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Financial and Grants Management Institute - March 18-20, 2008 1
Documenting Cash and In-Kind
Match
Financial and Grants Management Institute - March 18-20, 2008 2
Session Objectives
1. Understand allowable, allocable, necessary & reasonable costs
2. Gather and retain proper documentation
3. Learn about types and examples of match
Financial and Grants Management Institute - March 18-20, 2008 3
Total allowable budget or expenditures incurred to operate the program and accomplish its objectives
Portion of budget or expenditures paid for with Federal funds (CNCS)
Portion of total expenditures not paid for with CNCS funds
Project Costs
Federal Share
Grantee Share
aka: match
Talking Technical: Definitions to Know
Financial and Grants Management Institute - March 18-20, 2008 4
• Gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the award
• Value of non-cash contributions provided by non-Federal third parties
• May be in the form of real property, equipment, supplies, services, and other expendable property
ProgramIncome
In-KindContributions
More Technical Talk
Financial and Grants Management Institute - March 18-20, 2008 5
Cost Principle Requirements:• OMB Circular A-21: Cost Principles for Educational Institutions• OMB Circular A-87: Cost Principles for State, Local, and Indian Tribal
Governments• OMB Circular A-122: Cost Principles for Non-Profit Organizations
Administrative Requirements:• OMB Circular A-102: Grants and Cooperative Agreements with State
and Local Governments (CNCS: § 45 CFR 2541)• OMB Circular A-110: Uniform Administrative Requirements for Grants
and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (CNCS: § 45 CFR 2543)
Audit Requirements:• OMB Circular A-133: Audits of States, Local Governments, and
Non-Profit Organizations
OMB Circulars: www.whitehouse.gov/omb/grants/grants_circulars.html CNCS Regulations: www.nationalservice.gov/about/role_impact/history.asp
What We’ve Always Known About OMB Requirements
Financial and Grants Management Institute - March 18-20, 2008 6
Federal Grant
GuidelinesUniversities
States, Local, Indian
Tribal Governments
Non-Profits Hospitals
Administrative Requirements
§ 45 CFR 2543§ 2 CFR 215
(formerly A-110)
§ 45 CFR 2541A-102
§ 45 CFR 2543
§ 2 CFR 215 (formerly A-110)
§ 45 CFR 2543
§ 2 CFR 215 (formerly A-110)
Cost Principles
§ 2 CFR 220 (formerly A-21)
§ 2 CFR 225 (formerly A-87)
§ 2 CFR 230 (formerly A-122)
§ 45 CFR 74 (HHS
regulations)
Audit Requirement
s *A-133 A-133 A-133 A-133
Notes:CFR = Code of Federal Regulations* = Organization is subject to A-133 if it expends more than $500,000 in Federal funds in its fiscal year
Effective May 11, 2004 and August 31, 2005
Revised Grant Guidelines
Financial and Grants Management Institute - March 18-20, 2008 7
To be allowable under a grant, costs must: Be reasonable and allocable for the performance of the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply to both
federally-financed and other activities of the organization Be given consistent treatment Be in accordance with Generally Accepted Accounting
Principles (GAAP) Not be included as a cost or used to meet cost sharing or
matching requirements of any other federally-financed program
Be adequately documented
Cost Principle Requirements
Allowability of Project Costs
Financial and Grants Management Institute - March 18-20, 2008 8
Cash and in-kind contributions are accepted as part of the grantee’s cost sharing or matching when contributions meet all of the following criteria:
Are verifiable from the grantee's records Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives Are allowable under the applicable OMB cost principles Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing or matching
Are provided for in the approved budget Conform to other grant provisions or OMB Circulars
Administrative Requirements
Grantee Share or Match
Financial and Grants Management Institute - March 18-20, 2008 9
• Allowable• Reasonable• Allocable• Consistently Applied
Document, Document, Document
Defining Documentation
Financial and Grants Management Institute - March 18-20, 2008 10
To be allowable under a grant, costs must: Be reasonable and allocable for the performance of
the award Conform to grant award limitations or cost principles Be consistent with policies and procedures that apply
to both federally-financed and other activities of the organization
Be given consistent treatment Be in accordance with Generally Accepted Accounting
Principles (GAAP) Not be included as a cost or used to meet cost sharing
or matching requirements of any other federally-financed program
Be adequately documented
Allowable - What does it Mean?
