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Matt: Alright, aloha everyone. Thank you for joining us for today’s national ANA webinar,
“Federal Regulations and Cost Principles,” part 2 in ANA’s project implementation series.
Today’s webinar is presented by the Administration for Native Americans and the Pacific Region
Training and Technical Assistance Center. My name is Matt. I'm the guy in the brown
shirt you see there on screen. Next to me is Napua Harbottle, the Training Specialist
for the Pacific Region Training and Technical Assistance Center. Next to her is Dennis Wong.
He's the Technical Assistance Specialist. Susan White is next to Dennis, in the black
shirt. She's also a Technical Assistance Specialist. She's a veteran of ANA and Federal Grants,
and she'll actually be leading today's webinar. And then next to her, all the way on the right,
is our Regional Director, Keone Nunes. And if you'd like to learn more about the Pacific
Region Training and Technical Assistance Center, you can go to our website: www.anapacificbasin.org.
Today's national webinar is being made possible by the Administration for Native Americans.
ANA promotes self-sufficiency for Native Americans by providing discretionary grant funding for
community based projects and training and technical assistance to eligible tribes and
native organizations. And ANA's vision is that "All Native communities are thriving,"
and, you know, ANA is continually working towards that vision to make that vision statement
become true. And ANA is a part of the Administration for Children and Families, which is housed
in the Department for Health and Human Services, and all of the cost principles and regulations
we'll be going over today come from DHHS, the Department for Health and Human Services.
We have a few more webinars coming up in the month of November. On November 7, we have
part 3 of the Project Implementation Series, which will be on "Reporting." November 14
we'll have a webinar on Preparing Native Language Teachers. November 20, Grantee Government
Success Stories. And then on November 21 will be the foruht and last part in the Project
Implementation Series on Continuations and Grant Amendments. And you can find all of
those webinars on the Events page of the ANA website. And the URL to find that is there
on the screen: www.acf.hhs.gov/programs/ana/events, and you'll find links to register for all
of these webinars, as well as some other ones there on the Events page.
So, in today's webinar, we're going to be going over some regulations and cost principles
from DHHS, but here are the goals that we have for all of our participants today. The
first goal is to help current and future grantees understand the regulations that govern the
use of federal grant funds. So the webinar is not just for current grantees. Even if
you are planning on getting some type of federal grant or just want to become more familiar
with federal grant regulations and rules, then this is a good place to get that. Also,
number 2 is to equip you with a working knowledge of federal financial management regulations.
And then number 3 is to provide you with resources to evaluate the allowable costs that can be
charged to a grant, and for today's webinar, we'll be using kind of a basketball analogy
to help you understand all of the different players involved with managing a federal grant.
So, like I said, today is part 2 in the Project Implementation Series. Part 1 on Planning
& Organizing was done about two weeks ago, and that should be available as a recording
through the Resource Library on the ANA website. Part 2 is today: Regulations and Cost Principles.
And Part 3, Reporting, and part 4 is on Continuations and Grant Amendments. And at this point, I'd
like to hand it off to today's presenter, Susan White. Susan has lots -- decades -- of
experience managing federal grants, and she's really a master of the Federalese language,
and she'll be making all of these difficult concepts easy to grasp, so at this time, I'd
like to hand it off to you, Susan. It's all yours... sorry Susan, you might need to turn
your mic on.
Susan: OK, sorry you guys. I was really talking to myself there for a while. OK, but, before
we get started, why don't we let Rosia talk a little bit about some of the questions that
she had as they were implementing their new grant. So, Rosia, tell us a little bit about
your project and then why don't you tell us the questions, which they can read on the
screen, that you ran into as you began implementation.
Rosia: Talofa lava! Again, I'm Rosia Tavita-Curry, the Financial Officer consultant to the Le
Fetuao Samoan Language Center. Le Fetuao Samoan Language Center is a non-profit organization
based here in Honolulu, Hawaii. Le Fetuao received an ANA Native Language Preservation
and Maintenance Award for a three-year project, and the goal is to ensure the survival and
continuing vitality of Samoan language and culture for future generations. Mainly, the
three objectives throughout the three year project is to develop a Samoan language curriculum,
conduct teacher training certifications, and expanding sites for language classes. Currently
there is one site and classes are offered on Saturdays. So, as the Financial Officer,
the Program Manager and I work closely together to make sure that the budget costs are allowable
and in compliance with federal regulations. As we were implementing and starting off the
project, these are some questions that have come up. The first: do we have to get cost
quotations for everything we buy? We want to send an extra person on an out-of-area-trip.
