Title: Fund Accounting Clinic
1Fund Accounting Clinic
2Who Are We?
- Presented by Training and Development
Associates, Inc. - Edward Hammond
- Rocky Wade
- Sponsored by U.S. Department of Housing and
Urban Development
3Who Are You?
- What type of organization do you represent?
- Lead agency
- Sponsor
- Service provider
- What is your role at the organization?
- Executive Director
- Financial staff
- Case Manager
- Another position
4What Do You Expect?
- What are your expectations?
- Why are you here?
- What do you expect to gain from todays training
session? - What will be the outcome of your participation in
this training session?
5Why Are We Here?
- Participants should be able
- To understand what fund accounting is and how it
applies to SNAPS grants - To prepare a budget that uses fund accounting
and - To prepare an employee time and activity report
that reflects fund accounting.
6Why Are We Here?
- To strengthen the capacity of SNAPS grantees to
- Make sure that funded activities are eligible
- Make sure eligible costs are charged to the
appropriate grant - Prepare accurate reports to be used as management
tools - Avoid recapture of SNAPS funds by HUD
7Workshop Goals
- Participants will leave with tools and techniques
to incorporate fund accounting into the grantees
procedures for - Budgets
- Time and activity reports
- Reporting
8Logistics
- Resource materials
- Manual
- Presentation
- Handouts
- Activities
- Questions (the Bin)
- Restrooms and telephones
- Please silence or turn off cell phones
9What is Fund Accounting?
10What is Fund Accounting?
- Simply stated
- Fund accounting is a method of recording
financial information that groups resources into
funds based on the sources and the uses of those
resources
11What is Fund Accounting?
- Not-for-profit accounting systems should operate
on a fund basis - Fiscal and accounting entity
- With self-balancing accounts
- Matches revenues with expenses
- Funds are segregated for the purpose of carrying
out specific activities - Such as eligible activities cited in a grant
agreement
12Benefits of Fund Accounting
- Fund accounting tracks sources and uses of funds
for each funding source - Without fund accounting, one cannot truly analyze
the revenues and expenses of a specific funding
sourceHUD revenues HUD expensesHHS revenues
HHS expenses
13Benefits of Fund Accounting
- Allows one to evaluate each project and/or
activity individually - Results in proper information for the drawdown of
funds in LOCCS
14Common Misconceptions of Fund Accounting
- Taking a straight percentage of costs and
applying it against a grant - Fund accounting creates a link between eligible
expenditures and the actual grant funds drawn for
those expenditures
15Common Misconceptions of Fund Accounting
- Drawing budgeted amounts regardless of actual
costs (including salary) - Time must be actual and documented
- Drawing funds against multiple SHP sites instead
of the specific site in an approved grant award
16Common Misconceptions of Fund Accounting
- Thinking that one SNAPS grant is the same as
another SNAPS grant - Each grant has a separate approved budget
17Common Misconceptions of Fund Accounting
- Thinking that one can spend on anything as long
as it is SNAPS related - Expenses must be allocable to a specific grant,
not just eligible within the SNAPS program
18Common Misconceptions of Fund Accounting
- Drawing funds from a prior SNAPS grant to pay for
a present grants expenditure - Each grant has a specific funding period
- Excess funds are subject to recapture by HUD
19Start with a Chart of Accounts
- Fund accounting starts from a basic building
blockchart of accounts - Outlines all revenue sources
- Outlines all expenditures by eligible activities
20Model Chart of Accounts
- Start with chart of revenues
- Broken down by specific funding sources
- Expenditures for each possible activity and
sub-activity - Specific expenditure charts for each individual
project - Chart of accounts grows with each new project
undertaken
21Developing a Sources and Uses Statement
- Develop chart of accounts for grant, then
- Develop sources and uses statement outlined in
general ledger - Customized to particular SHP activity
- We will use the chart of accounts as a basic
building block through the rest of the
presentation.
