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City of Fernley Grants Administration News & Information Fall 2010 1 of 4 Grant Compliance Insight Two fundamental tasks associated with every grant award are tracking the project’s activities and ensuring compliance conditions. The Grant Administration Team has worked with practically every Department in the City and most Department Heads are pretty well seasoned when it comes to grant compliance. For some however, this isn’t the case. Once a grant is awarded, some Department Heads or members of their teams feel overwhelmed by the terms and conditions associated with the grant. This feeling is totally understandable, as meeting the objectives and compliance requirements of your program can be a daunting experience. In examining the following common questions, we attempt to quell compliance anxieties. Who needs the information (reports), by when, and how often? Who will prepare and submit them? The Grants Team will meet with your Department once a new award has been received to review and discuss grant requirements. We call this the Compliance Orientation. At the conclusion of the Orientation, you will know who at the funding source level receives the reports, by when, how often, and what method of submission should be used (email/fax/grantor online system). The orientation also allows us to answer and assist with any questions and determine who will prepare and submit the reports in your department. What activities must be tracked and by whom? The tracking of activity is also discussed during the Compliance Orientation. Fiscal reports will require a written analysis of expenditures to date and coordination with the Finance Department. Programmatic reports relate to grant implementation, which can mean tracking objectives, grant activities, and other deliverables that were outlined and approved as part of the grant agreement. Grant performance and activities is the responsibility of the Department Head and the funding source. However, all programmatic and fiscal processes are addressed during the Orientation, so Departments have a good understanding of grant expectations. How are you expected to demonstrate compliance? Demonstrating compliance is closely aligned with how well you track your grant activities. If you meet or exceed all your project goals, objectives, and deliverables, and you’ve submitted all required reports by the imposed deadlines, have followed fiscal processes/requirements, not over spent the grant, and have complete files, you have achieved grant compliance. ---PAGE BREAK--- City of Fernley Grants Administration News & Information Fall 2010 2 of 4 Does the size and nature of your Department affect your compliance responsibilities? This question is more relative in nature and should be addressed during the grant planning and development phases. Departments must be able to judge whether the compliance terms are feasible to achieve, if awarded. If the Department realizes that requirements can be met, but they may need assistance in preparing reports, etc., the Grants Team is available to provide technical assistance. Are compliance responsibilities influenced by the number and size of awards received? Yes, more so to the number of grants than size of award. If for example, your Department is currently implementing 4 to 5 grants with varying terms, conditions, and reporting cycles to meet, you should take a step back and consider all resources when deciding to apply for another grant opportunity, as overextending your staff and other resources (local match funds, equipment) could be detrimental when simultaneously implementing various grant programs. What does Audit Mean? Purpose of Audits: Audits are one way of ensuring that: the award’s performance goals and objectives are being met; the costs that have been claimed by the recipient are reasonable, allowable, allocable, and necessary for the purposes of the award; The recipient is following the administrative requirements set out by the granting agency. Essentially, the audits will review the “internal controls” of a recipient which are the plan of organization, methods and procedures adopted by management to ensure that resource use is consistent with laws, regulations, and policies; that resources are safeguarded against waste, loss and misuse, and that reliable data is obtained, maintained, and fairly disclosed in reports. (General Accounting Office) In the assistance context, it means: a look at the past performance of an entity, program or function to determine whether funds and property were properly administered and whether the projects have met or fallen short of program intent and expectations. This is done by: • Examination of financial operations and work • Review of compliance with applicable laws and regulations • Evaluation of economy and efficiency of operations • Evaluation of effectiveness in achieving program results Types of Audits These are the basic types of audits that Department Heads should be familiar with, irrespective of function: A-133 Single Audit; OIG Audits and GAO Audits and Reports. The A-133 Audits relates to OMB Circular A-133 and is called the Single Program Audit. This is the type of Audit that the City is most likely to encounter. A-133 is titled “Audits of States, Local Governments, and Non-Profits: - affect organizations that receive more than $500k /year in federal funds - non U.S.