ADMINISTRATION FOR CHILDREN & FAMILIES REGION VI · services and in mobilizing community resources...

ADMINISTRATION FOR CHILDREN & FAMILIES ADMINISTRATION FOR CHILDREN & FAMILIES REGION VIREGION VI

FINANCIAL MANAGEMENT OF

HEAD START GRANTS

To manage the financial aspects of Head Start grants, you must first know what the requirements are.

45 CFR 1301HEAD START GRANTS

ADMINISTRATION

1301.11 - INSURANCE AND BONDING

Non-profits must carry liability insurance for student accident, accidents on the premises, and transportation

1301.11 - INSURANCE AND BONDING

Non-profits must have bonding for officials and employees authorized to disburse funds

1301.12 - ANNUAL AUDIT

Annual audit of prior budget period to determine:

whether agency’s financial statements are accurate;


whether agency is complying with Terms and Conditions of the grant; and


whether appropriate financial and administrative procedures and controls have been installed and are operating effectively.

1301.13 - ACCOUNTING SYSTEM CERTIFICATION

Accounting system certification, prepared by an independent auditor, stating that the agency’s accounting system has appropriate internal controls for:

1301.13 - ACCOUNTING SYSTEM CERTIFICATION

safeguarding assets, checking the accuracy and

reliability of accounting data, and

promoting operating efficiency.

1301.20 - MATCHING REQUIREMENTS

Federal financial assistance shall not exceed 80% of the total costs of the program; non-federal share will not be required to exceed 20% of the total costs of the program.

1301.21 - CRITERIA FOR INCREASE IN ASSISTANCE

May apply to federal officials for approval of financial assistance in excess of 80%, with a written application and supporting evidence.

1301.30 - (PERSONNEL) GENERAL REQUIREMENTS

Agencies shall conduct the Head Start program in an effective and efficient manner, free of political bias or family favoritism.

1301.32 - LIMITATIONS ON ADMINISTRATIVE COSTS

Administrative costs may not exceed 15% of the total approved costs of the program without a waiver from federal officials.


Administrative costs are those costs related to the overall management of the program, including personnel and non-personnel categories.


Grantees must charge the costs of organization-wide management functions as administrative costs, including the following functions:


planning, coordination, and direction;

budgeting, accounting, and auditing; and

management of purchasing, property, payroll, and personnel.


These costs include salaries of: executive director, personnel officer, fiscal officer/bookkeeper, purchasing officer,


payroll/insurance/property clerk,

janitor for administrative office space, and

costs for volunteers carrying out administrative functions.


Administrative costs also include the related expenses for administrative staff functions such as fringe benefits, travel, and training.


Also expenses related to bookkeeping and payroll services, audits, and bonding; and administrative insurance, supplies, copy machines, postage, and utilities and other occupancy costs.


Dual benefit costs (i.e., shared program and administrative costs) must be identified and the administrative portion must be allocated appropriately (and counted toward the 15%).


Grantees must delineate all administrative costs in the grant application.

1301.33 - DELEGATION OF PROGRAM OPERATIONS

Federal financial assistance is not available for delegated program operations unless the delegation is made by a written agreement and has been approved by ACF before the delegation is made.

45 CFR 1304PROGRAM PERFORMANCE

STANDARDS

1304.3(a)(6) - DEFICIENCY

non-compliance with federal requirements, Head Start Act, or regulations, which involves…the misuse of Head Start grant funds;


loss of legal status or financial viability, debarment from receiving federal grants, or misuse of federal funds; or


violation of federal requirements which grantee has been unable or unwilling to correct within period specified by federal officials.

1304.23(b) - CHILD NUTRITION

Grantees must use funds from USDA as the primary source of payment for meal services.

Head Start funds may be used to cover allowable costs not covered by USDA.

1304.50(a)(1) - PROGRAM GOVERNANCE

Policy Council must establish and maintain a formal structure of shared governance, so parents can participate in decisions.

1304.50(a)(5) - PROGRAM GOVERNANCE

Governing Board is “the group with legal and fiscal responsibility for administering the Early Head Start or Head Start program”

1304.50(d)(1) - PROGRAM GOVERNANCE

Policy Councils must work in partnership with key management staff and the governing body to develop, review, and approve or disapprove the following:


All funding applications and amendments to funding applications, including administrative services, prior to submission to the ACF Regional Office;


Procedures describing how the governing body and policy group will implement shared decision-making;


Program planning; Long-range and short-range

program goals and objectives; Selection of delegate agencies

and their service areas;


Annual self-assessment of grantee’s progress in carrying out fiscal intent of the grant application, including planning or other actions resulting from audits or federal reviews;


Personnel policies, and subsequent changes to policies, including standards of conduct for staff;


Decisions to hire or terminate Head Start Director, or any other person who works primarily for the Head Start program.


Assist Parent Committees in planning, coordinating, and organizing activities for parents, and ensuring that funds set aside from program budgets are used to support parent activities;


Assist in recruiting volunteer services and in mobilizing community resources (i.e, “in-kind” - to meet non-federal share requirement of 20% match).

1304.50(f) - PROGRAM GOVERNANCE

Enable low-income members to participate fully in their group responsibilities by providing, if necessary, reimbursements for reasonable expenses incurred by the members.

1304.50(g)(1) - PROGRAM GOVERNANCE

Must have written policies defining roles/responsibilities of the governing body, and informing them of the necessary management procedures and functions.

