Numbers Don Lie They Hide by jolinmilioncherie

VIEWS: 1 PAGES: 191

									    Welcome to
    “Numbers don’t lie, they hide”




                               Training and Development
1                                        Associates, Inc.
Numbers Don’t Lie, They Hide



             Financial Management
             for Homeless Grantees
    Who Are We?

       Presented by
        –   Training & Development Associates, Inc.
            www.tdainc.org
                As a subcontractor of the Corporation for Supportive
                 Housing
       Sponsored by
        –   U.S. Department of Housing and Urban
            Development
                Los Angeles Field Office
                                                        Training and Development
3                                                                 Associates, Inc.
    Logistics

       Manual and handouts
       Exercises
       Teams
       Questions (the “Bin”)
       Restrooms and telephones



                                   Training and Development
4                                            Associates, Inc.
    Who Are You?

       Type of organization
        –   Lead agency
        –   Sponsor
        –   Service provider
       Your role
        –   Executive director
        –   Financial staff
        –   Case manager
        –   Another position

                                 Training and Development
5                                          Associates, Inc.
    Why Are We Here?

       Different funding requirements and reports confusing
       Grantees have questions about HUD’s requirements
       Finance roles for staff and subgrantees can be
        confusing
       Monitoring scrutiny plus new funding considerations
       Reliance on outside “experts” leaves some in the
        dark
       Programs rely on software they can’t interpret
       Staff does not know the language or tools of financial
        management

                                               Training and Development
6                                                        Associates, Inc.
    Workshop Goals

       Participants in this session will
        –   Understand the “nuts and bolts” of financial management
            and analysis
        –   Know how to use “internal controls” to guarantee
            compliance with HUD and other funder requirements
        –   Understand the “order of authority” and, therefore, what is
            required by HUD regulations, OMB Circulars and Generally
            Accepted Accounting Principles
        –   Leave with tools and techniques to address financial
            management and know when to seek external assistance

                                                       Training and Development
7                                                                Associates, Inc.
    Performance Benchmark

       Each participant will
        –   Leave with at least 3 new ideas, techniques or
            tools to address financial management
        –   Meet at least 2 new participants who can be their
            resource person, mentor or support network after
            the workshop




                                               Training and Development
8                                                        Associates, Inc.
    Table Talk: Real vs. Ideal

       Discuss the difference between the ideal-world and
        the real-world as it applies to financial management
        of your HUD homeless grant
       Identify 3 items and provide the following
        –   In an ideal world _____
        –   But in the real world _____ is
            what happens
        –   Why the real world differs from
            the ideal world
        –   Ways the real world can be more
            like the ideal world

                                               Training and Development
9                                                        Associates, Inc.
It’s Time for Bingo!
Financial Management Systems
     The Order of Authority

     1. GAAP
     2. Congress
     3. OMB/GAO
     4. HUD
     5. HUD Grantee



                              Training and Development
14                                      Associates, Inc.
     Relationship of Federal Regulations

                                            Administrative
      Type of Entity      Cost Principles   Requirements             Audits
     State and Local                        Common Rule
                                A-87                                 A-133
     Government                                A-122
     Colleges and
                                A-21            A-110                A-133
     Universities
     Hospitals and           Various           Various              Various
     Care Facilities        45 CFR 74           A-110                A-133

     Other Nonprofits          A-122            A-110                A-133

     For Profits
                            31 CFR 15.2         FAR*                  FAR*
     (Commercial)

       *Federal Acquisition Requirements                     Training and Development
15                                                                     Associates, Inc.
     Fiscal Management System
                                  Cash
                               Management
                 Accounting                 Regulations


      Financial Reports                         Procedures


      Internal Controls         Homeless         Documentation
                                Program

              Budgeting                         Policies


                    Auditing                Monitoring
                                Financial
                                                     Training and Development
16                             Management                      Associates, Inc.
     Setting the Stage

        Financial Management             Financial Analysis
         –   Constant process of           –   Systematic technique for
             safeguarding financial            evaluating financial
             assets of organization,           health of organization
             whether for-profit or         –   By quantifying
             nonprofit                         information and
         –   By instituting policies           comparing that
             and practices that                information to similar
             maintain and increase             organizations in the field
             the value of assets for
             overall benefit of the
             organization

                                                       Training and Development
17                                                               Associates, Inc.
     The Importance of Financial
     Management

        “Fitting in” with other funders
        Better planning
        Gaining allies
        Raising your “match”
        Sustaining future growth



                                           Training and Development
18                                                   Associates, Inc.
     Fitting in With Other Funders and
     Better Planning

        Funders (private and public) look at financial
         management to make investment decisions
        Solid information helps grantees to
         –   Realistically project the future
         –   Seek funding for that future
         –   Plan more accurately
        Financial management is part of a multi-year
         planning process
        Operating like a business helps organizations to
         –   Increase program services
         –   Not always be obsessed with raising more funds

                                                      Training and Development
19                                                              Associates, Inc.
     Fund Accounting

        Your grant may be one of many funding
         sources that your agency has
         –   Multiple funders leads to “fund accounting”
         –   Your financial system must account for the
             requirements of all of funding streams
        While many of the requirements have a
         higher authority than HUD
         –   HUD is the funding stream that we focus on
                                                 Training and Development
20                                                         Associates, Inc.
     Example of Fund Accounting

                                        United   Founda-
                        HUD SHP   HHS    Way       tion      Donor         Total
     Revenue
      –Grants
      –Cash
      –Donations

     Total Revenue
     Expenses
      –Labor
      –Overhead
      –Administration

     Total
     Expenses
     Excess
                                                       Training and Development
21   Revenue                                                     Associates, Inc.
     Gaining Allies

        Who is financially responsible for the
         viability of your organization?
         –   Your board of governance begins to own the
             program as they understand their liability and
             responsibility
         –   External funders gain confidence in your
             organization as you comply with the norms of the
             business world

                                                Training and Development
22                                                        Associates, Inc.
     100% Equals 100%

      To serve 100% of the HUD-eligible clients projected in your
      technical submission and approved budget…

      With 100% of the projected HUD-eligible activities…

      You must raise 100% of the total project costs (HUD grant
      and match)…

      Otherwise, you are either not serving 100% of the clients or
      not providing 100% of the activities


                                                  Training and Development
23                                                          Associates, Inc.
Keys to a Successful System
     Who is Involved in Managing
     Your System?

        Board of Directors
        Local community development staff
        Elected officials
        HUD
        Government staff
        Other investors
        Accountants
                                        Training and Development
25                                                Associates, Inc.
     Staff Responsibilities

        Fiduciary trust          Internal financial
        Payment of taxes          controls
        Government filings       Reports to committees
        Cash flow                Legal contracts
        Fund accounting and      “The books”
         reports to funders,      Construction…if?
         including HUD            Future planning and
        Service delivery          financial projections

                                            Training and Development
26                                                    Associates, Inc.
     Board Responsibilities

        Building the agency’s financial capacity
        Raising the funds to maintain the
         organization long-term
        Budgeting funds productively
        Managing funds wisely
        Reporting on funds raised
        Supplementing budgets
        Evaluating agency’s financial performance
                                         Training and Development
27                                                 Associates, Inc.
     When Do You Need An Accountant?

