Fiscal Monitoring Guide pageiii
Prepared by:
Department of Employment and Economic Development
Workforce Development Division – Fiscal/Monitoring Unit
332 Minnesota Street, Suite E-200
St. Paul, Minnesota 55101
www.positivelyminnesota.com
Minnesota Department of Employment and Economic Development
Fiscal Monitoring Guide pageiii
Table of Contents
Table of Contents iii
Introduction 1
Acronyms 2
Notes 3
General Information 3
Person/s Interviewed 3
Financial / Cash Management 4
References 4
Desk Review 5
Onsite Review 5
Accounting Systems and Internal Controls 5
Cost Classification (Onsite Review) 11
Cash Management 12
Workforce Development Division’s Financial Reconciliation Procedure 14
Procurement 16
References 16
Onsite Review 16
Review of agencies sent RFP package 17
Review of Grantee Cost/Price Analysis sample 18
Property Procurement 18
Subgrant Analysis 19
Required Subgrant Provisions 20
Analysis Of On-the-Job Training (OJT) Contract 21
General Information 21
Performance Requirements 21
Fiscal Control and Accountability 21
General Provisions, Assurances and Certifications 22
Individual Training Accounts (if applicable) 23
OJT, Work Experience, Internship File Review 24
Audit 25
References 25
Desk Review 25
Audit Timeliness 25
Audit Review – Grantee 26
Audit Review – Subgrantee 26
Minnesota Department of Employment and Economic Development
Page27 Fiscal Monitoring Guide
Introduction
This Guide is designed to determine whether the Minnesota Department of Employment and Economic Development Grantee and/or its subrecipient(s) have developed and implemented a comprehensive set of plans, policies and procedures to ensure that the criteria established for participants in the various program activities are met and that administrative management requirements are met. This responsibility should be found at the agency and the sub-recipient level. The Local Plan and previous monitoring reports will be reviewed as they relate to the various sections of this Guide.
Each Grantee/Subrecipient visit will be preceded by a desk review of all pertinent material available at the Workforce Development Division (WDD). The onsite portions of this review will obtain the needed information by using the discussion questions listed in the monitoring guide and a review of any related policies. The file review will verify that activities are appropriate and complete according to Federal law and regulation and/or State policies.
The entrance conference will include:
Scope of the visit
§ subject matter
§ method of review
Review of applicable sections of the law, regulations and State and/or local policies
Results
§ exit conference (establish date and time, if possible)
§ written report
At the exit conference, the Field Representative will present all tentative findings. Any additional information the Agency Director or designee can provide should be incorporated at this point. Agency and subrecipient requests for technical assistance should be noted and raised later at the WDD for resolution.
Findings may include:
§ recommendations/additional comments
§ technical assistance requests
§ a corrective action plan
§ a deadline for corrective action completion
§ follow-up on completed corrective action to verify its implementation
§ unique activities/practices that may be considered a model/best practice
A report and cover letter will be prepared within forty-five days of the completion of the onsite review.
Acronyms
AA Affirmative action
ADA Americans with Disabilities Act
CBO Community Based Organization
CFDA Catalogue of Federal Domestic Assistance
CFR Code of Federal Regulation
DEED Minnesota Department of Employment and Economic Development
DHP Displaced Homemaker Program
DOT Dictionary of Occupational Titles
EEO Equal employment opportunity
EO Equal opportunity
FDIC Federal Deposit Insurance Corporation
FICA Federal Insurance Contribution Act
FSLIC Federal Savings & Loan Insurance Corporation
FSR Financial Status Report
HUD Housing and Urban Development
IRCA Immigration Reform and Control Act
ITA Individual Training Account
LWIB Local Workforce Investment Board
LUP Local Unified Plan
MIS Management information system
MOU Memorandum of Understanding
NAFTA North America Free Trade Act
OJT On-the-job training
OMB Office of Management and Budget
RFP Request for proposal
SAA Single Audit Act
SCSEP Senior Community Service Employment Program
TAA Trade Adjustment Act
TANF Temporary Assistance for Needy Families
WFC WorkForce Center
WIA WorkForce Investment Act
WSA WorkForce Service Area
DOL Department of Labor
OGM Office of Grants Management
TRA Trade Readjustment Act
MFIP Minnesota Family Investment Program
Notes
General Information
Grantee Name:Date/s of Visit:
Monitored by:
Program Year :
Person/s Interviewed
1.2.
3.
4.
5.
6.
