Clinical Assessment for Systems Strengthening (ClASS)
FINANCIAL MODULE Revised August 2014
INTRODUCTION TO THE TOOL
The Financial Module of the ClASS Toolkit is a guide, not a checklist, for assessing fiscal organizational
systems at both treatment facility and organizational levels. This module is divided into ten sections
that cover the following areas:
1.
2.
3.
4.
5.
6.
Program Financial Management
Financial Policies and Procedures
Budget Management
Financial Management Systems
Accounting Systems - Payroll
Accounting Systems – Documentation,
Internal Controls, and Cash
7.
8.
9.
10.
Accounts Payable and Receivable
Procurement, Purchasing, Inventory, and Travel
Financial Program Monitoring and Oversight
Grants and Contract Management
All ten sections (including Grants and Contract Management) are for use with organizations receiving
direct HRSA funding or an in-country HQ office of a HRSA funded organization. Some of the sections
could apply if reviewing a sub-grantee or potential sub-grantee around applicable USG regulation
compliance issues.
Each section begins with a set of core competences based on USG financial guidance and best practices
from international organizations. The core competencies are followed by a series of questions that can
be used to facilitate discussions with organizational representatives. Reviewers should not feel
required to complete the tool sections in any specific order. Flexibility to accommodate the time
availability of staff is encouraged.
The tool contents are based on the assumption that there will be at least six hours available to reviewers
at each site. When time is more limited, reviewers should focus priority on the Rapid Visit (RV)
questions in each of the sections. As time allows the Extended Visit (EV) areas should be addressed. The
choice on which sections to prioritize should be made after the opening presentation and in
consultation with the team lead.
Reviewers will find that all of the sections of the tool will not apply to all types of organizations assessed.
This module is based on provisions of the U.S. government regulations contained in 2 CFR Part 220, 230 (OMB Circular A-21 and
A-122) “Cost Principles for Educational Institutions and Cost Principles for Non-Profit Organizations”. Guidance is also provided
from 45 CFR Part 74,( OMB Circular A-110; 2 CFR Part 215) “Uniform Administrative Requirements for Awards and sub-awards
to institutions of higher education, hospital, other Non Profit Organizations, and “OMB Circular A-133 Audits of States, Local
Government and Non-Profit Organizations” OMB Circular A-123 “ Management Accountability and Control”. HHS Grants Policy
Statement
ClASS Financial Module| Version 4.5 | Revised August, 2014
CLINICAL ASSESSMENT FOR SYSTEMS STRENGTHENING
ClASS Financial Module
REVIEWER: ___________________________ DATE: _____________
SITE: ________________________________
KEY –Rapid visit items – (RV) | Extended visit items: (EV)
SECTION 1: HIV PROGRAM/FINANCIAL MANAGEMENT & OVERSIGHT
Core Competencies

The organization has sufficient qualified staff responsible for the finance management function of the HIV
Program. (RV)

Managers with appropriate authority make decisions on grant-seeking, budget allocation and expenditures.
(EV)

The organization provides on-going staff development and allows for cross-training of financial staff. (EV)

The financial management and oversight is sufficient to manage the organization. (EV)

The organization has a process in place for implementing and measuring quality improvement of financial
systems and processes. (EV)
Open-Ended Questions/Statements

Describe the staffing mix and the number of individuals by position. (RV)

Discuss the financial management qualifications and experience of each key financial staff person. (RV)

How are funding and spending decisions made? Who makes those decisions? (EV)

Describe how and if on-going staff development and training opportunities are provided to finance staff. (EV)

Describe the financial quality improvement initiatives within the organization. Who performs this process?
(EV)
Performance Criteria
Financial staff provides
support to the HIV
1.
clinic/program:
Organization/clinic has
process for recruiting and
2. retaining qualified financial
staff and evaluating
financial staffing levels:
Verification Information
Comments
a. MOH Fiscal Staff Person(s)
b. Fiscal Director/Manager (FD)
c. Finance Manager (FM)
d. Accountant
e. Bookkeeper
f. Executive Director
g. Finance Controller
h. No fiscal staff support
i. Other
a. Process exists for recruiting and evaluating
qualifications and experience of individuals hired
b. Job descriptions specify levels of experience and
education for the position
c. HIV Program has input in hiring decisions
d. Staff are properly crossed-trained and provided
opportunities for development
e. Staffing levels have been properly evaluated and
are sufficient for workload
f. Organization has a staff retention plan
Page 1
3.
4.
5.
6.
a. HIV Clinic managers make funding allocation
decisions
b. HIV Clinic managers have input on funding
HIV program/clinic makes
allocation decisions
funding allocation
decisions:
c. Allocation decisions made by organization
management excluding HIV managers
d. Unclear how allocation decisions are made
a. HIV Clinic managers make spending decisions
b. HIV Clinic managers have input on decisions
HIV Clinic managers make
c. Spending decisions made by org. management
spending decisions:
excluding HIV managers
d. Unclear how spending decisions are made
a. Quarterly
Finance staff have access to b. Bi-annually
training opportunities/
c. Annually
support:
d. As needed
e. No training opportunities are provided.
The organization has on-going quality improvement initiatives for the finance
systems and processes.
Notes:
Page 2
SECTION 2: FINANCIAL POLICIES AND PROCEDURES
Core Competencies

