KANSAS WORKFORCEONE. Structural & Fiscal Policies and Procedures Manual

Transcription

1 KANSAS WORKFORCEONE Structural & Fiscal Policies and Procedures Manual

2 Effective Date(s) of Accounting Policies The effective date of all accounting policies described in this manual is January 1, If a policy is added or modified subsequent to this date, the effective date of the new/revised policy will be indicated parenthetically immediately following the policy heading. Effective Date of Policy: January 1, 2018 Date of Last Amended: July 1, 2016 Date of Next Review: January, 2019 NOTE: All Federal, State and Local policies and processes can change throughout the program year. All changes established by either the Federal, State or LAI LWDB take effect immediately upon release of the new or updated policy and/or process. 2

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4 Table of Contents INTRODUCTION Mission Statement Vision Statement Guiding Principles GENERAL STRUCTURAL POLICIES Organizational Structure Role of the Chief Elected Officials Board Role of the Local Workforce Development Board Kansas WorkforceONE Committee Structure Fiscal Committee Responsibilities Role of the Executive Director and Staff Fiscal Agent BUSINESS CONDUCT Practice of Ethical Behavior Compliance with all Laws, Regulations, and Organizations Policies CONFLICTS OF INTEREST Introduction What Constitutes a Conflict of Interest Honoraria Acceptance Disclosure Requirements Resolution of Conflicts of Interest Disciplinary Action for Violations of This Policy POLICY ON SUSPECTED MISCONDUCT Introduction Definitions Reporting Responsibilities Whistleblower Protection Fraud and Abuse Policy Fraud and Abuse Incident Report Prohibition of Reprisals, Whistleblower Protection, and Confidentiality National Hotline Submittal of Fraud and Abuse Incident Form... 32

5 Investigation Responsibilities Investigations Quarterly Reports and Final Report Local Designation: Investigative Responsibilities SECURITY Administrative Office and Fiscal Records Access to Electronically Stored Fiscal Records Storage of Sensitive Data Destruction of Consumer Information General Office Security GENERAL LEDGER AND CHART OF ACCOUNTS Chart of Accounts Overview Distribution of Chart of Accounts Control of Chart of Accounts Fiscal Year of Organization Accounting Estimates Journal Entries POLICIES ASSOCIATED WITH REVENUES AND CASH RECEIPTS REVENUE Revenue Recognition Policies Definitions ADMINISTRATION OF FEDERAL AWARDS Definitions Preparation and Review of Proposals Post-Award Procedures Compliance with Laws, Regulations, and Provisions of Awards Document Administration Closeout of Federal Awards Valuation and Accounting Treatment Cash Space, Buildings, Land, and Equipment Space Volunteer Time and Services... 34

6 Supplies GIFT ACCEPTANCE Overview of Gift Acceptance Policies Categories of Gifts Gift Acceptance Procedures CONTRIBUTIONS ACCOUNTING BILLING/INVOICING POLICIES Overview Responsibilities for Billing and Collection Billing and Financial Reporting Accounts Receivable Entry Policies Classification of Income and Net Assets CASH RECEIPTS Overview Processing of Checks Received in the Mail Endorsement of Checks Credit Card Receipts Reconciliation of Deposits Control Grid - Revenue and Cash Receipts GRANTS RECEIVABLE MANAGEMENT Monitoring and Recognition ACCOUNTS RECEIVABLE MANAGEMENT Monitoring and Reconciliations Credits and Other Adjustments to Accounts Receivable Accounts Receivable Write-Off Authorization Procedures POLICIES ASSOCIATED WITH EXPENDITURES AND DISBURSEMENTS PURCHASING POLICIES AND PROCEDURES Overview Responsibility for Purchasing Responsibility for Procurement Basic Procurement Principles Procurement Authority Equal Treatment... 47

7 Full and Open Competition Arms-Length Negotiations Protests and Remedies Procurement Records Determination of Need Conflict of Interest Policy Avoidance of Conflicts of Interest Procurement File Reasonableness of Cost Independent Cost Estimate Establishing Price Analysis Establishing Cost Analysis Guide to Conducting Cost Reasonableness Review Documentation Competitive Procurements: Small Purchase, Sealed Bid and Competitive Negotiation Methods Authorizations and Purchasing Limits Micro Purchase (aggregate dollar amount < $3,000) Small Purchase Method (up to Simplified Acquisition Threshold) Formal Advertisement Methods (aggregate cost > $150,000) Sealed Bid Method Competitive Negotiation Method Request for Proposal Process Basic Decisions Regarding the RFP Yearly or Multi-Year Contract Single or Multiple Cycle RFPs Program Dollar Allocations, Single Figure or No Dollar Figure Open or Rolling RFP RFP Development Modifications to the RFP RFP Elements Development/Use of Bidders Lists Published Notice Bidders Conference... 66

8 Receipt of Late Offers Unsolicited Proposals Proposal Processing Selection and Award Process Noncompetitive Procurements - i.e. Sole Sourcing Protest/Dispute/Grievance Procedures Contract Negotiations Pre-Awards Survey Contract Policy Special Procurement Considerations Leased Office Space and Insurance Providers Allowable, Allocable and Reasonable Code of Conduct in Purchasing (45 CFR Part (c)(1)) Competition (45 CFR Part ) Nondiscrimination Policy Procurement Procedures Use of Purchase Orders Evaluation of Alternative Contractors Affirmative Consideration of Minority, Small Business, Women-Owned Businesses, and Labor Surplus Area Firms (45 CFR Part ) Availability of Procurement Records (45 CFR Part (b)) Provisions Included in All Contracts (45 CFR Part 75 Appendix II) Right to Audit Clause Contractor Files and Required Documentation Procurement Grievance Procedures Receipt and Acceptance of Goods Contract Administration SUBRECIPIENTS POLITICAL INTERVENTION Prohibited Expenditures Endorsements of Candidates Individual vs. Organization Intervention Prohibited Use of Organization Assets and Resources... 92

9 LOBBYING Introduction Definition of Lobbying Activities Segregation of Lobbying Expenditures Lobbying Election CHARGING OF COSTS TO FEDERAL AWARDS Overview Segregating Unallowable from Allowable Costs Criteria for Allowability Direct Costs Indirect Cost Rate ACCOUNTS PAYABLE MANAGEMENT Overview Recording of Accounts Payable Accounts Payable Cutoff Preparation of a Voucher Package Processing of Voucher Packages Payment Discounts Employee Expense Reports Monitoring of A/P Subsidiary Ledger to General Ledger Management of Accounts Payable Vendor/Contractor Master File TRAVEL TRAVEL/MILEAGE TRAVEL TIME CONFERENCE/SEMINAR/OVERNIGHT TRAVEL Subsistence Arrival and Departure Subsistence and Lodging Amount Deduction rates for Provided Meals Reasonableness of Travel Costs Special Rules Pertaining to Air Travel Temporary Dependent Care Costs (45 CFR Part (c)) Spouse/Partner Travel CELL PHONES

10 Issuance of Corporate Cell Phones Cell Phone Use Cell Phone Plans Revocation of Corporate Cell Phones Employee Cell Phones Personal Cell Phones or Similar Devices at Work CASH DISBURSEMENTS (CHECK-WRITING) POLICIES Check Preparation Check Signing Mailing of Checks Voided Checks and Stop Payments Recordkeeping Associated with Independent Contractors Control Grid Purchasing and Disbursements CREDIT CARDS/PURCHASING CARDS PAYROLL AND RELATED POLICIES Classification of Workers as Independent Contractors or Employees Wage Comparability Study Review and Approval of Senior Management Compensation Payroll Administration Changes in Payroll Data Payroll Taxes Documentation of Personnel Expenses Preparation of Timesheets Processing of Timesheets Review of Payroll Distribution of Payroll Internal Audit of Payroll Data Control Grid Payroll and Human Resources POLICIES PERTAINING TO SPECIFIC ASSET ACCOUNTS CASH AND CASH MANAGEMENT Cash Accounts Payroll Account: Authorized Signers

11 Bank Reconciliations Stale Checks Petty Cash Wire Transfers INVENTORY OF MATERIALS Physical Counts Contributed Inventory PREPAID EXPENSES Accounting Treatment Procedures INVESTMENT POLICIES PROPERTY AND EQUIPMENT Capitalization Policy Contributed Assets Equipment and Furniture Purchased with Federal Funds (45 CFR Part ) Establishment and Maintenance of a Fixed Asset Listing Receipt of Newly Purchased Equipment and Furniture Depreciation and Useful Lives Changes in Estimated Useful Lives Repairs of Property and Equipment Dispositions of Property and Equipment Write-Offs of Property and Equipment LEASES Classification of Leases Reasonableness of Leases Accounting for Leases Changes in Lease Terms SOFTWARE ACQUISITION AND DEVELOPMENT COSTS Costs to Be Capitalized Costs to Be Expensed As Incurred INTANGIBLE ASSETS Acquisition of Intangible Assets Accounting for Intangible Assets Amortization

12 ASSET IMPAIRMENTS FAIR VALUE ACCOUNTING Scope Disclosures POLICIES PERTAINING TO LIABILITY AND NET ASSET ACCOUNTS ACCRUED LIABILITIES Identification of Liabilities Accrued Leave INCOME TAXES PAYABLE Accrual of Income Taxes Income Tax Positions NOTES PAYABLE NET ASSETS Classification of Net Assets Reclassifications from Restricted to Unrestricted Net Assets Reclassifications from Unrestricted to Restricted Net Assets Disclosures POLICIES ASSOCIATED WITH FINANCIAL AND TAX REPORTING FINANCIAL STATEMENTS Standard Financial Statements of the Organization Frequency of Preparation Review and Distribution Monthly Distribution Annual Financial Statements PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS GOVERNMENT RETURNS Overview Filing of Returns Public Access to Information Returns OTHER TAX CONSIDERATIONS State and Local Property, Sales, Use & Income Taxes State Charity Registrations TRANSACTIONS WITH INTERESTED PERSONS

13 Identification of Interested Persons Record of Transactions with Interested Persons UNRELATED BUSINESS ACTIVITIES Identification and Classification Allocation of Expenses to Unrelated Activities Reporting JOINT VENTURES FINANCIAL MANAGEMENT POLICIES BUDGETING Overview Preparation and Adoption Monitoring Performance Budget and Program Revisions Budget Modifications ANNUAL AUDIT Role of the Independent Auditor Auditor Independence How Often to Review the Selection of the Auditor Selecting an Auditor Preparation for the Annual Audit Planning Involvement Interim Procedures Concluding the Audit Audit Adjustments Internal Control Deficiencies Noted During the Audit Fiscal Committee Communications with the Auditors INSURANCE Overview Coverage Guidelines Insurance Definitions RECORD RETENTION Policy

14 Exception for Investigations Financial Management Policies and Processes Overview Financial Management Systems Processes Attachment A Organization Chart Attachment B Committee Structure and Members Attachment C Code of Conduct Attachment D Conflict of Interest Disclaimer Attachment E AGH, LLC Security Policies and Processes Attachment F - Employee and Customer Confidentiality Agreements Attachment G Firewall Overview Attachment H Fraud and Incident Form

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16 INTRODUCTION Kansas Local Area I Workforce Investment Board Inc. d.b.a. Kansas WorkforceONE is a 501(c)(3) nonprofit organization and is one of five Local Areas in Kansas designated by the Governor under the Workforce Innovation and Opportunity Act of 2014 (WIOA). WorkforceONE (WF1) is comprised of the following sixty-two counties in western Kansas: Barber, Barton, Chase, Cheyenne, Clark, Cloud, Comanche, Decatur, Dickinson, Edwards, Ellis, Ellsworth, Finney, Ford, Gove, Graham, Grant, Gray, Greeley, Hamilton, Harvey, Haskell, Hodgeman, Jewell, Kearny, Kiowa, Lane, Lincoln, Logan, McPherson, Marion, Meade, Mitchell, Morris, Morton, Ness, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt, Rawlins, Reno, Republic, Rice, Rooks, Rush, Russell, Saline, Scott, Seward, Sheridan, Sherman, Smith, Stafford, Stanton, Stevens, Thomas, Trego, Wallace and Wichita counties. The LA1 Service Delivery System includes six comprehensive KANSASWORKS Centers located in Salina, Hutchinson, Garden City, Great Bend, Dodge City and Hays. All locations provide the career services specified in WIOA Section 134(c)(2)(A)(i)-(xi) and (a) as well as provide access to additional workforce related programs and activities.. In addition to the partners mandated by law, the KANSASWORKS Centers include partners who fulfill distinctive needs of the residents of the local community. Each KANSASWORKS has required partner participation, either through co-location, shared offices, joint appointment scheduling, and/or electronic links. Additional WIOA Title IB Offices are located in Liberal, McPherson, Newton, Colby and Goodland, Kansas. Mission Statement The Local Area I Workforce Investment Board exists to connect employers to a motivated workforce having skills to obtain and maintain meaningful employment throughout its 62-county community. Vision Statement The workforce system in Local Area I is seen by employers as the source for a well-trained and competitive workforce. This workforce is qualified to meet the needs of employers, both now and in the future creating economic growth and vitality. Guiding Principles System Focus In order to meet the needs of employers in Local Area I, the board must expand its influence to include all workforce intermediaries not just those required by law. Partner Focus Establish strong state and local partnerships to achieve greater integration and alignment of the various resources available to employers and workers in Local Area I. WorkforceONE will challenge staff to continually seek to improve the efficiency and effectiveness of the workforce system through reduction in duplication and other means. 16

17 Customer Focus WorkforceONE and its staff will align its actions with the changing needs of employers and all seekers in Local Area I. Actions oriented to providing meaningful, lifelong employment for all workers, not simply jobs. 17

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19 GENERAL STRUCTURAL POLICIES The Mission and Vision Statement will be reviewed at the beginning of every joint CEOB and LWDB full board meeting and at every committee meeting to ensure all actions remain consistent with the Mission and Vison of the Boards. Organizational Structure Organizational Chart Attachment A Role of the Chief Elected Officials Board Appointment of members of the Local Workforce Development Board. Serve as grant recipient and assume fiscal responsibility for grant funds for WIOA Title I adult, dislocated worker and youth activities; as well as other such federal or state workforce funds as may be awarded. Participate and approve the submission of the local plan. Approval of the designation and certification of one-stop operators Coordinate Memorandum of Understanding with one-stop partners Oversight of all Local RFP Processes. Provide comprehensive oversight of the activities of the Local Board. Oversight of the one-stop delivery system and ensure that local area partnerships are functioning effectively. Approval and oversight of the Local Workforce Development Board Budget. Negotiate and reach agreement on performance standards and any additional local performance measures. In partnership with the Governor Agree on whether the Local Board may provide career services within the local area. Agree on whether the Local Board may serve as One-Stop operator; and Negotiate waiver requests as needed. In order to provide a vehicle for the CEOB to fulfill their requirements and adequately oversee the duties of the LWDB; members of the CEOB will assume active membership positions on each of the LWDB Standing Committees. Role of the Local Workforce Development Board General: o Establishing broad policies, including financial and personnel policies and procedures. o Reviewing and approving the annual audit. o Reviewing financial information. o Identifying and proactively dealing with emerging issues. o Interpreting the Organization s mission to the public. o Soliciting prospective contributors. o Hiring, evaluating, and working with the Executive Director]. 19

20 Establishing and maintaining programs and systems designed to ensure compliance with terms of contracts and grants. Develop, Implement and Monitor Local Plan Develop and Analyze the economic conditions of the region to create and maintain local labor market information: o Needed knowledge and skills for the local area/region o The workforce characteristics of the area/region o The workforce development activities in area/region; including both education and training o Convene, Broker and Leverage resources from all stakeholders o Select, Oversee and Monitor One-Stop Operator and One-Stop Partner MOUs. Engage Employers: o to promote business representation from employers whose employment opportunities reflect existing and emerging employment opportunities in the region on the local board o to develop effective linkages with employers to increase support and utilization of the local workforce development system. o to ensure workforce investment activities meet employer needs and support economic growth in the region, by enhancing communication, coordination, and collaboration among employers, economic development entities, and service providers o To develop and implement proven or promising strategies for meeting the employment and skill needs of workers and employers Career pathways development Lead efforts in the local area to identify and promote proven and promising strategies and initiatives for meeting the needs of employers, and workers and jobseekers (including individuals with barriers to employment), including providing physical and programmatic accessibility to the one-stop delivery system. Develop strategies for using technology to maximize the accessibility and effectiveness of the local workforce development system for employers, and workers and jobseekers. Operation of Adult, Dislocated Worker and Youth Programs which includes: o Approval of Budget o Approval of all Program Policies and Procedures o Ensure performance attainment. o Ensure full compliance with all Federal, State and Local laws and regulations. The Executive Director shall be responsible for the day-to-day oversight and management of Kansas WorkforceONE. Kansas WorkforceONE Committee Structure Executive Committee Fiscal Committee Operations Committee One-Stop Committee Youth Development Committee Attachment D Committee Structure Fiscal Committee Responsibilities 20

21 The Fiscal Committee is responsible for direction and oversight regarding the overall financial management of Kansas WorkforceONE. Functions of the Finance Committee include: Review monthly fiscal reports. Long-term financial planning. Establishment of investment policy and monitoring investment performance. Evaluation and approval of facilities decisions (i.e., leasing, purchasing property). Evaluation and approval of all RFPs. Review of financial procedures. Role of the Executive Director and Staff The Board of Directors hires the Executive Director who reports directly to the board. The Executive Director is responsible for hiring and evaluating Executive Staff. The Executive Staff are then responsible for hiring and developing other program staff. Formal job descriptions are developed and approved by the Executive Committee of the LWDB. Fiscal Agent Kansas WorkforceONE contracts with Allen, Gibbs and Houlik, L.L.C. as the Local Area I Fiscal Agent. Reference: Public Law ; Workforce Innovation and Opportunity Act (WIOA), Section 184; all governing regulations; Federal Office of Management and Budget (OMB) Circulars (Uniform Guidance); WIOA Training and Employment Guidance Letters (TEGLs); and all State and Commerce governing policies and regulations. Complete Bylaws, Strategic Plan and Program Policy Manuals can be found on 21

22 BUSINESS CONDUCT Practice of Ethical Behavior Kansas WorkforceONE requires board members, committee members, and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities, and all directors, committee members, and employees to comply with all applicable laws and regulatory requirements. Unethical actions, or the appearance of unethical actions, are unacceptable under any conditions. The policies and reputation of Kansas WorkforceONE depend to a very large extent on the following considerations. Each employee must apply her or his own sense of personal ethics, which should extend beyond compliance with applicable laws and regulations in business situations, to govern behavior where no existing regulation provides a guideline. Each employee is responsible for applying common sense in business decisions where specific rules do not provide all the answers. In determining compliance with this standard in specific situations, employees should ask themselves the following questions: Is my action legal? Is my action ethical? Does my action comply with Kansas WorkforceONE policy? Am I sure my action does not appear inappropriate? Am I sure that I would not be embarrassed or compromised if my action became known within the Organization or publicly? Am I sure that my action meets my personal code of ethics and behavior? Would I feel comfortable defending my actions on the 6 o clock news? Each employee should be able to answer "yes" to all of these questions before taking action. Compliance with all Laws, Regulations, and Organizations Policies Kansas WorkforceONE does not tolerate: The willful violation or circumvention of any federal, state, local, or foreign law by an employee during the course of that person's employment. The disregard or circumvention of Kansas WorkforceONE policy or engagement in unscrupulous dealings. Employees should not attempt to accomplish by indirect means, through agents or intermediaries, that which is directly forbidden. The performance of all levels of employees will be measured against implementation of the provisions of these standards. 22

23 Attachment Board Member Code of Conduct Personnel Manual Resource Library 23

24 CONFLICTS OF INTEREST Introduction In the course of business, situations may arise in which an Kansas WorkforceONE s decision maker has a conflict of interest, or in which the process of making a decision may create an appearance of a conflict of interest. All directors and employees have an obligation to: Avoid conflicts of interest, or the appearance of conflicts, between their personal interests and those of Kansas WorkforceONE in dealing with outside entities or individuals, Disclose real and apparent conflicts of interest to the Board of Directors, and Refrain from participation in any decisions on matters that involve a real conflict of interest or the appearance of a conflict. What Constitutes a Conflict of Interest All employees and directors of Kansas WorkforceONE owe a duty of loyalty to the Organization. This duty necessitates that in serving Kansas WorkforceONE they act solely in the interests of Kansas WorkforceONE, not in their personal interests or in the interests of others. The persons covered under this policy shall hereinafter be referred to as interested persons. Interested persons include all members of the Board of Directors and all employees, as well as persons with the following relationships to directors or employees: Spouses or domestic partners Brothers and sisters Parents, children, grandchildren, and great-grandchildren Spouses of individuals listed in 2 and 3 Corporations, partnerships, limited liability companies (LLCs), and other forms of businesses in which an employee or director, either individually or in combination with individuals listed in 1, 2, 3, or 4, collectively possess a [35%] or more ownership or beneficial interest. Other relationships such as close friendships which may also cause a conflict of interest Conflicts of interest arise when the interests of an interested party may be seen as competing with those of Kansas WorkforceONE. Conflicts of interest may be financial (where an interested party benefits financially directly or indirectly) or non-financial (e.g., seeking preferential treatment, using confidential information). A conflict of interest arises when a director or employee involved in making a decision is in the position to benefit, directly or indirectly, from his or her dealings with the Organization or person conducting business with Kansas WorkforceONE. (A potential conflict of interest exists when the director or 24

25 employee, or his or her immediate family {spouse, parent, child, brother, sister and spouse of parent, child, brother, or sister} owes/receives more than 1% of the benefiting business/profits.) Examples of conflicts of interest include, but are not limited to, situations in which a director or employee: Negotiates or approves a contract, purchase, or lease on behalf of Kansas WorkforceONE and has a direct or indirect interest in, or receives personal benefit from, the entity or individual providing the goods or services. Negotiates or approves a contract, sale, or lease on behalf of Kansas WorkforceONE and has a direct or indirect interest in, or receives personal benefit from, the entity or individual receiving the goods or services. Employs or approves the employment of, or supervises a person who is an immediate family member of the director or employee. Sells products or services in competition with the Kansas WorkforceONE. Uses Kansas WorkforceONE facilities, other assets, employees, or other resources for personal gain. Receives a substantial gift from a contractor, if the director or employee is responsible for initiating or approving purchases from that contractor. Honoraria Acceptance A Kansas WorkforceONE employee shall not accept an honorarium for an activity conducted where agency-reimbursed travel, work time, or resources are used or where the activity can be construed as having a relationship to the employee's position with Kansas WorkforceONE; such activity would be considered official duty on behalf of Kansas WorkforceONE. A relationship exists between the activity and the employee's position with Kansas WorkforceONE if the employee would not participate in the activity in the same manner or capacity if they did not hold their position with Kansas WorkforceONE. The employee should make every attempt to avoid the appearance of impropriety. An employee may receive an honorarium for activities performed during regular non-working hours or while on annual leave if the following conditions are met: All expenses are the total responsibility of the employee or the sponsor of the activity in which the employee is participating. The activity has no relationship to the employee's Kansas WorkforceONE duties. Nothing in this policy shall be interpreted as preventing the payment to Kansas WorkforceONE by an outside source for actual expenses incurred by an employee in an activity, or the payment of a fee to Kansas WorkforceONE (in lieu of an honorarium to the individual) for the services of the employee. Any such payments made to Kansas WorkforceONE should be deposited to the Kansas WorkforceONE account and an appropriate entry should be made coded to the same program or department to which the employee s corresponding time was charged. 25

26 Disclosure Requirements A member, director or employee who believes that he or she may be perceived as having a conflict of interest in a discussion or decision must disclose that conflict to the group making the decision. Most concerns about conflicts of interest may be resolved and appropriately addressed through prompt and complete disclosure. Therefore, Kansas WorkforceONE requires the following: At the inception of employment or volunteer service to Kansas WorkforceONE, and on an annual basis thereafter, a list of all contractors/vendors with whom Kansas WorkforceONE has transacted business at any time during the preceding year, along with a copy of the disclosure statement to all members of the Board of Directors, the Executive Director, members of senior management, and employees with purchasing and/or hiring responsibilities or authority. Using the prescribed form, these individuals shall inform, in writing and with a signature, the Executive Director and the chair of the Fiscal Committee, of all potential reportable conflicts. During the year, these individuals shall submit a signed, updated disclosure form if any new potential conflict arises. The Executive Director shall review all forms completed by employees, and the Fiscal Committee shall review all forms completed by directors and the Executive Director and determine appropriate resolution in accordance with the next section of this policy. Prior to management, board, or committee action on a contract or transaction involving a conflict of interest, a staff, director, or committee member having a conflict of interest and who is in attendance at the meeting shall disclose all facts material to the conflict of interest. Such disclosure shall be reflected in the minutes of the meeting. A staff, director, or committee member who plans not to attend a meeting at which he or she has a reason to believe that the management, board, or committee will act on a matter in which the person has a conflict of interest shall disclose to the chair of the meeting all facts material to the conflict of interest. The chair shall report the disclosure at the meeting and the disclosure shall be reflected in the minutes of the meeting. A person who has a conflict of interest shall not participate in or be permitted to hear management s, the board, or the committee s discussion of the matter except to disclose material facts and to respond to questions. Such person shall not attempt to exert his or her personal influence with respect to the matter. A person who has a conflict of interest with respect to a contract or transaction that will be voted on at a meeting shall not be counted in determining a quorum for purposes of the vote. The person having a conflict of interest may not vote on the contract or transaction and shall not be present in the meeting room when the vote is taken, unless the vote is by secret ballot. Such person s ineligibility to vote and abstention from voting shall be reflected in the minutes of the meeting. For purposes of this paragraph, a member of the Board of Directors of Kansas WorkforceONE has a conflict of interest when he or she stands for election as an officer or for re-election as a member of the Board of Directors. If required by Federal awarding agencies, Kansas WorkforceONE will notify those agencies in writing of any potential conflict of interest. (45 CFR Part , Conflict of interest) 26

27 Resolution of Conflicts of Interest All real or apparent conflicts of interest shall be disclosed to the Fiscal Committee and the Executive Director of Kansas WorkforceONE. Conflicts shall be resolved as follows: The Fiscal Committee shall be responsible for making all decisions concerning resolutions of conflicts involving directors, the Executive Director, and other members of senior management. The chair of the committee shall be responsible for making all decisions concerning resolutions of conflicts involving Fiscal Committee members. The chair of the Board shall be responsible for making all decisions concerning resolutions of the conflict involving the chair of the Fiscal Committee. The Executive Director shall be responsible for making all decisions concerning resolutions of conflicts involving employees below the senior management level, subject to the approval of the Fiscal Committee. An employee or director may appeal the decision that a conflict (or appearance of conflict) exists as follows: An appeal must be directed to the chair of the board. Appeals must be made within 30 days of the initial determination. Resolution of the appeal shall be made by vote of the full Board of Directors. Board members who are the subject of the appeal, or who have a conflict of interest with respect to the subject of the appeal, shall abstain from participating in, discussing, or voting on the resolution, unless their discussion is requested by the remaining members of the board. Disciplinary Action for Violations of This Policy Failure to comply with the standards contained in this policy will result in disciplinary action that may include termination, referral for criminal prosecution, and reimbursement to Kansas WorkforceONE or to the government, for any loss or damage resulting from the violation. As with all matters involving disciplinary action, principles of fairness will apply. Any employee charged with a violation of this policy will be afforded an opportunity to explain her or his actions before disciplinary action is taken. Disciplinary action will be taken: Against any employee who authorizes or participates directly in actions that are a violation of this policy. Against any employee who has deliberately failed to report a violation or deliberately withheld relevant and material information concerning a violation of this policy. Against any director, manager, or supervisor who attempts to retaliate, directly or indirectly, or encourages others to do so, against any employee who reports a violation of this policy. A Board member who violates this policy will be removed from the Board. 27

28 Attachment D Conflict of Interest Disclaimer 28

29 POLICY ON SUSPECTED MISCONDUCT Introduction This policy communicates the actions to be taken for suspected misconduct committed, encountered, or observed by employees and volunteers. Like all organizations, Kansas WorkforceONE faces many risks associated with fraud, abuse, and other forms of misconduct. The impact of these acts, collectively referred to as misconduct throughout this policy, may include, but not be limited to: Financial losses and liabilities. Loss of current and future revenue and customers. Negative publicity and damage to the Organization s good public image. Loss of employees and difficulty in attracting new personnel. Deterioration of employee morale. Harm to relationships with clients, contractors, bankers, and subcontractors. Litigation and related costs of investigations, etc. Kansas WorkforceONE is committed to establishing and maintaining a work environment of the highest ethical standards. Achievement of this goal requires the cooperation and assistance of every employee and volunteer at all levels of Kansas WorkforceONE. Definitions For purposes of this policy, misconduct includes, but is not limited to: Actions that violate Kansas WorkforceONE s Code of Conduct (and any underlying policies) or any of the accounting and financial policies included in this manual. Fraud (see below). Forgery or alteration of checks, bank drafts, documents or other records (including electronic records). Destruction, alteration, mutilation, or concealment of any document or record with the intent to obstruct or influence an investigation, or potential investigation, carried out by a department or agency of the federal government or by Kansas WorkforceONE in connection with this policy. Disclosure to any external party of proprietary information or confidential personal information obtained in connection with employment with or service to Kansas WorkforceONE. Unauthorized personal or other inappropriate (non-business) use of equipment, assets, services, personnel, or other resources. Acts that violate federal, state, or local laws or regulations. Accepting or seeking anything of material value from contractors, or persons providing goods or services to Kansas WorkforceONE. Exception: gifts valued at $25 or less. Impropriety of the handling or reporting of money in financial transactions. 29

30 Failure to report known instances of misconduct in accordance with the reporting responsibilities described herein (including tolerance by supervisory employees of misconduct of subordinates). Fraud is further defined to include, but not be limited to: Theft, embezzlement, or other misappropriation of assets (including assets of or intended for Kansas WorkforceONE, as well as those of our clients, subcontractors, contractors, suppliers, and others with whom the Organization has a business relationship). Intentional misstatements in Kansas WorkforceONE s records, including intentional misstatements of accounting records or financial statements. Authorizing or receiving payment for goods not received or services not performed. Authorizing or receiving payments for hours not worked. Forgery or alteration of documents, including but not limited to checks, timesheets, contracts, purchase orders, receiving reports. Kansas WorkforceONE prohibits each of the preceding acts of misconduct on the part of employees, officers, executives, volunteers, and others responsible for carrying out the Kansas WorkforceONE s activities. Reporting Responsibilities All employees, officers, and volunteers are responsible for immediately reporting suspected misconduct to their supervisor, Internal Audit, Executive Director, LWDB Chair or the Chair of the Fiscal Committee. When supervisors have received a report of suspected misconduct, they must immediately report such acts to their manager, Executive Director, Chair of the LWDB or Chair of the Fiscal Committee. Whistleblower Protection Kansas WorkforceONE will consider any reprisal against a reporting individual an act of misconduct subject to disciplinary procedures. A reporting individual is one who, in good faith, reported a suspected act of misconduct in accordance with this policy, or provided to a law enforcement officer any truthful information relating to the commission or possible commission of a federal offense or any other possible violation of the Kansas WorkforceONE Code of Conduct. Fraud and Abuse Policy Kansas WorkforceONE will follow Kansas Statute No and Kansas Department of Commerce Policy Number Definitions: To aid in the detection of fraud, program abuse, or criminal conduct, the following definitions are provided. These definitions are neither fully inclusive nor restrictive of all activities that may be included under each activity: 30

31 Employee/Participant Misconduct These actions include, but are not limited to, conflict of interest or the appearance of conflict of interest, involving outside employment; business and professional activities; the receipt or giving of gifts, fees, entertainment, and favors; misuse of federal property; misuse of official information; and such other activities as might adversely affect the confidence of the public in the integrity of the government as well as serious violations of federal and state laws. Fraud, Misfeasance, Nonfeasance or Malfeasance Any alleged deliberate action, which appears to be in violation of applicable federal, state, or local statutes and regulations. This category includes, but is not limited to, indications of bribery, forgery, extortion, embezzlement, theft of participant checks, kickbacks from participants or contractors, intentional payments to a contractor without the expectation of receiving services, payments to ghost enrollees, misuse of appropriated funds, and misrepresentation of information in official reports, including failure to report outstanding debt(s) on application for federal assistance. Gross Mismanagement Actions or situations arising out of management ineptitude or oversight, leading to major violations of the legislative requirements, regulations, or contract/grant provisions. Such actions or situations have the potential to severely hamper the accomplishment of program goals, waste government resources, and jeopardize future support for a particular project. This category includes, but is not limited to, unauditable records, unsupported costs, highly inaccurate fiscal reports or program reports, payroll discrepancies, payroll deductions not paid to the Internal Revenue Service (IRS), and lack of adequate internal control procedures. Misapplication of Funds Any alleged use of funds, assets, or property for purposes/activities not authorized or provided for by legislation or regulations, grants, or contracts. This category includes, but is not limited to, nepotism, political patronage, use of participants for political activity, ineligible enrollees, conflict of interest, failure to report income from federal funds, violation of contract/grant procedures, the use of federal funds for other than specified purposes, and failure to report compromise of federal debt for IRS purposes. Fraud and Abuse Incident Report The Fraud and Abuse Incident Report (see Attachment H) is the official document for reporting instances of fraud, misapplication of funds, gross mismanagement, and any other incidents of known or suspected criminal or other activities. The Fraud and Abuse Incident Report is also used to provide supplemental and final reports about such incidents. Any report received in a written format and signed shall be accepted and handled in the same manner as if it were filed on the Fraud and Abuse Incident Report. Individuals designated to accept incident reports will be responsible for contacting the reporting party and obtaining information required by the Fraud and Abuse Incident Report that is not included in the submitted report. Incident reports are not intended to elicit reports after a determination is made that an act or allegation is legally prosecutable. Any act which raises questions of possible illegal expenditures or other unlawful activity should be reported immediately. 31

