Chicago Department of Family Services Head Start

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1 Chicago Department of Family Services Head Start Fiscal Integrity Protocol Records and Report Review 1 2 Fiscal Integrity Introduction Fiscal Integrity (FIS) assesses a grantee s compliance with Head Start Performance Standards and Federal cost principle requirements to ensure that programs have sound internal controls, strong reporting systems, and use Federal funds for intended purposes. By monitoring Fiscal Integrity, the OHS is better able to ensure that the overarching goals of Head Start are met through programs that are properly using federal funds to best support children and families. Key Indicators of Program Performance Financial Management Systems The program implements a sound financial system that meets the required Federal standards for financial reporting, accounting records, internal control, budget control, compliance with cost principles, cash management, and administrative costs. 3 1

2 4 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. a. FISCAL MANUAL I. Fiscal Manual including the following policies and procedures for the Head Start/Early Head Start programs Financial Management System: Financial Reports Accounting and Source Records, including retention and access Budget Control: including Budget Development and Amendment Internal Controls: that addresses the five components of internal controls as described in the Integrated Framework (COSO) Report) 1). Control Environment, 2). Risk Assessment, 3). Control Activities, 4). Information and Communication and 5). Monitoring Activities), published by the Committee of Sponsoring Organizations of the Treadway Commission The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. a. FISCAL MANUAL I. Fiscal Manual including the following policies and procedures for the Head Start/Early Head Start programs Financial Management System: Cash Management: including receipt and disbursement of cash, use of credit cards, approving transactions for payments, drawdowns from the Payment Management System, payment of staff leave accruals (if applicable) and payments to delegate agencies Allowability, allocability, and reasonableness of costs: federal and non-federal share, including administrative costs. Chart of Accounts (Account Codes): Program, Program, Cost Categories, Functional Allocation, Revenue (Receipts, Disbursements & Credits), Outlay/Expenditure (Expenses & Obligations) Assets, Liabilities and Unallowable The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. a. FISCAL MANUAL I. Fiscal Manual including the following policies and procedures for the Head Start/Early Head Start programs Financial Management System: Procurements: including Code of Conduct, Contract Administration and Equipment Disposal Compensation Policy: that addresses salary and fringe benefits, including incentive and bonus pay (if applicable) Payroll Policies and Procedures: including recording time and approval (Time Sheet/Other, Personnel Activities Reports (Cost Allocation)), payroll approval by responsible official Journal Entry Policy and Procedures: including approvals 2

3 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. a. FISCAL MANUAL I. Fiscal Manual including the following policies and procedures for the Head Start/Early Head Start programs Financial Management System: Documenting non-federal share (Cash and In-kind): including procedures for valuing goods, services and space. Obligating costs: including posting to the accounting system Equipment Management procedures: including records, inventory and reconciliation The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. b. RECORDS (current and prior year records) c. REPORTS (current and prior year records) I. Agency Audits, including Management Letter, if I. applicable Monitoring reports to the Policy II. Others including; Council/Committee and i. Claims for reimbursement, including support documentation, ii. Bank statements iii. Advance payment requests records, if applicable iv. Corrective Action Plans (CAP), including records that support the activities included in the (CAP) as required by OMB A (a & c) v. Summary Schedule as required by OMB A (a & b) vi. Corrective Action Plan Monitoring Records Governing Body on Progress in implementing the Corrective Action Plan The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. d. RECORDS (current and prior year records) I. Delegate Agencies Listing (Grantee) II. Delegate Contract III. Procedures for reviewing credit card charges/retail store credit charges, if applicable. (Section 1.1.a.I) IV. Records of correspondence and notices from the Internal Revenue Service, State Income Tax, State Tax Withholding, Workers Compensation and Unemployment Compensation that revealed unresolved issues with late payroll taxes or late insurance premiums, if applicable.. V. Records of follow-ups by the grantee on audit findings VI. Records of accrued leave and funds used to cover accrued leave, if applicable VII. Records of recommendations discussed with the delegate agencies by the grantee regarding audits and re-imbursements/advance payments 3

