Executive Office of the President
of the United States
Office of National Drug Control Policy
http://www.whitehousedrugpolicy.gov
U.S. Department of Health and Human
Services
Substance Abuse and Mental Health Services
Administration
www.samhsa.gov
New Grantee Fiscal & Administrative Training
Drug Free Communities
October 18, 2012
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3 Sessions
1. Grantee Financial Management Requirements
- Rocco LaMonaca
2. Payment Management Overview
- Raynette Robinson
3. Grants Management Overview
- Virginia Simmons
Executive Office of the President
of the United States
Office of National Drug Control Policy
http://www.whitehousedrugpolicy.gov
U.S. Department of Health and Human
Services
Substance Abuse and Mental Health Services
Administration
www.samhsa.gov
Grantee Financial Management Requirements
Drug Free Communities
Presenter:
Rocco LaMonaca
SAMHSA/DGM
Objectives

U.S. Dept. of Health & Human Services’
(HHS) prescribed standards for grantee
financial management systems

SAMHSA Financial Capability Review (FCR)

Overview of the key controls needed to
administer the award
Financial Advisory Services
Office

Located in the Division of Grants
Management within the Office of Financial
Resources
FASO Responsibilities

Financial Capability Reviews

OMB Circular A-133 Audit Resolution

High Risk & Delinquent Audits

Financial Advisory
HHS Regulations
Financial management requirements

45 CFR Part 74.21 Educational Institutions,
Hospitals, and Non-Profit Organizations

45 CFR Part 92.20 States, Local
Governments and Tribal Organizations
Cost Principles




OMB Circular A-122 Non-Profit
Organizations
OMB Circular A-87 State & Local
Governments & Indian Tribal Gov’ts
OMB Circular A-21 Educational Institutions
Appendix E 45 CFR 74 Hospitals
Financial Capability Review
Why FCRs are important:

Help grantees succeed fiscally & programmatically

Having sound fiscal policies is good business
practice and helps protect Federal and grantee
dollars against fraud, waste and abuse

Help equip grantees with adequate financial
systems if the grantee decides to apply for future
Federal funding
Financial Capability Review
How FCRs are performed:

Review a recent report on an audit performed in
accordance with OMB Circular A-133 (a.k.a. Single
Audit); or

Obtain grantees’ recent financial statements
together with accounting & personnel policies &
procedures (P&P)

Grantee Financial Management Requirements guide helps
grantees ensure the necessary controls are incorporated
prior to submitting P&P,
http://www.samhsa.gov/grants/management.aspx
Financial Capability Review
Based on the review:
 Additional information may be requested; or

Conclude the organization has a financial
management system capable of adequately
administering the award.
High Risk

During the FCR, FASO may recommend high
risk if:


information is not received as requested; or
Indications of significant financial system
weaknesses.
Note: SAMHSA will not restrict an award pending
completion of the FCR unless a serious deficiency
is found
High Risk
HHS regulations (45 CFR 74.14 or 45 CFR 92.12)
permit awarding agencies to impose additional
requirements on recipients’ awards for the following
reasons:




History of poor performance;
Is not financially stable;
Financial management system that does not meet
prescribed standards; or
Does not conform to terms & conditions of award.
High Risk

High risk grantees must request approval of
allowable expenditures via SF 270 prior to
drawdown from Payment Management

When the required corrective action is
satisfied, SAMHSA will promptly remove
high risk designation & account restriction.
Suspension & Termination

Suspension & termination

Appeal Rights



Suspension & Termination
HHS Departmental Appeals Board
Does not apply to High Risk classification
Financial Mgmt. Requirements
Allowability
of Costs
Cash Management
Annual Audits
Accounting System
Bank Statements
Disb./Procurement
Matching/Cost Sharing
Expenditure
Analysis
Indirect Costs
Credit Cards
Timekeeping
Travel
Property Control
Conflict of interest
Consultants/Subcontracts Drug-Free Workplace
Program Income
Financial Mgmt. Requirements
Allowability of Costs
 Costs must be reasonable, allocable, and
adequately documented
 A cost is reasonable if it does not exceed what a
prudent person would incur under similar
circumstances
 A cost is allocable if the goods or services benefited
the project
 A cost is adequately documented if it is supported
by accounting records and source documents (i.e.,
timesheets & payroll records, contracts, invoices,
etc.)
Financial Mgmt. Requirements
Cash Management – Drawdowns
 Limited to minimum amounts needed to cover
allowable project costs
 Timed in accordance with the actual immediate cash
required to carry out the approved project
 Not be made to cover future expenditures. PMS
permits advance drawdown of funds only for
expenditures made w/in the next 72 hours
Financial Mgmt. Requirements
Annual Audits

Audits must be performed in accordance with
OMB Circular A-133 for FYs with expenditures
under Federal awards of $500,000 or more

Reports on these audits must be submitted to the
Federal Audit Clearinghouse within the earlier of
30 days after receipt or nine months after your
organization’s FY end
- Sections 200 and 320 of Office of Management and Budget
(OMB) Circular A-133
Financial Mgmt. Requirements
Accounting System

Must be able to separately report revenue
and expenditures by Federal program as
well as other programs

Maintain a Chart of accounts
Financial Mgmt. Requirements
Bank Statements

Opened and reviewed by a grantee official (i.e., treasurer,
president) not authorized to sign checks or perform the bank
reconciliation, but who is familiar with financial activities

Reconciliation performed in a timely manner by an employee not
authorized to sign checks. Define timely (i.e., within 14 days, etc.)