How do we go about it? Can we use grant funds to purchase T-shirts for the students? And
can we purchase toilet paper for he school? It may sound like an odd question, but you
never know. So, stay tuned, and towards the end of the webinar, we'll look for... we'll
find the answers to these questions. Thank you, Susan. Fa'afetai.
Susan: OK, thanks Rosia. OK, so, as you can see, since we're using basketball, this is
Rosia's team -- or a team that we found that Matt found a picture of.
Alright, so let's get going on this. And, you know, the reason we used basketball is
because we are talking about the rules and regulations, which, you know, I find them
quite exciting, other people really don't. So, um, but it is. It's just like anything
else that we do. When we talk about, we're going to be talking about three different
rule books, alright. So in basketball you have your rules, in financial regulations
in grants we have our rules. And where those are located is they're located in the Financial
Management Regulations and they're located in the Cost Principles. Now this third book
that I have, the HHS Grants Policy Statement, why that is really helpful... because that's
like the referees' rule book, alright? And so it's really good to know what they're looking
for, and so we're going to be talking a little bit about that and how it relates. And although
we're talking about HHS, I really want to make this clear. We're talking about the Department
of Health and Human Services. You know, what we're talking about really applies to all
federal grant funds. There's a little bit of difference between the different federal
agencies, but really, if you have currently, federal awards, or if your'e looking to start
applying to federal awards, this is some of the information that you will need to know
in order to manage those awards, alright?
So, let's check out our first rule book, alright? And that's called the Financial Management
Regulations. And where you'll find that for the Department of Health and Human Services
of which ANA is housed in, is in 45 Code of Federal Regulations -- so we'll say "45 CFR."
Alright? And then for governments, such as tribes, it'll be in part 92. And for non-profit
organizations and colleges, it'll be in part 74. And I know all of you are just excited
to go out and read it. Let me give you the cliff notes on it.
It's divided into 4 different areas. The first area, subpart A, is general, and we're really
not going to speak to that much today. It includes the definitions and the administrative
information. OK, the second part is subpart B, which is the pre-award requirements; we're
only going to talk about one area there, right, and then we'll get into that in a second.
Now what we're going to spend most of our time on is subpart C. And for those of you
who are current grantees, that's the post-award requirements. This is the big one that you're
in right now, so we're going to devote quite a bit of time to that. And the final part
is after the grant, and we'll spend just a brief minute or two on that.
So let's get right into it. OK, this is the topic that I was telling you about in pre-award
conditions. And it's something that you really need to be aware of, and they're called special
restrictive conditions of awards. What that means is that if you have not complied or
if your standards are low... well, what is says here is: "a history of unsatisfactory
performance, you're financially unstable, you have poor management standards or you
haven't conformed with prior awards," right, then you'll be considered a high risk grantee.
And how we relate the to basketball, it's like getting a technical; you get thrown out
of the game. But the real point here is that if you ever hear mention of high risk, you
really need to find out what's happening, you know, what's wrong. And work with your
funding agency to find out exactly what conditions they consider you high risk and what corrective
actions you need to take. That's the important thing, right? So high risk is something to
really perk up about and find out what's going on with that, and that's covered in the pre-award
part of the regulations. Hopefully none of you will ever hear that term throughout your
life of managing grants.
Now let's get into the post-award, alright? And these are very key. These are called the
Financial Management Standards, and all of your financial systems have to meet these
standards, so this is real, real important. The first is that you have accurate and complete
disclosure of all financial activities. Well, what that is is that they have to be accurate,
and this is where the program people are so critical to finance people. You're just key
to it, because you have to tell us what to charge certain expenses to. Alright? We need
to know, especially if you have multiple funding sources. You have to, to be current, we have
to have current... finance needs to have -- and I keep saying "we" because I'm a finance person,
so bear with me on that, you guys -- but, finance needs to have current information.
That means if you go on a trip, you need to turn your travel expense report and the receipts
in right away. Alright? You need to turn any invoices that you have in to finance right
away. And then complete disclosure means that all of these financial activities have to
be in the accounting records, and, you know, where that comes into play especially is like
if you're generating program income and for your non-federal share. Alright? So it has
to be complete. The second standard is that you have to identify the source and application
of all funds. And what they're talking about here is, maybe -- and most of you have multiple
funding sources. So say that you have a language department, and you're getting funding from
the Administration for Native Americans, you're getting funding from Department of Education
-- then you also have a private foundation grant. Kay, well you can't just charge the
cost off to language, you're going to have to say, is it ANA, or should I charge it to
the Department of Education or does that go to our private foundation. And in the accounting
records, we'll track all of those separately using the chart of accounts, how they're coded.