Financial and Grants Management Institute - March 18-20, 2008 11
A cost is reasonable if:• It does not exceed what a prudent person would do
under the circumstances at the time the decision was made to incur the cost
• Consideration should be given to:
– Whether the cost is ordinary and necessary for the operations of the organization
– The restraints or requirements imposed by generally accepted sound business practices
– Whether the individuals concerned acted with prudence
– Significant deviations from established practices which may unjustifiably increase the award costs
Reasonable - What Does it Mean?
Financial and Grants Management Institute - March 18-20, 2008 12
A cost is allocable:• Based on its relative benefits received• If it is treated consistently with other costs incurred
for the same purpose in like circumstance and if it:– It is incurred specifically for the award
– Benefits both the award and other work and can be distributed in reasonable proportion to the benefits received or
– Is necessary to the overall operation of the organization
Any cost allocable to a particular award may not be shifted to other Federal awards
to overcome funding deficiencies, or to avoid restrictions imposed by law or by the
terms of the award
Allocable - What Does it Mean?
Financial and Grants Management Institute - March 18-20, 2008 13
Grantees must be consistent in assigning costs:• Whether a direct cost or an indirect cost
• Regardless of the source of funding, i.e., federally or non-federally sponsored activities, and
• Following written cost allocation plan, as applicable
Key wording in the cost principles:• Consistent with that paid for similar work in the
organization’s other activities
• Distributed to awards and other activities in a consistent pattern
• The organization must follow a consistent, equitable procedure
• Charges must be consistent with those normally allowed in like circumstances in the organization’s non-Federally-sponsored activities
Consistent - What Does it Mean?
Financial and Grants Management Institute - March 18-20, 2008 14
Why Retain Documentation?
• To track incoming information
• To review information
• To provide historical evidence
• To provide evidence of accomplishments
• To prepare for an audit
See Forms Collection
Documentation Basics
Financial and Grants Management Institute - March 18-20, 2008 15
Physical information: • Hard copy• Soft copy: CD, flash drive, server, microfilm
Source: • Internal source• External source
Benefits supports a value, cost, or performance criteria relative to the grant
Defining Source Documentation
Financial and Grants Management Institute - March 18-20, 2008 16
Benefits
Training
Admin
Supplies
Evaluation
Contract &Consultant
Salary Travel
Member Costs
Documentation Examples
Financial and Grants Management Institute - March 18-20, 2008 17
• Signed timesheets with supervisory approval
• Quarterly payroll returns (941)
• Payroll register
• Personnel file with salary/wage information
• Employment contract
• Cancelled checks
• Direct deposit schedule
Salary
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 18
Exceptions:• State, Local and Indian Tribal
Governments must comply with requirements of § 2 CFR 225 [OMB A-87]
• Educational Institutions must comply with requirements of § 2 CFR 220 [OMB A-21]
All salaries and wages charged to grants must be supported by signed time & attendance records, i.e., timesheets
Time & Activity Reporting Summary
Financial and Grants Management Institute - March 18-20, 2008 19
• The estimates produce reasonable approximation of the activity actually performed
• Quarterly comparison is performed of actual activity to budgeted estimates
• Budget estimates are revised at least quarterly to reflect changed circumstances
§ 2 CFR 225 (formerly A-87):Budget estimates determined before services are performed do not qualify as support for expenditure, except on an interim accounting basis, provided that:
Time & Activity Reporting: State, Local, and Indian Tribal
Governments
Financial and Grants Management Institute - March 18-20, 2008 20
• The established policies of the institution * • Consistently applied• Provided that the charges for work performed
directly on sponsored agreements and for other work allocable as facilities and administrative (F&A) costs are determined and supported as defined in § 2 CFR 220
§ 2 CFR 220 (formerly A-21): Salaries, wages, and fringe benefits are allowable to the extent that the total compensation to individual employees conforms to:
* Check with your Accounting Department for your college or university requirements
Time & Activity Reporting: Educational Institutions
Financial and Grants Management Institute - March 18-20, 2008 21
§ 2 CFR 230 (formerly A-122):Reports maintained by non-profit organizations:
Must reflect an after-the-fact determination of the employee actual activity (not budgeted)
Must account for the total activity of each employee
Must be signed by the employee or supervisor having first hand knowledge
Must be prepared at least monthly and must coincide with one or more pay periods
See Forms Collection
Time & Activity Reporting:Non-Profit Organizations
Financial and Grants Management Institute - March 18-20, 2008 22
• Insurance policy• Paid invoices and receipts• Claims made against the insurance• Cost allocation plan
Benefits
