Head StartEarly Head Start Financial Pre-Institute December 11

Document Sample
Head StartEarly Head Start Financial Pre-Institute December 11 Powered By Docstoc
					                 Head Start/Early Head Start
                   Financial Pre-Institute
                  December 11 – 12, 2006

                    Presenter: Phil Doherty
             Development and Administrative Costs
                                                    PRISM Fiscal Training



2006 Head Start and Early Head Start Financial Pre-Institute
   Leading With A Vision: Managing Change & Creating Quality
                       Applicable Regulatory
                       Requirements


                 • 45 CFR Part 74.21 Standards for Financial
                   Management Systems

                 • 45 CFR Part 92.20 Standards for Financial
                   Management Systems

                 • 45 CFR Part 74.27 Allowable Costs

                 • 45 CFR Part 92.22 Allowable Costs
2006 Financial
 Pre-Institute
                       Applicable Regulatory
                       Requirements (cont.)

                 • 2 CFR 225 Cost Principles for State, Local &
                   Indian Tribal Governments

                 • 2 CFR 230 Cost Principles for Non-Profit
                   Organizations

                 • 45 CFR 1301.2 Definitions

                 • 45 CFR 1301.32 Limitations on costs of
2006 Financial     development and administration of a Head
 Pre-Institute     Start/Early Head Start program
                       Definitions


                 • Development and Administrative Costs
                   (D&A): costs incurred in accordance with an
                   approved Head Start budget that do not
                   directly relate to the provisions of program
                   component services, including services to
                   children with disabilities.




2006 Financial
 Pre-Institute
                       Definitions


                 • Dual benefit costs: costs incurred in
                   accordance with an approved Head Start
                   budget that directly relate to both development
                   and administrative functions and to the
                   program component services, including
                   services to children with disabilities.




2006 Financial
 Pre-Institute
                        Administrative Costs:
                        Personnel


                 • Executive Director
                 • Deputy Director
                 • Fiscal Manager
                 • Head Start/Early Head Start Director (only
                   responsibility)
                 • Bookkeeper



2006 Financial
 Pre-Institute
                         Administrative Costs:
                         Personnel (cont.)


                 •   Administrative Assistant
                 •   Administrative Secretary
                 •   Human Resource Manager
                 •   Fringe benefits for administrative personnel
                 •   Other Managers (not service component
                     specific)



2006 Financial
 Pre-Institute
                        Administrative Costs:
                        Non-Personnel


                 • Legal services
                 • Advertising
                 • Accounting
                 • Single audit
                 • Indirect costs (not identified as program costs
                   in application)
                 • Travel costs for administrative personnel


2006 Financial
 Pre-Institute
                        Dual Benefit Costs



                 • Head Start Director (also has specific
                   component responsibility)
                 • Secretary
                 • Office equipment
                 • Office supplies
                 • Rent


2006 Financial
 Pre-Institute
                         Dual Benefit Costs (cont.)


                 •   Mortgage
                 •   Utilities, telephone
                 •   Building insurance
                 •   Postage
                 •   Other supplies




2006 Financial
 Pre-Institute
                         Developmental Costs


                 •   Grant writing
                 •   Planning for expansion
                 •   Locating facilities
                 •   Long-range planning committees
                 •   Architectural designs




2006 Financial
 Pre-Institute
                        Specific Requirements:
                        Uniform Administrative


                 • Part 74.21(b)(1) & (2) and Part 92.20(b)(1) &
                   (2) require:
                    – Accurate, current and complete disclosure
                       of the financial results
                    – Records that identify adequately the
                       source and application of funds



2006 Financial
 Pre-Institute
                        Specific Requirements:
                        Uniform Administrative (cont.)


                 • The cost must be allowable to the Head Start
                   Program
                    – Parts 74.27 and 92.22 specify which OMB
                      circular is used when determining the
                      allow-ability and allocability of costs.
                    – State, local governments and Indian tribal
                      governments use 2 CFR 225, Appendix B
                    – Nonprofit organizations use 2 CFR 230,
                      Appendix B
2006 Financial
 Pre-Institute
                      Specific Requirements:
                      Uniform Administrative (cont.)


