Surviving ADE ESS Fiscal Monitoring & Time and

Surviving ADE ESS Fiscal Monitoring & Time and

Surviving ADE ESS Fiscal Monitoring & Time and Effort Compliance Darren Brown, Director of Federal Monitoring Arizona Department of Education June 1, 2017 Presentation Focus on: Fiscal Monitoring Time & Effort Potential Consequences of Non-Compliance

Grant Sub-recipient Duties Receiving Federal Grant Monies Entails both Programmatic and Financial Duties Including Proper Programming and Expenditure of Monies, Goals Achievement and the Related Reporting Monitoring The Federal Dept. of Education requires LEAs to be monitored by ADE during the course of the grant period

You are monitored by several entities to ensure that the grant is properly executed and achieves the goals set forth Definition of Monitoring A process whereby the programmatic and business management performance aspects of a grant are reviewed by collecting and assessing information from reports, audits, site visits, and other sources Why Compliance is Important Ensure money is spent properly to achieve goals

program Program goals are to help kids and families Non-compliance could result in paying back grant with M&O monies, suspension, and/or termination of grant Losing future grants Going to jail for fraud/illegal activities What is Monitored? Grant Expenditures Time and Effort reporting Fixed Assets

ADE Grants Management Monitoring Expenses 2 C.F.R. Part 200 Check financial reports for: Unallowable costs Late cost transfers (expenses that are posted significantly later than incurred) Budget deviations Journal entries near end of funding period Excessive or unreasonable expenses Excessive Expenditures 2 C.F.R. Part 200

All travel expenses must adhere to agency or state travel policies Reasonable, NOT Excessive Able to show clear link and benefit to program Remember all expenses must receive prior approval from ADE Fixed Assets 2 C.F.R. Part 200 & U.S.F.R.C.S All assets must be tracked and safeguarded Complete Fixed Asset report Property Identification tag Asset description

Purchase Date Cost Location Time and Effort Reporting OMB A-87 & 2 C.F.R. Part 200 Missing Time and Effort report documentation is one of the most frequent and costly audit findings in Arizona and nationally All Federal Funds being used for Payroll expenses MUST have Time and Effort regardless of amount

Time and Effort Reporting OMB A-87 & 2 C.F.R. Part 200 Time and Effort Reporting for Employees who are paid 100% from a SINGLE cost objective: An employee whose salary is paid in whole from one federal source must certify, on a semi-annual basis, that they worked solely on that program (single cost objective) for the period covered by the certification The certification must be signed and dated by the employee and may be signed by a knowledgeable SUPERVISOR (recommended)

Single Cost Objective Reporting Individual Semi-Annual Certification Also see Appendix B of A Quick Guide on Time and Effort Requirements: Individual Periodic Certification Single Cost Objective Reporting Group Semi-Annual Certification See Appendix C of A Quick Guide on Time and Effort Requirements:

Group Periodic Certification Time and Effort Reporting OMB A-87 & 2 C.F.R. Part 200 Time and Effort Reporting for Employees who are paid from Multiple Cost Objectives: An employee who works on more than one federal program, or on a combination of a federal program and a non-federal program, must maintain personnel activity reports that accurately declare the amount of time the employee spends performing the federal work activity any other duties

Time and Effort Reporting OMB A-87 & 2 C.F.R. Part 200 Time and Effort Reporting for Employees who are paid from Multiple Cost Objectives: Report must reflect an AFTER-THE-FACT distribution of actual activities performed Account for TOTAL activity (100%) for which employee is compensated Must be completed at LEAST MONTHLY Must be signed and dated by the EMPLOYEE and may be signed by a knowledgeable SUPERVISOR Multiple Cost Objective Reporting

Personal Activity Monthly Reports Also see Appendix D of A Quick Guide on Time and Effort Requirements: Personnel Activity Reports Time and Effort Reporting OMB A-87 & 2 C.F.R. Part 200 What Type of Reporting is Needed: Single cost objective Semi-Annual Certification Multiple cost objectives Monthly Time Reports or Personnel Activity

