Fundamentals of Grant Management DISASTER GRANTS MANAGEMENT

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1 Fundamentals of Grant Management DISASTER GRANTS MANAGEMENT

2 GRANTS MANAGEMENT TECHNICAL ASSISTANCE To promote sound business practices for grants administration To provide assistance through education and direct interaction To move grants toward closure more quickly

3 BUSINESS PROCESS THE GRANT LIFE CYCLE Declaration FSA/FTA Signed Reporting Monitoring Program Establishment Payment Requests Amendments Program Application SF- 424 & Assurances Award/Obligation Audits Review & Approval Program Administrative Plans Closeout

4 AUTHORITIES FOR COMPLIANCE Appropriations Statue Authorizing Statue Federal Regulations (e.g. 2 and 44 Code of Federal Regulations (CFR)) Office of Management and Budget (OMB) Circulars (e.g. A-133) Terms and conditions of the Grant Award Program Guidance ask Program Analyst for clarification, if needed DHS and FEMA Policy

5 PLANNING KEY TO SUCCESS Planning for Organizational Structure Staffing Training Compliance Monitoring, Reporting and Auditing Sustainment Evaluation of Monitoring, both desk reviews and on-site Make adjustments, either revisions or extensions

6 ESTABLISHING YOU PROGRAM: CREATING POLICIES AND PROCEDURES What? Integrate Federal, State/Tribal, and local policies Develop internal and external forms and procedures Expectations vs. requirements Publish formally Why? Provides documentation and authorization Tracks modifications Provides accountability and audit compliance Who? FEMA Program Analyst Grants Manager Accounting Departments Program Officers Locals All Grant Stages Provides documentation and authorization Tracks modifications Provides accountability and audit compliance

7 BUDGET REVIEW Federal Application Applicant eligibility and application completeness Assurances and Certifications Terms and conditions common to all applicants Indirect Cost Rate Agreements (If Applicable) A-133 compliance Applicant s standing (good, debarred, suspended) Excluded Parties List System hhps://

8 BUDGET REVIEW: COST PRINCIPLES Allowable Allocable Reasonable Necessary Necessary and reasonable Conforms to the Cost Principles and Grant s Terms and Conditions Authorized or permitted by law or regulation Treated consistently as a direct or indirect cost Adequately documented Chargeable and assigned to cost categories Incurred solely to advance the work under the grant agreement Necessary to the overall operation of the agreement Not charged to other Federal awards Reasonable costs are determined by prudent person test (i.e., charge amount not excessive and within the bounds of common sense) A cost that is necessary for proper and efficient performance and administration of the grant

9 BUDGET REVIEW COST CATEGORIES Personnel Fringe Benefits Travel Equipment Supplies Contractual Other Indirect Costs

10 COST CATEGORIES: PERSONNEL Personnel Is the basis for determining each employee s compensation described (annual salary and percent time devoted?) Is each position identified by title? Are time commitments and the amount of compensation stated and reasonable? Are salary increases anticipated during the grant period and are they justified (COLA, etc.)?

11 COST CATEGORIES: FRINGE BENEFITS Fringe Benefits Is the amount specified as a separate line item? Is each type of benefit indicated separately or does the organization provide a fringe benefit rate? Are fringe increases anticipated during the grant period?

12 COST CATEGORIES: TRAVEL Is the basis for computation provided? Is the travel necessary for the purpose of the program? Are the travel costs separately identifiable and reasonable? Include transportation, hotel, meals, mileage, etc. Does the organization have a written travel policy? If no written policy must follow Federal guidelines

13 COST CATEGORIES: EQUIPMENT Are equipment items specified by unit and cost? How will equipment items be used and which agencies will receive them? Is the request reasonable and allowable under the project?

14 COST CATEGORIES: SUPPLIES Are supplies listed separately? Office Computer Training Other types of supplies Is the basis for the cost reasonable? Monthly estimates are sufficient

15 COST CATEGORIES: CONTRACTUAL Is the type of service to be rendered described? Travel for consultants is included in this category For individuals Is an hourly, daily, or weekly base rate given? Are rates allowable, justified, reasonable and comparable to market? Is the procurement method described?

