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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