        Benefits justify the costs
        “Too many hoops”
        Adjunct staff and business partner
        Fund accounting required
        Funders’ requirement



                                          Training and Development
28                                                  Associates, Inc.
     What Services Should An
     Accountant Provide?

        Advice on tax matters, unrelated business
         income, tax questions
        Preparation of tax forms
         –   Quarterly IRS Form 941
         –   Quarterly federal, state and local government tax
             filings
         –   Annual income tax returns and/or 1099’s
        Analysis of management activities and
         advice
                                                 Training and Development
29                                                         Associates, Inc.
     What Services Should An
     Accountant Provide?

        Assistance in establishing financial management
         systems
         –   Collecting grants, outstanding revenues and “fees for
             service”
         –   Control of inventory, asset purchases and cash
        Recommendations to cut expenses, increase cash
         flow and price services
        Assistance in preparing the organization for long-
         term growth
         –   When can the agency afford new staff?

                                                        Training and Development
30                                                                Associates, Inc.
Components of a
Financial Management
System
     Why a Financial Management
     System?

        Required by HUD and OMB
        Systems required to meet certain standards
         –   Control and account for funds, property and other
             assets
         –   Identify source and application of funds
         –   Allow accurate, timely and complete reporting
         –   Minimize time in transfer of funds between parties
        Addressed through policies, procedures,
         practices and personnel—the “4-P’s”
                                                 Training and Development
32                                                         Associates, Inc.
     Financial Management System

        Ineffective results in        Effective results in
         –   Major audit findings       –   Sound management
         –   Negative publicity             decisions
         –   Funding withheld           –   Documentation supporting
                                            program activities and
                                            expenditures
                                        –   Knowledge of regulations,
                                            policies and procedures
                                        –   Strong accounting system
                                        –   Good internal controls

                                                   Training and Development
33                                                           Associates, Inc.
     Components of Financial Management
     Systems

        Uniform administrative requirements
        Cost principles
        Audit procedures
        Procurement standards




                                         Training and Development
34                                                 Associates, Inc.
     In The Final Analysis…

        Like it or not, financial management is a requirement
         of your grant
        We need to learn to appreciate it, rather than fight it!
        Use source documents for guidance
         –   Regulations
                 24 CFR Part 85—Governments
                 24 CFR Part 84—Nonprofits
         –   HUD’s desk guides
         –   OMB Circulars
         –   HUD’s Monitoring Checklist
                 Exhibit 13 – 8, Items 1-12


                                                  Training and Development
35                                                          Associates, Inc.
Frequently Asked Questions



            Who? What? How?
            Under SHP
     Supportive Housing Program

        One component of the continuum of care
         strategy for homelessness
         –   Outreach and assessment
         –   Immediate (emergency) shelter
         –   Transitional housing (with support services)
         –   Permanent housing (with support services)
        Enacted in the McKinney-Vento Act

                                                 Training and Development
37                                                         Associates, Inc.
Answering the Important
      Question:




           What is 3-6-8-8?
     National Objectives

        3 goals of HUD’s homeless programs
         –   Help participants obtain and remain in permanent
             housing
         –   Help participants increase skills and/or income
         –   Help participants achieve greater self-
             determination




                                               Training and Development
39                                                       Associates, Inc.
     HUD Objectives

     National Targets
        –   Create new PH beds for chronically homeless persons.
        –   Increase percentage of homeless persons staying in PH
            over 6 months to 71%.
        –   Increase percentage of homeless persons moving from
            transitional housing into permanent housing to 61%.
        –   Increase percentage of homeless persons becoming
            employed by 11%.
        –   At least 390 CoC’s will have functioning HMIS.



                                                    Training and Development
40                                                            Associates, Inc.
     Program Components

        6 types of projects
         –   Transitional Housing
         –   Permanent Housing for people with disabilities
         –   Supportive Services Only
         –   Safe Havens
         –   Innovative Supportive Housing
         –   Homeless Management Information Systems


                                                Training and Development
41                                                        Associates, Inc.
     Eligible Activities

        8 ways to spend SHP funds
         –   Acquisition
         –   Rehabilitation
         –   New construction
         –   Leasing
         –   Supportive services
         –   Operating expenses
         –   Administration
         –   Homeless Management Information System
                                            Training and Development
42                                                    Associates, Inc.
     Acquisition and
     Rehabilitation

        Purchase and/or rehabilitate all or part of building
         –   Used for housing and/or services
        Pay off a current mortgage (lump sum)
         –   If not previously used for HUD
        Funding limited to between $200,000 and $400,000
         –   Higher amounts applicable to high cost area
        50% cash match obligation
        20-year use restriction

                                                       Training and Development
43                                                               Associates, Inc.
     New Construction

        Newly construct building for housing (not services)
        Funding limited to $400,000
         –   Covers both land and building
         –   Funds cannot be used for demolition
        Must demonstrate costs are less than for
         rehabilitation
        50% cash match obligation
        20-year use restriction

                                                   Training and Development
44                                                           Associates, Inc.
     Leasing

        Leasing building for supportive housing or supportive
         services
         –   Portion of building, entire building or multiple buildings
         –   Not building already owned
         –   No mortgage payments or building operations
        Pay rent for individual units
         –   Paid directly to landlord
        Units must meet housing standards
        Rents must be reasonable
        No match requirement for leasing
                                                           Training and Development
45                                                                   Associates, Inc.
     Supportive Services

        For new grantees, cost of new or increased
         services
        For renewals, cost of continuing services
        Salaries to providers and other direct costs
         (actual direct staff time)
        Services aimed at moving homeless to
         independence
         –   Offered while part of project
         –   For transitional housing, services may continue for
             6 months after graduating
        20% cash match obligation
                                                        Training and Development
46                                                                Associates, Inc.
     Operating Expenses

        Costs of operating facilities
        Only for new project or expanded portion of existing
         project
        Supports function and operation of project
        Often referred to as indirect costs
         –   Standards in OMB Circulars A-87 and A-122
         –   Pro rate costs to individual funding sources
        Eligible for all components except supportive
         services only
        25% match obligation

                                                       Training and Development
47                                                               Associates, Inc.
     Administrative Costs

        You may request up to 5% of grant to cover
         administrative costs
         –   Costs associated with carrying out the grant
        May be split between lead agency and sponsors
        Costs associated with carrying out components
         ineligible
        No match requirement for administrative costs



                                                        Training and Development
48                                                                Associates, Inc.
     Homeless Management
     Information System

        Computerized data collection tool
        Designed to capture client level system-wide
         information
        Costs to implement and/or operate a computerized
         data collection tool
        Characteristics and service needs of the homeless
        Funds cannot be used for planning or developing
         new system
        20% cash match obligation

                                              Training and Development
49                                                      Associates, Inc.
     HUD Eligible Activities