16 COST CATEGORIES: OTHER Are items listed by major type (rental space, printing, phone, maintenance, etc.)? Office space rental Not allowable, if owned by grantee organization Maintenance costs Is the square footage and cost per square foot provided? Are all costs justified, reasonable and allowable?

17 COST CATEGORIES: INDIRECT COSTS Incurred for common or joint objectives Cannot be readily allocated to a particular award / project Contribute to recipient s ability to support projects and programs and sustain organization s daily operations Negotiated Indirect Cost Rate Agreement Ratio or percentage of total indirect costs to direct cost base Point of contact for negotiating Indirect Cost Rate Agreement Danielle Unger danielle.unger@fema.dhs.gov (540)

18 INDIRECT COST EXAMPLES Administrative salaries Costs of operating and maintaining facilities, equipment, grounds, etc. Depreciation or use allowances

19 MANAGEMENT AND ADMINISTRATION (M&A) COSTS Direct costs that are incurred to administer a particular program / award (State Management Costs) Identifiable and unique to each program / award Charges based on the activity performed for the particular project

20 M&A COST EXAMPLES Hiring full-time/part-time staff or contractors/consultants Developing operating plans Responses to FEMA data calls Travel expenses directly related to program administration Meeting-related expenses directly related to administration

21 BUDGET NARRATIVE Justifies the need for each line item and justifies the cost estimates Explains how costs relate to the programmatic goals of the project Supplements information provided in the budget detail worksheet

22 Business Process: AWARD

23 GRANT AWARD DOCUMENT Official document used for FEMA assistance: Project Worksheet for PA and Project Narrative for HMGP Establishes legally binding arrangement between FEMA and recipient Establishes period of performance Special Condition Referes to conditions placed on the award above and beyond the standard Terms and Conditions Contains or refers to Terms and Conditions of the grant Obligates Federal funds

24 Fiscal Matters AWARD

25 GETTING STARTED WITH FINANCIAL MANAGEMENT SYSTEMS Getting started Getting organized for receipt of Federal funds Program vs. financial not mutually exclusive Understanding Federal requirements Establishing policies and procedures, these are required and will be monitored by DHS / FEMA Minimum requirements for financial system Provide financial / performance data Associate grant expenditures to specific funding source Provide clear audit trail Manage cash effectively

26 FINANCIAL MANAGEMENT SYSTEMS Adequate accounting systems require: Internal Controls Ability to test internal controls Chart of accounts Compliance with Cash Management Improvement Act (CMIA) Procedures for minimizing Federal cash-on-hand Track expenditures on accrual basis (budget control) Track both financial and program budgets Documentation for all grant-related expenditures Expenditures must be broken down by award, then by project Fulfill quarterly government-related financial reporting Fiscal: Quarterly SF-425 Program: Quarterly Program Progress Report

27 FINANCIAL MANAGEMENT SYSTEMS Must record and report grant funds Authorizations Budgeted amounts Obligations Unobligated balances Expenditures Outlays Income

28 FISCAL MATTERS: PROCEED WITH CAUTION Allowable vs. unallowable costs Prior approval(s) Renovations and construction Travel authorizations CAUTION Time and effort Overtime and backfill Direct costs Indirect Costs Facilities and Administrative (F&A) Costs Supplanting (substituting) and comingling

29 FISCAL MATTERS: PROCEED WITH CAUTION Consultants Fair Market Value cautious on sole sourcing contractors Program income Cash Advances Interest earned (CMIA) Match Outstanding purchase orders CAUTION Excessive spending near end of grant period Record Retention

30 POST AWARD SOURCE DOCUMENTATION REQUIREMENTS Accounting records must be supported by: Cancelled Checks Time and Attendance Records Sub-grant award Documents Receipts Invoices Purchase orders Contracts Travel authorization forms/travel vouchers Payroll registers Federally approved indirect cost rate agreement Fringe benefit rate