4 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. d. RECORDS (current and prior year records) VIII.Records to support changes to staffing and financial management systems as a result of the most recent audit, including i. Revised fiscal policies and procedures, ii. Staff trainings iii. New staff iv. Changes to the current or new accounting system v. Changes to the organizational structure, if applicable IX. System (procedures) for payments to delegate agencies (Reimbursement and Advances), if applicable (Section 1.1.a.I) X. System (procedures) for processing delegate agencies payments (Section 1.1.a.I)(Grantee) XI. System (procedures for leave accruals, if applicable ((Section 1.1.a.I)Human Resources) 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. d. RECORDS (current and prior year records) XII. System (procedures) for payment of vested accrued leave owed to employees, if applicable (Section 1.1.a.I) XIII. Records that identify funds used to pay vested accrued leave (General Ledger statements, etc.) The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. e. RECORDS (current and prior year records) I. Records used to pay delegate agencies, contractors, vendors, including vouchers, invoices purchase orders, cleared checks 12 f. REPORTS (current and prior year records) I. Reports of current transactions (invoice, contractor, vendor payments, others) 4

5 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. 13 g. RECORDS (current and prior year records) I. Organizational Structure, including Fiscal II. Names and titles of Fiscal Staff III. Records that identify the experience and educational level of the staff assigned financial responsibilities (Human Resources) IV.Job Descriptions of the staff assigned financial responsibilities (Human Resources) V. Policies and procedures that describe the segregation of duties (Section 1.1.a.I) 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. h. RECORDS (current and prior year records) i. REPORTS (current and prior year records) I. Records of aged payables I. Current reports or listing of aged payables for Head Start and/or Early Head Start, including dates (less than 30 days, days and days) II. Monthly Banks Statements III. Monthly General Ledger revenue reports (Head Start and /or Early Head Start II. Monthly Banks Statement to General Ledger (Head Start and/or Early Head Start) Reconciliation Reports The grantee s financial management systems provide for effective control over and accountability for grant and sub-grant funds, property and other assets and ensure they are used solely for authorized purposes. h. RECORDS (current and i. REPORTS (current and prior prior year records) year records) 15 IV. Fiscal records that differentiate development and administrative costs from program costs used to develop the budget V. Fiscal records that differentiate development and administrative costs from program costs III. Grant Application Budget Instrument (GABI Detailed Report) that identifies the budgeted developmental and administrative costs. IV. Monthly financial reports that developmental and administrative costs expenditures 5

6 1.1 The grantee s financial management systems provide for effective control over and accountability for grant and subgrant funds, property and other assets and ensure they are used solely for authorized purposes. 16 j. RECORDS (current and prior year records) I. Records and reports that show payments were disbursed (ie. checks signed and issued to the payees) II. Policies and procedures for approving transactions (purchase order, vendor payments, etc.) (Section 1.1.a.I) III. Davis Bacon Repair, construction or renovation contracts of $2,000 or greater Contracts Contractor s payrolls (WH-347 s or equivalent) U.S. Department of Labor prevailing wages The grantee sought and received prior approval in writing for budget changes where prior approval is required and received approval for hiring of designated key personnel. a. RECORDS (current and prior year records) I. Notice of Awards (One-Time Supplements for construction, purchase or major renovation of facilities), if applicable II. Notice of Awards (Hiring Key Personnel, Head Start/Early Head Start Director and Executive Director and/or Fiscal Officer, if Head Start compensation is more than 50%) III. Notice of Awards (Procurement of equipment with an acquisition costs of S25, or more) b. REPORTS (current and prior year records) I. Monthly financial reports that separately account for the use of one-time funds for the construction, purchase or major renovation of facilities 1.3 The grantee has obtained and maintained required insurance coverage for risks and liabilities. I. Records of current certificate showing a fidelity bond or employee dishonesty coverage on officials and employees authorized to disburse program funds, including policy II. Records of current certificates of insurance for vehicles purchased using Head Start funds showing coverage equivalent to the level of coverage on other agency-owned vehicles, including policy III. Records of current certificates of insurance for program service locations (donated, leased, or owned) covering liability for accidents on the premises, physical-destruction insurance and flood insurance, if applicable, including policy IV.Records of current certificates of transportation liability insurance for vehicles used by the agency (or its contractors), including policy V. If self-insured, records that describe the sources of funding and the amount of coverage. 18 6

