office of field services fiscal review process

Office of Field ServicesFiscal Review Process

Becky PenningtonSusan Szymas

February 7, 2013

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Program Fiscal Reviews

• The program fiscal review process complements the On Site Review process

• Goal: Review all LEAs within a 5-year cycle

• Program fiscal reviews have a different scope and do not replace Single Audits

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Fiscal Review ProcessSelection•Risk-based criteriaNotice•Date and required documentationOn Site Visit•Audit fiscal records•Prepare report•Require compliance plan for findings

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Risk Factors• Size of Title I Allocation• Late application or amendment submission when “Grant Funds Available”

• Deviations found on Final Expenditure Reports (FERs)

• LEAs reporting a deficit • Single Audit findings

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Risk Factors

•Low Graduation Rate•Not making proficiency targets for Reading or Mathematics

•A school on the Persistently Low Achieving (PLA) List

•And …

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Risk FactorsThe degree to which:

1. This LEA has excellent educational program and business office staff working cooperatively to manage grant programs

2. This LEA produces excellent comprehensive needs assessments and school improvement plans likely to accelerate student achievement

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Risk FactorsThe degree to which:

3. This LEA respects all of the major laws, regulations, and guidance for OFS grant programs

All risk factors are considered in identifying highest priority for fiscal reviews

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Documents RequestedPrior to Visit

• Staff list for those funded by each Consolidated Application program

• FTEs and their respective assignments • List should identify the staff and specific

funding source(s) • General ledger expenditure summary (both

payroll and non-payroll) including grant source cost centers for each grant for prior fiscal year

• General ledger expenditure detail for Title I, Part A

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Documents RequestedPrior to Visit

• Policies and Procedures for: • Cash Management, • Procurement, and• Payroll

• Inventory list of all equipment purchased with Consolidated Application funds (list needs to identify which federal program the equipment was charged to)

• General ledger account description

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Documents Made Available During Visit

• For selected employees, the following original documentation:

• Payroll summaries for selected sample for a selected pay period

• Personnel activity reports (PARs), semi-annual certifications

• Teacher certifications• Professional licenses• Evidence of criminal background checks

• Employee contracts, bargaining unit step information

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• General Ledger detail for payroll and benefit expenditures for Consolidated Application funded staff

• Final Expenditure Reports (FERs)• For selected supplies and materials:

• Invoices/Receipts• Purchase Orders/Requisitions• Duplicate checks• Travel Reimbursements forms (when applicable)

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• For selected contracted services:• Original Contracts • Bid documents• Invoices for selected services • Evidence of criminal background checks on

contracted individuals• For selected equipment purchases:

• Inventory Listing• Invoices, approvals• Physical inspection (location, use, tag

identifications)

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Scope of Program Fiscal Reviews

Staff • Provide evidence the employee is

highly qualified• Provide evidence the employee has had

criminal background screening• Teacher certificates or professional

licenses

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Policies and Procedures• Provide Board approved Policies and bylaws for

Cash Management, Payroll, and Procurement; Business office Manuals/Procedures/Internal Controls

•Narratives are not considered policies and procedures •Policies and procedures need to be on school letterhead• OFS will examine these documents and compare

them to actual LEA operations

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Cash Management System (CMS)• Copies of the LEAs cash draws from CMS and the

supporting documentation from the general ledger for each cash draw during the grant period

Payroll Expenditures• Provide a payroll summary for each employee,

indicating all the accounts the selected employee is charged to for the selected pay period

• OFS may use this information to decide if an employee should have completed a PAR or a semi-annual certification

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Payroll Expenditures (continued)•Time cards for hourly staff for the selected pay period; we compare hours worked to the hours charged to the grant •If a specified percentage of time is charged each pay period through the payroll accounting system, then we expect to see a quarterly reconciliation of the actual hours worked versus hours charged •If time cards do not clearly indicate the hours staff worked on a grant, then detailed logs will be used to define this information

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Payroll Expenditures (continued)•PARs or semi-annual certifications for all selected employees; OFS will verify the hours/FTE to the time and effort documents for accuracy•Step, level and education criteria will be compared to the bargaining agreements

