimbursement Definition

Reimbursement Request

Reimbursement Documentation

Project Reimbursement10

Project Reimbursement #1

Reimbursements are made by the State upon receiving:

1) Demonstration that deliverables in the approved Work Plan have been achieved

2) Documentation of eligible expenses

3) Proof of payment (when applicable)

Note: Any expenditure submitted for reimbursement must be direct and necessary for the project and have been incurred during the grant period.

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Project Reimbursement #2

Grantee pays for expenses prior to seeking reimbursement

Advance payment with prior (board) approval only

Total $ reimbursed cannot exceed the total award $

Grantees should expect payment within 30 days of the DNR receiving a reimbursement request as long as all the proper documentation has been submitted.

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Reimbursement Request

The Reimbursement request is comprised of four sections: Section 1: Project Reimbursement Payment Request Form Section 2: Reimbursement SpreadsheetsSection 3: Project Activity Summary SpreadsheetSection 4: Reimbursement Documentation

These documents are provided with the Reimbursement Manual

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Section 1: Project Reimbursement Payment Request Form

SWIFT PO Number:

Grantee:

Project Name:

Request Number

_________________

Period for which funds are being requested:

From:

_____/_____/_____

To:

_____/____/______

Amount of Request

$ _______________

Final Request: Y / N

I certify that I am authorized to request funds, and that all services rendered, materials purchased, and expenditures reported are as shown in the attached reimbursement forms. I certify that the expenditures reported have been incurred, are not being reimbursed from another source, and were used exclusively for this project. All original documentation is retained by the grantee in the form of invoices, proof of payment, and signed time records. Copies of these supporting documents are attached as required by State grant management policies. Signature Date _____________________________________________________ Name, Title Daytime Phone Number: ________________________________ E-Mail: ______________________________________________

Remarks:

For DNR Use Only I have reviewed the evidence provided by the grantee for the goods, materials and/or services presented and they satisfy State requirements for reimbursement under the pass through agreement.

Reimbursement approved for: $ ______________

By: ____________________________________

Title: ________________________________ Date: _______________

2nd Review By: ___________________________________

Title: ________________________________

Date: _______________

Date Received

Please keep originals of invoices and evidence of payment as documentation for payments, along with a copy of this completed form. Records must be retained for six (6) years from the end of the agreement.

Section 1: Required for all payment

requests including acquisition. The form must be signed by someone who is authorized to submit reimbursement payment requests on behalf of your organization.

Note:The period for which funds are being requested can be the earliest and latest dates that costs were incurred or the time period this request covers.

Reimbursement Payment Request Form 14

Section 2: Provides a snapshot of the grant status including the starting budget,

current requested reimbursement amount, and the remaining balance

Note: The starting budget reflected in the latest revision of the approved Work Plan. Only approved budget items are eligible for reimbursement.

Reimbursement Spreadsheet15

Transaction Date

Description- ie. vendor, contractor, restoration site location, etc. Category

Requested Amount

4/1/13Johnson Nursery - Seeds for Lafayette Park Supplies 4,265.31

4/1/13Johnson Nursery - Mulch for Spring Park Supplies 2,039.07

4/5/13Restoration Inc. - Herbicide application, Lafayette Park Contract 3,600.00

4/5/13Restoration Inc - Burn for Spring Park Contract 7,430.00

Total 17,334.38Personnel 0.00Contracts 11,030.00Supplies 6,304.38Travel 0.00

Total Request #9 17,334.38

Section 3: Project Activity Summary Spreadsheet Section 3: Provides a detailed

summary of all reimbursement request items. This document aids both the grantee and state in tying all requested expenses to the project’s goals/work plan with each reimbursement request.

Note: Expenses should relate to the Activities and/or Outcomes in the Work Plan.

Project Activity Summary Spreadsheet 16

Reimbursement Request Examples17

1. Reimbursement Payment Request Form2. ENRTF Spreadsheet #13. ENRTF Spreadsheet #24. OHF Spreadsheet #15. OHF Spreadsheet #26. Project Activity Summary Spreadsheet

Reimbursement Spreadsheet-Final

Common Mistakes The spreadsheet $ fields are not formatted to include cents (e.g.