7 Key Indicators of Program Performance Reporting The program accurately reports the source and application of funds, 19 distinguishing between the allocation of funds for each Head Start award Financial reports and accounting records are timely and complete and contain accurate information pertaining to grant or sub-grant awards, authorizations, obligations, unobligated balances, assets, liabilities, outlays (total expenditures), income, and interest. Reports include: SF-425 (paper-based Federal Financial Report filed to Regional Office); SF-425 (web-based Federal Cash Transactions Report filed with Division of Payment Management); and USDA/Child and Adult Care Food Program (CACFP) reports. b. REPORTS (current and prior year records) I. Records that separately identify the source and application for each Head Start award: i. Federal awards: Notice of Awards; Subawards; USDA Contract, Applications for Funding (with Goals and Objectives), including GABI (GABI Detail and Grant Application reports) Amended Applications, Operating Budgets (Head Start, Early Head Start, USDA and Other funds used in the provision of Head Start/Early Head Start Services) I. Reports that separately identify the source and application for each Head Start award: i. SF- 425 (Cash) including support documentations general ledger revenues reports (Section 2.1.b.vii) (Grantee only) ii. SF- 425 (Outlay/Expenditures), including general ledger expenditures reports, for federal, non-federal and USDA,.(Section 2.1.b.viii) (Grantee only) Financial reports and accounting records are timely and complete and contain accurate information pertaining to grant or sub-grant awards, authorizations, obligations, unobligated balances, assets, liabilities, outlays (total expenditures), income, and interest. Reports include: SF-425 (paper-based Federal Financial Report filed to Regional Office); SF-425 (web-based Federal Cash Transactions Report filed with Division of Payment Management); and USDA/Child and Adult Care Food Program (CACFP) reports. b. REPORTS (current and prior year records) ii. Authorizations: Transactions iii. USDA (Financial) Reports, including approvals, including USDA Monitoring Report by the State iii. Obligations: amounts of orders Agency for Grantee and (contracted placed, contracts awarded, providers, if applicable) services received and similar iv. Grantee Reconciliation Reports transactions (Outlay/Expenditure): Financial iv. Unobligated balances: funds records, general ledger, Final SF-425 authorized that has not been and audit obligated v. Grantee Reconciliation Reports v. Assets: cash, accounts (Cash): financial records, general receivable, inventory, equipment, ledger (Cash Receipts and buildings and real property, etc. Disbursement) and Quarterly SF-425 7

8 Financial reports and accounting records are timely and complete and contain accurate information pertaining to grant or sub-grant awards, authorizations, obligations, unobligated balances, assets, liabilities, outlays (total expenditures), income, and interest. Reports include: SF-425 (paper-based Federal Financial Report filed to Regional Office); SF-425 (web-based Federal Cash Transactions Report filed with Division of Payment Management); and USDA/Child and Adult Care Food Program (CACFP) reports. b. REPORTS (current and prior year records) vi. Liabilities: loans, accounts payable, mortgages, deferred revenues and accrued expenses vii. Revenue: Cash Receipts, Drawdowns, Electronic Credits, Rebates, Refunds, Disbursements viii. Outlays (total expenditures), charges made to the program, may be reported on a cash or accrual basis vi. Delegate Agency Reconciliation: voucher, financial records, general ledger (receipt, disbursements, expenditures) vii. GAAP Financial Reports (Statement of Financial Positions (Balance Sheet), Statement of Activities, Statement of Cash Flow and Statements of Functional Expenses) viii. General ledger revenue reports, including cash receipts and disbursements Financial reports and accounting records are timely and complete and contain accurate information pertaining to grant or sub-grant awards, authorizations, obligations, unobligated balances, assets, liabilities, outlays (total expenditures), income, and interest. Reports include: SF-425 (paper-based Federal Financial Report filed to Regional Office); SF-425 (web-based Federal Cash Transactions Report filed with Division of Payment Management); and USDA/Child and Adult Care Food Program (CACFP) reports. b. REPORTS (current and prior year records) ix. Income; gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award x. Interest: earned on advances of federal funds, credits, rebates, refunds, etc. xi. Non-Federal Share Records (cash and inkind), for cash include records that identify the sources and if from federal sources it can be used as a match to other federal funds ix. General ledger expenditures reports, including federal, non-federal, USDA, Un-liquidated obligations, Un- Obligated balances, Program Income, Indirect Costs Expenses, and Administrative Costs. x. IRS-941 s, including general ledger reports xi. IRS-990 s, including general ledger reports, if applicable Financial reports and accounting records are timely and complete and contain accurate information pertaining to grant or sub-grant awards, authorizations, obligations, unobligated balances, assets, liabilities, outlays (total expenditures), income, and interest. Reports include: SF-425 (paper-based Federal Financial Report filed to Regional Office); SF-425 (web-based Federal Cash Transactions Report filed with Division of Payment Management); and USDA/Child and Adult Care Food Program (CACFP) reports. a. RECORDS (current and prior b. REPORTS (current and prior year records) year records) xii. USDA Financial Records, including Correction Plans with documentation for all Fiscal Deficiencies and Findings xiii. Monthly Financial Reports (Revenue (receipts and disbursements) and Expenditures, including obligations)(budget to Actual, Administrative Costs, USDA, Non- Federal share, others) Staff, Board, and Policy Council/Committee 8