The organization has approved financial policies and procedures which are properly disseminated and
consistently followed. (EV)

Approved policies and procedures USG complaint and address areas of grants management, budgeting,
accounting, payroll, procurement, travel, accounts payable, accounts/contract receivable and cash
management. 45 CFR Part 74; 2 CFR Part 220, 230 (RV)

Written policies and procedures are developed to determine reasonableness, allocability, and allowability of
costs. 2 CFR Parts 220 Appendix A (C) and Part 230 Appendix A (A); 45 CFR Part 74.21 (RV)

Written policies and procedures are in place to minimize the time elapsing between transfer of advance funds
to recipient and issuance of checks or payments 45 CFR Part 74.22 (RV)
Open-Ended Questions

Discuss who develops and approves the policies and procedures that the organization is expected to follow. (RV)

How are policy changes/updates made and communicated to staff? (EV)

Discuss areas covered by fiscal policies and procedures. (EV)

How does the organization monitor and track actual use of the policies? (EV)

Describe how the policies and procedures comply with USG financial requirements. (RV)
Performance Criteria
There are current written
1. financial policies and
procedures
Accounting policies and
procedures have been
2.
approved by the
organization leadership
Accounting policies are
shared with program
3.
managers and decisionmakers:
The following are
4. adequate in the financial
policies and procedures:
Verification Information
a. Written policies and procedures exist and are
available for review
b. Employees know processes, but no written policies
c. All processes in writing, but not official policy
d. Some processes in writing
a. Policies have been approved and adopted by
organization
b. Governance minutes reflect approval
c. Management meeting minutes reflect approval
d. Staff not sure
a. Policies shared at department meetings
b. Policies shared at management meetings
c. Staff receive management memos or letters
d. Varies depending on decisions and/or staff
a. The role of the Procurement Committee is
appropriately documented
b. Purchasing procedures are specific and address
processes (from ordering to the receipt and
payment of goods and services)
c. Policies prevent remuneration or benefits by
individuals or the organization itself in return for
arranging or recommending the purchasing, leasing,
or ordering of any goods, facility or service.
d. Purchasing criteria is specific to quality, cost,
delivery, competition, source selection, etc.
e. Policies define: budgeting process, finance office
contact, organization fiscal/budget year, signature
authority for purchase order approvals, etc.
Comments
Page 3
f. Procedures on collection of fees for services
provided by the organization, if applicable
5.
Policies and procedures
are being followed:
There are adequate travel
6. policies and procedures
addressing the following:
a. Purchasing policies
b. Collection policies
c. Accounts payable policies
d. Payroll policies
e. Other accounting
a. Approval of travel requests prior to occurrence
b. Policies describes use and control over travel
advances
c. Policies specifies what expenses are reimbursed
based on per diem rates versus actual incurred
expenses
d. Approval of travel expense reports and travel
settlement process
e. Policies describes expenses requiring receipts
Notes:
Page 4
SECTION 3: BUDGET MANAGEMENT
Core Competencies

The organization’s budgets appropriately reflect organization’s activities. 45 CFR Part 74.25 (EV)

The organization receives funding from other sources. (EV)

The organization has a detailed budget development, budget approval and budget monitoring process
consistent with USG financial standards. 45 CFR Part 74.20-28: Process includes input from project level,
management and finance staff.(EV)

Payroll and benefits are at levels that are consistent with labor market standards. (EV)

The organization has a current operating budget. (EV)

The proposed budget reflects the submitted workplan. 45 CFR Part 74.25 (EV)

Budget to actual expenditures comparisons are made monthly/quarterly and variances are explained. 45 CFR
Part 74.20-28 and 45 CFR Part 74.50-53 (RV)

The organization has a NICRA/or an established basis for the calculation of indirect rate charged to the grant. 2
CFR Part 220 Appendix A (G-H), 2 CFR Part 230 Appendix A (C-E)(RV)