$1,029 vs. $1,029.13) This throws off the totals.

The beginning balance is not the ending balance from the previous reimbursement request.

Budget amounts do not match latest approved Work Plan

Overspending in budget item-LSOHC has 10% budget modification language that needs to be approved into the work plan, LCCMR allows overspending in subcategories, but not the total line item amount

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Reimbursement Documentation-Expenses #1

Project expenses for reimbursement must be documented with:

1) Receipts2) Invoices3) Time (payroll) records 4) Proof of purchase or payment

This information is required to determine the eligibility of the expenses and to ensure expenses were made within the project period.

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The following information must be added to (or written on) the copies of receipts, invoices, time records or other documentation:

1) Activity # the expense is being posted to (Environment and Natural Resource Trust Fund only)

2) Budget item such as personnel, equipment, travel, etc.

3) If the documentation has expenses for more than one activity and/or budget item, mark which elements of the documentation are posted to each activity and budget item

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4) If the documentation has non-project expenses on it, be sure to circle the expenses being posted to the project along with the activity and budget item

5) Check number or payment number used to pay for receipt, invoice, or payroll. Number should match with bank statement or other proof of payment

6) All invoices must explicitly state the date(s) that the services were performed and that date must fall within the project period in order to be eligible for reimbursement.

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Reports and Work Plans

Progress Reports are due to the LCCMR and LSOHC boards on a semi-annual basis. Due dates are specific in each Accomplishment/Work Plan.

The State may withhold payments for projects with past due Work Plans or Progress Reports.

The final reimbursement request payments will be paid when the Final Report has been submitted and approved.

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Budgets and Work Plans #1

Personnel- the percent of a full-time employee’s time dedicated to the entire project must not exceed what was approved in the work plan

If that percentage is not enough, contact the appropriate board for a budget amendment.

All staff working on the project must report the actual time worked on a project, regardless if that amount exceeds the percentage the project was approved for.

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Budgets and Work Plans #2

Personnel- benefits, paid time off, vacation, and sick time will be reimbursed on a proportional level

For example, if you dedicated 80% of your full-time status to the project, the DNR can reimburse 80% of your benefits.

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Reimbursement Documentation (Proof of Payment)

Proof of payment documentation is required to ensure that funds are being provided on a reimbursement basis

Examples of payment documentation include:1) Electronic bank statement

2) Copy of canceled checks

3) A copy of bank statement with photocopies of cleared checks

4) Certified financial records

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Proof of Payment Examples26

1) Cancelled Checks2) Receipts3) Invoice Cross Reference4) Expense Summary

Reimbursement Documentation - Overview

Send one copy of the Reimbursement Request by mail or email to your assigned DNR Grant Specialist…

1. Reimbursement Payment Request Form

2. Spreadsheet

3. Project Activity Summary Spreadsheet

…along with the supporting documentation (receipts, invoices etc.)

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Project Reimbursement-Final28

Questions

Documentation Kept on File29

Grant Monitoring30

The Office of Grants Management (OGM) requires the Grants Unit to conduct grant monitoring on all pass-through grants projects.

OGM Policy #08-10 requires one site visit during the course of the grant period on projects valued at over $50,000. All projects valued at over $250,000 require annual monitoring visits.

The state may conduct a proof of payment review for all reimbursement requests submitted during the grant period.

No additional reimbursement requests will be processed until the proof of payment for the request being reviewed is submitted and approved.

http://www.admin.state.mn.us/documents/grants_policy_08-10.pdf

Proof of Payment

The State requires proof of payment documentation to ensure that funds are being provided on a reimbursement basis.

It is the grantee’s responsibility to maintain proof of payment documentation and make it available when requested by the State.

The State will monitor proof of payment compliance through grant monitoring.