        For Shelter Plus Care, remember:
         –   Housing Assistance is for the term of the grant
         –   Service Match is $1:$1 during the term of the
             grant
         –   Service match must be for HUD-eligible activities
         –   Administration is 8% of the grant ( after the
             housing assistance)


                                                 Training and Development
50                                                         Associates, Inc.
     Eligible Clients

        8 eligible categories of homelessness
        Not all homeless people are HUD-homeless
         eligible
        Not all clients with disabilities are eligible for
         permanent housing
        If a client is not eligible, all costs associated
         with that client (including administration and
         match) are not eligible

                                              Training and Development
51                                                      Associates, Inc.
Procurement, Match and LOCCS
Procurement
     Procurement Rules

        Grantees and subgrantees must adhere to federal
         procurement rules when purchasing
         –   Services
         –   Supplies and materials
         –   Equipment
        Applicability
         –   Governmental entities: 24 CFR Part 85
         –   Nonprofits: 24 CFR Part 84
        Also refer to
         –   SHP Monitoring Checklist Exhibit 13 -10, Items 1 - 17

                                                       Training and Development
54                                                               Associates, Inc.
     Procurement Overview

        Procurement policies must be in place
         –   Must follow written procedures and document
             compliance
        Four procurement methods available
         –   Small purchase (less than $100,000)
         –   Sealed bid (construction)
         –   Request for proposals (RFP)
         –   Non-competitive
                                               Training and Development
55                                                       Associates, Inc.
     Small Purchase Method

        Also known as “streamlined” method
        May be used for purchases below $100,000
        Requirements include
         –   Getting 3 to 5 competitive quotes
         –   Selecting the most reasonable offer
         –   Using purchase orders or petty cash to purchase



                                               Training and Development
56                                                       Associates, Inc.
     Sealed Bid

        Use for construction contracts and to
         purchase equipment and/or supplies
        Process involves
         –   Developing an invitation for bids
         –   Publicly soliciting bids
         –   Opening bids and announcing prices
         –   Reviewing bids in detail
         –   Awarding contract to winning bidder
                                               Training and Development
57                                                       Associates, Inc.
     Request for Proposal (RFP)

        Used when sealed bid not appropriate (for
         example, consulting services)
        Process involves
         –   Announcing and issuing RFP
         –   Opening, reviewing and comparing proposals
         –   If necessary, negotiating with offerors
         –   Requesting and reviewing “best and final” offers
         –   Awarding contract
                                                Training and Development
58                                                        Associates, Inc.
     Non-Competitive Award

        Permitted when award is infeasible under
         other methods and one of following applies
         –   Item is available from only one source
         –   Emergency situation will not permit delay
         –   HUD authorizes non-competitive proposals
        Price or cost analysis and written justification
         must be in files

                                               Training and Development
59                                                       Associates, Inc.
     Contracts

        Two basic types permitted
         –   Firm fixed price
                 Agreed upon price, regardless of actual cost
         –   Cost reimbursement
                 Estimated cost, usually with a ceiling
        When using sealed bid method, firm fixed-
         price contract required
        Other methods, use either type
                                                           Training and Development
60                                                                   Associates, Inc.
     Bonding and Insurance

        For contracts of $100,000 or more,
         completion assurance required through:
         –   Performance and payment bonds
         –   Deposit of cash escrow
         –   Letters of credit




                                             Training and Development
61                                                     Associates, Inc.
     Bonding and Insurance

        Insurance requirements include
         –   Worker’s compensation and employee liability
         –   Auto insurance for injuries on job site
         –   Comprehensive public liability
         –   Property damage




                                               Training and Development
62                                                       Associates, Inc.
     Other Contracting Requirements

        Minority- and women-owned businesses
         –   MBE and WBE outreach requirements
         –   Must take affirmative steps to use businesses
             owned by minorities and women
        Section 3
         –   applies to construction contracts
         –   Goals for training and hiring low-income residents
             of area
         –   Goals for hiring contractors located in area
                                                 Training and Development
63                                                         Associates, Inc.
     Ethics in Contracting

        Conflict of interest requirements apply
         –   24 CFR 583.330(e)
         –   SHP Monitoring Checklist Exhibit 13 -12, Item 4
        Gratuities and kickbacks not allowed
        Confidential information may not be used for
         personal gain
        Influence peddling not allowed

                                                Training and Development
64                                                        Associates, Inc.
Numbers Don’t Lie, They Hide



             Financial Management
             for Homeless Grantees

                      DAY TWO
     Pop Quiz on Day One
        3__________________           24 CFR, Part ______ is for
        6__________________            governments
        8__________________           24 CFR, Part ______ is for
        8__________________            not-for-profits

        4__________________           OMB Circular A-ll0 governs
                                        ____________
                                       OMB Circular A-122 outlines
        14__________________           ____________
                                       OMB Circular A-133
        100% must equal _____ or       governs ____________
         ___________________
                                       Extra Credit Question?
                                                   Training and Development
66                                                           Associates, Inc.
Meeting Programmatic
Match Requirements
     SHP Match Requirements

        Acquisition           50/50
        Rehabilitation        50/50
        New Construction      50/50
        Supportive Services   80/20
        Leasing               None
        Operations            75/25
        Administration        None
        HMIS                  80/20

                                       Training and Development
68                                               Associates, Inc.
     SHP Match Sources

        Match must be CASH!
        Must document match as part of the
         management of your financial system
        Must show that match is not being counted
         as match for another federal program
        Must keep source documentation on file for
         review when needed

                                         Training and Development
69                                                 Associates, Inc.
     SHP Match Sources

        Rent collected from clients may be counted towards
         your match requirement
         –   If the rent is calculated properly and used for HUD eligible
             activities
                 Self-Monitoring Checklists, pp. 31 to 35
                 HUD Notice 96-3: Certain Tenant Rent Calculations
        Match can be from another federal source
         –   ESG’s transitional housing program
         –   HOME Program
        Match is leverage but not all leverage is match

                                                           Training and Development
70                                                                   Associates, Inc.
Team Exercise



      Safe House Match
      Requirements
     HUD Eligible Activities

        For Shelter Plus Care, remember:
         –   Housing Assistance is for the term of the grant
         –   Service Match is $1:$1 during the term of the
             grant
         –   Service match must be for HUD-eligible activities
         –   Administration is 8% of the grant ( after the
             housing assistance)


                                                 Training and Development
72                                                         Associates, Inc.
Calculating Resident Rents
     Rent can be match

        Rent can be used for match if :
         –   Properly calculated
         –   Properly documented
         –   Properly used




                                           Training and Development
74                                                   Associates, Inc.
     Calculating Resident Rents

        Grantees may charge participants rent under
         specific guidelines
        Maximum rent (housing expense) is higher of
         –   30% of monthly adjusted income
         –   10% of monthly gross income
         –   TANF rent
        Utility expenses deducted


                                              Training and Development
75                                                      Associates, Inc.
     Calculating Rents, cont’d

        Annual income from all sources
        Income exclusions subtracted
        Adjustments to annual income
         –   Dependent allowance
         –   Childcare allowance
         –   Disabled assistance allowance
         –   Medical expenses allowance
         –   Elderly/disabled family allowance

