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Introductions

Grants Fiscal Management Unit - Fiscal Monitoring

One full-time and two part-time

Starting with FY25 Single Audits (SA), spearhead review of Single Audits and Management Decision Letter (MDL) issuance and oversight

Any SA with findings (either Financial Statement or Federal Award) gets reviewed internally by team of School Finance Unit, Fiscal Monitoring and relevant Program personnel

Reimbursement Request Reviews focused on specific FRs, RFFs, FERs, etc…

Large focus on supporting documentation

On going training and example documentation

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Forward Funded (State) vs Reimbursement Based (Federal)

Advanced Revenue - State Categorical Grants & Competitives

Book all of the related/allowable Expenses
Most grants should have more Expenses than revenue
Revenues need to equal expenses at a minimum

If needed, book Unearned Revenue (7482)

Request For Funds/Fund Requests - Federal

Revenues must equal Expenses to the penny
Only request funds after expenses are recorded
Only Grant Receivable should be recorded, not Unearned Revenue

There should never be Unearned Revenue (cash on hand)
Best practice to periodically monitor 7481/7482 for anything federal

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Requesting Federal Funds Once Spending Begins

Grant Requests for Funds - 1st or 15th of every month (award specific)

Fund Request (FR) through GAINS

Scroll to bottom of the link for additional trainings

Request for Funds (RFF) through Formsite

What is it?

Requesting reimbursement from CDE for expenditures in your federal funds (Title, IDEA, etc.)

What do you need to get it done?

Must submit a General Ledger detailing the expenditures being requested
Expectation that supporting documentation is retained by the entity for all of those expenditures

Contact: GFMU - grants_fiscal@cde.state.co.us

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Trail of Fund Request Breadcrumbs

Strongly encourage use of a fund request “packet” or other method for supporting the amount requested

GL(s) must be submitted with FR
Supporting documentation must be maintained in easily retrievable manner
Reviewed during fiscal monitoring

Tie expenditures to GL

Can use as a road map to all the charges being requested

Use the technology you have

Maintain digital copies in an internal folder
Use links or paths to supporting documents
Makes data gathering more efficient when requested down the road
Especially helpful during personnel transitions

More detail in the following slides for expectations/guidance on proper supporting documentation

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Maintaining Compliant Supporting Documentation�

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Proper Grant Management Begins with a Documented Process

The Two-Pronged Approach

Policy

A guiding principle used to set direction in an organization.

Changes infrequently
States generally who, what, when, or why
Is broad and general

Procedure

A series of steps to be followed as a consistent and repetitive approach to accomplish a result.

Continuously changes and improves
States specifically who, what, when, and how

CDE recommends using titles rather than names when documenting the “Who”

Offers a detailed description of activities

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Creating or Refining a Process

Start with a defined (and documented) process - How do I …?

To ensure compliance with the federal rules around documenting internal processes, CDE recommends LEAs begin by documenting their current process at a level of detail that would describe all the steps needed from start to finish to accomplish a task (e.g. – make a purchase, document time and effort, receive and track capital assets, etc.).
Once developed, an LEA should then identify what internal controls or compliance requirements may be missing and adjust the process and/or procedure accordingly.
An LEA should develop their process to ensure it works at their entity and may choose to have more controls or be more restrictive than the federal guidance. However, an LEA must follow their internal process, so they should avoid adding steps to a process unless they are prepared to follow them.
To help facilitate this internal process documentation, CDE has compiled some rules and guidance an LEA should incorporate. An LEA will need to determine how best to fit these required elements into their documented processes.

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What Are the Federally Required Internal Processes and Procedures?

