Policy: TCN Financial &. Grants Management

A cost is generally considered allowable if it is reasonable, necessary, and allocable under the grant. Reasonable costs are costs that would be incurred by a prudent person in similar circumstances. Necessary costs are those needed to operate the program. Costs are allocable to a grant when shared costs are equitably distributed across an organization. Costs also must be consistently applied in a similar manner as other like costs.

Documentation is another factor that affects cost allowability, so it is critical to gather the correct information.

Grantee share, which can be made up of both cash and in-kind contributions, is any expense borne by the organization that helps to meet the program goals and objectives. To meet matching requirements, grantees can use a combination of in-kind and cash match. CNCS does not have specific requirements in this area.

CNCS national service programs have specific matching requirements. When using other Federal funds as match, grantees should use caution by carefully researching to be sure that other Federal appropriations allow for funds to be used to match other Federal funds. You must also get permission from other Federal funders if you want to use that agency’s Federal funds as match. It is important to know the specific match regulations for the type of program that you operate.

It is important to properly value match. Grantees cannot count the value of direct community service performed by volunteers as match. However, they should count service that contributes to meeting the goal and operations of the program, such as accounting or training services.

Grantees must properly value in-kind contributions and document how it was valued. It can be valued by the donor, or by determining fair market value through an independent source.

The necessary steps for properly documenting in-kind contributions used as match include a written acknowledgement from the donor in a letter, invoice, or donation form that includes:

    • Name and signature of the donor;
    • Date and location of the donation;
    • Detailed description of the goods or service;
    • Estimated value of the contribution;
    • How the value was determined and who made the determination; and
    • If the contribution was obtained with federal funds.

Proper recording and accounting treatment of in-kind contributions as match should be done in the general ledger. Grantees should record in-kind contributions in a similar manner as all other expenses and income using its accounting systems. If grantees do not follow this practice, to avoid an audit finding they should create a written policy outlining the internal controls and records retention regarding reporting for in-kind donations.

Definitions

Administrative (Indirect) costs: costs that have been incurred for common objectives and cannot be readily identified with a particular final cost objective or program activity. OMB Circulars define these costs as accounting, auditing, general legal services, facility occupancy costs (rent, utilities, insurance, taxes and maintenance), depreciation on building and equipment, office supplies(used by everyone such as printer paper, toner, etc.) and general administrative salaries and wages (Executive Director, Finance and HR Staff ,etc.).

Allowable cost: a reasonable, budgeted cost that complies with generally accepted accounting principles, OMB Circulars, is not charged against any other grant or used to match other grant funds, is treated consistently with other costs incurred by the organization and is documented.

Allocable cost: actual cost incurred that benefit more than one program for an organization; such costs
must be distributed fairly between the variousfunding sources and they must be necessary to the overall
administration of the programs to which the expense is charged. These costs make up an organizations
Cost Allocation Plan.

Budget Modification- defined as any change to the approved budget during the project period of performance which can include a shift of funding from one budget category to another, a shift of funds from one section to another or a reduction of the Grantee Share (match) commitments.

CFDA (Catalog of Federal Domestic Assistance) number: the number assigned to a Federal program. The CFDA for AmeriCorps is 94.006.

Chart of Accounts: the formal listing of all items that need to be accounted for. The items are numbered and grouped according to whether they are assets, liabilities, fund balance, revenues or expenses.

Cost disallowance– is the penalty for noncompliance. The disallowance amount will depend, in part, on what a subgrantee has done in the absence of full compliance. As a general rule, CHC disallowance will be capped at 25% of the CNCS federal share of the award.

Debarment: an action taken by an official or government agency in accordance with regulations to exclude a person or organization from participating in covered transactions; the process of being excluded from receiving Federal funds. (SAM Search Required). Applicants must certify that they will adhere to the guidelines and standards included in Federal Executive Order 12549, Debarment and Suspension. By signing the Certification of Assurance of Compliance Form, the applicant certifies to that effect

Direct Cost: charges that can be identified specifically with a particular final cost object, award, project, service or other direct activity of the organization.

Internal Controls: organizational processes and systems designed to: provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations; safeguard assets from fraud ,waste ,theft and abuse; assure reliability of financial reporting and compliance with applicable laws and regulations.