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Vendors and Subcontractors

Subcontractors include other organizations and/or businesses that perform services identified in the work program/accomplishment plan

Vendors provide supplies or materials to the project

Both must be selected based on contracting/purchasing procedures outlined in the current reimbursement manual

Grantees may submit a copy of their contracting policies for review and approval to the State as an alternative or follow the DNR’s contracting policies/procedures

Transparency, fiscal control and accountability are key reasons why the State requires grantees to be thorough in the solicitation and selection of subcontractors and vendors

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Solicitation and Selection #1

The following guidelines should be used: 1) Grantees shall retain copies of executed subcontracts and bid

tabulation on file along with written documentation that describes the rationale for selection of the subcontractor

2) Services/Subcontracts less than $2,500 require two or more verbal quotes

3) Services/Subcontracts more than $2,500 but less than $10,000 require two or more written quotes

4) If the subcontract exceeds $10,000, it must be awarded through a process of competitive bidding unless the subcontractor is listed in session law such as Conservation Corps Minnesota

5) Grantees must use a Request for Proposal/Request For Quote process to competitively select professional and technical services

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6) The advertisement for bid processes must allow for fair competition among potential qualified bidders.

7) Grantee must verify the vendor/subcontractor is not on the State’s debarment list: Debarment List Website

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http://www.mmd.admin.state.mn.us/debarredreport.asp


8) Single/sole source contracts: It is the policy of the State of Minnesota (Policy 08-07: Single and Sole Source Grants) that grants are to be competitively awarded as much as possible.

Single and sole source grants are to be used when only one entity is reasonably able to meet a grant’s intended purpose and objectives, due to their geographic location, specialized knowledge, relationships or specialized equipment.

The following template may be modified to reflect appropriate organization information/titles: Grant Single Source Justification Form.

The Grantee should send in the original to the State’s authorized representative for signature and approval. If approved, the Grantee must keep the executed copy on file.

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Documentation Kept on File Q & A36

Questions

Land Acquisition Reporting Requirements 37

Land Acquisition Requirements #1

Most grantees that are working with land and easement purchases are using the guidelines of Attachment E which are the guidelines established as part of the executed grant agreement

The latest version (July 2013) of Attachment E had some changes that primarily centered on items of clarity, consistency and expanding eligible costs.

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Legislative changes made last spring that affected both OHF and ENRTF acquisition requirements were also incorporated into the latest version of Attachment E.

If an acquisition requires preliminary work performed by the DNR such as an appraisal review, it is important that a Use of Funds Letter is submitted well in advance and that funding is available in the DNR Professional Services line item of the approved work/accomplishment plan

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All documentation that is required per Attachment E must be submitted at least 10 days prior to close to ensure the documents can be reviewed and the payment can be delivered

Grantees have the option of having funds wired directly to their title company

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Land Acquisition Reporting Requirements Q & A

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Questions

Materials and Services42

Materials and Services #1

Materials and services purchased by the grantee to achieve outcomes/activities stated in the work plan are eligible project expenditures

1) Typical examples of material/service purchases include hardware, paint, lumber, sand/gravel, concrete, landscape materials, signs, design/engineering services and subcontractor services.

2) Professional service rates require written documentation to justify the reason for the rate, how it was calculated, and the services included in the rate.

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Materials and Services #2

3) An invoice must be obtained from the vendor to provide evidence of the sale/service, whenever the grantee purchases materials or services.

4) The invoice and the copy sent in with the reimbursement request must be legible and include the following items:

Name and address of the vendorDate the item or service was purchasedDate the service was performedQuantity of item(s) purchased or hours workedDescription of item(s) or services purchasedUnit price/ProrateTotal amount of each line item

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Materials and Services Q & A45

Questions

Record Keeping - Accounting, Documentation and Record Reconciliation #1

The grantee is responsible for maintaining fiscal controls and fund accounting procedures that are based on generally accepted accounting standards and principles. Grantees must:

1) Retain original supporting documents for each project including all expenditures, receipts, and signed employee time records

2) Itemize all supporting records of project expenditures in sufficient detail to show the exact nature of each expenditure

Please be sure that invoices and receipts contain the name or type of the item or service that was purchased in sufficient detail, so project eligibility can easily be determined

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3) Cross-reference the expenditure with the supporting invoice, purchase order, contract voucher, etc.

