Nonprofit Financial Management - Florida Non-Profit Housing, Inc.

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10 Νοε 2013 (πριν από 3 χρόνια και 8 μήνες)

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11/10/2013

Presented by David McQuay, Jr.,
CPA

1

Non
-
Profit Financial
Management

Florida Non
-
profit Housing, Inc.

Self
-
help Housing

Conference

11/10/2013

Presented by David McQuay, Jr.,
CPA

2

Vision Statement


To improve the agency’s financial
management and reporting efficiency.
(rowing harder does not help if the boat is
headed in the wrong direction)



To identify types of risks and procedures to
minimize risks. (problem
-
solving is finding
ways to get you from where you are to where
you want to be)


11/10/2013

Presented by David McQuay, Jr.,
CPA

3

Goals and Objectives


Improving nonprofit financial management



Understanding the risk assessment process



Understanding financial statements

11/10/2013

Presented by David McQuay, Jr.,
CPA

4

Nonprofit Financial Management


(1) Accurate, current and complete
disclosure of the financial results of each
program in accordance with the applicable
reporting requirements.


(2) Records that identify adequately the
source and application of funds for each
program activity.


Financial management systems shall provide
for the following

11/10/2013

Presented by David McQuay, Jr.,
CPA

5

Nonprofit Financial Management


(3) Effective control over and accountability
for all funds, property and other assets. All
such assets shall be adequately safeguard
and assure they are used solely for
authorized purposes.


Financial management systems shall provide
for the following

11/10/2013

Presented by David McQuay, Jr.,
CPA

6

Nonprofit Financial Management


(4) Comparison of expenditures with budget
amounts for each award. Whenever
appropriate, financial information should be
related to performance and unit cost data.


(5) Written cash management procedures



Financial management systems shall provide
for the following

11/10/2013

Presented by David McQuay, Jr.,
CPA

7

Nonprofit Financial Management


(6) Written accounting procedures to assure
compliance with grant award and other laws


(7) Accounting records including cost
accounting records that are supported by
source documentation.


Financial management systems shall provide
for the following

11/10/2013

Presented by David McQuay, Jr.,
CPA

8

Nonprofit Financial Management


Transactions are properly recorded and
accounted for to: (
i
) Permit the preparation of
reliable financial statements and Federal
reports; (ii) Maintain accountability over
assets; and (iii) Demonstrate compliance with
laws, regulations, and other compliance
requirements;
.

The objectives of internal control pertaining to the
compliance requirements for Federal programs (Internal
Control Over Federal Programs), as found in
§
____.105 of
OMB Circular A
-
133, are as follows:

11/10/2013

Presented by David McQuay, Jr.,
CPA

9

Nonprofit Financial Management


Financial transactions must be authorized,
classified, executed and recorded in
compliance with program objective.


Funds, property, and other assets are
safeguarded against loss from unauthorized
use or disposition.


Management must communicate the above
criteria to employees, board of directors and
grantors.

11/10/2013

Presented by David McQuay, Jr.,
CPA

10

How Did We Get Here?


The grant application
--
RD

§

1944.410
processing pre
-
applications, applications, and
completing grant dockets.


Provide a detailed proposal of its goals including a
list of other activities the applicant is engaged in
and expects to continue, and a statement as to
other sources of funding and whether it will have
sufficient funds to assure continued operation of
the other activities for at least the period of the
agreement.


11/10/2013

Presented by David McQuay, Jr.,
CPA

11

Why Implement Criteria?


RD instruction 1944
-
I exhibit A
paragraph (e)(3).


(3) grant termination will be based on
the following:



(I)

failure to establish an accounting
system acceptable to rural
development.


11/10/2013

Presented by David McQuay, Jr.,
CPA

12

Available Options


Accounting systems that are easy to
maintain (cost vs. Benefit)


Well developed budgets (forecast) plans


Well defined financial policies and
procedures


Well defined personnel policies and
procedures



11/10/2013

Presented by David McQuay, Jr.,
CPA

13

Recommendations


Procedures to communicate, evaluate and
monitor


Budget vs. Actual reporting


Monthly reporting to management and
board


Reconciling grantee reports to financial
records


11/10/2013

Presented by David McQuay, Jr.,
CPA

14

What to Do Next?


Review grantee regulations and guidance


RD instruction 1944
-
I



Administrative requirements OMB A
-
110


Cost principles OMB A
-
122


Grantee audit requirements OMB A
-
133


Review adequacy of


Accounting systems


Written policies and procedures

11/10/2013

Presented by David McQuay, Jr.,
CPA

15

Grantee’s Fiduciary Roles


Self
-
help grantee’s fiduciary
responsibilities


RD instruction 1902
-
A

PART 1902
-

SUPERVISED BANK ACCOUNTS


11/10/2013

Presented by David McQuay, Jr.,
CPA

16

How Did We Get Here?


§
1944.425
handling and accounting for
borrower loan funds
.


The extent of grantees involvement will
depend on the experience of the
grantee and the amount of authority
delegated to them by the district director
in accordance with
§

1924.6(c).

11/10/2013

Presented by David McQuay, Jr.,
CPA

17

What is the criteria?