9 Key Indicators of Program Performance Procurement 25 The program develops and effectively implements procurement policies and procedures and meets, at a minimum, all requirements in the applicable Federal, State, and local statutes, regulations and administrative rules for Federal grants. 3.1 The grantee implemented procurement procedures that meet, at a minimum, all requirements specified in the applicable Federal, State, and local statutes, regulations, and administrative rules for Federal grants, including a written code or standards of conduct governing the performance of its employees engaged in awarding and administering contracts. The grantee can demonstrate that contractual agreements were met. I. Procurement policies and procedures (Section 1.1.a.I) II. Fiscal Code of Conducts ((Section 1.1.a.I) or Human Resources Procedures) III.Contract policies and procedures (Section 1.1.a.I) The grantee implemented procurement procedures that meet, at a minimum, all requirements specified in the applicable Federal, State, and local statutes, regulations, and administrative rules for Federal grants, including a written code or standards of conduct governing the performance of its employees engaged in awarding and administering contracts. The grantee can demonstrate that contractual agreements were met. b. RECORDS (current and prior year records) I. Records to support the basis for contractor or vendor selection, including justification for lack of competition when competitive bids or offers were not obtained II. Records to support open and free competition procurements, goods and services III. Records to supports an analysis of lease and purchase alternatives, if necessary 27 9

10 3.1 The grantee implemented procurement procedures that meet, at a minimum, all requirements specified in the applicable Federal, State, and local statutes, regulations, and administrative rules for Federal grants, including a written code or standards of conduct governing the performance of its employees engaged in awarding and administering contracts. The grantee can demonstrate that contractual agreements were met. 28 b. RECORDS (current and prior year records) IV. Records to support a cost or price analysis in connection with procurements for goods and services V. Records to support performance bond and payment bond on the part of the contractor for 100 percent of the contract price for procurements of construction or facility improvement contract or subcontract in excess of $100, The grantee implemented procurement procedures that meet, at a minimum, all requirements specified in the applicable Federal, State, and local statutes, regulations, and administrative rules for Federal grants, including a written code or standards of conduct governing the performance of its employees engaged in awarding and administering contracts. The grantee can demonstrate that contractual agreements were met. b. RECORDS (current and prior year records) VI. Records to support procurement of $25, or more weren t awarded to contractors or vendors debarred or suspended (45 CFR Part 76 and HHS Grant Policy Statement) from receiving federal funds VII. Records to support the awarding of goods and services to contracts and vendors The grantee implemented procurement procedures that meet, at a minimum, all requirements specified in the applicable Federal, State, and local statutes, regulations, and administrative rules for Federal grants, including a written code or standards of conduct governing the performance of its employees engaged in awarding and administering contracts. The grantee can demonstrate that contractual agreements were met. b. RECORDS (current and prior year records) VIII. Listing of all contracts, including purchase orders IX. All vendor contracts X. Records of contractor evaluation, if applicable 30 10

11 Key Indicators of Program Performance Compensation 31 The program ensures that salaries charged to the award are reasonable and necessary for the accomplishment of the program s objectives and are allocated to the grant in relationship to the relative benefit received. The program must also be able to provide documentation of all salaries charged to the award. 4.1 Original time records are prepared and properly signed by the individual employee and approved by a responsible supervisory official, and an appropriate methodology was used to allocate salaries among Head Start and other programs I. Payroll Procedures, including documenting actual after-the-fact activities, signing time sheets/timecards/personnel Activities Reports, payroll approval by responsible official, processing and disbursing payroll. (Section 1.1.a.I) II. Procedures for allocating positions between multiple programs. (Section 1.1.a.I) III.Description of the methodologies used to allocate the personnel costs Original time records are prepared and properly signed by the individual employee and approved by a responsible supervisory official, and an appropriate methodology was used to allocate salaries among Head Start and other programs IV. Time and attendance records (e.g., timecards, timesheets, summary records, or other supporting documentation verifying attendance) signed by the employee and signed or electronically approved by the employee or a supervisor having first-hand knowledge of the actual work performed by the employee V. Personnel Activities Reports, including support documentation if reports aren t completed after activities are performed in the programs VI. Job description, organization chart, classroom rosters, list of programs served by the agency VII. GABI Detailed Report and grant application reports 33 11