1304.50(g)(2) - PROGRAM GOVERNANCE

Grantee Boards of Directors:Must ensure that appropriate internal controls are established and implemented to safeguard federal funds.

1304.51(d) - MANAGEMENT SYSTEMS AND PROCEDURES

Grantees must ensure that the following information is provided regularly to the Board and Policy Council:

1304.51(d) - MANAGEMENT SYSTEMS AND PROCEDURES

financial reports; plans, policies, procedures; communications from federal

officials; and grant applications.

1304.51(h) - MANAGEMENT SYSTEMS AND PROCEDURES

Grantees must establish and maintain efficient and effective reporting systems that:


(1) generate periodic reports of financial status, in order to: control quality, maintain accountability, and advise Board, Policy Council,

and staff; and


(2) generate official reports for federal, state, and local authorities (including audit reports and SF-269 Financial Status Reports).

1304.52(b) - HUMAN RESOURCES MANAGEMENT

Grantees must ensure that staff and consultants have the knowledge, skills, and experience they need to perform their assigned functions responsibly.

1304.52(b) - HUMAN RESOURCES MANAGEMENT

Grantees must ensure that only candidates with the qualifications specified are hired.

1304.52(d) - HUMAN RESOURCES MANAGEMENT

Grantees must secure the regularly scheduled or ongoing services of a qualified fiscal officer.

1304.52(h) - HUMAN RESOURCES MANAGEMENT

Grantees must ensure that all employees engaged in the award and administration of contracts or other financial awards sign statements that:


they will not solicit or accept personal gratuities, favors, or anything of significant monetary value from contractors or potential contractors.


Personnel policies and procedures must include appropriate penalties for employees who violate the standards of conduct.

1304.52(i) - HUMAN RESOURCES MANAGEMENT

Must, at a minimum, perform annual employee appraisals/performance reviews.

Suggestions for oversight of Head Start financial

management and internal controls:

MONTHLY STATUS REPORTS

Require monthly budget status reports which list, by line item:

annual budgeted cost, actual monthly cost, total cost to-date for the

budget period, and balance remaining.

ADMINISTRATIVE COSTS

The monthly budget status reports should include administrative costs as a line item, so the 15% limitation can be monitored monthly.

NON-FEDERAL SHARE/IN-KIND

The monthly budget status reports should also include non-federal share/in-kind costs as a line item, so the amount can be monitored monthly to ensure meeting the 20%.

BUDGET ADJUSTMENTS

Review the monthly reports to determine whether any line items need to be adjusted up or down. If more funds are needed for a line item, determine which line item will be reduced to cover the cost.

CHECK RATE OF SPENDING

Also review the monthly reports to determine whether funds are being spent at about the correct rate (i.e., only about half the funds should be spent if you are 6 months into the grant budget period, etc.).

If monthly status reports are received, but are of a style not easy for non-accountants to understand, then management needs to require revised reports to be produced that are easily understood.

In order for monthly status reports to be produced which are up-to-date and include this much detail, all accounting records must be posted and closed out monthly, every month.

Bank statements should be required to be reconciled and balanced to the accounting records monthly, every month.

If the finance office cannot post monthly, reconcile monthly, and produce adequate reports monthly, then you need to determine whether a new accounting system and/or new finance office staff are needed.

EXPENDITURES & DRAWDOWNS

Periodically review the log of dates and amounts of draw downs of Head Start grant funds, compared to General Ledger expenditures of funds, for each month of the grant budget period.


The expenditure of grant funds in a month should not be significantly higher or lower than the amount of grant funds drawn down (i.e., advanced) for the same month.


The amount of each Head Start draw down of advance funds should have been determined by a trial balance of the expenses to be paid with those funds.


If there appears to be a significant difference between the total amount drawn down each month and the expenditures, whether lower or higher, determine why.

SUFFICIENT FUNDS

Whoever signs checks should periodically require verification that sufficient funds have been drawn down and are in the bank account to cover the total amount, before signing any of the checks.

PAYROLL PRINTOUTS

Program Director should periodically review a payroll printout of everyone who was paid any portion of their salary under the Head Start account code, to determine whether it was a Head Start expense.

INTERNAL CONTROL

An internal control system basically involves:

division of responsibility so that no one person has control from beginning to end of a financial process;

INTERNAL CONTROL

Clear establishment of each employee’s responsibilities and duties;

INTERNAL CONTROLS

separation of responsibility for maintaining records, from the responsibility for operations, acquisitions, and custody of assets; and

INTERNAL CONTROLS

use of proofs, checks, sign-offs, and other security measures.

SEGREGATION OF DUTIES

Ensure that there is an appropriate segregation of finance office employee duties. (See “Sample Segregation of Duties”)

CHECKLISTS

Use the “Checklists for Internal Control” to assess the adequacy of the organization’s business management capabilities.

CHECKLISTS

Personnel Management Payroll Accounting Budget Cash Management Procurement (Purchasing) Property Management

SF-269 REPORTS

Program Director should always review the SF-269 Financial Status Reports to verify the expenditure amount reported, and the line item for the Unobligated Balance of Federal Funds.

GRANT AWARDS (FAA’S)

Program Director should also always review the Financial Assistance Award (FAA) documents to ensure amounts are what was expected, and prior approvals were obtained.

FINANCE COMMITTEES

Recommend Board and Policy Council each have Finance Committees (or have a joint committee) made up of persons who like financial management and have the time for it.

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