Timely reimbursement requests for federal grants are very important to school districts, especially for cash flow purposes. And, even though drawing down funds is only a click away, it’s critical that school districts have written policies and procedures over the draw down process. These procedures should be included in their Federal Grants Manual and should address proper segregation of duties, required supporting documentation, and retention period. Moreover, the users’ access to the Texas Education Agency’s (TEA) expenditure reporting or other federal or state agencies’ reporting system should be reviewed to prevent unauthorized access to confidential data.
Before school districts request reimbursement, understanding the underlying expenditures and the timeline of when the expenditures were incurred is key. Do the expenditures conform to the allowable activities/cost principles included in the grant agreement? Did the school district use General Fund dollars first to pay for these expenditures before requesting reimbursement? Are federal program and finance personnel working together to ensure the district is meeting all milestones and budgets?
Here are some cash management and financial reporting procedures that should be included in your Federal Grants Manual:
- The grants accountant or equivalent prepares the claim for expenditure reimbursement at least monthly. 2 CFR 200.305 Payment indicates that “non-federal entities must be authorized to submit requests for reimbursements at least monthly when electronic fund transfers are not used, and as often as they like when electronic transfers are used, in accordance with the provisions of the Electronic Fund Transfer Act.”
- Program Grants personnel should verify that the expenditure report includes only expenditures that have been obligated and liquidated in the requested reimbursement amount.
- The grants accountant, working closely with the Grant Department, should verify that the expenditure report includes costs that are on an approved budget and have been determined allowable.
- The Controller or Director of Finance reviews the financial reports for each federal grant comparing actual to budget on a monthly basis to monitor grant progress.
- The General Ledger Detail and other records that support the requests for reimbursement should be printed (paper or PDF) and attached to the reimbursement request.
- The school district’s Controller or Director of Finance approves and certifies the claim prior to submission. Certification can be delegated to the grant accountant as long as the District’s Controller or Director of Finance receives notification of the submission and is aware of the provision of the required certification.
- 2 CFR 200.415 Required certifications states that to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets, the annual and final fiscal reports or vouchers requesting payment under the agreements must include a certification, signed by an official who is authorized to legally bind the non-Federal entity, which reads as follows: “By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).”
- The approver (Controller or Director of Finance) should verify that the final expenditure report agrees to the general ledger accounts.
- Formal review is evidenced by manual or electronic signature of the approver. The preparer’s (grants accountant) initials or signatures are also encouraged.
- The accountant who is responsible for bank reconciliations should monitor the cash receipts and payment reports that agree to the reimbursement requests.
- The school district should follow the 2 CFR 200.333 Retention requirements for records which states that “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.”
The list of controls and procedures above are not an all-inclusive list but rather to be used as guidance. Policies and procedures should be tailored to the nature, size, and operation of the school district with the goal of following the federal compliance requirements.
Whitley Penn contributes to the TASBO Internal Control Tips at www.tasbo.org/IC-Tips