12 4.2 Head Start or Early Head Start grant funds are not used as any part of the monetary compensation (e.g. salary, bonuses, severance) of an individual employed by the grantee who is paid at an annual rate in excess of Executive Level II ($179,700 through calendar year 2012). I. IRS Form 990, individual W-2 statement, and final year end payroll register 34 II. Records that identify compensation paid from Head Start funds (directly charged or as part of an indirect rate) or claimed as non-federal share (match or inkind) Total compensation for personal services, including employee wages and incentive compensation payments, charged to the grant are allowable and reasonable. I. Compensation Policy that addresses salary and fringe benefits, including incentive and bonus pay, if applicable (Section 1.1.a.I) II. Wage comparability study that establishes comparable compensation for similar work in the labor markets in which the organization competes, including salaries and fringe benefits III. Salary Schedule for all positions compensated whole or in part with Head Start funds, including fringe benefits IV. COLA records: Notice of Awards and Application for Funding contract, if applicable V. Incentive compensation agreements, if applicable Key Indicators of Program Performance Cost Principles The program ensures all costs direct, indirect, Federal, or non-federal charged to the grant award meet the standards of allowability specified in the Federal cost principles

13 5.1 The grantee has implemented procedures to determine allowability, allocability, and reasonableness of costs charged against its Head Start and Early Head Start grant awards as required by the applicable cost principles. If the grantee is required to allocate costs between funding sources (including Head Start and Early Head Start awards), the program utilizes a method for allocating costs that reflects the relative degree of benefit for each program receiving the benefit of the allocated cost. I. Policies and Procedures for determine allowability, allocability, and reasonableness of costs (Part 74 agency policies and procedures must be in writing) (Section 1.1.a.I) II. Policies and Procedures for Journal Entries, including for approvals (Section 1.1.a.I) 37 III. Cost Allocation System (Plan), include methodologies 5.1 The grantee has implemented procedures to determine allowability, allocability, and reasonableness of costs charged against its Head Start and Early Head Start grant awards as required by the applicable cost principles. If the grantee is required to allocate costs between funding sources (including Head Start and Early Head Start awards), the program utilizes a method for allocating costs that reflects the relative degree of benefit for each program receiving the benefit of the allocated cost. IV. Space map or other mechanism that show how the portion of the building allocable to Head Start was determined (Leased and Agency Owned space) 38 V. Records to support the determination that expenses are allowable, reasonable, necessary, and allocable (i.e., supporting the need for the purchased product and its benefit to Head Start)? 5.1 The grantee has implemented procedures to determine allowability, allocability, and reasonableness of costs charged against its Head Start and Early Head Start grant awards as required by the applicable cost principles. If the grantee is required to allocate costs between funding sources (including Head Start and Early Head Start awards), the program utilizes a method for allocating costs that reflects the relative degree of benefit for each program receiving the benefit of the allocated cost. 39 a. RECORDS (current and prior year records) I. Records of approval Journal Entries, including posting b. REPORTS (current and prior year records) I. General Ledger Journal Entry detail reports 13

14 Indirect cost charges are supported by a negotiated and approved indirect cost rate. I. Current negotiated Indirect Cost Rate Agreement II. Notice of Awards for the grant period III. Indirect Costs Budget that identifies the Head Start costs 5.2 Indirect cost charges are supported by a negotiated and approved indirect cost rate. a. RECORDS (current and b. REPORTS (current and prior year records) prior year records) I. Final, paper-based SF-425 computed per the approved agreement II. Fiscal records differentiate between indirect cost charges and direct administrative cost charges I. Detailed general ledger reports for Developmental and Administrative Costs, including Indirect Costs charged to Head Start The grantee can demonstrate that all contributions of non-federal share (NFS), including cash and third-party inkind (such as donated services, goods or supplies), are necessary and reasonable for accomplishing program objectives, allowable under applicable cost principles, and allocable if also benefiting another award. Financial records are also sufficient and support the verification of adherence to applicable cost principles. I. Policies and procedures for documenting non-federal share (Cash and In-kind), including procedures for valuing goods, services and space. (Section 1.1.a.I) II. Policies and procedures for the determination of allowability, allocability, and reasonableness of costs (Section 1.1.a.I) III. Application and GABI (Section 2.1.a.I.i) IV.Operating Budget (Section 2.1.a.I.i) 42 14