• If paraprofessionals are not part of a bargaining agreement, then an LEA wage scale document will be used for the same purpose

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Budget•Provide a general ledger summary, complete with budget information•OFS compares the LEA’s board approved budget to the budget in the Consolidated Application and to actual LEA expenditures•The scope of the budget comparison is by function code, object code

• 10% rule applies to subtotal in approved function code

• Budget changes need prior approval from OFS Consultant (EDGAR 80.30)

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Scope of Program Fiscal ReviewsBudget (continued)•If two different projects for Title I, Part A have expenditures in a single fiscal year, (i.e. the grant for 2011/2012 and the grant for 2012/2013) then OFS expects to see two separate cost centers, one for each project•Expenditures should not be coded in the cost center, if they are not approved in the Consolidated Application

• Some LEAs want to track all expenses related to Title I and record them in the grant cost center which may be considered commingling of federal and local funds

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General Expenditures•Provide a detailed, non-payroll general ledger of Title I, Part A •OFS will compare actual expenditures with approved budget items in the Consolidated Application •Expenditures should be readily identified in the Consolidated Application and should be classified as they were approved in the Consolidated Application

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Final Expenditure Reports (FERs)•Provide a general ledger summary for the prior grant year (i.e. July 1, 2011 through Sept. 30, 2012) •OFS will compare the FER to the general ledger summary •The general ledger summary should match the FER •Only record expenditures that have been approved in the Consolidated Application to grant cost centers

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Scope of Program Fiscal ReviewsContracted Services•If the LEA has expenditures for purchased services, these services will be part of the expenditure test sample •OFS will review the contract between the LEA and the contractor (even PESG or Will Sub) •OFS will verify that criminal background screening has been done on contractors who have contact with children or are regularly in the school building•If purchased services are for in-house professional development and/or Community Services for Parent Activities, then agendas and sign-in sheets must be kept by the LEA

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Equipment/Inventory•An ongoing listing should be kept by the LEA for all equipment/inventory the LEA has purchased with Title I, Part A funds

• For purposes of this list, all items $100.00 or greater and a life expectancy greater than one year should be included

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Scope of Program Fiscal ReviewsEquipment/Inventory (continued)•The list should be in accordance with EDGAR (34 CFR 80 SS. 80.32) regulations, and should include:

• A description of the item (each item listed separately)• The item’s serial number (if applicable)• The LEA assigned asset number (if applicable)• The cost of the item• The location of the item• The funding source of the item• Each item should be tagged with the funding source.• Acquisition Date of the property• Use and condition of property• Disposal date and sale price

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Common Findings – 2011-12

• Semi-annual certifications and PARs:• Not completed• Not signed by employee and/or supervisor

• Criminal background checks are missing from proof of certifications, salaries, and contracts

• Expenditures are not specifically approved in the Consolidated Application

• Questioned costs• Misclassified costs

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• Lack of policies and procedures to ensure proper internal controls are in place, implemented, and properly monitored

• Written procedures (and policies) are not detailed and specific to the LEA

• LEA could not provide adequate documentation for cash draws

• LEA’s budget approved by Board does not align with LEA’s Consolidated Application

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• Inventory list of items purchased with Title I, Part A funds are not maintained

• Equipment purchased with Title I, Part A funds are not tagged with the funding source

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Common Issues with PARs and Semi-Annual Certifications

• Historical LEA non-compliance of federal requirements

• Staff performing one job all day long (one cost objective) are required to complete a semi-annual certification.

• Staff performing multiple jobs (more than one cost objective) are required to complete a PAR.

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• Cost Objective – a function, organizational subdivision,

contract, grant, or other activity for which cost data are needed and for which costs are incurred

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• PARs must be prepared at least monthly, be signed and dated by the employee, and account for the staff person’s total activity for all pay periods

• Staff members hired for a fully federally funded Title I summer school are required to have a separate certification for that time period

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Timekeeping: Decision Making Rubric

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Timekeeping: Decision Making Graphic

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Questions?

Financial UnitOffice of Field Services

Michigan Department of [email protected]

517-373-2519

office of field services fiscal review process

Documents

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