Fringe benefits are allowable, provided such costs are absorbed by all organization activities in proportion to the relative
amount of time or effort actually devoted
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 23
• Authorization/reimbursement requests• Paid invoices and receipts• Per diem rates (applicable for area)• Mileage calculation• Reconciliation of advances to payments
Travel
Travel costs must not exceed charges normally allowed by the organization in its
regular operations based on the organization’s written travel policy
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 24
• Purchase orders• Packing slips• Paid receipts and invoices• Donated Supplies, i.e., in-kind
donations
Supplies
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 25
• Purchase orders• Signed agreements• Paid invoices and receipts
Contract &Consultant
Maximum Allowed by CNCS for Consultant fee is $540 per day
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 26
• Agenda• Course description, cost• Sign-in sheet• Consultant/trainer agreement• Paid invoices and receipts
Training
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 27
• Purchase orders• Signed agreement/contract• Paid invoices and receipts• Final copy of the evaluation
report
Evaluation
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 28
• Member eligibility
• Signed member contract
• Member timesheets signed by both member and supervisor
• Documented pay system
• Signed midterm and end-of-year written member evaluations, depending on the member’s term
Member Costs
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 29
• Authorized in the budget– Cost must be identifiable to the
project
• Purchase orders• Paid invoices and receipts• Packing slip
Administrative
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 30
• Grant agreement with amendments• General correspondence • Reimbursement requests• Financial Status Reports• Federal Cash Transactions Reports• Budget vs. actual reports• Financial statements• Audits• General Ledger and supporting ledgers
General
Identifying Documentation
Financial and Grants Management Institute - March 18-20, 2008 31
Exercise
In-Kind or Not?
Financial and Grants Management Institute - March 18-20, 2008 32
AmeriCorpsMatch Requirements
Financial and Grants Management Institute - March 18-20, 2008 33
New 2008 Match RequirementsSingle Overall Minimum Match
• 24% for the first 3 years of funding, and thereafter annually increases to 50% by Year 10
• Applies to 2008 new, recompete, and continuation applicants• No requirements on cash or in-kind amounts, at this time• Must still request approval to use other federal funds as
match• Must still meet minimum member living allowance• Will use standard Federal FSR starting in 2008
2008 Clarification Period• Between March 24 to April 28, 2008 applicants may revise
budgets to reflect new match requirements, if desired
AmeriCorps Match Requirements
Financial and Grants Management Institute - March 18-20, 2008 34
§ 45 CFR 2521.60(a) – Regulatory Match:• Grantees must meet minimum requirements as
shown in table below up to 50% overall match • $1 dollar for every CNCS $1 - by year 10
Year 1
Year 2
Year 3
Year 4
Year 5
Yea
r6
Year 7
Year 8
Year 9
Year
10
Overall Minimum Share
24%
24%
24%
26%
30%
34%
38%
42%
46%
50%Note: Pre-existing grantees as of September 2005 were
deemed to be in Year 3 for matching purposes.
Therefore, long term grantees would be in Year 5 based on the above chart.
Examining “Overall Match” Requirement
Financial and Grants Management Institute - March 18-20, 2008 35
Finding, Recording,Valuing &
Documenting Match
Financial and Grants Management Institute - March 18-20, 2008 36
Finding MatchCash:
• Donations• Non-Federal income• Local governments• State appropriations• Foundation grants or
corporate contributions
In-Kind Contributions:• Value of donated services and/or donated goods
Labor space vehicles
training supplies equipment
Government-wide, with few rare exceptions, Grantees cannot use other Federal funds as match
Financial and Grants Management Institute - March 18-20, 2008 37
Do not count as match -
• The value of direct community services performed by volunteers
Do count as match -
• Services that contribute to organizational functions
• Count services such as accounting, training of staff or members that are elements of the grantee’s cost allocation plan
Exception: Volunteer Match
Financial and Grants Management Institute - March 18-20, 2008 38
• Maintain adequate documentation to support amounts claimed as match
• Maintain same documentation for both CNCS Federal share and for grantee’s share
• Documentation must meet same standards as other expenditures
• Record donation and valuation of item in detail
• Enter into the general ledger as income and expenditure
• Failure to enter match contributions into general ledger requires a formal explanatory policy and separate spread sheet accountability of receipt and use
Recording In-Kind Contributions
Financial and Grants Management Institute - March 18-20, 2008 39
Statement of Financial Accounting Standards (SFAS #116) sets the standard:
• Contributed services are recognized in financial statements if services received:– Create or enhance non-financial assets,
or – Require specialized skills, are provided by
individuals possessing those skills, and would need to be purchased if not provided by donation.