32 Prohibition of Reprisals, Whistleblower Protection, and Confidentiality In accordance with federal regulations and the Kansas Whistleblower s Act, no action will be taken against any employee, grantee, or contractor for disclosing information of criminal or improper activities or making a complaint to the proper authorities. The reporting party s identity will not be disclosed except where there is consent or it is determined that disclosure will be unavoidable during the course of an investigation. As per Kansas Statue No , each state office shall prominently post a copy of the Kansas Whistleblower s Act in locations where it can reasonably be expected to come to the attention of all employees. Kansas WorkforceONE will monitor to ensure all KANSASWORKS Centers have Whistleblower s Act poster appropriately displayed. National Hotline Kansas WorkforceONE will ensure all workforce center staff and workforce system partners are aware of the following: Availability of the Office of Inspector General (OIG)/USDOL Hotline for providing information confidentially. The OIG/USDOL National Hotline number is The National Hotline availability to employees and the public. The Hotline may be used to notify the OIG of suspected fraud, abuse, or waste in any programs funded by the USDOL. Information supplied via the Hotline should be as specific as possible to enable the OIG to identify and solve the problem. The Hotline should not be used for resolving employee grievances, EEO complaints, labor disputes, or other personnel concerns. Kansas Whistle Blower s Act As per Kansas Statue No , Posters may be obtained by contacting the following individual: Kansas Department of Commerce Director Commerce Regulatory Compliance 1000 S.W. Jackson Street, Suite 100 Topeka, Kansas (785) Fax: (785) crc@kansascommerce.com Submittal of Fraud and Abuse Incident Form The Fraud and Abuse Incident Form shall be forwarded within one business day of the occurrence. Emergency or Serious Allegations An emergency exists when immediate action is required to forestall impending loss or harm to an individual or organization related to WIOA, Commerce, or a local area. If it is determined an incident requires immediate attention, a telephone report should be made to the OIG to relate the necessary information, and the written report submitted as outlined in this policy. The OIG should not be contacted for resolving employee grievances, EEO complaints, labor disputes, or other personnel concerns. U.S. Department of Labor Office of Inspector General Office of Labor Racketeering and Fraud Investigations 2300 Main Street, Room 1040 Kansas City, MO Phone: (816) Fax: (816)

33 Investigation Responsibilities Investigations The Kansas Department of Commerce Legal Counsel will assign staff and coordinate activities in response to an incident reported as directed by the OIG, regional administrator, governor, secretary, or deputy secretary of the Kansas Department of Commerce. Quarterly Reports and Final Report Where OIG has established a reporting number, CRC will submit quarterly status reports as required to the OIG, Commerce legal, and other appropriate parties. Local Designation: The Kansas Procedure for Reporting Suspected Program Fraud and Abuse will be included in the LAI Staff Personnel Handbook. The LAI Executive Director will be designated as the individual who will receive and assist in the preparation of the Fraud and Abuse Incident Report. If involving the Executive Director the LWDB Chair or Attorney will assist. Changes to this designation, should be reported to Director, Commerce Regulatory Compliance, (785) , crc@kansascommerce.com Investigative Responsibilities Due to the sensitive nature of suspected misconduct, supervisors and managers should not, under any circumstances, perform any investigative procedures. The Executive Director has the primary responsibility for investigating suspected misconduct involving employees below the Executive Director and executive management level. The Executive Director shall provide a summary of all investigative work to the Fiscal Committee and Executive Committee. The Executive Committee has the primary responsibility for investigating suspected misconduct involving Executive Director, as well as board members and officers. However, the Executive Committee may request the assistance of the Fiscal Committee in any such investigation. Investigation into suspected misconduct will be performed without regard to the suspected individual s position, length of service, or relationship with Kansas WorkforceONE. In fulfilling its investigative responsibilities, the Executive Director or responsible committee shall have the authority to seek the advice and/or contract for the services of outside firms, including but not limited to law firms, CPA firms, forensic accountants and investigators, etc. Members of the investigative team shall have free and unrestricted access to all Organization records and premises, whether owned or rented, at all times. They shall also have the authority to examine, copy, and remove all or any portion of the contents (in paper or electronic form) of filing cabinets, storage facilities, desks, credenzas and computers without prior knowledge or consent of any individual 33

34 who might use or have custody of any such items or facilities when it is within the scope of an investigation into suspected misconduct or related follow-up procedures. The existence, the status, or results of investigations into suspected misconduct shall not be disclosed or discussed with any individual other than those with a legitimate need to know in order to perform their duties and fulfill their responsibilities effectively. Protection of Records Federal Matters Kansas WorkforceONE prohibits the knowing destruction, alteration, mutilation, or concealment of any record, document, or tangible object with the intent to obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States government, or in relation to or contemplation of any such matter or case. Violations of this policy will be considered violations of Kansas WorkforceONE s Code of Conduct and subject to the investigative, reporting, and disclosure procedures described earlier in this Policy on Suspected Misconduct. Disciplinary Action Based on the results of investigations into allegations of misconduct, disciplinary action may be taken against violators. The seriousness of misconduct will be considered in determining appropriate disciplinary action, which may include: Reprimand Probation Suspension Demotion Termination Reimbursement of losses or damages Referral for criminal prosecution or civil action This listing of possible disciplinary actions is for information purposes only and does not bind Kansas WorkforceONE to follow any particular policy or procedure. Confidentiality All parties must treat all information received confidentially. Any employee who suspects dishonest or fraudulent activity will notify the Executive Director or the Fiscal Committee Chair immediately, and should not attempt to personally conduct investigations or interviews/interrogations related to any suspected fraudulent act (see Reporting Procedures section above). Great care must be taken in the investigation of suspected improprieties or irregularities so as to avoid mistaken accusations or alerting suspected individuals that an investigation is under way. Investigation results will not be disclosed or discussed with anyone other than those who have a legitimate need to know. This is important in order to avoid damaging the reputations of persons suspected but 34

35 subsequently found innocent of wrongful conduct and to protect Kansas WorkforceONE from potential civil liability. An employee who discovers or suspects fraudulent activity may remain anonymous. All inquiries concerning the activity under investigation from the suspected individual(s), his or her attorney or representative(s), or any other inquirer should be directed to the Executive Director, Executive Committee or legal counsel. No information concerning the status of an investigation will be given out. The proper response to any inquiry is I am not at liberty to discuss this matter. Under no circumstances should any reference be made to the allegation, the crime, the fraud, the forgery, the misappropriation, or any other specific reference. The reporting individual should be informed of the following: Do not contact the suspected individual in an effort to determine facts or demand restitution. Do not discuss the case, facts, suspicions, or allegations with anyone unless specifically asked to do so by Kansas WorkforceONE legal counsel or the corresponding committee. Disclosure to Outside Parties Allegations of and information related to allegations of suspected misconduct shall not be disclosed to third parties except under the provisions described in this policy (such as disclosure to outside investigators hired by Kansas WorkforceONE to aid in an investigation). However, all known frauds involving the Executive Director, senior management, or members of the Board of Directors, as well as all material frauds involving employees below the senior management level, shall be disclosed by the Executive and/or Fiscal Committee to the Organization s external auditors. Kansas WorkforceONE will disclose, in a timely manner, in writing to Federal awarding agencies all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. (45 CFR Part Mandatory disclosures) 35

36 SECURITY Administrative Office and Fiscal Records The Administrative Office is locked whenever vacant. The room where all client files are stored is closed and locked at all times. In addition, all checks and stamps are kept in a lock box of which only the Executive Director and Operations Manager have a key. The lock will be changed whenever any of these individuals leaves the employment of Kansas WorkforceONE. Kansas WorkforceONE does not have access to checks. Kansas WorkforceONE does not have petty cash. Access to Electronically Stored Fiscal Records Kansas WorkforceONE utilizes passwords to restrict access to all fiscal records and data saved on the organization s server. Allen, Gibbs and Houlik L.L.C. (AGH) as Kansas WorkforceONE s Fiscal Agent maintains high security measures for all Kansas WorkforceONE records both physical and electronic. Attachment E AGH Security Measures Storage of Sensitive Data In addition to fiscal data security it is equally important for Kansas WorkforceONE to secure protected personally identifiable information (PPII) for all employees and customers. This information includes but is not limited to social security numbers of employees and clients, personnel records, customer eligibility status, and employee financial information. Locations and security measures include, but are not limited to: Employee PPII o Physical Location: Executive Director Office o Physical Data Security Measures: Locked file cabinet, executive director and operations manager only persons with keys. o Electronic Data Security Measures: All employee PPII is transferred utilizing password protected transfer. Customer PPII o Physical Location: Official File - Administrative Office Field File Employment Specialist Office o Physical Data Security Measures: Locked file cabinets in both administrative and field offices. o Electronic Data Security Measures: Part ID s are used in place of SSN in all electronic communications and KansasWorks.com stores all participant data and is password protected. Kansas WorkforceONE s policy is to minimize the storage of sensitive data both in the Administrative 36

37 and Field Offices by shredding documents with such data or deleting the sensitive data from documents as soon as possible. Destruction of Consumer Information As stated earlier, all sensitive data must be securely stored and shredded when no longer needed. Kansas WorkforceONE will also shred all consumer information obtained by the Kansas WorkforceONE for any reason. Shredding will be performed on a schedule determined and the schedule shall be made a part of the Record Retention policy (see the Fiscal Management policies section of this manual). General Office Security During normal business hours, all visitors are required to check in with the receptionist. After hours, a security key is required for access to the offices of Kansas WorkforceONE. Administriative Office kesy are issued only to those employees who are a member of Senior Management. Only employees of each individual Workforce Center have keys to their offices. Keys are returned upon leaving employment. Attachment F Employee and Customer Confidentiality Agreements 37

38 GENERAL LEDGER AND CHART OF ACCOUNTS The general ledger is the collection of all asset, liability, net assets, revenue, and expense accounts. It is used to accumulate all financial transactions and is supported by subsidiary ledgers that provide details for certain accounts. The general ledger is the foundation for the accumulation of data and production of reports. Chart of Accounts Overview The chart of accounts is the framework for the general ledger system and the basis for the accounting system. The chart of accounts consists of account titles and account numbers assigned to the titles. General ledger accounts are used to accumulate transactions and the impact of these transactions on each asset, liability, net asset, revenue, expense, and gain and loss account. Kansas WorkforceONE s chart of accounts is comprised of six types of accounts: Assets Liabilities Net Assets Revenues Expenses Gains and Losses Each account number shall be preceded by a three-digit department number and a two-digit project/function code. Distribution of Chart of Accounts Kansas WorkforceONE employees involved with account coding or budgetary responsibilities will be issued a current chart of accounts, or the section of the chart of accounts applicable to their program. As the chart of accounts is revised, an updated copy of the chart of accounts shall be promptly distributed to these individuals. Control of Chart of Accounts The Executive Director monitors and controls the chart of accounts, including all account maintenance, such as additions and deletions. Any additions or deletions of accounts must be approved by the Executive Director who ensures that the chart of accounts is consistent with the Organizational structure of Kansas WorkforceONE and meets the needs of each division and department. Upon approval AGH selects and assigns the additions and deletions to the chart of account. Fiscal Year of Organization 38

39 Kansas WorkforceONE shall operate on a fiscal year that begins on July 1 and ends on June 30. Any changes to the fiscal year of the Organization must be ratified by majority vote of Kansas WorkforceONE s Board of Directors. Accounting Estimates Kansas WorkforceONE utilizes estimates in the preparation of its interim and annual financial statements. Some of those estimates include: Useful lives of property and equipment Cost allocation calculations The Executive Directly will reassess, review, and approve all estimates quarterly. All conclusions, bases, and other elements associated with each accounting estimate shall be documented in writing. All material estimates, and changes in estimates from one year to the next, shall be disclosed to the Fiscal Committee, CEOB, LWDB and the external audit firm. Journal Entries All general ledger entries that do not originate from a subsidiary ledger shall be supported by journal vouchers or other documentation, including an explanation of each such entry. Examples of such journal entries are: Recording of noncash transactions Corrections of posting errors Nonrecurring accruals of income and expenses Adjustments of Cost Allocation Activity Percentages Certain journal entries, called recurring journal entries, occur in every accounting period. These entries may include, but are not limited to: Depreciation of fixed assets Amortization of prepaid expenses Accruals of recurring expenses Amortization of deferred revenue Recurring journal entries shall be supported by a schedule associated with the underlying asset or liability account or, in the case of short-term recurring journal entries or immaterial items, a journal voucher. All journal entries not originating from subsidiary ledgers shall be authorized in writing by the Kansas WorkforceONE Executive Director and/or AGH Senior Account by initialing or signing the entries. 39

40 POLICIES ASSOCIATED WITH REVENUES AND CASH RECEIPTS REVENUE Revenue Recognition Policies Kansas WorkforceONE receives revenue from several types of transactions. Revenue from each of these types of transactions is recognized in the financial statements in the following manner: Grant income Monthly accrual based on incurrence of allowable costs (for costreimbursement awards) or based on other terms of the award (for fixed price, unit-of-service, and other types of awards). In-Kind Contributions or Non-Federal Share Recognized as income when received. (See the following section titled Cost Sharing and Matching. ) Program Income Defined as gross income generated by a supported activity or earned as a result of an award, and is recognized as a reduction in expenditures in the period in which it is received. Nongovernmental Cash Contributions Recognized as income when received, unless accompanied by restrictions or conditions. (See the next section on contribution income.) Fee-for-Service Income Recognized as income when services are rendered unless collection of amounts due is in question. In this case, revenue is recognized when payments are received. Interest income monthly accrual based on when it was earned. Immaterial categories of revenue may be recorded on the cash basis of accounting (i.e., recorded as revenue when received) as deemed appropriate by the Executive Director. Definitions The following definitions shall apply with respect to the policies described in this manual: Contribution An unconditional transfer of cash or other assets to the Organization, or a settlement or cancellation of the Kansas WorkforceONE's liabilities, in a voluntary nonreciprocal transfer by another entity or individual. Condition A donor-imposed stipulation that specifies a future and uncertain event whose occurrence or failure to occur gives the promisor a right of return of the assets it has transferred to the Kansas WorkforceONE or releases the promisor from its obligation to transfer its assets. In practical terms, this means a donor has imposed some type of stipulation other than a purpose or time period stipulation (which is defined as a restriction below) and that condition has some degree of uncertainty as to whether or not it will occur, and if the condition is not met, Kansas WorkforceONE is not entitled to the contribution. Conditions may or may not be within the control of Kansas WorkforceONE. Restriction A donor-imposed stipulation that specifies a use for the contributed asset that is either 40

41 limited to a specific future time period or is more specific than the broad limits resulting from the nature of the Kansas WorkforceONE, the environment in which it operates, and the purposes specified in the Articles of Incorporation and Bylaws. Restrictions on the use of an asset may be temporary or permanent. Nonreciprocal Transfer A transaction in which an individual or entity incurs a liability or transfers assets to Kansas WorkforceONE without directly receiving value in exchange. Promise to Give A written or oral agreement to contribute cash or other assets. Exchange Transaction A reciprocal transaction in which Kansas WorkforceONE and another entity each receive and sacrifice something of approximately equal value. 41

42 ADMINISTRATION OF FEDERAL AWARDS Definitions Kansas WorkforceONE may receive financial assistance from a donor/grantor agency through the following types of agreements: Grant: A financial assistance award given to Kansas WorkforceONE to carry out its programmatic purpose. Cooperative Agreement: A legal agreement where Kansas WorkforceONE implements a program with the direct involvement of the funder. Throughout this manual, federal assistance received in any of these forms will be referred to as a federal award. Preparation and Review of Proposals Individual departments are responsible for preparing proposals for projects that the department intends to pursue. However, all proposals shall be reviewed by the Executive Director prior to submission to government agencies or other funding sources to ensure the proposed budget includes all appropriate costs. Final proposals shall be reviewed and approved in writing by the Executive Director. 45 CFR Part , Proposal Costs, defines proposal costs as the costs of preparing bids, proposals, or applications on potential Federal and non-federal awards or projects. Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as indirect costs and allocated currently to all activities. 45 CFR Part ) Kansas WorkforceONE will distribute proposal costs to the appropriate and/or charge to the administrative office. Post-Award Procedures After an award has been made, the following steps shall be taken: Verify the specifications of the grant or contract. The Executive Director and AGH Senior Management shall review the terms, time periods, award amounts, and expected expenditures associated with the award. A Catalog of Federal Domestic Assistance (CFDA) number shall be determined for each award. All reporting requirements under the contract or award shall be 42

43 summarized. Create new general ledger account numbers (or segments). New accounts shall be established for the receipt and expenditure categories in line with the grant or contract budget. Gather documentation. See the following section, Document Administration, for details. Compliance with Laws, Regulations, and Provisions of Awards Kansas WorkforceONE recognizes that as a recipient of federal funds, Kansas WorkforceONE is responsible for compliance with all applicable laws, regulations, and provisions of contracts and grants. To ensure that Kansas WorkforceONE meets this responsibility, the following policies apply with respect to every grant or contract received directly or indirectly from a federal agency: For each federal award, an employee within the department responsible for administering the award will be designated as "grant manager. Each grant manager shall attend a training on grant management prior to beginning his or her role as a grant manager (or as early in their functioning as a grant manager as practical). Thereafter, all grant managers shall attend refresher/update courses on grant management every two years. The grant manager shall take the following steps to identify all applicable laws, regulations, and provisions of each grant and contract: o Read each award and prepare a summary of key compliance requirements and references to specific laws and regulations. o Review 45 CFR Part 75 Appendix XI, Compliance Supplement (updated annually) published by the Office of Management and Budget (OMB) for compliance requirements unique to the award and for compliance requirements common to all federal awards. o Review the section of the Catalog of Federal Domestic Assistance (CFDA) applicable to the award. o The grant manager will communicate grant requirements to those who will be responsible for carrying them out, or impacted by them. The Executive Director shall forward copies of applicable laws and regulations to the grant manager (such as OMB regulations, pertinent sections of compliance supplements, and other regulations). The grant manager and/or the Accounting Department shall identify and communicate any special changes in policies and procedures necessitated by federal awards as a result of the review of each award. The grant manager shall take all reasonable steps necessary to identify applicable changes in laws, regulations, and provisions of contracts and grants. Steps taken in this regard shall include, but not be limited to, reviewing subsequent grant and contract renewals, reviewing annual revisions to 45 CFR Part 75 Appendix XI, Compliance Supplement, and communications with federal awarding agency personnel. The grant manager shall inform the independent auditors of applicable laws, regulations, and provisions of contracts and grants. The grant manager shall also communicate known instances of noncompliance with laws, regulations, and provisions of contracts and grants to the auditors. 43

44 Document Administration For each grant/award received by Kansas WorkforceONE from a federal, state, or local government agency, a master file of documents applicable to the award shall be prepared and maintained. The responsibility for assembling each master file shall be assigned to the Operations Manager assigned to administer the program. The master file assembled for each government award shall include all of the following documents (including originals of all documents received from the awarding agency): Copy of the initial application for the award and corresponding budget All correspondence to and from the awarding agency post-application, leading up to the award The final, approved budget and program plan, after making any modifications The grant agreement and any other documents associated with the initial making of the award Copies of pertinent laws and regulations, including awarding agency guidelines, associated with the award Subsequent grant modifications (financial and programmatic) Copies of program and financial reports Subsequent correspondence to/from the awarding agency Results of any monitoring visits conducted by the awarding agency, including resolution by Kansas WorkforceONE of any findings arising from such visits Correspondence and other documents resulting from the closeout process of the award Key compliance requirements, including citations of applicable laws and regulations Important deadlines Correspondence contact information at the awarding agency The preceding grant document file shall be organized into four sections as follows: Pre-award documents Post-award documents, including reports Laws, regulations, and agency guidelines Audit/monitoring-related documents The original grant document file shall remain in Administrative Office in a locked filing cabinet. The Operations Manager shall maintain a separate file of frequently requested documents that shall consist of photocopies of the documents included in the secure grant document file. The purpose of this file of copied documents is to limit the potential for loss of valuable documents. Closeout of Federal Awards Kansas WorkforceONE shall follow the closeout procedures described in 45 CFR , Closeout, and in the grant agreements as specified by the granting agency. 44

45 Kansas WorkforceONE shall liquidate all obligations incurred under the grant or contract within 90 days of the end of the grant or contract agreement. 45

46 COST SHARING AND MATCHING (IN-KIND) Overview Kansas WorkforceONE values contributed services and property that are to be used to meet a cost sharing or matching requirement at their fair market values at the time of contribution, unless award documents or federal agency regulations identify specific values to be used. Kansas WorkforceONE shall claim contributions as meeting a cost sharing or matching requirement of a federal award only if all of the following criteria are met: They are verifiable from Kansas WorkforceONE records. They are not included as contributions (or match) for any other federally-assisted project or program. They are necessary and reasonable for proper and efficient accomplishment of project or program objectives. They are allowable under the federal cost principles, 45 CFR Part 75 Subpart E, Cost Principles. They are not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching. They are provided for in the approved budget when required by the federal awarding agency. They conform to all provisions of federal administrative regulations, 45 CFR Part 75 Subpart D, Post Federal Awards Requirements. In the case of donated space, (or donated use of space), the space is subject to an independent appraisal performed by a certified appraiser as defined by 45 CFR Part (i)(1) to establish its value. The following flowchart should be used to determine the allowability of in-kind. 46

47 #1 Is receipt of the donation/ services verified in writing? NO #1A Can you get it verified in writing? NO Unallowable In-Kind YES #2 Is it not included as contributions for another federally-assisted project/ program? NO #2A Can you document that the source of the donation is not being used for another Federal program? NO Unallowable In-Kind YES #3 Is it necessary & reasonable for proper & efficient accomplishment of project or program objectives? State the benefit. NO Unallowable In-Kind YES #4 Is it allowable under the applicable cost principles*? NO Unallowable In-Kind YES #5 It is paid by non-federal funds**? NO # 6 YES 30Go To Question

48 Unallowable In-Kind

49 31

50 From Question #5 #6 Is it provided for in the approved budget? NO #6A Is it something you would have put in the budget? NO Unallowable In-Kind YES #7 Would the agency pay, out of federal funds, the same amount being claimed as the in-kind value? NO Unallowable In-Kind YES Could the agency defend paying Federal money for it? #8 NO Unallowable In-Kind YES IN-KIND IS ALLOWABLE * 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ** Except where authorized by Federal statute to be used for cost sharing or matching: Determinations have been made on a case-by-case basis on whether Federal funds from other programs are allowable match for an ACF program. These determinations are based on specific requirements of ACF programs and language in applicable statutes. Specifically: 1. USDA funds are of Federal origin and, therefore, cannot be counted as match. 2. Bureau of Indian Affairs - Indian Self-Determination and Education Assistance Act (P.L , as amended). The Act authorizes the use of funds for matching purposes as long as the identified use is specifically related to the approved grant activities. 3. Title XX Social Services Block Grant funds are considered to be Federal funds and, therefore, may not be used as match for ACF programs. 4. Expenditure of funds from the Housing and Community Development Act of 1974, P.L may count as allowable match for a Head Start program for renovation of a building. The determination is dependent on whether or not the Head Start grant is included as part of the Community Development Program, as required by the Housing and Community Development Act. (Grants Administration Manual, Section (b)(1-4)) 32

51 Valuation and Accounting Treatment In-kind typically falls into one of the following categories: Cash Space, buildings, land, and equipment Volunteer time and services Supplies The following sections discuss the valuation and accounting treatment for each category. Cash Kansas WorkforceONE shall recognize cash contributions as in-kind income in the period in which they are spent on allowable program costs. Any discounts received on goods or services are recognized as in-kind only if such discounts are not available to the general public. Discounts taken as in-kind must be supported by a letter from the contractor stating that it is providing this discount in support of the program. Space, Buildings, Land, and Equipment Buildings and Land If the purpose of the contribution is to assist the Kansas WorkforceONE in the acquisition of equipment, building, or land, the total value of the donated property may be claimed as matching with prior approval of the awarding agency. If the purpose of the donation is to support activities that require the use of equipment, buildings, or land, depreciation or usage charges (e.g., rent) may be claimed as matching, unless the awarding agency has approved using the full value as match. Equipment, land, or buildings are valued at their fair market value as determined by an independent appraiser. Information on the date of donation and records from the appraisal will be maintained in a property file. Space Will be valued at the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality. Information on the date of donation and records from the appraisal will be maintained in a property file. If less than an arms-length transaction, will be valued based in actual allowable costs to occupy the facility (e.g. repairs and maintenance, insurance, etc.) not to exceed fair market value. 33

52 Volunteer Time and Services Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor will be included in in-kind if the services are an integral and necessary part of the program. Volunteer services will be valued at rates consistent with those paid for similar work in the Organization. For skills not found at Kansas WorkforceONE, rates will be consistent with those paid for similar work in our labor market. Rates should include gross hourly wages plus fringe benefits calculated based on fringe benefits received by employees in similar positions, or on agency average. Volunteers must possess qualifications and perform work requiring those skills in order to be valued at greater than an unskilled labor rate. Kansas WorkforceONE requires volunteers to document and account for their contributed time utilizes WorkforceONE staff timesheets. Each program that uses volunteers will provide the volunteers a signin sheet which collects the following information: Date service was performed Volunteer name and address Hours donated (time in and out) Service provided Signature of volunteer The sign-in sheets will be turned in on a monthly basis and tallied, valued, and recorded as in-kind in the accounting records. Supplies Donated supplies must be used in the program and shall be valued at fair market value at the time of donation. Supplies can be counted as match only if the program would have purchased such items with federal funds. 34

53 GIFT ACCEPTANCE Overview of Gift Acceptance Policies A gift/contribution is consideration given to the Kansas WorkforceONE for which the donor receives no direct benefit and requires nothing in exchange (it is nonreciprocal) other than assurance that the intent of the contribution will be honored by Kansas WorkforceONE. Two broad principles apply to all gifts given to Kansas WorkforceONE: A gift shall not be accepted that is not in the charitable interest of the donor, considering the donor s financial situation and philanthropic interests, as well as tax, legal, and other relevant factors. A gift shall not be accepted unless there is a reasonable expectation that acceptance of the gift shall ultimately benefit Kansas WorkforceONE. Kansas WorkforceONE will not accept any donations that imply endorsement of businesses, products or services. Donor businesses may not use Kansas WorkforceONE s name for promotion of any product or service. Categories of Gifts Gifts to Kansas WorkforceONE are classified into two categories, based on the level of risk associated with acceptance of the gift. Gifts of marginal risk include the following: Cash and cash equivalents (e.g., certificates of deposit) Gifts of securities actively traded on a U.S. public market (e.g., publicly-traded stocks, mutual funds, corporate and government bonds, etc.) Personal property with a fair value of less than $5,000 (new or used). Gifts of the preceding three categories shall be considered to be of marginal risk only if they are either unrestricted or restricted to one specific, existing Kansas WorkforceONE program. Gifts of greater-than-marginal risk include the following: Any gift requiring the acceptance of a restriction that: o is not clearly identifiable with an existing program of Kansas WorkforceONE, o would require the addition or modification of an Kansas WorkforceONE program, o would not be consistent with the mission of Kansas WorkforceONE, o would not be consistent with Kansas WorkforceONE s tax-exempt purpose under IRC section 501(c)(3), 35

54 o would require the reclassification of unrestricted net assets to temporarily restricted o would violate any federal, state, or local law or regulation, or o would result in excessive control to the donor, or anyone designated by the donor, over the subsequent use of the contributed asset Any gift from a donor involved in businesses or activities that may be deemed to be inconsistent with the mission of Kansas WorkforceONE Personal property with a fair value of [$5,000] or more (new or used) Real property (either an outright gift of property or the donated use of such property) Non-publicly-traded securities (e.g., ownership interests in privately-held businesses, partnerships, etc.) Charitable remainder trusts Charitable lead trusts Conditional promises to give/pledges Unusual items or items of questionable value (including works of art, animals, historic artifacts, memorabilia, etc.) Life insurance Notification of the intent to give noncash assets through a bequest Gift Acceptance Procedures Gifts of marginal risk may be accepted by the Executive Director without any further review and approval. Gifts of greater-than-marginal risk may be accepted only after review and approval of both the Executive Director and Chair of the Fiscal Committee. This review and approval shall be documented on a Gift Acceptance form. 36

55 CONTRIBUTIONS ACCOUNTING Kansas WorkforceONE Executive Director and Fiscal Committee will work to develop Contributions Accounting Policies and Processes. 37

56 BILLING/INVOICING POLICIES Overview The Organization s primary sources of revenue are: Reimbursement grants Billed monthly, or as funders require, based on allowed, incurred expenses. Fee-for-service income Billed according to contract requirements based on number of units of services provided. Private grants funds are usually received once funding is approved. Financial expenditure reports, if required, are submitted as required by funding sources. Donations/Contributions may be solicited or unsolicited. Responsibilities for Billing and Collection Beginning January, 2018, Kansas WorkforceONE s Fiscal Agent Allen, Gibbs and Houlik is responsible for the invoicing of funding sources. Kansas WorkforceoNE staff are responsible for the collection of outstanding receivables. Billing and Financial Reporting Kansas WorkforceONE strives to provide management, staff, and funding sources with timely and accurate financial reports applicable to federal awards. These reports include monthly and cumulative expenditures, a project budget, and a balance remaining column. Kansas WorkforceONE shall prepare and submit financial reports as specified by the financial reporting clause of each grant or contract award document. Preparation of these reports shall be the responsibility of AGH, subject to review and approval by AGH Senior Management and Kansas WorkforceONE Executive Director. The following policies shall apply to the preparation and submission of billings to federal agencies under awards made to Kansas WorkforceONE: Kansas WorkforceONE will request reimbursement after expenditures have been incurred, unless an award specifies another method. Kansas WorkforceONE will strive to minimize the time between receipt and disbursement of grant funds by issuing payments within [24 business] hours of receipt of such funds. Each award normally specifies a particular billing cycle. Therefore, a schedule is established for each grant and contract to ensure that reimbursement is made on a timely basis along with any other reporting that is required in addition to the financial reports. Requests for reimbursement of award expenditures will use the actual amounts as posted to the 38

57 general ledger as the source for all invoice amounts. All financial reports required by each federal award will be prepared and filed on a timely basis. To the extent Kansas WorkforceONE s year-end audit results in adjustments to amounts previously 39

58 reported to federal agencies, revised reports shall be prepared and filed in accordance with the terms of each federal award. Kansas WorkforceONE shall maintain separate billing records in addition to the official general ledger accounting records. Billing records shall be reconciled to the general ledger on a monthly basis. At the time invoices (requests for reimbursement) are prepared, revenue and accounts receivable shall be recorded in the accounting records of Kansas WorkforceONE by AGH Senior Accountant. If a federal award authorizes the payment of cash advances to Kansas WorkforceONE, the Executive Director may require that a request for such an advance be made. Upon receipt of a cash advance from a federal agency, Kansas WorkforceONE shall reflect a liability equal to the advance. As part of the monthly closeout and invoicing process, the liability shall be reduced, and revenue recognized, in an amount equal to the allowable costs incurred for that period. Cash Drawdowns of Federal Funds Advances Cash drawdowns of advances from federal agencies shall be made weekly in conjunction with the accounts payable and payroll schedule, based on need. All federal funds shall be deposited into an interest-bearing cash account under the cash receipts policies and procedures described in this manual. Kansas Fiscal Link will be used for all Client expenditure. Electronic Spreadsheets will be used for all LWDB, Operations, Service Delivery and other grant expenditures. Vouchers will be sent by the LWDB staff to the Fiscal Agent by the close of business on each Friday. The following Tuesday the Fiscal Agent will conduct the drawdown and prepare the checks to be mailed on the following Thursday. Confirmation of each drawdown and applicable checks will be sent to the LWDB within two business days. Check registers will be sent to LWDB Staff on Thursday, staff then reconciles checks with vouchers to ensure amounts are correct. If either the voucher or drawdown day falls on a holiday arrangements will be made to conduct the draw two weeks prior to the holiday. ER payment vouchers will be transmitted to the Fiscal agent no later than the Wednesday before the allowable Thursday draw. The above process will be used to communicate ER draws. Accounts Receivable Entry Policies Individuals independent of the cash receipts function shall post customer invoices, credit adjustments, and other adjustments to the accounts receivable subsidiary ledger. Classification of Income and Net Assets All income received by Kansas WorkforceONE is classified as "unrestricted, with the exception of the following: 40

