MODULE 8 MONITORING

INDIANA HPRP Training1

Role of Independent Financial Monitors

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IHCDA is retaining an independent accounting firm to monitor its sub recipients under the HPRP. They will be conducting on-site monitoring of program documentation and procedures.

IHCDA will allocate specific accounting staff for the HPRP, who will be in direct contact with each sub recipient about procedures and required documentation.

Monitoring of Sub-Recipients

HUD requires that grantees (State of Indiana) engage in remote and onsite monitoring of sub-recipients

Factors to examine include: Adequate financial management systems Appropriate qualifications required for staff and

auditors Adequate time distribution records if employees are on

multiple grants Appropriate policies and procedures to prevent conflicts

of interest Retain records for a period of at least 4 years

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Monitoring of Sub-Recipients (2)

Additional monitoring factors: Adequate systems to track sub-recipient property A-133 Audits completed for all sub-recipients receiving

$500,000 or more in federal funds Audits reviewed by grantee Grantee uses appropriate risk assessment process to select

sub-grantees for on-site monitoring Use of program income for program related purposes only If funds are provided by advances:

Ensure that funds provided are not in excess of immediate needs

Funds are timely disbursed by sub-recipient Funds used solely for eligible program purposes

Monitoring results communicated on a timely basis to sub-recipients

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Monitoring of Financial Management

Budget established and tracked by eligible activityAdequate source documentation maintained for

expenditures (invoices, contracts, purchase orders, etc.)Organization chart showing actual lines of

responsibilitySegregation of duties to reduce opportunities for

someone to perpetrate or conceal errors or irregularities

Internal controls adequate to prepare financial statements that are fairly presented and in compliance with GAAP

Draw downs match official accounting records of sub-recipients

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Monitoring of Financial Management (2)

Sub-recipient’s audits confirm adequacy of internal accounting and control systems audit costs are allowable as administrative fee

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Common Monitoring Findings

Lack of internal controlsStaffing or financial assistance expenditures

not supported by documentationReported and charged costs do not agree

with financial recordsStaffing costs not supported by time sheets

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Basic Principles of Allowable Costs8

Remote Monitoring Includes:

Timely and accurate invoicesAdequate documentation to back-up invoicesPace of spending is within expectationsBilling matches approved activitiesBilling matches progress reportsTimely and accurate performance and

outcome reportingAudit reports received from sponsor and

reviewed by grantee

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On-Site Monitoring Includes10

Set financial management monitoring priorities, based on prior or current concerns, audit findings, etc.

Verify that adequate financial policies & procedures in place

Verify that internal cash controls are in placeVerify adequate tracking of grant and

activity-level spendingCheck for timesheet-type documentation for

all personnel costs, inc. administrative staff

Adequate Documentation for HPRP Expenditures

Beneficiary is eligible to receive HPRP assistance Income Homeless At risk of homelessness

Personnel costs are supported by documentation of staff activity

Assistance provided to program beneficiaries meets program requirements Time limits Rent reasonableness Units meet HQS and Lead Based Paint requirements

All payments have been made to 3rd parties

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Procurement and Property Controls

Written procurement policies Prevent conflicts of interest Allow for open, competitive procurements

Property controls Inventoried at least every other year

Equipment description Serial number, model number, and/or other identification

numbers Source of equipment including award number Acquisition date and cost Location and condition of equipment and date information

reported Unit acquisition cost

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IHCDA Requirements13

HPRP funds be deposited in a separate bank account into which IHCDA may deposit.

Financial controls including segregation of duties, dual check signatures and use of a recognized computerized accounting system must be in place