                 • The cost must be reasonable, allowable,
                   allocable and necessary.
                    – Appendix A to 2 CFR 225 and 230




2006 Financial
 Pre-Institute
                       Specific Requirements:
                       Applicable HS Regulations


                 • Costs do not exceed 15 percent of total project
                   costs. Total project costs include the Federal
                   and non-Federal share. [1301.32(a)(1)]

                 • Costs of organization-wide management are
                   charged as D&A costs [1301.32(e)]




2006 Financial
 Pre-Institute
                       Specific Requirements:
                       Applicable HS Regulations


                 • Delivery of program services are categorized
                   and charged as program costs [1301.(c-d)]

                 • Dual benefit costs are identified and
                   allocated.[1301.32.(d)]

                 • Indirect costs categorized as program costs
                   are fully explained in the application
                   [1301.32(f)(3)]
2006 Financial
 Pre-Institute
                        Other Considerations


                 • D&A costs or contributions used for the non-
                   Federal share are included in the 15%
                   limitation

                 • The 15% limitation is enforced at the grantee
                   level

                 • Delegate agency(s)’ D&A costs are part of the
                   15% limitation

2006 Financial
 Pre-Institute
                         Other Considerations
                         (cont.)


                 • Head Start regulations do not require a
                   separate system for identifying and tracking
                   D&A costs

                 • Compliance with the 15% requirement is
                   based on final expenditures

                 • For HS/EHS grantees, the 15% limitation is
                   calculated on the total project costs for both
                   HS/EHS
2006 Financial
 Pre-Institute
                         Reviewing, Analyzing and
                         Evaluation: Source Documents


                 •   Grantee’s identification of D&A costs
                 •   GABI line item budget
                 •   GABI Detailed Report
                 •   Audit report
                 •   Payroll records
                 •   Job descriptions



2006 Financial
 Pre-Institute
                        Reviewing, Analyzing and
                        Evaluation: Source Documents


                 •   Financial statements
                 •   General Ledger entries
                 •   Organization chart
                 •   Delegate agency(s)’ financial reports
                 •   Chart of Accounts




2006 Financial
 Pre-Institute
                       Reviewing, Analyzing &
                       Evaluation: Suggested
                       Procedures

                 • Review the GABI Line Item Budget and the
                   Detailed Report. List the costs identified as
                   D&A/dual benefit and the allocation
                   percentages.

                 • Determine if allocations for dual benefit costs
                   are based on accepted methodologies such as
                   time studies, square footage, full-time
                   equivalents.
2006 Financial
 Pre-Institute
                       Reviewing, Analyzing &
                       Evaluation: Suggested
                       Procedures

                 • Review audit report. If HS/EHS is a major
                   program, the Compliance Supplement to OMB
                   Circular A-133 requires that the auditor verify
                   compliance with the 15% requirement.

                 • Obtain a copy of the auditor’s work papers
                   regarding D&A costs to determine if all D&A
                   costs were identified.


2006 Financial
 Pre-Institute
                        Reviewing, Analyzing and
                        Evaluation: Suggested
                        Procedures

                 • Review organization chart to determine D&A
                   positions. Compare questionable positions to
                   job descriptions.

                 • Ascertain if financial statements or financial
                   reports identify D&A costs.




2006 Financial
 Pre-Institute
                       Reviewing, Analyzing and
                       Evaluation: Suggested
                       Procedures

                 • Obtain organization unit code or sub-account
                   code for D&A costs from the Chart of
                   Accounts. Review D&A org. unit or sub-
                   account for object classes.

                 • Identify D&A costs from the General Ledger
                   entries. Compare org. unit or sub-account
                   codes used to org. unit code or sub-account
                   code for D&A costs. Do the same for payroll.


2006 Financial
 Pre-Institute
                        Reviewing, Analyzing &
                        Evaluation: Suggested
                        Procedures

                 • Review delegate agency(s)’ financial reports to
                   determine if D&A costs are reported to the
                   grantee. Verify that these costs are included
                   in the Grantee’s reported D&A costs.

                 • Review guidance provided to delegate
                   agencies for identifying and reporting D&A
                   costs.

2006 Financial
 Pre-Institute