Characteristics of an Effective Financial Management System

Characteristics of an Effective Financial Management System

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10. Internal Controls

1. Regulatory Requirements

9. Reporting

8. Matching Requirements

and In-Kind Contributions

Effective Financial Management

7. Time & Activity

Documentation

6. Budget Controls

2. Written Policies and Procedures

5. Efficient Accounting

System

3. Documentation

of Expenses

1 4. Managing

42 Cash

Regulatory Requirements

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OMB Circular Requirements

State Requirements Federal Grant Provisions Award Letter

Program

412

OMB Circulars

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Type of Institution

Cost Principles

Administrative Requirements

Audit Requirements

State and Local OMB Circular A-87 "Common Rule"

A-133

Governments

A-102

Non Profit Organizations

OMB Circular A122

OMB Circular A110

1 Colleges and

Universities

OMB Circular A-21 OMB Circular A110

2 Cost Circulars can be found at:

4

A-133 A-133

Written Policies and Procedures 0011 0010 1010 1101 0001 0100 1011

? Organization operates within a written set of policies and procedures.

? All staff are familiar with policies and procedures.

? Organizational policies and procedures are up-

1 to-date.

? Policies and procedures incorporate grant

42 provisions.

Documentation of Expenses

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? All staff are familiar with documentation requirements for grants.

? All expenses have supporting documentation that directly relates to expense funded under the grant.

1 ? Organization has proper record retention policy.

? Documentation supports expenditure

2 requirements: reasonableness, necessity,

allocability, allowability, and adherence to grant

4 guidelines.

Managing Cash

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? Organization has adequate cash to meet obligations.

? Organization is requesting funds on a regular basis.

? Advance requests (if used) are timed so funds

1 are spent within three days for grantee or thirty

days for subgrantees.

2 ? Organization performs monthly bank

4 reconciliations with financial records.

Efficient Accounting System ?

The Accounting System must be capable of:

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? Distinguishing grant verses non-grant related expenditures.

? Identifying costs by program year.

? Identifying costs by budget category.

? Differentiating between direct and indirect costs (administrative costs).

? Accounting for each award/grant separately.

? Maintaining Federal/nonFederal matching funds separately from grant funds.

? Recording in-kind contributions as both revenues and expenses.

1 ? Allowing management to easily obtain financial reports at both the summary or 2 detailed levels. ? Correlating accounting

information and documents

4to financial reports

submitted to the granting agency.

Budget Controls

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? A properly approved budget is a financial blueprint to help an organization meet its goals and objectives.

? A properly approved budget is a tool to help ensure an

? ? ? ?

organization is meeting matching requirements.

An organization should periodically review budget to actual expenses.

1 An organization should assure budget changes are properly

approved.

2 An organization should review movements between line items

and verify if they are within provisions and/or guidelines.

Budget changes should be approved by the awarding agencies if they are: changes in scope, objectives or goals of the program;

4 additional sub-grants or contracts; or line item changes greater

than the established percentage of the grant award.

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