59 Grants and other awards received from government agencies or other grantors, which are classified as temporarily restricted. Special endowments received from donors requesting that these funds be permanently restricted for specific purposes. Income earned from endowment funds (e.g., interest and dividends, gains and losses) in connection with endowments where the donor has explicitly stated that earnings on an endowment be temporarily restricted for specific purposes. From time to time, Kansas WorkforceONE may raise other forms of contribution income which carry stipulations that Kansas WorkforceONE utilize the funds for a specific purpose or within a specified time period identified by the donor of the funds. When this form of contribution income is received, Kansas WorkforceONE shall classify this income as Temporarily Restricted income. As with all Temporarily Restricted net assets, when the restriction associated with a contribution has been met (due to the passing of time or the use of the resource for the purpose designated by the donor), Kansas WorkforceONE will reclassify the related net assets from "Temporarily Restricted" to "Unrestricted" in its Statement of Financial Position and reflect this reclassification as an activity in its Statement of Activities. From time to time, the Kansas WorkforceONE Board of Directors may determine that it is appropriate to set funds aside for specific projects. Such funds shall be classified as unrestricted, labeled Board- Designated, and reported as a separate component of unrestricted net assets. 41

60 CASH RECEIPTS Overview Cash (including checks payable to the Kansas WorkforceONE) is the most liquid asset an organization has. Therefore, it is the objective of Kansas WorkforceONE to establish and follow the strongest possible internal controls in this area. Kansas WorkforceONE does not receive cash. Checks are sent only to Kansas WorkforceONE Administrative Office. Processing of Checks Received in the Mail The following procedures will be followed: Mail is opened, date stamped, entered in check log, endorsed and stored in lock box. A deposit voucher is completed on a monthly basis. Vouchers are reviewed and signed by two individuals. Checks are then mailed to AGH Transmittal Clerk. The AGH Tranmittal Clerk deposits the checks into the Kansas WorkforceONE account and forwards deposit receipt to account staff. Endorsement of Checks All checks received that are payable to the Kansas WorkforceONE shall immediately be restrictively endorsed by the Operations Manager at time of receipt. The restrictive endorsement shall be a stamp that includes the following information: Credit Card Receipts Kansas WorkforceONE does not utilize credit cards. Reconciliation of Deposits On a monthly basis, the Fiscal Agent reconciles the all bank deposits. Any discrepancies shall be immediately investigated. Control Grid - Revenue and Cash Receipts 42

61 Kansas WorkforceONE strives to maintain adequate segregation of duties in its income and cash receipts functions. The following table illustrates how responsibilities have been assigned. In this table, personnel are identified as follows: A. Executive Director B. Operations Manager C. AGH Transmittal Clerk D. AGH Accountant E. Fiscal Committee A B C D E Produces invoice to bill customer/funder X Enters invoice into A/R system X Initials receipt of funds (checks) X Restrictively endorses checks X Prepares initial record of funds collected X Prepares deposit slip X Transmits deposit slip to bank X Enters payments into A/R system X Reconciles log of collections w/ A/R posting X Authorizes credits or other adjustments X Posts credits/adjustments to A/R system X Authorizes write-off of bad debts X Posts bad debt write-offs to A/R system X Prepares periodic customer statements X X Reconciles A/R with general ledger X Reconciles bank statement X Reviews A/R aging X X Performs follow-up calls on old A/R X 43

62 GRANTS RECEIVABLE MANAGEMENT Monitoring and Recognition Kansas WorkforceONE records grants receivable and income as it is earned and billed during the grant year. The Executive Director is responsible for monitoring budget-to-actual expenditures throughout the grant year, and will meet monthly with the Director of Operations to discuss grant fiscal results. Reports are also provided by the Fiscal Agent to the Fiscal Committee on a monthly basis and full LWDB and CEOB on a quarterly basis. 44

63 ACCOUNTS RECEIVABLE MANAGEMENT Monitoring and Reconciliations On a quarterly basis, the AGH will reconcile a detailed accounts receivable report (showing aged, outstanding invoices by customer) to the general ledger. The Executive Director will review the reconciliation and ensure that all differences are immediately investigated and resolved. Issues will be reported to the Fiscal Committee and full LWDB and CEOB when necessary. Credits and Other Adjustments to Accounts Receivable From time to time, credits against accounts receivable from transactions other than payments and bad debts will occur. Examples of other credits include returned products and adjustments for billing errors. An employee who is independent of the cash receipts function will process credits and adjustments to Accounts Receivable, and all credits shall be authorized by the Executive Director and Fiscal Committee. Accounts Receivable Write-Off Authorization Procedures All available means of collecting accounts receivable will be exhausted before write-off procedures are initiated. Write-offs are initiated by the department associated with the amount to be written off, in conjunction with the Accounting Department. If an account receivable is deemed uncollectible, the following approvals are required before the write-off is processed: Amount Authorized in writing by Less than [$1,500] Executive Director [$1,500] or more Executive Director and Fiscal Committee Once a write-off has been processed, appropriate individuals in the originating department will be advised to ensure that further credit is not granted and the master list of bad accounts is updated. Customers listed as poor credit risks will be extended future credit only if the back debt is paid and the customer is no longer deemed a collection problem. If write-off procedures have been initiated, the following accounting treatment applies: 1. Current year invoices that are written off will either be charged against an appropriate revenue or revenue adjustment account, or against the original account credited. 2. Invoices written off that are dated prior to the current year will be written off against net assets. 45

64 POLICIES ASSOCIATED WITH EXPENDITURES AND DISBURSEMENTS PURCHASING POLICIES AND PROCEDURES Overview THE POLICIES DESCRIBED IN THIS SECTION APPLY TO ALL PURCHASES MADE BY KANSAS WORKFORCEONE. Kansas WorkforceONE requires the practice of ethical, responsible, and reasonable procedures related to purchasing, agreements and contracts, and related forms of commitment. The policies in this section describe the principles and procedures that all staff shall adhere to in the completion of their designated responsibilities. The goal of these procurement policies is to ensure that materials and services are obtained in an effective manner and in compliance with the provisions of applicable federal statutes and grant requirements. Responsibility for Purchasing The Operations Manager and Operations Assistant are responsible for making all purchases for Kansas WorkforceONE. Each office is assigned a staff member who is in charge of ordering for each office. An order form with a list of typical office supplies is provided to staff at the beginning of every Program Year. Staff do not need to request approval to order these items. Items not listed on this form are considered a special order and must be pre-approved by the Operations Manager. The Operations Manager shall be responsible for processing purchase orders. The Executive Director and as outlined below the Fiscal Committee and full LWDB and CEOB has approval authority over all purchases and contractual commitments, and shall make the final determination on any proposed purchases where budgetary or other conditions may result in denial. Responsibility for Procurement All procurement activities must comply with requirements imposed by federal/state statute, regulations or the terms of a federally/state funded grant. In general, compliance with standards established for federal/state funds will ensure acceptable procurement practices. All must follow these standards and guidelines for the procurement of goods and services for all programs. A Code of Conduct is adopted and maintained to prohibit persons involved in the procurement process from accepting gifts, favors or anything of monetary value from contractors, subrecipients, or potentialsubrecipients. The code must addresses moral and ethical issues involved in procurement to including the following: 46

65 Individual conflicts of interest occurring when persons involved in the award and administration of contracts have a financial or personal interest in prospective lower-tier subrecipients or suppliers and Penalties, sanctions or disciplinary actions for violators to the extent provided by state and local laws, rules or regulations A cost or price analysis must be performed for every procurement action and documentation maintained of such in their procurement file. Basic Procurement Principles Employees shall comply with the following principles of procurement when initiating actions to procure goods or services in support of funded programs. Procurement Authority The authority for procurement actions, as well as the responsibility for design and implementation of procurement systems, is vested with each entity purchasing goods and services, related to the provision of workforce services. Employees shall utilize specific program requirements in the event of a conflict with these requirements. Equal Treatment Equal opportunity must be available to all prospective sources of goods and services to be purchased. This means equal access to bid specification information and evaluation must be ensured for all bidders and prospective providers. Full and Open Competition All goods and services must be procured in a manner to provide maximum open and full competition. Such competition shall be sought for every purchase, regardless of the article or service to be obtained or the dollar value of the purchase. Where no competition exists or where it is not cost effective to obtain competitive bids, documentation shall be maintained to substantiate why there was a deviation from full and open competition. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, and invitations for bids or requests for proposals must be excluded from competing for such procurements. The OMB Uniform Guidance identifies several situations which restrict open and free competition, and the following must be avoided: Unreasonable requirements imposed on firms to qualify 47

66 Unnecessary requirements for experience or bonding Noncompetitive pricing practices between firms or affiliated companies Noncompetitive awards to consultants on retainer contracts Organizational conflicts of interest, including related party transactions Brand name specifications Overly restrictive specifications Arbitrary actions in the procurement process and Exclusion of potential bidders from qualifying during solicitation period for prequalified bidders lists Arms-Length Negotiations Negotiations with bidders must be arms-length arrangements. A strict code of conduct shall be observed to prohibit favors or special treatment. Negotiations between departments within the same unit of government shall be structured to achieve an arms-length arrangement. Protests and Remedies Potential subrecipients and contractors shall have recourse to remedy a situation when it believes it was treated unfairly in the procurement/award process. Procedures include both an informal and a formal resolution process. Procurement Records Employees shall maintain fully documented files and other records sufficient to detail the significant history of procurement. Employees shall retain all records pertinent to all grants and agreements including financial, statistical, property and participant records and supporting documentation. These records must be retained for three years after acceptance of the final audit report, unless any litigation or claim has been started before the expiration of the three-year period. Then records must be retained until the completion of the action and resolution of all issues or until the end of the regular three year period, whichever is later. Employees shall be responsible for notifying all contractors of the retention requirements. If the relationship with a contractor is terminated, the organization is responsible for the maintenance and retention of the contractor records if the contractor is unable to retain them. Determination of Need The process of considering and justifying the determination of the need for a purchase shall be documented and included in the procurement file. The Board may refer to their plan in satisfying this requirement. Where the need was not identified in the plan, the requirements of this section shall be followed. The extent of the needs assessment analysis is dependent upon the nature of the procurement. 48

67 Simple, small purchases may require as little as concurrence from the person with the procurement authority. More complex and costly procurement requires a full assessment as described below. Decisions on the extent of assessment require justification and the organization shall ensure justification is consistent with the nature of the procurement. Part of the process includes gathering information using objective, statistical and subjective data. Census reports, municipal and county demographic data, information from special projects and surveys may be used to determine areas of need based on the extent and complexity of the procurement. A written statement of need is compiled for the procurement record. The needs assessment shall address the following: Clear statement describing the population in need of services Statement describing the services needed Description of the benefit to employers and the workforce population to be served Description of the availability and accessibility of local and other resources to meet the identified need, including cost, location and eligibility conditions and Assessment of the availability of funding and the cost effectiveness of purchasing the services externally as opposed to transferring clients to other community resources providing the service An appropriate authorization through the chain of command must be obtained and documented for each procurement. The authorization must include documentation and approval of the following: Needs assessment determination Procurement method selected Funding level Procurement time frames and Procurement and performance specifications, requirements and criteria Conflict of Interest Policy The organization maintains a written Code of Conduct to govern the performance of its Board members, officers, standing committee members, employees or agents engaged in the award and administration of contracts. Each Board member, officer, standing committee member, employee or agent of the organization must sign the code of conduct. Organizational officers, standing committee members, employees and agents involved in the procurement process are prohibited from accepting gifts, favors or anything of monetary value from existing or potential contractors or parties to sub-agreements. Every reasonable course of action shall be taken in order to maintain the integrity of the expenditure of public funds and to avoid any favoritism or questionable conduct. Any situation suggesting a decision was influenced by prejudice, bias, special interest or personal gain shall be avoided. Before being awarded a contract a person may be required to ensure, in writing, such person has not been retained in violation of the ethical standards. Failure to do so constitutes a breach of ethical standards. Avoidance of Conflicts of Interest The Code of Conduct addresses real or apparent circumstances requiring declarations of conflicts, 49

68 abstention from voting and abstention from participating in procurement decisions. If an individual has a conflict of interest they must declare a conflict on the official record and abstain from voting on and participating in the procurement. The following create conflicts of interest and must be avoided by all Board members, officers, standing committee members, employees or agents of the organization in procuring goods or services with federal/state funds: Gratuities - Soliciting, demanding, accepting or agreeing to accept or to offer, give or agree to give, from/to another person any economic opportunity, future employment, gift, loan, special discount, trip, favor or service, except nominal gifts as specified in state requirements Procurement Documents - Any individual s participation in the development of procurement documents, review of procurement packages prior to release to potential bidders, acceptance by deadline, initial review of procurement packages, negotiation, selection, discussion, award or administration of a procurement supported by funds where, to the individual s knowledge, any of the following has a financial or other substantive interest in any organization which may be considered for award: o The individual o Any member of his or her immediate family o His/her partner or o Any organization in which any of the above has a material financial or other substantive interest Contingent Fees - To solicit or secure a contract upon agreement or understanding for a commission, percentage, brokerage or contingent fee except for retention of bona fide employees or established commercial selling agencies for the purpose of securing business Confidentiality and Nondisclosure Certain information may not be disclosed until a particular point in the procurement process has been reached. Other information must be kept confidential permanently. The following are examples of procurement information not to be used by any person for actual or anticipated personal gain or for the gain of any other person: o Information about the funds available or related data, until the information is made known to all bidders o Number and names of bidders until the contract is awarded and the decision is made public o Technical or cost/price information to anyone not officially involved in the procurement while the procurement is in progress and o Certain technical or proposal information the bidder has designated as proprietary or trade secret, even after the award is made and publicized Illegal Acts - Accepting or paying bribes or kickbacks, conspiring to thwart the competitive procurement process Other Actions Other actions which create real or apparent conflicts of interest Substantive interest means any interest of a substantial nature, whether or not financial in nature, including membership on an organization s governing board, acting as the agent for an organization or employed as an officer of an organization. Immediate family means any person related within the second degree of affinity (marriage) or within third 50

69 degree of consanguinity (blood) to the party involved. The prohibited relationships are as follows: First degree of affinity Husband, wife, spouse s father or mother, son s wife, daughter s husband Second degree of affinity Spouse s grandfather or grandmother, spouse s brother or sister First degree of consanguinity Father, mother, son, daughter Second degree of consanguinity Grandfather, grandmother, brother, sister, grandson, granddaughter and Third degree of consanguinity Great grandfather, great grandmother, uncle, aunt, brother or sister s son or daughter, great grandson, great granddaughter Procurement File A historical file to accurately reflect a trail of events and actions leading to the procurement of a product or service must be maintained in a secure, central, accessible location. Procurement files shall include, at a minimum, copies of the following: Needs assessment determination Procurement method selected Procurement authorization(s) Public media advertisement Request for Proposal (RFP)/Invitation for Bids document Proposals received Rating criteria Completed staff and/or Board evaluation forms Independent cost estimates Cost/price analysis forms and cost reasonableness determination Notes and other documentation concerning negotiations Notice of award/non-selection Fully executed contract; including amendments/modifications Contract performance evaluation Signature authorities General correspondence related to the specific procurement action; required reports and Documentation related to disputes; protests; and claims Reasonable determination Amendments/Modifications General procurement Action Dispute, Protest and Claim Documentation The procurement records/files are subject to audit and must be available for review during monitoring or audits by an authorized agency. Reasonableness of Cost 51

70 As stated previously, the selection and award of contracts should reflect an assurance consideration has been given to competition, effectiveness and efficiency during the evaluation process. A reasonableness of cost analysis is a required step in this process. It is of utmost importance the procuring organization recognize its responsibility in this area. The task should be specifically assigned, there should be a clear understanding of the steps required and the process must be thoroughly documented. Employees shall perform a cost and/or price analysis in connection with every procurement action, including modifications, except for modifications lacking a monetary impact. The method and degree of analysis depend on the facts surrounding the particular procurement and pricing situation but, at a minimum, the organization shall make independent cost estimates before receiving bids or proposals. Price analysis includes a comparison of prices paid for the same or similar products in the past, as well as the current market rate. Quantities, production and delivery rates should also be taken into consideration. Cost analysis is the element-by-element examination of the detailed costs submitted in the line item budget. Each of the costs contributes to the total price. A cost analysis must be performed under the following circumstances: When the bidder is required to submit the elements of its estimated cost When adequate price analysis is lacking and For noncompetitive procurements, including contract modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation A price analysis will be used in all other instances to determine the reasonableness of the proposed contract price. Independent Cost Estimate Employees shall, prior to release of the RFP, develop an independent cost estimate. The independent cost estimate provides an objective reference point from which the cost reasonableness is determined. It is derived from a cost breakdown of similar programs in the local market. The estimated costs should be as precise as possible. In some cases, specific costs may not be available either due to the lack of similar types of programs in the market area or due to the inability to predict the type of proposals responding to the RFP. In those cases, the estimate should be based on the best information available. The estimate is the standard from which the established reasonable cost may vary. It is not necessarily the standard to which the proposals must conform. The estimate may be derived from historical data, although allowances and adjustments for time (i.e., information from programs conducted in prior years) must be factored in. This estimate shall be included in the procurement file as an integral part of the cost/price reasonableness analysis. Establishing Price Analysis 52

71 Price analysis is the process of examining and evaluating a price without looking at the estimated cost elements and proposed profit of the offer. In negotiated procurements, especially where technical factors are most important, price competition may be inadequate. In such instances, comparing the prices of offers is not usually sufficient to ensure cost reasonableness. A more detailed analysis is needed utilizing past prices, quantities, production, delivery rates and similar non-cost information. Employees will need to conduct discussions with bidders in negotiated procurements to be sure about price. Acceptable ways to seek and document price analysis include the following: RFP solicitation of competitive proposals Invitation for bid solicitation (formal advertising) with receipt of sealed bids, public opening and award to the lowest responsible and conforming bidder on a fixed price basis Small purchase method-documentation of price quotations, RFQ, received is a result of shopping for equipment, supplies or services priced by commercial contractors not in excess of the authorized local small purchase dollar threshold amount Catalog pricing (such as for tuition) to the extent these rates are actually relied upon to charge the public for the listed goods or services (frequent discounting would jeopardize reliance on catalog prices as a source for demonstrating reasonableness) Recent past pricing for similar goods or services procured locally (assumes past pricing was reasonable) Recent past pricing for similar goods or services procured by others in the vicinity (assumes past pricing was reasonable) and Yardsticks developed from models designed to identify and price the mix of resources considered necessary for achievement of delivery within the expected range of performance (seeks to predetermine the cost of the object of the procurement) Establishing Cost Analysis Proposal costs analysis is used to establish the basis for negotiating contract prices where price competition is not adequate or is lacking altogether and where price analysis by itself does not ensure the reasonableness of prices. Cost analysis is the review and evaluation, element by element, of the cost estimate supporting a bidder s proposal for the purpose of pricing a contract. This review includes analysis and evaluation of the following: Supporting data submitted by the bidder Cost elements and Factors the bidder considered in projecting from data to develop the estimate of cost to perform the specified work. The following processes require specific additional cost analysis and justification to be supported as price reasonable: Agreements in which a written technical and cost proposal applicant has not been submitted Agreements funded at or above the proposed cost level 53

72 Agreements only compared to average cost standards (i.e., per participant per training hour) and do not weigh actual differences in relative value (i.e., pre-employment skills versus occupational training) Agreements resulting from noncompetitive (sole source) procurement and Tuition-based agreements in which the rate charged is not justified by comparison to other available prices in the area After costs are identified, they are evaluated to determine permissibility of individual items. Factors affecting permissibility are necessity, reasonableness, application of generally accepted accounting principles, practices appropriate to the particular circumstances and any regulatory or contractual limitations on types or amounts of cost items. Bidders are usually required to submit basic cost or pricing data for most training related procurements. Even when the contract type contemplated is a fixed unit price performance-based contract, the bidder will submit a detailed line-item budget. This budget shows the detailed cost elements and sub-elements the bidder estimates it will incur in carrying out the work in its technical proposal. Frequently, the bidder is requested to submit backup data to support its cost estimates, either with the cost and price proposal or at a later point in the procurement process. Contract cost analysis is the element-by-element examination of the costs and related information presented in the cost and pricing data bidders submit. It involves analyzing cost data furnished, estimating assumptions stated and the rationale employed by bidders in reaching the amounts proposed. All these are cost factors contributing to the total price estimated by bidders. The first step of a cost analysis is verifying the cost and pricing data submitted and evaluate the cost elements in the data to include the following: Judging the necessity for and reasonableness of proposed costs Evaluating the bidder s cost trends on the basis of current and historical costs or pricing data Conducting a technical appraisal of the estimated labor, material and other requirements proposed and Applying negotiated, audited or proposed indirect cost rates to determine the contract price, where such rates are proposed The second step of a cost analysis is comparing the costs proposed by bidders with other data. This data includes actual costs incurred by the same bidder in the past. Cost analysis can also compare the current proposed costs with previous cost estimates from the same bidder or from other bidders for the same or similar items. It is appropriate and helpful to compare a bidder s costs with those proposed by other bidders in the same procurement. Comparison to the independent cost estimate can be helpful as well. The third step of a cost analysis is evaluating the bidder s cost submissions against applicable contract cost principles. These cost principles define and describe the meanings and limits of a variety of costs. Costs not conforming to these meanings and limits are not allowable. State or 54

73 local laws and regulations may make certain costs unallowable or place limits on costs in addition to those cited in program specific provisions and regulations. Profit shall be negotiated as a separate element of the price. Procurements shall not permit excess program income (for nonprofit and governmental entities) or excess profit (for private forprofit entities). Under no circumstances shall fees or profits exceed 10 percent of the contract amount. To establish a fair and reasonable profit, consideration shall be given to the following: Complexity of the work to be performed Risk borne by the awardee Bidder s investment Amount of subcontract Quality of the bidder s past performance Industry profit rates in the surrounding geographical area for the same or similar work and Market conditions in the surrounding geographical area Guide to Conducting Cost Reasonableness Review The following is a guide to conduct a cost reasonableness review. The review should include, but not be limited to the following: Consider prior experience and effectiveness Conduct a line item budget analysis Determine the amount of profit applicable. Profit should be allocated by category according to benefits received. Profit may be identified as a fee. Excess profit (for privatefor-profit entities) is not allowable. Neither is the generation of excess program income (for nonprofit and governmental entities). Determine the amount of the total budget Determine the amount of the administrative budget Determine the administrative percentage of the total budget Identify all cost items and salaries Ensure costs are properly allocated and classified Review all cost items with respect to relevancy and appropriateness in accomplishing the services provided List any high or questionable costs Ensure an organization-wide cost allocation plan is provided where the bidder has multiple sources of funding, if applicable List any questionable issues of purchase or lease Ensure the cost of audit is covered Review staffing resources and salaries Ensure the budget matches the salary distributions sheet 55

74 Ensure staff salaries are properly allocated to administration or other applicable categories, such as training Determine if the staff appears adequate for the proposed activities List high or questionable staff salaries and benefits List low cost or unreasonable staffing Review travel reimbursement policies Review cost per positive termination in relation to similar training, length of time and quality Review cost per entered employment in relation to similar training, length of time and quality Review cost per contract hour (total participants x hours of participation for completion = contract hours) Perform a comparative analysis when more than one organization responds to the solicitation for same or similar services. The analysis should include a comparison of activities and services to be offered, staffing patterns and costs proposed. Use this type of comparison to assess the reasonableness of price through competition. Perform a comparative analysis when an item or service is currently available in the local service delivery area. This should include comparisons with current market rates to establish the reasonableness of the proposed cost and Compare relevant data to information gathered in the independent cost estimate. Consideration should be given to such factors as time (i.e., currently programs as compared to previous programs), similarity of programs and other relevant cost elements. Other relevant factors to be considered may be target populations (i.e., hard-to-serve individuals, dislocated workers, unemployment insurance claimants, etc.) and performance measures. These and any other relevant comparisons must be justified in terms of similarities and differences of the programs under consideration. Documentation Records must be maintained certifying an appropriate review has determined the price is reasonable. All awards must be supported with documentation establishing relevant and appropriately detailed cost and/or price data has been submitted and reviewed by assigned staff. At a minimum, each proposal should contain the following: Copy of the line item budget Lease agreements and calculations of space and costs allocated for program purposes Cost allocation plans where costs to be funded are prorated between different funding sources Approved wage and benefit schedules for positions to be funded in the proposal submitted Policies on travel reimbursement 56

75 Calculations, bids and/or documentation used to determine costs of equipment, supplies and where appropriate, start-up costs Cost determinations of each classroom training course based on per hour, day and week cost considerations if applicable to services offered and Documentation on costs of other funding sources received by the organization impacting directly or indirectly on the program services proposed Records must be maintained certifying the name(s) of individual(s) who performed and/or approved the cost reasonableness review. Records should also be maintained to show differences in the quality of the service or output. After completion of the review, a report outlining strengths and weaknesses of the proposed budget should be compiled and used in negotiations. All changes resulting from negotiation should be documented. Costs or prices based on estimated costs are allowed only to the extent costs incurred or cost estimates included in negotiated prices are consistent with items of the contract and applicable federal cost principles. Competitive Procurements: Small Purchase, Sealed Bid and Competitive Negotiation Methods Authorizations and Purchasing Limits All completed purchase orders must be signed by the preparer and approved by the Executive Director. The following table lists required approval levels and solicitation processes: Amount of Purchase < $3,000 (including Micro Purchases) $3,000 $50,000 Executive Director Required Approvals Required Solicitation Required Documentation Operations Manager Evidence of solicitation is Operations Manager not required if price is reasonable but purchases should be distributed among qualified contractors 3 written bids (catalogue, Internet, written) Documentation of bids received How decision was made 57

76 $50,001 $150,000 Executive Dir. Fiscal Committee Full Board > $150,000 Executive Dir. Fiscal Committee Full Board 3 written bids (Request for Bids or Request for Proposals) 3 written bids (Request for Bids or Request for Proposals) Copy of RFB or RFP Proposal scoring grids including who participated in the scoring Proposal and contract of winning bid Copy of RFB or RFP Proposal scoring grids including who participated in the scoring Proposal and contract of winning bidder Micro Purchase (aggregate dollar amount < $3,000) The micro purchase method shall be used for aggregate purchases not greater than $3,000. Purchases can be made without obtaining competitive quotes if management determines the price for purchase is reasonable. Purchases under this method should be distributed among qualified suppliers. Small Purchase Method (up to Simplified Acquisition Threshold) The small purchase method shall be used for relatively simple, informal purchases with an aggregate cost of at least $3,000 but not more than $150,000. Employees shall make every reasonable effort to obtain price or rate quotations from a minimum of three responsive providers to ensure reasonable competition. Such quotations shall be documented and made part of the procurement files for review purposes. Documentation of all awards must substantiate the best price/value. Aggregate purchases exceeding $150,000 shall not be divided to fall within the small purchase limit and avoid competitive bidding requirements. Split purchases used to circumvent competitive bidding shall be considered flawed and may be disallowed. Formal Advertisement Methods (aggregate cost > $150,000) Purchases with aggregate cost exceeding $150,000 must be procured using one of two formal advertisement methods. The nature of the goods/services needed generally specifies the method used. The sealed bid method is generally used to obtain goods and services where 58

77 precise requirements can be easily specified. The competitive proposal method is generally used to obtain services that cannot be specifically defined. Both methods solicit written responses via public invitation (advertising). Sealed Bid Method The sealed bid procurement method shall be used if, at a minimum, the following conditions are present: Complete, adequate and realistic specification or purchase description is available Two or more responsible suppliers are willing and able to compete effectively for the award and Procurement lends itself to a firm fixed-price contract and lower-tier subrecipient or contractor selection based primarily on price is appropriate In formally advertised procurements the following shall be accomplished: Issue invitations for bids to known suppliers and publicly advertise the invitation allowing sufficient time, considering the complexity of the item to be procured prior to the date of bid opening, to permit adequate responses Clearly define the items or services needed to enable bidders to respond properly Open all bids publicly at the time and place stated in the invitation for bids and Award a firm fixed-price contract (lump sum or unit price) by written notice to the responsible suppliers whose bid, conforming to the invitation for bids, is lowest in price Factors such as discounts, transportation costs and life cycle costs shall be considered if the invitation for bids provides for their consideration. Payment discounts may be used to determine the low bid only if prior experience indicates such discounts are generally taken. The invitation for bid should state the organization may reject any or all bids when there are sound, documented business reasons. Competitive Negotiation Method The competitive negotiation method shall be used if the following conditions are present: Nature of the item or service needed precludes developing a specification or a purchase description precise enough so all interested parties have an identical understanding of the requirement In addition to price, other factors will be considered in making an award and Two or more responsible suppliers are willing and able to compete effectively for the award When using the competitive negotiation method, the following must be accomplished: Solicit offers by distributing RFPs to an adequate number of qualified sources to ensure competition. This should include contacting sources included on the organization s mailing or bidders lists, publicizing the RFP and honoring requests for copies of the RFP to the maximum extent practicable 59

78 Ensure the RFP identifies all significant evaluation factors, including cost or price, and the relative importance of each Identify the type of contract (cost reimbursement, fixed price, or fixed unit price performance based) to be awarded Provide mechanisms for the following: o Making technical evaluations of proposals received and determining responsible suppliers for the purpose of holding written or oral discussions o Selecting the lower-tier subrecipient or contractor whose proposals, when evaluated, are believed to have a reasonable chance of being selected for awards o Conducting negotiations with bidders deemed to be in the competitive range o Awarding the contract to the responsible bidder(s) whose proposal will be most advantageous, price and other factors considered; and o Notifying unsuccessful bidders of the award. Request for Proposal Process The RFP process provides the opportunity for negotiation of both technical and cost/price elements with responsive and responsible bidders whose proposals are judged to be within the competitive range. In addition to price, values such as experience and apparent understanding of the quality/effectiveness of the goods or services must be considered. To assess these values equitably, a point system should be used to rate the proposals received. All requests for offers for the provisions of goods and services must be in writing. At a minimum, an RFP process shall include the following elements: Bidders shall submit a line item budget RFP process shall require proposals are separately rated by staff and/or other qualified objective third parties using a rating method to set criteria for valuing and judging price reasonableness and consideration of past performance in a quantifiable and criteria referenced manner. Rating sheets describing the minimum qualification thresholds, dated and signed by designated reviewers, must be maintained RFP process shall provide for individual scores to be aggregated Final awards shall be consistent in dollar value and category with the stated intentions and numerical ratings in the RFP. Any inconsistencies shall be documented. Awards for training shall be in-demand occupations approved by the Board Awarded contracts shall be consistent in cost, scope and deliverables approved by the Board and any inconsistencies shall be documented and An RFP shall not indicate acceptable prices This method of solicitation requires step-by-step written procedures to address the ways the proposals will be developed. The process begins with some basic decisions described in the following section. 60

79 Basic Decisions Regarding the RFP Because the RFP is an extension of the local planning process, there are many variables to its development. Employees shall be aware each method has its own vulnerability and requires countervailing steps and measures. Basic considerations are as follows: Yearly or Multi-Year Contract The yearly method means the contract shall be for a period of one year only. In using the multiyear choice, the organization shall establish additional year continuation requirements such as whether or not an updated proposal will be required. The renewal process must be fully documented from start to finish. Single or Multiple Cycle RFPs Employees shall decide on the most effective system for issuing the RFP, whether one RFP cycle should be utilized for all procurement transactions or whether it would be more appropriate to establish varying cycles for different transactions. An important consideration is the length and timing of the cycles within the previously established frameworks. Program Dollar Allocations, Single Figure or No Dollar Figure In publishing the RFP, employees must decide whether to include the overall program allocation, the amount of the allocation set-aside for the RFP process, or omit any inclusion of available funding. It is generally preferable to not make public the amount of the set-aside allocation, as bidders may attempt to back into the amount available. Open or Rolling RFP Similar to the single/multiple cycle decision, employees should decide on the acceptability of open or rolling RFPs. Repeatedly funding an organization through noncompetitive, roll over awards creates a risk of unreasonable pricing and inadequate quality, especially in situations where the activity being sought is a tailored rather than an off-the-shelf procurement. The market should be tested periodically to signal a readiness for acceptance of change and to demonstrate no one has a lock on the procurement action. RFP Development An acceptable RFP must reflect decisions concerning funding sources, labor market conditions, program mix and federal, state and local requirements. An internal review shall be conducted to 61

80 ensure all required elements have been included in the document and are described in detail, leaving nothing to assumption. If an area is to be reviewed separately (during negotiation or after selection) the RFP should make this clear. While it is not required to publish the point scale assigned to each criterion as a part of the RFP package, the scale must be developed and established prior to the solicitation. Any requirement noted in the RFP instructions must be included in the evaluation criteria. It shall be decided, and stated in the RFP, whether proposing entities will be afforded an opportunity to submit information or documentation initially omitted. It is of the utmost importance to the integrity of the RFP process proposing entities be afforded fair and equitable treatment. The RFP package shall include general information such as the purpose, due date, information about the bidder conference, available funds, proposed grant period and type of contract to be awarded, applicable policies and procedures, assurances and certifications and the contract boilerplate (if applicable). The package shall also contain solicitation instructions including a requirement for information, as applicable, concerning the bidder s background and experience, accounting system and audit/monitoring results, as well as instructions for developing the program proposal, budget detail and performance schedule. Modifications to the RFP During the procurement process, if changes occur regarding service delivery requirements, funding, or the scope of work to be procured, the RFP may be amended. All bidders of record shall be notified of the modification(s) in writing. If modifications are substantial and may affect a bidder s right to equal and non- biased treatment, the RFP shall be withdrawn and another shall be prepared. RFP Elements A strong RFP process reflects the goals and objectives of the organization. The RFP shall be comprehensive and detailed to secure responsive proposals. If an element is not included in the RFP, it cannot be considered during the rating process. At a minimum, the RFP shall include the following: Proposal Outline - This element identifies the exact format and sequence for submitting responses. This can be accomplished by including a table of contents in the RFP to define the expected contents and format. Statement of Work - The RFP must include a statement of work. One of the most crucial parts of the RFP package is the statement of work. This provides a clear, concise description of the services to be provided and influences the bidder s actions and indicates expectations as well as whether this is a subrecipient or contractor procurement. A sufficient statement of work summarizes the key features of the proposal in terms of mandatory, optional and supplemental components and program results. A statement of 62

