Ensuring Compliance with CPB Grant Requirements

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Ensuring Compliance with CPB Grant Requirements
PBMA Annual Conference, Las Vegas May 28,
2008 Sean Simplicio, Director, CSG Policy and
Review Bob Winteringham, Deputy General
Counsel Ken Konz, Inspector General Bill
Richardson, Deputy Inspector General David
Tanner, Audit Team Leader
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Agenda

• Introduction Overview
• Station Eligibility
• Operational Criteria
• Performance Criteria
• Communications Act Requirements
• Required Activities
• Financial Reports
• Surveys and Timelines
• Grant Expenditure
• Record Keeping
• Other CPB Grants
• Questions/Comments

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Station EligibilityOperational
CriteriaPerformance CriteriaCommunications Act
Requirements
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Operational Criteria

• Noncommercial
• Noncommercial license and service
• Broadcast Operations
• Minimum hours power
• Facilities
• Programming
• CPB-Qualified services
• Staffing
• Minimums depending on TV or Radio

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Performance Criteria

• Non-Federal Financial Support
• Minimums for Radio and Television
• TV Only Multi-Provider Markets
• Program Differentiation (for bonus recipients)
• Radio Only Audience Service Criteria
• Minimum levels of listening and/or community
  support

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Communications ActRequirements
For more information, visit www.cpb.org/stations
/certification/
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Open Meetings

• Board of Directors, or any subset or advisory
  body
• Includes all committees, CAB, etc.
• Anonymous observation
• Question does the meeting relate to public
  broadcasting?
• Question proprietary or employees information?
• Reasonable notice
• Seven days
• Multiple ways to stay in compliance
• Closed Meetings
• Written Notice

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Open Financial Records

• What is included?
• Annual Financial Reports
• Audited Financial Statements
• Budgets of other contracts with CPB
• What isnt included?
• Financial information accompanying a proposal
• Financial support information to substantiate an
  audit
• Financial related personnel records
• Proprietary information

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Community Advisory Board

• May or may not be required
• Is the station some kind of state entity? If so,
  not required.
• Independent from station management and BOD
• Must meet regularly
• Open meetings requirement applies
• Station can control composition of the CAB
• But must be representative of the community
• Can share boards if the CABs meet all
  requirements for each station

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Equal Employment Opportunity

• Comply with FCC requirements
• Submit Statistics
• Part of SABS or SAS
• Keep whenever there are five or more FTEs
• Many laws affect employment

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Donor Lists and Political Activities

• Cannot share with political groups of any kind
• Cannot share with unaffiliated third parties,
  unless
• You disclose that names can be shared, and
• You give the donor the ability to opt-out of
  sharing
• Anyone is a third party, unless it
• Is part of your station or licensee or
• Is acting on behalf of the PBE for fundraising
  purposes

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OIG Observations Communication Act

• Adequate advance notice of public meetings are
  not provided for Board of Directors and CABs, as
  well as other station committees.
• Quarterly on-air announcements are not made of
  stations Open Meeting policy over 3 consecutive
  days.
• Open financial records do not include all CPB
  funding agreements that require a financial
  report.
• CABs not established or meeting.
• Stations have not documented written procedures
  that describes how it complies with Open
  Meetings, Financial Records, CAB, EEO, and Donor
  Lists requirements.

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OIG Observations of Non-ComplianceFY 2000 - 2007
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Required ActivitiesFinancial ReportsSurveys
and TimelinesGrant ExpenditureRecord Keeping
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Financial Reporting Requirements

• Annual Financial Reports (AFRs)
• Governed by CPBs Financial Reporting Guidelines
• Collect revenue and expense data for calculating
  NFFS
• Must reconcile to audited financial statements
• Include attestation by independent accountant
• Financial Summary Report (FSR) for Radio levels A
  and B
• Audited Financial Statements
• Annually or Biennially
• Governed by CPBs Principles of Accounting
• Not required for Radio levels A and B with TSR of
  lt300K

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Non-Federal Financial Support

• Basic Definition
• The total value of cash and the fair market value
  of property and services received as either a
  contribution or a payment and meeting all of the
  respective criteria for each.
• Criteria
• Depend on whether revenue is a contribution or
  payment
• Must evaluate the Source, Form, Purpose, and
  Recipient
• NFFS Exclusions
• Be mindful of them!