Findings/Recommendations/Comments/Technical Assistance/ Corrective Action
Financial / Cash Management
This section is designed to review the Grantee’s financial and cash management systems. The purpose of the review is to determine if the accounting systems are adequate to track and report expenditures, costs are being categorized correctly and cash on hand is not excessive.
References
WIA Law (Sections)
134 Use of Funds for Employment and Training Activities
184 Fiscal Controls; Sanctions
185 Reports, Record keeping and Investigations
195 General Program Requirements
WIA Federal Regulations (20 CFR Sections
667.200 General Fiscal and Administrative Rules
667.210 Administrative Cost Limits
667.220 Administrative Cost Limits
SCSEP Rules and Regulations
641.847 - 641.881
Minnesota Office of Grants Management Policies & Statues
Policy 08-10 - Grant Monitoring
Minnesota Statue 10A.07 Conflict of Interest
Minnesota State Statues (Sections)
345.31 – 345.60 Minnesota Unclaimed Property Law
Minnesota Right To Know Act
Minnesota Data Privacy Practices
OMB Circulars (Numbers)
A-21 Cost Principles for Educational Institutions
A-87 Cost Principles for State and Local Government
Common Rule Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments
A-122 Cost Principles for Non-Profit Organizations
A-110 Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations
A-133 Audit Requirements for Non-Profit Institutions
Other Publications
OASMB-5 A Guide for Non-Profit Organizations (Indirect Costs & Other Rates)
ASMBC-10 A Guide for State & Local Government Agencies (Cost Allocation Plans & Indirect Cost Rates)
Desk Review
Prior to the onsite visit, review any previous financial monitoring reports, audit findings and the most recent set of monthly Financial Status Reports (FSRs). Check with the appropriate staff to determine if there are any on-going reporting problems with the Grantee.
Onsite Review
Accounting Systems and Internal Controls
Review Chart of Accounts and any other written policies and procedures that pertain to financial systems and cost classification.
Items obtained for review and/or future reference:
_____ Chart of Accounts
_____ Grantee’s financial policies
_____Other______
Does the Grantee use anything other than a modified accrual system? How often is a full accrual completed?
Does the Grantee maintain a petty cash system? / Yes / NoIf yes, how much money is kept in petty cash? / $
How is petty cash safeguarded?
Who is the petty cash custodian?
Do staff other than the petty cash custodian have direct access to the cash?
· Definition of modified accrual
Method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the liability is incurred. Most government accounting follows this method.
What is petty cash used for? Can staff or participants borrow from petty cash?
How often is petty cash reconciled and replenished?
WeeklyMonthly
Other
Who does the reconciliation?
How often are audits of petty cash done?
Does the Grantee maintain a cash receipt and disbursement system consistent with Federal Regulations 20 CFR Section #667.200 and which provides for the following?
Are checks pre-numbered? / Yes / NoAre monthly cash reconciliations made to bank statements? / Yes / No
Are monthly bank reconciliations made by an employee not responsible for cash receipts and disbursements? / Yes / No
Do bank reconciliation procedures provide for:
Accounting for check numbers used? / Yes / No
Comparing checks, including voided ones, with the check register to verify date, number, amount and payee? / Yes / No
Inspecting a sample of signatures and endorsements? / Yes / No
Investigating checks outstanding for long periods? (over 90 days) / Yes / No
Itemizing outstanding checks? / Yes / No
Are outstanding checks periodically voided? / Yes / No
Are voided checks controlled through a General Ledger Payable account? / Yes / No
Is all information concerning voided checks maintained for future claims? / Yes / No
Does the agency report unclaimed or uncashed checks according to the procedures of the Minnesota Unclaimed Property Law? / Yes / No
Are blank checks safeguarded to prevent unauthorized access? / Yes / No
Are undelivered checks adequately accounted for to prevent theft? / Yes / No
Must documentation accompany checks for signature? / Yes / No
Are mechanical check-signers adequately controlled? (is there a dollar amount limit) / Yes / No
Is drawing checks payable to cash (except for petty cash) prohibited? / Yes / No
Does someone prepare a list of checks as they come in? (cash receipts journal) / Yes / No
What is the procedure for recording funds received electronically?