The organization has a process in place to differentiate allowable and unallowable costs; Process in place to
determine costs applicable to R&D. 2 CFR Part 220 Appendix A (C), 2 CFR Part 230 Appendix A (A); 45 CFR 74
Appendix E; 45 CFR Part 74:21, 27 (RV)

Program costs charged to the program are allowable (reasonable and allocable). 2 CFR Part 220 Appendix A (C);
2 CFR Part 230 Appendix A (A); 45 CFR Part 74 Appendix E; 45 CFR Part 74.20-25 (RV)

Budget revisions and program plan changes in scope, or key personnel changes have been approved by the
funder. 45 CFR Part 74.25 (RV)
Open-Ended Questions

What are the different types of budgets? E.g., program, organization-wide, grant/contract, departmental. Do
they reflect the organization’s activities? (EV)

Describe how multiple budgets and funding sources are managed? (EV)

Describe the budget development/approval process and when/how budget revision takes place. Who is
involved? What is the role of the HIV program staff in the budget process? (EV)

Describe the budget development/approval process and when/how budget revision takes place. Who is
involved? What is the role of HIV program staff in the budgeting process? (EV)

How well does the payroll and benefits budget reflect the local labor market? (EV)

Describe the current operating budget. Describe the level of funding and the various funding sources. (EV)

Does the proposed budget reflect the submitted workplan? (EV)

Describe if and how often budgets compared to actual costs are monitored and if variances are explained.(RV)

Describe the basis for the calculation of the indirect rate. (RV)

Describe the process the organization uses to ensure that costs charged to the program are allowable and
allocable. (RV)

Describe the process for determining cost applicable to Research and Development (Grants and Contracts with
Hospitals). (RV)

Describe the process for ensuring that budget revisions and program plan changes requiring approval by
sponsor are approved. (RV)
Performance Criteria
1.
Various budgets are used
to manage resources
Verification Information
Comments
a. Current (operating or general) budget.
b. Capital budget governing the acquisitions of property
or equipment
c. Budget for programs, departments,
contracts/grants
d. Other
Page 5
The organization has a
clear and systematic
2. approach for the
management of multiple
funding sources.
3.
4.
5.
6.
7.
e. The organization does not have a budget
a. There is a separate budget for each activity/funding
source.
b. Budget details and the actual revenue or expenses
can be displayed in various date ranges by
programs, funding source and in the aggregate.
c. There is a reasonable system for allocating salaries
and other costs to multiple budgets.
d. There is a mechanism to ensure that there are no
overruns or duplication of charges, e.g., charging
more than 100% of a salary or charging the same
expense to several funding sources.
a. HIV Clinic Manager/PI
b. HIV Clinic Director with Accounting staff
An annual HIV Clinic budget
c. Organization Finance Director
for the unit is developed by:
d. MOH staff and HIV Clinic Director/PI
e. Other
a. HIV Clinic Manager/PI
b. HIV Clinic Director with Accounting staff
There is a process for
approval of the HIV Clinic
c. Organization Finance Director
budget by management
d. MOH staff and HIV Clinic Director/PI
e. Other
a. Budget vs. actual reports are reviewed and budget
variances addressed.
b.
Tolerances
have been established for budget
Budget to actual
variances that trigger a need for budget
comparisons are made and
modification, e.g., 5%, 10%.
explained; Budget
modifications occur as
c. Managers are required to provide written
necessary, i.e. staff
explanation when budget variances exceed
vacancies.
tolerances.
d. Appropriate corrective action is taken based on
budget variances exceeding
Budgets for salary and fringe
a.Salary surveys are conducted
benefits are reasonable in
terms of the local labor
market based on salary
b. Salary ranges are consistent with job responsibilities
surveys.
The proposed budget
a.Budget is reasonable based on current operation.
reflects the current
workplan submitted.
b. Budget is reasonable based on patient volumes.
Notes:
Page 6
SECTION 4: FINANCIAL MANAGEMENT INFORMATION SYSTEMS
Core Competencies
 The organization has an effective accounting system that allows for (RV):
a. The tracking of all expenditures in accordance with USG and in-country audit requirements;
b. Analysis of unit costs;
c. Financial projections;
d. Tracking of expenditures against budgets and identification of budget variances;
e. Evaluating the financial performance of subgrantees.