                                                 Training and Development
76                                                         Associates, Inc.
     Calculating Rents, cont’d

        General Guidelines
         –   Review & document income annually or when
             changes occur
         –   Distinguish between employment & training
               Employment = income
               Training = stipends or reimbursements
         –   Fees for food & services acceptable if reasonable
             & not paid for by HUD or match already


                                                Training and Development
77                                                        Associates, Inc.
Team Exercise



      Tenant Rent
      Calculations
Line of Credit Control
System (LOCCS)
     Line Of Credit Control System

        LOCCS Access Authorization
         –   HUD Form 27054
        Banking information
         –   Direct Deposit Form 1199
        LOCCS Voucher for Grant Payment
         –   HUD Form 50080



                                        Training and Development
80                                                Associates, Inc.
     LOCCS Access

        Authorize a staff person for draw downs
        Maintain security of password
         –   If a LOCCS password is shared, one can be
             banned from using LOCCS forever
        Access LOCCS to maintain an active
         password
        Approving official – certification

                                              Training and Development
81                                                      Associates, Inc.
     Direct Deposit

        Banking information
         –   Form 1199
         –   Use Your existing bank account or establish a
             new account
         –   Submit Form 1199 to HUD Officials
                 Washington, DC OR Field Office
         –   Ensure that all banking information is accurate


                                                   Training and Development
82                                                           Associates, Inc.
     LOCCS Payment

        Minimize the time elapsing between transfer
         of funds to recipients from the U.S. Treasury
        Advance method
         –   Expend in 3 days
        Reimbursement method
         –   No timeframe for reimbursing the general fund
             account


                                               Training and Development
83                                                       Associates, Inc.
     Tracking LOCCS Draw Downs

        Cash control register
         –   Track each draw request
         –   Track SNAP funds by grant number and voucher
             number
         –   Maintain a cumulative balance of SNAP funds




                                             Training and Development
84                                                     Associates, Inc.
Uniform Administrative
    Requirements
     Internal Controls

        Combination of polices, procedures, job
         responsibilities, personnel and records that
         create accountability in financial system
        Ensures funds are used and managed
         properly
        Remember, a small investment early will
         reap great benefits later

                                           Training and Development
86                                                   Associates, Inc.
     Internal Control System

        Basic elements
         –   Organizational chart
         –   Written delineation of job duties
         –   Accounting policy and procedures
         –   Separation of duties
         –   Hiring policies
         –   Control over assets and documents
         –   Reconciliation of records
                                                 Training and Development
87                                                         Associates, Inc.
     Internal Controls

        Hiring competently trained      Reconciling bank
         financial personnel              statements monthly
        Board authorizing bank          Having timesheets to justify
         accounts and checks              payroll expenses
        Recording all cash              Recording petty cash
        Maintaining pre-numbered        Maintaining fireproof storage
         receipts                        Maintaining detailed
        Board signing checks             inventory records
        No invoice, no check            Obtaining fidelity Insurance



                                                     Training and Development
88                                                             Associates, Inc.
     Organization Chart

        Supervision of employees
        Lines of authority
        Communication
        Delineates responsibility, functions and duties
        Auditors want it!




                                                Training and Development
89                                                        Associates, Inc.
     Segregation of Duties

        Not having one person             Separating
         in control from inception          –   Operational work from
         to final recording                     record-keeping of assets
        Having independent                 –   Asset custody from asset
                                                records
         cross-checking
                                            –   Authorization of asset
         –   SHP Monitoring
                                                purchases from custody
             Checklist, Exhibit 13-8,
             Item 14                            and record-keeping
                                            –   Purchasing from
                                                receiving

                                                       Training and Development
90                                                               Associates, Inc.
     Documenting Time

        For employees that work in a single indirect cost
         activity, document time with a timesheet
        For employees that work in a single federal award
         category, document time with a timesheet and
         periodic certifications
        For employees that work on more than one activity
         (direct or indirect), document time with timesheets
         supported by activity records
        SHP Monitoring Checklist, Exhibit 13-8, Items 11-13
         and 15-17
                                               Training and Development
91                                                       Associates, Inc.
     Time and Activity Records

        Time and activity records
         –   Accordingly to OMB Circular and Parts 84 and 85:
                 After-the-fact determination of actual activity
                 Signed by individual employee, certified by supervisor
                 Prepared at least monthly
        Applies to direct HUD grantees and
         subgrantees


                                                         Training and Development
92                                                                 Associates, Inc.
     Sample Timesheet
                                         Dat e Dat e Dat e Dat e Dat e Dat e Dat e Tot al Hours Funding
          Client or service provided                                                           Source




          Vacation
          Overhead
          Non-HUD
          Sick
          Holiday
          TOTAL


          Employee Signature



          Supervisor's Certification

          Special Notes, Comments or Explanations:                                         Training and Development
93                                                                                                   Associates, Inc.
     Sample Timesheet
                                     Dat e Dat e Dat e Dat e Dat e Dat e Dat e Tot al Hours Funding
          Client or service provided Mon. Tues. Weds. Thurs. Fri.   Sat. Sun.              Source
          1234                          2           1     2       1                      6 HUD #1
          Group Session                 1     1     1     1       1                      5 HHS
          1239                          1                         1                      2 Casey
          1241                          3                         2                      5 HUD #1
          1256                          1     1     1     1       1                      5 HUD #2
          1235                                2           2                              4 HUD #1
          1255                                      1     1                              2 ESG #1
          1238                                1     1     1                              3 HUD #1
          Staff Meeting                       2                                          2 Overhead
          Fundraising Event                   1                                          1 Unrest.
          1257                                      3                                    3 HUD #2




          Vacation                                                                        Vacation
          Overhead                                                                        Overhead
          Non-HUD                                                                         Non-HUD
          Sick                                                   2                      2 Sick
          Holiday                                                                         Holiday
          TOTAL                             8        8   8   8   8                     40



          Employee Signature


          Supervisor's Certification

          Special Notes, Comments or Explanations:                                     Training and Development
94                                                                                               Associates, Inc.
     Types of Activity Sheets

        Clients’ case notes
        Calendars, logs and sign-in sheets
        Palm pilots
        Daily, weekly and quarterly reports
        Products and deliverables
        What do you use now?


