THE IMPORTANCE OF GRANT MONITORING Preston Alderman MSDE, Director of Audit RESPONSIBILITIES OF THE GRANT RECIPIENT As recipients of federal and state funds we are charged with ensuring that the funds are adequately accounted for and spend in accordance with the grant assurances. Receipt of those funds also subjects the recipient to being monitored and audited regarding the use of the funds. MSDE HAS BEEN REVISING ITS MONITORING TOOLS: Monitoring tools must be consistent with the following; Grant assurances Federal (OMB) regulations/policies (including testing of expenditures) State regulation/policies Agency policies NEW FEDERAL REQUIREMENTS EDGAR (Education Department General Administrative Regulations)has been updated. Cost , administrative & auditing rules are located in 2 CFR Part 200 The effective date of the changes are; December 26, 2014 –Direct Grants from ED July 1, 2015 – State Administered Programs July 1, 2016 – Procurement Rules CHANGES IN FEDERAL GRANT MANAGEMENT Focus on outcomes Performance metrics Risk assessments Financial management Audit thresholds Major emphasis on strengthening accountability by improving policies that protect against waste, fraud and abuse GRANT RECIPIENTS SHOULD: Review the criteria for determining allowable costs: Part 76 State Administered Programs Governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. Reasonable costs Review 2 CFR Part 200 Subpart D – Post Award Requirements Purpose of financial and program management Standards for financial management systems Purpose of reports and records Monitoring and reporting program performance Review 2 CFR Part 200 Subpart D – Post Award Requirements Termination If a recipient materially fails to comply with the terms and conditions of the award Review 2 CFR Part 200 Subpart D – Post Award Requirements Enforcement Temporarily withhold payment pending correction of deficiency Disallow all or part of the cost of the non compliant activity Wholly or partly suspend or terminate the award ALLOWABLE COSTS Review 2 CFR Part 200 Subpart E 55 specific costs detailed Listed in alphabetical order 10 ALL COST MUST BE: Necessary, reasonable & allocable Conform with federal law & grant terms Consistent with state && local policies Consistently treated In accordance with GAAP Not included as match Adequately documented FINANCIAL MANAGEMENT SYSTEM 2 CFR 200.302 12 FINANCIAL MANAGEMENT SYSTEM: COMMON PROBLEMS Controlling allowable costs Clear record trail Cash management 13 FINANCIAL MANAGEMENT SYSTEM (FMS) Identification of Awards (new) Financial Reporting Accounting Records Internal Control Budget Control Written Cash Management Procedures (new) Written Allowability Procedures (new) 14 FINANCIAL REPORTING Accurate, current and complete disclosure of financial information All financial reports required by ED, must be submitted no less than annually, no more than quarterly. Non federal entities must submit performance reports at intervals by federal agency or pass through. Performance metrics must be included. 15 ACCOUNTING RECORDS Must identify source and application of funds (expenditure level detail): Award amount Authorizations Obligations Unobligated balances Assets Liabilities Expenditures Income 16 INTERNAL CONTROLS Internal controls are tools to help program and financial managers achieve results and safeguard the integrity of their programs Includes processes for planning, organizing, directing, controlling, and reporting on agency operations 17 QUESTIONS ?