15 5.3 The grantee can demonstrate that all contributions of non-federal share (NFS), including cash and third-party inkind (such as donated services, goods or supplies), are necessary and reasonable for accomplishing program objectives, allowable under applicable cost principles, and allocable if also benefiting another award. Financial records are also sufficient and support the verification of adherence to applicable cost principles. V. Current appraisals performed by a licensed independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient organizations for donated space (other than space in family homes or occasional space rental to support the claimed value. VI. Records to support space in family homes or occasional space rental used as a match (e.g. market survey, other) The grantee can demonstrate that all contributions of non-federal share (NFS), including cash and third-party inkind (such as donated services, goods or supplies), are necessary and reasonable for accomplishing program objectives, allowable under applicable cost principles, and allocable if also benefiting another award. Financial records are also sufficient and support the verification of adherence to applicable cost principles. VII. Records of cash match was from state or local government funds that establishes the claimed match is not from funds paid by the Federal Government under another award, except where authorized by Federal Statute, or the funds were not used to match other Federal fund VIII.Head Start Salary Schedule (Section 4.3.a.II) IX. Wage Comparability Study (Section 4.3.a.III) The grantee can demonstrate that all contributions of non-federal share (NFS), including cash and third-party inkind (such as donated services, goods or supplies), are necessary and reasonable for accomplishing program objectives, allowable under applicable cost principles, and allocable if also benefiting another award. Financial records are also sufficient and support the verification of adherence to applicable cost principles. X. Records of Non-Federal Share Records consistent with the Application for Funding and Operating Budget (volunteers, supplies, equipment, space services) XI. For Cash, include cash receipts and disbursements (Section 2.1.a.I.vii) XII. Non-Federal Share Waiver, if applicable 45 15

16 During each funding period reviewed, the grantee charged to the award only costs resulting from obligations incurred during the funding period. a. RECORDS (current and prior year records) b. REPORTS (current and prior year records) I. Records to support the posting of I. Reports to support the posting obligations to the general ledger of obligations to the general (Federal, Non-Federal (cash or inkind, if applicable) USDA and ledger (Federal, Non-Federal Other (cash or in-kind, if applicable) II. Policies and Procedures for USDA and Other obligating costs and posting to the accounting system(section 1.1.a.I) Key Indicators of Program Performance Facilities and Property 47 The program complies with all Federal requirements (e.g. adhering to the instructions in the application process and providing required documentation to Regional Offices) associated with the purchase, construction, or major renovation of facilities or equipment purchased with a purchase value of at least $25, The grantee has established the allowability of costs for owned or leased facilities and has adequately protected any Federal Interest in facilities through the filing of Notices of Federal Interest, insurance, and maintenance of property records. Compensation for the use of facilities owned by the grantee, a delegate agency, or other related party was through depreciation or use allowance based on the cost of the facility (excluding costs paid by Head Start). The grantee obtained advance Regional Office permission for any mortgage or loan agreements using collateral property acquired or subject to major renovation using Head Start funds and has ensured that mortgage/loan agreements include the required provisions. I. All leases between the grantee/delegate and unrelated parties, including affidavits if applicable II. Loan/Mortgage records, if applicable III. Records for major renovation, construction, purchases and incidental alterations to facilities (including modular units) which require prior approval under Part 1309, including application and checklists. 16

