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Grant Compliance –Avoiding Common Pitfalls
May 9, 2019
THOUGHTWARE®
PresentersNeely [email protected]
Emily GeorgeSenior Managing [email protected]
Maura [email protected]
Samantha [email protected]
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To Receive CPE Credit
Individuals• Participate in entire webinar• Answer polls when they are provided
Groups• Group leader is the person who registered & logged on to the webinar• Answer polls when they are provided• Complete group attendance form • Group leader sign bottom of form• Submit group attendance form to [email protected] within 24 hours of webinar
• If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar
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Agenda
It Takes a Village
What Can Go Wrong?
Common Causes of Noncompliance
Pitfalls• Audit & award requirements• Pre-award • Post-award• Other
Best Practices for Compliance
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It Takes a Village
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• Proper tone at the top• Training & education• Involves all departments
• Procurement/purchasing• Legal/contracting• Program personnel• Accounting/finance
department
It Takes a Village
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What Can Go Wrong?
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What Can Go Wrong?
• Loss of funding• Award amount impact
• Reduction in future payments or funding amounts• Recoupment of federal funds already received & spent• Imposed fines & penalties
• Termination of grant• Suspension or debarment
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What Can Go Wrong?
• Reputational damage• Front page news• Credibility• Turnover
• Special status for oversight & review• Increased staff time• Additional oversight responsibilities
• Corrective action plan
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Common Causes Of Noncompliance
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Common Causes of Noncompliance
• Lack of understanding• Staff roles• Staff responsibilities• Job descriptions
• Inadequate resources• Inadequate training & education
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Common Causes of Noncompliance
• Policies & procedures• Incomplete• Outdated • Nonexistent
• Lack of supporting documentation• Improper perceptions
• Internal control systems are not necessary• It’s not that hard• Administrative burden is equivalent to other funding
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Pitfalls
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Audit Pitfalls
• Understanding difference between an external audit & a desk review or other monitoring/site visit
• Financial statement deficiencies & material weakness will result in single audit findings
• Not using or understanding compliance supplement
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Audit Pitfalls
• Schedule of Expenditures of Federal Awards• Inaccurate• Incomplete• What is not there? • Managements responsibility
• Understanding complexity of identifying the source of funding (federal, state, local)
• Subrecipient vs. contractor determination
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Pitfalls –Award RequirementsMultiple layers of complex regulations
Federal requirements (Uniform Guidance)
Departmental requirements (HHS, DOL, DOJ)
Grant requirements (Notice of Award)
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Pitfalls – Pre-Award• Improper or insufficient planning• Not understanding or assessing complexity or administrative
requirements of award• Not performing a detailed review of financial information
(indirect cost rate, salary information, calculation)• Evaluate the timing needed to scale up & scale down
operations
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Pitfalls –Post-Award Reconciling Items
• Timing differences• Subrecipients paid vs.
subrecipient expense• Program income• Matching• Rejected costs• Variances between accrual
estimates & actual
When to Reconcile• Cumulative & by period at
month, quarter & annual for • Grant reporting year-end• Your year-end• Calendar year-end• Total grant project end
Reconciliations
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Pitfalls – Allowable Costs• Unallowable direct costs
• Insufficient support for direct costs• Improper period of performance• Food & meals charged to grant when not allowable
• Misallocation of costs• Between direct & indirect costs• Between grants
• Improper cost transfers
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Pitfalls – Payroll Expenditures• Manual nature of time & effort tracking• Payroll reported based on actual effort
• Understanding time vs. effort• 100% of effort tracked & included in calculation
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Pitfalls – Payroll Expenditures
• Timesheet• Timely submissions• Accurate submissions• Proper approvals
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Pitfalls – Payroll Expenditures• Calculation errors
• Human error• PTO considerations• Application of benefits• Salary cap limitations
• Proper cutoff (period of availability)
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Pitfalls –Indirect Costs
• Rate approval & application following Uniform Guidance requirements
• Duplication of costs in direct & indirect cost bucket
• Proper base to apply indirect cost rate to• Modified total direct cost
• Subawards• Exclusions
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Pitfalls – Procurement• Understanding procurement requirements
• Current thresholds• Noncompetitive proposal
• Policies & procedures • Not updated for Uniform Guidance requirements • Only partially address the requirements• Include small & minority business & women-owned business enterprises
provisions
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Pitfalls – Procurement• Documentation of grace period adoption• Lack of sufficient documentation
• Procurement method used• Vendor/contractor selection rationale• Agreements with the vendor/contractor do not address the contract
provision requirements of Uniform Guidance• Lack of documentation for cost price analysis
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Pitfalls –Procurement
• Lack of communication & coordination with other departments
• Decentralized• Varying policies by department • Staff knowledge & training • Monitoring
• Debarment checks
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Pitfalls –Reporting
• Understanding various reporting requirements
• Timeliness • Method to track deadlines• Accuracy of financial & performance reports• FFATA• Data Collection Form filing
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Pitfalls –Matching
• Not applying the same requirements for match that are required for other federal spending
• In-kind match• Volunteer hours• Supporting documentation
• Timing of application of match amounts
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Pitfalls – Subrecipient Monitoring• Assessment of subrecipients ability to administer prior to
entering into arrangement• Risk assessment
• Not performed• Incomplete• Inadequate
• Contract requirements excluded from contracts with subrecipients
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Pitfalls – Subrecipient Monitoring• Appropriateness of monitoring procedures performed
• Request supporting documentation• Timeliness of invoicing• Agreed upon procedures
• Timely addressing known issues• Staff turnover• Audit findings
• Varying requirements between not-for-profits, universities & states
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Pitfalls – Program Income• Various methods • Appropriate method of applying program income• Method to track & account for• Underspend & overspend
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Pitfalls – Eligibility• Complexity• Supporting documentation• Who is responsible?
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Pitfalls – Equipment• Prior approval• Purchases• Physical inventory of equipment• Disposal
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Pitfalls – Special Tests & Provisions• Key personnel• Salary cap limitations• Unique & specific for certain grants
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Other Pitfalls
• Training• Changing regulations & staying current• Document, document, document• Communication with granting agency
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Other Pitfalls
• Budget to actual monitoring & variances• Fund balance controls• Monitoring controls for compliance• Grant closeout procedures• Document retention
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Consequences of Noncompliance
• Financial impact• Reduction in future payments or funding amounts• Recoupment of federal funds already received & spent• Imposed fines & penalties
• Termination of grant• Reputational damage• Special status for oversight & review• Corrective action plan• Suspension or debarment
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Best Practices
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Best Practices for Compliance
• Focus on internal control systems• Checklists• Review requirements• Use of technology & systems
• Policies & procedures• Staff training & education• Understanding by staff of roles & responsibilities• Adequate resources
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Continuing Professional Education
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The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.
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• CPE credit may be awarded upon verification of participant attendance
• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]
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