                                          Training and Development
95                                                  Associates, Inc.
     Basic Cash Controls

        Making disbursements         Reconciling bank
         with checks, not cash         statements monthly
        Pre-listing and               (backed by checks)
         recording cash receipts      Having supporting
         by someone other than         documentation for
         depositor                     checks
        Having subsidiary and        Having payroll
         control accounts              expenses backed up by
        Using pre-numbered            timesheets/separate
         checks                        bank account

                                               Training and Development
96                                                       Associates, Inc.
     Physical Control of Assets

        Keeping canceled              Using fireproof safes
         checks in a safe,              and locked file cabinets
         fireproof place               Keeping duplicate
        Periodically                   records in a safe,
         inventorying physical          secure off-site location
         assets                        Depositing cash
        Using a check protector        receipts on a daily
         machine vs. individually       basis
         drafted checks

                                                  Training and Development
97                                                          Associates, Inc.
Budget Controls
     Team Exercise: We Need a Budget

        Your team has won the lottery!
        While you have only won $100, you decide to
         celebrate as a group
        Prepare a celebration budget
         that includes
         –   Budget assumptions
         –   Cost estimates
         –   Proposed expenditures
                                        Training and Development
99                                                Associates, Inc.
      Budget Controls

         Compare and control expenditures
          –   Keep records on budgeted amounts
          –   Compare obligations and expenditures to planned
              budgets and accomplishments
          –   Report deviations from budgets and plan




                                               Training and Development
100                                                      Associates, Inc.
      Developing Budgets

         Budget is projection of expenses based on
          actual experience
          –   Defines goals for a given period of time
          –   Provides ability to monitor progress
          –   Identifies significant variances between financial
              goals and how resources are actually used
         Budgets should never be submitted to
          decision-makers and funding sources without
          including assumptions
                                                   Training and Development
101                                                          Associates, Inc.
Accounting Records
      Accounting Records

         Accounting system should include
          –   Chart of accounts
          –   Cash receipts journal
          –   Cash disbursements journal
          –   Payroll journal
          –   General ledger



                                           Training and Development
104                                                  Associates, Inc.
      Accounting Records

         Source documentation required
          –   SHP Monitoring Checklist Exhibit 13-8, Items 1- 4
         Also, ensure that program costs were
          –   Incurred for the proper period
          –   Actually paid
          –   Expended on eligible items
          –   Approved by appropriate officials


                                                  Training and Development
105                                                         Associates, Inc.
      Sources and Uses of Funds

         Up-to-date information on sources and uses
          of funds
          –   Amount of federal funds received and
              authorization of funds
          –   Obligations of funds and un-obligated balances
          –   Assets and liabilities
          –   Program income
          –   Expenses by grant year and program

                                                 Training and Development
106                                                        Associates, Inc.
Cash and Property
Management
      Cash Management

         Procedures to minimize the time between
          receipt and disbursement of funds required
         Three methods allowed
          –   Reimbursement
                  Almost all SHP lead agencies use reimbursement
          –   Cash advance
          –   Working capital


                                                       Training and Development
108                                                              Associates, Inc.
      Property Management

         Definitions
          –   Real property is land and improvements
          –   Personal property is other types of property
              (supplies and equipment)
         SHP Monitoring Checklist 13 -11
          –   Complies with 24 CFR 85.32 and 24 CFR 84.34



                                                  Training and Development
109                                                         Associates, Inc.
      Property Management

         General requirements
          –   Property can only be acquired for a specific purpose
         Specific requirements
          –   Use must continue for a certain period of time
                  Remember the SHP 20 year use restriction
          –   Accurate records must be kept
                  SHP Monitoring Checklist Exhibit 13 -11, Items 1-3
          –   Use should reflect intended purpose
          –   Property can be disposed of only if rules are followed
                  There are specific requirements for SHP property
                  SHP Monitoring Checklist Exhibit 13 -11, Item 4
                                                              Training and Development
110                                                                     Associates, Inc.
Federal Cost Principles
      Cost Principles

         Three components to cost principles
          –   Cost reasonableness
          –   Cost allowability
          –   Cost allocation
         Applicability
          –   Governmental entities: OMB Circular A-87
          –   Nonprofits: OMB Circular A-122
         Also refer to
          –   SHP Monitoring Checklist, Exhibit 13-9

                                                         Training and Development
112                                                                Associates, Inc.
      Determining Costs

         Costs are only eligible if they can be
          associated with an eligible client
         Costs are only eligible if they are
          –   Eligible activity under funding program
          –   Delineated in your application submissions and
              budgets
          –   Source documented
          –   Reasonable, allowable and allocable
                                                 Training and Development
113                                                        Associates, Inc.
      Cost Reasonableness

         Costs charged to federal award must be
          necessary, reasonable and directly related to
          the grant
         Look at the following
          –   Whether cost is ordinary and necessary
          –   Market prices for comparable goods and services
          –   Benefit to individuals involved


                                                Training and Development
114                                                       Associates, Inc.
      Cost Allowability

         In general, cost must be
          –   Necessary and reasonable
          –   Allocable to the program
          –   Authorized or not prohibited
          –   Conform to and be consistent with rules and
              requirements
          –   Not charged to any other program
         Refer to list of costs in OMB Circular A-122
                                                 Training and Development
115                                                        Associates, Inc.
      Table Talk: Cost Allowability

         Which of the following costs are allowable?
          –   Alcohol
          –   Pre-award costs
          –   Writing a Continuum of Care
              grant application (fundraising)
          –   Client graduation ceremony
              (entertainment)


                                                Training and Development
116                                                       Associates, Inc.
      Cost Allocation

         A cost is allocable to a HUD program if it is
          –   Treated consistently with other similar costs
          –   Incurred specifically for the program
          –   Benefits program or can be distributed based on a
              reasonable proportion OR
          –   Necessary to operations




                                                 Training and Development
117                                                        Associates, Inc.
      Allowable vs. Allocable


       The real issue with timesheets is not whether
       the activity is allowable or not…

       …BUT whether the time is allocable to the
       specific grant.



                                        Training and Development
118                                               Associates, Inc.
      Table Talk: Allowable vs. Allocable

         Under what circumstances could furniture,
          which is allocable, not be allowable?
         Under what circumstances would a computer
          printer, which is allowable, not be allocable?
         Under what circumstance would
          the case managers’ time, which is
          reasonable, not be allowable?
          Not be allocable?


                                                 Training and Development
119                                                        Associates, Inc.
      Determining Eligibility

         If properly procured, cost is reasonable
         If on approved budget, cost is allowable
         If directly linked to grant, cost is allocable
         Therefore, if costs are…
             Reasonable…
               Allowable…
                 Allocable…
                   They are eligible for federal reimbursement


                                                 Training and Development
120                                                        Associates, Inc.
      Direct and Indirect Costs

         Direct costs can be identified with specific
          program or activity
         Indirect costs are incurred for common/joint
          purpose benefiting more than one program
          or activity
          –   Administrative salaries
          –   Accounting expenses
          –   Facility maintenance
                                           Training and Development
121                                                  Associates, Inc.
      Table Talk: Direct vs. Indirect

         Assign the following costs as direct or
          indirect
          –   Staff salaries
          –   Utility costs
          –   Food
          –   Depreciation
          –   Insurance


                                            Training and Development
122                                                   Associates, Inc.
      What kind of cost is it?

       Direct?           Indirect?
       Eligible?         Ineligible?
       Allowable?        Unallowable?
       Allocable?        Non-allocable?
       Fixed?            Variable?
      Restricted?        Unrestricted?
                                     Training and Development
123                                            Associates, Inc.
      Pro-Rating Costs

       Required by HUD where full cost is not
        the actual cost for HUD’s piece
       Must always have source
        documentation




                                    Training and Development
124                                           Associates, Inc.
      Pro-Rating Costs

         Supportive service costs
          –   Salaries pro-rated based on percentage time
          –   Document with time and activity records reflecting
              funding source
         Operating expenses
          –   Pro-rate based on percentage of space or time
              used
          –   Document with logs, plans, etc.

