DHHS Division of Social Services Economic and Family

DHHS Division of Social Services Economic and Family Services Trends in Monitoring Jean Fecteau Ginell Rogers Natasha Elliott OEO Fiscal Analysts October , 2016 1

TRENDS IN MONITORING Objectives: Discuss common on-site findings; Provide guidance to prevent findings; Discuss preliminary observations from organizational standards.

TRENDS IN MONITORING Topics: q Asset Inventory q Bank Reconciliations q Budget changes q Comingling of funds q Cost Allocation Methodology q Organizational Standards q Procurement files q Year end purchases

TRENDS IN MONITORING Asset Inventory q A physical inventory of equipment shall be taken and results compared to accounting and fixed asset records at least once every two years. q Adequate maintenance procedures shall be implemented to ensure that equipment is maintained in good condition. q A control system shall be in place to ensure adequate safeguards to prevent loss, damage, or theft of equipment and shall provide for full documentation and investigation of any loss or theft. § 200. 313 Equipment. See also § 200. 439 Equipment and other capital expenditures.

TRENDS IN MONITORING Asset Inventory q Each program should keep their own equipment listing, or the program to which the equipment belongs should be readily identifiable within the agency Equipment Listing records. q Insurance coverage must be maintained on all equipment purchased with federal fund. A review of coverage amounts shall be conducted on a periodic basis, preferably at least annually. § 200. 313 Equipment. See also § 200. 439 Equipment and other capital expenditures. § 200. 310 Insurance coverage. The non-Federal entity must, at a minimum, provide the equivalent insurance coverage for real property and equipment acquired or improved with Federal funds as provided to property owned by the non-Federal entity.

TRENDS IN MONITORING Bank Reconciliations Need two signatures with dates. Ø the person who performed the bank reconciliation Ø the person that reviewed and approved the reconciliation Need the General Ledger printed to show balance. Need the run of Outstanding checks. 14. Disbursement (e) Implement procedures to insure that account balance is solvent and reconcile the account monthly.

TRENDS IN MONITORING Budget Changes q DHHS DSS Contract Office’s requirement is all Realignment/ Amendment requests must be submitted no later than April 1, 20 xx before the end of the grant period. Contract Document 17. Other Requirements: Continuation of 4. Contractor’s Duties Any contract amendment or budget realignment must be submitted within 120 days prior to the end of the contract period.

TRENDS IN MONITORING Commingling of Funds Each award must be accounted for separately. Recipients and subrecipients are prohibited from commingling funds on either a program-by-program or project-by-project basis. Funds specifically budgeted and/or received for one project may not be used to support another. the recipient or subrecipient shall establish a system to provide adequate fund accountability for each project it has been awarded. § 200. 302 Financial management. b. (3) Records that identify adequately the source and application of funds for federallyfunded activities.

TRENDS IN MONITORING Cost Allocation Methodology Provide updated cost allocation methods to OEO when changes occur and effect budget. Paid Invoices for shared costs should include notations of the allocation on the invoice detailing the split by accounts charged. Shared costs should be cost allocated to all programs that benefit even if funder limits costs. Consistently apply your allocation plan.

TRENDS IN MONITORING Organizational Standards Support Documentation Category 8: Financial Operations and Oversight Standard 8. 1 The Organization’s annual audit (or audited financial statements) is completed by a Certified Public Accountant on time in accordance with Title 2 of the Code of Federal Regulations, Uniform Administration Requirements, Cost Principles, and Audit Requirement (if applicable) and/or State audit threshold requirements. Standard 8. 2 All findings from the prior year’s annual audit have been assessed by the organization and addressed where the governing board has deemed it appropriate. Standard 8. 3 The organization’s auditor presents the audit to the governing board. Standard 8. 4 The governing board formally receives and accepts the audit.

TRENDS IN MONITORING Organizational Standards Support Documentation Standard 8. 5 The organization has solicited bids for its audit within the past 5 years. Standard 8. 6 The IRS Form 990 is completed annually and made available to the governing board for review. Standard 8. 7 The governing board receives financial reports at each regular meeting that include the following: 1. Organization-wide report on revenue and expenditures that compares budget to actual, categorized by program; and 2. Balance sheet/statement of financial position. Standard 8. 8 All required filings and payments related to payroll withholdings are completed on time.

TRENDS IN MONITORING Organizational Standards Support Documentation Standard 8. 9 The governing board annually approves an organization -wide budget. Standard 8. 10 The fiscal policies have been reviewed by staff within the past 2 years, updated as necessary, with changes approved by the governing board. Standard 8. 11 A written procurement policy is in place and has been reviewed by the governing board within the past 5 years. Standard 8. 12 The organization documents how it allocates shared costs through an indirect cost rate or through a written cost allocation plan. Standard 8. 13 The organization has a written policy in place for record retention and destruction.

TRENDS IN MONITORING Procurement files Limited procurement policies, such as lacking detail on the requirements, selection criteria and notice of selection. No support documentation of prior approval of equipment or capital purchase; Failed to follow procurement process, used current vendor instead of procuring new services. No procurement file available for completed purchase; (required to be retained for five years minimum from end of contract period) Missing or incomplete documents in procurement file. Under NC DHHS Procurement policies 7. 1 Procurement File Maintenance A procurement file should be created for each procurement (equipment, goods or services) transaction. Each file should contain all documents relative to the procurement of equipment, goods or services….

TRENDS IN MONITORING Year-end Purchases The transactions have been recorded in the correct accounting period based on generally accepted accounting principles (GAAP); Cutoff This is a Management Assertion. Cutoff relates to whether transactions and events have been recorded in the correct accounting period. Cut off of purchases test determines if goods, for which title has passed or not passed, are appropriately accounted for. The cost is reasonable for the grant period. Items purchased have been ordered and received by year end. US OFFICE OF FINANCIAL MANAGEMENT 90. 25. a Governmental fund type accounts Expenditures in governmental fund type accounts are recognized in the period in which the account liability is incurred; that is, the period in which the goods or services are received. Goods and services must be received by June 30 to be included as an expenditure of the concluding fiscal year.

TRENDS IN MONITORING q q q q Asset Inventory listing should include all required information. Perform Bank Reconciliations timely. Do Budget changes as needed don’t wait until year end. Comingling- funds should only be used for intended program. Allocate your shared costs consistently. Organizational Standards documentation should be complete and Board reviewed when required. Procurement files should be maintained and complete. Year end purchases should not be charged or occur unless received in the correct contract period.

Trends in monitoring Contact Information: Telephone : (919) 527 -6250 Jean Fecteau jean. fecteau@dhhs. nc. gov Ginell Rogers ginell. rogers@dhhs. nc. gov Natasha Elliott natasha. elliott@dhhs. nc. gov