Reconciliation approved by grantee official outside the payment
process but familiar with financial activities
Financial Mgmt. Requirements
Disbursements/Procurement

Documentation maintained to support all disbursements

Blank checks safeguarded

Disbursements pre-approved (indicate by whom);

Expenditures reasonable

Two signatures on all checks for purchases over $1,000

Organization officials authorized to sign checks designated in
the policies
Financial Mgmt. Requirements
Matching or Cost Sharing
Contributions (including cash and 3rd party in-kind) must be
 Verifiable from the grantee’s records
 Not included as contributions for any other federally-assisted project
 Necessary & reasonable for proper and efficient accomplishment of
the project or program objectives
 Not paid by the Federal Government under another award (except
where authorized by Federal statute)
 Allowable, similar to the grant’s Federal expenditures, and provided
for in the approved budget
- 45 CFR 74.23 or 45 CFR 92.24 & Part I-24 HHS Grants Policy
Statement
Financial Mgmt. Requirements
Consultants & Subcontracts
 Nature and scope of services that may be
outsourced
 In-house capabilities must be evaluated before
obtaining external assistance
 Selection process described
 Method for ensuring costs and fees are reasonable
 Prior to selection, check General Services
Administration’s (GSA) Excluded Parties List
System & HHS Office of Inspector General’s (OIG)
List of Excluded Individuals & Entities
Financial Mgmt. Requirements
Expenditure Analysis
 Actual vs. budgeted expenditures are to be
compared periodically
 Significant variances investigated, resolved,
and documented to ensure actual
expenditures do not exceed amounts
budgeted for the grant period
Financial Mgmt. Requirements
Indirect Cost
 Any existing or planned indirect cost rates
and the type of rate used

If all costs are charged directly to the award,
the method used to allocate costs that benefit
more than one cost objective must be
described in detail
Financial Mgmt. Requirements
Credit Cards

All expenditures be pre-approved

Expenditure amounts & types limited

Personal expenditures prohibited

All receipts submitted for review & comparison
with credit card statements before payment
Financial Mgmt. Requirements
Timekeeping

Salaries and wages based on actual time
employees worked & be supported by timesheets
that separately report total time worked on each
project & leave

Timesheets certified as accurate by the employee
or supervisor familiar with the employee's activities

Salaries & wages charged to Federal awards
cannot be based on budgets or estimates
- Attachment B, Sec. 8.h & 8.m, of OMB Circulars A-87 & A-122
Financial Mgmt. Requirements
Travel

Expenses be reasonable, necessary & preapproved

Mileage, meals & incidentals and lodging rates be
limited to rates published in the GSA Federal
Travel Regulation

Airfare limited to coach & car rental limited to midsize

Travel costs reimbursed based on travel vouchers,
expenditure reports or the like listing each cost
individually along with receipts.
Financial Mgmt. Requirements
Property Control
 Property records must include a description, cost,
purchase date, source of funding, location, and
condition
 Physical inventories conducted at least every other
year & reconciled with property records
 Property purchased with Government funds tagged
and safeguarded to prevent loss or theft
Financial Mgmt. Requirements
Conflict of Interest

Prohibit the appearance and existence of
conflict of interest situations for employees,
officers, and agents of the organization

Examples of conflict of interest situations
given

Define the code of conduct for conflict of
interest situations, i.e., nature of penalties
for violations.
- 45 CFR 74.42 & 43; Part II-7 HHS Grants Policy Statement; 45
CFR 92.36
Financial Mgmt. Requirements
Drug Free Workplace

Unlawful manufacture, distribution, dispensing,
possession, or use of controlled substances is
prohibited in the workplace

As a condition of employment, employees must
notify management in writing within 5 calendar
days, if convicted of violating a criminal drug
statute

Appropriate personnel action must be taken, within
30 calendar days, against any convicted employee
Financial Mgmt. Requirements
Drug Free Workplace (cont.)
 Federal agencies must be notified in writing,
within 10 calendar days, if any employee
engaged in the performance of an award is
convicted of violating a criminal drug statute
- 45 CFR 82.205 & 225
Financial Mgmt. Requirements
Program Income
 Further the eligible project or program
objectives
 Finance the non-Federal share of the project
or program
 Deduct it from the total Federal share of
project or program allowable costs
Useful Websites
SAMHSA Grants Management Website:
http://www.samhsa.gov/Grants/management.aspx