FINANCIAL MANAGEMENTSUMMER TRAINING FFY2011

Sponsors and Independent

Child and Adult Care Centers

CACFP SummerTraining - 2011

FINANCIAL MANAGEMENT AGENDA

Federal Financial Management Requirements

DPI Financial Management Requirements– Accounting System– Budget– Nonprofit Food Service Financial Report

DPI Detailed Financial Review– Other CACFP financial reviews

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Frequently Used Terms

Agency: The organization name on the CACFP Application. Same as the name on the federal tax-exempt status (non-profit) or the legal name of the agency (for-profit).

Child and Adult Care Food Program (CACFP): Federally funded program through USDA and administered in WI by the Department of Public Instruction. Provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”.

Nonprofit Food Service Financial Report (NPFS): DPI form required from all participating agencies (for-profit and non-profit) that is used to report actual food program expenditures and earned food program revenue. Annually = Independent and Quarterly = Sponsors.

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Frequently Used Terms (cont.)

United States Department of Agriculture (USDA): The federal branch of government that oversees and regulates the CACFP administered to State Agencies.

Department of Public Instruction (DPI): The Department in the State of WI that administers the CACFP to participating institutions.

Institution: A licensed center that contracts with the DPI to administer the CACFP to it’s enrolled participants. Also referred to as an “Agency”. Two types:

– Independent: One site participating in the CACFP.– Sponsoring Organization (SO): Two or more sites participating

in the CACFP. Affiliated - same legal entity as the Institution/Agency. Unaffiliated – no affiliation with Sponsor – SO must be non-profit

Child and Adult Care Food Program

IS Federally Funded

– Passed through DPI

a FOOD Program Healthy meals to eligible

participants Optional Program

– Except in Head Start

Heavily Administered– Detailed program

requirements.

IS NOT “Free” money Funding for personal

expenses To purchase soda/coffee

for teachers, non-healthy and/or not enough food and snacks for participants

Entitlement Program For the disorganized5

FEDERAL FINANCIAL MANAGEMENT REQUIREMENTS

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FINANCIAL VIABILITY

Appropriate practices for recruiting facilities. [7 CFR 226.6(b)(2)(vii)(A)(1)]

Adequate financial resources to operate the CACFP on a daily basis. [7 CFR 226.6(b)(2)(vii)(A)(2)]

– Other Sources of funding During interruptions in program payments Fiscal claims against the agency Unallowable program costs Documentation:

– Financial Statements– Audit Reports

Budgets [7 CFR 226.6(b)(2)(vii)(A)(3)]– Costs must be necessary, reasonable, allowable and

appropriately documented.

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Nonprofit Food Service [7 CFR 226.6(e)(13)]

CACFP funds used solely for operation of food service for enrolled participants.

Cannot make a profit on Federal food program

No more than 3 month operating balance per program year

Documentation to support actual costs

Must have other source of income – Costs Not Covered– Temporary interruptions in

program payments– Unallowable program costs

Nonprofit Food Service Operation

CACFP is like a separate nonprofit business within your business

Must show how you spend CACFP reimbursement in an allowable way

Required for ALL types of agency’s even for-profits

DPI FINANCIAL MANAGEMENT REQUIREMENTS

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MEASUREMENTS OF FINANCIAL VIABILITY

1. Accounting System Does your agency have one? If so is it in compliance to GAAP?

2. Approved Budget Amended Budget

3. Incurred Costs (Actual Costs) Reported annually (Independent) and Quarterly

(Sponsors) on the Nonprofit Food Service Financial Report

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Accounting System

Cash/Accrual/Modified Accrual– Cash System: Recognizes revenues and costs when cash is received and bills are paid. – Accrual System: Recognizes revenues and costs when costs are incurred and uses a

payable and receivable system.– Modified Accrual System: Certain expenses are reported on an accrual basis.

Compliance with Generally Accepted Accounting Principles (GAAP)– Rules for the accounting of costs and revenues– Resource: http://www.fasab.gov/accepted.html or Ask your staff Accountant– Items should not be purchased with CASH.