22 Examples of Fund Accounting
- Budget models
- Housing operations with supportive services
- Leasing with supportive services
- Development with supportive services
- Supportive services only
- HMIS only
- Development only
- Grantee with sponsors
23One Model
- Housing operations with supportive services
- Accounts for all revenues
- From HUD and others
- Accounts for all expenses
- HUD-eligible and not eligible
- HUD-eligible costs classified
- Direct
- Allocated
24Who Uses Fund Accounting
- Board of Directors
- Financially responsible for viability of
organization - Owns program as they understand their liability
and responsibility - External funders (including HUD)
- Gain confidence in organization as it complies
with business norms - Staff and management
- Tracks operations and reporting
25Exercise
- Family Services, Inc.
- Review the case description
- Complete the worksheet
- Answer the related questions
26How Does Financial Management Relate to Fund
Accounting?
27Financial Management
- OMB establishes guidelines for financial
management - Addresses many areas of financial systems
including requirement for fund accounting - Applies to all awards of federal assistance
- May apply differently to specific grants based on
role of recipient
28Relationship of Federal Regulations
29OMB Accounting Standards
- Fund Accounting helps an organization comply with
OMBs federal standards - Control and account for funds, property and other
assets - Identify source and use of all federal funds
- Allow accurate, timely and complete financial
reporting - Minimize time in transfer of funds between
federal government and grantee
30Accounting Records
- Tracks the sources and uses of funds
- Ensures that program costs are
- Incurred for the proper period
- Actually paid
- Expended on eligible items
- Expended from the appropriate grant
- Approved by appropriate officials
31Sources 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
32Determining Costs
- Costs are only eligible if they
- Are associated with an eligible client
- Pay for eligible activities
- Are delineated in your application (budget)
- Have adequate source documentation
- Meet OMB standards for being reasonable,
allowable and allocable
33Cost 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 the individuals involved
34Cost 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 allowed costs in OMB Circular
35Cost 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 - Necessary to operations
36Determining 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 and
allocable - They are eligible for federal reimbursement!
37Grant Agreement
- Establishes compliance standards for federal
requirements - SuperNOFA
- Application
- Technical Submission
- OMB Circulars
38Importance of Fund Accounting toFinancial
Management
- HUD grant may be of many funding sources
- Multiple grants lead to fund accounting
- Multiple HUD grants lead to fund accounting
- Financial management system must account for
requirements - All funding streams
- Each project and/or activity
39Developing Budgets
- Budgets are projections of expenses drawn from
actual experience - Defines goals for a given period
- 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
40Budget Requirements
- OMB requires organizations put budget controls
into place - Starting with the application
- Confirmed in the technical submission
- Established with an approved budget
- Analyzed throughout agency operations
- Reconciled in any required reports
41Budget Requirements
- OMB requires organizations to compare and control
expenditures - Keep records on budgeted amounts
- Compare obligations and expenditures to planned
budgets and accomplishments - Report deviations from budgets and plan
- Be prepared to request grant amendments when the
budget deviations trigger such actions
42Developing a SNAPS Budget
- Study SNAPS budget requirements
- Ask questions of the lead agency and/or HUD
before developing the SNAPS budget - Budget should include
- Description of particular SNAPS project
- All HUD-eligible activities to be funded by the
SHP grant
43Developing a SNAPS Budget
- If necessary, include previous financial
statements and budgets - Justifies historical assumptions used in your
budget - Contrast any budget changes from recent history
- Such as increases in utilities
44Developing a SNAPS Budget
- Include all budget assumptions
- Especially those which might require greater
explanation - Such as substantial difference in cost from
historical assumptions
45Developing a SNAPS Budget
- Include allocation of all positions funded by the
SNAPS grant - Include assumptions about projected hours to be
budgeted for each position by various funding
sources - Include for all funded positions
- Descriptions
- Fully loaded rates (wages and fringe benefits)
- Breakdown of costs funded by SHP grant
46Developing a SNAPS Budget
- Include all sources of funds
- Match allocated to a specific SNAPS eligible
activity - Budget must fully account for all costs
associated with grant
47Developing a SNAPS Budget
- Funding non-HUD eligible activities
- Identify source of funds
- Comprehensive budget for the agency that accounts
for all HUD, cash match, and non-HUD funded
activities - Analyzing the budget
- One other staff member
- One Board member
- Analyze and ask questions
48How Does Fund Accounting Impact Running A Program?
