SILC-NET, a project of ILRU – Independent Living Research Utilization 11

Playing by the Rules: Playing by the Rules:

A SILC Fiscal Guide to Spending A SILC Fiscal Guide to Spending Federal Money Federal Money

Part I – The BasicsPart I – The Basics

April 21, 2011

Presented by:

Tim and Melissa GlissonTim and Melissa Glisson

SILC-NET at ILRU Presents…SILC-NET at ILRU Presents…

SILC-NET, a project of ILRU – Independent Living Research Utilization 22

Playing by the Rules: Playing by the Rules:

A SILC Fiscal Guide to Spending A SILC Fiscal Guide to Spending Federal Money Federal Money

Part I – The BasicsPart I – The Basics

April 21, 2011

Presented by:Tim and Melissa GlissonTim and Melissa Glisson

SILC-NET at ILRU Presents…SILC-NET at ILRU Presents…

SILC-NET, a project of ILRU – Independent Living Research Utilization 3

Session Objective

• Identify key components and best practices of effective general fiscal requirements and management.

SILC-NET, a project of ILRU – Independent Living Research Utilization 4

Rehab. Act Sec. 725 Standards & Assurances

“The applicant will practice sound fiscal management “

SILC-NET, a project of ILRU – Independent Living Research Utilization 5

• Effective & Efficient Operations- You• Reliable Financial Reporting- Public• Regulatory Compliance- Law

Financial Management Standards3 Outcomes of Financial Management

SILC-NET, a project of ILRU – Independent Living Research Utilization 6

General Fiscal RequirementsWhy the Basics?

• Understand budgets• Read and understand financial statements• Meet contract obligations• Respond appropriately to funders

SILC-NET, a project of ILRU – Independent Living Research Utilization 7

Everyone Needs The Basics

• Board of Directors• Council Members• Executive Director & Fiscal Staff• Leadership Team• Staff

SILC-NET, a project of ILRU – Independent Living Research Utilization 8

Fiscal Terms

• Award• Accrual basis of

accounting• Allocable• Allowable• Cognizant Federal

agency

• Direct cost• Indirect cost• Internal controls• Pass-through entity• Program income• GAAP

SILC-NET, a project of ILRU – Independent Living Research Utilization 9

Overarching Principle One

“The applicant will practice sound fiscal management “

Rehab. Act Sec. 725 Standards & Assurances

SILC-NET, a project of ILRU – Independent Living Research Utilization 10

Overarching Principle Two

Transparency &

AccountabilityARE KEY !

SILC-NET, a project of ILRU – Independent Living Research Utilization 11

Overarching Principle Three

Systems Must Provide:

AccurateCurrent

& Complete Disclosure

(OMB A – 110)

SILC-NET, a project of ILRU – Independent Living Research Utilization 12

Allows auditors and federal reviewer(s) to follow

money from its point of award to:

• Receipt of Cash• Drawdowns• Expenditures• Cash after Expenses

Financial Management Standards -Clear Paper Trail (From EDGAR 74.22)

SILC-NET, a project of ILRU – Independent Living Research Utilization 13

Documentation shows:- expenses (all)- justification (i.e. travel; Part B activity)- funding source

Financial Management Standards -Source Documentation (From OMB Circular A-110)

SILC-NET, a project of ILRU – Independent Living Research Utilization 14

Financial Management Standards -Internal Controls (OMB standards)• Policies to ensure federal funds safeguarded• Separation of duties (priority control) for

approving purchases, check signing, checks & balances

• Conflict of interest• Independent Audit …and more.

SILC-NET, a project of ILRU – Independent Living Research Utilization 15

Financial Management Standards -Efficient Accounting System

• User & System Friendly• Meets Needs of Agency• GAAP

SILC-NET, a project of ILRU – Independent Living Research Utilization 16

Financial Management Standards -Contract & Grants Management (OMB Circular A-110)

• ReportingAccurate & Timely

• Oversight Internal (administrator) External

SILC-NET, a project of ILRU – Independent Living Research Utilization 17

Financial Management Standards -4 Money Matters

• Federal funds ONLY for expenditures and activities described in goals & objectives of approved contract.

• Fiscal control & accounting procedures must ensure proper disbursement of, and accounting for, federal funds.

SILC-NET, a project of ILRU – Independent Living Research Utilization 18

Financial Management Standards -4 Money Matters, cont’d.

• When In Doubt…Check It Out….Get it in Writing!!