Financial Reports– General Ledger / Check Register– Profit/Loss Statement– Balance Sheet

Co-mingled CACFP funds with Agency funds– Method of separation (ie. independent account codes)– Approved allocation plan for shared costs

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Accounting System

Consistent with all programs Written Procedures

– Process of Payments, Deposit of funds and Payroll Single Audit Reports (non-profits only)

– A-133 report required if expend over $500,000/year in federal dollars (non-profits only)

Single Audit Clearinghouse http://harvester.census.gov/sac/index.html– Less than $500,000 - Annual report/review from outside party should be

conducted annually.– Copy sent to DPI within 9 months from end of agency’s FY if CACFP is major

program. For-profits: Compliance review by outside accountant

– Annual Report– Should be completed when Federal taxes are completed.– Good resource: www.irs.gov

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Accounting System

Summary DPI Requirements: CACFP vs. Other agency

activities Operational and

Administrative Costs Support NPFS reports

submitted to SA Consistent with other agency

operations

Accounting Systems

Acceptable Center credit card Center checking

account Charge Account at

local store Invoice or COD

– Food delivery vendor

Unacceptable Cash

– Including cash-back

Third party checks Food Stamps

15 * Information per GAAP

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CACFP BUDGET

Budget Summary submitted with online application Projection –

– “Road Map” of Upcoming Program Year– All Expenses

Allowable, Reasonable, in accordance to FNS Instruction– All Revenue Available

CACFP Meal Reimbursement CACFP Cash-in-lieu reimbursement Interest earned on CACFP funds and/or other FS income “Other” Non-CACFP Income

– Unfunded/Unallowable Costs– SA Overclaims– Interruption in Program Payments– Ex. Child Care Fees, Tuition, Headstart, W-2, Donations

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Review Online CACFP Budget

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FFY2012 CACFP Application/Budget

Available online at:

http://fns.dpi.wi.gov/fns_cacfpapps Click on first dot point: “CACFP Internet Application

Manual”– Instructions for online application

FFY2012 Online Application (second dot point) Renewing – all material will carry-over just make

updates and submit a new online budget summary. All NEW Sponsoring Organizations must submit a

completed Attachment G.

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Project Food Program Costs & Revenue– Costs: Regardless if paid with CACFP

reimbursement How much will it cost your agency to

administer the food program from October 1, 2011 – September 30, 2012

– Revenue: All sources and amounts available to fund food program expenses.

Not covered Unallowable Pay Overclaims

Costs not approved are unallowable– Cannot be funded with CACFP funds

FFY2012 Budget

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What do I put in my budget?

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Administrative & Operational Costs

Administrative Monitoring Claim

– Compiling – Submitting– Reconciling

Accounting / Bookkeeping

Operational Kitchen

– Meals Preparation Delivery

– Menus– Purchasing / Vended

Meals

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Frequent Allowable CACFP Costs(lists are not all inclusive)

Allowable Food (consumable) Kitchen Supplies/Nonfood Contract / Vended Meals Food Program Personnel

– Admin & Operational Audit Services

– CACFP Portion Employee CACFP Travel

– e.g. Grocery shopping, DPI training

Equipment Purchase/Rental

Food Costs

Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants

At least 50% of budget– For healthy, reimbursable meals at least ½ of

reimbursement on food costs.

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Food Supplies

Consumable food products used to create menu items served to program participants.

Costs can include delivery costs. Taxes must be paid with non-CACFP funds

(tax-exempt). Report on the Food Supplies/Food Costs

line on budget and NPFS.

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Food Vendors

Outside food service, not related to agency.

Contract approved with DPI Provide all CACFP components. Report as Contracted Services

on CACFP Budget and Financial Report

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Contracted/Vended Meals

Costs of purchased, prepared meals are contracted service costs

Contract must be signed prior to beginning date (contracted service)

The vendor must keep production records(a record of quantityof food prepared)

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Food Service Labor

All wages, salaries, employee benefits, and the share of the employee taxes paid by the agency.