Line Item: a budget item within a section and/or category in an approved budget.

Match: is the grantee share portion of total expenditures not paid for with CNCS funds. Match can either be in-kind or cash. Sources of match include corporate contributions, state appropriations, foundations and also from local governments.

Program Income: gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. This includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded projects, the sale of items fabricated under an award, license fees and royalties and interest on loans made with award funds. In most cases program income earned under CNCS grants is used to meet match requirements.

Qualified Opinion: An independent auditor’s opinion given of a financial statement as part of an audit report for which some limitations existed.

Reasonable and Necessary: a requirement for all costs charged to a federal grant. To meet this standard, a cost must be something a prudent person would acquire as something considered needed for the program to operate as approved.

Risk Assessment: a qualitative or quantitative estimation of the likelihood of adverse effects that may result from exposure to specified hazards or from the lack of mitigating influences. Risks arise or change due to several factors including, but not limited to, changes in operating environment, new personnel, new information systems ,rapid growth, changes in services provided, organization restructuring and changes in accounting and reporting methods.

Separation of Financial Duties: also known as Segregation of Duties is the concept of having more than one person required to complete a task. This is an internal control of sharing of more than one individual in one single task to prevent fraud and error.

Unliquidated Obligations: For financial reports prepared on a cash basis, this means the amount of obligations incurred by the recipient that have not been paid. For financial reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the recipient for which an outlay has not been recorded.

Unallowable costs: are defined as those disallowed allocations that do not comply with the grant provisions and OMB requirements. Such costs include lobbying, fines and penalties, entertainment, alcohol, bad debt and unreasonable costs from a “prudent person” perspective.

Relevant OMB Circulars

Each grantee must comply with three specific circulars related to: Cost Principles, Administrative Requirements and Audit Requirements. See below-

  • Administrative Requirements– § 45 CFR 2543; § 2 CFR 215 (formerly A-110)
  • Cost Principles– § 2 CFR 230 (formerly A-122)
  • Audit Requirements – OMB A-133
  • CNCS– 45 CFR §2520-2530
  • Financial Management Requirements– § 200.300
  • Payment of Funds-§ 200.305
  • Procurement Standards– § 200.317-326
  • Record Retention– § 200.333

The Corps Network will:

  • Review all financial documentation (budgets ,reimbursement requests ,etc.)for compliance;
  • Identify any compliance issues that need to be addressed;
  • Communicate compliance issues within 30 days(14 days for reimbursement requests);
  • Establish a timeline (not to exceed 30 days) in which compliance issues must be resolved. If compliance issues are not resolved within the established timeline, payments will be withheld until the issues are resolved.
  • Provide detailed written justification for any sole source procurement in excess of the threshold. Justification should describe why competition was not appropriate.
  • Adhere to the following procurement standards in securing: professional consultant/contract services; purchase of supplies and other expendable property; equipment; real property; and other services. Conduct, to the maximum extent practical, open and fair competition. This requires three bids per transaction exceeding the threshold:
Professional Greater than or equal to $25,000 per consultant/contractor per year.
Equipment Greater than or equal to $2,000 per purchase
Supplies Greater than or equal to $1,000 per purchase
Expendable Greater than or equal to $1,000 per purchase
Real Property Greater than or equal to $1,000 per purchase
Other Greater than or equal to $1,000 per service.
  • Review all vendors/contractors doing business (procurement transactions) with The Corps Network in the System for Award Management (SAM). Ineligible (debarred) parties will be excluded from The Corps Network’s involvement. This procedure also applies to all sub-recipients who are enrolled in Federal programs through The Corps Network.