                                                  Training and Development
125                                                         Associates, Inc.
      Table Talk: Pro-Rating Costs

         A case manager works with 30 clients under 3
          different funding programs of which 8 clients are
          associated with this HUD grant
         How would you pro-rate the case manager’s time?
          –   Divide the total cost equally among the 3
              funding programs
          –   Charge 8/30ths of the cost to this grant
          –   Compare the number of hours spent with
              the 8 clients to that spent with all 30 clients
          –   None of the above
                                                                Training and Development
126                                                                       Associates, Inc.
      Table Talk: Pro-Rating Costs

         Your HUD-funded program is located in the same
          facility as another program where there is only one
          utility meter
         How would you pro-rate the utility costs?
          –   Divide the cost equally among the 2 programs
          –   Use the percentage of square footage used
              by clients
          –   Use the percentage of square footage used
              by clients and staff
          –   None of the above
                                                       Training and Development
127                                                              Associates, Inc.
      Cost Eligibility Summary

         Costs are eligible if they are reasonable, allowable
          and allocable
          –   A cost is only a “cost” if charged to the correct budget line
              item
          –   If the client is not eligible, all costs (including administration)
              associated with that client are ineligible
         If a cost is not specifically listed in OMB’s Circular,
          does that mean that the cost is allowable?


                                                              Training and Development
128                                                                     Associates, Inc.
Auditing, Monitoring and
      Compliance
      Why Do We Need An Audit?

         Universally accepted analytical tool
          –   Ratios, standards, disciplined way of viewing numbers
         Demonstrates accountability
          –   GAAP, GAGAS, OMB Circular, HUD requirements
         Demonstrates proper stewardship
          –   Verifies internal financial controls
          –   Demonstrates board oversight
          –   Independently audited and adequate reporting


                                                        Training and Development
130                                                               Associates, Inc.
      Audits

         Federal programs are subject to review or
          audit
         When spending $500,000 or more in federal
          awards per year, specific rules apply
         Grantees and subgrantees must adhere to
          OMB Circular A-133


                                        Training and Development
131                                               Associates, Inc.
      Federal Awards

         Federal awards include
          –   Grants, loans and loan guarantees
          –   Direct assistance or appropriations
          –   Property insurance or interest subsidies
          –   Property, food commodities
          –   Cooperative agreements or contracts
          –   Other assistance
         But only counts if “expended”
                                                  Training and Development
132                                                         Associates, Inc.
      Type of Audit

         Program-specific audit
          –   OK if recipient or subgrantee gets federal funds
              from only one source
          –   Involves only looking at that program
         Single audit
          –   Required if funds come from more than one
              source
          –   Involves looking at all programs and financial
              statements

                                                  Training and Development
133                                                         Associates, Inc.
      Auditing Standards

         Federal audits performed using Generally
          Accepted Government Auditing Standards
          –   Financial information correctly presented
          –   Internal controls exercised regarding cash
              management, payroll processing, fixed assets
              and reporting
          –   Activities in compliance with program
              requirements
         Audit report must address each area
                                                Training and Development
134                                                       Associates, Inc.
      Compliance Requirements

         A federal audit must satisfy 14 compliance
          requirements
          –   Laws (for example, Davis Bacon)
          –   Regulations covering match, eligibility, etc.
          –   Other grant provisions including subgrantee
              monitoring




                                                  Training and Development
135                                                         Associates, Inc.
      Audit Findings

         Audit may include findings and questioned
          costs
          –   Material weakness in internal control
          –   Noncompliance with laws and/or regulations
          –   Questioned costs in excess of $10,000
          –   Fraud affecting federal award
          –   Misrepresentation of prior audit finding


                                                Training and Development
136                                                       Associates, Inc.
      Qualified Audits

         Auditor’s work based on the work of others
         Uncertainties exist affecting the potential
          effect of the audit
         Serious doubt about organization as an
          ongoing concern (bankrupt?)
         Supplementary information not presented or
          inadequate

                                          Training and Development
137                                                 Associates, Inc.
      Review and Resolution

         Audit report must be submitted to HUD within
          9 months of audit period and
         Submit an A-133 Audit to the Federal
          Clearinghouse
         Grantees and subgrantees must establish
          system to ensure timely and appropriate
          resolution to audit findings

                                          Training and Development
139                                                 Associates, Inc.
      What HUD Looks For

         Audits that are “clean”
          –   There are no findings, either financial or
              management
         Fund accounting applied to segregate HUD’s
          grants and costs associated with those
          grants from other funding sources
         Costs that are supported with source
          documentation
                                                   Training and Development
140                                                          Associates, Inc.
      Hiring An Auditor

         Many nonprofits need specialized auditor
          –   Multiple funding sources requires fund accounting
          –   Specialized experience with federal programs
          –   Too much emphasis on cost vs. needs
          –   Perception of low-risk of liability for agencies
          –   Failure to recognize the needs of all interested
              parties


                                                 Training and Development
141                                                        Associates, Inc.
      Specialized Auditors

         Specialized auditors need to know
          –   AICPA’s industry audit and accounting guide
          –   GAO’s Government Auditing Standards manual
          –   Applicable OMB Circulars
          –   Catalogue of Federal Domestic Assistance
          –   HUD’s program guidelines
          –   OMB’s Compliance Supplement


                                              Training and Development
142                                                     Associates, Inc.
      Selecting The Right Auditor

         Use a competitive process with at least 3 bids
         Issue a request for qualifications (RFQ) that outlines
          what you want
         Separate the technical submission from the cost
          quote
         Issue an engagement letter
         GAO secondary considerations include
          –   Financial education and audit experience
          –   An audit committee to handle selection
          –   Detailed policies and procedures
                                                         Training and Development
143                                                                Associates, Inc.
      The Audit Process Is Ongoing

         As one audit period ends, another audit
          period begins




                                          Training and Development
146                                                 Associates, Inc.
Team Exercise



      Family Services Audit
      Consideration
Annual Progress
Reports
      Purpose of APR

         Tracks project progress
          –   Help participants obtain and remain in permanent housing
          –   Help participants increase skills and/or income
          –   Help participants achieve greater self-determination
         Tool for HUD…and YOU!
          –   Helps to keep your program on track
          –   Gives you information about how the project is doing and
              what it is accomplishing
          –   Used to document success for other funders
          –   Used for completing continuum gaps analysis

                                                        Training and Development
149                                                               Associates, Inc.
      Submission Requirements

         Each grantee must submit an APR
          –   If grantee does not run the project
                  Sponsor completes
                  Gives to grantee for submission to HUD
         A separate APR submitted for each HUD
          grant received
          –   Each program component = a project = a
              separate APR