81 work is comprehensive and includes definitions and specifications (such as units of service, standards, performance goals, objectives, activities) of the workforce development services to be purchased. The proposed program or activity must be sufficiently detailed and adequate to protect federal/state funds. This item is developed, in negotiation with bidders, to establish acceptable levels of performance during the time period for the training. Time/date - This element includes statements regarding the period of time during which services are to be performed and due dates established for responses to be considered. Where proposed contracts are to be multi-year, the RFP should include requirements for continuing the additional years. Protest Rights - This element establishes the recourse for bidders who believe their rights were violated in the solicitation or selection process and for those whose proposals were rejected. The RFP shall identify the process to be followed when protesting or inquiring. It shall include the name and address of the person to whom inquiries may be submitted and the time frame for submittals. Methods to be undertaken upon receipt of the inquiry, should be addressed, including who will respond and the time frame for response. Right to Not Make Award - This element includes statements regarding the soliciting organization s right to accept or reject any and all proposals received. It also addresses the organization s right to cancel all or portions of the RFP or reject any contract, and whether any of the bidder's costs in preparing or submitting a response to the RFP will be paid. Negotiation Requirement - This element establishes the soliciting organization s negotiation rights to contact the bidder to clarify, explain, or verify any aspect of a submitted proposal in response to an RFP. It also establishes the right to require the revision of any price, technical aspect, or other portion of the proposal resulting from negotiations conducted. Signature Authorization Certificate - This element includes signed statements from the responding organization to ensure the individual signing on behalf of the organization has the authority to submit the proposal and carry out services solicited in the RFP. Defined Cost Data Requirement - This element identifies fiscal compliance requirements of cost categories, allowable costs and references to cost limitations (where applicable) by specific program legislation or regulation. This element also specifies the use of specific forms (if applicable) such as use of a standard budget form to be used in responding to the RFP. Line Item Budget by Cost Category - This element includes an outline of the budget summary to be completed by the bidder. It must require sufficient detail of costs to enable an analysis of cost/price reasonableness. Planned expenditures within each cost category should be detailed by line item. Responsiveness Thresholds - This element identifies minimum standards for considering a response, as well as any component to cause a proposal to be disqualified. These components may include administrative and organizational qualifications, fiscal system 63

82 standards, performance and outcome expectations, expected completeness, compliance with RFP requirements, adherence to time frames, pre- award survey results and other provisions. Assessment Ranking Criteria - The entire review and selection process for assessing and considering responses should be identified in the RFP. The description should note when selected staff and committee members will review the proposals. It shall also describe how the proposals will be reviewed. The discussion shall include the ranking or rating criteria to be used and how points will be assigned, as well as any considerations relating to competition, reasonableness of cost/price, organizational issues and scope of work activity. Performance Standards - This element defines the established goals and outcomes expected in the solicitation. Any written procedures regarding performance standards to be met through services solicited should be included. Participant Selection - This element identifies the approach to be used and the process to be followed to select participants, negotiated service levels for target groups, clear delineation of responsibility for participant recruitment and a provision for the contingency of low enrollments. Policy Priorities - This element identifies policies or statements of intent regarding program specific priorities established by the soliciting organization as a result of its review of local workforce development needs. Required Certifications - A certification of compliance with the Clean Air Act, Federal Water Pollution Act, Drug-Free Workplace Act and prohibitions on lobbying, suspension and debarment may be required by federal regulations. All RFPs expected to result in a lower tier subrecipient award or contract exceeding $100,000 must include a completed debarment certification or statement of compliance. Federal agency organizations must certify they will provide a drug-free workplace as a pre-condition of receiving a federally funded contract exceeding $100,000. Lobbying certifications are required for all lower tier subrecipient contracts exceeding $100,000. Conflict of Interest - This element defines the soliciting organization s code of conduct and conflict of interest policies. Such policies shall include confidentiality of the proposal process, arms-length negotiation expectations with the bidders, objectivity and fairness bidders may expect in the RFP process, provisions concerning the protection of government funds and expected standards of performance. Corporation Certification - When applicable, this element requires submission of the State of Kansas Corporation Certification to include articles of incorporation, organization charts, bylaws and governing board members. The element also requires submission of the certification of nonprofit status, if applicable. Standard Contract Terms and Conditions - All RFPs shall include a copy of the general obligations to be made a part of the final contract. Definition of Terms - All key terms contained in the RFP shall be expressly defined in the RFP. 64

83 Regulations - Potential respondents of the RFP are expected to be familiar with applicable regulations and appropriate directives governing the program. All lower tier subrecipients and contractors selected for a subaward or contract are expected to understand and comply with all applicable requirements in conducting services under the agreement awarded. Copies of all legislation and regulations must be made available upon request. Program Income Requirements - This element describes the soliciting organization s requirements concerning profit earned/program income for lower tier subrecipient solicitations. Refer to applicable regulations for guidelines to establish reasonable profit level and program income disposition requirements. Pell Grants and Other Funding Sources When applicable, this element identifies funds that may directly or indirectly impact the services solicited under the RFP. Provisions shall require duplicate resources be used to supplement the expenditure of federal/state funds. Key Staff Qualifications When applicable, this element requires information concerning the staff qualifications and licensing and/or certification necessary to provide services. This could include a request for resumes and job descriptions for personnel to be hired for the services to be provided. Training Definition, if applicable - This element requires the following information regarding any training to be provided: o Days/hours o Sequence o Duration o Course curriculum o Skills to be achieved o Measurement of achievement o Pre/post testing o Entrance minimums/maximums o Attendance Development/Use of Bidders Lists Development of the bidders list is accomplished through a survey of the open market. Efforts to fortify the list must be made through advertising and other means designed to recruit the greatest number of potential bidders. Bidders lists are intended to provide a directory of responsible bidders/bidders the organization may utilize in its solicitation of goods and services. A potential bidder may have his/her name placed on a potential bidders list maintained and kept current by the entity or agency conducting procurement activity. Release of information about the procurement must not compromise the equal competitive status and treatment of all potential lower tier subrecipients and contractors. Historically, underutilized businesses must have an equal opportunity to compete for and be selected for award of contracts or subcontracts. 65

84 Published Notice A competitive procurement is formally advertised by publishing a notice of intent to contract. Consider the type of service to be purchased, the geographic area to be served, the number of individuals to be served and the availability of resources (i.e., staff, time, funding, etc.) to determine the appropriate degree of advertisement. The following information should be included in the published notice: Brief description of the issuing agency and service to be provided Description of geographic area to be served How to obtain a RFP package Deadline for obtaining RFP package and submitting an offer Date of bidder conference, if applicable and Name and phone number of contact person If Federal funds will be utilized for procurement an organization receiving approval must be an Equal Opportunity Employer Bidders Conference The entity conducting the procurement may hold a conference for potential bidders to acquaint them with procurement policies and procedures, the service(s) being procured and the requirements of the RFP. The decision to hold a bidders conference is based on the extent of competition, the complexity of the RFP material and resources available (i.e., staff, time, funding, etc.). If a bidder s conference is held, the information concerning the date, time and place of the conference must be stated in the procurement package and in the advertisement of the procurement. Ideally, the conference is held shortly after the procurement package is released and after potential bidders have had time to review the RFP. The conference can be conducted in one or more of the following ways: Deliver a presentation on the procurement package, then accept written questions from those in attendance Accept written questions only and respond to bidders only in writing Accept written and oral questions and respond orally and in writing with copies of the questions and answers provided to all potential bidders of record. Only written answers to questions are considered official and binding. Following the bidders conference, all written questions and answers should be documented and maintained in the procurement file. In any event, all bidders must be treated equally and be given access to the same information. The bidders conference may be recorded by video or audio for future reference and clarification and Capacity-building conferences may be held by entities procuring services. At these conferences, staff may complete an example or model package to give potential bidders 66

85 an understanding of the procurement process. Capacity building conferences must be held prior to a procurement activity. Receipt of Late Offers Offers received after the RFP s specified date and time shall not be considered. Unsolicited Proposals If an employee receives an unsolicited proposal and considers the proposal for funding, the employee must document a determination of need and initiate a full procurement process. If an RFP or other solicitation is developed, the employee must take special care to ensure the language contained in the specifications is unbiased, clear and unambiguous. Every effort shall be taken to ensure the principle of full and open competition is maintained. Proposal Processing The method by which an RFP is processed is equally as important as the contents of its package. The availability of the RFP should be announced through a legal notice in general circulation newspapers and bidders list notices (if applicable) updated at least annually. A bidder s conference is beneficial in providing information regarding the RFP. A list of attendees and minutes of the meeting shall be kept in the official file. An official proposal receipt list shall be maintained. Proposals received should be date and time stamped. Receipt signatures shall be required for hand delivered proposals. All proposals accepted shall be reviewed. Initially, proposals must be reviewed for completeness. If a proposal is incomplete, the procuring organization may either contact the bidder to obtain additional information or declare the proposal unresponsive, thereby eliminating it from further consideration. In all cases, the procurement procedures shall identify which practice will be used when incomplete information is received and such information should be shared with potential bidders. Responsive offers are those offers conforming to all the requirements of the solicitation request. The procuring organization must ensure potential lower tier subrecipients are none of the following: Organizations/Corporations not in good standing with the State of Kansas (delinquency in paying taxes, etc.) Organizations/Corporations listed on the federal debarment list f425559b9408&interactionstate=jbpns_ro0abxc0abbfannmqnjpzgdlvmlld0lkaaaaa QATL2pzZi 9uYXZpZ2F0aW9uLmpzcAAHX19FT0ZfXw**&portal:type=action#1 67

86 The review and rating of responses to solicitations through a consistently applied evaluation method is of primary importance in the procurement process. The key to an acceptable method is the assurance of equal treatment and arms-length consideration. In developing a method for reviewing and rating responses to solicitations the following considerations should be addressed: Each acquisition shall include evaluation factors specific to the particular acquisition A cost analysis shall be performed by the contracting entity to arrive at the best offer. A cost reasonableness determination shall be part of the evaluation process and such determination shall be made a part of the procurement file and While price is an important factor in selecting proposals for an award, other factors in the competitive proposal process shall be considered. Those factors may include the following: o Quality of services offered o Operating characteristics o Technical innovations o Administrative capability o Compatibility with ongoing programs of the bidder s organization o Previous experience in providing the same or similar programs o Audit/monitoring reports; and o Goal attainment and program outcomes Review criteria shall include, at a minimum, the following: Administrative and organizational capability - The demonstrated ability of the responding organization to successfully administer and operate a program of services of the kind and scope proposed including the following: o Experience providing services o Quality and staffing pattern of project personnel and o Organization s capability for project administration and fiscal management Scope of work activity - The demonstrated methods proposed to achieve the desired results through the adequacy of detailed work plans, activities and outcomes identified in the proposal Program Budget - The demonstrated cost reasonableness of budgeted items with respect to permissibility, necessity and relationship to the provision of services identified in the proposal and its anticipated outcomes Generally, the procuring organization selects the lower tier subrecipient or contractor receiving the most favorable evaluation, cost and other factors considered. Where only one agreement is to be awarded and more than one bidder is being considered for an award, changes in proposals resulting from any negotiation performed with each bidder shall be re-evaluated in accordance with the same evaluation method used in the original review. Proposals received shall be rated in relation to other proposals received in the same solicitation. Proposals selected for an award, as a result of the review and evaluation method should be 68

87 contingent upon satisfactory results received from negotiations conducted and a pre-award survey of the organization. The procuring organization should reserve the right to not award a contract should the proposals received fail to meet established minimum standards. In all RFP procurements, documentation to justify the selected bid is required. All bidders shall be notified in writing of the results of the selection process. Upon request, procuring organizations may conduct a meeting with unsuccessful bidders. A copy of the successful proposal may be made available upon request. In the review and decision process, it is important to follow established RFP steps to the letter. Each decision step must be segregated, each step and outcome at all levels must be documented, the roles of each decision making group (i.e., review committee, program staff, Board staff, etc.) must be distinguished, and all records must be maintained in the official files. Selection and Award Process Because of its importance to the procurement process, the system for selection and award must be well planned in advance of the receipt of proposals. The written plan should include the following: Dates the process will begin and end Roles assigned to staff and committee members Reasonableness of cost/price (analysis required) Scoring approaches Procedures to be used in technical evaluation of responses and Assurances of maximum use of full and open competition, including criteria to justify approval of any sole source procurements Technical evaluations shall include the following: Quality of services offered Operating characteristics Technical innovations Administrative capability Compatibility with other ongoing programs Previous experience in providing the same or similar programs and Review of monitoring reports, goal attainment and program outcomes (if the bidder is a previous subrecipient, lower tier subrecipient or contractor) Evaluation Process - The need to rigorously correlate the evaluation process to the technical criteria is especially important. The RFP shall incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. The RFP must set forth all requirements bidders must fulfill and all other factors employees will use in evaluating bids or proposals. The evaluation process must be based upon the technical criteria included in 69

88 the RFP. Evaluation Factors - Factors must be established and used to standardize and evaluate the proposals received. In addition to the standard audit requirement and necessary debarment language, the following factors must be utilized to evaluate responses to solicitations: How the Statement of Work was addressed in relation to what was requested in the RFP Pre-award survey results satisfying the related questions of soundness of fiscal and administrative ability. Existing lower tier subrecipients or contractors shall have a valid preaward survey/monitoring report not more than two years old Sufficient knowledge of federal/state/local policies to perform objectives of the RFP Cost-reasonableness consideration for all aspects including cost per objective or payment sequence, administrative costs (including salaries) and building/rent costs How objectives are addressed Programmatic structure and format Conformance to the soliciting organization s requirements Budget reviews including payment schedule Experience of those proposed to perform the training documented and In case of ties on the rating, consideration may be given to those bidders who propose additional services to participants beyond the scope of work/core training/budget. Historically Underutilized Businesses may also be given consideration in case of ties in the evaluation process. Rating/Scoring Sheets - Once evaluation factors have been established, they are used to evaluate/score the proposals received. Employees may achieve the benefits of group rating by holding a discussion of the evaluation factors in advance of the actual rating. However, proposals shall not be rated as part of a group. Each proposal must be rated individually. Rating/scoring sheets are used to determine which bidder will be offered a contract agreement. In the event a dispute or disagreement arises concerning the projects funded, the rating/scoring process will be subject to close scrutiny. A clear and objective format is essential to this particular phase of the procurement process. A sound rating/scoring is possible only if a technical or specific RFP is utilized. Different parts of the proposal have varying importance factors and shall be reflected in the scoring of the proposal components. Usually each component has a number of points possible to become part of the overall score. Evaluation Criteria - Weighting an evaluation factor can be accomplished by using numbers or qualitative description. The evaluation factors may be prioritized in ascending or descending order of importance, such as the following: 70

89 Permissibility of proposed activities or services Conformance with regulations and policies Capability (experience) of bidder to deliver services (both programmatic and administrative) and Cost (amount and reasonableness) Weights may be assigned as a percentage or as a point value. Percentages should add up to 100 percent. Individual point values should add up to the total number of points in the scoring system. After evaluation, each rating/scoring sheet shall be completed and signed by the reviewer. All scores shall be collected and totaled. To help ensure objectivity, each member of the responsible committee should review every proposal. The proposals must be rated against standard criteria established by the organization and its governing board. This criterion shall be included in the RFP. Rating results shall be issued in writing and reported to the Board. Under no circumstance will members of the review committee be directed, or pressured, to change their rating results by any other committee member, Board member, or staff member. Violations of this policy may result in disallowance of all subsequent contract expenditures. Relevancy and ensuring the best product is received at the best value should always be the primary objectives of procurement. Applying common sense, knowledge of the process and familiarity with the specific situation will help ensure these objectives are accomplished. Noncompetitive Procurements - i.e. Sole Sourcing Noncompetitive negotiation is procurement through solicitation of a proposal from only one source or after solicitation of a number of sources; competition is determined inadequate or nonexistent. The circumstances under which procurements may be awarded by noncompetitive negotiation are limited to one or more of the following conditions: If an emergency exists and the urgency of the requirement will not permit a delay created by obtaining competition On-the-Job Training (OJT) contracts, except OJT brokering contracts, which shall be selected competitively The item is available from only a single source Competition is deemed inadequate by an attempt to obtain competing bids Enrollment of individual participants in classroom training and The awarding agency authorizes noncompetitive proposals 71

90 The following types of purchases are also exempt from competitive procurement: Magazines Books Periodicals Newspapers Direct advertising space and time, unless there are multiple businesses in the area able to provide the same services to the same coverage area needed and same demographics Conferences the cost of attending or participating is exempted. The cost of putting together a conference is not exempted. Training Sessions and Seminars related to the individual s profession or program and that are available to the public Copyrighted materials such as films, film strips, books, pamphlets, videotapes, or audiotapes (computer software is not included in this category). Copyrighted materials are defined as those which are available for purchase from only the publisher owning an exclusive copyright or from a single distributor operating under an exclusive franchise from the publisher. Updates of Computer Software, which the agency already owns Repair services and operational supplies by original manufacturer, if such repairs/parts/services/supplies must be performed or obtained by the original manufacturer or by the manufacturer s authorized service center, because (1) the nature of the repair, service or supplies are available only from the original manufacturer as a result of a lawful patent, or (2) the technical nature of the repair or service can only be performed by the original manufacturer due to a patented design or technical manufacturing process or (3) repairs of such equipment would violate the terms of, or part of, the equipment warranty or purchase agreement Organizations eligible to acquire equipment from either State or Federal surplus property may do so without any additional procurement practices Organizations eligible to utilize a state contract/agreement awarded by the State of Kansas may do so without any additional procurement practices Awards for on-the-job training may be made (except OJT brokering awards which shall be selected competitively) of program participants without obtaining competition if the contracts, subgrants, or subagreements provide that an employer-employee relationship will exist between the employer/contractor and the program participant; and that the employer/contractor will provide job training to enable the participant to perform effectively as a regular employee of the employer/contractor s establishment. When such awards are made, the organization shall maintain a record of the awards and, if requested, shall furnish the state with the record that includes the employer/contractor s name, award amount and services to be performed. Payment for professional certification licenses which are needed by the client to complete their job training 72

91 Micro purchases including participant program outlay purchases for $3,000 or less (i.e. tools, books, supplies, uniforms) Poor planning shall not qualify as an emergency. Procurement may be handled as an emergency if the following occurs: A public calamity requires the prompt purchase of items to provide for public needs or preserve property The item is necessary to preserve or protect the public health or safety of residents or The item is made necessary by unforeseen damage to public property A noncompetitive negotiation procurement resulting from inadequate competition must be preceded by a demonstrated good faith effort on the part of the organization to solicit qualified providers through the small purchase, sealed bids, or competitive proposal processes. Noncompetitive/sole source procurements require cost negotiation and a thorough cost/price analysis. The files must document evidence the values achieved through competition have been maintained. Noncompetitive Procurement Application - The organization must complete and submit the noncompetitive procurement application form to Commerce prior to executing a contract for any sole source procurement exceeding $25,000. Application submission for noncompetitive procurements in response to public emergencies is required within 30 days of contract execution. All organizations shall document the circumstances of the noncompetitive procurement in the procurement file. The Noncompetitive Procurement Application should be submitted to the following address: Kansas Department of Commerce Fiscal Unit 1000 S.W. Jackson, Suite 100 Topeka, Kansas or fiscal@kansascommerce.com Protest/Dispute/Grievance Procedures To ensure equity both in the pre-award and post-award phases of the procurement, written procedures are required for protests and disputes. Once a selection is made bidders must be notified in writing of the results. Failed bidders must be advised in writing they may have the right to appeal the decision. Employees must include this information to prospective bidders. Potential bidders shall be provided with the name and address of the person to contact for any protests, appeals, disputes and inquiries. The organization will be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but not limited to, protests, disputes and claims. These 73

92 standards do not relieve the organization of any contractual responsibilities under its contracts. Protests occur when unsuccessful bidders or bidders believe they were treated unfairly in the contract award process. Protesters generally believe they, rather than the organization selected for the award, deserve the contract. Protests may be made before or shortly after an award has been made. Since award of contracts may depend on the disposition, protests should be handled as expeditiously as possible. Disputes, unlike protests, occur after a contract is awarded and involve a disagreement between the procuring agency and the supplier related to one or more contractual provisions. To ensure objectivity, parties other than those charged with failure to make a proper award or recognize bidder s rights should handle disputes and protests. Commerce shall accept no protest or dispute appeal until all administrative remedies at the organizations level have been exhausted. Commerce appeal review is limited to the following: Violations of federal law and regulations (violations of state or local law shall be under the jurisdiction of state or local authorities) and Violations of organization s protest/dispute procedures or failure to review a protest or dispute Any complaint, protest, or dispute will be resolved using the organization s Grievance and Complaint Policy. Administrative processes and negotiation will be used in advance of litigation in attempted to resolve disputes. Contract Negotiations Successful bidders should be invited in writing to enter negotiations. This phase of the procurement process involves critical decisions. Decisions, including approvals required before an agreement is executed, should be described in writing. Pre-Negotiation Following notification of selection, successful bidders shall be invited to attend a pre-negotiation session, if appropriate. The session is intended to advise each bidder of the parameters of the negotiations to be followed. Pre-negotiating discussions are conducted among monitoring, planning, operations, management information system, and contracting and client service staff. These sessions usually reveal the previous year s deficiencies or future program and performance variations. These discussions result in a written listing of weaknesses, necessary changes and other items to be addressed during negotiation discussions. Purpose of Negotiation Negotiation procedures should establish the initially proposed funding amount as a starting point rather than an entitlement, and additional cost detail may be required of the bidder for the 74

93 purpose of establishing a reasonable cost or price. Any increase in costs or reduction in services must be justified and documented to be in the best interest of the program and must be consistent with the authority delegated by the governing body. Negotiation During negotiation, focus is given to cost/price analysis, clarifying the Statement of Work, developing appropriate performance standards and payment terms, assuring reporting requirements measure performance and verifying the bidder is a responsible party. Part of the negotiation discussions should include administrative cost restrictions and local limits on profit/program income. Additional issues of audit requirements, appropriate insurance, bonding and necessary legal fees should be included. Documentation The steps in the negotiation process should be fully documented, including the names and titles of the individuals participating in the negotiation process. In noncompetitive negotiations a written record of the process should be maintained to sufficiently demonstrate the objectives of least cost, fairness, impartiality and independence have been appropriately safeguarded in the absence of competition. Pre-Awards Survey The purpose of conducting a pre-award survey is to ensure each organization being considered for funding meets all federal/state/local requirements for the provision of program services. For existing lower tier subrecipients and contractors, a valid pre-award survey or monitoring report, not more than two years old, is adequate. The pre-award survey process, including the name(s) and title(s) of individual(s) responding to the survey, should be documented. A report should be prepared noting the strengths and weaknesses identified during the survey. Contract Policy The type of contract used is determined in the negotiation process. The type of contract or agreement form selected for a given procurement shall reflect the characteristics of the products or services to be acquired. It should also provide suitable assurances costs incurred are reasonable and necessary, given the value provided, the risk entailed in the contract s performance and current market conditions. Employees shall not use a cost-plus-a-percentage-of-cost or percentage-of-construction-cost contract. 75

94 Special Procurement Considerations Contractors list A contractors list for services is used in circumstances requiring occasional, often unpredictable access to specific services and/or goods which, when the need arises, may require almost immediate acquisition. Lists are developed in anticipation of the unpredictable yet likely recurrence of situations requiring response by a given program. The development of the contractors list requires issuance of either an invitation for bid or an RFP (if it can be reasonably anticipated the purchase will be less than $25,000 in the aggregate, small purchase procedures may be employed). Selection of contractors to be included on the list results from a technical evaluation and the issuance of an instrument of understanding with the contractors to include procedures and potential deadlines for eventual selection and contract execution. The nature of the unpredictable need for services/goods may preclude a cost/price reasonableness analysis at the time of proposal evaluation and selection. This does not eliminate the requirement to conduct a cost/price reasonableness analysis at the time of acquisition of the service/goods. A contractors list ensures those included on the list have undergone a full technical evaluation as described in this chapter for the specific services/goods disclosed on the list. At the time of acquisition, employees must notify all entities willing to provide the goods/services in the area required of the intent to procure. The notification shall provide specifics of the purchase and (as prescribed in the instrument of understanding) a deadline for cost estimate submission. Employees shall conduct a cost price analysis and shall select a vendor(s) for negotiation and contract development. Contractor Enrollment There are circumstances where institutions are enrolled as potential service providers based on licensing requirements (must be licensed in Kansas) and such other factors as minimum insurance. For example, child care providers are placed on the list if they are licensed by the State of Kansas and maintain insurance. Customized Training Customized training means company or industry specific training designed to fulfill specific workforce needs. For this purpose, an organization may consist of a company(s) or industry, or a trade union or other industry cooperative organization. The organization may be in an alliance or partnership with a training provider to develop and deliver training for specific skills designed to fulfill current workforce needs in the industry. The training must be designed to fulfill training standards/quality and performance consistent with the approved training plan of the Board. Customized training is conducted with a commitment by the employer to employ an individual 76

95 upon successful completion of the training, and involves the employer paying for a significant portion of the cost of training, as determined by the Board involved. In the case of customized training involving an employer located in multiple local areas in the State, the Governor of the State determines the significant portion of the cost of the training as determined to be appropriate. In most circumstances, this type of training agreement is procured competitively as prescribed. However, organizations may have short timelines requiring immediate implementation of a training program. Under conditions that can be documented, and with a full justification as to the value of the opportunity, the proposal may be procured under the noncompetitive procurement method. In these circumstances, the organization shall obtain prior written approval from Commerce. A full explanation and justification for the training, with a description of the need and its potential for the local economy, as well as for the participant, shall accompany the notice. The opportunity must clearly be an opportunity for the participant to improve his/her circumstances in terms of skill development and pay consistent with the requirements of the funding program. It is imperative the employee provides a full explanation of the circumstances precluding competitive procurement and all documentation to back up the justification is maintained in the organization s files. The request shall include the results local board determinations of cost of training appropriateness, taking into account: the number of employees participating in training, wage and benefit levels of those employees (at present and anticipated upon completion of the training), relation of the training to the competitiveness of a participant, and other employerprovided training and advancement opportunities. As with all procurement files, a comprehensive cost/price analysis must be maintained in the procurement file. Pay-for-Performance Contract Strategy This is a procurement strategy that uses pay-for-performance contracts in the provision of training services described in Section 134(c)(3) or activities described in Section 129 (c)(2) and includes: Contracts, each of which shall specify a fixed amount that will be paid to an eligible service provider (which may include a local or national community-based organization or intermediary, community colleges, or other training provider eligible under Section 122 or Section 123) based on the achievement of specified levels of performance on the primary indicators of performance described in Section 16(b)(2)(A) for target populations as identified by the local board, with a defined timetable, and which may provide for bonus payments to such service provider to expand capacity to provide effective training A strategy for independently validating the achievement of the performance described above and A description of how the State or local area will reallocate funds not paid to a provider because the achievement of the performance described above did not occur 77

96 Professional Services Contracts For the purpose of this policy the term professional services means those within the scope of the practice of accounting, architecture, optometry, medicine, land surveying, professional engineering, or real estate appraising as defined by Kansas law or those performed by any licensed architect, optometrist, physician, surgeon, certified public accountant, land surveyor, professional engineer, or a state certified or state licensed real estate appraiser in connection with his professional employment of practice. Only those individuals or entities listed above may be contracted for services under a professional services contract. Contracts with professionals cannot be based on, nor can their selection arise from, competitive bidding. Instead, the selection and award of such contracts and the engagement of such services shall be made on the basis of demonstrated competence and qualifications for the type of professional services to be performed. The costs may be deemed fair and reasonable as long as the professional fees are consistent with and not higher than the published and recommended practices and fees of the various applicable professional associations and do not exceed the maximum provided by any state law. Such a process must be documented prior to the contract award. The choice of a potential contractor may be accomplished through the use of an RFP or an Invitation for Bids. Although attorneys or legal services in general are not included in the definition of professional services outlined above, all agreements with attorneys to provide legal services must result from an arm s length relationship. Organizations shall not enter into agreements with attorneys without first ascertaining and documenting their demonstrated competence, knowledge and qualifications. For the purposes of this policy, organizations may choose an attorney through the RFP or RFQ process as identified above (professional services). Consultant Contracts Consulting service means the practice of studying an existing or a proposed operation or project of an agency and advising the agency with regard to the operation or project. Only those contracts providing for the study of an existing or a proposed operation or project of an agency, and advising the agency with regard to the operation or project can qualify as a consultant contract. For example, a contract providing for the study of an agency s computer capability and the advice given to better utilize such capability would be a consultant contract. A contract to provide instruction to staff in the more efficient use of the computer would not be a consultant contract, as there was no study of the system involved. A consulting service may be procured only under the following circumstances: There is a substantial need for the consulting services and The organization cannot adequately perform the services with its own personnel or obtain the consulting services through a contract with another state agency 78

97 Consulting services must be competitively procured and do not fall under the rule for professional services described above. In the selection of a private consultant, employees must accomplish the following: Demonstrate, through documentation, a substantial need for consulting services exists Base the selection on demonstrated competence, knowledge and qualifications and reasonableness of the proposed fee for the services and Give preference to a private consultant whose principle place of business is in the State of Kansas, or who will manage the consulting contract from an office in the State of Kansas, given other considerations are equal Consultant contracts of less than $150,000 do not require formal bids. However, consultants may not receive a combination of contracts if the total exceeds $150,000 during any state fiscal year without benefit of a published competitive procurement. Consultant contracts under $150,000 may be awarded following a thorough evaluation process. This ability to perform and cost/price involved shall be evaluated for at least three prospective contractors. The object of the evaluation process is to demonstrate the best cost/price was obtained from a qualified contractor for the service being sought. Consultant contracts valued in excess of $150,000 must be secured through a formally advertised procurement process. Contract performance must be evaluated and used as a consideration in any future contract with the same party. Leased Office Space and Insurance Providers Employees shall adhere to the procurement standards for all contractor procurement actions, including the solicitation, evaluation and award of office space leasing and/or insurance providers. Although the use of informal bidding is allowable under the small purchase method, when such services are expected to exceed the small purchase threshold of $150,000, employees should ensure appropriate measures are taken to promote and maximize competition. Minimum measures to promote competition include publicizing the availability of the solicitation and disseminating it to all parties requesting it, as well as to those on bidders or contractor mailing lists maintained. Utilizing the standards outlined will ensure full and open competition and provide equal treatment to all potential respondents. A broker/agent may procure leasing office space and/or insurance providers on behalf of the organization provided these standards are adhered to. Employees must maintain documentation to substantiate the procurement and selection process. Documentation required is inherent of the procurement method used and the total dollar amount of the award. The relationship between the organization and the broker/agent must be established through an 79

98 arm s length relationship. Employees shall not enter into agreements with brokers/agents without first ascertaining and documenting their demonstrated competence, knowledge and qualifications. Although the selection of a broker/agent for these types of procurements may be informal, it is recommended this process be documented through the issuance of an RFP and a written determination of the selection process. Allowable, Allocable and Reasonable SUMM ARY OF COST ITMES NT A AC AP U A/U Not included in Uniform Guidance Allowable Allowable with conditions Allowable with prior approval of either the USDOL Grant Officer or Commerce Unallowable Some categories within the particular activity are allowable, while some e are not (consult Uniform Guidance for precise explanations). Activities 2 CFR Part 220 (A-21) 2 CFR Part 230 (A-122) 2 CFR Part 225 (A- 87) 48 CFR Part 31 1 Accounting systems NT NT A NT 2 Advertising and public relations AC AC/U AC/U AC 3 Advisory councils NT NT A NT 4 Alcoholic beverages U U U U 5 Alumni activities U NT NT NT 6 Asset valuations resulting from business combinations NT NT NT A 7 Audit services See 200 CFR Subpart F See 200 CFR Subpart F See 200 CFR Subpart 8 Automatic electronic data processing NT NT AC NT 9 Bad debts U U U U 10 Bid and proposal costs (See Item 65) Item 65 Reserved Item 65 Item Bonding costs NT A A NT 12 Budgeting NT NT A NT 13 Civil defense costs A NT NT A/U 14 Commencement and convocation costs U NT NT NT 15 Communication costs A A A NT 16 Compensation for personal services A/U A/U A/U A/U 17 Contingency provisions U U U U 18 Cost of money (See Item 40) U U U AC 19 Deans of faculty and graduate schools A NT NT NT 20 Defense and prosecution of criminal and civil U U A/U U proceedings, claim s, appeals and patent infringement 21 Deferred research and development costs NT NT NT AC/U NT 80