31 FISCAL MATTERS: PROCUREMENT Indentify conditions requiring prior approval Funding agency (direct recipient) Develop forms for prior approval Understand difference between types: Competitive Federal (GDA) or State/Tribal contract Sole Source Emergency Only one source (provider) (uniqueness / compatibility) After solicitation, competition deemed inadequate

32 FISCAL MATTERS: PROCUREMENT Sole source Recommend project director and local procurement official signatures Contractual services Use review checklist and review committee Document results of reviews Coordinate with State/Tribal/Local Procurement Association Include Procurement Officer during monitoring

33 Business Process MONITORING

34 WHAT IS MONITORING Oversight and stewardship of Federal funds Assessment of performance and progress Quality assurance and control Compliance to regulations, Administrative Requirements, Cost Principles (2 CFR, 44 CFR) and OMB Circulars Not a one-time event, but an on-going process

35 WHY MONITORING? Assess progress of grant Identify problems early Work with grantee to correct problems Prevent waste, fraud, and abuse Ensure good performance and success Strengthen performance measure documentation and reporting Develop relationships Federal requirements (44 CFR and 2 CFR /11 Act requires programmatic and financial monitoring for each State/Tribe and high-risk urban area (not less than once every two years)

36 IT S ALL ABOUT RELATIONSHIPS Get to know your Program Managers, Program Analysts, Grants Managers, etc. Ask questions Schedule appointments for more in-depth assistance, if needed Success depends on positive working relationships

37 MONITORING: (FINANCIAL AND PROGRAMMATIC) Monitoring Review and evaluation of required financial and progress reports, correspondence and other documentation, including grantee policies and procedures, to substantiate progress and compliance Can be conducted on-site (site visit) and/or by desk review Site Visit: Visit by program staff and/or grants management staff to the site of grantee operations and/or selected performance sites Desk review: Detailed, paper-based review and evaluation performed from the grantor agency s offices

38 MONITORING: TOOLS AND RESOURCES Federal guidelines Program Guidance (by Federal fiscal year) Federal Regulations 44 CFR, 2 CFR, A-133 Use a monitoring checklist and/or report form for documentation and consistency Make advance notes Identify areas needing special attention

39 MONITORING: NOTIFICATION LETTER Send pre-monitoring letter / Identify monitoring objectives Confirm location, date, and time Provide name(s) of agency staff conducting monitoring Request materials / equipment necessary for monitoring Inventory inspection and location Grant file(s) Programmatic and financial records

40 MONITORING Review grant files Signed grant award Final application(program / financial pages) Meet Special Conditions Personnel status, position descriptions, interviewing, hiring Status of procurement, revisions, etc. Original Grant Guidance Review grant file(s) folder Previous monitoring reports / correspondence Compliance with deadlines Progress and financial report Fiscal information Invoices, payments, source documentation and purchase orders

41 MONITORING: EXAMPLES OF REQUIRED DOCUMENTATION Application (FSA / FTA and SF-424 & Assurances) Award Package (Project Worksheets for PA and Project Narratives for HMGP) Amendments (Changes to the scope of work & Time Extensions) Performance and Financial Reports Expenditure Source Documentation Sub-Recipient Award Files (If applicable) Policies and Procedures Indirect Cost Rate Agreements Audit Reports

42 MONITORING: WHAT TO EXPECT POST VISIT Post monitoring letter (desk or on-site) Agreed upon modifications Remaining compliance issues Recommendations for improvements Recognition of progress and success Deadline for response, if applicable Copied to Authorized Official

43 EXAMPLES OF FINANCIAL MONITORING ISSUES Lack of adequate written policies and procedures Lack of sub-recipient monitoring plan Late, incomplete, in incorrect reporting Inadequate accounting procedures Lack of documentation Period of performance expired with no prior approval Failure to manage audit results Inventory management deficiencies Comingling of funds Supplanting (substituting or replacing)

44 SUB-RECIPIENT MONITORING Direct recipients (Grantees) must monitor subrecipient supported activities to ensure compliance with applicable Federal requirements and performance goals are being achieved. Monitoring of sub-recipient use of Federal funds Required Programmatic Financial Information sharing and gathering Status of National, State, and Tribal goals Reinforce priorities and policies

