# Presentation: 264312

## New Fiscal ChecklistReimbursement IncomeProgram Income

## New Fiscal Checklist: Prospective, Risk-Based Focus 

- Purpose:
- Early detection of high risks to fiscal health of grantee
- Corrective Action to mitigate risks and ensure program improvement
- Audience:
- Governing Body
- Policy Council
- Grantee Senior Management
- Responsible HHS Official or Designee
- Federal Staff

## Definition of Internal Controls

- “An integral component of an organization’s
- management that provides *reasonable*
*assurance* that the following objectives are
- being achieved:
- effectiveness and efficiency of operations,
- reliability of financial reporting, and
- compliance with applicable laws and regulations.”

- Source: GAO, Standards for Internal Control in the Federal Government (November 1999)

## Program Governance covers need for Internal Controls

- 45 CFR Part 1304.50(g)(2) Grantee and delegate agencies must ensure that appropriate internal controls are established and implemented to safeguard Federal funds.

## New Fiscal Checklist: Overview

- Three areas, Sections I, II, and III
- 54 questions -- 24 in Section I, 28 in Section II, and 2 in Section III
- “Yes” or “No” answers to all questions

## New Fiscal Checklist: Overview (cont.)

- Emphasis is on internal controls and program governance
- When Section I and II are completed, reviewers are asked to assess in Section III:
- Effective control over and accountability of funds; and
- Whether the governing body has ensured that appropriate internal controls are established and implemented.

## New Fiscal Checklist: Section I

- 24 questions that serve as “indicators” designed to identify underlying fiscal problems
- No regulations are cited
- Questions, however, might have “red flag” answers that must be further evaluated
- Evidence reviewed that has raised a “red flag” should be documented

## New Fiscal Checklist: Section I (cont.)

- The 24 questions can be categorized into four groups:
- Questions  1 -  7:   Cash Analysis (Audit)
- Questions  8 -13:   Funding Issues
- Questions 14-19:   Payroll
- Questions 20-24:   Internal Controls

## New Fiscal Checklist: Questions 1-7

- Questions 1-7, Cash Analysis
- An organization must have enough cash, or assets that can be quickly converted into cash, to:
- Meet its operating needs
- Pay outstanding debts as they mature

## New Fiscal Checklist: Questions 8-13

- Questions 8-13, Funding Issues_ _
- Unexpected costs or a sudden loss of funding can severely impact cash flow
- Inadequate cash flow will eventually lead to bankruptcy, and
- The inability of the organization to continue to operate as an entity

## New Fiscal Checklist: Questions 14-19

- Questions 14-19, Payroll
- Payroll is typically an entity’s largest expense, therefore it must be evaluated
- An accurate list of employees is one of the most critical internal control elements

## New Fiscal Checklist: Questions 20-24

- Questions 20-24, Internal Controls
- The responsibility of the governing body
- GAO states, “ A reviewer, in assessing the adequacy of internal control activities, must consider:
- If proper controls have been established
- If they are sufficient in number
- The degree to which they are operating effectively”

## New Fiscal Checklist: Section II

- 28 questions where regulations are cited
- All questions have “red flag”

## 53. Grantee lacks effective control over and accountability for all grantee and /or delegate funds, property, and other assets.  [45 CFR Parts 74.21(b)(3), 92.20(b)(3)]

- New Fiscal Checklist: Section III

## 54. Governing body does not ensure that appropriate internal controls are established and implemented to safeguard funds.  [CFR Part 1304.50(g)(2)]

- New Fiscal Checklist: Section III

##    Reimbursement & Program Income

- How they are different
- How they are alike- used last
- Reporting Requirement
- 		In Application: GABI & Agency’s Line-Item Budget
- 		On SF269: USDA $in Section 12, Program Income on line 10r (addition alternative.