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Operational Food Service Labor

Menu planning– Production Records

Food purchasingCookingServing the foodCleaning-up after the mealMeal Attendance

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Food Service Labor is also…

Time spent completing required records– HSIR and HSIS– Monthly claim– Financial reports

Supervision of day-to-day food service operations

These are Administrative costs

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Administrative Costs

Sponsors: No more than 15% of CACFP meal reimbursement can be spent on administrative costs without State Agency waiver.

Independent Centers: Not an issue because CACFP meal reimbursement is usually spent on operational costs, any leftover should be less than 15%.

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Administrative Costs

CACFP Administrative Costs should never be higher then CACFP Operational Costs.– It should cost an agency more to prepare and

serve the meals then doing the paperwork and monitoring of the program.

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Frequent Allowable CACFP Costs(list is not all inclusive)

Allowable Food (consumable) Kitchen Supplies/Nonfood Contract / Vended Meals Food Program Personnel

– Admin & Operational Audit Services

– CACFP Portion Employee Travel

– e.g. Grocery shopping, DPI training

Equipment Purchase/Rental

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Frequent Unallowable CACFP Costs(lists are not all inclusive)

Unallowable Bad Debts, Fines, Penalties

Non food program food costs– Coffee, non-CACFP personnel

meals (i.e. driver, maintenance, non-employee/family member)

– Entertainment – “Family Night”, catering costs

Purchase of food for personal use– Money received must be kept in

food program account. Must have strict internal policy.

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Resources for Allowable/Unallowable Costs

Guidance Memorandum #11– Child Care: http://fns.dpi.wi.gov/fns_centermemos– Adult Care: http://fns.dpi.wi.gov/fns_adultmemos– “Standards for Allowable Costs”

User friendly, searchable, Excel reference

FNS Instruction 796-2 (rev. 3)– Electronic copy available on our website.– Derived from OMB Circulars and Federal Regulations.– USDA website for OMB Circulars:

http://www.fns.usda.gov/fm/FeaturedAreas_menus/FA_Reference.html

STRETCH TIME

35 Stretch your mind, body and CACFP dollars

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How am I going to pay for this program?

CACFP Reimbursement

CACFP Reimbursement is based upon:– Number of meals you serve– Eligibility of the participants

The funds you receive will not cover all of yourallowable FP costs.

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Remember!

The CACFP funds are replacing funds you are now spending

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Other Source of Income

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CACFP is part of your overall organization. Funds received to run organization must also be

available to fund CACFP costs not covered by reimbursement.

Examples: Headstart, Tuition, W-2, Fundraising, Private Donations

Food Stamps is not another source of income for the center.

Report projected Source and Amount on Budget

Best use of your CACFP Reimbursement

Plan, budget, and organize the funds available will help you to maximize your CACFP reimbursement.

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No planning, using funds on non-program needs, no accountability of funds spent will result in loss of funding and/or participation

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All Food Program Costs Paid with CACFP Reimbursement must have received

PRIOR DPI approval

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I need to change my budget!

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Amending Budgets

DPI Policy: CACFP funds can only be used for approved food program line items on annual budget.

Notify DPI of any budget omissions.

When in doubt contact DPI for approval.

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How would DPI know what I spent my CACFP reimbursement on?

Review of NPFS Reports

On-Site Financial Reviews

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Nonprofit Food Service Financial Report (NPFS)

Form PI-1463 (Independent) and PI-1463-A (Sponsors)

Report of all ACTUAL CACFP expenditures during the reporting period.

Costs should equal expenditures charged to food service program plus any additional expenses covered with non-CACFP funds.

Amounts must be supported by actual documentation – NO ESTIMATES

Forms can be found under Guidance Memo 11

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All Food Program Costs: Actual Expenditures

– Not Estimates Support Documentation Only report CACFP %

– Shared costs Amount net credits Allowable and Approved

– FNS 796-2 (rev.3)– CACFP Budget

Nonprofit Food Service Financial Report (NPFS)

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Nonprofit Food Service Financial Report (NPFS)

CACFP revenue should be reported using the accrual method (as earned, not received).

