Part C Fiscal Management Verification
Part C: Fiscal Management Verification
Continuous Improvement Focused Monitoring System (CIFMS)
Monitoring and State Improvement Planning Division (MSIP)
Office of Special Education Programs (OSEP)
December 3, 2007
Table of Contents
I. Components of General Supervision 3
II. Verification Overview 4
III. Desk Audit Components 5
IV. Desk Audit Outline 6
V. Desk Audit 7
VI. Web Resources/Acronyms 15
Components of General Supervision
States, through a single line of authority in a lead agency, have the responsibility, under Federal law to have a system of general supervision that monitors the implementation of Part C of the Individuals with Disabilities Education Act (IDEA). This applies to all identified providers of early intervention services in the State, whether or not they receive funding under Part C. [20 U.S.C. 1435(a)(10)(A)] The system is accountable for enforcing the requirements and for ensuring continuous improvement. As stated in sections 616 and 642 of the 2004 amendments to the IDEA: "The primary focus of Federal and State monitoring activities ,,, shall be on-- (A) improving early intervention results and functional outcomes for all children with disabilities; and (B) ensuring that States meet the program requirements under this part, with a particular emphasis on those requirements that are most closely related to improving early intervention results for infants and toddlers with disabilities." An effective system of general supervision must include, at a minimum, each of the following components.
Note: This section adapted with permission from: Developing and Implementing an Effective System of General Supervision: Part C, National Center for Special Education Accountability Monitoring, March 2007.
Verification Overview
Definition:
Fiscal Management Verification is the process used to assess how effectively the lead agency implements the Part C fiscal requirements identified in the IDEA, GEPA, Federal regulations, and applicable OMB guidance.
Process:
1. Identify the components of the lead agency’s fiscal management system.
2. Determine if the lead agency’s fiscal management system contains the components necessary to ensure compliance with Part C fiscal requirements.
3. Identify barriers that may impede the lead agency’s ability to implement required fiscal controls.
Critical Elements:
In looking at the State’s fiscal management system, OSEP will focus its analysis on a number of elements, including whether the State:
1. Has mechanisms for ensuring fiscal accountability at the State level in the distribution and use of IDEA funds;
2. Implements procedures to ensure that EIS programs appropriately use IDEA funds; and
3. Has mechanisms for ensuring the timely obligation and liquidation of IDEA funds.
Desk Audit Components
In the desk audit document, the fiscal management requirements are categorized into three areas:
Interagency Financial Responsibility - How does the lead agency ensure the assignment and maintenance of interagency financial responsibility?
Fiscal Controls - How does the lead agency ensure Part C funds are used in accordance with State and Federal requirements?
Service Provision Arrangements - How does the lead agency ensure the provision of Part C services?
Desk Audit Outline
Desk Audit
|Fiscal Indicator |Related Requirements |Investigative Questions |
|I. Interagency Financial Responsibility |
|Note: It is not necessary to provide a detailed description of the State’s general accounting system (e.g., software programs, accounting codes, etc.). |
|A. Financial |20 U.S.C. 1440(b)(1)(A) - ESTABLISHING FINANCIAL RESPONSIBILITY FOR SERVICES. IN GENERAL. - The |1. What method(s) does the lead agency use to establish financial |
|Responsibility |Chief Executive Officer of a State or designee of the officer shall ensure that an interagency |responsibility for early intervention services (State statute, regulation or|
| |agreement or other mechanism for interagency coordination is in effect between each public agency |signed interagency agreements)? If the State uses “appropriate written |
| |and the designated lead agency, in order to ensure - (i) the provision of, and financial |methods” other than State statute, regulation or signed interagency |
| |responsibility for, services provided under this part; and (ii) such services are consistent with |agreements to establish financial responsibility for early intervention |
| |the requirements of section 635 and the State's application pursuant to section 637, including the |services, did the State submit these “appropriate written methods” for OSEP |
| |provision of such services during the pendency of any such dispute. |approval as policies and procedures that are part of the Part C application?|
| |20 U.S.C. 1440(b)(3) - SPECIAL RULE. The requirements of paragraph (1) may be met through- (A) |(20 U.S.C. 1435(a)(10)(C) and 1435(b)(3) and 1440(b)) |
| |State statute or regulation; (B) signed agreements between respective agency officials that clearly|2. How does the lead agency ensure its methods of establishing financial |