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NFFS Exclusions

• Exclude any revenue from a for-profit entity or
  an individual for such goods or services as
• Production, taping, or other broadcast related
  activities
• Telecasting production/teleconferencing
• Foreign rights
• Rentals of studio space, equipment, tower, etc.
• Sale or rental of programs or program rights,
  sale of premiums, or ancillary materials
• Any other payments received from a for-profit
  entity or an individual
• Exclude all revenue (regardless of source) from
•  
• Gains on sale of assets and realized or
  unrealized gains or losses on investments.
• A wholly- or partially owned for-profit
  subsidiary regardless of the nature of its
  business.
• A wholly- or partially owned nonprofit subsidiary
  engaged in non-telecom. work.
• Sale of program guides.
• Program guide advertising attributable to the
  percentage of total copies distributed that have
  been sold through normal retail outlets and/or by
  magazine subscription.
• Refunds, rebates, reimbursements, and insurance
  proceeds
• Income classified as unrelated business income
  and revenue from non-broadcast activities that
  fail to meet exception criteria.

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Valuation and Documentation

• Valuation
• Record all significant contributed support at
  fair value at the time of donation, provided
  there is a clearly measurable and objective basis
  for determining the value.
• Do not recognize contributions if the donated
  goods or services are such that values cannot
  reasonably be determined.  
• Documentation
• Must support the determination of fair value.  
• Sufficient evidence must be retained by the
  grantee and be available for audit purposes
  (e.g., invoice or letter).
• Donors must independently document their
  contributions (description, date of donation,
  fair value, method of valuation, etc.)
• Must show donors intent to contribute.

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In-Kind Donations

• Acceptable
• Contributed professional services, materials,
  supplies and the contributed use of assets from
  donors other than the licensee.
• Services must be provided for normal, standard
  activities of the grantee.  If services are
  provided for activities that are normal and
  standard, but the grantee would not pay for them,
  do not include them.
• Unacceptable

• Programs that are nationally distributed
• Promotional items
• Regional organization allocations of program
  services
• State PB agency allocations other than those
  allowed on line 3(b)
• Services that would not need to be purchased if
  not donated
• Other

• Compact discs, records, tapes and cassettes
• Exchange transactions
• Federal or public broadcasting sources
• Fundraising related activities
• ITV or educational radio outside the allowable
  scope of approved activities
• Local productions
• Program supplements

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Miscellaneous

• Exchange Transaction or Contribution?
• Value received vs. Value given
• Co-productions
• Partner expenses are not in-kind contributions
• Pay attention to contributions vs. payments for
  services
• Federal Funds
• Be aware of intermediary organizations and
  Federal character
• Joint Licensees
• Allocation methodology for unspecified gifts
• Instructional Television
• Specific criteria for acceptable donations

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OIG Observations Direct Revenues

• The following are NOT NFFS
• Revenue from selling things to for-profit
  entities or individuals
• Revenue received from activities not related to
  public broadcasting
• Revenue from donors that is designated to upgrade
  or build new or digital facilities for TV
  stations
• Refunds, rebates, and reimbursements
• Revenue from an acceptable source that originated
  from a federal source or grant

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OIG Observations Direct Revenues (contd)

• The following are NOT NFFS
• Revenue received from co-production partners for
  expenses
• If the recipient of a contribution or payment is
  not a public broadcasting entity the revenue
• Revenue from other public broadcasters
• Revenue received in a transaction where
  commensurate value is given back to the
  contributor/donor
• Revenue claimed without acceptable documentation.