45 SUB-RECIPIENT MONITORING BENEFITS Direct funding agency provides technical assistance to sub-recipient Sub-recipients identity / showcase successes Ensure projects are on track Improve communications / process

46 MONITORING VS. AUDITING Monitoring is preventative Auditing is corrective / curative

47 Business Process PAYMENT REQUESTS

48 PAYMENT REQUESTS Cash Management Improvement Act (CMIA) To improve the transfer of Federal funds to grantees Efficiency Effectiveness Equity Advance Minimize time between transfer of funds and expenditures Reimbursement Grantee should periodically draw down funds throughout Period of Performance

49 SOURCE DOCUMENTATION Accounting records must be supported by source documentation such as: Canceled checks Computer-generated report showing outlay of funds Paid bills Payroll records Time and attendance records Contract and sub-grant award documents

50 FEMA PAYMENT SYSTEMS Payment Management System (PMS) Processes payments through the United States Department of Health and Human Services (HHS) computer link with the United States Treasury Department FEMA contact for PMS Accounts and inquires: Susan Hunt (540)

51 IMPROPER PAYMENTS INFORMATION ACT OF 2002 (IPIA) What is an improper payment? Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. Incorrect amounts are overpayments and underpayments (including inappropriate denials of payment and service) An improper payment includes any payment that was made to an ineligible recipient or for an ineligible service, duplicate payments, payments for services not received, and payments that are for the incorrect amount. When an agency s review is unable to discern whether payment was proper as a result of insufficient or lack of documentation, this payment must also be considered in error.

52 IMPROPER PAYMENTS INFORMATION ACT OF 2002 The objective of the IPIA is to enhance the accuracy and integrity of Federal payments; both the Executive Branch and Congress use the IPIA as a tool to strengthen accountability and to enhance oversight Enhance accuracy and integrity of payments Federal agencies annually required to identify programs and activities that are vulnerable to significant improper payments Federal agencies must report to Congress steps being taken to reduce such (improper) payments Grantees must comply with all regulations (e.g. 44 CFR and 2 CFR) and program guidance for payments

53 Business Process REPORTING

54 REPORTING Required Reporting Federal Financial Report Financial / Fiscal Performance Report Programmatic

55 REPORTING Reports required no more than quarterly Individual program project reporting requirements may vary Performance Reports Project Progress Financial Reports Status of Funds Federal Funding and Transparency Act (FFATA) Reports

56 FINANCIAL REPORTING: FFATA Information Bulletin #350 re: Federal Funding Accountability and Transparency Ace of 2006 (FFATA) Sub-Recipients have obligation to provide to direct recipients all information required for the FFATA Sub-Award Reporting System (FSRS) Register and submit sub award and executive compensation data Sub award information will be displayed Can sign up to receive updates via News central point for new FFATA policy and system information, as well as Fact Sheets regarding requirements

57 PROGRAMMATIC REPORTING: FEMA DISASTER GRANTS Quarterly Program Progress Report Due 30 days after the close of each reporting quarter. In other words, January 30, April 30, July 30, and October 30. Consult the appropriate FEMA Program Analyst for more specific guidance and information.

58 REPORTING SCHEDULE FOR FEMA DISASTER GRANTS Quarter Calendar Quarter Report Due Date Reminder Sent First Quarter Second Quarter Third Quarter Fourth Quarter Jan 1 st Mar 31st Apr 1 st Jun 30th Jul 1 st Sept 30th Oct 1 st Dec 31st Apr 30th Jul 30th Oct 30th Jan 30th Financial report reminder sent to all grantees at the end of each reporting quarter

59 Business Process AMENDMENTS

60 EXAMPLES OF AMENDMENTS Period of performance extension Scope or objective modifications Change of Authorized Official Budget change Cumulative transfers that exceed 10% of the current total approved budget whenever FEMA s share exceeds $100,000 Transfer of funds from direct to indirect costs For sub-recipients: Requirements for submission/prior approval are determined by the Funding agency

61 Business Process AUDITS

62 AUDIT TYPES OMB Circular A-133 Audit Independent Audits and Financial Statements DHS Office of Inspector General (OIG) Audit Government Accountability Office (GAO) Audit