| |identify the responsibilities of each agency relating to the provision of services; or other |responsibility for early intervention services are current as of the |
| |appropriate written methods as determined by the Chief Executive Officer of the State or designee |application? (20 U.S.C. 1437(a)(2) and 1440) |
| |of the officer and approved by the Secretary through the review and approval of the State’s |3. How does the lead agency define the financial responsibility of each |
| |application pursuant to section 637. |agency that pays for early intervention services (consistent with State |
| | |law)? |
|B. Coordination of |34 CFR §303.522 – Identification and coordination of resources. (a) Each lead agency is responsible|1. How does the lead agency ensure the identification and coordination of |
|Resources |for – (1) The identification and coordination of all available resources for early intervention |all available resources for early intervention services within the State, |
| |services within the State, including those from Federal, State, local, and private sources; and (2)|including those from Federal, State, local and private sources? (34 CFR |
| |Updating the information on the funding sources in paragraph (a)(1) of this section, if a |§303.522(a)(1)) |
| |legislative or policy change is made under any of those sources. (b) The Federal funding sources in|2. How does the lead agency ensure the information regarding funding sources|
| |paragraph (a)(1) of this section include- (1) Title V of the Social Security Act (relating to |is updated when needed? (34 CFR §303.522(a)(2)) |
| |Maternal and Child Health); (2) Title XIX of the Social Security Act (relating to the general |3. How does the lead agency ensure coordination of resources with the |
| |Medicaid Program, and EPSDT); (3) The Head Start Act; (4) Parts B and H of the Act; (5) The |required Federal programs? (34 CFR §303.522(b)) |
| |Developmental Disabilities Assistance and Bill of Rights Act (Pub.L. 94-103); and (6) Other Federal| |
| |programs. | |
|C. State Interagency |20 U.S.C. 1441(d) - MANAGEMENT AUTHORITY: Subject to the approval of the Governor, the council may|If the lead agency uses Part C funds to support SICC functions, describe how|
|Coordinating Council Funds|prepare and approve a budget using funds under this part to conduct hearings and forums, to |the lead agency ensures that Part C funds used by the SICC are expended on |
|(Optional) |reimburse members of the council for reasonable and necessary expenses for attending council |allowable functions (e.g., conduct hearings and forums, reimburse members of|
| |meetings and performing council duties (including child care for parent representatives), to pay |the council for reasonable and necessary expenses for attending council |
| |compensation to a member of the council if the member is not employed or must forfeit wages from |meetings and performing council duties, including child care for parent |
| |other employment when performing official council business, to hire staff, and to obtain the |representatives, pay compensation to a member of the council if the member |
| |services of such professional, technical, and clerical personnel as may be necessary to carry out |is not employed or must forfeit wages from other employment when performing |
| |its functions under this part. |official council business, hire staff, and obtaining the services of such |
| | |professional, technical, and clerical personnel) as may be necessary to |
| | |carry out its function. (34 CFR §303.602) |
|D. Payor of Last Resort |20 U.S.C. 1440(a) – NONSUBSTITUTION: Funds provided under section 643 (Allocation of Funds) may |How does the lead agency ensure that Part C funds are not used to satisfy a |
| |not be used to satisfy a financial commitment for services that would have been paid for from |financial commitment for services that would have been paid by another |
| |another public or private source, including any medical program administered by the Secretary of |public or private source including any medical program administered by the |
| |Defense, but for the enactment of Part C, except that whenever considered necessary to prevent a |Secretary of Defense, but for the enactment of Part C, except that whenever |
| |delay in the receipt of appropriate early intervention services by an infant, toddler, or family in|considered necessary to prevent a delay in the receipt of appropriate early |
| |a timely fashion, funds provided under section 643 may be used to pay the provider of services |intervention services by an infant, toddler, or family in a timely fashion, |
| |pending reimbursement from the agency that has ultimate responsibility for the payment. |funds provided under Part C may be used to pay the provider of services |
| |34 CFR §303.527(a), (b), (c) - Part C funds may be used only for early intervention services that |pending reimbursement from the agency that has ultimate responsibility for |
| |an eligible child needs but is not currently entitled to under any other Federal, State, local or |the payment? (20 U.S.C. 1440 and 1437(b)(2)) |
| |private source. | |
|II. Fiscal Controls |
