A National Resource to Support Excellence in Community Action

Financial Management for Federally Funded Organizations

Last Revised: Jan 5, 2017 - Initial Posting: Sep 27, 2005
Purpose

The Early Childhood Learning & Knowledge Center, ACF/DHHS, provides information to help Federal grantee agencies understand and comply with the requirement to have financial management systems that provide for timely, accurate, current and complete disclosure of financial information while providing for oversight and protection of Federal funds.

Description

Also see CAA Financial Management Resources - Expanded Listing

The Administration for Children & Families, U.S. Department of Health & Human Services, has developed a web page on Fiscal Management to assist federally funded organizations ensure compliance with Federal regulations and laws, which are useful and largely applicable for governance and management of any federal grant.

Examples are provided of common requirements that all agencies must fulfill when administering Federal programs:

  • Contract and compliance requirements must be fulfilled and grant and contract funds must be expended appropriately
  • Accounting records must be maintained
  • Assets must be safeguarded
  • Internal control systems must be adequate
  • Internal policies and procedures must be developed and implemented
  • Costs must be allocated to the correct program based upon a cost allocation plan in cases where costs are shared by programs
  • Grantees must have an annual audit

Subjects covered are:

  • Federally defined financial management system benchmarks
  • Accurate, current and complete disclosure
  • Records that support the source and application of Federal funds
  • Internal controls
  • Comparison of outlays with budget amounts
  • Cash management
  • Written procedures
  • Accounting records that are supported by source documentation
  • Audit requirements
  • Related links

ACF_HS_Monitoring_Protocol_FY17 ACF_HS_Monitoring_Protocol_FY16- The Fiscal Integrity Protocol used during federal Head Start reviews is a helpful tool to assess the strength of an organization’s fiscal operations, including fulfillment of management and governance responsibilities. The FY16 Fiscal Integrity Monitoring Protocol is organized into six performance areas designed to guide reviewers through the data collection process (Governance and Internal Controls, Use of Head Start Grant Funds, Grant Property, Compensation, and Financial Reporting). Some tips for preparing for reviews include:

  • Review fiscal status of agency
    • Audited financial statements
    • Internal controls
    • Budgeting process
    • Expenditure monitoring and reporting
  • Examine prior triennial review results to ensure progress and systems and services improvements continue
  • Improve ongoing monitoring systems

ACF's Early Childhood Learning & Knowledge Center offers Fiscal Management information and resources.

CSBG Fiscal Self-Assessment Tool - Missouri Association for Community ActionThe Missouri Association for Community Action developed a CSBG Fiscal Self-Assessment that is one section of an overall CSBG Self-Assessment Tool. This tool is a modification of the 2005 Head Start Prism tool with two sections – questions 1-23 are expected to result in negative responses and questions 24-56 are expected to result in positive answers.

Based on national findings from federal reviews in the area of Financial Management, the requirements that Head Start agencies most commonly fail to meet are:

  • Non-Profit Organizations
  • Written procedures for determining the reasonableness, allocability and allowability of costs
  • Effective control over and accountability for all funds, property, and other assets
  • Written procedures to minimize the time elapsing between the transfer of funds to the recipient from the U.S. Treasury and the issuance or redemption of checks
  • Comparison of outlays with budget amounts
  • Accounting records that are supported by source documentation
  • Secure regularly scheduled or ongoing services of a qualified fiscal officer
  • State, Local and Tribal Governments
  • Allowable costs
  • Accounting records
  • Budget control
  • Financial reporting

Important information on audits is provided in GAO Government Auditing Standards: Implementation Tool (December 2007).  This publication was created to serve as a professional requirements tool for use in implementing requirements identified by "Must" or "Should" in the Government Auditing Standards (July 2007 Revision).

Outcomes

Effective financial oversight is an element of National Goal 5: Agencies Increase Their Capacity to Achieve Results. CSBG Information Memorandum 82 (issued March 23, 2005) emphasizes that CAA boards are ultimately responsible for assuring that an agency’s funds are spent and accounted for consistently with all applicable Federal, State, and local statutes and regulations. Therefore, boards must make sure that the agency put in place and maintain fiscal controls and procedures that provide for:

  • Trained and qualified staff to manage fiscal accounts and records of the agency on a day-to-day basis;
  • Commonly accepted financial procedures for transactions, recordkeeping, and reporting such as those required by the CSBG Act, Part 74 of the Code of Federal Regulations, and OMB Circular 133;
  • Frequent reports to the board by agency fiscal staff on overall agency fiscal status, procedures, practices, and transactions;
  • Required board review and approval of all "substantial" agency fiscal transactions or commitments, as defined by statute or agency bylaws; and
  • Audits and audit reports to the board by a CPA firm independent of board member or agency staff association.
Contact

Head Start Fiscal Assistant Project Team,
Unavailable