The organization has an accounting system which relies on a chart of accounts, categorizes expenses
appropriately, and supports reporting by funding source. (RV)

The financial system produces routine, accurate, complete fiscal reports as well as customized reports.
(EV)

Policies and procedures are written and address the areas of system utilization, maintenance and
security. (EV)

The organization has systems in place to ensure the maintenance of system, security of data and the
training of program staff. (EV)
Open-Ended Questions

Describe the local partner accounting system. Does it allow for (RV):
a. The tracking of all expenditures in accordance with USG and in-country audit requirements;
b. Analysis of unit costs;
c. Financial projections;
d. Tracking of expenditures against budgets and identification of budget variance;
e. Evaluating the financial performance of sub-grantees.

Describe the accounting system used to monitor spending: Is it manual or electronic? If electronic,
which accounting application is used? How does the program ensure that people and materials are
charged to the current funding source and expense account? (RV)

Describe the capability of the financial system to produce routine, accurate, complete as well as
customized reports? (EV)

Describe policies and procedures for the utilization, maintenance and security of the system. Is
documentation sufficient? (EV)

Describe how the organization ensures the security of the data. Who has access to the information
system? Describe how the system is maintained and the training available to staff. (EV)
Performance Criteria
1. The accounting system:
Verification Information
a. Has detailed chart of accounts that allows for
tracking of expenditures in accordance with USG and
in-country audit requirements.
b. Allows for the tracking of expenditures in
accordance with USG and in-country audit
requirements.
c. Allows sufficient detail for financial projections and
development and analysis of unit costs.
d. Allows for sufficient tracking and monitoring of
financial performance of subgrantees to include
advances and liquidations.
Comments
e. Provides for accrual or modified accrual basis of
Page 7
The chart of accounts
provides adequate details
2.
to permit:
Describe the accounting
3. system used:
accounting
f. Allows for tracking of budget-to-actual
expenditures.
a. Appropriate allocation of expenses by grant or
funding streams.
b. Appropriate allocation of expenses to multiple
funding sources.
c. Appropriate allocation of expenses to multiple sites.
d. Expenses booked in the chart of accounts to include
advances and liquidation of advances.
a. The accounting system used is manual.
b. Excel worksheets are used for tracking and
reporting.
c. An accounting software application has been
implemented and is being used.
d. Computer system and accounting application is
password protected and only authorized personnel
have access.
a. Written polices describe security procedures.
4.
There are appropriate
safeguards in place.
System security,
5. maintenance and staff
training:
b. Computer backups are performed regularly and
stored separately from accounting office.
c. Documents/reports for manual systems are stored
in a fireproof safe.
a. A comprehensive training program is in place and
employees have been appropriately trained.
b. Technical support is available.
c. System is maintained by: finance department, IT
department, outside vendor or other.
d. System is password protected.
e. Passwords are based on job functions within the
finance department.
Notes:
Page 8
SECTION 5: ACCOUNTING SYSTEMS – PAYROLL
Core Competencies

The organization makes provisions for appropriate separation between payroll and other accounting
functions. (EV)

Appropriate communication exists between payroll and human resources related to hiring and termination.
The organization regularly reconciles staff and payroll records. (EV)

Salaries and wage rates are formally approved and consistent with labor market. (EV)

The organization has a comprehensive payroll process in place; staff time is allocated based on appropriate
cost center, and payroll taxes are paid consistently and timely to government authority. 2 CFR Part 220
Appendix A (J) (10-12) (49), 2 CFR Part 230 Appendix B (8) (47) (RV)

Distribution of wages and salaries are supported by activity reports or timesheets; reports reasonably reflect
the activities for which employees are compensated; system reflects activities application to each sponsored
agreement. 2 CFR Part 220 Appendix A (J) (10-12) (49), 2 CFR Part 230 Appendix B (8) (47) (RV)

Time and effort reports are signed by employee and responsible official as to verification that work was
performed 2 CFR Part 220, Appendix A (J) (10-12) (49) 2 CFR Part 230 Appendix B (8) (47) (RV)
Open-Ended Questions

Describe how payroll duties are divided among staff. (EV)

Describe communication between accounting and program related to hiring, termination, time and effort, and
salary changes. (EV)

Describe the basis for how salary and wages are determined. Are rates consistent with the local labor market?
(EV)