Additional program income must be reported (e.g. interest income, rebates)

Additional non-program income must be reported

– Total Costs less Program income = non-program income

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Nonprofit Food Service Financial Report (NPFS) Due Dates

Independent Annual Report

– Reporting period: October 1 – September 30

Due Date: November 1st

Submit via: E-mail: cari.muggenburg@dpi.wi.gov Fax: (608) 267-0363 Regular Mail

E-mail or call if need extension

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Nonprofit Food Service Financial Reports (NPFS) Due Dates

Sponsoring Organization 1st Quarter

– Reporting period: October 1 – December 31 Due Date: March 1st

2nd Quarter– Reporting period: January 1 – March 31 Due Date: June 1st

3rd Quarter– Reporting period: April 1 – June 30 Due Date: September 1st

4th Quarter– Reporting period: July 1 – September 30 Due Date: December 1st

PI-1463-A (front page)

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State Agency (SA) USDA OIG

CACFP Financial Reviews

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CACFP Financial Reviews

SA Reviews (DPI)– Announced or Unannounced– Usually occur during a program review– Items to have available:

Support documentation for NPFS for current and last FFY ALL support documentation for food program costs Bank statements/cancelled checks for food program funds General Ledger, allocation plan, P/L reports

– Should be able to describe accounting system. How do you pay your bills? Where did CACFP funds go?

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CACFP Financial Reviews

SA Reviews (continued)– Any non-food program/unallowable cost found to be paid with

CACFP funds will be disallowed. May result in repayment to DPI. CACFP funds exceed CACFP costs = repayment to DPI Appeal-able Action

– MUST BE ORGANIZED Be able to show and explain your organizations system

USDA Reviews– Monitoring SA as part of Management Evaluation– SA will work with agency on Corrective Action (if needed)

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CACFP Financial Reviews

OIG Audits– Office of Inspector General– “Report Card” on CACFP– Focus Audit on key elements or red flags

Related party transactions (less than arms length) Purchase of property and/or real estate with federal funds Excessive growth in short time-span Contracted Services Disbarment from other Federal and State Programs

– Result: DUNS Number requirement – track all federal grant recipients

– http://www.fns.usda.gov/fm/documents/DUNS_general.htm– Reports go to Washington DC– http://www.usda.gov/oig/

Let’s Summarize…

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Which are allowable food costs?

Milk Beer & Liquor Personal Groceries Spices Bread

Crab meat Soda Pop Rabbit Food Teacher Meals Refrigerator

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Which are allowable nonfood/kitchen supplies?

Dishes Milk Cups Arts/Crafts Supplies

Toilet paper Cooking utensils Dishwashing

detergent Paper towels used in

the classrooms

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receipts.

What are some “Other” allowable CACFP expenses?

Food Service labor– Operational Exp.

Admin. Labor– Only CACFP %

Vended Meals– Contracted Service

Kitchen Equipment Gas for Vehicles

– Only CACFP %

Maintenance/Repairs– Only CACFP %

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CACFP funds should always be spent on food and kitchen supplies FIRST

What items should you retain to support your CACFP costs?

Receipts Invoices Payroll (timesheets,

paystubs, etc.) Checkbook/check

register General Ledger

CACFP Claim documentation

Bank Statements A shoebox or

garbage bag The number to your

accountant

58Retained for 4 years (3 yrs plus the current)

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Resources

Financial Management: Guidance Memo 11

– State agency Financial Management policy Child and Adult Care sites (Sponsors & Independent)

Instructions Completion of NPFS Report(s) Allowable/Unallowable costs Fiscal Action Procedures

FNS Instruction 796-2 (rev. 3)– Abbreviated version– Available Electronically – User Friendly– http://fns.dpi.wi.gov/fns_centermemos (under Guidance

memo 11)

QUESTIONS

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Contact Info

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Cari Ann Muggenburg, AuditorCommunity Nutrition Programs

Ph. 608-264-9551E-mail: cari.muggenburg@dpi.wi.gov

FINANCIAL MANAGEMENTSUMMER TRAINING FFY2011

Sponsors and Independent

Child and Adult Care Centers

CACFP SummerTraining - 2011