Must (required in UGG)

Time and effort (200.430)
Employee benefits (200.431)
Procurement (200.318-320)
Equipment management (200.313)
Cost Allowability (200.403-405)
Cash management & Internal Controls (200.302, 303 and 200.305)
Fraud Waste and Abuse (200.113)
Travel (200.475)
Conflicts of interest (200.318(c)), (200.112)
Accounting Policies (200.400(a)), (200.302, 303)

Should (best practice)

Record retention (200.334)
Internal monitoring (e.g., risk assessments, subrecipient review, etc.)
Program specific requirements (e.g., eligibility, matching, etc.)

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Typical Examples of Source Documentation

Employee Compensation (aka - time and effort)

Timesheets
Semi-annual certifications
Personnel Contracts
Extra Pay Timesheets
Stipend Memos

Purchase Orders/Receiving
Contracts
Pcard Statements
Invoices
Travel Reimbursement Forms

For indicating the purpose for travel
Per Diem Rates
Hotel Confirmations
MapQuest or Google Maps for Mileage
Uber Receipts
Car Rental Receipts

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Employee Compensation - What’s Required?

An employee’s compensation is just like any other cost charged to a federal award; it must be allowable (a.k.a., reasonable, necessary, and allocable) and supported by adequate documentation.
Uniform Grant Guidance (UGG):

Specifically, 2 CFR 200.430(g) Standards for Documentation of Personnel Expenses states that records must:

Be accurate, allowable, and properly allocated,
Be incorporated into the official records of the non-Federal entity,
Reasonably reflect the total activity (federal and non-federal) for which the employee is compensated,
Comply with the established accounting policies and practices of the non-Federal entity; and
Support the distribution of the employee's salary or wages among specific activities or cost objectives.

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What is a Cost Objective?

A cost objective is a program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, and capital projects.
Whether an employee works on a single cost objective or multiple cost objectives impacts the type of supporting documentation necessary for compliance.
Note, a single cost objective does not necessarily mean a single funding source (i.e., a single cost objective can be funded by multiple sources). For example:

Is a Title I teacher funded 50% Title I and 50% General Fund due to limitations on the funding available in the Title I award?

Is a Title I teacher funded 50% Title I and 50% General Fund because 50% of their duties are not allowable on the Title I award?

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Employee Compensation - How to Document?

Current regulations allow for flexibility in meeting the requirements at 2 CFR 200.430(g)
The two main historical methods of time and effort reporting are still compliant and frequently used, so CDE will focus on those two:

Semi-Annual Certifications - used when an employee works solely on a single cost objective
Personnel Activity Reports (PAR) - most commonly called timesheets, these are used when an employee works on multiple activities or cost objectives

The main difference between the methods is how often they must be completed.

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Employee Compensation - Semi-Annual Certification

Semi-annual certifications can only be used when an employee works on a single award or cost objective (i.e., it cannot be used for multiple cost objectives)

Must be prepared at least semiannually;
Typically includes signatures (employee and/or supervisory official with direct knowledge of work performed);
Must account for total work activity; and
Must reflect after-the-fact distribution of actual activity

Reminder, a single cost objective does not necessarily mean a single funding source
An example semi-annual certification can be found on CDE’s webpage

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Employee Compensation - Personnel Activity Report (PAR)

PARs can be used when an employee works on multiple activities or cost objectives

Typically prepared monthly but must coincide with one or more pay periods;
Appropriate approvals (e.g., signatures by employee, supervisor, etc.);
Must account for total work activity; and
Must reflect after-the-fact distribution of actual activity

Note, a PAR can be used in lieu of a semi-annual certification but not the other way around
An example PAR can be found on CDE’s webpage

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Application of Cost Objective - Examples

Single Cost Objective (may use a semi-annual certification or a PAR)

Dedicated SPED teacher working 100% of time on SPED duties.
Teacher working 100% of time on basic education as part of a schoolwide program
A supplemental math teacher serving low-achieving students funded 50% Title I, Part A funds/50% State compensatory education funds (fully allocable under Title I, Part A)
Extra duty stipend paid from federal funds (separate and distinct contracts)

Multiple Cost Objective (must use a PAR and cannot use a semi-annual certification)

A SPED teacher who also spends some of their time as a General Reading Interventionist
A PERA hired for IDEA support 4.0 hours as well as 1.5 hours of recess duty, crossing guard duty
Extra duty stipend paid from federal funds (included in base contract)

Note, see additional examples at Time and Effort Requirements and Standards.