Describe the payroll process and approvals from time and effort tracking through payment of funds to
employees. Is staff time allocated based on cost centers? Documentation demonstrates payment of payroll
taxes. (RV)
Performance Criteria
Duties of individuals
preparing the payroll are
1.
separate from other
accounting functions.
There is appropriate
communication between
2.
payroll and human
resources functions.
Payroll is verified at regular
3. intervals against the
personnel records
All salaries and wage rates
4. are authorized and
approved in writing by a
Verification Information
a. There is separation between payroll and the hiring
of new employees.
b.Payroll is reviewed and approved by another
employee after preparation.
c. Payroll is verified and recorded in the accounting
system by another employee.
Comments
a. Human Resources office provides written
verification of names, hire dates, salary levels.
b.Human Resources office provides written notice of
all terminations.
c. Human Resources provides a written notice of
salary changes
a. Payroll is compared to personnel records to verify
amount of salary, and number of hours to be
worked per week
b.Discrepancies are reported to management.
a. Employee offer letters/contracts from an authorized
manager are in place and contain salary/wage
information.
Page 9
designated official or
supervisor.
b.Employee offer letters/contracts do not exist.
c. Salary/wage information is not documented.
d.Salary/wage information has not been authorized
and approved in writing by a designated official.
a. Employees are required to report actual time
worked
There is a system to record
5. and validate employee time
and effort.
b. Supervisors approve employees’ time/effort reports
c. Employees time and effort reports are used to
support allocations of salaries
d. A system is in place to verify that allocations are
consistent with reports of actual time and effort
a. Financial staff have access to instructions regarding
the applicable payroll taxes
There is a process in place
b. Applicable payroll taxes are calculated for each
6. for collecting and submitting
payroll
payroll taxes.
c.
c. Applicable payroll taxes are paid on a timely basis
d. and recorded in the accounting system
Notes:
SECTION 6: ACCOUNTING SYSTEMS – DOCUMENTATION, INTERNAL CONTROLS & CASH
Core Competencies

The organization has an adequate internal controls system that includes documentation to support all
transactions; separation of functions, appropriate separation of responsibilities and procedures provide
reasonable control over cash. OMB Circular A-123; OMB A-133 Circular Part 6 (RV)

The organization has systems in place that demonstrate effective control and accountability of all funds,
property and other assets. 45 CFR Part 74.21; OMB Circular A-133 Part 6 (RV)

Advances of Federal funds are deposited and maintained in insured bank accounts/depositories whenever
possible. 45 CFR Part 74.22 (RV)
Open-Ended Questions/Statements

What are the requirements for support documentation? (RV)
Page 10







Do transactions include appropriate forms with signatory approval? (RV)
Describe the systems in place that demonstrate control and accountability of funds and that funds are used only
for the purposes of the grant. (RV)
How does the organization separate accounting functions between staff? (EV)
How are purchasing, receipt of goods, and payment duties separated? Transactions are supported by
appropriate documentation. (EV)
Describe how petty cash is maintained and accounted for? Are written policies in place? How often is petty cash
reconciled? (RV)
Describe the process for preparation and issuances of checks or electronic fund transfers. (EV)
Describe procedures for reconciling bank accounts. (RV)
Performance Criteria
1.
Documentation is
sufficient.
2. If3there is a petty cash fund:
Verification Information
Comments
a. Standardized forms are used to support
transactions.
b. Authorized signers appropriate for dollar amounts
c. Forms include required signatory approvals.
a. Responsibility is vested in one individual.
b. The fund is limited to a reasonable amount and is
based on written policy.
c. Restricted as to purchase.
d. Purchases supported by receipts.
e. Funds are regularly reconciled.
f. Balanced by an independent employee at time of
reimbursement.
g. Petty cash is always locked.
a. There is separation between check signers and
voucher preparation, purchasing, payroll
preparation, approval for payments etc.
b. Signing of blank checks is prohibited.
3.
Internal control over bank
accounts
c. Bank accounts are reconciled monthly by someone
other than employee who participated in the
receipt or disbursement of cash.
d. Bank reconciliations are approved by a responsible
official.
e.No checks are written to cash.
f. If a facsimile signature is used for cash
disbursements, the signature plate, die, key,
electronic card, etc., is under strict control.
Notes:
Page 11
SECTION 7: ACCOUNTING SYSTEMS – ACCOUNTS PAYABLE & RECEIVABLE
Core Competencies

Payables within the organization are managed appropriately and include provisions such as a timetable with
sufficient lag to process invoices prior to payment. (EV)

Drawdowns/receipt of funds are supported by appropriate documentation; Recipients must be able to account
for the receipt, obligation, and expenditure of funds. 45 CFR Part 74.22 (RV)

Drawdowns that are advances are kept in interest bearing accounts unless exception applies 2 CFR Part 220,
230; 45 CFR 74.22 (RV)

Payment methods shall minimize the time elapsing between the transfer of advance funds from the US Treasury
& the issuance of payments 45 CFR Part 74.21-22 (RV)

Program Income (if applicable) is tracked and funds are used to further project objectives. 45 CFR Part 74.24
(RV)
Opened-Ended Questions/Statements

Describe the process for paying a bill. (EV)

Describe how payment of bills and receipt of funds/drawdowns are separated among staff. Who is involved in
the process? (EV)

Describe how drawdowns/the receipt of funds take place. What supporting documentation is
required/maintained?