Reports (PARs) Time and Effort Reporting Common Missed Steps No Time and Effort System at all Staff failing to date the form after the effort has been completed Not documenting: Stipends Supplemental pay Substitutes Training/Professional Development ESY (Extended School Year)

Time and Effort Reporting Additional Work See Appendix D of A Quick Guide on Time and Effort Requirements: Payment for Additional Work Time and Effort Reporting Additional Work See Appendix E of A Quick Guide on Time and Effort Requirements: Payment for Additional Work Website

! n o ti c u r t s n o C r

e d n U Monitoring Findings Most Common Findings: Non-compliance with financial requirements of the federal program: Lack of adequate Time and Effort Reporting Inaccurate Fixed Asset/Inventory System Report Purchasing Capital Assets that were not previously approved Excessive or Unallowable Travel Expenses

Why Compliance is Important Ensure money is spent properly to achieve program goals Program goals are to help kids and families Non-compliance could result in paying back grant with M&O monies, suspension, and/or termination of grant Losing future grants Going to jail for fraud/illegal activities Tips for Success Documentation is key! Ask questions prior to due dates Coordination/Communication between Finance and Grants Departments

Make staff available and accountable and provide all of the requested documentation Make sure policies and procedures are complete, accurate and being followed by staff Check email for updates from our monitoring department The Impact of Non-Compliance with Federal Requirements Date Institution Settlement

2010 Philadelphia School District $123M 2011 Colorado Department of Education $24M

2013 State of Arizona, Arizona Health Care Cost Containment System (200 LEAs) University of California $11.7M Teaching and

Mentoring Communities $635K 2014 2015 $5.4M $3.8M Reason

Did not maintain complete Time and Effort documentation for staff charged to federal grant awards. Did not maintain complete Time and Effort documentation for staff charged to federal grant awards. State guidelines methodology was not fully consistent with federal requirements. Sub award costs not adequately

documented. Sub award costs not adequately documented due to pilot payroll certification incomplete. Sub award costs not adequately documented. Unsupported charges, excessive consulting costs with no prior approval. The Impact of Non-Compliance with Federal Requirements in AZ LEAs in County 2015 / 2016 Questioned Costs

County A $ 1,455.02 County B $ 561,887.03 County C $ 35,927.47 County D $ 90,294.90 County E

$ 165,331.75 County F $ 46,526.73 County G $ County H $ 377,553.71

County I $ 69,267.14 County J $ 100.00 805.29 Investigative Entities

Depending on the finding the following may be involved: Local Law Enforcement Attorney General Auditor General Federal Dept of Ed Inspector General (OIG) Investigation Examples Arizona Attorney General School X School X should use effective internal controls to demonstrate responsible stewardship for the tax dollars it receives School X failed to comply with the USFRCS (not exempt)

AG noted certain deficiencies in controls to ensure its responsibility to establish and maintain adequate financial stewardship and to comply with the USFRCS Investigation Examples Auditor General School Y Allegations of financial misconduct by their former business manager Internal controls over the disbursement process were inadequate Specifically, check preparing, check signing, and recordkeeping duties were not properly segregated;

supporting documents were not required to process transactions; and authorization controls were circumvented Investigation Examples Federal Inspector General School Z School Z draw of grant funds on June 8, 2004 exceeded its immediate needs and, previous to that date, the District had made other excessive draws of grant funds (This issue is less common because ADE has transitioned to a reimbursement basis for grant funds distributions) Questions, Concerns

PLEASE ASK: ADE Federal Program Contact ADE Grants Management LEA Business and Grants Managers

LEA External Auditors Darren Brown, Directory of Fiscal Monitoring Grants Management (602) 364-3518 [email protected] Resources OMB Source documents www.whitehouse.gov/omb/circulars Cost Principles A-87 (specifics of Time & Effort reporting)

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Grant Guidance) 2 C.F.R. Part 200 ADE Grants Management (new website currently under construction) www.azed.gov Review grant agreements General Statement of Assurance Thank you for attending!

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