99 22 Depreciation and use allowances AC AC AC AC 23 Disbursing service NT NT A NT 24 Donations and contributions U U U U 25 Economic planning costs AC/U AC/U AC/U NT/U 26 Employee morale, health/welfare costs & credits A A A U 27 Entertainment costs U U U U 28 Equipment and other capital expenditures A/U AP AP AP 29 Executive lobbying costs U U U U 30 Fines and penalties U U U U 31 Fundraising and investment management costs NT NT U U (See item 40) 32 Gains and losses on disposition of depreciable NT NT A A property and other capital assets and substantial relocation of Federal programs (See Item 64) 33 General government expenses NT NT U NT 34 Goods/services for personal use U U NT NT 35 Goodwill NT NT NT U 36 Housing and personal living expenses U AC/U NT NT 37 Idle facilities and capacit y NT AC/U AC/U AC/U 38 Independent research and developm ent NT Reserved NT AC 39 Insurance and indem nification A A A A 40 Interest, fund raising and investment m anagem ent A/U A/U A/U U costs 41 Labor relations costs AC AC NT AC 42 Lobbying U U U U 43 Losses on other sponsored agreem ents/contracts U U U U 44 Maintenance and repair costs A A A A 45 Manufacturing and repair costs NT NT NT A 46 Manufacturing and product engineering costs NT NT NT A 47 Material costs A A A A 48 Meetings and conferences NT A See Item 2 See Item 2 49 Memberships, subscriptions and professional A/U A/U A/U NT activity costs See Item 2 See Item 2 50 Motor pools NT NT A NT 51 Organization costs NT AP NT U 52 Other business expense NT NT NT A 53 Overtime, extra-pay shift, $multi-shift premiums NT AC AC See Item Page charges in professional journals NT A NT NT 55 Participant support costs NT A NT NT 56 Patent costs A A/U NT A/U 57 Plant protection costs NT NT NT A 58 Plant reconversion costs (See Item 68) NT NT NT U 59 Plant security costs U A NT NT 60 Pre-agreement costs (See Item 61) U NT NT NT 61 Pre-award costs NT AP U (formula)/ AP NT 62 Pre-contract costs (See Item 61) NT NT NT AP 81

100 63 Professional services costs A A A A 64 Profits and losses on disposition of plant equipment/other capital assets A A See Item 32 See Item Proposal costs (See Item 10) AP Reserved AP AP 66 Publication and printing costs NT A/U A NT 67 Rearrangement and alteration costs A A A NT 68 Reconversion costs (See Item 58) A A A NT 69 Recruiting costs A/U A/U See Item 2 A 70 Relocation costs NT A NT A/U 71 Rental costs of buildings and equipm ent AC AC AC AC 72 Royalties and other costs for use of patents A A NT A 73 Sabbatical leave costs A NT NT NT 74 Scholarships and student aid costs A NT NT NT 75 Selling and outreach U U NT A/U 76 Service and warranty costs NT NT NT A 77 Severance pa y AC AC AC AC 78 Special tooling and special test equipm ent costs NT NT NT A 79 Specialized service facilities A A NT NT 80 Student activity costs U NT NT NT 81 Taxes AC AC AC AC 82 Termination costs NT A NT A/U 83 Trade, business, technical and professional AC AC AC AC 84 Training and education costs AC AC AC AC 85 Transportation AC AC NT AC 86 Travel costs AC AC AC AC 87 Termination costs applicable to sponsored A NT NT NT agreem ent (See Item 82) 88 Trustees A A NT NT 89 Under recovery of costs under fed agreem ents U U U U Code of Conduct in Purchasing (45 CFR Part (c)(1)) Ethical conduct in managing the Organization's purchasing activities is absolutely essential. Staff must always be mindful that they represent the Board of Directors and share a professional trust with other staff and the general membership. Staff shall discourage the offer of, and decline, individual gifts or gratuities of value in any way that might influence the purchase of supplies, equipment, and/or services. Staff shall notify their immediate supervisor if they are offered such gifts. No officer, board member, employee, or agent shall participate in the selection or administration of a contractor if a real or apparent conflict of interest would be involved. Such a conflict would arise if an officer, board member, employee or agent, or any member of his or her immediate family, his or her spouse or partner, or an organization that employs 82

101 or is about to employ any of the parties indicated herein, has a financial or other interest in the contractor selected. Officers, board members, employees, and agents shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to sub-agreements. Unsolicited gifts Employees are prohibited from accepting any gifts of value from vendors or other persons who are attempting to influence the employee. Sporadic hospitality in the form of meals or donations of supplies (i.e. calendars, pens, caps, etc.) is generally acceptable, with a nominal cash value limitation of up to $ See Also Gift Acceptance Section of this Manual Competition (45 CFR Part ) In order to promote open and full competition, purchasers will: Be alert to any internal potential conflicts of interest. Be alert to any noncompetitive practices among contractors that may restrict, eliminate, or restrain trade. Not permit contractors who develop specifications, requirements, or proposals to bid on such procurements. Award contracts to bidders whose product or service is most advantageous in terms of price, quality, and other factors. Issue solicitations that clearly set forth all requirements to be evaluated. Reserve the right to reject any and all bids when it is in the Organization s best interest. Not give preference to state or local geographical areas unless such preference is mandated by Federal statute. (75.328(b) Name brand or equivalent description may be used as a means to define the performance or requirements (75.328(c)(1)) Nondiscrimination Policy All contractors who are the recipients of Kansas WorkforceONE funds or who propose to perform any work or furnish any goods under agreements with Kansas WorkforceONE, shall agree to these important principles: Contractors will not discriminate against any employee or applicant for employment because of race, religion, color, sexual orientation, or national origin, except where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of the contractors. Contractors agree to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. Notices, advertisements, and solicitations placed in accordance with federal law, rule, or regulation shall be deemed sufficient for meeting the intent of this section. 83

102 Procurement Procedures The following are Kansas WorkforceONE s procurement procedures: Kansas WorkforceONE shall avoid purchasing items that are not necessary or duplicative for the performance of the activities required by a federal award. (45 CFR Part (d)) Where appropriate, an analysis shall be made of lease and purchase alternatives to determine which would be the most economical and practical procurement for the federal government. (45 CFR Part (d)). This analysis should only be made when both lease and purchase alternatives are available to the program. Purchasers are encouraged to enter into state and local inter-governmental or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. (45 CFR Part (e)) The Operations Manager is encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs. (45 CFR Part (f)), In addition, the Operations Manager is encouraged to utilize State Surplus as well prior to making a purchase. The Operations Manager will include quotes from either Federal or State Surplus when preparing bids for approval by Executive Director. Documentation of the cost or price analysis associated with each procurement decision in excess of the simplified acquisition threshold ($150,000) and for sole source purchases shall be retained in the procurement files pertaining to each federal award. (45 CFR Part ) All pre-qualified lists of persons, firms or products which are used in acquiring goods and services must be current and include enough qualified sources to ensure maximum open and full competition. (45 CFR Part (d)) Kansas WorkforceONE will maintain records sufficient to detail the history of procurement, including: (45 CFR Part (i)) o Rationale for the method of procurement; o Selection of contract type; o Contractor selection or rejection; and o The basis for the contract price. Kansas WorkforceONE shall make all procurement files available for inspection upon request by a federal awarding agency. Kansas WorkforceONE shall not utilize the cost-plus-a-percentage-of-costs method of contracting. (45 CFR Part (d)) All staff members with the authority to approve purchases will receive a copy of and be familiar with 45 CFR Part , Cost Principles. Use of Purchase Orders Kansas WorkforceONE utilizes a purchase order system. A properly completed purchase order shall be required for each purchase decision (i.e., total amount of goods and services purchased, not unit cost) in excess of $3000 with the exception of travel advances and expense reimbursements, which 84

103 require the preparation of a separate form described elsewhere in this manual. A properly completed purchase order shall contain the following information, at a minimum: Specifications or statement of services required Contractor name, address, point of contact and phone number Source of funding (if applicable) Delivery or performance schedules Delivery, packing, and transportation requirements Special conditions (if applicable) Catalog number, page number, etc. (if applicable) Net price per unit, less discount, if any Total amount of order Authorized signature Date purchase order was prepared Purchase orders are created when needed. Kansas WorkforceONE does not maintain surplus purchase orders for security purposes. Evaluation of Alternative Contractors Contractors shall be evaluated on a weighted scale that considers some or all of the following criteria as appropriate for the purchase: Adequacy of the proposed methodology Skill and experience of key personnel Demonstrated experience Other technical specifications designated by the department requesting proposals Compliance with administrative requirements of the request for proposal (format, due date, etc.) Contractor s financial stability Contractor s demonstrated commitment to the nonprofit sector Results of communications with references supplied by vendor Ability/commitment to meeting time deadlines Cost Minority- or women-owned business status, or location in a labor surplus area of contractor Other criteria (to be specified by the department requesting proposal) Not all of the preceding criteria may apply in each purchasing scenario. However, the department responsible for the purchase shall establish the relative importance of the appropriate criteria prior to requesting proposals and shall evaluate each proposal on the basis of the criteria and weighting that have been determined. After a contractor has been selected and approved by the Fiscal Committee the final selection shall be approved by others according to Kansas WorkforceONE s purchasing approval policies. 85

104 Affirmative Consideration of Minority, Small Business, Women-Owned Businesses, and Labor Surplus Area Firms (45 CFR Part ) Kansas WorkforceONE defines minority and women-owned business as having ownership of a least 51% of the company. Kansas WorkforceONE defines small business as having less than 50 employees. Positive efforts shall be made by Kansas WorkforceONE to utilize small businesses, minority-owned firms, women's business enterprises, and labor surplus area firms, if appropriate, whenever possible. Therefore, the following steps shall be taken: Ensure that small business, minority-owned firms, women's business enterprises, and labor surplus area firms, if appropriate are used to the fullest extent practicable. (45 CFR Part ) Make information on forthcoming opportunities available and arrange time frames for purchases and contracts to encourage and facilitate participation by small business, minority-owned firms, women's business enterprises and labor surplus area firms, if appropriate. (45 CFR Part (b)(4)) Consider in the contract process whether firms competing for larger contracts tend to subcontract with small businesses, minority-owned firms, and women's business enterprises and labor surplus area firms, if appropriate. (45 CFR Part (b)6)) Encourage contracting with consortiums of small businesses, minority-owned firms, women's business enterprises, and labor surplus area firms, if appropriate when a contract is too large for one of these firms to handle individually. (45 CFR Part (b)(3)) Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce's Minority Business Development Agency in the minority-owned firms and women's business enterprises. (45 CFR Part (b)(5)) Availability of Procurement Records (45 CFR Part (b)) Kansas WorkforceONE shall, on request, make available for the federal awarding agency, pre-award review and procurement documents, such as requests for proposals, when any of the following conditions apply: The process does not comply with the procurement standards in 45 CFR Part 75. (45 CFR Part (b)(1)) The procurement is expected to exceed the federally-defined simplified acquisition threshold ($150,000) and is to be awarded without competition or only one bid is received. (45 CFR Part (b)(2)) The procurement exceeds the simplified acquisition threshold and specifies a name brand product. (45 CFR Part (b)(3)) The proposed award exceeds the federally-defined simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed-bid procurement. 75 CFR 86

105 Part (b)(4)) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the amount of the federally-defined simplified acquisition threshold. (45 CFR Part (b)(5)) Provisions Included in All Contracts (45 CFR Part 75 Appendix II) Kansas WorkforceONE includes all of the following provisions, as applicable, in all contracts charged to federal awards (including small purchases) with contractors and subgrants to grantees: Contracts for more than the simplified acquisition threshold currently set at $150,000, which is the inflation adjusted amount determined by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) as authorized by 41 U.S.C. 1908, must address administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate. All contracts in excess of $10,000 must address termination for cause and for convenience by the non-federal entity including the manner by which it will be effected and the basis for settlement. Equal Employment Opportunity: All contracts shall contain a provision requiring compliance with E.O , Equal Employment Opportunity, as amended by E.O , Amending Executive Order Relating to Equal Employment Opportunity, and as supplemented by regulations at 41 CFR Part 60, Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7): When required by Federal program legislation, all construction contracts of more than $2,000 awarded by Kansas WorkforceONE and its subrecipients shall include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by Department of Labor regulations (29 CFR part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction ). Contract Work Hours and Safety Standards Act (40 U.S.C ). Where applicable, all contracts awarded by the non-federal entity in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C and 3704, as supplemented by Department of Labor regulations (29 CFR Part 5). Rights to Inventions Made Under a Contract or Agreement: Contracts or agreements for the performance of experimental, developmental or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR Part 401, Rights to Inventions Made by Nonprofit Organization and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements," and any implementing regulations issued by the award agency. Clean Air Act (42 U.S.C et seq.) and the Federal Water Pollution Control Act (33 U.S.C et seq.), as amended: Contracts and subgrants of amounts in excess of $150,000 shall contain a provision that requires the recipient to agree to comply with all applicable standards, orders, or regulations issued pursuant to the Clean Air Act (42 U.S.C et seq.) and the Federal Water Pollution Control Act, as amended (33 U.S.C et seq.). Violations shall be reported to the federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA). 87

106 Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (42 U.S.C. 6201). Byrd Anti-Lobbying Amendment (31 U.S.C. 1352): For all contracts or subgrants of $100,000 or more, Kansas WorkforceONE shall obtain from the contractor or subgrantee a certification that it will not and has not used federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any federal contract, grant, or any other award covered by 31 U.S.C Debarment and Suspension (E.O.s and 12689): No contract shall be made to the parties listed on the General Services List of Parties Excluded from Federal Procurement or Nonprocurement Programs in accordance with E.O. s and 12689, Debarment and Suspension. Right to Audit Clause Kansas WorkforceONE requires a Right to Audit clause in all contracts between the Organizations and contractors that either: Take any form of temporary possession of assets directed for the Organization, or Process data that will be used in any financial function of the Organization. This Right to Audit clause shall permit access to and review of all documentation and processes relating to the contractor s operations that apply to Kansas WorkforceONE, as well as all documents maintained or processed on behalf of Kansas WorkforceONE, for a period of three years. The clause shall state that such audit procedures may be performed by Kansas WorkforceONE employees or any outside auditor or contractor designated by the Organization. Contractor Files and Required Documentation The Operations Manager shall create a contractor folder for each new contractor from whom Kansas WorkforceONE purchases goods or services. AGH shall mail a blank Form W-9 to new contractor and request that the contractor complete and sign the W-9 (or provide equivalent, substitute information) and return it in the postage-paid envelope provided. Completed, signed Forms W-9 or substitute documentation shall be filed in each contractor s folder. Contractors who do not comply with this request shall be issued a Form 1099 at the end of each calendar year in accordance with the policies described in the section of this manual on Government Returns. See the section on Payroll and Related Policies for guidance on determining whether a contractor should be treated as an employee. Procurement Grievance Procedures 88

107 Any bidder may file a grievance with Kansas WorkforceONE following a competitive bidding process. Once a selection is made, bidders must be notified in writing of the results. The written communication mailed to bidders must also inform them that they may have a right to appeal the decision. Information on the organization s appeal procedures must be made available to all prospective contractors or subgrantees upon request, including the name and address of a contact person, and a deadline for filing the grievance. Grievances are limited to violations of federal laws or regulations, or failure of the Organization to follow its own procurement policies. Receipt and Acceptance of Goods In the Administrative Office the Operations Director inspects all inspect all goods received. In the field the staff members authorized to place the order inspects the items. Upon receipt of any item from a contractor, the following actions shall immediately be taken: Review bill of lading for correct delivery point. Verify the quantity of boxes/containers with the bill of lading. Examine boxes/containers for exterior damage and note on the bill of lading any discrepancies (missing or damaged boxes/containers, etc.). Sign and date the bill of lading. Remove the packing slip from each box/container. Compare the description and quantity of goods per the purchase order to the packing slip. Examine goods for physical damage. Count or weigh items, if appropriate, and record the counts on the purchase order. Additional field process includes faxing the packing slip to the Operations Manager in the Administrative Office. This inspection must be performed in a timely manner to facilitate prompt return of goods and/or communication with contractors. Contract Administration Kansas WorkforceONE is required to have policies and procedures on contract administration. (45 CFR Part (b)) Therefore, all contract managers will adhere to the following procedures. All contractors/vendors will be given a Vendor File. Contract administration files shall contain: o The required documentation specified in the authorizations and purchasing limits table for the original scope of work and for all amendments. o Where the contract work is identified in the grant award or budget, the identification and scope of the work contained in the award or budget, and all approved changes. o Authorization of work: o No work shall be authorized until the contract for the work has been approved and fully executed. 89

108 o No change in the work shall be authorized until an amendment to the contract for the work has been approved and fully executed, except as permitted for Special Purchasing Conditions. o No amendment of a contract for work shall be executed until it has been approved and authorized as required in the Authorizations and Purchasing Limits table and, where required by the terms of the grant award or budget, approval by the funding source. o Conformance of work: o For each grant award, based on the applicable laws, regulations and grant provisions, the Operations Director shall establish and maintain a system to reasonably assure contractor: Conformance with the terms, conditions, and specifications of the contract, and Timely follow-up of all purchases to assure such conformance and adequate documentation. o The Operations Director will authorize payment of invoices to contracts after final approval of work products. 90

109 SUBRECIPIENTS Kansas WorkforceONE does not have subrecipients. 91

110 POLITICAL INTERVENTION Prohibited Expenditures Consistent with its tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, Kansas WorkforceONE shall not incur any expenditure for political intervention. For purposes of this policy, political intervention shall be defined as any activity associated with the direct or indirect support or opposition of a candidate for elective public office at the federal, state, or local level. Examples of prohibited political expenditures include, but are not limited to, the following: Contributions to political action committees Contributions to the campaigns of individual candidates for public office Contributions to political parties Expenditures to produce printed materials (including materials in periodicals) that support or oppose candidates for public office Expenditures for the placement of political advertisements in periodicals Endorsements of Candidates Kansas WorkforceONE will not endorse any candidates for public office in any manner, or otherwise make statements that support or oppose a candidate or a political party, either verbally or in writing. This policy extends to the actions of management, the Board of Directors, volunteers, and other representatives or agents of Kansas WorkforceONE, when these individuals are acting on behalf of, or are otherwise representing, the Organization. Individual vs. Organization Intervention The preceding policies prohibiting acts of political intervention apply to the organization and to individuals acting on behalf of the organization. It does not apply to the personal lives of employees and volunteers of the organization, who have the right to support or oppose political candidates and parties as individuals. Employees and volunteers of Kansas WorkforceONE who engage in political activities outside the scope of their employment with or service to the Kansas WorkforceONE shall at all times be mindful of maintaining a clear distinction between personal activities and those which can be attributed to the Kansas WorkforceONE. Prohibited Use of Organization Assets and Resources No assets or personnel of Kansas WorkforceONE shall be utilized for political activities, as defined above. This prohibition extends to the use of Kansas WorkforceONE assets or personnel in support of political activities that are engaged in personally by board members, members of management, 92

111 employees, or any other representatives of Kansas WorkforceONE. While there is no prohibition against these individuals engaging in political activities personally (on their own time, and without representing Kansas WorkforceONE), these individuals must at all times be aware that Kansas WorkforceONE resources (including computers and systems) cannot at any time be utilized in support of political activities. 93

112 LOBBYING Introduction Unlike political intervention, described in the preceding section, expenditures by a section 501(c)(3) public charity for lobbying activities are allowable under the Internal Revenue Code. However, no lobbying expenditures may be charged directly or indirectly to any federal award (i.e., Kansas WorkforceONE must have a nonfederal source of funds to which such lobbying costs can be charged). Definition of Lobbying Activities Lobbying activities conducted by Kansas WorkforceONE may be either direct or indirect. Direct lobbying activities consist of attempts to influence legislation through communication with any member or employee of a legislative body (federal, state, or local levels) or, if the principal purpose of the communication is lobbying, with any government official or employee who may participate in the formulation of the legislation. Direct lobbying occurs when employees of Kansas WorkforceONE or paid lobbyists communicate directly in attempts to influence legislation. Lobbying is distinguishable from advocacy activities, which involve efforts to advocate certain positions which may have legislative implications, as long as a nonpartisan analysis of the relevant facts is performed. Lobbying occurs only when there is a specific piece of legislation or legislative proposal pending that Kansas WorkforceONE is attempting to influence. Therefore, lobbying is considered to have taken place only if both of the following elements are present: The communication refers to specific legislation (legislation that has been introduced or a specific legislative proposal that the Kansas WorkforceONE supports or opposes), and The communication reflects a view on the legislation (supporting or opposing it). Indirect lobbying involves communications with the general public (rather than directly with legislators, etc.) where the communication includes the same two preceding characteristics, plus it encourages the recipient of the communication to take action with respect to the specific legislation (by contacting legislators, etc.). Segregation of Lobbying Expenditures Lobbying expenditures are allowable for charities under the Internal Revenue Code. However, lobbying may not represent a substantial portion of the Kansas WorkforceONE s overall activities. The Kansas WorkforceONE s tax exemption would be at risk if lobbying becomes a substantial portion of the Kansas WorkforceONE s activities. Accordingly, Kansas WorkforceONE segregates all direct and indirect lobbying expenditures in a separate section of the chart of accounts in the general ledger. Where appropriate, lobbying 94

113 expenditures shall also be allocated their fair and reasonable share of employee benefits and other allocated costs in accordance with cost allocation policies described elsewhere in this manual. Lobbying Election As a public charity, Kansas WorkforceONE has two options with respect to the Internal Revenue Code s restriction against lobbying being a substantial portion of its activities. One option is to make a formal lobbying election, which results in Kansas WorkforceONE following a specific mathematical formula to determine its lobbying limitations. Exceeding the limitation would result in an excise tax assessed to Kansas WorkforceONE. Exceeding the limitation by 50 percent or more over a four-year period would result in loss of Kansas WorkforceONE s overall tax exemption. The other option is to not make the election, resulting in an entirely judgmental assessment of its lobbying activities by the IRS. If it is deemed by the IRS to have engaged in substantial lobbying for any period, Kansas WorkforceONE would lose its overall tax exemption under this option. If Kansas WorkforceONE incurs lobbying expense, it will make the Internal Revenue Code section 501(h) lobbying election by filing Form 5768 and will leave that election in place. As a result, the Organization shall report its lobbying expenditures by completing the section for Electing Charities on Schedule A that accompanies its annual Form 990 information return filed with IRS. 95

114 CHARGING OF COSTS TO FEDERAL AWARDS Overview Kansas WorkforceONE charges costs that are reasonable, allowable, and allocable to a federal award directly or indirectly. All unallowable costs shall be appropriately segregated from allowable costs in the general ledger in order to assure that unallowable costs are not charged to federal awards. Segregating Unallowable from Allowable Costs The following steps shall be taken to identify and segregate costs that are allowable and unallowable with respect to each federal award: The budget and grant or contract for each award shall be reviewed for costs specifically allowable or unallowable. Grant managers and accounting personnel shall be familiar with the allowability of costs provisions 45 CFR Part , Cost Principles, particularly: o The list of specifically unallowable costs found in , Selected Items of Cost, such as alcoholic beverages, bad debts, contributions, fines and penalties, etc. o Those costs requiring advance approval from federal agencies in order to be allowable in accordance with 45 CFR Part , Prior Written Approval, such as participant support costs, equipment purchases, etc. No costs shall be charged directly to any federal award until the cost has been determined to be allowable under the terms of the award and/or 45 CFR Part , Cost Principles. For each federal award, an appropriate set of general ledger accounts (or account segments) shall be established in the chart of accounts to reflect the categories of allowable costs identified in the award or the award budget. All items of miscellaneous income or credits, including the subsequent write-offs of uncashed checks, rebates, refunds, and similar items, shall be reflected for grant accounting purposes as reductions in allowable expenditures if the credit relates to charges that were originally charged to a federal award or to activity associated with a federal award. The reduction in expenditures shall be reflected in the year in which the credit is received (i.e., if the purchase that results in the credit took place in a prior period, the prior period shall not be amended for the credit). Criteria for Allowability All costs must meet the following criteria from 45 CFR Part , Basic Considerations, in order to be treated as allowable direct or indirect costs under a federal award: The cost must be reasonable for the performance of the award, considering the following factors: o Whether the cost is of a type that is generally considered as being necessary for the operation 96

115 of Kansas WorkforceONE or the performance of the award. o Restraints imposed by such factors as generally accepted sound business practices, arm s length bargaining, federal and state laws and regulations, and the terms and conditions of the award. o Whether the individuals concerned acted with prudence in the circumstances. o Consistency with established policies and procedures of Kansas WorkforceONE, deviations from which could unjustifiably increase the costs of the award. The cost must be allocable to an award by meeting one of the following criteria: o The cost is incurred specifically for a federal award, o The cost benefits both the federal award and other work and can be distributed in reasonable proportion to the benefits received, or o The cost is necessary to the overall operation of Kansas WorkforceONE, except where a direct relationship to any particular program or group of programs cannot be demonstrated. The cost must conform to any limitations or exclusions of 45 CFR Part 75 Subpart E Cost Principles, or the federal award itself. Treatment of costs must be consistent with policies and procedures that apply to both federally financed activities and other activities of Kansas WorkforceONE. Costs must be consistently treated over time. The cost must be determined in accordance with generally accepted accounting principles (GAAP). Costs may not be included as a cost of any other federally financed program in the current or prior periods. The cost must be adequately documented. Direct Costs Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal Award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy (45 CFR Part (a)). Kansas WorkforceONE identifies and charges these costs exclusively to each award or program. Each invoice shall be coded with the appropriate account number reflecting which program received direct benefit from the expenditure. Invoices are approved by the appropriate Operations Manager and reviewed by the Executive Director or Director of Operations. Time sheets are also submitted on a regular basis, reflecting employees' work and which programs directly benefited from their effort. Time sheets shall serve as the basis for charging salaries directly to federal awards and nonfederal functions. See the Payroll section of this manual for detailed procedures. Equipment purchased for exclusive use on a federal award and reimbursed by a federal agency shall be accounted for as a direct cost of that award (i.e., such equipment shall not be capitalized and depreciated for grant purposes, but will be capitalized and depreciated at year-end for financial statement purposes). 97

116 Indirect Cost Rate Kansas WorkforceONE does not utilize an indirect cost rate. If in the future an indirect cost is required for a particular project, Kansas WorkforceONE will apply the funders approved rate. 98

117 ACCOUNTS PAYABLE MANAGEMENT Overview Kansas WorkforceONE strives to maintain efficient business practices and good cost control. A wellmanaged accounts payable function can assist in accomplishing this goal from the purchasing decision through payment and bank account reconciliation. The following are general policies for accounts payable: Assets or expenses and the related liability are recorded by an individual who is not responsible for ordering and receiving. The amounts recorded are based on the contractor/vendor invoice for the related goods or services. The contractor/vendor invoice should be supported by an approved purchase order where required by Kansas WorkforceONE policy, and should be reviewed and approved by a Executive Director/Director of Operations prior to being processed for payment. Invoices and related general ledger account distribution codes are reviewed prior to posting to the subsidiary system. The primary objective for accounts payable and cash disbursements is to ensure that: Disbursements are properly authorized. Invoices are processed in a timely manner. Contractor/Vendor credit terms and operating cash are managed for maximum benefits. Recording of Accounts Payable All valid accounts payable transactions, properly supported with the required documentation, shall be recorded as accounts payable in a timely manner. Accounts payable are processed on a weekly basis. Information is entered into the system from approved invoices or disbursement vouchers with appropriate documentation attached. Only original invoices will be processed for payment unless duplicated copies have been verified as unpaid by researching the contractor/vendor records. Invoices received via will be printed, date-stamped, and initialed by Operations Manager. Any additional copies of the ed invoice will be deleted.. No payments will be made from contractor/vendor statements. Accounts Payable Cutoff For purposes of the preparation of Kansas WorkforceONE s monthly financial statements, all contractor invoices that are received, approved, and supported with proper documentation by the fifth day of the following month shall be recorded as accounts payable as of the end of the immediately preceding month if the invoice pertains to goods or services delivered by month-end. 99

118 Preparation of a Voucher Package Prior to any accounts payable being submitted for payment, a package called a voucher package shall be assembled. Each voucher package shall contain the following documents: Contractor invoice (or customer timesheet, employee expense report) Packing slip (where appropriate) Receiving report (or other indication of receipt of merchandise and authorization of acceptance) Purchase order if required by procurement policies Any other supporting documentation deemed appropriate Processing of Voucher Packages The following procedures shall be applied to each voucher package by the Operations Manager: Check the mathematical accuracy of the vendor/contractor invoice. Compare the nature, quantity, and prices of all items ordered per the vendor/contractor invoice to the purchase order, packing slip, and receiving report. Document the general ledger distribution, using the Organization s current chart of accounts. Obtain the review and approval of the Executive Director or Director of Operations associated with the goods or services purchased. Upon receipt, each invoice shall be stamped date received, scanned, and copies distributed to the appropriate personnel for approval via . Unapproved invoices will be maintained in a file, matched with notice of approval, and processed for payment. The Operations Manager will follow up on unapproved invoices pending for longer than 1 week. Approvals by Executive Director or Director of Operations indicate their acknowledgment of satisfactory receipt of the goods or services invoiced, agreement with all terms appearing on the contractor invoice, agreement with general ledger account coding, and agreement to pay the contractor in full. Approvals shall be documented with initials or signatures of the approving individual, and date of approval. Additional Processes: Local Area Management o The Fiscal agent will not drawdown funds from vouchers or payroll unless two LWDB staff signatures are present on the vouchers: Operations Manager completes the vouchers Program Director or Executive Director Authorizes with second signature. Director of Operations completes the vouchers Executive Director authorizes with second signature. o The Fiscal agent will reconcile all vouchers with drawdown requests and pass through verifications. o LWDB Staff will reconcile all disbursements with vouchers. Kansas Fiscal Link will be used to submit client disbursement vouchers to the fiscal agent. The fiscal agent must reconcile the voucher prior to issuing checks on behalf of the LWDB. Each LWDB and Fiscal agent 100

119 staff member will be given unique user names and pass words; and authority to access to information is given as it applies to each position. The KFL has the capability to identify parties who completed all transactions. All invoices are processed the week they are received unless incorrect or missing data. Payment Discounts To the extent practical, Kansas WorkforceONE takes advantage of all prompt payment discounts offered by contractor. When such discounts are available and all required documentation in support of payment is available, payments will be scheduled so as to take full advantage of the discounts. Employee Expense Reports Reimbursements for travel expenses, business meals, or other approved costs will be made only upon the receipt of a properly approved and completed expense reimbursement form. (See further policies under Travel and Business Entertainment. ) All required receipts must be attached, and a brief description of the business purpose of the trip or meeting must be noted on the form. Expense reports will be processed for payment in the next contractor payment cycle if received within two business days of the deadline. Expenses older than one month will not be reimbursed, unless preapproved. See also Travel Policy found in this manual. Expense reports are processed primarily at the same time as payroll and direct deposited into staff accounts. Monitoring of A/P Subsidiary Ledger to General Ledger On a monthly basis, the Executive Director or Director of Operations shall perform the following procedures: Check all statements received for unprocessed invoices. Check the purchase order file for open purchase orders more than 30 days old and follow up. Management of Accounts Payable Vendor/Contractor Master File Upon the receipt of an invoice from a new contractor that is not already in Kansas WorkforceONE s Accounts Payable Vendor/Contractor Master File, the Operations DIrector shall mail (or ) a Form W-9 and a request for completion of the Form W-9, including the vendor s full address and federal employer identification number. Debarrment will also be checked and maintained in Vendor/Contractor file. All vendor/contractor files shall include the following: Contractor s legal name and any DBA name(s) Street address (payments may be mailed to a P.O. Box, but a street address must be in the file) 101

120 Federal employer identification number Telephone number Fax number Contact name Payments shall not be made to any vendor/contractor whose file does not comply with the preceding requirements. Contractor/Vendor files will be maintained according to Record Retention policies found in the manual. 102

121 TRAVEL TRAVEL/MILEAGE LWDB Employees and Board Members may be required to travel on official business. All travel must be pre-approved by direct supervisor unless travel is expectation of position (i.e. Colby and Goodland position). When possible, employees will be expected to car pool in order to minimize travel expenditures. Mileage Reimbursement Rate o Employee/Board Members will be reimbursed at the most current allowable IRS mileage rate when travel for WF1 official business. o The Kansas Department of Transportation s mileage chart ( will be used to calculate distance. If destination is not listed on the KDOT mileage chart MapQuest will be utilized and documentation attached to Expense Report. o When an employee/board member begins travel from his or her domicile located in an area other than the city designated as the employee/board member s official station, the employee may be reimbursed for mileage between the employee/board member s domicile and destination or the employee's official station and destination, whichever is less. If the employee/board member returns directly to his or her domicile from the last point of official business, the employee/board member may be reimbursed for mileage from that point to the employee/board member s domicile or that point to the employee/board member s official station, whichever is less. o Reimbursement rates are considered to cover all costs associated with the use of the privately owned conveyance. This includes, but is not limited to: gasoline, oil, tires, repairs, insurance (including uninsured losses, and insurance deductibles resulting from damage to the privately owned conveyance), license fees, depreciation costs, and expenses of any type. Travel may be paid in advance; however, if travel does not take place it must be deducted from the next travel voucher completed. o Travel Expense Log must be completed identifying the destination, miles incurred and purpose of travel in order to be reimbursed. o The LWDB will not reimburse any travel expenses reimbursed by another entity. TRAVEL TIME On occasion, non-exempt employees may be required to travel for work-related purposes. The following guidelines should be used when determining when travel time is considered "work time" and therefore must be paid. Travel time considered work time includes: o Participating in any business related activities at a conference or seminar. o Participating in social activities where attendance is required. o Traveling out of town for work-related reasons, regardless of the day/time. o Traveling between work locations during the workday. o Traveling from the office to a local airport, bus depot, or train station, or vice versa. Travel time not considered work time includes: o Participating in social activities where attendance is not required. 103