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What about Budget to Actual adjustments?

Charges to federal awards for salaries and wages must:

Reflect actual time worked
Be supported by records that accurately reflect the work performed

Many entities initially record employee compensation expenditures based on budget estimates, but time actually worked often differs from what is budgeted
Ideally, time actually worked should be compared to payroll records:

Any variances over 10% should be adjusted in the payroll records on at least a quarterly basis to reflect actual time worked

All variances must be adjusted by year end to ensure compliance with federal requirements
Note, this Budget to Actual analysis applies to all of the federal expenditures … not just employee compensation

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Procurement - What’s Required?

Documented Procedures – purchase cycle

Federal guidance has specific requirements (e.g., purchase thresholds, segregation of duties, approvals, etc.)

Typical support for transactions (specific to school)

Should follow the school’s internal policy/procedures. Some typical items may include:

Purchase Orders – based on dollar amounts
Approvals – departments, dollar levels
Invoices – approvals to pay, specific cost objective(s)
Receiving documents – any tagging required

Supported by strong internal controls
Document any allowed exceptions to internal rules�

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Capital Property and Equipment - What’s Required?

Documented Procedures – receiving and inventory cycle

Federal guidance has specific requirements (e.g., capital threshold defined, receiving and inventory process, any required tagging, adjustment to records, etc.)
Federal equipment threshold is $10K but entities may have lower thresholds - make sure this is defined in your policy

Physical inventory conducted at least every two years

Results reconciled to property records

Specific items required by federal guidance for tracking

Description and serial number or other identification number
Source of funding for the property, including FAIN# (Federal Award Identification Number); and ALN#
Title owner/holder, acquisition date & cost, % for federal program
Location, use and condition of property
Disposition data including the date of disposal and sale price of the property, federal release of title/approval to dispose

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What Happens When Property and Equipment Are No Longer Needed?

Equipment must be used by the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award.

Includes the requirement to track mentioned previously
If equipment is being replaced for the same award, the proceeds from any sale or trade-in may be used to offset the cost of the replacement

When the item is no longer needed by that program, first look to other activities that might use it
Any disposition rules apply when the Fair Market Value of the equipment at the time of disposition exceeds $10K
Step by step analysis detailed on the CDE website
Note, records retention rules kick in upon final disposition (3 years minimum)

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Projects/Construction - What’s Required

Best to avoid funding projects with federal funds so as to avoid the large number of additional requirements as highlighted on the next few slides.

Not common in USDE grants until ESSER but compliance requirements have lasting effects
Really tied in closely with Procurement process

Some projects meet the definition of construction found at 34 CFR 77.1(c), which will trigger additional compliance requirements at 34 CFR 75.600-75.618
Start with Appendix II in UGG for potential clauses - this dictates which rules come into play (e.g. Davis-Bacon and Related Acts) throughout the funded activity starting with the contract/purchasing document

Davis-Bacon and Related Acts (DBRA) typically takes center stage. This means ensuring laborers are paid prevailing wages (possibly higher project costs)

Rules apply if contract:

Exceeds $2,000
Is federally financed (in whole or in part)
Is for the construction, alteration, or repair (including painting and decorating) of public buildings and public works
Involves the employment of mechanics or laborers

Cannot split-fund different phases or purchases of a project in an attempt to avoid DBRA.

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Projects/Construction - Common Pitfalls

CDE has noted significant noncompliance with Davis-Bacon requirements

LEAs must:

Collect and review weekly certified payrolls - looking for assurance of prevailing wage being paid
Conduct on-site reviews for required wage notifications and Davis-Bacon poster

Contract Clauses

Ensure applicable Appendix II clauses are included
Always review the rules prior to drafting any contracts, purchase orders, etc.