But that's the important thing. Also, for those of you that work on multiple grants,
that means your time sheets need to reflect how many hours you're spending on each one
of those grants. So that's really important that you have a system in place that documents
that. The third standard is effective control and accountability for all assets. See you
have to safeguard the funds and any equipment or anything else that you may have that was
purchased with government funds, and how we do that is, like, with time sheets, a supervisor
will sign that an employee did work those hours. Or with purchase orders, whoever approves
the expenditure, that's, uh, the person that saying yes, this is an allowable cost and
that. And, so, remember, don't ever just blanket-sign everything, for those of you who supervise
people or can approve purchase orders, because that's a real important part of the control
system. It's why we keep blank checks locked up and things like that. And you do have to
safeguard and have the procedures in place to ensure that you're doing that. The fourth
one is that you have to compare you're actual expenditures with your budget expenditures.
Alright? On a periodic basis. Now, it doesn't specify in the regulations what that periodic
basis is. It could be monthly, it could be quarterly, it could be every six months. You're
going to hear a lot of my personal opinions in this webinar also, you guys. OK, I think
it should be monthly because, you know, if you're overspending or you're underspending
on a certain line item, you want to catch that quickly and you want to take corrective
action, so that has to be done, so make sure you have those reports.
OK, the next one is that you have to follow the cost principles, and we're going to speak
to that after these, so I'll talk about it then. The sixth one is that your accounting
records have to be supported by source documentation. Well, examples of that are your timesheets,
they're invoices, they're your travel expense reports. There has to be some type of paper
that supports each one of your expenditures. You know, kind of a rule of thumb that we
have here is that a copy of the check doesn't get filed if there isn't a piece of paper
behind it. So that's real important. And that goes for your non-federal share as well; remember
that. So you have to have those sign-in sheets if people are volunteering their time or the
receipt of goods that people have donated things to it, and all of that's very, very
important to keep throughout the life of the grant. Then the last one is that you have
to have procedures to minimize the time between when you receive funds from federal Treasury
and when you disperse those funds. So, and what that time period is -- because if you're
getting ANA funds and you're getting an advance, you're getting it through the division of
payment management, and so you have 3 days between receipt and disbursement. And I get
a lot of questions about that, you know, "can we draw down a month at a time" or "can we
draw down three months at a time." If it's an advance -- now this is for advances -- if
it's an advance, you can only have three days cash on hand. And you really want to watch
this closely because what will happen is if you do draw down excess funds, OK, your account
will be frozen, and then you have to, you know, provide information and why did you
have too much cash on hand. So be real careful about your cash management of these grants,
too. And that relate to advances. That relates to advances. Now if you're meeting all these
standards, then it's just like hitting a three-pointer; I mean, you're in good shape. You're gonna
score really, really well, alright, as you move through this game.
OK, the other thing that's addressed in the regulations is payment. OK, there's basically
three methods of payment: you know, you can get an advance, which you are allowed to do
it these are ANA funds. In fact, for most federal funds, if you meet the financial management
standards, you can request advances. Very similar to paying for your ticket to the game
in advance. Alright? If you don't meet standards, though, you could be put on reimbursement,
which means you need to spend the money first and then request reimbursement for what you
spent. Well, for a lot of non-profits and even governments, too, it's very difficult
to front the cost of a grant, so that's why the financial management standards, it's so
important that you adhere to those. The third type of payment is working capital advance,
and that is, if you can't run the grant, you can ask for working capital, and it gets liquidated
throughout the budget period. And I really haven't seen that ever put in play very often.
The Financial Manage Regulations also address the cost principles, which we're going to
talk about after we get through the Financial Management Regulations here.
OK, when can we spend the funds? What's the period of availability? Just like a shot clock,
there's only a certain amount of time that you can spend the funds for, and that's called
the budget period. So you're going to want to look t your Notice of Grant Award and see
what the budget period is. Say that you have a SEDS grant. Well, your budget period is
September 30 of 13 thru September 29 of 14. It's the only time that you can expend the
funds. What you really have to be careful of here is your cut-off dates. Like say your
pay period ends on September 30. Well, guess what? One day of that pay period has to be
charged to your next grant and the rest of the pay period is charged to your current
grant. So always watch the cut-off date, and look at your budget period, because that can
be and, in ANA's case, is different than your project period, if you have a multi-year grant.
You may have a project period for three years, but the budget period may only be for one
year, and the budget period is when the funds are available. So always watch that, especially
cut-off dates, you guys.
OK, program income. Let's talk about program income, alright? Program income, what it is
is it's any income generated by a grant-supported activity, or you earned it as a result of
the grant agreement during the grant period. Now program income is a really good thing.