Describe how the organization tracks and minimizes the time elapsing between the drawdown of funds and the
payment of the funds. (RV)

If the program receives program income, describe how the income is tracked and how income is used to
further project objectives. (RV)
Performance Criteria
1.
2.
Payables are managed
appropriately
Drawdown of funds are
apace with the budget
Drawdown of funds is
3. supported by
documentation
Verification Information
a. Payables are authorized and/or the vendors
invoice is approved by a responsible party;
approval signifies receipt of goods/services
Comments
b. Obligations or liabilities are properly recorded
c. Payments to vendors are made in a schedule that
allows for a discount and avoids late fees
a. Drawdown of funds are made on a schedule that
ensures sufficient cash balance
b. Advances are liquidated on a timely basis,
conforming to the timeframe prescribed by the
funding source
a. Supporting documentation is organized and filed
to correspond with the line items in the budget
b. Spreadsheets/documents are used to
demonstrate the source, type and amount of
documentation, especially if split between line
items.
Page 12
Notes:
SECTION 8: PROCUREMENT, PURCHASING, INVENTORY & TRAVEL
Core Competencies

The organization has a comprehensive procurement process for procuring services, equipment,
products/supplies and drugs. (RV)

Written procurement policies and procedures outline employee conduct, conflict of interest and allows for
vendor competition. 45 CFR Part 74.40-48 (RV)

The organization has appropriate policies and procedures to govern procurement, and inventory. 45 CFR Part
74 .40-48 (RV)

Property standards allow for: management and disposition of property procured with USG funds; appropriate
safeguard to prevent loss or theft; adequate maintenance 45 CFR Part 74.(30-37) (RV)

Inventory records document: description, serial number, location, unit cost, disposition date a minimum;
proper insurance; physical inventory and reconciliation with equipment records occur at a minimum every two
years. 45 CFR Part 74.34 (RV)

The organization has travel policies and procedures to include, approval process and process to settle travel
expenses after travel has occurred. 2 CFR Part 220 Appendix A (J 51,53-54), 2 CFR 230 Appendix B 49,51-52)
(RV)

There is a clear basis and consistency established for how travel costs are charged. 2 CFR Part 220 Appendix (A)
51, 53-54; 2 CFR 230 Appendix B 49, 51-52 (RV)
Open-Ended Questions/Statements

Describe the written policies, procedures, processes and systems for procurement/purchasing of goods and
services. (RV)

Does the organization have a procurement committee or procurement oversight body in place? If so, describe
how the committee or oversight body is used. Who participates in the committee? What is the guidance to
prevent conflict of interest?(RV)

Describe the process for tracking inventory and fixed assets. (EV)

Describe the systems and documentation in place that demonstrate proper management and disposition of
property procured with USG funds. (RV)

Describe the travel policies and procedures and systems in place from “request for travel to the travel expense
settlement process after the travel has occurred.” Are forms used to standardize tasks? Do forms display
signatory approval? Is there a clear basis for how travel costs are charged? (RV)
Performance Criteria
1. Procurement/purchasing:
Verification Information
Comments
a. Do the policies require the employees to avoid
and/or disclose conflicts of interest?
b. Has the responsibility for purchasing been
Page 13
2. Inventory:
3. Travel:
assigned to one department, section or
individuals within the organization?
c. Are competitive bids obtained for items or service
agreements over specific amounts?
d. Are purchase orders required for purchasing all
equipment and services?
e. Are deliveries checked against the purchase
order?
f. There are clear guidelines as to the role of the
procurement committee.
g. Does documentation includes meeting minutes?
h. Do RFPs specify selection criteria on the basis of
price, quality, and delivery?
i. Does documentation include signature approvals?
a. A usable perpetual inventory system is
maintained (if the program has access to an inhouse pharmacy or warehouse).
b. Purchasing policies and procedures address
matters such as quality, cost, delivery, and receipt
of goods.
c. There is an adequate system for checking and
recording of partial deliveries.
d. Independent counts are conducted on a regular
basis and reconciled to the records.
a. Travel requests are approved appropriately by
management.
b. Travel charges are reimbursed based on actual
cost incurred or by per diem (if based on actual
costs, receipts are required).
c. Organization has a process to ensure individual
travel expenses are settled within a reasonable
timeframe and prior to additional authorized
travel for the individual.
d. Travel policies are consistent with USG
requirements for first class and business travel.
e. Travel expenses are summarized and documented
by the use of forms that display signatory
approval, identify the advance, detail expenses
with attached receipts, etc.
Notes:
Page 14
SECTION 9: FINANCIAL PROGRAM MONITORING & OVERSIGHT
Core Competencies
Audits (Internal & External)