17 The grantee has established the allowability of costs for owned or leased facilities and has adequately protected any Federal Interest in facilities through the filing of Notices of Federal Interest, insurance, and maintenance of property records. Compensation for the use of facilities owned by the grantee, a delegate agency, or other related party was through depreciation or use allowance based on the cost of the facility (excluding costs paid by Head Start). The grantee obtained advance Regional Office permission for any mortgage or loan agreements using collateral property acquired or subject to major renovation using Head Start funds and has ensured that mortgage/loan agreements include the required provisions. IV. Depreciation and/or use allowance records for facilities and equipment owned by the grantee/delegate agency, including acquisition date and amount and depreciation schedule. V. Records to support deprecation and/or use allowance charged to the grant/contract as federal and/or non-federal share. VI. All Notices of Federal Interest. 6.1 The grantee has established the allowability of costs for owned or leased facilities and has adequately protected any Federal Interest in facilities through the filing of Notices of Federal Interest, insurance, and maintenance of property records. Compensation for the use of facilities owned by the grantee, a delegate agency, or other related party was through depreciation or use allowance based on the cost of the facility (excluding costs paid by Head Start). The grantee obtained advance Regional Office permission for any mortgage or loan agreements using collateral property acquired or subject to major renovation using Head Start funds and has ensured that mortgage/loan agreements include the required provisions. 50 VII. Certificate of Insurance (physical-destruction) (Section 1.3.a.III) VIII. Certificate of Insurance (flood) (Section 1.3.a.III) IX. Subordination Agreement signed by an ACF official, if applicable X. Notices of defaults on mortgages or security agreements, if applicable 6.1 The grantee has established the allowability of costs for owned or leased facilities and has adequately protected any Federal Interest in facilities through the filing of Notices of Federal Interest, insurance, and maintenance of property records. Compensation for the use of facilities owned by the grantee, a delegate agency, or other related party was through depreciation or use allowance based on the cost of the facility (excluding costs paid by Head Start). The grantee obtained advance Regional Office permission for any mortgage or loan agreements using collateral property acquired or subject to major renovation using Head Start funds and has ensured that mortgage/loan agreements include the required provisions. 51 XI. Records of written and telephonic notice to ACF in the event of a default in payment, if applicable XII. Certified copies of the deed, lease, loan instrument, mortgage, and any other legal documents related to the acquisition or major renovation of the facility or the discharge of any debt 17

18 6.2 The grantee has safeguarded equipment purchased using Head Start funds by maintaining complete and accurate equipment records, verifying the accuracy of records by conducting a physical inventory, and following disposition requirements. The grantee obtained advance Regional Office permission for any mortgage or loan agreements using real property or equipment acquired with Head Start funds. 52 I. Equipment Management procedures (Section 1.1.a.I) II. Equipment Disposal Procedures (Section 1.1.a.I) 6.2 The grantee has safeguarded equipment purchased using Head Start funds by maintaining complete and accurate equipment records, verifying the accuracy of records by conducting a physical inventory, and following disposition requirements. The grantee obtained advance Regional Office permission for any mortgage or loan agreements using real property or equipment acquired with Head Start funds. III. Records of equipment that includes the following: i. a description of the property; ii. serial number or other identification number; source of the property; title holder; iii. acquisition date; iv. cost of the property (unit & total); The grantee has safeguarded equipment purchased using Head Start funds by maintaining complete and accurate equipment records, verifying the accuracy of records by conducting a physical inventory, and following disposition requirements. The grantee obtained advance Regional Office permission for any mortgage or loan agreements using real property or equipment acquired with Head Start funds. v. percentage of Federal participation in the cost of the property; vi. location, use and condition of the property; and vii. ultimate disposition data, including the date of disposal and sales price of the property 54 18

19 6.2 The grantee has safeguarded equipment purchased using Head Start funds by maintaining complete and accurate equipment records, verifying the accuracy of records by conducting a physical inventory, and following disposition requirements. The grantee obtained advance Regional Office permission for any mortgage or loan agreements using real property or equipment acquired with Head Start funds. 55 IV. Equipment Listing, for all equipment procured whole in part with Head Start funds (Federal and Non-Federal) V. Equipment Inventory for all equipment procured whole or in part with Head Start funds (Federal and Non-Federal) with an *acquisition costs of $5, and a one (1) year useful life. 6.2 The grantee has safeguarded equipment purchased using Head Start funds by maintaining complete and accurate equipment records, verifying the accuracy of records by conducting a physical inventory, and following disposition requirements. The grantee obtained advance Regional Office permission for any mortgage or loan agreements using real property or equipment acquired with Head Start funds. VI. Records of equipment inventory reconciliation to the equipment records *acquisition costs of equipment means the net invoice price of the equipment, including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges, such as the cost of installation, transportation, taxes, duty or protective in-transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the recipient's regular accounting practices