-based organizations are exempted from this type of audit What an Auditor will review This is essentially what an auditor will undertake and ask you for when evaluating a grant program: all financial records, supporting documents, statistical records, and all other records pertinent to an award. At a minimum, your grant file should contain the following documents and must be available for the auditor: • Grant Application ---PAGE BREAK--- City of Fernley Grants Administration News & Information Fall 2010 3 of 4 • Notice of Award and All Award Amendments/Special Conditions • Financial Status Reports quarterly or semi-annual) • Grant Progress Reports • Grant Budget and any revisions to budget and revision approvals • Copies of Disbursements/Expenditures and supporting documentation • Copies of Contracts • Program Reports • Report of Federal Cash Transactions Reports • Resolution of Audit and Disallowed Cost • Property/Equipment Status Report Finding(s) Terms in Audits Material “material” concerns recipient management of grant funds. An audit’s findings will revolve around the idea of materiality –the organization presents a real internal control problem that could be systemic and affect all the organization’s programs. A material weakness is a very key finding for an audit report, and a grant manager should be on alert for these. A material weakness means that the organization is deficient in some critical aspect of the financial management of the operation and this could mean that the award the City has with the organization could be likewise affected. Control deficiency - exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect on a timely basis noncompliance with a type of compliance program of a Federal program. Significant deficiency - a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected. Audit Opinions The opinions in the report use special terms of art as well. Three of the most important are: Unqualified --In our opinion, the financial statement of the recipient presents fairly, in all material respects Qualified --Except for the following issues, the financial statement of the organization presents fairly Adverse – The organization doe not present fairly, in all material respects Disclaimer –The auditor offers no opinion; evidence not available (not auditable) to make a determination; Top Ten Audit Findings 10) Conflicts of Interest 9) Inaccurate Financial Status Reports 8) Inappropriate Changes 7) Inadequate Time and Effort Records 6) Unallowable Costs 5) Inadequate Submission of Reports ---PAGE BREAK--- City of Fernley Grants Administration News & Information Fall 2010 4 of 4 4) Excess Cash on Hand 3) Lack of Documentation 2) Commingling of Funds 1) Untimely submission of Reports Summing Up We realize that compliance can be somewhat overwhelming, but reviewing grant terms and conditions before we apply and understanding expectations if we are awarded is the best course of action to grant compliance. Let’s continue to work together in achieving grant success! For more information on grant compliance and regulations, contact Grants Administration and/or Finance and visit the Grants Administration web pages on the City’s web site. Upcoming Grant Opportunities If you plan to submit a proposal, please contact Grants Administration to avoid duplication of efforts among departments. U.S. Environmental Protection Agency Deadline: October 15, 2010 Brownfields Cleanup Grants Institute of Museum and Library Services Deadline: November 15, 2010 Sparks! Ignition Grants for Libraries and Museums FY 2010 Rail Line Relocation Program Program for Capital Grants for Rail Line Relocation and Improvement Projects Deadline: No later than 5:00 pm, EDT October 29, 2010 http://edocket.access.gpo.gov/2010/pdf/2010- 22652.pdf Office Depot Foundation Deadline: November 15, 2010 Grant Program U.S. Soccer Foundation Deadline: October 29, 2010 Grant Programs U.S. Forest Service Deadline: November 29, 2010 National Urban and Community Forestry Challenge Cost Share Grant Program Verizon Foundation Grants Projects that support communities Education Projects Domestic Violence Projects Health Care Projects Internet Safety Projects Deadline: October 31, 2010 Grants Program Bikes Belong Deadline: November 30, 2010 Grants Program CVS Caremark Deadline: October 29, 2010 CVS Caremark Community Grants Energy Foundation Deadline: December 1, 2010 Grants Program Institute of Museum and Library Services Deadline: November 1, 2010 Museums for America The information contained in this publication regarding specific grant programs, and grant deadlines is subject to change by the funding agency at any time. Some grant applications require extensive research and planning prior to development and submission to the funding source. Grant preparation for projects of this nature should begin between 3 to 6 months prior to the anticipated deadlines so we must be cognizant of posted announcement and deadlines for submitting applications. Grants Administration will collaborate with you to determine a reasonable timeframe between grant development and the imposed deadline.