Subgrantees are required to have the following systems in place:

  • Automated accounting system that is capable of:
  • Distinguishing grant versus non-grant related expenditures
  • Identifying costs by program year
  • Identifying costs by budget category
  • Differentiating between direct and indirect costs(administrative costs)
  • Distinguishing matching funds separately from grant funds
  • Recording in-kind contributions as both revenues and expenses
  • Chart of accounts to identify all accounts in the accounting system
  • Sound internal controls
  • Accounting and financial manual in place which describes policies and procedures
  • Time and activity reporting system for staff which tracks time on an hourly basis by funder
  • Ability to provide annual audit report (A-133 or otherwise as applicable).
  • Sufficient funds to cover program match

Source Documentation – see Reimbursement Guidelines for specifics

  • Subgrantees are required to use the form provided by The Corps Network.
  • Expenses must not exceed the budgeted amount. If changes to line items are necessary, sub- grantees are required to send a budget modification request for those changes to The Corps Network for approval.
  • Must be signed and dated.
  • Reimbursement requests are required to be submitted monthly.
  • Subgrantees are required to close out and submit reimbursement for expenses incurred through The Corps Network’s fiscal year end (September) no later than October 30th. If requests are not resolved ,submitted or verified by October 30th , The Corps Network may not reimburse subgrantees for those costs and those expenses cannot be submitted at a later date. All expenses incurred from October 1 – September 30, must be submitted and approved before October 30th.

Reimbursement Requests – see also Reimbursement Guidelines

Subgrantees must maintain adequate supporting documents for expenditures (federal and nonfederal) and in-kind contributions made under this grant. Costs must be shown in books or records [e.g., a disbursement ledger or journal], and must be supported by a source document, such as a receipt, travel voucher, invoice, bill, in-kind voucher, or similar document.

Documentation must ensure that costs are allowable under the budget and grant provisions. All documentation must support:

  • What services or goods were obtained
  • Why the transaction is allowable for the grant purposes
  • The value of the contribution
  • Provide rates and calculations for each line item
  • Submit a single PDF file with supporting documents in the order they appear on the
    spreadsheet
  • Provide a single form of documentation for each expense (a bill or check will suffice)
  • Time & Activity Reporting for Project Staff – See also, “The Basics of Time and Activity Reporting,” guidance issued by The Corps Network based on § 2 CFR 230. All salaries and wages charged to grants must be supported by signed timesheets, whether supported by direct or indirect costs and should have live signatures and not electronic Must reflect an after-the-fact distribution of the employee’s actual activity
  • Must account for the total activity of each employee
  • Must be prepared at least monthly and must coincide with one or more pay periods
  • Must be signed by the employee and supervisor having firsthand knowledge of employee activities.

Financial Reporting

Subgrantees shall submit a bi-annual Federal Financial Report (FFR) due in mid-April and October using the form provided by The Corps Network.

The Financial Report should reflect the actual program expenditures based on reimbursement requests submitted to, and reimbursed by, The Corps Network as well as “program income. The financial report must be verifiable and tied to the Corps internal accounting system.

Subgrantees must be current with all financial report requirements in order to receive reimbursement for monthly program expenditures.

Program Income – see also Fee-for-Service Guidance

Program income is gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award (see complete definition above).

Some grant programs include activities that generate income; conference fees are a common example. Program Income is the amount of income remaining after deducting costs associated with a particular activity or the grant as a whole. Program income must be used to fund the Grantee Share of the match.

Excess Program Income. Program income earned in excess of the amount needed to finance the grantee share must follow the appropriate requirements of 45 CFR §2541.250, 2 CFR 225, 2 CFR 215, or 2 CFR 220 and be deducted from total claimed costs. Subgrantees that earn excess income must specify the amount of the excess on the Financial Report.

Fees for Service. When using assistance under this grant, the subgrantee may NOT enter into a contract for or accept fees for service performed by members when:

  • The service benefits a for-profit entity,
  • The service falls within the other prohibited activities set forth in these Grant Provisions, or
  • The service violates the non-displacement Provisions of the Act set forth in these Grant
    Provisions.

CNCS Match Requirements – see also Match and In-Kind Resource Development and Management Guidance

Subgrantees will provide the match as agreed to in the approved budget.

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Grantee Share Requirements24%26%30%34%38%42%46%50%

What happens when a subgrantee does not meet anticipated match?

The Corporation’s general policy is that grantees must provide and account for the matching funds as agreed upon in the Notice of Grant Award (NGA) and the approved budget. Many programs provide more than the minimum match required by the law. The Corporation encourages this additional voluntary match and the budget reflects all anticipated match. However, it is not always possible to meet the full level of this anticipated additional voluntary match. If you anticipate that this will be a challenge you must notify The Corps Network immediately to discuss options.
Valid documentation of match includes:

  • Grants award documents from other entities
  • Timesheets and in-kind vouchers for services
  • Equipment and furnishing receipts for donated items
  • Leases and other sources documenting the value of donated space
  • Copies of receipts given to donors of goods and services

Budget Management

Budget management should complement program management. Your budget should support your program design and needs and be expended in line with your program progress.