The organization has an annual external audit of financial system. (RV)

The A-133 audit, if required, has been completed annually and in a time manner. OMB Circular A-133 (RV)

The organization’s A-133 audit report includes no deficiencies in compliance, reportable conditions, material
weakness or questionable costs. OMB Circular A-133 (RV)

Governance minutes document that external audit reports have been presented to the Board. (EV)

The organization has an internal audit department or internal auditor who provides independent review of
financial systems and processes. (EV)

A comprehensive monitoring tool is used to verify USG compliance for the organization and sub-grantee(s)
and to ensure audit requirements have been met as delineated in 45 CFR Part.74.26. 45 CFR Part 74.51; OMB
Circular A-133 (RV)

Sub-recipient invoices present charges that are deemed allowable based on the terms and conditions of the
agreement and applicable regulations2 CFR Part 220 Appendix A (C); 2 CFR Part 230 Appendix A (A); OMB
Circular A-133 (RV)

The organization has processes in place for responding to and resolving audit findings; to include,
development/implementation of corrective action plan and evaluation of improvements. (RV)
Financial Reporting & Cash Flow

Performance reports contain information comparing actual accomplishments with goals, explains why
established goals not met, and documents other pertinent information. 45CFR Part 74.51(RV)

Required reports are submitted in a timely manner. 45 CFR 74.50-51 (RV)

Management receives reviews and approves financial reports regularly and on a timely basis. (EV)

The organization has a cash management system which includes forecasting of cash needs. (EV)

The organization has sufficient cash reserves to sustain operations after transition. (EV)
Open-Ended Questions/Statements
Audits (Internal & External)

Describe external audit processes. (EV)

What is the date of the most recent A-133 audit? Was there an unqualified opinion? Were findings presented
to the Board of Directors? (RV)

The organization’s A-133 audit report includes no deficiencies in compliance, reportable conditions, material
weakness or questionable costs. (RV)

Describe the internal audit processes. (EV)

Describe the monitoring tool(s) used to verify USG compliance for the organization and sub-recipient(s). (RV)

How does the grantee validate the accuracy and allowability of invoice charges by sub-recipient(s)(RV)

Describe management’s process for: responding to audit findings, development and implementation of
corrective action plan monitoring and evaluation of improvements. (RV)
Financial Reporting & Cash Flow

Describe the distribution of financial reports to management; what reports are distributed? To whom? How
often? (EV)

Will the local partner be able to manage an appropriate cash flow during and after the transition? Explain.
(EV)

Describe how the organization ensures that sponsor’s reporting requirements are met. (RV)
Page 15
AUDITS (INTERNAL & EXTERNAL)
Comments
Performance Criteria
Verification Information
a. Finance Manager conducts internal reviews.
The organization has
b. Accountant conducts periodic reviews.
internal and external
c. Governance members conduct periodic
review processes,
reviews.
1. including a
d. Internal audits are conducted periodically.
management plan to
e. External audits are conducted annually.
respond to audit
f. Management has developed a written plan in
findings.
response to audit findings.
Is there a regular schedule that ensures that all sub-grantees will receive an
2.
annual fiscal monitoring visit? (Yes or No). Describe the frequency of the reviews.
3. Is there a fiscal monitoring instrument/tool? Verify.
a. Accounting system.
b. Cash balance.
c. Fiscal reports and financial statements.
d. Most recent audit.
e. Follow-up on auditor’s findings.
f. Effectiveness of Accounts Receivable (A/R).
g. Calculation of days in A/R
h. Review of aging reports.
i. Status of payroll liabilities.
j. Sub-grantee’s internal control.
k. Budget management system.
l. Allowable and unallowable costs as identified
in the OMB Circular A-22, Cost Principles for
Non-Profit Organizations
m. Client eligibility policies.
n. Staffing is adequate for fiscal management.
o. Approved policies and procedures adhered to.
Does the monitoring
p. Budget management and oversight:
instrument include
4.
reviews of:
 Actual expenses compared to budget.
 Variances between budget and actual
expenses are tracked and can be justified.
 Payroll expenses are verified by program
management and supported by
documentation.
q. Documentation supports transactions.
r. Separation of duties is appropriate.
s. Aging accounts receivable and accounts
payable reports.
t. Cash flow statement/Cash balance.
u. Bank accounts reconciliation.
v. Review of internal and external audits,
including management’s action plan.
w. Contracts/leases for HIV Program.
x. Fixed assets are tagged and accounted for.
Inventory listing is up-to-date.
Page 16
a.
b.
5.
On-site assessment of
sub-recipient
c.
d.
e.
f.
g.
Are findings reviewed with the accountant onsite and followed up with a written report?
Is a report of the monitoring visit approved by
the reviewer’s supervisor?
Is a written report sent to the sub-grantee?
Does the sub-grantee have an opportunity to
respond?
Is a corrective action plan developed jointly by
the sub-grantee and the organization?
Are follow-up activities appropriate?
Is there evidence of successful follow-up (if
applicable)?
FINANCIAL REPORTING & CASH FLOW
Performance Criteria
Verification Information
a. Type of reports distributed to management
(specify)
b. Financial reports are accompanied by narrative
highlighting areas of concern, e.g. current ratio
1. Financial reports
c. Finance staff participate in management
meetings
d. Type of actions typically taken by management
after reviewing reporting
a. Calculate the current ratio (current assets/
current liability)
b. Calculate working capital to total asset ratio
(working capital/total assets)
c. Determine average number of days between
2. Cash Flow
submission of a drawdown and receipt of
funds
d. Identify other resources; (reserves, lines of
credit). Based on current burn rate of
expenses, calculate any cash shortfalls.
Comments
Notes:
Page 17
SECTION 10: GRANTS/CONTRACT MANAGEMENT
Core Competencies