                                                        Training and Development
150                                                               Associates, Inc.
      Due Date – Reporting Period

         Failure to submit an APR may lead to a delay
          in receiving future grant funding
         Due 90 days after the end of each operating
          year of your program
         What is the operating year?
          –   Trigger date for start and end of grant term
          –   Starts the clock for submission of APR
          –   Trigger varies depending on program and project
              activities
                                                Training and Development
151                                                       Associates, Inc.
      Operating Year

         Projects with acquisition, rehabilitation or new
          construction
          –   Operating year begins after
                  Obtaining a certificate of occupancy
                  Accepting first client
         Other projects
          –   Operating year begins after
                  Accepting first client
                  LOCCS draw of leasing, supportive services or operating
                   funds
         Renewal projects
          –   Specified in grant agreement letter

                                                             Training and Development
152                                                                    Associates, Inc.
      Components of APR

         Basic information about project and goals
         Information about participants in project
         Information about participants leaving project
         Financial information and match




                                            Training and Development
153                                                   Associates, Inc.
      APR Part I: Project Progress

         No. 1: Projected level of service
          –   At a given point in time show
                  Number of singles not in families
                  Number of adults in families
                  Number of children in families
                  Number of families




                                                       Training and Development
154                                                              Associates, Inc.
      APR Part I: Project Progress

         No. 2: Persons served
          –   Enrolled on first day of operating year
          –   Enrolled any time after the first day
          –   Who left during the operating year
          –   Still enrolled in the program on the last day of the
              operating year
         No. 3: Project capacity
         No. 4: Non-homeless housed (Section 8
          SRO only)                    Training and Development
155                                                       Associates, Inc.
      APR Part I: Project Progress

         Nos. 5 – 14: Demographic Data
         Participant information by individual, families and
          chronically homeless
           –   Age                      –   Income change
           –   Gender                   –   Income source
           –   Race/ethnicity           –   Length of stay
           –   Primary disability       –   Reasons for leaving
           –   Prior living situation   –   Post-project destination


                                                    Training and Development
156                                                           Associates, Inc.
      APR Part I: Project Progress

         No. 15: Supportive Services
          –   Number of participants receiving discrete
              categories of service
          –   Identify those participants receiving services that
              are chronically homeless




                                                   Training and Development
157                                                          Associates, Inc.
      APR Part I: Project Progress

         No. 16: Goals and objectives
          –   Shows goals and objectives
                  Current year’s goals and progress
                  Next year’s goals
          –   Measurable goal for each year as it relates to the
              overall HUD program goals
                  Obtain and remain in permanent housing
                  Increase skills and income
                  Achieve greater self-determination

                                                       Training and Development
158                                                              Associates, Inc.
      APR Part I: Project Progress

         No. 17: Number of beds
          –   SHP (not completed for SSO projects)
                  Number of beds – Current Level
                  Number of beds – New Effort
                  New Effort beds in place at the end of operating year
          –   Shelter Plus Care
                  Number of beds
                  Number of dwelling units
          –   Section 8 SRO
                  Number of dwelling units
                                                          Training and Development
159                                                                 Associates, Inc.
      APR Part II: Financial Information

         No. 18: Supportive Service
          –   SHP funded services
                  Amount of SHP funds spent during operating year
                  For discrete services outlined in application and technical
                   submission
          –   S+C projects
                  Amount of funding from other sources
                  Spent on services by discrete categories
          –   SRO projects
                  Estimates percentage of clients who use discrete service
                   categories
                  Funded outside of SRO program


                                                                Training and Development
160                                                                       Associates, Inc.
      APR Part II: Financial Information

         For S+C service match
          –   14 categories of eligible services
          –   Match is overall
                  Not year-by-year
                  Each client need not receive the same amount of
                   services as rental assistance.
          –   Examples of match [582.110]
                  Volunteer time at $10 per hour
                  Actual salaries paid to staff that provide services
                  Value of lease on service facility

                                                            Training and Development
161                                                                   Associates, Inc.
      APR Part II: Financial Information

         No. 19: SHP leasing, supportive services, operating
          costs, HMIS, and administration
          –   Tracks SHP expenditures
                  SHP funds drawn down during the year
                  Cash match (by activity)
                  Total expenditures
          –   Tracks sources of cash match
                  Cash only! (no in-kind contributions, etc.)
                  Required match varies by activity
         Keep documentation on file
          –   SHP expenditures and cash match
          –   No regulatory guidance outside of OMB Circulars

                                                                 Training and Development
162                                                                        Associates, Inc.
      APR Part II: Financial Information

         No. 20: SHP acquisition, rehabilitation, and new
          construction
          –   Tracks SHP expenditures
                  Fill out in year-1 only
                  SHP funds drawn down during the year
                  Cash match (by activity)
                  Total expenditures
          –   Tracks sources of cash match
                  Match is $1 for $1
         Keep documentation on file
                                                          Training and Development
163                                                                 Associates, Inc.
      APR Part II: Financial Information

         No. 21: SHP HMIS activities
          –   Shows how SHP funds for HMIS activities were
              spent during year
                  Equipment
                  Software
                  Services
                  Personnel
                  Space and operations


                                               Training and Development
164                                                      Associates, Inc.
      APR Part II: Problems, Changes, and
      Technical Assistance Request

         Open-ended questions
          –   Describe problems or changes
          –   Solicit information on
                  Need for technical assistance
                  Ways HUD could improve service
                  Self-reflection on project improvement
         Chance to give important feedback!
         Establish HUD relationship
                                                            Training and Development
165                                                                   Associates, Inc.
Grant Amendments and Mergers
      Technical Submission

         Technical submission is your contract
         If an activity is not specified in the technical
          submission, it is not eligible
         Strengthening the technical submission
          –   Site control (within 1 year of award letter)
          –   Restrictive covenants for 20 year use
          –   Match raised (evidence of first year in hand)




                                                          Training and Development
168                                                                 Associates, Inc.
      Spending Down the Grant

         Timeliness!
         Timeliness!
         Timeliness!




                            Training and Development
169                                   Associates, Inc.
      Grant Amendments

         Program changes during grant term
         Scope of changes
          –   Significant
          –   Minor
         HUD involvement and approval
          –   Informed (minor)
          –   Review and approval (significant)

                                                  Training and Development
170                                                         Associates, Inc.
      Scope of Changes

         Significant changes
          –   Departure from application
          –   And substantially affects implementation
          –   HUD approval required and amended grant agreement
         Minor changes
          –   Departures from application
          –   But does not substantially affect implementation
          –   No HUD approval or amended grant agreement
          –   Must document change


                                                         Training and Development
171                                                                Associates, Inc.
      Examples of Significant Changes

         Substantial amendment needed when
          –   New grantee or name change
          –   Change in project site
          –   Change in project activities
          –   Shift over 10% of funds from one activity to
              another (cumulative)
          –   Change in population or number of participants
              served

                                                 Training and Development
172                                                        Associates, Inc.
      HUD Approval