63 A-133 AUDITS OF STATE/TRIBAL, LOCAL GOVT. AND NON-PROFIT ORGANIZATIONS A-133 audit not required A-133 audit required Exempt Non-federal entity that expends less than $750,000 of Federal funds in their fiscal year Non-exempt Non-Federal entity that expends $750,000 or more of Federal funds in their fiscal year

64 A-133 AUDITS OF STATE/TRIBAL, LOCAL GOVT. AND NON-PROFIT ORGANIZATIONS All non-federal entities are required to comply with OMB Circular A-133 Government, education, and non-profit Single audit includes both the entities financial statements and the federal awards Program-specific audit means an audit of one specific program Commercial organizations are exempt Non-profit organization includes non-profit institutions of higher education and hospitals

65 A-133 AUDITS OF STATE/TRIBAL, LOCAL GOVT. AND NON-PROFIT ORGANIZATIONS Audit report is due no later than nine months after the end of the entities fiscal year Submit audit package to the Federal Audit Clearinghouse (FAC) in Jacksonville, Indiana via OMB circular a-133 single audit database

66 A-133: MATRIX OF COMPLIANCE REQUIREMENTS Compliance Matrix website:

67 A-133: TYPES OF COMPLIANCE REQUIREMENTS Types of compliance requirements Activities allowed or un-allowed Allowable costs/cost Principles Cash management Equipment and real property management Period of availability of funds Procurements Real property acquisition and relocation assistance Reporting Sub-recipient monitoring

68 A-133: AUDIT RESOLUTION Awarding agency responsibility Oversee Corrective Action Plans (CAPs) Grantee oversee compliance of sub-recipients If findings exist, audit resolution staff at FEMA Headquarters work with the Program Office and Regional Grants Management Specialist in collaboration with the grantee to develop CAPs

69 A-133: AUDIT RESOLUTION Recipient Responsibility Audit submissions to FAC Monitoring and resolution of sub-recipient audit findings Review and analyze the audit report If findings exist, the audited recipient: Should be contacted CAP should be requested Monitor implementation of CAP

70 A-133: CORRECTIVE ACTION PLAN CAP should include the following: Description of each finding Specific steps to be taken to implement the recommendation Timetable for performance of each corrective action Description of monitoring to be performed to ensure implementation of the CAP Audited Recipient Generate response to CAP request within 30 calendar days Primary Recipient Analyze response Follow-up on action taken

71 INDEPENDENT AUDITS AND FINANCIAL STATEMENTS Independent Audits and Financial Statements A-133 is not required (expended less than 750K in Federal funds in a fiscal year) Used in place of A-133 Single Audit to assess organization s financial management standing and capabilities

72 DHS OFFICE OF THE INSPECTOR GENERAL (OIG) AUDITS Performance and Financial Audits Rotating schedule of States, localities, programs Conducted by OIG staff or contract support Compares expenditures to program impact Evaluates State Homeland Security Strategy and objectives with activities and a range of other topics Reports posted on OIG website:

73 EXAMPLES OF OIG AUDIT FINDINGS Lack of documentation for expenditures Lack of written policies and procedures Inadequate monitoring of sub-recipients Inaccurate financial status reports Inadequate time and effort records Inadequate tracking of interest Supplanting (substituting) Unallowable costs Comingling of funds Conflicts of interest Untimely submission of reports

74 GOVERNMENT ACCOUNTABILITY OFFICE (GAO) Independent, nonpartisan agency that works for Congress that investigates how Federal government spends taxpayer dollars Support congressional oversight by: Auditing agency operations Investigating allegations of illegal and improper activities Assessing performance of governmental programs Performing policy analyses Issuing legal decisions and opinions May participe in site visits to grantees

75 WEB RESOURCES State Audits National Association of State Auditors and Comptroller and Treasurers A DHS OIG GAO

76 QUESTIONS? FEMA, Region VIII Disaster Grants Management Specialist (DGMS) Emily C. Valora (303) Public Assistance Grants Management Specialist Denna Freeman (303)