Developing Internal Controls For Post Secondary Institutions

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Developing Internal Controls For Post Secondary
Institutions

• Michael Brustein, Esq.
• mbrustein_at_bruman.com
• Erin Auerbach, Esq.
• eauerbach_at_bruman.com
• Brustein Manasevit, PLLC
• Spring 2012 Forum

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Types of Grants

• Direct Grants
• Any grant other than those that are distributed
  by formula to eligible states. EDGAR 75.1
• Ex Gear-Up
• State Administered Grants
• Any grant that is distributed by formula to
  eligible states. EDGAR 76.1
• Ex. Perkins, AEFLA

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Grant Management Starts with Submission of Grant
Application

• A grant application should be written so that it
  can be managed within the regulations that apply.
  
• Control starts here.
• Review every grant application with a grants
  management eye before submitting it.

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Post-Award Grants Control and Management

• Routine, predictable and consistent grants
  management will help you
• Meet your project goals
• Be accountable
• Be audit/monitoring ready
• Audits/monitoring a legal process
• Routine, consistent, accurate record keeping and
  review of systems make audits and monitoring
  reviews run smoother!

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Internal Control Tools
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• Continual Dialogue
• Acceptance of Award
• Management Meetings and Handbook
• Internal Audit
• Budget Controls
• Time and Effort Records
• Inventory Records
• Matching Records
• Managing Communications
• Managing Audits and Monitoring Reviews

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Tool 1

• Continual Dialogue

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Continual Dialogue

• Discuss and Review with appropriate parties each
  grant as well as samples of record keeping
  documents to ensure internal understanding,
  agreement, commitment, and consistency.
• Appropriate parties program and fiscal
• Forms/processes should be reviewed and updated
  regularly based on new and changing institutional
  and funding agency information.
• Useful to the extent that they are applied
  consistently and correctly.

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Tool 2

• Acceptance of Award

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Acceptance of Award

• Read and understand your Grant Award Notification
  (GAN)
• Be aware of
• Applicable regulations
• Record keeping responsibilities
• Direct Grants
• Whether or not formal acceptance is required,
  meet with appropriate parties to be certain you
  want to accept.
• Make acceptance a conscious act. Things may have
  changed between submission and notice of award
  internally and externally.

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Tool 3

• Management Meetings and Handbook

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Management Meetings and Handbook

• Set up a schedule for management meetings
  involving the grants office staff, finance
  staff, grant staff and partners, and any internal
  compliance officer you may have.
• Length and complexity of grant will determine
  frequency.
• Have an up-to-date grants management handbook.

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First Meeting New Grant

• Review the approved proposal
• Clarify Roles
• Review handbook and applicable federal, state,
  and college regulations
• Agree on baseline data and data collection
• Discuss project and budget change process
• Set-up schedule for management meetings

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Routine Meetings All Grants

• Keep everyone in the loop finance, academic,
  procurement, grants office, project staff,
  partners.
• Formal agenda
• Are you making adequate progress?
• Are you managing and spending grant funds
  properly?
• Are records up-to-date and auditready?

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Grants Management Handbook

• Preparation
• Outline of General Topics
• Cross-Cutting
• Programmatic
• Questions that frame the topics
• Identify current policy and procedure documents
• Identify staff members

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Grants Management Handbook

• Cross-Cutting
• Organizational Chart
• Financial Management System
• Budget
• Setting up the budget
• Budget and programmatic changes
• Source Documentation
• Cash Management
• Basic Cost Principals
• Allowable Costs
• Direct and Indirect Costs
• Timely Obligation of Funds
• Property Management
• Procurement
• Conflict of interest policy
• Record Keeping
• Payroll and Time Distribution

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Grants Management Handbook

• Programmatic
• Key definitions
• Use of funds
• Accountability
• Reporting
• Evaluating project
• Programmatic Fiscal Requirements
• Supplement not Supplant, MOE, Matching, Hold
  Harmless
• Communications with Funding Agency
• Close-Out

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Grants Management Handbook

• Attachments
• Forms and Samples
• Proposal/GAN
• Grant Budget
• Grant-related correspondence

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Tool 4

• Internal Audit

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Internal Audit

• New grant - Consider internal audit or review of
  grant in first 6 months, particularly if the
  grant is very large, match is included, grant
  involves sub-recipients, or if it is multi-year
  (risk factors)
• Continuing grant Consider internal audit at
  regular intervals
• Internal audit can be done anytime you have a
  concern or if institution wants a comfort level
  that all is well with a large or risky grant.
• Grant has additional restrictions that require
  additional controls beyond what is standard for
  other college funds.