Alright? In ANA's case, you know, because what it allows you to do is it allows you
to expand what you're doing. Just like, say that you sell food at one of your events and
you generate money from that, but the staff are being paid with grant funds. Well that
automatically becomes program income. And, in ANA's case, they allow it to be an additional
cost. So all of you check your Notices of Grant Award and look in box 21 and make sure
it says "Additional Costs." And the reason for that's because if it's silent on how program
income will be treated, OK, it will automatically default into what's called deduction, and
you don't want to go there, because if you generate program income, it'll reduce the
size of your grant. That's the default on program income. So that's kind of good advice
for any federal funds you get. It's that if... check to see how program income will be treated.
Even if you don't plan on getting it, you never know. And all of that's for additional.
OK? And then the third method that it can be treated as is cost sharing. So if you wanted
to say "our non-federal share will be through the program income we generate," that would
be called the cost sharing portion of it. But, again, look for program income and you
are going to have to track it. Remember, one of the financial standards was accurate, current
and complete disclosure. OK. Well, that means that you are going to have to report on any
program income that you generate. And you're going to have to keep records on it just like
all the other expenditures.
Now, in ANA's case, they look at it as gross program income. OK, I already talked about
deduction. ANA is additional cost, so check that box 21. OK, here's the really good thing
about program income that I was telling you about: if you have some activities that actually
generate program income, once your project period is over with... OK, there are no federal
requirements governing the use of that program income. So it could be a revenue stream for
you, um, to support sustainability of the organization or this project, or whatever
you need to use it for. So program income really is a good thing, but be aware of it,
track it, and report it.
Now let's talk about cost-sharing, which this is basically your non-federal share. OK, I
do need to comment on the picture, though. The half-time for our game of financial management
is Beyonce singing. Matt picked out that picture you guys. Alright? And that was his idea of
match, or who he wanted to volunteer to support his program. But all of you have a non-federal
share requirement. Alright? And there's some rules around the non-federal share. 1) It
has to be verifiable through records. We talked about that in the Financial Management Standards,
the first one: accurate, current and complete. So you're going to have to have records on
all your non-federal share, OK? You can't count it for other federal programs. Say someone
donates a computer to you, you know, and it's being used by, um, by an ANA project staff.
OK, you can't use it to meet your EPA non-federal share. It's like spending the same dollar
twice. So you treat it just like that. It has to be necessary for completion of the
project. Say that you have a language project and someone gives you a canoe, OK, for physical
activity. Probably it's not necessary for the completion of the project unless you're
going to have classes out on the water. But that's real important to make sure that it's
necessary for the completion of the project. It has to be allowable under the cost principles,
OK? One of the item costs that's not allowable under cost principles is alcohol. So if someone
donates alcohol, you can't count it as non-federal share, right? It's still not allowable. It
can't be paid for with other federal funds. Now there are certain exceptions to that,
one of them being such as 638 funds, because those lose their identity. But you can't use
federal funds unless you have approval or it's approved in the statute to match other
federal funds, alright? It has to be, um, it has to have been included in your approved
budget. Now, for those of you who have done an ANA grant application, you know how in
your budget, you had your federal share, your non-federal share, right? And it... how you
treat it is just like how you would treat any federal dollars. It might be in-kind,
but you still, you know, it still has the same requirements on it. So, and again, your
non-federal share, which, we've heard it called a million things, matching, cost-sharing,
in-kind, whatever, you know, is a legal requirement of your Notice of Grant Award, so it has to
be in accounting records, it follows everything else, all those same rules.
Mmmkay, non-federal audits. You can see here we have the commissioner. And that's kind
of like your audit; they're checking to make sure all the rules are followed, alright?
And, for an audit, the requirements of an audit is that if your tribe, your college,
your organization spends $500,000 or more in the, um, in your corporate year and whatever
the organization, college, tribe's corporate year is, you are required to do what's called
an "OMB A133" or "single audit." Alright? And you have to do that audit. That's
a requirement, and you have 9 months to get that audit done and filed with the clearinghouse.
Audits are big deals, you guys, they're important, especially if you federal funds at that level
or above, because it does go to a clearinghouse, and it is available for federal agencies to
review in addition to your cognizant agency. So, remember, you do have audit requirements
depending on your level of federal expenditures throughout the year. Now there... there is
information on budget revisions and project revisions. I'm not going to go over that now,
because that's going to be covered in the next webinar that's going to be on November
7, and that's kind of a topic all in itself, alright? ... I'm sorry, it's going to be in
the November 21 webinar. OK? You get reporting on the next webinar.