4) Maintain certified payroll vouchers for salaries and wages if employee staff time is being charged to the project

All employees working on a project may fill out daily time and effort sheets.

Timesheet elements include the period worked, time spent on the project (time coding), employee’s name, rate of pay, hours worked, benefit rate, and documentation that the payroll has been paid.

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The original time records must be available for review and copies are to be submitted with each reimbursement request.

All vacation (paid time off), sick, and holiday benefits are eligible for reimbursement on a proportional level.

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5) Records for grantee-owned equipment used on a project must include the time actually used for the project and the computation used to arrive at the charged use rate.

Use rates are subject to review by DNR

6) When a project expenditure payment is by check, the check must be properly identified with the project item and invoice number written on the check, submitted along with proof of payment.

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7) Project records are required for audit purposes and must be readily available for review.

Note:All records related to the project must be retained for a minimum of six (6) years following the project completion and final payment.

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Thoughts from an Auditor51

Grant Management: Auditor’s Insight #1

Quick Intro Mark Allan Current: Internal Control/Accountability Unit Coordinator

Provide DNR consulting and assurance services .

Past: Auditor & Investigator for the Office of the Legislative Auditor

Had the opportunity to audit a variety of grant programs at several state agencies. Focused on agencies’ grant management processes and controls.

Performed special reviews of grant recipients Requested to do work by state employees, legislators, or citizens, based on

allegations/complaints/concerns of fraud, waste, or abuse.

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Legislative (Pass-thru) Grants These grants present a unique challenge for agencies.

Typically, programs are governed by another entity.

Executive branch agencies tasked with administrative functions.

Programs, as you know, can be complex and intricate. At times, there can be a blurring of what the governing entity and agency

duties/responsibilities are.

Legislative Auditor, Jim Nobles, has stated that the agency receiving the appropriation is ultimately responsible for controls.

DNR is a high-profile agency with a lot of public relations risk. If there are any issues, it will be DNR in the press regardless of where the cause originated.

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Why all the paper work and procedures?!? It takes me away from doing important stuff!

They are a result of internal controls! Internal controls are processes and activities that help to provide reasonable assurance that objectives

are met. In a nutshell, internal controls promote good things, and prevent or detect bad things.

As good stewards of tax payer dollars, DNR is tasked with ensuring that funds are spent in accordance with legislative intent.

As good stewards, we also have a responsibility to all stakeholders to demonstrate that the bullet point above has happened - this is called transparency. This generally boils down to processes, activities, and documentation.

To an auditor, if it isn’t documented, it never happened.

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Conflict of Interest State Grant Policy: “A conflict of interest, actual or perceived, occurs when a person has actual or

apparent duty or loyalty to more than one organization and the competing duties or loyalties may result in actions which are adverse to one or both parties. A conflict of interest exists even if no unethical, improper or illegal act results from it.”

Why such a high bar? If nothing bad happened, why do we need to worry about it? Transparency!

For legislatively named grantees, why is this an issue? They’re not competitive, grantees are picked! Subcontractor and vendor selection

How do grant recipients demonstrate they’ve addressed this risk? What would an auditor look for? A conflict of interest or ethics policy. But more importantly, documentation of some sort of

periodic disclosure process. An annual process is suggested at a minimum - wise to revisit if business environment

changes.

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Conflict of Interest

Policies are an important framework; however they are just pieces of paper if there are no corresponding actions - such as a disclosure process.

So, who should do it? Anybody with decision making duties

It is important to remember that it doesn’t have to be an actual conflict. The state policy purposefully addresses conflicts that are “actual or perceived”.

In the spirit of transparency, during the disclosure process document those relationships that may be benign from your perspective.

Take the approach of “what would this relationship look like if I were an independent observer outside of my organization”.

