What financial records must be maintained?
Accounting records must track expenditures for each grant. Expenditure accounts should be set up to reflect the various cost categories and the books should be kept current. Supporting documentation such as cancelled checks, invoices, personnel activity reports, contracts, etc., should be retained for at least three years from the date the final financial status report is filed.
Are we required to maintain personnel activity reports?
The OMB Circulars require that compensation for personnel services charged to Federal awards, in whole or in part, be properly documented. However, the NEA has received a waiver, whereby, it no longer requires nonprofit or educational institutions to maintain personnel activity reports for grants less than $50,000 starting in fiscal year 2005. (See General Terms and Conditions for Grants and Cooperative Agreements for more specific details and a sample personnel activity report.)
Do we have to do anything if for unforeseen reasons, the grant advance will not be
immediately disbursed upon receipt?
OMB Circular A-110, Subpart C, Paragraph 22, declares that payment methods shall minimize the time elapsing between the transfer of funds from the US Treasury and issuance or redemption of checks or warrants. The Circular also specifies that recipients shall maintain advances of Federal funds in interest-bearing accounts unless certain conditions apply, for example, total receipts of less than $120,000 in Federal awards per year. NEA’s position is that cash requests must reflect expenses already incurred (reimbursement) and/or to be incurred (advance) within 30 days or less from the date the authorizing official signs the payment request form. If you find yourself in the position where an advance has been received and will not be disbursed within the next 30 days, then it should be returned to the NEA.
If we don't spend enough to meet the matching requirements, can we carry over the
remaining grant award balance and spend it under the following year's grant?
No. Each grant is separate and distinct; therefore, awards may be applied only to costs that are incurred under the grant during the grant period.
Is it permissible to borrow from either an Endowment Fund or a Cash Reserve Fund that
was established by virtue of a NEA grant?
An Endowment Fund is permanent and restricted, and no borrowing from the fund is permissible. However, if certain conditions are met, earnings and capital gains may be used for other purposes such as operations. Borrowing from a Cash Reserve Fund is permissible. However, the borrowing should be considered temporary and repayment must be made within two years. (For Challenge grants awarded between 1984 and 1993, the NEA in October 2007, reviewed the permanence restrictions imposed on these grants, and as a result of this review, the NEA is converting the terms of the grants made during these years for cash reserves and/or endowments from permanent to a term of the grant period plus 10 years after the grant end date. Note that the grantee must have been in compliance with the grant terms at the end of the 10 year period for the permanence restrictions to be removed.) (For FY 94 grants and later, restrictions on permanence ends 10 years after the grant end-date.)
We have a small staff. What can we do to provide better internal controls?
Try to segregate as many of the financial functions as possible. For income, accept only checks, not cash. For expenditures, ensure that the person who signs the checks is someone other than the person who approves the vouchers and/or prepares the checks. Try to maintain an audit trail so that at least once a quarter, someone such as a Board member, can come in and do a quick audit/review of the financial transactions. Keep records current and balance monthly. Whenever possible, have someone cross-trained.
Where can I get copies of the OMB Circulars?
Federal government publications are obtainable from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 (order desk telephone: 202-783-3238). The Circulars are also available on OMB's web page.
When is my organization required to have an audit performed in accordance with the
Single Audit Act and OMB Circular A-133?
Whenever an organization expends $500,000 or more of Federal funds in a fiscal year, it is required to have an audit performed.
We expended less than $500,000 in federal funds during the year, does that mean that we will not be audited?
An organization, while exempt from the OMB Circular A-133 audit requirements, is still required to make its records available for review or audit by appropriate officials of the federal agency, pass-through entity or Government Accounting Office.
The OIG routinely conducts a small number of audits of selected recipients of NEA funds to verify compliance with federal laws and agency regulations.
Where can I find the Catalog of Federal Domestic Assistance (CFDA) numbers?
CFDA numbers for NEA grants can be found near the back of the General Terms and Conditions for Grants and Cooperative Agreements booklet. CFDA numbers for all Federal funding can be found on the Internet at www.gsa.gov/fdac.
If selected by the NEA for audit or evaluation, what should we expect?
You will be contacted by one of NEA auditors by mail, fax or phone. Additional information may be requested by the auditor at that time to determine the scope of the audit. Any other questions that you might have can be addressed at that time. Upon completion of the audit, a report will be prepared and a letter will be sent indicating whether there are any findings and recommendations where corrective action must be taken. Your organization will be given 30 days from the date of the letter to provide a response to the recommendations.
What are some of the most common findings in NEA audits?
The three most common findings are as follows:
- The required Section 504 Self-Evaluation Workbook was not on file;
- Personnel activity reports were not maintained when required; and
- Actual expenditures were not reported on the Final Financial Status report.
Why is our organization on an alternative method of funding and what is it?
Organizations are placed on one of the alternative methods of funding if the NEA auditors determine that the organization’s financial management system is weak or if the auditors determine that the organization’s financial condition is weak. Depending on the method of payment assigned, an organization may be required to provide additional documentation or finance its grants operations with its own working capital prior to the grantee being reimbursed by the NEA. For documentation requirements on the alternative method of funding, please click the appropriate method below:
How do we get off an alternative method of funding and return to the regular method of funding?
If your organization’s fiscal systems and/or financial condition have improved since the organization was placed on the alternative method of funding, you should provide the Office of Inspector General (OIG) with a copy of the organization’s latest audited financial statements. In addition, the OIG will need a copy of your organization’s current unaudited financial statements and a copy of the organization’s budget for the coming year. Upon completion of the OIG’s review of the organization’s financial information, the Audit Followup Official will make a determination as to whether the organization will return to the regular method of funding. The information should be sent to: Tonie Jones, Inspector General, Office of Inspector General, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW, Room 601, Washington, D.C. 20506.
If you have questions on financial management, you may call the Inspector General’s Office at 202-682-5402, fax the office at 202-682-5649 or email any individual in the OIG directory.
If you have any questions about amending the scope of the grant, call the Grants and Contracts Office at 202-682-5403.
If you need grant guidelines and applications, they can be found at www.arts.gov/grants.