|Note: It is not necessary to provide a detailed description of the State’s general accounting system (e.g., software programs, accounting codes, etc.). |
|A. Fiscal Control |34 CFR §76.702 - A State and a subgrantee shall use fiscal control and fund accounting procedures |1. How does the lead agency ensure that the control of funds provided |
|Procedures |that insure proper disbursement of and accounting for Federal funds. |under 20 U.S.C. 1443, and title to property derived from those funds, will |
| |34 CFR §80.20 - (a) A State must expend and account for grant funds in accordance with State laws |be in a public agency for the uses and purposes provided by Part C and that |
| |and procedures for expending and accounting for its own funds. Fiscal control and accounting |a public agency administers such funds and property? (20 U.S.C. 1437(b)(3))|
| |procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient |2. Do the lead agency’s accounting procedures assure proper disbursement |
| |to: (1) Permit preparation of reports required by this part and the statutes authorizing the grant,|of, and accounting for, Federal Part C funds? (34 CFR §303.125) |
| |and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such |3. How does the lead agency monitor personnel time and effort to ensure |
| |funds have not been used in violation of the restrictions and prohibitions of applicable statutes; |funds are appropriately allocated to the Part C program? |
| |(b) The financial management systems of other grantees and subgrantees must meet the following | |
| |standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial | |
| |results of financially assisted activities must be made in accordance with the financial reporting | |
| |requirements of the grant or subgrant; (2) Accounting records. Grantees and subgrantees must | |
| |maintain records which adequately identify the source and application of funds provided for | |
| |financially-assisted activities. These records must contain information pertaining to grant or | |
| |subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays| |
| |or expenditures, and income; (3) Internal control. Effective control and accountability must be | |
| |maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees | |
| |and subgrantees must adequately safeguard all such property and must assure that it is used solely | |
| |for authorized purposes; (4) Budget control. Actual expenditures or outlays must be compared with | |
| |budgeted amounts for each grant or subgrant. Financial information must be related to performance | |
| |or productivity data, including the development of unit cost information whenever appropriate or | |
| |specifically required in the grant or subgrant agreement. If unit cost data are required, estimates| |
| |based on available documentation will be accepted whenever possible; (5) Allowable cost. Applicable| |
| |OMB cost principles, agency program regulations, and the terms of grant and subgrant agreements | |
| |will be followed in determining the reasonableness, allowability, and allocability of costs; (6) | |
| |Source documentation. Accounting records must be supported by such source documentation as | |
| |cancelled checks, paid bills, payrolls, time and attendance records, contract and subgrant award | |
| |documents, etc.; (7) Cash management. Procedures for minimizing the time elapsing between the | |
| |transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be | |
| |followed whenever advance payment procedures are used. Grantees must establish reasonable | |
| |procedures to ensure the receipt of reports on subgrantees’ cash balances and cash disbursements in| |
| |sufficient time to enable them to prepare complete and accurate cash transactions reports to the | |
| |awarding agency. When advances are made by letter-of-credit or electronic transfer of funds | |
| |methods, the grantee must make drawdowns as close as possible to the time of making disbursements. | |
| |Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially| |
| |to the same standards of timing and amount as apply to advances to the grantees. | |
| |20 U.S.C. 1437(b)(3) - The control of funds provided under section 643 (Allocation of Funds), and | |
| |title to property derived from those funds, will be in a public agency for the uses and purposes | |
| |provided in Part C and a public agency will administer such funds and property. | |
|B. Prohibition Against |20 U.S.C. 1437(b)(5) - Federal funds made available under section 643 (Allocation of Funds) to the |How does the State ensure that Part C funds will not be commingled with |
|Commingling |State (A) will not be commingled with State funds; and (B) will be used so as to supplement the |State funds? (34 CFR §303.123) |
| |level of State and local funds expended for infants and toddlers with disabilities and their | |
| |families and in no case to supplant those State and local funds. | |
|C. Prohibition Against |34 CFR §303.124(b) - To meet the requirement in paragraph (a) of this section, the total amount of |How does the lead agency identify and monitor the total amount of State and |