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OIG Observations In-kind Revenue

• The following are NOT NFFS
• In-kind revenue not included in your audited
  financial statements
• In-kind services provided at standard discount
  rates available to the public
• Services provided that the station would never
  pay for if they werent free
• The value of goods and serviced contributed to
  help with fundraising events and activities
• In-kind donations not recorded at fair value or
  for which the value cannot be reasonably
  determined

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OIG Observations In-Kind Revenue (contd)

• The following are NOT NFFS
• Donated goods or services including local and
  national advertising not properly documented by
  the Donor as to
• Donors intent to donate,
• Description of donation,
• Date (s) of donation, and
• Fair value and method valuation
• The value of donated programs that are
  distributed nationally
• The value of in-kind contributions to support a
  stations local productions

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OIG Observations In-Kind Revenue (contd)

• The following are NOT NFFS
• Donated promotional items (tickets to events,
  dinners to give to listeners, etc.)
• The value of donated personal services of
  volunteers, unless they are providing their
  professional services to the station (guest host
  for pledge drive--no).
• Advertising and promotion donated by underwriters
  for their sponsored programs in barter or trade
  deals, unless there is
• Third party substantiation of fair value to the
  station,
• Detailed documentation of costs incurred by the
  underwriter,
• Documentation of the value of contributed
  promotion to the underwritervalue of the
  benefits received by the underwriter. Exchange
  transaction issues.

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Surveys and Timelines

• Station Activities Survey (SAS)
• TV and Radio EEO and Programming data
• Station Activities Benchmarking Survey (SABS)
• Mostly expense-related data
• Timelines
• AFR data due 5 months after end of fiscal year
• SAS/SABS February 15
• Grant certification and acceptance starts in
  Sept. (thru 6/30)

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CSG Expenditure

• Appropriate expenditures and restrictions
• Radio Restricted/Unrestricted
• Interconnection
• LSG DSG primarily for local or distance
  services
• Licensee cannot impound funds or use to offset
  overhead
• Expenditure period
• Unallowable Lobbying, Entertainment for Govt
  Officials
• Discrete Accounting
• Track expenditures of CPB funds
• Support with documentation (invoices, contracts,
  etc.)
• Recommendations for recordkeeping

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OIG Observations - Expenditures

• Restricted funds have not been used for intended
  purposes
• Funds have not been expended within two year
  period for CSG funding.
• Can not readily identify source and application
  of funds to ensure CPB grants have been expended
  only on allowable purposes.
• CPB grants (e.g., CSG, Interconnection, Local or
  Distance Services) are co-mingled in joint fund
  or in general funds.

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Other CPB Grants
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Nature of Grants

• CPB provides stations with other types of grants.
  These include
• Television and Radio Programming Grants
• Digital Conversion Grants
• Other System Support
• (including research, demonstrations, or training
  in matters related to public television or radio
  broadcasting and the use of non-broadcast
  communications technologies for dissemination of
  noncommercial educational and cultural television
  or radio programs)
• Other CPB grants audited by OIG
• Radio Internet Service Acquisition Grants
• Radio Audience Services Challenge Grants
• Television Grants to fund Joint Master Control
  Facilities

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Audit Criteria

• Public Broadcasting Act Provisions
• General Provisions of the Grant

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Approach to IG Review

• Focus on whether CPB grant funds were
• Properly accounted for in accordance with
  applicable generally accepted accounting
  principles
• Properly used in accomplishing purposes of the
  grant
• Provided consistent treatment relating to
  recording and reporting of direct costs to
  grant/contract projects
• Spent within budgeted amounts and significant
  variances were justified and approved by CPB
• Refunded to CPB (when not expended as part of the
  reasonable, necessary, allocable, and allowable
  cost incurred under the grant).

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Approach to IG Review (contd)

• Focus on whether expenditures were
• Properly documented to show that costs charged to
  the grant were reasonable, necessary, and
  allocable to the grant based on relative benefits
  received
• Allowable after considering restrictions imposed
  under provisions of the Public Broadcasting Act
• Allowable under the terms and conditions of the
  grant
• Not claimed in excess of amounts authorized in
  the CPB grant.

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Resources

• Financial Reporting Guidelines and
  General Provisions Eligibility Criteria
• In ISIS Help Files
• Certification Requirements
• www.cpb.org/stations/certification
• Principles of Accounting and Financial Reporting
• www.cpb.org/stations/principles
• ISIS Help Desk
• isis_at_cpb.org or [phone]

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Upcoming CPB Sessions

• CPB-Sponsored Luncheon Feedback for PBMA
  (Thursday 1230 pm)
• Update on CPBs Financial Reporting Guidelines
  (Thursday 215 pm)
• 2007 State of the Public Television System
  (Thursday 330 pm)

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Questions? Comments?
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(No Transcript)