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Conflict of Interest – Examples Each situation is often unique, with lots of shades of grey. But, here are a few scenarios: #1 - You used to work at a transportation company. You left there a year ago to work at your

current organization. You have no personal or professional ties with the old employer. Your program will most likely need a transportation company to provide services and it is reasonably expected that your old company will bid for the subcontract. Resolution: This is most likely only a perceived conflict of interest. But, if you think like an independent

observer outside of your organization, you realize that there is no way of knowing whether or not you still have ties. Best course of action is to discuss this relationship with your organization’s leadership. After details are discussed, document this relationship (disclosure) and the fact that you brought it to another person for review. That’s it. You’re done.

#2 – You are a decision maker for your organization. Your program will need an excavation company to do work. Your spouse owns an excavation company and is reasonably expected that the company will respond to the RFP. Resolution: This appears to be an actual conflict of interest. Best course of action is discuss this with

your organization’s leadership. Document this relationship (disclosure) and the fact that you discussed it with another person. In this case you would remove yourself from the RFP ranking and selection process.

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Subcontracting/Vendors: If I showed up, what would I want to see?

Documentation! Between $2,500 and $10,000: two or more written quotes on file. > $10,000: bid tabulation and/or other rationale for selection on file.

Current conflict of interest disclosures. We would establish who the decision makers were and determine if their was risk of

impairment. Sole Source

State’s Authorized Representative approval on file. We would review the rationale for reasonableness, and ensure authorized

representative’s decision was prudent. Knowing that your work is often times performed by a close-knit network in a relatively small

professional community, documenting even the appearance of conflicts of interest is critical. Appearance of conflicts of interest is not necessarily a bad thing - they just need to be

documented to ensure transparency.

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Reimbursements: If I showed up, what would I want to see? Pass-thru grants are structured to reimburse for expenditures previously made, for eligible

costs incurred in the timeframe stipulated by the grant agreement.

Eligibility of cost: Determine if it represents activity that ties out to a workplan budgetary item. Determine if the specific costs were “direct and necessary”. For payroll, we would look for timesheets or other payroll related documentation to ensure

time accurately tied to project outcomes.

Period of availability: Determine if the costs were incurred during timeframe stipulated in agreement.

Determination that costs were previously incurred before reimbursement request: Proof of payment

Cancelled checks, bank statement, etc.

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Monitoring

Grants unit will monitor activity in a variety of ways: Remotely by performing desk review. On site visits.

Either method requires the same documentation.

As you compile your reimbursement requests, assume that they will be selected for review. This will be a time saver in the event that grants staff, internal audit, or the OLA wants to

review the grant files.

DNR Internal Audit will monitor the grants unit’s monitoring (hows that for a brain twister!)

OLA most likely will not rely on any of DNR’s monitoring activity to gain assurances that controls are in place However, they will review using the criteria and approach mentioned in the previous slides

In Conclusion - Points to Remember #1

Reimbursement Requests should be submitted every three (3) months.

Spreadsheet - Beginning balances must equal ending balances from previous Reimbursement Payment Request.

Budget – Must match amounts in latest, approved Work/Accomplishment Plan.

Expenses – Submitted for reimbursement must be eligible expenses in latest, approved Work/Accomplishment Plan.

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Project expenses for reimbursement must be documented with:

1) Receipts2) Invoices3) Time (payroll) records 4) Proof of purchase or payment

The Date Range on the Reimbursement Payment Request Form represents the first and last date of costs incurred.

All costs must be incurred prior to the grant end date.

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The final reimbursement payment request will be paid when the Final Report has been submitted and approved by either board.

For questions regarding the eligibility of certain expenses, please contact your Grant Specialist.

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Contacts

Amanda Graeber - Grants Manager651-259-5533

[email protected]

*Patrick Donnell - Grants Specialist Sr.

651-259-5543

[email protected]

*Jason Tidemann - Grants Specialist Sr.

651-259-5534

[email protected]

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Documentation Reconciliation Q & A65

Questions

Reimbursement Manual for Pass Through Grants

Documents

Transcript of Reimbursement Manual for Pass Through Grants