OK, let's talk about property and equipment. You can see throughout this stadium there's
lots of equipment. And how equipment is defined is a single item that has, that costs $5,000
or more and is non-expendable, OK, and has a useful life of more than 1 year. That's
equipment, alright? Now, if your own, um, organization has a lower threshold, say $1,000,
they will respect that, but the max that it can be is $5,000. And I really recommend you
be at that level, you now, because there's requirements around equipment. You can have
a subcategory, because I know a lot of administration want to have additional requirements on, say,
computers or things like that. But for the equipment, you know, I would actually, uh,
try to use the $5,000. Now if you capitalize at a lower level, then you'll have to live
at the lower level, OK? Now who has title to the equipment? Well, the grantee has title
to the equipment, alright? And how can -- this question comes up all the time -- use of the
equipment. What can it be used for? Well, it is to be used for the project that purchased
it. Whether it's, you know, even after the funding ends. So your... currently... you
would use it for that. If the funding ends and you sustained the project, which we hope
you have for all of your projects, it's used for that, OK? Well, say that that project
totally goes away. It could be used for other federally-funded activities, whether they're
currently being funded or not. So that's the use of it. And then replacement -- and this
doesn't really happen with ANA, but with a lot of other federal programs, it does, with
construction projects or those types of projects -- you need to replace like, say, a vehicle.
You can use current equipment to replace as a trade-in when you're purchasing a new vehicle.
OK, there are very specific property records that have to be kept. And it's important to
know what those are. Usually everybody keeps the description and the serial number, who
bought it, who has title to it. Put yourself down. What the cost is, you usually have that.
The acquisition date. This one I always see forgotten, and that's percent of federal participation,
alright? In most cases, it's 100 percent. But maybe it's for Department of Transportation
where there's a 20 percent, you know, where the agency has spent 20 percent or paid 20
percent. Then that would be an 80 percent. Of course, the location, even if it's at your
facilities. The use. Always update the condition on it. And then the ultimate disposition of
it, OK? And, for disposition, what the rules are, if you're getting ready to get rid of
something -- you're not going to use it as a trade-in -- if the fair market value is
less than $5,000, you can dispose of that with, um, you know, without getting additional
instructions, OK? But if the fair market value is $5,000 or more, you do need to get disposition
from whoever the funding source that gave you the funds to purchase it. You definitely
have to have, oh, physical inventory at least every two years. Go count it. You know, count
it. And document it. Don't just have someone go and say, "ya, it's still there." You need
to document it. I think that should be done every year. I think it should be done right
before audit, OK, because then they know that you're complying with this regulation. You
do have to have safeguards in place to make sure that it doesn't get stolen or damaged
or lost; that would be awful, alright? So you do need to have written procedures for
that. And, of course, adequate maintenance procedures and proper sales procedures. So
make sure you have all that stuff in place if you're purchasing any equipment. Real important
on the equipment. Things to look at.
OK, supplies. As you can see in our basketball game, we need uniforms, we need shoes, we
need basketballs. For your projects, you need supplies. Title vests with you, as a grantee,
on the supplies. Now the only time that you need to go in to get disposition on supplies
is if your project ends, the project period ends, and the value of the supplies is $5,000
or more, so that's a real key threshold to remember.
OK, procurement. I'm not going to spend a lot of time on procurement because there's
a lot of regulations, and this is one thing that came up and was one of Rosia's initial
questions. Now really what we need to look at with procurement is that, what's the goal
of procurement? It's to get the best possible good or service at the best possible price.
Just like in the draft, they're trying to get the best player, you know, you're trying
to do the same thing for procurement, and, um, one thing about that, you do need to have
written procurement procedures, alright? It's important that you have written procurement
procedures, and there are standards that have to be incorporated into those procedures.
One is you have to have an administration system. There needs to be a code of conduct.
You need to make sure you aren't buying things you don't need. Uh, they do like you to use
intergovernmental agreements whenever possible and federal surplus property whenever possible.
Alright? You can only contract the people that are going to do the job. This is real
important, and I see this missing a lot. And I see it in audits a lot. Again, that's why
this is critical. There's some real common findings in audits that I review, and one
is that they have not kept records that detail the history of procurement. It's one of the
top 3 findings, alright? That's a main one, so it's real important to keep those records
on it. And everybody usually tries to, you know, save money whenever possible, and they
go through it, but they don't document it, alright? And then you are required to have
written protest procedures, and, um, if any of you would like some sample procedures,
just contact Matt. We have some of those for you, OK? But procurement is involved. And
know that there are... you have to have written procurement procedures, you have to follow
them, and really take a look at those. OK?
There's different methods of procurement. I'm not going to go in to these, but there
are only certain approved methods for procurement, and this is big stuff, you guys: the sealed
bids, the competitive proposals, the non-competitve proposals, that's your big stuff.
OK, there, I got out of procurement fast. Now let's talk about some of the other areas
in the financial management regulations. One is progress reports and financial reports.