Terms & conditions (See also Sections 2 and 9) a. Contract administration system is maintained to ensure contractor performance with the term,
conditions and specifications of the contract. Documentation reflects evaluation of the sub grantee’s
performance 45 CFR Part 74.47 (RV)
b. Grants to Foreign Organizations, International Organizations, and Domestic Grants with Foreign
components and sub-awards to Foreign Organizations adhere to conditions as outlined in 45 CFR Part
74 with exceptions as noted in HHS Grants Policy Guidance (RV)

Cost Considerations (See also Section 2 and 3)
Cost principles, cost transfers and allocation of costs have been properly applied. 2 CFR Part 220 Appendix (C);
2 CFR Part 230 Appendix A (A) and 45 CFR Part 74.20-28 (RV)

Prior-approval requirements (See also Section 2 and 3)
The grantee has a policy and procedure in place to obtain prior-approval for budget revision and program
plan modifications in accordance with 45 CFR Part 74.25 (RV)
Open-Ended Questions

Describe the grant management system in place that guide recipient on the terms and conditions compliance
of the award. (RV)

Describe how cost principles are applied and enforced. (RV)

What system does the recipient have in place to ensure that prior-approval is sought from donor when
necessary (RV)

Describe the grants managements system including bid selection process, oversight/management of subgrantees and file maintenance. (RV)
Performance Criteria
1.
2.
Identification and
selection of
subgrantees:
Each grantee has a
written contract that
specifies:
Verification Information
a. Selection requirements are made available to
interested subgrantees in advance.
b. Qualified, independent reviewers participate
in the evaluation and/or selection process.
Approval of reviewers includes screening for
conflicts of interest.
c. Records are maintained of the scoring/
selection process. Status of each applicant to
selection criteria from each reviewer is kept.
d. Selection decisions are reviewed by the
organization’s senior management prior to
final notice.
e. Written notices of selection or rejection are
provided to all applicants.
f. Are briefings held with unsuccessful grantees?
g. There are documents to clarify to subgrantees the requirements for receipt of
funding.
a. Nature and number of services to be provided.
b. Eligibility requirements for consumer
enrollment/visits.
c. Line item budget and/or a payment rate per
service.
Comments
Page 18
d. Nature and frequency of required narrative
reporting.
e. Data collection criteria and reporting
expectations.
f. Processes for advance or reimbursement
payments.
g. Invoicing procedures.
h. Program monitoring processes and
timeframes.
i. Quality management expectations.
There is a system to
document and track the
contract status of each
3.
sub-grantee. Complete
files are maintained that
include the following:
a. Notice of funding award.
b. Approved budget and budget modifications
c. Site visit reports include findings and
recommendations.
d. Records relating to procedural guidance or
technical assistance.
e. Fiscal reports.
f. Performance reports.
g. Sub-grantee invoices and supporting
documentation of expenditures.
h. Tracking of payments to the sub-grantee and
remaining balance of grant.
Notes:
Page 19