Are checks received restrictively endorsed? / Yes / No
Are receipts deposited immediately? / Yes / No
Is there an adequate segregation of duties between cash receipt and disbursement? / Yes / No
Within the financial system and the procurement requirements of Federal Regulations 20 CFR Section #667.200,
Purchase Orders / Yes / No
Bank Authorized Credit Cards / Yes / No
Authorized Forms / Yes / No
Other Method / Yes / No
Does the Grantee maintain a purchasing and receiving system that provides for the following:
Segregation of the purchasing and receiving functions? / Yes / No
Comparing of shipping documents to purchase orders? / Yes / No
In the accounts payable system:
Are vendor invoices compared and reconciled to purchase orders? / Yes / NoAre invoices authorized for payment? / Yes / No
Are subgrantee/vendor account balances reviewed? / Yes / No
Are invoices voided or stamped "paid" to ensure against duplicate payments? / Yes / No
PAYROLL SYSTEM
Does the Grantee maintain a payroll system that provides for the following?
Payrolls based on Personnel Activity Reports or their equivalent? / Yes / NoElectronic or paper form? / Yes / No
Time and attendance reports certified by:
employee/supervisor / Yes / No
participant/supervisor / Yes / No
Payrolls certified by management:
For accuracy? / Yes / No
That all payees are bonafide staff or participants? / Yes / No
Leave slips signed by staff/participants? / Yes / No
Staff paid only by check or direct deposit? / Yes / No
Participants paid only by check or direct deposit? / Yes / No
The preparation of the payroll entirely separate from and independent of the delivery of paychecks? / Yes / No
The distribution of paychecks made by independent persons not involved in timekeeping or bank reconciliation work? / Yes / No
Payroll clerical operations independently proofed and verified before the payroll is distributed? / Yes / No
Retention of payroll withholding forms for employees and participants? / Yes / No
Preparation and retention of payroll tax reports? / Yes / No
Bi-weekly or monthly time tracking of staff time charging to appropriate grants? / Yes / No
Is there a procedure for cross-training or rotation of duties for accounting personnel?
Review the grantee’s liability insurance. Does it include employee dishonesty? Does the coverage include participant work related activities and/or training activities? Has this coverage requirement been included in subgrantee agreements? Note: this is in addition to paid employment activities (work experience, OJT) covered by workers compensation. (obtain a copy)
Does the grantee believe current liability coverage is adequate? If so, why?
What bank(s) or account(s) are funds deposited in? Are the account(s) covered by FDIC or FSLIC and for what amount?
Does the amount kept in any account exceed the FDIC or FSLIC coverage? (If so, how are the funds in excess insured from loss?)
Per the DEED Policies all program income, which includes interest, shall be used to further WIA program objectives. Does the checking account earn interest? If so, what is current amount of program income/interest? How has the income been expended for Program purposes? (Ref: WIA 20 CFR reg. sec.#667.200)
Has any interest been carried forward from previous years to the current year? Review program interest/program income records. (Keeping in mind these funds must be expended within the 2 year funding period to further WIA purposes).
(Ref: WIA 20 CFR reg. sec.#667.107)
If the grantee subcontracts for program services, are procedures in place to ensure timely and accurate reporting by the subgrantee? / Yes / NoCost Classification (Onsite Review)
Federal Regulations, 20 CFR Sections #667.200 through #667.220 and the SCSEP Federal Regulations 20 CFR 641.853 require allowable costs be charged against administration and program categories. Through a review of the Chart of Accounts, written policies for cost classification and discussion with accounting staff, determine how costs are classified.
Has the grantee developed written and uniform cost classifications for each category? (obtain a copy) / Yes / NoDoes the program director or LWIB members charge expenses to cost categories other than administration?
For costs that are pro-rated, what are the methods used? Are the methods acceptable for making cost allocations and in compliance with grantee cost allocation plan(s)?
Does the grantee have an approved indirect cost rate? / Yes / NoIf so, what is it? Who is the cognizant agency? Is it provisional or fixed?
Rate / AgencyProvisional / Fixed
If provisional, how do you reconcile indirect costs at the end of the year?
How does the grantee verify that these classifications are being properly made by all subrecipients? (Review a sample of subgrants and invoices to ensure that costs are properly classified. Note any problems.)
When combined bank accounts are used, ask the following questions to determine how cash is managed. Note all of the funding sources that are commingled with DEED funds.
How often are bills paid? Are bills paid when due, not when received?
Are payables filed in a tickler file by date due? / Yes / NoCash Management
Determine whether the grantee is on a reimbursement basis; that is, program costs are paid with local funds and grantee is subsequently reimbursed. If the cash requests are prepared from compilations of program expenditures already disbursed from the grantee’s own resources, the grantee is on a reimbursement basis. If satisfied that this is the case, no further testing is necessary since federal and State cash balances will always be zero or negative.