Why Record In-Kind in the General Ledger?
Financial and Grants Management Institute - March 18-20, 2008 40
Enter into the general ledger as income and expenditure:
Example:A local paint store donates a professional paint sprayer with a fair market value of $550.00
$550.00 – 7250 In-Kind Expense Account (debit) $550.00 – 5250 In-Kind Income Account (credit)
Recording In-Kind Contributions
Financial and Grants Management Institute - March 18-20, 2008 41
• Use fair market price
• Consider what it would cost to obtain similar good or service
• Value of donation should be placed by the donor
• Review donation letter or form to ensure the value is reasonable
Valuing In-Kind Contributions
The IRS defines fair market value as the price that item would sell for
on the open market.
Financial and Grants Management Institute - March 18-20, 2008 42
Document in-kind contributions to show:• What service or goods were obtained• Why transaction is allowable for grant
purposes• The value of the contribution• How it is traced back to source
documentation
If audited, a grantee may be required to obtain full supporting documentation from all
donors, if not available during the audit.
Documenting In-Kind Contributions
Financial and Grants Management Institute - March 18-20, 2008 43
1. Document the basis for determining value of personal services, material, equipment, building, and land
2. Obtain written acknowledgement of the contribution including:
Name and signature of donor Date and Location of donation Detailed description of item/service Estimated value of contribution, how value
was determined, who made the determination
Was the contribution obtained with Federal funds
*** Keep a copy of the receipt in your files ***
Documenting In-Kind Contributions
Financial and Grants Management Institute - March 18-20, 2008 44
The ABCD Tutoring Program 1299 N Main Street, Suite 110, Great City, Good State 00000-1234, (800) 555-1212, Fax 321-1234
Date of Contribution
Description of Contributed Item(s) or Service
Purpose for Which Contribution Was
Made
Real or Approximate Value of Contribution
How Was Value Determined? (i.e. Actual,
appraisal, fair market value)
Who Made This Value
Determination?
Was Contribution Obtained With or
Supported By Federal Funds? (If so, indicate
source)
Name of Contributing Organization/Agency/Business/Individual:
Address of Above Contributor: Phone #:
Printed/Typed Name of Contributor’s Authorized Signee: Title:
Signature of Authorized Signee: Date:
In-Kind Contribution Form
See Forms Collection
Sample 1: In-Kind Contribution Form
Financial and Grants Management Institute - March 18-20, 2008 45
See Forms Collection
Sample 2: In-Kind Contribution Form
Financial and Grants Management Institute - March 18-20, 2008 46
• In 2007, the IRS changed the Form 990
• Revised Form 990 must be used for reporting year in 2009
• NEW Schedule M, Non-Cash Contributions:
– Requires organizations to report the aggregate of $25,000 of 24 specific categories of non-cash property an organization receives
– May require organizations to implement new recordkeeping practices
IRS Form 990 andIn-Kind Contributions
See the revised Form 990: www.irs.gov/charities
Financial and Grants Management Institute - March 18-20, 2008 47
Common Audit Findings Related to
Cash & In-Kind Match
See Forms Collection
Financial and Grants Management Institute - March 18-20, 2008 48
1. Familiarize all staff with cash and in-kind match documentation requirements
2. Establish documentation for expenditure requirements to ensure costs are: reasonable, necessary, allocable, allowable, and adhere to grant guidelines
3. Ensure supporting documentation relates directly to approved program funded by the CNCS grant
4. Maintain proper records and establish a written record retention policy
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