         Written request to field office with revised application
          –   Letter
          –   Revised application exhibit(s)
          –   If applicable, new ConPlan certification
         Field office approval and amendment of grant
          agreements
         Application must remain competitive
         Reduced rating requires HQ’s approval


                                                         Training and Development
173                                                                Associates, Inc.
      Reduced Rating Examples

         “Lower quality”
          –   Housing and/or services lower quality than
              originally funded
          –   Less experienced provider
          –   Innovative features eliminated
          –   Cost effectiveness reduced
          –   Site moved to area of less need


                                                 Training and Development
174                                                        Associates, Inc.
      Recapture of Funds

         Whole grants or portion of grants
         Used to fund additional projects next year
         Reasons
          –   Lack of site control
          –   Slow expenditure of funds
          –   Noncompliance with grant agreement
          –   Unspent or surplus funds

                                              Training and Development
175                                                     Associates, Inc.
      Recapture of Funds

         Lack of site control
          –   Must obtain within 1 year of award notification
          –   Statutory (cannot be waived)
          –   Exception where site control lost (rare)
         Slow expenditure of funds
          –   Acquisition, rehabilitation or new construction must begin
              within 3 months OR residents must begin occupancy within
              9 months of agreement
          –   Leasing, operating or supportive services must begin within
              3 months of availability


                                                          Training and Development
176                                                                 Associates, Inc.
      Recapture of Funds

         Noncompliance with grant agreement
          –   Any instance of default
          –   Factors beyond grantee’s control considered
         Unspent funds
          –   During grant term
          –   Costs are less than anticipated
          –   Funds may be shifted to other activities or carried forward




                                                          Training and Development
177                                                                 Associates, Inc.
      Recapture of Funds

         Surplus funds
          –   Upon expiration of grant
          –   Unspent funds
          –   Unless term extension received or final draw-
              down is pending




                                                 Training and Development
178                                                        Associates, Inc.
      Merging SHP Grants

         Under certain conditions, grants may be merged
         Applies to grantees with 2 or more grants that meet
          criteria
          –   Grants must be the same component
          –   Grants must have same period (expiration)
          –   Instructions included in SHP operating instructions
         Shelter Plus Care grants may also be merged



                                                         Training and Development
179                                                                Associates, Inc.
Financial Statements and
        Analysis
      What is Financial
      Analysis?

         Tool to analyze financial information in a
          systematic manner
         Quantify one’s financial questions
         “An art, not a science”
         Using standard ratios and measures
         Language of lenders and investors


                                            Training and Development
181                                                   Associates, Inc.
      The Process of Financial Analysis

         “Spreading the numbers”
         Reviewing basic credit questions
          –   Is the organization liquid?
          –   Is the organization profitable?
          –   Is there adequate cash flow to operate?
         Preparing follow-up questions
         Calculating and analyzing ratios
          –   Compare this organization to others
         Trend analysis
          –   The key is getting better
                                                        Training and Development
182                                                               Associates, Inc.
      Documents to Review

         Three years of financial       Projected financial
          statements                      statements for the next
          –   Revenue and Expenses        3 to 5 years
          –   Balance Sheets             Interim financial
          –   Cash Flow Statements        statements
          –   Corporate tax returns       –   Depending on the timing
          –   Bank statements                 of the yearly statements
         Why 3 years?


                                                      Training and Development
183                                                             Associates, Inc.
      Fund Accounting

         Fund accounting matches sources and uses
          of funds for each funding sources
         Without fund accounting, you cannot truly
          analyze the revenues and expenses of a
          specific funding source
         Applies the principles of financial analysis to
          each funding source

                                            Training and Development
184                                                   Associates, Inc.
Introduction to Financial
Statements
      Financial Statements

         Balance sheet
          –   What an organization owns (assets)
          –   What an organization owes (liabilities)
         Income statement
          –   Revenue
          –   Expenses
          –   Revenue in excess of expenses (profit)


                                                  Training and Development
186                                                         Associates, Inc.
      Notes to Financial Statements

         Provides extra detail about the information in
          the financial statements
          –   Terms and conditions of financing, leases, etc.
          –   Loans to staff and officers
          –   Collection and payment terms
          –   Inter-fund transfers
          –   Valuation of assets
          –   Outstanding receivables (grants)
          –   Pending litigation or contingent liabilities
                                                  Training and Development
187                                                         Associates, Inc.
      Forms of Financial Statements

         In-house financial statements
          –   Prepared internally by organization
          –   Used for day-to-day operations
         Compiled financial statements
          –   Auditor takes information from organization and compiles it
              into proper format
          –   Only as good as information provided by organization
          –   Auditor does not test information
          –   Least expensive independently prepared


                                                         Training and Development
188                                                                Associates, Inc.
      Forms of Financial Statements

         Reviewed financial statements
          –   Auditor reviews information provided by organization
          –   Provides limited verification
          –   Key tests completed to validate information
         Audited financial statements
          –   Auditor evaluates all aspects of organization’s finances
          –   Verifies assets, debt, other obligations and liabilities
          –   Most thorough and expensive



                                                          Training and Development
189                                                                 Associates, Inc.
      Session Ten:
Numbers Don’t Lie, They Hide
      Operating Cycles


                     Collecting
                     Receivables
       Paying
       Others



                Purchasing
                 Inventory
                                   Training and Development
191                                          Associates, Inc.
      Grantee’s Operating Cycle

         Even not-for-profits have an operating cycle and a
          need for working capital
         “Seasonality” – timing is everything
         Investing in fixed vs. variable expenses
          –   Fixed expenses drive up the need to raise revenues on a
              regular basis
         Don’t buy stuff until you need it
          –   Lease now, buy later
          –   Collect now, pay on time
         Grants are not cash until collected
                                                       Training and Development
192                                                              Associates, Inc.
      Team Exercise: Rehab, Inc.

         Analyze the finances of a typical SHP
          grantee using the BIG 4!




                                          Training and Development
193                                                 Associates, Inc.
Final Thoughts


      What Should I
      Remember When I Get
      Back Home?
      Top Ten of Financial Management

         Numbers don’t lie, they hide
         Only CASH pays the bills
         Pledges (and grants) are not cash until they
          are collected
         Always match sources and uses of funds
         Even nonprofits have an operating cycle and
          a need for working capital

                                          Training and Development
195                                                 Associates, Inc.
      Top Ten of Financial Management

         Fixed expenses drive up breakeven and the
          need to raise more funds
         Lease now, buy later! Collect now, pay on
          terms!
         Price your services to pay yourself
         It is not someone else’s responsibility (not
          the bank, the accountant or the funder)
         “What’s love got to do with it?”
                                           Training and Development
196                                                  Associates, Inc.
      Wrap Up

         Cleaning out the bin
         Evaluations
         Climate check
         Who you gonna’ call?
          –   Lead Agency
          –   HUD
          –   TDA
         Have a safe journey!
                                 Training and Development
197                                        Associates, Inc.
Training & Development
       Associates

          131 Atkinson Street, Suite B
          Laurinburg, North Carolina 28352
          (910) 277-1275
          (910) 277-2816 Fax
          www.TDAinc.org

								
To top