You can see that you have to keep track of how well you're doing, and that's from our
scoreboard. And then the financial reports show you that, um, you know, you have to keep
track of all the numbers and what they mean and that. Alright? Now that's the one that's
going to be covered in the November 7, uh, webinar, so I won't speak to it here. One
thing I do want to speak to, though is records retention. OK, you have to keep your records
for three years from the date you file your final financial status report. So that's a
key date, and you have to maintain those records. You do -- if you're subject to audit -- you
do have to have closed audits. You can't be in litigation on an audit or have an open
audit. You have to have finalized your audit, alright? So there is... now I'm not talking
about like the IRS requirements for the 7 years for personnel records or the payroll
records and that. I'm talking about your project records here. So don't be throwing your payroll
records away after three years. You'll get in trouble. OK, and then for close outs, there
are some regulations that govern close outs. 1) You do a final performance report. You
do a final financial report. You have to reconcile your cash, alright, which means that you've
only drawn down what you've spent, but make sure that you draw down what you've expended
so it's not sitting in the payment management system, OK? Because it will go away after
a certain point, and you'll never get it. The other one is that if you guys invent anything
out there, you have to file an invention disclosure report, and please send me a copy because
I've never seen one in my life, alright? And then the fifth one is, if you have any federally-owned
property, you do have to file a property report. Such as if you live by a military base and
they have, you know, they haven't given it to you, but they're letting you use something
that they have -- a bulldozer or a woodchipper (that's what one of our guys needed once)
-- you know, but they're not giving it to you, they're just letting you use it, then
you have to file a report on the federally owned property. So not so bad, huh? That's
rule book number 1. That's the Financial Management Regulations. Next we're going to go into rule
book number 2, and that's called the Cost Principles, OK?
And where those are located, OK. This tells you about where you can spend the money at
and where you can find it. They've just moved. They're called... I'm sure some of you have
heard the term "OMBA 21" or "87" or "122." They've actually moved those all over to Code
of Federal Regulations. And for educational institutions, it's part 220. For governing
bodies, it's part 225. For non-profits, it's part 230. So that's where you can find them
now, and then we're going to show you how to get there when we get down here in a little
bit. But basically there's four areas that are covered in the cost principles, alright?
Now for those of you that are program directors, just like Pat Riley manages the Heat, the
Miami Heat -- the basketball team -- you guys need to manage the costs, and it's real, real
important that you have a working knowledge of these cost principles, OK? Now, the general
principles are, they have to be necessary, alright -- so it has to be a necessary cost,
not just because we have money, alright, or it's the end of the year and we haven't spent
all our grant funds. They have to be necessary. They have to be reasonable; you may have approval
to develop a website, but if you spend $50,000 on that website, that could be determined
not reasonable, depends on what it is, alright? And so, there again, even though it's an allowable
cost, it still has to be reasonable. The third one is that you have consistent treatment
of costs. So you can't charge, you know, if everybody's in the same office, you can't
charge one program $15 a square foot and another program $5 a square foot because they don't
have as much money. There has to be consistent treatment in how you apply it. Alright? And
then, and I'm still in the general principles, you guys, the also have to be allocable. You
have to be able to allocate those costs to whoever benefits from the expense. So those
are 4 things, just under general principles, to be aware of, especially if you have approval
authority of costs. The second area that's, um, covered in the cost principles is cost
allocation. Kay, if you have a cost that benefits multiple funding sources, you need to allocate
those costs. It can't just be, "wow, we have two programs so we'll split it, even though
one program takes up 90 percent of the office space or, you know, uses 90 percent of the
resources." The key here is there has to be a basis for that cost allocation, you know,
whether it be based on like, say for the base cost for a telephone, you may want to do it
based on how many phones or handsets you have for each program, or you may want to base
it on F.T.E. -- full time employees for each program. Whatever it is, it needs to make
sense (1), but there has to be -- and this is the key word -- a basis for the cost and
how you allocate. OK, the third area covered in the cost principles was indirect cost.
Now, indirect cost is, um, you have to negotiate that with what's called your "cognizant agency."
Alright? And so, and you do that every year. And typically you'll go in for an indirect
cost when you, um, if you have a lot of different grants, you know, and they, you know, they
have costs that are common and joint and it's really hard to identify what to charge to
who, alright? But you negotiate that with a federal agency every year and then you can
charge each program whatever that cost is. It's much more complicated than that; just
remember: it has to be negotiated with the federal agency. You'll submit a proposal every
year, you'll get a negotiation agreement back, and that's what's allowable. Keep it current.