49Impact on Program Operations
- Documenting time and activities
- Pro-rating costs
- Personnel
- Non-personnel
- Tracking other funds
50Documenting Time
- Most employees work on more than one activity
and/or project - OMB standards require that
- Work be supported with employee time and
activity tracking system - Actual time was spent on an activity
- What activity took place ( eligible client,
eligible activity) - Must be documented with activity records
51Time and Activity Reports
- OMB requirements
- After-the-fact determination of actual activity
- Signed by individual employee, certified by
supervisor - Prepared at least monthly
52Time and Activity Reports
- Used to determine actual salary expenses
- Ties activities back to budget
- Applies to HUD grantees, sponsors and service
providers
53Model Time and Activity Report
- HUD-eligible and ineligible time allocations
possible - Time accounted for within specific HUD grants
- Signed by employee and certified by supervisor
- Recorded after-the-fact
54Allowable vs. Allocable
- The real issue with time and activity reports is
not whether the activity is allowable or not - BUT whether the time is allocable to the specific
SNAPS grant
55Activity Records
- Documentation that supports time and activity
reports - Clients case notes
- Calendars, logs and sign-in sheets
- Daily, weekly and quarterly reports
- Products and deliverables
56Top 10 Timekeeping Mistakes
- Charging straight 8 hours per day or straight
percentage of time to a grant - Not using information from the time and activity
report to charge the grant - Having discrepancies between payroll and budget
- Not including sick time and vacation
- Not linking time to an eligible activity
57Top 10 Timekeeping Mistakes
- Not linking time to an eligible grant (or
multiple grants) - Not identifying a project or client
- Not showing time spent on ineligible activities
- Not having documentation (activity records) to
support the time and activity report - Not getting the time and activity report signed
58Pro-Rating Costs
- Required by HUD where full cost is not the actual
cost for HUDs piece - Must always have source documentation to
substantiate
59Pro-Rating Costs
- Personnel costs for supportive services,
operations and administration - Salaries pro-rated based on actual, not budgeted
time - Personnel costs should include benefits
- Document with time and activity records
60Important Eligibility Consideration
- If the client is not eligible
- All costs associated with that client are
ineligible for federal reimbursement - All match associated with that client is
ineligible
61Pro-Rating Costs
- Non-personnel costs for buildings and equipment
- Pro-rate based on an established base
- Square footage of space
- Time used
- Actual mileage
- Document with logs, plans, etc.
62Allocating Non-Personnel Costs
- Space
- Square footage
- Usage (logs)
- Motor pool
- Miles driven
- Days used (logs)
- Computers
- Separate by function
- System usage
- Printing and reproduction
- Number of copies
- Separate by function
- Key/code access
- Telephone
- Number of instruments
- Separate by function
- Usage (logs)
63Tracking Other Funds
- Fees for services
- Rents collected from residents
- Mandatory savings accounts
- Also, application of receipts that reduce
expenses - Management fees
- Rebates
- Discounts
64Exercise
- Haven House
- Review each scenario
- Select one answer for each
65How Does Fund Accounting Impact Match
Requirements?