122 o Sleeping. o Non-work related meal breaks. o Traveling from home to a local airport, bus depot or train station, or vice versa. o Traveling from home to an in-town conference. However, mileage may be reimbursable. o Traveling from home to a regular designated work location or vice versa. Training/Conference Time: Attendance at lectures, meetings, training programs, seminars or similar activities are counted as hours worked when the training is related to the employee's job. Prior to attending such programs, employees should obtain supervisory approval. CONFERENCE/SEMINAR/OVERNIGHT TRAVEL The Executive Director or Director of Operations must approve conference, seminar and overnight travel in advance. The LWDB Chair must approve conference and seminar attendance for Executive Director. WF1 will not pay for expenses incurred by someone other than WF1 approved travelers. Meals and Incidentals will be reimbursed only when overnight stay is involved. Alcoholic beverages and entertainment are not allowable costs for reimbursement purposes. Meal and Incidental reimbursement will not exceed the current IRS high-low standard per diem rates for meals and incidentals. Incidentals include fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others of the like. WF1 adopts the Federal per diem rates for high-low rates updated annually by the IRS. It is WF1 s policy to further break down the high-low standard per diem into quarter-day rates. M&IE is provided for the time in which the employee is in travel status, including the quarters the employee departs and returns. Many conferences and/or seminars include breakfast, luncheons, etc., which will reduce the allowed per diem rate for the traveler. Exception: Continental breakfasts will not reduce the per diem rate. WF1 will reimburse Lodging reimbursement will not exceed the current IRS high-low lodging rate unless rate is pre-set by conference organizers. Lodging reimbursements of any amount must be submitted with detailed receipts and must be obtained by the traveler upon check out to be turned in with the Conference/Seminar Travel Voucher. WF1 will allow Saturday travel for conferences ending Friday or beginning Sunday or Monday only when the cost of the lower Saturday airfare plus additional lodging and meal expense is lower than the higher airfare for Friday or Sunday. Subsistence Arrival and Departure On the day of departure and the day in which the employee returns to the official station or domicile, M&IE allowance is reimbursed as follows: % of M&IE Day of Day of 104

123 Time of Departure Quarter Day Departure Return 12:00 AM - 5:59 AM Quarter 1 100% 25% 6:00 AM - 11:59 AM Quarter 2 75% 50% 12:00 PM - 5:59 PM Quarter 3 50% 75% 6:00 PM - 11:59 PM Quarter 4 25% 100% Subsistence and Lodging Amount SMART contains the official subsistence rates for CONUS and OCONUS travel locations and will be updated each October 1 and April 1. International subsistence rates are not loaded into SMART. Employees will obtain M&IE rates for international travel locations directly from the U.S. Department of State (DOS) website listed below. Contiguous United States (CONUS)- The U.S. General Services Administration (GSA) maintains the M&IE rates and lodging rates for travel locations in the contiguous United States - o U.S. General Services Administration website: Outside Contiguous United States (OCONUS): (Alaska, Hawaii, and U.S. Territories/Possessions) - The U.S. Department of Defense (DOD) maintains the M&IE rates and lodging rates for travel locations within Alaska, Hawaii and U.S. Territories/Possessions - o U.S. Department of Defense website: International Locations - The U.S. Department of State (DOS) is the source for M&IE rates only for international travel locationso U.S. Department of State website: For international travel, payment for actual lodging expense is allowed. Deduction rates for Provided Meals Breakfast Lunch Dinner Reduced % of Daily M&IE Allowance 15% 35% 50% Reasonableness of Travel Costs Kansas WorkforceONE shall reimburse travelers only for those business-related costs that are reasonably incurred. Accordingly, the following guidelines shall apply: Payment for suites and other upgraded rooms at hotels shall not be allowed unless required by a medical condition. Travelers should stay in standard rooms. Ask hotels for any available discounts nonprofit, government, or corporate rates. 105

124 When utilizing rental cars, travelers should rent midsize or smaller vehicles unless safety considerations require a larger vehicle. Rental of a vehicle larger than midsized must be approved by a supervisor. Share rental cars whenever possible. Business-related long-distance telephone calls while away on business travel are permitted, but should be kept to a minimum. Expense reports should explain long-distance charges. Whenever possible, travelers should utilize long-distance calling cards when placing calls while away on travel. Avoid using the hotel s long-distance service whenever possible. (Note: see the next section of cell phone policies.) Reasonable tips for baggage handling shall be reimbursed. No receipts are required. Special Rules Pertaining to Air Travel The following additional rules apply to air travel: Air travel should be at coach class or the lowest commercial discount fare at the time the ticket is purchased except when this fare would: o Require circuitous routing, o Require travel during unreasonable hours, o Excessively prolong travel, o Result in additional costs that would offset the transportation savings, or o Offer accommodations not reasonably adequate for the traveler s medical needs. First class air travel shall not be reimbursed unless there is a medical reason which must be documented and approved by a supervisor. Memberships in airline flight clubs are not reimbursable. Cost of flight insurance is not reimbursable. At least two quotes from a travel agency and/or an airline website should be obtained and attached to the expense report. Cost of upgrade certificates is not reimbursable. The cost of baggage fees required by airlines to either check or carryon luggage is allowable and reimbursable. Cost of canceling and rebooking flights is not reimbursable, unless it can be documented that it was necessary or required for legitimate business reasons (such as changed meeting dates, etc.). Travelers must identify and pay for all personal flights, even if such flights are incorporated into a flight schedule that serves business purposes (i.e., Kansas WorkforceONE will not reimburse for the personal legs of a trip). Frequent flyer miles will accrue to the traveler, not Kansas WorkforceONE. Temporary Dependent Care Costs (45 CFR Part (c)) Temporary dependent care costs above and beyond regular dependent care that directly result from travel to conferences are allowable and reimbursable providing that: The costs are a direct result of the individual's travel for the Federal award; The costs are consistent with the non-federal entity's documented travel policy for all entity travel; 106

125 and Are only temporary during the travel period. Spouse/Partner Travel Kansas WorkforceONE does not reimburse any employee or board member for separate travel costs (air fare, etc.) associated with his or her spouse or partner. The cost of a shared hotel room need not be allocated between employee/director and spouse/partner for purposes of this policy. 107

126 CELL PHONES Issuance of Corporate Cell Phones Kansas WorkforceONE recognizes that certain job functions require that an employee be accessible when away from the office or during times outside scheduled working hours. For this reason, Kansas WorkforceONE will provide cell phones to select employees as a working condition fringe benefit. Supervisors of employees who travel frequently on Kansas WorkforceONE business may request a corporate cell phone for specific employees by contacting the Operations Manager. Kansas WorkforceONE will include language in employment contracts, job descriptions, and personnel manuals documenting the business reasons for providing employees with cell phones. All Employees who have a company phone are required to sign an equipment agreement. Corporate cell phone holders will be required to sign a statement acknowledging that the cell phone shall be used for legitimate organization-related business purposes, shall not be used while driving. The cell phone holder also agrees to take reasonable precautions to protect the cell phone from loss or theft by storing it in a secure location. While corporate-issued cell phones are intended for Kansas WorkforceONE-related business use, Kansas WorkforceONE recognizes that occasional personal use may occur. Kansas WorkforceONE employees should make every effort to keep personal use of company cell phones to a minimum. Because such employer-provided cell phones are considered to be a working condition fringe benefit, the Kansas WorkforceONE employees use of the cell phone for personal reasons may be treated as excludable from the employees income as a de minimis fringe benefit. That is, the value of personal use of an organization-owned cell phone will not be taxable income to the employee. Cell Phone Use Employees of Kansas WorkforceONE are prohibited from using a corporate-owned cell phone or similar device, hands-on or hands-free, while driving, whether the business conducted is personal or organization-related. This prohibition includes receiving or placing calls, text messaging, accessing the Internet, receiving or responding to , checking for or listening to voice messages, or any other uses. Similarly, employees of Kansas WorkforceONE are prohibited from using their personal cell phone or similar device for any purpose, hands-on or hands-free, while driving either a company vehicle or a personal vehicle while on company business. Cell Phone Plans Kansas WorkforceONE will negotiate a master cell phone contract with a single contractor. All corporate-owned cell phones are to be acquired through the preapproved contractor. Employees 108

127 issued a corporate cell phone will estimate their usage needs and identify a plan that best accommodates those needs with the preapproved contractor. Cell phone plan terms will initially be set based on the employee s anticipated needs. The Operations Manager will monitor usage and recommend adjustments to terms as needed to ensure that the employee is on the most efficient plan based on his or her needs. Initial cell phone plan terms and any subsequent changes in terms will be approved in advance by the Executive Director or Director of Operations. In overages caused by personal use will be the responsibility of the employee to pay. Upon receiving the cell phone, the employee is required to sign a statement of receipt and acceptance of responsibility for corporate cell phones. Kansas WorkforceONE requires the following review and approval procedures: Operations Manager and Executive Director shall review and sign the monthly statement for cell phone holders they supervise and forward it to the Fiscal Department. Any fraudulent or other unauthorized usage shall be immediately pointed out to the Executive Director for further investigation with the cell phone provider. Cell phone holders shall report the loss or theft of a corporate cell phone immediately by notifying the cell phone provider Verizon Wireless as well as the Operations Manager. Revocation of Corporate Cell Phones Failure to comply with any of these policies associated with the use of Kansas WorkforceONE s corporate cell phones shall be subject to possible revocation of corporate cell phone privileges. The Executive DIrector shall determine whether cell phones are to be revoked. Employee Cell Phones Employees and officers needing to make periodic legitimate Kansas WorkforceONE business calls when they are off-site may elect to utilize their personal cell phones for such calls. Kansas WorkforceONE shall reimburse employees and officers for properly supported and documented business calls charged to personal cell phones within five business days of the proper completion of an expense report. (See the earlier policy on Travel and Business Entertainment for expense report preparation procedures and the guidelines above for detailing the calculation method for reimbursement as a part of this policy. Personal Cell Phones or Similar Devices at Work Employees of Kansas WorkforceONE are asked to minimize the use of personal cell phones in the workplace. In an emergency situation, employees may carry their personal cell phones in vibrate 109

128 mode. 110

129 CASH DISBURSEMENTS (CHECK-WRITING) POLICIES Check Preparation Kansas WorkforceONE does not store checks at the Administrative Office. Checks are secured at Kansas WorkforceONE s fiscal agent location (AGH). AGH prints checks and expense reimbursement checks on a weekly basis. Checks are only prepared when initiated by Kansas WorkforceONE through the voucher process. Once expenditures are initiated and approved, AGH account prepares checks for signature and enters into Kansas WorkforceONE s account records. by persons independent of those who initiate or approve expenditures, as well as those who are authorized check signers. All contractor and expense reimbursement checks shall be produced in accordance with the following guidelines: Expenditures must be supported in conformity with purchasing, accounts payable, and travel policies described in this manual. Timing of disbursements should generally be made to take advantage of all early-payment discounts. Generally, all contractors shall be paid within 30 days of submitting a proper invoice upon delivery of the requested goods or services. Total cash requirements associated with each check run are monitored in conjunction with available cash balance in bank prior to the release of any checks. All supporting documentation is attached to the corresponding check prior to forwarding the entire package to an authorized check signer. Checks shall be utilized in numerical order and unused checks are stored in a locked safe in the accounting department. Checks shall never be made payable to bearer or cash. Checks shall never be signed prior to being prepared. Upon the preparation of a check, contractor invoices and other supporting documentation shall immediately be canceled in order to prevent subsequent reuse. Check Signing Checks are signed by the Managing Partner of AGH, LLC. No check shall be signed prior to the check being completed in its entirety (no signing of blank checks). Checks shall be signed by an individual other than the one who approved the transaction for payment. Check signers should examine all original supporting documentation to ensure that each item has been properly reviewed prior to signing a check. Checks should not be signed if supporting documentation appears to be missing or there are any questions about a disbursement. 111

130 Equipment used to sign checks (plates, stamps, CD, etc.) will be kept in a locked drawer (safe). Access to the equipment shall be restricted to the AGH Managing Partner and other authorized check signers. Kansas WorkforceONE does not use electronic phone transfer or Positive Pay Systems. Mailing of Checks After signature, checks are mailed directly from that department. Checks shall not be mailed by or returned to the individuals or departments that authorized the expenditures. Voided Checks and Stop Payments Checks may be voided due to processing errors by making proper notations in the check register and defacing the check by clearly marking it as VOID. All voided checks shall be retained to aid in preparation of bank reconciliations. Stop payment orders may be made for checks lost in the mail or other valid reasons. Stop payments are processed by written authorization to the bank by accounting personnel with this authority upon receiving an approved Stop Payment request from Kansas WorkforceONE Operations Manager. A journal entry is made to record the stop payment and any related bank fees. Recordkeeping Associated with Independent Contractors Kansas WorkforceONE shall obtain a completed Form W-9 or equivalent substitute documentation from all contractors to whom payments are made (see Accounts Payable Management policies). A record shall be maintained of all vendors/contractors to whom a Form 1099 is required to be issued at yearend. Payments to such contractors shall be accumulated over the course of a calendar year. Control Grid Purchasing and Disbursements Kansas WorkforceONE strives to maintain adequate segregation of duties in its purchasing and disbursements functions. The following table illustrates how responsibilities have been assigned. In this table personnel are identified as follows: A. Executive Director B. Director of Operations C. Operations Manager D. AGH Senior Accountant E. AGH Accounts Payable Accountant F. LWDB Fiscal Committee G. AGH Managing Partner H. AGH Transmittal Clerk 112

131 Duty A B C D E F G Inputs data into contractor X X master file Obtains Form W-9 from new X contractors Initiates purchases X X Authorizes purchases X X Prepares purchase X order/requisition Prepares request for proposal X X Administers collection of X proposals Evaluates proposals X X Selects contractor X X Receives contractor invoice X Approves contractor invoice X X Assigns general ledger coding X X Inputs invoice into A/P system X X Selects A/P to be paid X Runs A/P checks X X Reviews checks X Signs checks X Mails checks Maintains custody of unused X checks Reconciles A/P to general ledger X Performs bank reconciliation X Reviews cancelled checks X Reviews bank reconciliations X X X 113

132 CREDIT CARDS/PURCHASING CARDS Kansas WorkforceONE does not utilize corporate credit cards. 114

133 PAYROLL AND RELATED POLICIES Classification of Workers as Independent Contractors or Employees Kansas WorkforceONE considers all relevant facts and circumstances regarding the relationship between the Organization and the individual in making determinations about the classification of workers as independent contractors or employees. This determination is based on the degree of control and independence associated with the relationship between Kansas WorkforceONE and the individual. Facts that provide evidence of the degree of control and independence fall into three categories: Behavioral control Financial control The type of relationship of the parties The Director of Operations in consultation with the Executive Director shall make the final determination. Wage Comparability Study Kansas WorkforceONE will perform wage comparability studies every three years to ensure the salary and wage structure is similar to other organizations of like size and employee base in our area. Review and Approval of Senior Management Compensation Salary and benefits of the Executive Director are determined by the Executive Committee of the LWDB and approved by the full board within the annual budget. This exercise is completed on an annual basis at the start of the Program Year. Payroll Administration Kansas WorkforceONE operates on a biweekly payroll. A personnel file is established and maintained for all employees with current documentation, as described throughout this section and more fully described in Kansas WorkforceONE's Employee Handbook. The following forms, documents, and information shall be obtained and included in the personnel files of all new employees: Kansas WorkforceONE Employment Application (and resume, if applicable) Applicant references (work & personal) Interview questions and notes 115

134 Form W-4 Employee Federal Withholding Certificate Form Kansas State Withholding Certificate Form I-9 Employment Eligibility Verification Copy of driver s license Copy of Social Security card issued by the Social Security Administration Starting date and scheduled hours Job title and starting salary Authorization for direct deposit of paycheck, along with a voided check or deposit slip Job description For employees without a current, valid driver s license, acceptable alternative documents shall include: U.S. Passport Certificate of U.S. Citizenship (INS Form N-560 or N-561) Voter s registration card U.S. Military card ID card issued by a federal, state, or local government, provided it contains a photo School record or report card (for persons under age 18 only) For employees without a Social Security card, acceptable alternative documents shall include: U.S. Passport Certificate of U.S. Citizenship (INS Form N-560 or N-561) Original or certified copy of a birth certificate issued by a state, county, or municipal authority Certificate of Birth Abroad issued by the Department of State (Form FS-545 or Form DS-1350) U.S. Citizen ID Card (INS Form I-197) Native American tribal document ID Card for use of Resident Citizen in the United States (INS Form I-179) Each employee payroll file shall also indicate whether the employee is exempt or non-exempt from the provisions of the Fair Labor Standards Act. If required by specific grants, the employee payroll file must also include a pre-employment background check. Changes in Payroll Data All of the following changes in payroll data are to be authorized in writing: New hires Terminations Changes in salaries and pay rates Voluntary payroll deductions 116

135 Changes in income tax withholding status Court-ordered payroll deductions New hires, terminations, and changes in salaries or pay rates shall be authorized in writing by the Executive Director or Director of Operations. Voluntary payroll deductions and changes in income tax withholding status shall be authorized in writing by the individual employee. Documentation of all changes in payroll data shall be maintained in each employee s personnel file. Payroll Taxes AGH s Payroll Department is responsible for ensuring all required tax forms are properly completed and submitted, and that all required taxes are withheld and paid. Kansas WorkforceONE will request an updated Form W-4 from each employee in January of each year. If there are no changes from the prior year, employees are not required to provide a new W-4. Withholding of federal income taxes shall be based on the most current Form W-4 prepared by each employee. Documentation of Personnel Expenses Kansas WorkforceONE follows the requirements in 45 CFR Part (i), Standards for Documentation of Personnel Expenses, as well as requirements in specific grants. Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; Be incorporated into the official records of the Organization; Reasonably reflect the total activity for which the employee is compensated; Encompass both federally assisted and all other activities compensated by the Organization on an integrated basis; Comply with the established accounting policies and practices of Organization; and Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 117

136 Preparation of Timesheets Each Kansas WorkforceONE employee must submit to the Operations Manager a signed and approved timesheet no later than 12:00 noon on the Monday following the close of each pay period. Timesheets shall be prepared in accordance with the following guidelines: Each timesheet shall reflect all hours worked during the pay period (time actually spent on the job performing assigned duties), whether compensated or not. Timesheets shall be prepared electronically (or in ink). Errors shall be corrected by crossing through the incorrect entry, filling in the correct entry, and placing the employee s initials next to the change (i.e., employees shall not use whiteout or correction tape). Employees shall identify and record hours worked based on the nature of the work performed. Compensated absences (vacation, holiday, sick leave, etc.) should be clearly identified as such. Timesheets shall be signed by the employee prior to submission. After preparation, Executive Director or Director of Operations shall approve timesheets prior to submission to the Accounting Department. Corrections identified shall be authorized by the employee by initialing next to the change. An Organization employee who is on leave, traveling, or is ill on the day that timesheets are due may telephone or timesheet information (actual time worked and the appropriate classifications) to his or her supervisor (or designated alternate). The employee must initial a timesheet submitted in this manner immediately upon his or her return to the office. Timesheets submitted in this manner shall bear the notation, "Time reported by telephone or by (employee) to (supervisor or designated alternate)." The timesheet shall be signed by the supervisor or the designated alternate. Processing of Timesheets The Operations Manager will process the timesheets by checking them for mathematical accuracy (not required if timesheets are electronic), then entering all timesheets into the payroll voucher. The Operations Manager may not change or correct timesheets. When errors are noted, if a corrected and approved timesheet is not resubmitted in time to the Operations Manager, the employee may not receive a paycheck until the next pay period. Tampering with, altering, or falsifying time records, recording time on another employee's time record, or willfully violating any other timesheet policy or procedure may result in disciplinary action, up to and including discharge. Review of Payroll Upon production of all payroll voucher, the Executive Director or Director of Operations reviews and 118

137 approved payroll prior to its distribution to employees. Distribution of Payroll Payroll payments (or check stubs for electronic deposits) shall be distributed by individuals who do not approve timesheets, are not responsible for hiring and firing, and do not control the preparation of payroll. Internal Audit of Payroll Data Kansas WorkforceONE will conduct an annual internal audit of certain payroll data. This internal audit shall be performed by the Organization s Executive DIrector and Director of Operations. The purpose of this internal audit is to determine the integrity of the Kansas WorkforceONE s payroll records. The internal audit shall include the following procedures: Tracing a sample of salaries, withholdings, deductions, and direct deposit information to supporting documentation in each selected employee s payroll and/or personnel file. Tracing a sample of new hires and departures to personnel files, including verification of first and last pay dates. Cross-checking the payroll master files for employees with identical addresses, social security numbers, or direct deposit bank account information. Any unexplained deviations found as a result of these internal audit procedures shall be reported to the chair of the Fiscal Committee Control Grid Payroll and Human Resources Kansas WorkforceONE strives to maintain adequate segregation of duties in its payroll and human resources functions. The following table illustrates how responsibilities have been assigned. In this table, personnel are identified as follows: A. Executive Director B. Director of Operations C. Operations Manager D. AGH Payroll Clerk E. AGH Managing Partner 119

138 Duty A B C D E Authorizes new hires X Authorizes salary adjustments X Authorizes terminations X Sets up new employee in P/R system X Enters salary adjustments to P/R system X 120

139 Duty A B C D E Enters direct deposit info. in P/R system X Deletes terminated employees from P/R X Reviews changes to payroll master file X Approves timesheets X Enters timesheets X Reviews input of timesheet data X X Reviews distribution of time X X Reviews payroll register X X Prints checks (or paystubs) Signs payroll checks X E Distributes checks (paystubs) X Has access to unused payroll checks X Prints annual W-2 forms X Reviews annual W-2 forms X Distributes annual W-2 forms X 121

140 POLICIES PERTAINING TO SPECIFIC ASSET ACCOUNTS CASH AND CASH MANAGEMENT Cash Accounts General Checking Account (operating account): The primary operating account provides for routine business check disbursements. All cash and credit card deposits are made to this account. Cash transfers are done on an as-needed basis to cover disbursements. Excess funds in this account are transferred into short-term investments or higher interest-bearing cash equivalents. In addition, all advances of federal funds shall be deposited in an interest-bearing account and interest earned in excess of $500 shall be returned to the Federal Payment Management System (PMS). Interest earned on such funds will be allocated to federal awards based on the percentage of funds received during the month for each award. Payroll Account: The payroll account is separate from the operating account. The payroll account is a zero-balance account. As such, only the amount needed to cover each payroll is transferred into this account from the operating account, based on the amount calculated. Transfers from the operating account into the payroll account are initiated by AGH Senior Accountant. Kansas WorkforceONE s agreement with its financial institution limits wire transfers from its operating account to those transfers into payroll only. Authorized Signers The following Kansas WorkforceONE personnel are authorized to sign checks drawn on the general operating and payroll accounts: Paul Allen, AGH, LLC Managing Partner AGH Senior Management will promptly notify Kansas WorkforceONE s financial institutions of changes in authorized signatures upon the departure of any authorized signer. Refer to the section titled Check Signing for procedures. Bank Reconciliations 122

141 Bank account statements are received each month and forwarded unopened to the AGH Senior Accountant. The Senior Accountant shall open the statement and review its contents for unusual or unexplained items, such as unusual endorsements on checks, indications of alterations to checks, etc. 123

142 (This review must be performed in a timely manner so that reconciliation of the bank account is not delayed.) Unusual or unexplained items shall be reported immediately to the Executive Director. After this review is complete, the Senior Accountant who prepares reconciliation between the bank balance and general ledger balance. The bank reconciliation process will be completed within one week of receipt of each bank statement. The reconciliation process shall involve an inspection of the fronts and backs of cancelled checks returned with the bank statement. The purpose of this inspection is to identify signs of forgery, altered or substitute checks, unusual endorsements, or other signs of fraudulent activity.. All bank reconciliations, including any adjusting journal entries resulting from preparing bank reconciliations, are reviewed and approved by the Senior Management on a monthly basis. Bank reconciliations and copies of resulting journal entries are filed in the current year's accounting files. Stale Checks For uncashed checks that are more than 3 months old, contact will be made with the payee to resolve the issue. All stale checks that are written off within the same fiscal year as they were written shall be credited to the same expense or asset account that was debited when the check was written or the expenditure incurred. For stale checks written off in fiscal years subsequent to the year in which the check was written, the credit shall be to miscellaneous income. Kansas WorkforceONE will also comply with Kansas State laws regarding unclaimed property. Accordingly, if uncashed checks are subject to a state reporting and transfer requirement, the Organization shall file all appropriate forms and remit unclaimed property to the appropriate jurisdiction. Petty Cash Kansas WorkforceONE does not have petty cash. Wire Transfers Kansas WorkforceONE does not utilize wire transfer. 124

143 INVENTORY OF MATERIALS Physical Counts A physical count of inventory will be performed on an annual basis by someone who does not have responsibility for ordering or approving purchases of such items. Any inventory items that appear damaged, obsolete, or otherwise unable to be sold shall be excluded from the counts. A detailed record of the physical count shall be kept by the individuals involved in taking the inventory. At the conclusion of the physical count, the inventory count sheets shall be extended by applying the most recent unit costs to the physical quantities of each item on hand. The general ledger balance shall be adjusted to reflect the total inventory on hand as determined by the physical count. Contributed Inventory Inventory items donated to Kansas WorkforceONE shall be recorded as assets of Kansas WorkforceONE at the fair market value as of the date of the contribution, unless Kansas WorkforceONE is acting as an agent in connection with a contribution by a donor through Kansas WorkforceONE to another charity specifically identified by the donor. Contributed inventory items shall be subject to the same physical counting and other policies as purchased inventory items. 125

144 PREPAID EXPENSES Accounting Treatment Kansas WorkforceONE treats payments of expenses that have a time-sensitive future benefit as prepaid expenses and will amortize these items over the corresponding time period. For purposes of this policy, payments of less than $1,000 shall be expensed as paid and not treated as prepaid expenses, regardless of the existence of a future benefit. Prepaid expenses with future benefits that expire within one year from the date of the financial statements shall be classified as current assets. Prepaid expenses that benefit future periods beyond one year from the financial statement date shall be classified as noncurrent assets. Procedures As part of the account coding process performed during the processing of accounts payable, all incoming contractor invoices shall be reviewed for the existence of time-sensitive future benefits. If future benefits are identified, the payment shall be coded to a prepaid expense account code. AGH shall maintain a schedule of all prepaid expenses. The schedule shall indicate the amount and date paid, the period covered by the prepayment, the purpose of the prepayment, and the monthly amortization. This schedule shall be reconciled to the general ledger balance as part of the monthly closeout process. 126

145 INVESTMENT POLICIES At this time Kansas WorkforceONE does not have investments. 127

146 PROPERTY AND EQUIPMENT Capitalization Policy Physical assets acquired with unit costs in excess of $5,000 are capitalized as property and equipment on the Kansas WorkforceONE s financial statements. Items with unit costs below this threshold shall be expensed in the year purchased. If an awarding agency requires a lower amount for equipment, Kansas WorkforceONE will adhere to that dollar amount only for that program or contract. Capitalized property and equipment additions are accounted for at their historical cost and all such assets, except land, are subject to depreciation over their estimated useful lives, as described later. Capitalized assets will be reported as expensed for grants if they were so budgeted in the grant application. However, for Kansas WorkforceONE s financial statements, these assets will be capitalized and depreciated according to these policies. Contributed Assets Assets with fair market values in excess of $5,000 (per unit) that are contributed to Kansas WorkforceONE shall be capitalized as fixed assets on the financial statements. Contributed items with market values below this threshold shall be expensed in the year contributed. Capitalized contributed assets are accounted for at their market value at the time of donation and all such assets, except land and certain works of art and historical treasures, are subject to depreciation over their estimated useful lives, as described later. Equipment and Furniture Purchased with Federal Funds (45 CFR Part ) Kansas WorkforceONE may occasionally purchase equipment and furniture that will be used exclusively on a program funded by a federal agency. In addition to those policies on Asset Management described earlier, equipment and furniture charged to federal awards will be subject to certain additional policies as described below. For purposes of federal award accounting and administration, equipment shall include all assets with a unit cost equal to the lesser of $5,000 or the capitalization threshold utilized by Kansas WorkforceONE, described under Asset Management. All purchases of equipment with federal funds shall be approved, in advance and in writing, by the federal awarding agency. In addition, the following policies shall apply regarding equipment purchased and charged to federal awards: Adequate insurance coverage will be maintained with respect to equipment and furniture charged to 128

147 federal awards. For equipment (or residual inventories of supplies) with a remaining per unit fair market value of $5,000 or less at the conclusion of the award, Kansas WorkforceONE shall retain the equipment without any requirement for notifying the federal agency. If the remaining per unit fair market value is $5,000 or more, Kansas WorkforceONE shall gain a written understanding with the federal agency regarding disposition of the equipment. This understanding may involve returning the equipment to the federal agency, keeping the equipment and compensating the federal agency, or selling the equipment and remitting the proceeds, less allowable selling costs not to exceed $500, to the federal agency. (45 CFR Part (e)) The Grant Manager shall determine whether a specific award with a federal agency includes additional equipment requirements or thresholds and requirements that differ from those described above. A physical inventory of all equipment purchased with federal funds shall be performed annually by an employee who is not responsible for ordering or approving the purchase of these assets. The results of the physical inventory shall be reconciled to the accounting records of and federal reports filed by Kansas WorkforceONE. Establishment and Maintenance of a Fixed Asset Listing All capitalized property and equipment shall be recorded in a property log. This log shall include the following information with respect to each asset: (45 CFR part (d)(1)) Date of acquisition Cost Description (including color, model, and serial number or other identification number) Source of the funds used to purchase the equipment, including the federal award number, if applicable Whether the title vests in the Organization or the federal government Information to calculate the federal share of the cost of the equipment, if applicable Location, use and condition Depreciation method Estimated useful life Ultimate disposition data including the date of disposal and sale price A physical inventory of all assets capitalized under the preceding policies will be taken on an annual basis by Kansas WorkforceONE. This physical inventory shall be reconciled to the property log and adjustments made as necessary. All adjustments resulting from this reconciliation will be approved by the Executive Director. Receipt of Newly Purchased Equipment and Furniture At the time of arrival, all newly purchased equipment and furniture shall be examined for obvious 129

148 physical damage. If an asset appears damaged or is not in working order, it shall be returned to the contractor immediately. In addition, descriptions and quantities of assets per the packing slip or bill of lading shall be compared to the assets delivered. Discrepancies should be resolved with the contractor immediately. Depreciation and Useful Lives All capitalized assets are maintained in the special property and equipment account group and are not included as an operating expense. Property and equipment are depreciated over their estimated useful lives using the straight-line method. In the year of acquisition, depreciation is recorded based on the number of months the asset is in service, counting the month of acquisition as a full month (Example: an asset purchased on the fifteenth day of the fifth month shall have eight full months of depreciation (eight-twelfths of one year) recorded for that year.) Estimated useful lives of capitalized assets shall be determined by the Executive Director in conjunction with the AGH that shall utilize the asset. The following is a list of the estimated useful lives of each category of fixed asset for depreciation purposes: Furniture and fixtures Up to 10 years General office equipment 5 years Computer hardware and peripherals (which exceed the capitalization threshold) 3 5 years Computer software 2 3 years Leased assets Life of lease Leasehold improvements Remaining lease term For accounting and interim financial reporting purposes, depreciation expense will be recorded on a annual basis. Editor s Note: 45 CFR Part (d)(4) states that no depreciation may be allowed on any assets that have outlived their depreciable lives. Therefore, use allowance on fully-depreciated assets is no longer allowable. Changes in Estimated Useful Lives If it becomes apparent that the useful life of a particular capitalized asset will be less than the life originally established, an adjustment to the estimated useful life shall be made. All such changes in estimated useful lives of capitalized assets must be approved by the Executive Director and Fiscal Committee. 130