|Supplanting |State and local funds budgeted for expenditures in the current fiscal year for early intervention |local funds budgeted for early intervention expenditures? |
| |services for children eligible under this part and their families must be at least equal to the |How does the lead agency ensure that the total amount of State and local |
| |total amount of State and local funds actually expended for early intervention services for these |funds is maintained? |
| |children and their families in the most recent preceding fiscal year for which the information is | |
| |available. | |
|D. Expenditure of Funds |20 U.S.C. 1437(b)(1) - Federal funds made available under section 643 (Allocation of Funds) will be|How does the lead agency ensure that Federal funds made available under 20 |
| |expended in accordance with Part C requirements. |U.S.C. 1443 will be expended in accordance with Part C requirements? (20 |
| | |U.S.C. 1437(b)(1) and 1438) |
|E. Timely Obligation/ |34 CFR §80.23 - (a) GENERAL. Where a funding period is specified, a grantee may charge to the award|States must ensure that Part C funds are expended in accordance with Part C |
|Liquidation |only costs resulting from obligations of the funding period unless carryover of unobligated |fiscal requirements, OMB Circular A-87, and other applicable Federal |
| |balances is permitted, in which case the carryover balances may be charged for costs resulting from|requirements. |
| |obligations of the subsequent funding period. (b) Liquidation of obligations. A grantee must |How does the lead agency ensure that Part C funds are obligated and tracked |
| |liquidate all obligations incurred under the award not later than 90 days after the end of the |during the Federal funding period? |
| |funding period (or as specified in a program regulation) to coincide with the submission of the |If Part C funds not used during the first 15 months of the grant period are |
| |annual Financial Status Report (SF-269). The Federal agency may extend this deadline at the request|carried over, how does the lead agency ensure these carry over funds are |
| |of the grantee. |obligated within the 12 month Tydings period? (Note: During the first |
| | |succeeding fiscal year, pursuant to section 421(b) of the General Education |
| | |Provisions Act, amounts under a grant that are not obligated and expended |
| | |prior to the beginning of the first fiscal year shall remain available for |
| | |obligation and expenditure during such first succeeding fiscal year. (Sec. |
| | |643(e)(3)) |
| | |How does the lead agency ensure that all obligations incurred under the |
| | |award are liquidated no later than 90 days after the end of the funding |
| | |period? (EDGAR §80.23(b)) |
|F. Annual Audits |The Single Audit Act of 1984 established requirements for audits of States, local governments, and |How does the lead agency ensure Annual Audits are conducted in accordance |
| |Indian tribal governments that administer Federal financial assistance programs. Circular A-133. |with OMB requirements? |
| |Circular A-133 Subpart B, §___. 200(b) - Single audit – Non -Federal entities that expend $300,000 |How does the lead agency ensure the correction of audit findings in a timely|
| |($500,000 for fiscal years ending after December 31, 2003) or more in a year in Federal awards |manner? |
| |shall have a single audit conducted in accordance with §___. 500 except when they elect to have a | |
| |program-specific audit conducted in accordance with Subpart B, §___. 200, paragraph (c). | |
|III. Service Provision Arrangements |
|A. Service Provision |34 CFR §303.526 - Each system must include a policy pertaining to contracting or making other |How does the lead agency make arrangements with service providers to provide|
|Policies |arrangements with public or private service providers to provide early intervention services. The |early intervention services that meet State standards and are consistent |
| |policy must include - (a) A requirement that all early intervention services must meet State |with the provisions of Part C, including the contents and conditions of the |
| |standards and be consistent with the provision of this part; (b) The mechanisms that the lead |application, contract or other arrangement used? (20 U.S.C. 1435(a)(11)) |
| |agency will use in arranging for these services, including the process by which awards or other | |
| |arrangements are made; and (c) The basic requirements that must be met by any individual or | |
| |organization seeking to provide these services for the lead agency. | |
| |34 CFR §303.520(a) - GENERAL. Each lead agency is responsible for establishing State policies | |
| |related to how services to eligible children will be paid for under the State’s early intervention | |
| |program. The policies must (1) meet the requirements in paragraph (b) of 34 CFR §303.520; (2) be | |
| |reflected in the interagency agreements required in 34 CFR §303.523. | |
|B. Timely Provision of |34 CFR §303.520(c) - PROVISIONS TO ENSURE THE TIMELY PROVISION OF SERVICES. The State shall |What mechanism does the State use to ensure that services to eligible |