Keep it, keep it current. I cannot stress that enough. That really needs to stay current
so that you can charge it, you know, to your different funders. Right? And then the last
thing that's covered in the cost principles is selected items of cost. And each cost principle
that covers the same items, you know, it's advertising, um, you know, personnel -- it's
called compensation for personal services -- supplies, all of those. And what they do
is they tell you if it's allowable, if it's allowable with prior approval, or if it's
not allowable. Then you really need to know what the non-allowable costs are. I mean,
they're basically like alcoholic beverages, bad debts, contingency provisions, donations
(when you're making the donations), entertainment costs, fines and penalties, OK, there's a
number of them... business services for personal use. Um, so you really need to know what those
are, and no one can tell you you can spend money on it, alright? And that's the important
thing to remember. Now there's others that require prior approval, and that comes into
play when you're looking at your line items, you know, and say that you want to, um, you
need to add a line item. Well, you need to look and see if it requires prior approval,
and, if so, then you'll have to go in and request approval from your funding source.
And that's kind of the four things that are covered in our second rule book, alright?
And that's called the Cost Principles. So that goes hand-in-hand with the Financial
Management Regulations. We're almost there you guys.
OK, and the third rulebook is called the HHS Grants Policy Statement, and that's kind of
the referee's rule book, and this one is really, really good to know, even though this is for
like your grants specialist, alright? This is like knowing what they're looking for and
what they want to see, and it's just... so I think it's good as a reference. You may....
say that you were wondering about a budget modification. Well, go to the grants policy
statement, and that tells you when you have to go in for budget modifications, what your
federal grants specialist is going to say about budget modifications. So I think this
is a good supplement to help you as you move through the management of these funds. It's
basically divided into four parts, OK? Breathe easy, you guys, I'm not going to cover all
four, OK? The first one is about the grants process. Now, I found it good readying. I
don't know about you guys, but it kind of explains, from a federal perspective, the
whole grants process, alright? Part II is what I really like; it's called the "Terms
and Conditions of HHS Grant Awards," and that gives you so much insight into, you know,
what they're looking for in a modification, you know, how they define terms, what they're
looking for in that, what they're looking for when they're looking at your non-federal
share cost and things like that. That's why I really do find that to be kind of a very
interesting document to read. You know, once you've made it through the Regs and the Cost
Principles. Then the Part III and Part IV really are kind of specific to the federal
employees. So I'd say, you know, glance at I, read II, III and IV, you know, that's OK.
Alright? So there you go you guys. You've made it through all three rulebooks. That
wasn't bad, was it?
Let's go back to Rosia's questions now and see if we have some answers to that, OK? Rosia?
... There's her team...
Rosia: Hi. Talofa lava. For those of you who joined in the session or the webinar later,
later on, I'm Rosia Tavita with Le Fetuao Samoan Langauge Center, a new grantee, and,
as financial officer, these were some of the questions that came up from our project or
program manager. So, "do we have to get cost quotations for everything we buy?" In reviewing
the procurement requirements in the Financial Management Regulations, I realized that it
was based on our own financial policies and procedures and the cost of the items we were
going to buy. So for Le Fetuao and our policies, anything that costs, a single unit item that's
$100 or more, um, we ask that they provide at least three cost quotations. The second
question: "We want to send an extra person on an out-of-area trip. How do we go about
it?" We will have the funds in the travel line item; however, the trip is out-of-country
and the Cost Principles require that the organization get prior approval for all foreign travel.
The third question: "Can we use grant funds to purchase T-shirts for the students?" Kay,
the budget -- in our budget -- it includes promotional supplies, so, in assessing the
expense, the project manager, um, Elisapeta Alaimaleata (she's on our webinar), stated
that the T-shirts were for the students to wear while on field trips. As supplies are
an allowable line item in the Cost Principles and the students will wear them on field trips,
it was determined that they would be promotional and, therefore, allowable. The last question:
"Can we purchase toilet paper of the school?" Again, supplies are an allowable cost, which
would make that an expense that's allowable. Thank you! Fa'afetai.
Susan: OK, thanks Rosia. That was great. Alright. Well, we've come to the end of our webinar.
Does anybody have a question? You guys all going to manage your money perfectly? Matt,
you have a question?
Matt: I just wanted to show people how to ask a question if you have one.
Susan: Hahaha, really?
Matt: Ya, near my name you'll see that red hand icon. Just click on the Raise Hand button
and you'll enter the queue. You can either talk on your computer's microphone using the
Talk button, on the left, or you can type your question into the chatbox... Um, we have
a question from Helen Tupa'i. "Can we access the Powerpoint presentation online?" Yes,
um, you will be able to access a recording of this presentation in about a week. We need
to get it captioned, um, and then we'll post it online, and you can find that in, um, the
ANA, uh, in the ANA website in their Resource Library. And then I'll send out the actual
Powerpoint file, um, to everyone who registered for the webinar after we're done today.