149 When a change in estimated useful life is made, the new life is used for purposes of calculating annual depreciation expense. In the year in which the change in estimate is made, the cumulative effect of the change shall be reflected as depreciation expense in the Kansas WorkforceONE s statement of activities. For example, if in the fourth year of an asset s life, it is determined that the asset will last five years instead of the original estimate of seven years, depreciation expense for that year shall be equal to the difference between 4/5 of the asset s basis (accumulated depreciation at the end of year four) and 3/7 of the asset s basis (accumulated depreciation at the beginning of the year). Repairs of Property and Equipment Expenditures to repair capitalized assets shall be expensed as incurred if the repairs do not materially add to the value of the property or materially prolong the estimated useful life of the property. Expenditures to repair capitalized assets shall be capitalized if the repairs increase the value of property, prolong its estimated useful life, or adapt it to a new or different use. Such capitalized repair costs shall be depreciated over the remaining estimated useful life of the property. If the repairs significantly extend the estimated useful life of the property, the original cost of the property shall also be depreciated over its new, extended useful life. Dispositions of Property and Equipment If equipment is sold, scrapped, donated, or stolen, adjustments need to be made to the fixed asset listing and property log. If money is received for the asset, then the difference between the amount received and the "book value" (purchase price less depreciation) of the asset will be recorded as a loss (if the money received is less than the book value) or a gain (if the money received is more than the book value). Kansas WorkforceONE will follow the Kansas Department of Commerce s policy for disposition of equipment. Write-Offs of Property and Equipment The Executive Director approves the disposal of all capitalized fixed assets that may be worn-out or obsolete. Property that is discovered to be missing or stolen will be reported immediately to the Executive Director. If not located, this property will be written off the books with the proper notation specifying the reason. 131

150 LEASES Classification of Leases Kansas WorkforceONE classifies all leases in which the Kansas WorkforceONE is a lessee as either capital or operating leases. Kansas WorkforceONE shall utilize the criteria described in Statement of Financial Accounting Standards No. 13 in determining whether a lease is capital or operating in nature. Under those criteria, a lease shall be treated as a capital lease if, at the time of entering into the lease, any of the following factors are present: The lease transfers ownership to Kansas WorkforceONE at the end of the lease term. The lease contains a bargain purchase option. The lease term is equal to 75% or more of the estimated economic life of the leased property. The present value of the minimum lease payments is 90% or more of the fair value of the leased property (using, as the interest rate, the lesser of Kansas WorkforceONE's incremental borrowing rate or, if known, the lessor's implicit rate). All leases that do not possess any of the four preceding characteristics shall be treated as operating leases. In addition, all leases that are immaterial in nature shall be accounted for as operating leases. Reasonableness of Leases Kansas WorkforceONE assesses the value of leases according to the requirements of 45 CFR Part , Rental Costs of Real Property and Equipment, considering the following factors; The rate is reasonable when compared to similar property in the same area; The rate of any alternatives; and The type, life expectancy, condition, and value of the property leased. Rental arrangements will be reviewed every 3 years to determine if circumstances have changed and other options are available. Accounting for Leases All leases that are classified as operating leases and immaterial capital leases shall be accounted for as expenses in the period in which the lease payment is due. For leases with firm commitments for lease payments that vary over the term of the lease (i.e., a lease with fixed annual increases that are determinable upon signing the lease), the amount that Kansas WorkforceONE shall recognize as monthly lease expense shall equal the average monthly lease payment over the entire term of the lease. Differences between the average monthly payment and the actual monthly payment shall be accounted for as an asset or liability. 132

151 All leases that are classified as capital leases shall be treated as fixed asset additions. As such, upon the inception of a capital lease, Kansas WorkforceONE shall record a capitalized asset and a liability under the lease, based on the net present value of the minimum lease payments (or the fair value of the leased asset, if it is less than the present value of the lease payments). Periodic lease payments shall be allocated between a reduction in the lease obligation and interest expense. The capitalized asset recorded under a capital lease shall be depreciated over the term of the lease, using the straightline method of depreciation. Kansas WorkforceONE shall also maintain a control list of all operating and capital leases. This list shall include all relevant lease terms, including a schedule of future annual lease payments obligations. Changes in Lease Terms As described in earlier policies, leasehold improvements and deferred rent incentives are amortized over the initial lease term. If such lease term is changed prior to the expiration of the initial lease term, Kansas WorkforceONE will revise amortization to reflect the remaining lease term as of the effective date of the lease modification. 133

152 SOFTWARE ACQUISITION AND DEVELOPMENT COSTS Costs to Be Capitalized Certain costs incurred in connection with the acquisition or development of internal-use software shall be capitalized and reported as an asset of the Organization. The costs that shall be capitalized are those that are in excess of the Organization s capitalization threshold (explained earlier) and that meet any one of the following criteria: External direct costs (i.e., amounts paid to contractors) of materials and services for developing or obtaining internal-use software ( developing to include design, coding, installation, and testing) Internal payroll and related benefit costs for employees who are directly associated with, and who devote time to, an internal-use software project (i.e., the same types of software development costs described above). Interest costs incurred in developing software. Costs associated with upgrades and enhancements when it is probable that these expenditures will result in additional functionality. Costs that are capitalized in connection with the preceding policy shall be included as assets on the Kansas WorkforceONE s property and equipment listing, and shall be amortized over an estimated useful life in accordance with the previously stated policies on depreciation and amortization. Costs to Be Expensed As Incurred Many costs associated with acquiring or developing internal-use software are to be expensed as incurred, rather than capitalized, including: External and internal costs incurred in the preliminary project phases, such as costs associated with making decisions to allocate resources to the project, determining performance requirements and specifications, and reviewing and selecting contractors and consultants. Research and development costs. General and administrative costs. Data conversion. Training costs. Internal maintenance costs. 134

153 INTANGIBLE ASSETS Acquisition of Intangible Assets Intangible assets include a variety of items, such as copyrights, service marks, trademarks, license agreements, and videos. The Organization may acquire intangible assets in any of the following manners: Contribution from a donor; Purchase from an outside party that holds title to an intangible asset; or Internally developing an intangible asset through utilization of the Organization s employees, volunteers, and contractors (e.g., an employee writes a document on behalf of the Organization) Accounting for Intangible Assets Intangible assets acquired by contribution from donors shall be accounted for as assets measured at fair value at the date of the gift. (See Fair Value Accounting Procedures for a description of internal controls over the establishment of fair values.) Intangible assets acquired by purchase shall be capitalized as assets at the purchase price paid for such assets. The costs of intangible assets that are developed internally shall be charged to expense (not capitalized) if any of the following criteria are met: The intangible asset is not specifically identifiable. The asset has an indeterminate life. The asset is inherent in Kansas WorkforceONE and related to Kansas WorkforceONE taken as a whole. Costs of internally-developed intangible assets not meeting any of the three preceding criteria shall be capitalized. These costs may include salaries, allocated employee benefit costs, consultant fees, and other related costs. Amortization Capitalized intangible assets of Kansas WorkforceONE s shall be classified into one of three categories, as follows: Assets with finite and precise useful lives (such as a license agreement with a fixed term) Assets with finite, but imprecise, useful lives Assets with indefinite useful lives 135

154 Intangible assets with finite and precise useful lives shall be amortized over their useful lives, using the straight-line method of amortization. For intangible assets with finite, but imprecise, useful lives, the organization shall estimate a useful life and amortize the asset over that life, using the straight-line method of amortization. For either of the two preceding categories of amortizable intangible assets, Kansas WorkforceONE shall evaluate the useful life on an annual basis to determine whether an adjustment of the useful life is appropriate. For intangible assets with indefinite useful lives, the cost of the asset shall remain on the books of the Organization as an asset, without reducing this basis for amortization, until such time as an impairment in the value of the asset is determined to have occurred. See the next section for a description of the Kansas WorkforceONE s policies and procedures associated with asset impairments. In addition, intangible assets with indefinite useful lives shall be evaluated on an annual basis for purposes of determining whether the previously indefinite useful life has become finite and estimable (e.g., a copyright that when initially acquired had an indefinite life, but which has become dated and now has a finite remaining useful life). If it is determined that any intangible asset previously accounted for as having an indefinite useful life has become an asset with a finite and estimable useful life, the Organization shall begin amortizing the intangible asset over the estimated remaining useful life (i.e., rather than recording an impairment in the value of the asset). 136

155 ASSET IMPAIRMENTS Long-lived assets of the Organization include personal property and equipment, land, buildings, intangible assets, and other noncurrent assets. In connection with long-lived assets, the organization shall record an impairment loss when the carrying amount (book value, net of any accumulated depreciation or amortization) is both: Not recoverable (through sale, etc.); and In excess of the asset s fair value. Long-lived assets shall be tested for impairment whenever events or changes in circumstances indicate that an asset s carrying value may be impaired. Examples of such events or circumstances that the organization shall consider include: A significant decrease in the market price of a long-lived asset. A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition. A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action by a regulator. An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset. A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that indicates continuing losses associated with the use of a long- lived asset. A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. If Kansas WorkforceONE records an impairment loss in connection with a long-lived asset subject to depreciation or amortization, the reduced basis resulting from recording the loss shall be used as a new basis for calculating future periods depreciation or amortization. 137

156 FAIR VALUE ACCOUNTING Scope Throughout this manual, numerous references are made to fair value accounting issues. Examples include the valuation of publicly-traded securities held as investments, valuation of contributed services, other contributed noncash assets, recording of asset impairment losses based on fair value declining below book value. For purposes of this manual, the term fair value shall be defined as it is in SFAS 157: the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Determination of fair value shall be performed by the individuals identified in this manual associated with each type of fair value accounting issues. All fair value determinations in excess of $500 shall be reviewed and approved by the Executive Director. Disclosures Kansas WorkforceONE shall comply with the disclosure requirements of SFAS 157, in that it will disclose information in the footnotes to the financial statements that enable readers of the financial statements to assess the inputs used to develop all material fair value measurements associated with assets and liabilities of the organization. For any asset impairment losses recorded as a result of the policy described earlier, the organization shall disclose the reason for recording the impairment, in addition to the preceding disclosures. 138

157 POLICIES PERTAINING TO LIABILITY AND NET ASSET ACCOUNTS ACCRUED LIABILITIES Identification of Liabilities The Accounting Department shall establish a list of commonly incurred expenses that may have to be accrued at the end of an accounting period. Some of the expenses that shall be accrued by Kansas WorkforceONE at the end of an accounting period are: Salaries and wages Payroll taxes Paid leave (see policy below) Rent Interest on notes payable In addition, Kansas WorkforceONE shall record a liability for deferred revenue (revenue received but not yet earned) in accordance with the revenue recognition policies described elsewhere in this manual. Adjustments to deferred revenue accounts shall be made monthly. Accrued Leave Personnel policies permit employees to carry forward up to 40 hours of unused leave from year to year. Such unused leave is payable to an employee upon termination of employment. Accordingly, Kansas WorkforceONE records a liability for accrued leave to which employees are entitled. The total liability at the end of an accounting period shall equal the total earned but unused hours of leave, up to a maximum of 40 hours multiplied by each employee s current hourly pay rate. Leave that does not vest with employees (i.e., leave that is not paid to employees if unused at the time of termination of employment), such as sick leave, shall not be accrued as a liability. 139

158 INCOME TAXES PAYABLE Accrual of Income Taxes Kansas WorkforceONE is exempt from federal income taxes. However, if Kansas WorkforceONE generates taxable income from unrelated trade or business activities, a liability for income taxes payable shall be accrued at the applicable corporate income tax rates. All income taxes payable shall be paid by the due date of the returns on which such income taxes are to be reported. If Kansas WorkforceONE becomes subject to a requirement to remit estimated income taxes on a quarterly basis, such amounts shall be accrued and paid quarterly. Income Tax Positions Kansas WorkforceONE takes several income tax positions that are reflected in the Organization s financial statements. The primary income tax positions of Kansas WorkforceONE are: 1. That Kansas WorkforceONE qualifies for its exemption from income taxes under IRC section 501(c)(3) meaning it has not engaged in any activity that could result in revocation of this exemption, including but not limited to: a. Not providing net distributions of profits, or paying compensation that was not earned or is excessive. b. Not making political contributions or engaging in political activities. c. Not exceeding the appropriate lobbying limitations. 2. That none of Kansas WorkforceONE s forms of revenue is subject to the unrelated business income tax (UBIT). 3. That Kansas WorkforceONE has properly determined which forms of revenue are subject to the unrelated business income tax and which forms of revenue are exempt from UBIT. 4. That the calculations of income, deductions, tax credits, and other amounts reported on Form 990-T are in compliance with the Internal Revenue Code and IRS regulations. 5. That Kansas WorkforceONE s calculations of income, deductions, etc. reported on its state income tax return are in compliance with state laws and regulations. 6. That Kansas WorkforceONE s allocation of gross taxable income by state is in compliance with all applicable state laws and regulations (i.e., the Organization is filing state returns in each state that would require a return). It is the policy of Kansas WorkforceONE that all income tax positions taken by Kansas WorkforceONE shall meet the more likely than not criterion of FIN 48 meaning the Kansas WorkforceONE s management believes that it is more likely than not that the applicable taxing authorities would concur with the position taken by Kansas WorkforceONE s. AGH Tax Accountant shall perform whatever tax research is considered necessary and shall report to the Executive Director. If Kansas WorkforceONE receives advice and/or research from an outside party in connection with this 140

159 policy, Kansas WorkforceONE shall make its own final determination of whether or not to take a particular income tax position. In doing so, it shall not blindly rely on outside advice. Rather, the Organization shall gain a complete understanding of the conclusions reached by any outside parties in providing counsel to the Organization in connection with this policy. Gaining this understanding and forming the income tax positions of Kansas WorkforceONE shall be the responsibility of Executive Director. The Executive DIrector shall provide a briefing to the Fiscal Committee and obtain the committee s concurrence each time an income tax position is established or changed. 141

160 NOTES PAYABLE Kansas WorkforceONE does not have notes payable. 142

161 NET ASSETS Classification of Net Assets Net assets of Kansas WorkforceONE shall be classified based upon the existence or absence of donor- imposed restrictions as follows: o Unrestricted Net Assets Net assets that are not subject to donor-imposed stipulations. o Temporarily Restricted Net Assets Net assets subject to donor-imposed stipulations that may or will be satisfied through the actions of the Organization and/or the passage of time. o Permanently Restricted Net Assets Net assets subject to donor-imposed stipulations that the Organization permanently maintain certain contributed assets. Generally, donors of such assets permit the Organization to use all or part of the income earned from permanently restricted net assets for general operations or for specific purposes. Permanent restrictions do not pass with the expiration of time, nor can they be removed through the Organization s actions. Net assets accumulated that are not subject to donor-imposed restrictions, but which the Board of Directors of Kansas WorkforceONE has earmarked for specific uses, shall be segregated in the accounting records as "board-designated" funds within the unrestricted category of net assets. Restrictions may be associated with either a time period (e.g., a particular future time period) or a purpose (e.g., specific programs). A purpose stipulation will be considered a restriction only if it is more specific than the broad limits resulting from the nature of Kansas WorkforceONE, the environment in which it operates, and the purposes specified in Kansas WorkforceONE's Articles of Incorporation and Bylaws. Reclassifications from Restricted to Unrestricted Net Assets Kansas WorkforceONE shall report in its statement of activities a reclassification from restricted to unrestricted net assets if any of the following events occur: Fulfillment of the purpose for which the net assets were restricted (e.g., spending restricted funds for the stipulated purpose) Expiration of time restrictions imposed by donors Death of an annuity beneficiary Withdrawal by the donor (or by a court) of a time or purpose restriction If a donor stipulates multiple restrictions (such as a purpose and a time restriction), reclassifications from temporarily restricted to unrestricted net assets shall be reported only upon the satisfaction of the final remaining restriction. 143

162 Reclassifications from Unrestricted to Restricted Net Assets If Kansas WorkforceONE accepts and receives a restricted contribution from a donor who further stipulates that the Organization set aside a portion of its unrestricted net assets for that same purpose, the Organization shall report in its statement of activities a reclassification of net assets from unrestricted to temporarily or permanently restricted, based on the specific nature of the restriction. (See the preceding Gift Acceptance policy for procedures for determining whether to accept a gift that requires reclassification of net assets from unrestricted to temporarily restricted.) Disclosures Kansas WorkforceONE discloses in a footnote to the financial statements the different types of temporary and permanent restrictions associated with Kansas WorkforceONE s net assets as of the end of each fiscal year. 144

163 POLICIES ASSOCIATED WITH FINANCIAL AND TAX REPORTING FINANCIAL STATEMENTS Standard Financial Statements of the Organization Preparing financial statements and communicating key financial information is a necessary and critical accounting function. Financial statements are management tools used in making decisions, in monitoring the achievement of financial objectives, and as a standard method for providing information to interested parties external to the Organization. Financial statements may reflect year-to-year historical comparisons or current year budget-to-actual comparisons. The basic financial statements that are maintained on an organization-wide basis shall include: 1. Statement of Financial Position Reflects assets, liabilities, and net assets of the Kansas WorkforceONE and classifies assets and liabilities as current or noncurrent/long-term and net assets by category (unrestricted, temporarily restricted, and/or permanently restricted.) 2. Statement of Activities Presents support, revenues, expenses, and other changes in net assets of the Kansas WorkforceONE, by category of net asset (unrestricted, temporarily restricted, and permanently restricted), including reclassifications between categories of net assets. 3. Statement of Cash Flows Reports the cash inflows and outflows of Kansas WorkforceONE in three categories: operating activities, investing activities, and financing activities. 4. Statement of Functional Expenses Presents the expenses of Kansas WorkforceONE in a natural or objective format and by function (i.e., which program or supporting service was served). Frequency of Preparation The objective of Kansas WorkforceONE is to prepare accurate financial statements in accordance with generally accepted accounting principles and distribute them in a timely and cost-effective manner. In meeting this responsibility, the following policies shall apply: A standard set of financial statements described in the preceding section shall be produced on a monthly basis by the 15 th of each month. The standard set of financial statements described in the preceding section shall be supplemented by the following schedules: 145

164 1. Individual statements of activities on a departmental and functional basis (and/or program/grant basis) 146

165 2. Comparisons of actual year-to-date revenues and expenses with year-to-date budgeted amounts The monthly set of financial statements shall be prepared on the accrual method of accounting, including all receivables, accounts payable received by the 15 th of the month, and actual depreciation expense. Review and Distribution All financial statements and supporting schedules shall be reviewed and approved by the Senior Accountant prior to being issued by the Accounting Department. After approval, a complete set of monthly financial statements, including the supplemental schedules described above, shall be distributed to the following individuals: Treasurer and all members of the Fiscal Committee Executive Director Department Directors The purpose of this schedule is to provide known explanations for material budget variances in accordance with Kansas WorkforceONE s budget monitoring policies described later in this manual (under the Financial Management Policies section). Monthly Distribution On a quarterly basis, the Board of Directors will be provided with summary program and/or grant financial information. Annual Financial Statements On an annual basis, the Organization shall prepare, under the direction of the AGH Senior Accountant a complete set of GAAP financial statements, including footnotes addressing all disclosures required by GAAP. These financial statements shall be presented to Kansas WorkforceONE s independent auditors at the beginning of their annual audit as the draft statements from which they will conduct their audit. A formal presentation of the Kansas WorkforceONE s annual audited financial statements shall be provided by the Independent Auditor to the full Board of Directors. 147

166 PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS Kansas WorkforceONE does not requirement preparation of consolidated financial statements. 148

167 GOVERNMENT RETURNS Overview To legitimately conduct business, Kansas WorkforceONE must be aware of its tax and information return filing obligations and comply with all such requirements of federal, state, and local jurisdictions. Filing requirements of Kansas WorkforceONE include, but are not limited to, filing annual information returns with IRS, [state charitable solicitation reports, annual reports for corporations, property tax returns, income tax returns, sales tax returns, information returns for retirement plans, annual reporting of compensation paid, and payroll tax withholding tax returns]. Filing of Returns AGH Senior Accountant shall be responsible for identifying all filing requirements and ensuring that Kansas WorkforceONE is in compliance with all such requirements. Kansas WorkforceONE will file complete and accurate returns with all authorities and make all efforts to avoid filing misleading, inaccurate, or incomplete returns. Filings made by Kansas WorkforceONE include, but are not limited to, the following returns: Form 990 Annual information return of tax-exempt organizations, filed with IRS. Form 990 for Kansas WorkforceONE is due on the fifteenth day of the fifth month following year-end. An automatic 3-month extension of time to file Form 990 may be obtained filing Form Upon expiration of the first 3-month extension, a second 3-month extension may be requested using Form Form 990-T Annual tax return to report Kansas WorkforceONE's unrelated trade or business activities (if any), filed with IRS. Form 990-T is due on the fifteenth day of the fifth month following year-end. An automatic 6-month extension of time to file Form 990-T may be obtained by filing Form Form 5500 Annual return for Kansas WorkforceONE's employee benefit plans. Form 5500 is due on the last day of the seventh month after the end of the plan year, but a 2½-month extension of time to file may be requested using Form Personal Property Tax Return Filed with the State of [XX] to report personal property and officers of the corporation. Kansas WorkforceONE's personal property tax return is due [April 15]. W-2s and 1099s Annual report of employee and non-employee compensation, based on calendar-year compensation, on the cash basis. These information returns are due to employees and independent contractors by January 31 and to the federal government by February 28. Generally, Form 1099 is required only if the organization has provided more than $600 in compensation to an independent contractor during the calendar year. Form 940 Annual federal unemployment tax return filed with IRS, for all employers [other than charitable organizations exempt from FUTA (but not necessarily state unemployment tax) under 149

168 IRC section 501(c)(3)], due January 31. Form 941 Quarterly payroll tax return filed with IRS to report wages paid to employees and federal payroll taxes. Form 941 is due by the end of the month following the end of each quarter, or 10 days later if all payroll tax deposits have been made in a timely manner during the quarter. Kansas WorkforceONE's fiscal and tax year-end is December 31. All annual tax and information returns of Kansas WorkforceONE (Form 990, Form 990-T) are filed on the accrual basis of reporting. Federal and all applicable state payroll tax returns are prepared by AGH, LLC. Kansas WorkforceONE complies with all state payroll tax requirements by withholding and remitting payroll taxes to the state of residency of each Kansas WorkforceONE employee. Public Access to Information Returns Under regulations that became effective in 1999, Kansas WorkforceONE is subject to federal requirements to make the following forms "widely available" to all members of the general public: The three most recent annual information returns (Form 990 and Form 990-T, if applicable) [excluding the list of significant donors (Schedule B) that is attached to the Form 990, but including the accompanying Schedule A]. Kansas WorkforceONE's original application for recognition of its tax-exempt status (Form 1023 or Form 1024), filed with IRS, and all accompanying schedules and attachments. Kansas WorkforceONE adheres to the following guidelines in order to comply with the preceding public disclosure requirements: Anyone appearing in person at the offices of Kansas WorkforceONE during normal working hours making a request to inspect the forms will be granted access to a file copy of the forms. The Executive Director shall be responsible for maintaining this copy of each form and for making it available to all requesters. For all written requests for copies of forms received by Kansas WorkforceONE, Kansas WorkforceONE shall require prepayment of all copying and shipping charges. For requests for copies that are received without prepayment, Kansas WorkforceONE will notify the requester of this policy via phone call or by letter within 7 days of receipt of the original request. For requests for copies made in person during normal business hours, copies shall be provided while the requester waits. 150

169 OTHER TAX CONSIDERATIONS State and Local Property, Sales, Use & Income Taxes Kansas WorkforceONE will monitor state and local tax laws in locations where Kansas WorkforceONE conducts business to ensure that it is complying with all applicable tax laws. Organizations that qualify as tax-exempt charitable entities under Section 501(c)(3) of the Internal Revenue Code for income tax purposes may need to apply separately for exemptions from state and local property and/or sales tax in the various locations where they conduct business. State and local tax rules vary widely from state to state State Charity Registrations Various states may require Kansas WorkforceONE to register with them for two primary reasons: if the Organization has an office, programs or owns real estate in that state and/or if they raise funds in the state. Kansas WorkforceONE could be required to register and file annual reports with other states if it conducts charitable solicitations within those states. States regulate fundraising through charitable solicitation laws. State reporting can involve two components registration and an annual financial report. The registration may be a single initial filing or an annual filing which provides information about an organization s finances and budgets. The annual financial report generally covers operating results with an emphasis on fundraising. Kansas WorkforceONE s internet fundraising efforts could be considered charitable solicitations in various other states. Kansas WorkforceONE will examine the reach of its internet fundraising efforts and register to solicit funds in all applicable states. Some factors Kansas WorkforceONE will consider in determining whether internet fundraising efforts require registration in specific states are whether the campaigns specifically target individuals in a certain state and whether Kansas WorkforceONE repeatedly receives contributions from a state on an ongoing or substantial basis. 151

170 TRANSACTIONS WITH INTERESTED PERSONS Identification of Interested Persons In connection with complying with requirements of the Internal Revenue Code and the Form 990 information return, the Organization shall identify all individuals and entities qualifying as interested persons as defined by the IRS: All current officers, directors, trustees, and key employees (individuals required to be listed on the Form 990) All former officers, directors, trustees, and key employees Substantial contributors (a person required to be listed on Schedule B of the Form 990) Family members of any individual listed in 1, 2, or 3, defined as spouses, ancestors, brothers, sisters, children, grandchildren, great-grandchildren, and spouses of brothers, sisters, children, grandchildren, and great-grandchildren. A 35% controlled entity of any of the persons listed in 1, 2, or 3 A donor or donor advisor to a donor-advised fund An investment advisor of a sponsoring organization. Record of Transactions with Interested Persons The Organization shall maintain a record of all transactions and balances with interested persons for each fiscal year for purposes of disclosure on the Form 990. This record shall be reviewed and approved by the Executive Director and provided to the Form 990 preparer. 152

171 UNRELATED BUSINESS ACTIVITIES Identification and Classification Kansas WorkforceONE properly identifies and classifies income-producing activities that are unrelated to Kansas WorkforceONE s tax-exempt purpose using the guidelines described in the Internal Revenue Code and underlying regulations. Such income accounts shall be segregated in separate accounts in the general ledger in order to facilitate tracking and accumulation of unrelated trade or business activities. Allocation of Expenses to Unrelated Activities In addition to segregating income associated with activities that are unrelated to Kansas WorkforceONE s exempt purpose, Kansas WorkforceONE s general ledger shall also provide accounts for expenses associated with each such unrelated activity. These expenses shall be offset against unrelated business revenue in arriving at unrelated business taxable income. Expenses that shall be offset against gross unrelated business income shall be limited to those expenses directly associated with the production of such income, including reasonable allocation of indirect costs that benefit each activity, in accordance with expense allocation policies described elsewhere in this manual. Reporting Kansas WorkforceONE will file IRS Form 990-T to report taxable income from unrelated trade or business activities. Form 990-T is subject to public access and disclosure requirements. Please see Public Access to Information Returns above. Kansas WorkforceONE shall also report taxable income from unrelated trade or business activities that are subject to state or local income or franchise taxes on the appropriate return (Kansas) 153

172 JOINT VENTURES Kansas WorkforceONE will evaluate and negotiate potential participation in joint ventures under Federal tax law to ensure that any proposed venture safeguards the Kansas WorkforceONE s taxexempt status. For the purposes of this policy, a joint venture is any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment or exempt purpose activity. In order to adequately safeguard its tax-exempt status, Kansas WorkforceONE will negotiate transactions and arrangements so that it has sufficient control over the venture to ensure that the activity furthers the exempt purpose of Kansas WorkforceONE and that all agreements be on terms that are arm s length or more favorable to Kansas WorkforceONE. Kansas WorkforceONE will also require that the venture give priority to exempt purposes over maximizing profits and that the venture not engage in activities that would jeopardize Kansas WorkforceONE s exempt status. 154

173 FINANCIAL MANAGEMENT POLICIES BUDGETING Overview Budgeting is an integral part of managing any organization in that it is concerned with the translation of organizational goals and objectives into financial terms. A budget should be designed and prepared to direct the most efficient and prudent use of the organization's financial and human resources. A budget is a management commitment of a plan for present and future organizational activities that will ensure survival. It provides an opportunity to examine the composition and viability of the organization's programs and activities simultaneously in light of the available resources. Budgets are also prepared for funding sources, and each grant manager must be aware of budget modification requirements. Awarding agencies may or may not require approval for changes in line items. Kansas WorkforceONE will document and follow all such requirements. Preparation and Adoption Kansas WorkforceONE will prepare an annual budget on the accrual basis of accounting. The Executive Director prepares the budget by funding stream for the following three departments: LWDB, Operations and Services Delivery. The budget is then presented to the CEOB and full Board for approval. Monitoring Performance Kansas WorkforceONE monitors its financial performance by comparing and analyzing actual results with budgeted results. This function shall be accomplished in conjunction with the monthly financial reporting process described earlier. On a monthly basis, financial reports comparing actual year-to-date revenues and expenses with budgeted year-to-date amounts shall be produced by AGH and distributed to the Executive Director. The Executive Director completes full review and analysis and sends to Fiscal Committee and LWDB Chair. Budget and Program Revisions Kansas WorkforceONE will request prior approval from federal awarding agencies for any of the following program or budget revisions: (45 CFR Part ) 155

174 Change in the scope or objective of the project or program, even if there is no associated budget revision requiring prior written approval. Change in a key person (Project Director, etc.) specified in the application or award document. Changes in grant activity. The need for additional federal funding. The inclusion, unless waived by the federal awarding agency, of costs that require prior approval in accordance with 45 CFR Part , Prior written approval. The transfer of funds allotted for participant support costs to other categories of expense. Unless described in the application and funded in the approved awards, the subaward, transfer, or contracting out of any work under an award. (However, this provision does not apply to purchases of supplies, materials, equipment, or general support services.) Changes in the amount of the approved cost-sharing or matching provided by the Organization. Budget Modifications Modifications to federal Title I awards are approved by the LWDB chair. Other grant modifications are approved the Executive Director in accordance with the grant requirements. 156

175 ANNUAL AUDIT Role of the Independent Auditor Kansas WorkforceONE will arrange for an annual audit of Kansas WorkforceONE s financial statements to be conducted by an independent accounting firm. The independent accounting firm selected by the Board of Directors will be required to communicate directly with the Executive Director upon the completion of their audit. In addition, members of the Fiscal Committee and Executive Committee are authorized to initiate communication directly with the independent accounting firm. Audited financial statements, including the auditor's opinion thereon, will be submitted and presented to the Board of Directors. Auditor Independence Kansas WorkforceONE may from time to time request the independent auditor to provide services outside the scope of the annual audit and Form 990 preparation. In connection with these non-audit services, it is imperative that the independent auditor remain independent in fact and in appearance in order to continue serving the Organization as its auditor. Generally, in order to remain independent with respect to the audit, Kansas WorkforceONE auditors should not provide non-audit services that involve performing management functions or making management decisions nor should they provide non-audit services in situations where the non-audit services are significant/material to the subject matter of the audits (or where they would be auditing their own work in connection with the annual audit). Therefore, it is Kansas WorkforceONE s policy to evaluate any non-audit service requested from the independent auditor for possible impairments to the firm s independence, and to not permit the performance of any services that would impair independence. This evaluation shall be performed by the Executive Director, who may consult the independent auditor or other external sources in making this determination. In addition, for each non-audit service that is to be provided by Kansas WorkforceONE independent auditor, the Organization shall: 1. Designate a management level individual to be responsible and accountable for overseeing the non-audit service (to be determined by the [Executive Director]. 2. Establish and monitor performance of the non-audit service to ensure that it meets management s objectives (to be performed by the person designated in step 1). 3. Make any decisions that involve management functions related to the non-audit service and accept full responsibility for such decisions. 157

176 4. Evaluate the adequacy of the services performed and findings that result. How Often to Review the Selection of the Auditor Kansas WorkforceONE shall review the selection of its independent auditor in the following circumstances: Any time there is dissatisfaction with the service of the current firm. When a fresh perspective and new ideas are desired. Every 5 years to ensure competitive pricing and a high quality of service (this is not a requirement to change auditors every five years, but simply to reevaluate the selection). Selecting an Auditor The selection of an accounting firm to conduct the annual audit is a task that should be taken very seriously. The following factors shall be considered by Kansas WorkforceONE in selecting an accounting firm: The firm s reputation in the nonprofit community. The depth of the firm s understanding of and experience with not-for-profit organizations and federal reporting requirements under 45 CFR Part 75 Subpart F. The firm s demonstrated ability to provide the services requested in a timely manner. The ability of firm personnel to communicate with Organization personnel in a professional and congenial manner. If Kansas WorkforceONE decides to prepare and issue a written Request for Proposal (RFP) to be sent to prospective audit firms, the following information shall be included: Period of services required Type of contract to be awarded (fixed fee, cost basis, etc.) Complete description of the services requested (audit, management letter, tax returns, etc.) Identification of meetings requiring their attendance, such as staff or Board of Director meetings Organization chart of Kansas WorkforceONE Chart of account information Financial information about the Organization Copy of prior year reports (financial statements, management letters, etc.) Identification of need to perform audit in accordance with 45 CFR Part and the appropriate Compliance Supplements. Other information considered appropriate Description of proposal and format requirements Due date of proposals Overview of selection process (i.e., whether finalists will be interviewed, when a decision shall be made, etc.) 158