(1) The grantee acts in the same capacity as
a construction manager in the group
Purchase of material and services.



(2) The grantee has an adequate
bookkeeping system approved by the District
Director to assure that funds in each RH
account are properly distributed and
maintained.


11/10/2013

Presented by David McQuay, Jr.,
CPA

18

What Is the Criteria?


(3) The grantee receives no compensation in
the way of profit or overhead for this service
and all discounts and rebates received in
connection with the purchase of materials or
services are passed on to the participating
families.


(4) The grantee has a record
-
keeping system
which shows that the costs of the materials
and services were prorated to each
borrower's account in relation to the actual
material and service used by each borrower.



11/10/2013

Presented by David McQuay, Jr.,
CPA

19

Types of Activities


1902.8 authority to establish supervised bank
accounts, deposit loan checks and other
funds, countersign checks, close accounts,
and execute all forms in connection with
supervised bank account transactions.


1902.9

deposits.


1902.10

withdrawals


1902.14

reconciliation of accounts


1902.15

closing accounts


11/10/2013

Presented by David McQuay, Jr.,
CPA

20

Recommendation


What form of accounting system to use?


Manual versus automated


Record retention


Identify other criteria and action items

11/10/2013

Presented by David McQuay, Jr.,
CPA

21

Cost Allocation Plans


Rural development guidance
§

1944.410
processing pre
-
applications, applications,
and completing grant dockets

11/10/2013

Presented by David McQuay, Jr.,
CPA

22

How Did We Get Here?


(A) (8) A list of other activities the
applicant is engaged in and expects to
continue, and a statement as to other
sources of funding and whether it will have
sufficient funds to assure continued
operation of the other activities for at least
the period of the agreement

11/10/2013

Presented by David McQuay, Jr.,
CPA

23

What Is Criteria



If multi
-
funded, its cost allocation plan or indirect
cost rate must be part of the pre
-
application.



(E) (8) indirect or direct cost policy and proposed
indirect cost rate developed in accordance with 7
CFR part 3015 and part 3016.Form SF

424,
‘‘application for federal assistance.’’


11/10/2013

Presented by David McQuay, Jr.,
CPA

24

Vocabulary


Indirect cost


Direct cost


Cost allocation plan


Indirect cost proposal


Administrative cost


Cost policy statement

11/10/2013

Presented by David McQuay, Jr.,
CPA

25

Definitions




"Indirect Costs"

are those costs which are
not readily identifiable with a particular cost
objective but nevertheless are necessary to
the general operation of a non
-
profit
organization and the conduct of the activities
it performs. The cost of executive salaries,
payroll, accounting, personnel, depreciation,
general telephone expenses, general travel
and supplies expenses are examples of
expenses usually considered as indirect
costs.




11/10/2013

Presented by David McQuay, Jr.,
CPA

26

Definitions




"Direct Costs"

are those costs that can be
specifically identified with a particular cost
objective. For example, salaries, fringe benefits
and travel of a project director who is working
100% of the time on a DOL grant/contract are
direct costs. Some non
-
profit organizations also
classify as direct costs common or joint costs
that can be readily assignable (allocated) to cost
objectives, e.g., occupancy costs are allocated
to a DOL grant/contract as direct costs based
on square feet of space occupied.

11/10/2013

Presented by David McQuay, Jr.,
CPA

27

Definitions


Cost Allocation Plan"

is a document that identifies,
accumulates, and distributes allowable direct and
indirect costs to cost objectives. The plan also
identifies the allocation methods used for
distribution to cost objectives on the basis of
relative benefits received. The cost objectives
include specific grants, cooperative agreements,
contracts, programs, projects, titles/cost
categories within a grant, a product or service
provided to cost centers, or other activities of a
non
-
profit organization, e.g. fund raising, services
to members.

11/10/2013

Presented by David McQuay, Jr.,
CPA

28

Definitions


"Indirect Cost Proposal"

means the
documentation prepared by an organization
to substantiate its claim for the
reimbursement of indirect costs. This
proposal provides the basis for the review
and negotiation leading to the establishment
of an organization's indirect cost rate, i.e.,
ratio between total indirect expenses and
some financial base.

11/10/2013

Presented by David McQuay, Jr.,
CPA

29

Definitions




"Administrative Costs"

consists of all
direct

and
indirect

costs associated with
the management of an organization's
programs. Non
-
profit organizations need
to refer to their grant/contract terms and
conditions for the applicable definition of
"Administrative Costs" and any related
limitations.


11/10/2013

Presented by David McQuay, Jr.,
CPA

30

Definitions




"Cost Policy Statement"

is a
document that identifies a non
-
profit
organization's policy on the costs that it
considers direct, and the costs it
considers indirect and the rationale to
support those costs.

11/10/2013

Presented by David McQuay, Jr.,
CPA

31

Available Options


Cost allocation plan


Indirect cost proposal


Documentation for both

11/10/2013

Presented by David McQuay, Jr.,
CPA

32

Recommendations


Recommended strategies


Expected Results under each methods
proposed


What to do next


Identify action items

11/10/2013

Presented by David McQuay, Jr.,
CPA

33

The End


Questions


Reference materials and web site links


What to do next


Action items