Key budgetary controls include:

  • Regular monitoring of budgets to actual year-to-date ¤t period expenditures & outlays;
  • Explaining any unexpected/unusual budget variations & determining necessary adjustments;
  • Ensuring compliance with laws, regulations, and CNCS provisions, particularly matching percentage requirements;
  • Requesting prior approvals for modification, if necessary; and
  • Assuring that budget changes are properly approved. Subgrantees must ensure that
    • All budget modifications must be submitted to TCN for approval
    • Purchases of equipment over $5,000 using grant funds, unless specified in the approved application and budget
    • Total budget includes both the Corporation and Grantee share
    • All budgets, modifications, reimbursements must be submitted to the Programs team at programs@corpsnetwork.org
    • The overall budget amount cannot change as CNCS funding is tied to the amount of members (MSY) you have. Cumulative reallocation cannot exceed 10% of the total budget. If there are any changes in MSY, your budget will also changes

Risk Based Approach to Monitoring

The Corps Network conducts formal and informal risk assessments for all subgrantees. If you are notified that you are a “high risk” subgrantee you will be given the opportunity to create and complete a program improvement plan to move back into good standing.
Source documentation that will be reviewed may include: data collection sheets, member files, financial documents, and any other documents that will substantiate data reported in progress reports and/or financial reports. Achievement of program objectives will be verified by examining source data on several separate objectives.

Risk Assessments help identify:

  • Potential vulnerabilities in managing federal funds
  • Best methods to help mitigate vulnerabilities or identified problems for each subgrantee
  • Needs for training – technical assistance – monitoring
  • Most appropriate monitoring and oversight strategies for each subgrantee
  • Priorities for monitoring activities
  • Most effective and efficient use of resources

Program may be audited by TCN, CNCS or an independent agency at any time to determine whether financial operations are properly conducted, that financial reports are fairly presented and that the program has complied with all applicable laws, regulations, and administrative requirements that affect the expenditure of program funds.

Uniform Administrative Requirements Subpart F applies to all grantees of Federal Funds; however, only non-profits organizations and state and local governments that expend federal of $750,000 or more in a year must have a single audit

Each subgrantee must provide The Corps Network with a copy of its A-133 audit and management letter within six months of the end of their fiscal year. If a subgrantee does not undergo an A-133 audit, the latest audit of financial statements must be provided. Programs with qualified audits will automatically be reviewed. All audit report summaries will be reviewed for auditor notes, suggestions, and concerns.

Programs must follow up and correct identified weaknesses and findings. The Corps Network maintains the right to annul and void your site agreement if it deems the subgrantee is not adhering to the financial management requirements. The Corps Network will attempt to resolve issues through verbal and written communication prior to annulment.

No-Cost Extension Period

You may not enroll new Corps members during the period of a no-cost extension. The no-cost extension is available only to allow existing Corps members to complete their service. A no-cost extension must be requested 45 days prior to the scheduled grant end date from CNCS. Therefore, subgrantees must communicate specific program needs to The Corps Network 60 days prior to the scheduled grant end date.

Closeout

At the end of The Corps Network’s three-year grant cycle subgrantees must close out grants according to appropriate Office of Management and Budget (OMB) Circular After-the-Grant Policies. Programs not continuing through the full three years must submit this information at the end of their final program year. Subgrantees submit closeout information via email to The Corps
Network:

  • Subgrantee has reported all the equipment purchased through the grant on hand;
  • Subgrantee has reported all the inventory purchased through the grant on hand; and
  • Subgrantee has completed all closeout actions; accomplished all program and financial requirements; secured all reports; and reconciled all funding.
  • The Corps Network staff review subgrantee closeout forms, final financial reports and other documents to ensure compliance with all requirements.

I have reviewed, understand, and agree to adhere to this policy:

Signature of Program Director or other Authorized Staff | Title

Print Name of Signatory | Date