177 Identification of criteria for selection Minimum Proposal Requirements from prospective CPA firms shall be: Firm background Biographical information (resumes) of key firm member who will serve Kansas WorkforceONE Client references Information about the firm's capabilities Firm's approach to performing an audit Copy of the firm s most recent quality/peer review report, including any accompanying letter of finding s Other resources available with the firm Expected timing and completion of the audit Expected delivery of reports Cost estimate including estimated number of hours per staff member Rate per hour for each auditor Other information as appropriate Copies of all proposals shall be forwarded to each member of the Fiscal Committee for scoring and recommending to full board. Preparation for the Annual Audit Kansas WorkforceONE shall be actively involved in planning for and assisting with the Organization s independent accounting firm in order to ensure a smooth and timely audit of its financial statements. In that regard, the Accounting Department shall provide assistance to the independent auditors in the following areas: Planning The Executive Director is responsible for delegating the assignments and responsibilities to accounting staff in preparation for the audit. The Executive Director shall review the list of information requested by the auditors and assign responsibility for each item to the appropriate staff of Kansas WorkforceONE. The Executive Director shall then schedule and direct status meetings in the weeks leading up to the audit in order to review the progress of staff in preparing for the audit. The Executive Director shall arrange and coordinate any and all meetings, interviews, telephone discussions, and conference calls requested by the auditor with Kansas WorkforceONE board members, audit or finance committee members, or employees of Kansas WorkforceONE to facilitate the auditor s work. Prior to any such meetings or discussions, the [Director of Finance] shall inform each Organization participant of the nature of the discussion or meeting and what, if any, preparations they should do prior to the meeting. The Executive Director shall communicate to each Kansas WorkforceONE participant in such meetings or discussions the importance of being open, 159

178 honest, and frank with the auditors with respect to any and all questions posed by the auditors. Involvement Organization staff will do as much work as possible in order to assist the auditors and, therefore, reduce the cost of the audit. Interim Procedures To facilitate the timely completion of the annual audit, the independent auditors may perform selected audit procedures prior to the Organization s year-end. By performing significant portions of audit work as of an interim date, the work required subsequent to year-end is reduced. Kansas WorkforceONE staff will provide requested schedules and documents to assist the auditors during any interim audit fieldwork. Throughout the audit process, Kansas WorkforceONE will make every effort to provide schedules, documents, and information requested by the auditors in a timely manner. Concluding the Audit Upon receipt of a draft of the audited financial statements of Kansas WorkforceONE from its independent auditor, the Executive Director shall perform a detailed review of the draft, consisting of the following procedures: Carefully read the entire report for typographical errors. Trace and agree each number in the financial statements and accompanying footnotes to the accounting records and/or internal financial statements of Kansas WorkforceONE. Review each footnote for accuracy and completeness. Any questions or errors noted as part of this review shall be communicated to the independent auditor in a timely manner and resolved to the satisfaction of the Executive Director. It shall also be the responsibility of the Executive Director to review and respond in writing to all management letter or other internal control and compliance report findings and recommendations made by the independent auditor. In addition, the Single Audit Clearinghouse form shall be completed and a copy submitted to the Fiscal Committee. Audit Adjustments It is the policy of Kansas WorkforceONE to review all adjustments prepared by the independent auditor in connection with the annual audit, and, if in concurrence, record them in the general ledger. 160

179 Kansas WorkforceONE may also receive a list of unadjusted differences (or passed audit adjustments) from the independent auditor in connection with the audit. If Kansas WorkforceONE receives such a list, it shall be the responsibility of the Executive Director to review them and determine whether or not to record them in the current year. Internal Control Deficiencies Noted During the Audit In accordance with generally accepted auditing standards, at the conclusion of the audit the Executive Director s independent auditors may provide a written communication of internal control deficiencies noted in connection with their audit. Not all deficiencies in internal control are required to be reported by the auditor. Only the following two types of deficiencies are required to be communicated: Material weakness A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Significant deficiency A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. The Executive Director s independent auditors are required to provide written communication to the Fiscal Committee of all significant deficiencies and material weaknesses (i.e., only those control deficiencies that rise to the level of materiality at which they qualify under the definitions provided above, in the opinion of the auditor). It is Kansas WorkforceONE policy that all internal control deficiencies that are communicated by the auditor in writing shall be formally addressed by the Audit Committee, the Executive Director. The Executive Director shall prepare a written response, which shall include a corrective action plan, to each internal control finding and such response shall be presented to the Audit Committee for its review and approval. Fiscal Committee Communications with the Auditors In accordance with generally accepted auditing standards, in connection with and at the conclusion of each annual audit, the auditors are required to make certain communications directly to the Audit Committee. The Executive Director shall facilitate all of these communications, arranging for faceto- face meetings, telephone or conference calls, or delivery of electronic or paper documents between auditor and Audit Committee members. Some of the communications that Kansas WorkforceONE s auditors may have with the Organization s Fiscal Committee include: 161

180 1. Planning discussions prior to commencing the audit, such as by inquiring of audit committee members their perception of where the risk of material misstatements in Kansas WorkforceONE s financial statements may be greatest, the various risks of fraud, and other inquiries. 2. Planning stage communications informing the audit committee of the planned scope and nature of certain audit procedures that the auditors plan to perform, to aid in the audit committee members having a thorough understanding of the audit. 3. Internal control deficiencies noted during the audit, communicated in writing at the conclusion of the audit. 4. Any material fraud detected by the auditor, or any fraud, regardless of materiality, involving senior management, noted at any time during the audit. 5. Significant problems or other issues that arose during the audit (e.g., disagreements with management and certain other items that the auditors may be required to report to the audit committee). 6. Audit adjustments made by the auditors as a result of their audit. 7. Certain audit differences noted by the auditors that they deemed not material enough to warrant making an adjustment for. Fiscal Committee members should be aware of these communications and engage in active discussions with the auditors whenever it is considered appropriate in the fulfillment of these or their other duties. 162

181 INSURANCE Overview It is fiscally prudent to have an active risk management program that includes a comprehensive insurance package. This will ensure the viability and continued operations of Kansas WorkforceONE. Kansas WorkforceONE maintains adequate insurance against general liability, as well as coverage for buildings, contents, computers, fine arts, equipment, machinery, and other items of value. Coverage Guidelines As a guideline, Kansas WorkforceONE will arrange for the following types and levels of insurance as a minimum: Type of Coverage Amount of Coverage Comprehensive Liability $1,000,000 Umbrella Liability $1,000,000 $10,000,000 Automobiles for Employees, $1,000,000 Volunteers, or Escorts Employee dishonesty/bonding Fire and Water Damage Directors and Officers Theft Workers' Compensation $1,000,000 for all accounting department employees and the Executive Director and Director of Operations. Coverage for all items with acquisition cost greater than $1,000 $1,000,000 (with an appropriate deductible level) Coverage for all items with acquisition cost greater than $1,000 To the extent required by law (or contractual obligations of the Organization) Kansas WorkforceONE shall maintain a detailed listing of all insurance policies in effect. This listing shall include the following information, at a minimum: 163

182 1. Description (type of insurance) 2. Agent and insurance company, including all contact information 3. Coverage and deductibles 4. Premium amounts and frequency of payment 5. Policy effective dates 6. Date(s) premiums paid and check numbers Insurance Definitions Workers' Compensation and Employer's Liability Contractors are required to comply with applicable federal and state workers' compensation and occupational disease statutes. If occupational diseases are not compensated under those statutes, they shall be covered under the employer's liability insurance policy, except when contract operations are so commingled that it would not be practical to require this coverage. Fidelity Bond For all personnel handling cash or preparing or signing checks, Kansas WorkforceONE shall obtain insurance that provides coverage in a blanket fidelity bond. The specific needs of the Organization will determine the dollar limit of this coverage. Comprehensive Liability This type of coverage may include directors, officers, and employee general liability insurance, buildings, contents, computers, fine arts, boilers, and machinery. 164

183 RECORD RETENTION Policy Kansas WorkforceONE will follow the Kansas Department of Commerce Records Retention Policy. The formal records retention policy of Kansas WorkforceONE is as follows: Record Audit reports Correspondence Legal and important matters Deeds, mortgages, and bills of sales Financial statements Year-end General ledgers/year-end trial balance Minute books of directors, bylaws, and charters Retirement and pension records Tax returns and worksheets, examination reports and other documents relating to tax filings Trademark registrations and copyrights Accident reports/claims (settled Cases) Accounts payable ledgers and schedules Accounts receivable ledgers and schedules Contracts, mortgages, notes, and leases expired Garnishments Insurance claims Inventories of products, materials, and supplies Invoices (to customers, from contractors) Notes receivable ledgers and schedules Payroll records and summaries Personnel records (terminated) Property records (incl. depreciation schedules) Purchase orders Sales records Subsidiary ledgers Timesheets/cards Withholding tax statements Retention Permanent Permanent Permanent Permanent Permanent Permanent Permanent Permanent Permanent 7 Years 7 Years 7 Years 7 Years 7 Years 7 years 7 Years 7 Years 7 Years 7 Years 7 Years 7 years 7 Years 7 Years 7 Years 7 Years 7 Years Bank statement & reconciliations Chart of accounts Employment applications Insurance policies (expired) Internal audit reports Years 3 years 3 Years 3 Years 3 Years

184 Internal reports Petty cash vouchers Correspondence General Record Retention 3 Years 3 Years 2 Years Exception for Investigations In connection with any ongoing or anticipated investigation into allegations of violations of federal laws or regulations, provisions of government awards, or violations of the Kansas WorkforceONE s Code of Conduct, the following exceptions are made to the preceding scheduled retention and/or destruction of records: 1. All records related to the subject of the investigation or allegation shall be exempt from any scheduled record destruction. 2. The term records shall also apply to any electronically stored record (e.g., documents stored on computers, messages, etc.), which shall also be protected from destruction. 166

185 Financial Management Policies and Processes Overview Internal Controls o LWDB Fiscal, Executive Committee and/or designated member of LWDB s Roles and Responsibilities: Leave Request for Executive Director are approved by LWDB Chair LWDB Chair approves all WIA Notice of Funding Award initial budgets and WIA budget modifications. Fiscal committee reviews monthly reports and financial statements. Full Board reviews fiscal reports at quarterly meetings. Fiscal Committee reviews all fiscal monitoring reports. Data Access: Read only access to all KFL client, vendor and LWDB budgets; Limited access to Client Files. Read only access to accounting system used by fiscal agent for monitoring purposes including bank statements. o Executive Director Role and Responsibilities: Reviewing and authorizing all other staff member s time sheets and expenditures. Reviewing and authorizing all disbursements. Reviewing monthly reports and financial statements. Reviewing and analyzing monthly reports and financial statements submitted by the fiscal agent. Reviews and authorizes all adjustments and budget modifications. Conducting fiscal monitoring of staff and fiscal agent. Completing, reviewing and analyzing monthly reports and financial statements submitted by the fiscal agent. Reporting the financial status of the local area to the fiscal committee on a monthly basis and the full boards on a quarterly basis. Data Access: Write and editing access to all KFL client, vendor and LWDB budgets; Client File Access Read only access to accounting system used by fiscal agent for monitoring purposes including bank statements. o Director of Operations Role and Responsibilities: Ensure that Local Area I policies and processes remain current with laws and regulations. Any changes in regulations, policies or law will be communicated to all responsible parties and training will be provided when necessary. Director of Operations Reviews and authorizes Executive Director time sheets and expenditures. Review and authorize the client disbursements. Approving and entering all client service budgets to ensure Local Area policies and spending limits are adhered to. Conducting fiscal monitoring of staff and fiscal agent. Analyzing monthly reports and financial statements submitted by the fiscal agent. Data Access: Write and editing access to all KFL client, vendor and LWDB budgets; Client File Access Read only access to accounting system used by fiscal agent for monitoring purposes including bank statements. o Operations Manager role and responsibilities: Verifying invoices/timesheets with each individual client budget and activity plan; Entering requested amount into electronic spreadsheets for LWDB, Operations, Service 167

186 Delivery and Other grant expenditures. Entering requested amount into Kansas Fiscal Link (KFL) to be transmitted to the fiscal agent for disbursement. Reconciling all disbursements Data Access: Limited Write access to all KFL client, vendor and LWDB budgets in ability to enter budgets in KFL ; Client file access No access to accounting system used by fiscal agent o Fiscal agent Role and responsibilities Establish and maintain an accounting system for each designated program to reflect each funded program and program year. Programs include: WIA Adult Program WIA Youth Program WIA Dislocated Worker Program WIA Administration KDOC authorized Set Aside programs Any additional funding sources as obtained by the local area. Establish and maintain an accounting system for non-wia-funded programs, e.g. other federal grants, contracts for services and/or donations. Within each fund, establish line item program budgets and sub-contract budgets as determined by the LAI LWDB. Maintain current, accurate financial records for each budget. Ensure that all financial transactions and records are kept in accordance with generally accepted accounting principles applicable under state and federal laws and regulations. Maintain all general ledger accounts for the LAI LWDB programs. Maintain and reconcile all required bank/checking accounts. Establish and maintain an appropriate disbursement account(s) for receipt and disbursement of funds from KDOC and other sources. Accounts must be maintained with an institution with federal deposit insurance coverage. Disburse payroll funds for all work experience participants in accordance with time sheets. The Fiscal agent will be responsible for mailing checks to designated recipients. Disburse payroll funds for all LWDB staff in accordance with time sheets. The Fiscal agent will be responsible for mailing checks/pay stubs or conducting direct deposits to designated staff. Disburse funds to training providers, vendors/suppliers, board members, program participants and others in accordance with LWDB approval process. Assist LWDB to ensure valid documentation determining fund accountability and detailing the daily cash balances for WIA funds, and to ensure funds are expended consistent with data submitted. Process all refunds and overpayments. Ensure expeditious processing and payments, generally checks issued and mailed within 2 weeks of receipt of authorization. Maintain capability to issue checks within 2 days in emergency situations. Provide financial reports to LWDB staff to include the following information for each program/program year. Budget Total program year, YTD, Current Month Expenditures-YTD, Current Month (KDOC Expenditure Summary) Obligations YTD, Current Month Balance for program year budget 168

187 Variance YTD, Current Month Financial Statements trial balance, balance sheet and income statement Summary of all budgets within each program fund for program YTD and current month A quarterly projection of obligations for each program for a period of two prospective years. Monthly report listing checks outstanding (uncashed more than 60 days from date of issuance) Bank reconciliation Annual reports required by the State of Kansas and the Internal Revenue Service including the 1099 for applicable contractors. Preparation of periodic fiscal reports required by KDOC Annual report to the State Treasures Office of unclaimed checks. Annual LWDB Tax Return Annual Non-Profit Status report Quarterly Employee Tax withholding reports Upon request, provide copies of any and all transaction reports, account reconciliation reports, etc.; Provide periodic financial reports to KDOC in designated format. Submit all required financial reporting designated under WIA and by KDOC; Prepare Request for Payments to KDOC and draw funds for program expenditures from KDOC in accordance with established procedure Close out program year budgets at end of two- year expenditure period, including expenditure transfers between program years as necessary with approval of LWDB; Complete any fund transfers between WIA-funded programs as directed by LWDB. (To date there have been no fund transfers) Data Access: Read only access to all KFL client, vendor and LWDB budgets; No access to Client Files Access to accounting system. Local Area Management o The Fiscal agent will not drawdown funds from vouchers or payroll unless two LWDB staff signatures are present on the vouchers: Operations Manager completes the vouchers Program Director or Executive Director Authorizes with second signature. Director of Operations completes the vouchers Executive Director authorizes with second signature. o The Fiscal agent will reconcile all vouchers with drawdown requests and pass through verifications. o LWDB Staff will reconcile all disbursements with vouchers. o The Fiscal agent will be responsible for completing all LAI Federal and State fiscal reports. Fiscal Director / Executive Director will review, approve and submit all LAI Federal and State Reports to the Kansas Department of Commerce Fiscal Department. Executive staff will then review and analyze the information which will then be submitted to the LAI Fiscal Committee for their review. o Board staff must submit the following fiscal reports to the fiscal committee on a monthly basis: LAI Program Expenditures vs. Allocations LWDB/CEO, Service Delivery and Operations Budget Analysis Report by applicable program. Expenditure Report o Operations Manager is responsible for monitoring outstanding checks. The AAO will work with the staff to contact the client regarding outstanding checks on a monthly basis. All attempts to 169

188 o o o o contact the client will be documented in the client s physical file. If the check remains outstanding past the 90 days, the AAO will request the fiscal agent void the check. The client s electronic account will be notated and funds will continue to be obligated for one year. If at the end of the one year contact has not been made with clients, the LWDB staff will make a request to the fiscal agent to drawdown the funds in the name of the client to be sent to the State Treasurer for holding as unclaimed property. Kansas Fiscal Link will be used to submit client disbursement vouchers to the fiscal agent. The fiscal agent must reconcile the voucher prior to issuing checks on behalf of the LWDB. Each LWDB and Fiscal agent staff member will be given unique user names and pass words; and authority to access to information is given as it applies to each position. The KFL has the capability to identify parties who completed all transactions. The fiscal agent is responsible for reconciling the LWDB bank account at the end of every month. The reconciliation is to be submitted to the LWDB Staff by the 15 th of the following month. A copy of the bank statement must be included. Monthly expenditure reports will be submitted to the LWDB staff and State no later than the 15 th of every month. At minimum the LAI Fiscal agent will backup all electronic files on a weekly basis. Financial Management Systems Processes Fiscal agent Processes: o The Fiscal agent will be responsible for generating checks for the following: All payments to clients All vendor payments on behalf of clients All Staff Payroll All vendor payments for Operations, LWDB, Service Delivery and other applicable grants. o Kansas Fiscal Link will be used for all Client expenditure. Electronic Spreadsheets will be used for all LWDB, Operations, Service Delivery and other grant expenditures. o Vouchers will be sent by the LWDB staff to the fiscal agent by the close of business on each Friday. The following Tuesday the fiscal agent will conduct the drawdown and prepare the checks to be mailed on the following Thursday. Confirmation of each drawdown and applicable checks will be sent to the LWDB within two business days. o Check registers will be sent to LWDB Staff on Thursday, staff then reconciles checks with vouchers to ensure amounts are correct. o If either the voucher or drawdown day falls on a holiday arrangements will be made to conduct the draw two weeks prior to the holiday. o ER payment vouchers will be transmitted to the Fiscal agent no later than the Wednesday before the allowable Thursday draw. The above process will be used to communicate ER draws. o Monthly reports will be sent to the LWDB and the State by the 15 th day of the month following the applicable month. Client Services Drawdown Process: o Upon Receipt of client service invoice or timesheet: LWDB staff date stamps the invoice or timesheet; LWDB staff verifies invoices/timesheets with each individual client budget and activity plan; If the invoice/timesheet does not coincide the case manager is notified to submit a revised budget or activity plan; If the invoice/timesheet coincides with the client s budget and activity plan, the requested 170

189 amount is entered into Kansas Fiscal Link (KFL) and invoice is stamped with the vouchered stamp and dated; Electronic vouchers are generated according to the drawdown schedule and forwarded to the Fiscal agent for disbursement of funds. The fiscal agent generates and submits the drawdown requests to the Kansas Department of Commerce (KDOC); KDOC completes the drawdown and notifies the fiscal agent of the fund transfer. The fiscal agent generates checks and forwards to the vendor or client; The fiscal agent reconciles the drawdown request and forwards check register to the LWDB staff; LWDB staff reconciles the check registers with vouchers; The LWDB staff places the voucher with supporting documents, invoices, and drawdown reconciliation in the applicable drawdown, client file and budget binders. LWDB, Operations, Service Delivery and Other Grant Disbursement Processes: o Upon receipt of invoices: LWDB staff date stamps the invoice; LWDB Operations Manager verifies invoices to ensure amounts are within budget, that activity supports the charges, and that all costs are allowable and allocable. The Operations Manager will apply expenses according to the applicable funding stream and cost category. If costs are shared by multiple funding streams, activity reports (timesheets) submitted by staff are utilized to determine the correct funding stream to be charged. If not shared by multiple funding streams, the costs are applied directly to the applicable funding stream. Activity Splits are reviewed quarterly to ensure proper allocation of funds based on actual activity. If a marked difference adjustments will be made based on actual activity. The actual staff activity split will then be used to allocate expenditures for the next quarter; If the invoice is incorrect or poses questions, vendors are asked to clarify or revise; If the invoice and activity meet the requirements, the requested amount is entered into the electronic voucher spreadsheet by applicable funding stream and applied to the applicable budget and invoice is stamped with the vouchered stamp and dated; Electronic vouchers are generated according to the drawdown schedule and forwarded to the Fiscal agent for disbursement of funds The fiscal agent generates and submits the drawdown requests to the Kansas Department of Commerce (KDOC); KDOC completes the drawdown and notifies the fiscal agent of the fund transfer. The fiscal agent generates checks and forwards check register to LWDB Staff. LWDB staff reconciles the check register; Staff placed the voucher with supporting documents, invoices, and drawdown reconciliation in the monthly drawdown, vendor file and applicable budget binders. Staff Payroll Disbursement Processes: o o Upon hiring staff the Payroll Deduction Form is reviewed and approved by Executive Director then submitted to Fiscal agent Payroll Department. Payroll deduction forms are used to notify fiscal agent of changes in position, wages, status and benefits deduction. Upon receipt of timesheets: Operations Manager reviews timesheets; Operations Manager enters hours into spreadsheet; Director of Operations or Executive Director reviews and approves payroll; 171

190 Signed payroll spreadsheet is faxed to Fiscal agent Payroll Department; Electronic spreadsheet is ed to Fiscal agent Payroll Department; Fiscal agent completes payroll preprocess and sends to Executive Director for approval; Executive Director approves and authorizes fiscal agent to complete payroll process; The fiscal agent generates and submits the drawdown requests to the Kansas Department of Commerce (KDOC); KDOC completes the drawdown and notifies the fiscal agent of the fund transfer. The fiscal agent generates checks and forwards check register to LWDB Staff. LWDB staff reconciles the payroll register; The LWDB places the voucher with supporting documents, invoices, and drawdown reconciliation in the monthly drawdown and applicable budget binders. Cash Management o Upon receipt of invoices: LWDB staff date stamps the check; Check information entered into check log; Checks then locked until processing; On a monthly basis, Executive Director completes deposit remittance voucher for all LWDB, Service Delivery and Operations receipts. If AR invoices are appropriately marked paid. On a monthly basis, Fiscal Director completes customer refunds through Kansas Fiscal Link. During processing all checks are stamped with the voucher stamp and dated. Copies of checks are filed in vendor file, AR binders, voucher binders and/or client file if applicable. Deposit remittance vouchers and KFL vouchers are signed and forwarded to fiscal agent. Checks are then mailed to Fiscal agent for full processing. Checks are processed by the Transmittal Clerk Attachment G Additional Firewall Overview 172

191 Attachment A Organization Chart 173

192 174

193 Attachment B Committee Structure and Members 175

194 Kansas WorkforceONE Committee Structure and Members Committee Policy Overview: In order to ensure transparency and oversight with CEOB, each standing committee of the LWDB including the Executive Committee will include a CEOB Member. All members must sign the Code of Conduct and Conflict of Interest Disclaimer form on an annual basis. Minutes of the meeting must be reviewed and approved by the committee; then signed and presented by the committee chairs at each full LWDB and CEOB Meeting. LWDB staff have no voting rights on any of the LWDB Committees. The Third-Party Monitor will provide reports directly to the corresponding committee. Executive Committee The Executive Committee shall consist of the chairperson and chairs of the LWDB standing committees and shall include at least one Human Resources Professional. The Executive Committee is empowered to act in lieu of the LWDB when matters arise that must be dealt with between regular meetings of the LWDB that are not of the magnitude to warrant a special meeting of the entire LWDB, including the handling of personnel issues. In such cases, the Executive Committee should remain consistent with the existing philosophies, policies and procedures of the LWDB and such action should be reported to the entire LWDB in writing. The Executive Committee will also act as the Nomination Committee for the LWDB. All committee chairs will also report activity to the Executive Committee including reports from Third-Party Monitor. Chair: Kenneth Gates, LWDB Chair Committee Staff: Deb Scheibler, Executive Director Current Members: Kenneth Gates Earnie Lehman Annette Suppes Steve Gieber Aaron White Don Davis, CEOB Chair Fiscal Committee The Fiscal Committee oversees the development and management of the budget; ensures accurate tracking, monitoring and accountability of funds; ensures existence of adequate financial controls and reviews monthly fiscal reports. In addition, this committee will oversee the development and scoring of all RFPs, the fiscal agent contract with Allen, Gibbs and Houlik and facility management. The fiscal agent and independent auditor will report to the Fiscal Committee 176

195 as well as the third-party monitor. Chair: Steve Gieber Committee Staff: Deb Scheibler, Executive Director Michael Wolff, Fiscal Agent Members: Don Davis, CEOB Member Steve Gieber, Treasurer Phil Wyssenbach Tony Fiedler David Bishop Youth Development Committee The Youth Committee will provide guidance and oversight of Local Area I youth programs of all core partners. This committee will seek methods to improve youth service delivery systems, reduce duplication, improve and expand partnerships and improve outcomes of all youth workforce programs. Third party monitor will report program monitoring results to the Youth Committee. Chair: Aaron White Committee Staff: Allison Stewart, Operations Director Voting Members: Marcy McClelland (CEOB) Ardis Newhouse (Project Search) Debbie Kearns (AE CCCC) Vicki Richardson (Foster Care) Mario Morales (Job Corps) Dennis Ford (DCF VR) One-Stop Committee The One-Stop Committee provides guidance and oversight of the Workforce System in LAI. This committee will seek methods to improve the job seeker and employer service delivery systems, reduce duplication among partners, improve partner relationships, increase community partnerships, and promote the workforce system in LAI. In addition, this committee will oversee the development of Local Area I One-Stop Memorandum of Understanding with all partners as well as establish a shared cost and performance tracking system as required by WIOA. Third party monitor will report program monitoring results to the One-Stop Committee. Organizational Structure will be further developed upon selection of One-Stop Operator. 177

196 Chair: Annette Suppes, Vice-Chair Committee Staff: Tucky Allen, Local Area Business Services Director Allison Stewart, Operations Director Voting Members: Andy Reichart Dennis Ford (DCF VR) Matt Hoisington Abigail Crandall (WP, TAA & VETS) Matt Connell (AE Barton County College) Larry Poore (CEOB) Emma Trevino (SER Senior) Mario Morales (Job Corp) Carolyn Benitez (SER MSFW) Daniel Decker (DCF E&T) Travis Combs (AE Liberal) Kelly Mobray (AE Salina) Hector Martinez (AE Garden City) Michael Donnelly (DCF VR) Program Operations Committee The Operations Committee will provide oversight and guidance of the WIOA Title IB Adult, Dislocated Worker and Youth programs as well as all other grants operated by LAI. In addition, this committee will provide oversight of Workforce Center services and performance. This committee will review service delivery methods, recommend policy modifications, oversee enrollment levels and seek methods to improve program performance. This committee will also be responsible for negotiating levels of performance for recommendation to the full LWDB and CEOB. Monitor Entity will report program monitoring results to the Operations Committee. Chair: Earnie Lehman Committee Staff: Tucky Allen, Local Area Business Services Director Current Members: Allison Stewart, Operations Director Earnie Lehman Chris Ryan Ron Loomis (CEOB) Phil Wyssenbach Heather Herren Bryan Herwig Steve Gieber 178

197 Attachment C Code of Conduct 179

198 Kansas WorkforceONE Board Code of Conduct Introduction Members of non-profit boards are generally viewed as having three duties under the law. They are: Duty of care board members must exercise reasonable care in making decisions while acting as board members. Duty of loyalty when making decisions regarding board issues, members allegiance to the board must be undivided. Members must always act in the best interests of the organization. Duty of obedience Board members must be faithful to the mission, the purpose of the board, and the decisions of the majority. These three duties are the basis for this code of conduct. Code of Conduct Members of Kansas WorkforceONE, serving as the Workforce Development Board for Kansas Local Area I and Chief Elected Official Board, are obligated to abide by the following code of conduct. Board members are expected to be active participants in the organization, through regular attendance at board meetings, participation in board decision-making and discussions, membership in committees, and attendance at committee meetings and functions. Board members are expected to treat fellow board members, board staff, representatives of partner organizations, and consultants with respect. Board members should accept differences of opinion about board matters, and avoid allowing them to deteriorate into personal animosity. Board members must ensure that they are making informed decisions, by being familiar with orientation materials, board packets, and other materials, by actively participating in board discussions, and by asking questions about issues raised in board meetings. Each board member must declare any conflicts of interest between his or her personal life and his or her position on the board, and abstain from voting on any issue that appears to involve a conflict of interest. Board members must abstain from voting if they or an immediate family member has a financial interest in the outcome of the vote. No immediate family member of any board member may be employed by Local Workforce Development Board Area I, Inc. While many board members serve on the board as representatives of particular businesses, industries, or organizations, they must make voting decisions based on the best interests of the entire community, rather than a particular geographic area or special interest. 180

199 Board members must follow rules of order in meetings, and not engage in any behavior that is disruptive to the orderly conduct of business. Board members must be faithful to the mission of the organization as embodied in the mission statement, and refrain from actions that contradict the mission. Members have a duty to respect and support the majority decisions of the board. Board members must recognize that all authority is vested in the board as a body, and not in individual board members. Board members have a duty to understand the roles of and relationships among the Chief Elected Officials Board, the Workforce Development Board, the executive director, and the One-Stop Operator, and to refrain from actions that interfere with or infringe on others roles and duties. Board members are expected to act as ambassadors of Kansas WorkforceONE throughout the community, and to be advocates for the workforce development system. Board members may, if authorized by majority decision of the board, participate in political advocacy on behalf of the board, but members must refrain from actions that could cause Kansas WorkforceONE to be identified with a particular political party or particular candidate. I have read and understand the Kansas WorkforceONE Code of Conduct and agree to abide by its requirements. Print Name Date Signature 181

200 Attachment D Conflict of Interest Disclaimer 182

201 KANSAS WORKFORCEONE LOCAL WORKFORCE DEVELOPMENT BOARD DISCLOSURE OF CONFLICT(S) OF INTEREST I,, a Member of the Kansas WorkforceONE Local Workforce Development Board, or WDB Staff Member hereby affirm that I have read and understand the Conflict of Interest Policy. I also hereby declare and promise to carry out my responsibilities in relation to upholding the Conflict of Interest Policy during my term as a Board Member. I disclose the following conflict(s) of interest with another position that I hold outside of the WDB. Check All That Apply: I have no conflicts to disclose. I represent a private sector employer that has current business/contractual dealings with the Kansas WorkforceONE, or one or more of the, Partners, or other WIOA funded Service Providers/Contractors. I have a family member(s) who is employed by a current or potential WIOA funded Service Provider/Contractor or by another organization that provides services directly to Kansas WorkforceONE. I represent a WIOA funded Service Provider/Contractor. I represent an entity that provides monitor and/or oversight of Kansas WorkforceONE or any of its partners. I represent a WIOA Core or Required Partner. Other: (please describe the nature of the conflict) For the reasons stated above, I promise and attest that I will hereby declare, before a vote or discussion on the matter, the nature and extent of the conflict. I will hereby voluntarily withhold from participating in any discussions pertaining to this matter and abstain from voting on the subject. I further understand that this shall not prohibit me from responding to any direct questions on the matter from other Members. Member Signature: Print Name: Date: 183

202 Attachment E AGH, LLC Security Policies and Processes 184

203 As a certified public accounting and consulting firm, AGH is committed to preserving the confidentiality, integrity, and availability of all physical and information assets used in the performance of its professional services. AGH s information security management system is designed to enable efficient information processing while reducing information-related risks to acceptable levels. All AGH employees and certain third parties are required to comply with all information security policies and the security systems that implement those policies. Executive management supports and periodically reviews AGH s information security management systems and related policies to ensure alignment with firm goals and to encourage continuous improvement in those systems and policies. All employees and certain third parties receive routine security awareness training to improve their understanding of the evolving risk environment and reaffirm their compliance with current security policies and procedures. AGH s information security management systems define control objectives for protecting and sustaining critical information assets. Examples of control objectives and specific controls that have been implemented to satisfy those controls objectives include: To ensure that employees and contractors understand their responsibilities and are suitable for their assigned roles, AGH routinely performs background verification checks in accordance with relevant laws, regulations, and ethics. These checks are proportional to the firm s business requirements, the classification of the information to be accessed, and the associated risks. To ensure that employees and contractors are aware of and fulfil their information security responsibilities, AGH requires all employees and contractors to apply information security in accordance with the firm s established policies and procedures. All employees and certain third parties receive appropriate education, training, and regular updates on firm policies and procedures as appropriate for their job function. The firm has formal and communicated disciplinary processes for taking action against employees who have committed an information security breach. And information security responsibilities that remain valid af ter termination or changes of employment are defined, communicated to employees and contractors, and enforced. To ensure proper and effective use of cryptography to protect the confidentiality, authenticity, and integrity of information assets, AGH uses encryption for protection of information transported by mobile computing devices, removable media devices, and remote access and communication. For example, notebook computers are whole -disk encrypted and all remote access requires use of secure Internet connections or virtual private networks. To prevent unauthorized access to firm systems, applications, and data, AGH restricts access in accordance with defined access control policies. These restrictions are based on role, purpose, and individual business requirements. As required by the firm s access control policies, access to systems, applications, and data is controlled by secure log-on procedures. Interactive password management systems are used to ensure quality passwords. Individual user IDs and passwords are enforced to maintain accountability. Regular password changes are enforced and re-use of previously used passwords is restricted. To ensure availability of information processing facilities, AGH identifies and documents its business requirements for the availability of its critical information systems. W here the availability cannot be guaranteed using existing systems architecture, AGH maintains redundant components or architectures, and contracts with third-party recovery services providers. AGH does not have a dedicated or permanent alternate office location. 185

204 Attachment F - Employee and Customer Confidentiality Agreements 186

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