OK, we have a question from Elisapeta. You want to take that, Susan?
Susan: Sure, what's you're question Elisa... peta? Elisapeta. OK, she's typing it in now,
you guys, so as soon as she gets it typed in, I'll tell you what it is. Oh, "how do
we report on in-kind office space or space?" OK, what you do on that is, what you're going
to have to find out, it depends on who you get it from. If you're getting it from a regular
landlord, alright, and they lease out other parts of the building, you can ask, just ask
them to say what the value of it would be and submit a letter to you of what the value
would be and what they're charging other people for it, and then you would just track that.
You'd have that record of it on file. Or say that you're using a community building where,
um, you know, it's built with HUD funds and they don't really lease anything. What you're
going to want to do is you're going to want to find comparables in the area -- if you
had to go out and lease it -- and document those comparables and then use that and keep
that in your file. OK? Does that answer your question? ... OK, good! OK. And we have another
question coming up... OK, "we have three days to have cash on hand. How do we prove that
we have spent the cash within three days?" Well, basically, what's going to happen in
that situation is that, at the end of each quarter, and I don't want to get too much
into reporting, you're going to have to file a report with the division of payment management,
and they're going to see -- part of that report says "current cash on hand." They'll look
at what you drew down, what your expenditures were, and what your cash balance is, alright?
And you can pretty much tell from that if you, you know, if you drew down $20,000 in
three months and you spent 15 and you got 5, you've clearly got excess cash on hand.
The other time it will be checked -- and this real important -- is if you are at the threshold
where you have to get an auditor, that's on eof the things the auditors check as they,
you know, when they're performing your audit. And so, you really don't need to prove it
to them. Just make sure you say that. And there are different ways that it gets checked:
one, through your quarterly report, and the second one if you are subject to audit when
the audit happens, alright? That's a great question. That's a great question, because
they're not going to be looking into your bank accounts, OK? ... Any other questions?
Did that answer yours, Tilia? (I don't know if I pronounced your name right). ... OK,
great. Got anything else? We good? Kay. Kay, Matt. It's all yours. Thank you so much everyone.
I know this isn't the most exciting topic, but it's really important. Trust me, it's
really, really important.
Matt: Thanks Susan. That was a really good presentation. So, thank you everyone for joining
us. Um, these are some resources that we mentioned, uh, during today's webinar. Um, so if you
want to find, you know, some, um, parts of the Code of Federal Regulations, you can go
to this website: ecfr.gov, and it should take you to a page where you can just type in the
section that you want to read, and it'll just pull it up for you. So, it's a good resource
to have on hand, and you can refer back to the sections that Susan was talking about
earlier to determine what's relevant to your project. Then the DHHS Grants Policy Statement
should have been cited on Letters of Grant Award if you've received them already. And
I know not... some of you are not, um, current ANA grantees, and so you should be able to
find that on the DHHS website. And then, um, a lot of other resources are available in
the online ANA Resource Library. You can find that on the ANA website. Try to find their
Resource Library, and the URL is here: acf.hhs.gov/programs/ana/resource-library, and there you'll find our Post Award Manual
-- it's a, you know, big PDF with all of the updated ANA rules for your Post Award training
-- and then you'll also find recordings of past webinars, including, um, the first part
in the ANA Project Implementation Series, which happened a couple weeks ago. This is
Part 2, um, and then Part 3 and 4 will be coming up in November. So we have some other
webinars happening in November, for those of you who joined us a little later. On November
7, we have Part 3 of this series that we're in right now. The next part will be on Reporting.
I know some of you, some of your questions kind of, um, would be a good segue to getting
into Part 3, so they'll be covering a lot of the ANA reporting during that part. On
November 14, um, we have a webinar on preparing Native Language teachers. November 20: Grantee
Governance Success Stories, and on November 21st, we'll have the final fourth part of
the Project Implementation Series on Continuations and Grant Amendments. Um, so be sure to sign
up for those and, once again, you can sign up for all of them at the Events page of the
ANA website. And you can see it up there: acf.hhs.gov/programs/ana/events. But um, just
find the ANA webste and click on Events.
And so if you have any more questions, you can contact our office. My name is Matt. I'm
the Outreach and Technology Specialist at the Pacific Region T/TA Center, and my contact
info is there on the screen. Um, and if you have any questions or, you know, if you have
any questions for any of our presenters today or if you want additional resources, feel
free to give me a call or email me, and I'll get back to you as soon as possible. And,
uh, thanks a lot for attending. At this time, I'm going to stop the recording and if you
could help me by filling out a survey, I'd really appreciate that.