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Tool 5

• Budget Controls

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Budget Controls

• Know terms and conditions of grant, required
  set-asides and caps
• Administrative funds
• Hold harmless
• Match
• Internal policies regarding budget creation and
  modifications
• Who signs off/reviews budgets and modifications
• Budget Records

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Budget Controls

• Pre-award costs
• EDGAR 76.708
• Period of Availability
• Obligations
• Direct v. Indirect Costs

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Budget Control

• Must compare outlays with actual budget
• Budget Changes
• EDGAR 74.45
• Prior approval required
• Change in project scope or objective
• Change in key personnel
• Absence for more than three months or 25
  reduction in time devoted to project
• Need for additional federal funding
• Transfer of amounts between direct and indirect
  costs
• Inclusion of costs requiring prior approval (OMB
  Circular A-21)
• Dont assume approval will be received

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Budget Management

• Allowable Costs
• Necessary, reasonable, allocable
• OMB Circular A-21
• Advertisements
• Professional Development
• Travel

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Tool 6

• Time and Effort Records

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Time and Effort Records

• OMB Circular A-21, Part J(10) Compensation for
  personal services
• Professional/Professorial v. Other staff

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Time and Effort Records

• After-the-fact
• Based on actual work performed
• Account for total activity
• Signature by employee or supervisor with
  first-hand knowledge
• Coincide with one or more pay period

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Tool 7

• Inventory Records

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Inventory Records

• Definition of Equipment
• All equipment must be inventoried
• highly walkable items

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Inventory Records

• Documentation
• Description
• Serial number
• Source
• Title
• Acquisition date
• Percentage of federal participation
• Location and condition
• Acquisition cost
• Disposition

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Inventory Records

• Inventory every two years
• Safeguards to prevent loss, damage or theft
• All differences must be investigated
• Implement adequate maintenance procedures

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Tool 8

• Matching Records

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Matching Records

• After-the-fact
• Must be kept up-to-date, but can add to record
  later
• Use forms to document matching personnel and
  volunteer time, supplies/goods, facilities,
  equipment, and funds donated
• Must be signed by person donating, project
  director, or person with first-hand knowledge
• Method of valuation must be clear and keeping
  with the regulations

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Tool 9

• Managing Communications

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Managing Communications

• Routine required reports
• Have a process for internal review prior to
  submission.
• These communications tell a story. Make story as
  accurate as possible.
• Watch for consistency of language and data among
  the approved proposal and required reports.
• Have policies in place for all communications
  including
• Requests for changes
• Desk reviews/audits
• Site visits

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Tool 10

• Managing Audits and Monitoring Reviews

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Managing Audits and Monitoring Reviews

• Be prepared
• Can be prescheduled or a complete surprise
• Length and purpose/nature of visit
• Monitoring and Audits are legal processes. Must
  take them seriously.
• Form a response team, assign point of contact
• Visit agenda

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Desk Review

• Can be done by a program officer or contractor
• Their prep Analyzing your approved grant
  proposal, your programmatic and financial
  reports, any info they can access from a
  distance.
• Your task Respond to written questions and keep
  duplicates of the records supplied. Keep notes
  on conversations. Follow-up as needed.

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Site Visits/Program Reviews

• Program/grant officer regional office staff
  contracted reviewers
• Their prep Analyzing your approved grant
  proposal/application, your programmatic and
  financial reports, any info they can access from
  a distance.
• Their interest Documentation of project
  progress, programmatic and fiscal compliance,
  internal controls.
• Your task Arrange for requested access to
  records and people, prep those to be interviewed,
  keep duplicates of all records supplied.

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Audits

• One or more auditors
• Their prep Stating the scope of the audit and
  analyzing your approved grant proposal/application
  , your programmatic and financial reports, and
  any info they can access from a distance.
• Their interest Anything within the scope of the
  audit, or that comes to their attention during
  the audit.
• Your task Arrange for access to requested
  records and people, keep duplicates of all
  records supplied.

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Audits and On-Site Monitoring Reviews

• Records
• Finance records
• Source documentation
• Project director records
• Conducting Interviews
• Project staff and administrators
• Participants/Beneficiaries/Partners
• Visiting Project Sites
• Unless told otherwise prepare sites

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Audits and On-Site Monitoring Reviews

• Exit meeting with auditors/monitors
• Hold a debriefing meeting and safeguard notes and
  records. Control communications through one
  person.
• Report with findings
• Response to Report
• If necessary corrective action plan
• Implement corrective actions

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Questions??
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This presentation is intended solely to provide
general information and does not constitute legal
advice. Attendance at the presentation or later
review of these printed materials does not create
an attorney-client relationship with Brustein
Manasevit, PLLC. You should not take any action
based upon any information in this presentation
without first consulting legal counsel familiar
with your particular circumstances.