66100 Equals 100
- To serve 100 of the clients
- With 100 of the activities
- You must raise 100 of the total project costs
- HUD grant plus match
- If not, you are either
- Not serving 100 of the clients
- Not providing 100 of the activities
67Meeting Match Obligation
- Calculating match
- Expenditures
- Less SNAPS reimbursement
- Equals Cash Match
- For example, an agency has incurred 100,000 of
eligible operations costs - 100,000 Total expenditures
- 75,000 SHP reimbursement
- 25,000 Cash match
68SHP Match Requirements
- Acquisition
- Rehabilitation
- New Construction
- Supportive Services
- Leasing
- Operations
- Administration
- HMIS
- 50/50
- 50/50
- 50/50
- 80/20
- None
- 75/25
- None
- 80/20
69SHP 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
70SHP 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 - Remember, rent is rent, fees are fees
- and savings are savings!
71SNAPS Match Sources
- Match can be from another HUD source
- CDBG Program
- HOME Program
- for acquisition, rehabilitation or new
construction - Make sure match is eligible and authorized by the
federal funding source
72What Is Not Match?
- Rent is not always match
- Fees are not match
- Fees are charged for a specific non -SNAPS use
- Savings are not match
- Savings belong to the client, not the agency
- Non-cash donations are not match
- Cash pledged to another grant is not match
73How Does Fund Accounting Affect Grant Reporting?
74Reporting Your Finances
- APR shows how grantee has performed financially
during an operating year - Financial statements show financial condition of
organization at a point in time - Audit verifies all financial accounts over a
specific period of time, usually a fiscal year
75Function of Each Report
76Annual Progress Report
- APR used to track project progress
- Information on clients and services
- Information on expenditures and match
- Each grantee must submit an APR
- Supported with source documentation on file
- Separate APRs submitted for each grant received
- Budget?Systems?Match?APR
77Components of APR
- Part I includes information on clients and
activities - Part II provides financial information
- Expenditures and match for leasing, supportive
services, operations, HMIS, administration,
acquisition, rehabilitation and new construction
78Completing the APR
- Ensure you are using the most recent APR
- Have program and finance staff complete APR
together - Parts I and II must be consistent
79Financial Statements
- Shows financial information at a point in time
- Balance sheet (assets and liabilities)
- Revenue and expenses
- Shows a positive or negative fund balance over
time - Shows whether revenues are greater than expenses
80Audit Requirement
- Federal programs subject to audit
- Spending 500,000 or more in federal awards per
year - OMB Circular A-133 standards apply
- In addition to OMBs requirement, audits
- Are a universally accepted analytical tool
- Demonstrates accountability of the Board
- Demonstrates proper stewardship of funds
81OMB Standards
- A-133 single audit
- Funds come from more than one source
- Involves looking at all programs individually and
organization as a whole - Select auditor who knows requirements
- More than a clean bill of health
- Auditor must understand program compliance
- Not all auditors check for compliance with
federal regulations, including fund accounting
82Auditing Standards
- Audits look at
- Correct presentation of financial information
- Financial management systems
- Activities generally in compliance with program
requirements - Audit report must address each area
- Audit does not assure there will be no monitoring
findings - Narrower scope of work than monitoring
- Auditors may not determine compliance with all
HUD requirements
83Wrap-up
84What Have You Learned?
- Post-assessment
- Complete each true or false question
85Fund Accounting Action Plan
- Read NOFA, application, desk guide, technical
submission, budget and OMB circulars - Create a chart of accounts
- Create budgets based on specific SHP grant
activities - Develop financial management system including
policies and procedures - Develop a time and activity reporting system
86Fund Accounting Action Plan
- Develop allocation system for non-personnel costs
- Train staff on financial management
- Use both program and finance staff to complete
APR - Hire an auditor who knows A-133 requirements
- Implement checks and balances
87Wrap Up
- Cleaning out the BIN
- Evaluations
- Who you gonna call?
- Lead Agency
- HUD
- TDA
- Have a safe journey!
88For Future Reference
- Training Development Associates, Inc.
- 131 Atkinson Street, Suite B
- Laurinburg, NC 28352
- 910/277-1275 (O)
- 910/277-2816 (F)
- www.tdainc.org