Issuing addendums inherently becomes a much higher obstacle to overcome

Notice of Federal Interest

An administrative filing that is commonly overlooked
County departments may have standard forms/language
See additional guidance for sample language

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But … For How Long?

Most federal awards must comply with the requirement of retaining supporting documentation for a minimum of 3 years beyond the final financial report.

Entities receiving SLFRF funds must comply with the US Treasury rules requiring records to be retained for a minimum of 5 years after all funds have been expended or returned.

If there is any litigation or audit at the expiration of the record retention time period, those records must be retained until final resolution.

A good best practice is to utilize the longest period applicable to avoid potential confusion down the road.

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Indirect Costs, Allowability & Resources�

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Indirect Cost Guidance

The indirect cost rate (ICR) is calculated by CDE based on financial data pipeline.

Every entity receives Restricted Rate and Unrestricted Rate
Allowable rate depends on award (ESSER allowed unrestricted, training caps at 8%)

Indirect costs (IDC) represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the entity

Designed to offset expenditures already incurred by the entity

Must have direct expenditures incurred and posted to the grant PRIOR to applying the ICR
Extraordinary or distorting items such as equipment or capital expenditures must be removed before applying the ICR
Certain contracted services are distorting in nature and the ICR must only be applied against the first $50K of costs associated with these contracts
Typically not allowed on any state award administered through CDE.
ICR loses its ‘strings’ when reimbursed. Once the LEA receives reimbursement for its indirect costs, those funds can be used for any purpose; they do not have to be spent on the award on which they were earned.
Best practice to review and reconcile at least quarterly (Rev=Exp)

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The Mathematics of Allowability

Allowable = reasonable + necessary + allocable

Reasonable (200.404)

Would a prudent person consider the cost and nature of the item to be ordinary and necessary?

Allocable (200.405)

Cost assignable in accordance with relative benefit received

Necessary

Required for the proper performance of the award

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Compliance - Common Issues Related to Allowable Costs

Food - very specific scenarios in which ED sees food as an allowable use of federal funds

Taxes - make use of available tax exemptions (200.470)

Personal benefit - be careful with perceived benefits (e.g., incentives/gifts)

Conflict with internal policies (e.g., travel normally charged to non federal funds?)

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Additional Grant Resources�

Chart of Accounts: http://www.cde.state.co.us/cdefinance/sfcoa
Grants Fiscal: https://www.cde.state.co.us/cdefisgrant
Indirect Rates: https://www.cde.state.co.us/cdefinance/icrc
Request for Funds: https://www.cde.state.co.us/cdefisgrant/requestforfundsforms (Formsite submissions)
Federal Regulation 2 CFR 200: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200?toc=1
EDGAR Regulation: https://www.ecfr.gov/current/title-34
Related School Finance Trainings: http://www.cde.state.co.us/cdefinance/upcomingschoolfinancetownhallsandtrainings
Colorado Revised Statutes: https://leg.colorado.gov/agencies/office-legislative-legal-services/colorado-revised-statutes
Colorado Office of the State Controller Fiscal Rules: https://osc.colorado.gov/financial-operations/fiscal-rules-procedures/fiscal-rules
CDE Grants Fiscal Resources: https://www.cde.state.co.us/cdefisgrant/webinarstrainingsguidance
GAINS: https://www.cde.state.co.us/idm/gains
Indirect Cost Guidance: https://www.cde.state.co.us/cdefisgrant/idcusesrequirements and 2 CFR 200.1 Modified Total Direct Cost (MTDC)
Federal GAL Additional Regulations to review: http://www.cde.state.co.us/cdefisgrant/federalattachments

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Grants Fiscal Contacts

Jennifer Austin

Grants Fiscal Management Director