|Services |implement a mechanism to ensure that no services that a child is entitled to receive are delayed or|children are not delayed or denied because of disputes between agencies |
| |denied because of disputes between agencies regarding financial or other responsibilities. |regarding financial or other responsibilities? |
| |20 U.S.C. 1440(b)(2)(A) - REIMBURSEMENT FOR SERVICES BY PUBLIC AGENCY. (A) IN GENERAL- If a public |How does the lead agency ensure that if a public agency other than an |
| |agency other than an educational agency fails to provide or pay for the services pursuant to an |educational agency fails to provide or pay for a service, the child's Part C|
| |agreement required under paragraph (1), the local educational agency or State agency (as determined|service is not delayed? |
| |by the Chief Executive Officer or designee) shall provide or pay for the provision of such services|How does the lead agency obtain reimbursement for services from a public |
| |to the child. |agency that fails to provide or pay for such services? |
| |20 U.S.C. 1440(b)(2)(B) - REIMBURSEMENT FOR SERVICES BY PUBLIC AGENCY. Such local educational | |
| |agency or State agency is authorized to claim reimbursement for the services from the public agency| |
| |that failed to provide or pay for such services and such public agency shall reimburse the local | |
| |educational agency or State agency pursuant to the terms of the interagency agreement or other | |
| |mechanism required under paragraph (1). | |
|C. Reimburse-ment of Funds|34 CFR §303.528 - Each system must include a procedure for securing the timely reimbursement of |How does the lead agency ensure timely reimbursement of funds? (20 U.S.C. |
| |funds used under this part, in accordance with §303.527(b). (Payor of Last Resort) |1440(a) and 20 U.S.C. 1435(a)(12)) |
|D. System of Payments |20 U.S.C. 1432(4)(B) - Early intervention services are provided at no cost except where Federal or |If the lead agency requires parent financial participation, |
|(Optional) |State law provides for a system of payments by families, including a schedule of sliding fees. |What services does the lead agency specify are to be provided at no cost? |
| |34 CFR §303.520(b) - SPECIFIC FUNDING POLICIES. A State’s specific funding policies must (1) |Has the lead agency’s system of payments policy been approved by OSEP? |
| |specify which functions and services will be provided at no cost to all parents; (2) specify which |How does the lead agency address co-insurance, deductibles, or co-payments |
| |functions or services, if any, will be subject to a system of payments, and include-- (i) |for Part C families who have been determined unable to pay? |
| |Information about the payment system and schedule of sliding fees that will be used; and (ii) the |How does the lead agency define “inability to pay”? |
| |basis and amount of payments; and (3) include an assurance that-- (i) fees will not be charged for |How do the lead agency’s policies and procedures ensure that the inability |
| |the services that a child is otherwise entitled to receive at no cost to parents; and (ii) the |of a parent to pay for services does not deny access to needed early |
| |inability of the parents of an eligible child to pay for services will not result in the denial of |intervention services? |
| |services to the child or the child’s family; and (4) set out any fees that will be charged for |Does the lead agency (or contracted service provider) obtain written |
| |early intervention services and the basis for those fees. |parental permission to access public and private insurance? |
| |34 CFR §303.521(a) - A State may establish, consistent with 34 CFR §303.12(a)(3)(iv), a system of | |
| |payments for early intervention services, including a schedule of sliding fees. | |
| |20 U.S.C. 1435(c)(2)(A)(ii)(III) - FLEXIBILITY TO SERVE CHILDREN 3 YEARS OF AGE UNTIL ENTRANCE INTO| |
| |ELEMENTARY SCHOOL. If a State chooses to serve children 3 years of age until entrance into | |
| |elementary school, the State must ensure that annual notice to parents include possible costs | |
| |(including any fees to be charged to families as described in Sec. 632(4)(B), if any, to parents of| |
| |infants and toddlers with disabilities. | |
Web Resources
|Name |Website Address |
|A-133 Compliance Supplement – Department of Education | |
|Annual State Application - Under Part C of the Individuals with |
|Disabilities Education Act as Amended in 2004 for Federal Fiscal Year |doc |
|2007 | |
|Education Department General Administrative Regulations (EDGAR) 34 CFR | |
|Part 80 – Uniform Administrative Requirements for Grants and | |
|Cooperative Agreements to State and Local Governments | |
|Fiscal Management Verification - NECTAC Website | |
|OMB Circular A-87 - Cost Principles for State, Local, and Indian Tribal| |
|Governments | |
|Single Audit Reference Information | |
Acronyms
|CFR |Code of Federal Regulations |
|GEPA |General Education Provisions Act |
|IDEA |Individuals with Disabilities Education Act |
|OMB |Office of Management and Budget |
|USC |United States Code |
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