• Relationships are Critical!• Make Them• Maintain Them• Use Them

SILC-NET, a project of ILRU – Independent Living Research Utilization 19

Questions and Answers

SILC-NET, a project of ILRU – Independent Living Research Utilization 20

Internal Controls Policies & Procedures that…

• Protect the assets• Provide consistency and operational

efficiency • Increase fiscal viability• Uncover potential liabilities

SILC-NET, a project of ILRU – Independent Living Research Utilization 21

Benefits of Internal Controls

• Assure fiscal prudence• Safeguard assets• Assure fiscal compliance & viability• Set policy (board responsibility)• Create checks and balances• Required by funding sources

SILC-NET, a project of ILRU – Independent Living Research Utilization 22

Internal Controls Policies

Key Policy:

Segregation of Duties– Limits amount of fiscal activity controlled

by any one person.

SILC-NET, a project of ILRU – Independent Living Research Utilization 23

Internal Controls Policies, cont’d.

• Authorizing signatories• Separating accounts receivable from

accounts payable• Segregating payroll from Human Resources • Balancing cash and checking accounts• Creating checks and balances

SILC-NET, a project of ILRU – Independent Living Research Utilization 24

Internal Controls Policies, cont’d. 2

• Inspecting payroll reports• Recording cash: journal & general ledger• Passwords whenever possible• Petty cash limits • Using P.O.s (purchase orders)• Regular computer backups - offsite

SILC-NET, a project of ILRU – Independent Living Research Utilization 25

Internal Controls: Reporting Level• Board monthly financials• Compare utilization data• Balance GL monthly• Quarterly finance committee meetings• Time sheets / written OT authorization

SILC-NET, a project of ILRU – Independent Living Research Utilization 26

Internal Controls: Board Level

• Accurate records of income/expenses• Cost of programs and services• Comparison of income/expenses• Segregation of duties

SILC-NET, a project of ILRU – Independent Living Research Utilization 27

Internal Audit

Quality assurance process for the accountingdepartment

• Assures timely and accurate recording of information

• Twice per year per program (minimum)• Performed by audit committee, board or

auditor

SILC-NET, a project of ILRU – Independent Living Research Utilization 28

Expenditures approved in advance? Requests for checks reviewed? Check signer reviews and initials check

register? Larger checks require two signatures? Checks pre-numbered? Voided checks on file? Bank statements & canceled checks

received & reconciled?

Internal Control Checklist:Check Signing & Payments

SILC-NET, a project of ILRU – Independent Living Research Utilization 29

List of unpaid invoices on file and reviewed periodically by ED? Purchase orders pre-numbered? Employees submit expenses & receipts on-

time?

Internal Control Checklist:Check Signing & Payments, cont’d.

SILC-NET, a project of ILRU – Independent Living Research Utilization 30

Financial Management Standards -Accounting & Financial Manual (OMB 110 – EDGAR 74)• Excellent internal control tool• Effective training tool• Needs board approval• Updated annually (at least)• Must be used!!

SILC-NET, a project of ILRU – Independent Living Research Utilization 31

I. Board Roles & Responsibilities

II. Accounting Procedures• Chart of Accounts• Income & Expenses• Banking Procedures

III. Financial Management• Revenue & Expense Classification• Budget Management• Purchasing Policies

Policies Procedures Manual - Model

SILC-NET, a project of ILRU – Independent Living Research Utilization 32

IV. Financial Reporting• Annual Budget• Contract Requirements & Audit

V. Payroll Policies• Independent Contractors• Personnel Policies

Policies Procedures Manual -Model, cont’d.

SILC-NET, a project of ILRU – Independent Living Research Utilization 33

Questions and Answers

SILC-NET, a project of ILRU – Independent Living Research Utilization 34

IL Regs, EDGAR, OMB Circulars, FASB, & More

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.htmlOMB Circulars:A-110 Uniform Administrative

Requirements http://www.whitehouse.gov/omb/circulars/a110/2cfr215-0.pdf

A-122 Cost Principles for Nonprofit Organizations,

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

A-133 Audits of States, Local Governments, and Non-Profit Organizations

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 www.o.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

SILC-NET, a project of ILRU – Independent Living Research Utilization 35

Wrap Up and Evaluation

• Please complete the evaluation of this program by clicking here:

https://vovici.com/wsb.dll/s/12291g49d9d

SILC-NET, a project of ILRU – Independent Living Research Utilization 36

SILC-NET Attribution

Support for development of this Webinar/teleconference was provided by the U.S. Department of Education, Rehabilitation Services Administration under grant number H132B070003-10. No official endorsement of the Department of Education should be inferred. Permission is granted for duplication of any portion of this PowerPoint presentation, providing that the following credit is given to the project: Developed as part of the SILC-NET, a project of the IL NET, an ILRU/NCIL/APRIL National Training and Technical Assistance Program.