Homeland Security and Emergency Services

Fiscal Monitoring Unit (FMU)

Topics

SINGLE AUDIT REQUIREMENTS | MONITORING VISITS | COMMON OBSERVATIONS

SUPPLANTING | EQUIPMENT | PERSONNEL CHARGES | RESOURCES | CONTACT FMU

 

The New York State Division of Homeland Security and Emergency Services (DHSES) is responsible for monitoring all subrecipients that receive federal and State funding to help ensure compliance with audit requirements, applicable laws, rules, and regulations. To assist DHSES in fulfilling its obligations, the Fiscal Monitoring Unit (FMU) was established.

The FMU is responsible for the fiscal monitoring of subrecipients utilizing grant funds awarded by the DHSES. The FMU conducts fiscal monitoring through documentation review, on-site visits, review of single audit reports and technical assistance.

Fiscal Monitoring Unit Responsibilities

  • Provide on-going fiscal oversight and fiscal monitoring of DHSES grant contracts.
  • Obtain a reasonable assurance that subrecipients are expending funds in accordance with State and federal guidelines.
  • Inform subrecipients of fiscal compliance requirements.
  • Provide technical advice and training to subrecipients, as necessary.
  • Help ensure timely expenditure of grant funds.
  • Work with subrecipients to help detect and prevent fraud and abuse.

Goals and Objectives

  • Continuously develop and administer a fiscal monitoring program that will provide a reasonable assurance grant funds are expended in compliance with federal and State financial management requirements.
  • Ensure subrecipients follow the most restrictive of applicable regulations, but not limited to the following:
    • DHSES Contracts and Appendices
    • New York General Municipal Law - Article 5-A
    • County, municipal, or local procurement policies
    • 2 CFR Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards).
  • Obtain and review single audit reports as required.
  • Ensure corrective action from previous fiscal monitoring reports, audits, or from any other sources that require such follow-up.
  • Track single audit report findings and fiscal monitoring issues of subrecipients to identify trends and address problem areas.
  • Identify and provide technical assistance to subrecipients.
  • Identify innovative tools and techniques for the achievement of Fiscal Monitoring Unit goals and objectives.
  • Review the adequacy of internal controls and the reliability of the subrecipient's financial management system as they relate to the contracts.
  • Help to ensure that the subrecipient meets the terms and conditions of the contract(s), as they relate to fiscal goals or requirements.
  • Help to ensure that amounts reported are accurate, allowable, supported by documentation and properly allocated.

Single Audit Requirements

The FMU is tasked with ensuring that each DHSES subrecipient receiving federal funds complies with the requirements of the Code of Federal Regulations 2 CFR Part 200 Subpart F - Audit Requirements.

To assist with fiscal monitoring and in accordance with federal requirements, a subrecipient which expends $750,000 or more of federal funds from all sources during its fiscal year, must have a single or program-specific audit of such federal funds. As stated in Appendix A-1 for all DHSES contracts and agreements, subrecipients are required to submit an organization-wide financial and compliance audit report. The audit must be performed in accordance with the requirements of Subpart F of 2 CFR Part 200. The final report for such audit must be completed within nine months of the end of the subrecipient’s fiscal year. The subrecipient must provide one copy of such audit report to DHSES within nine months of the end of its fiscal year or communicate in writing to DHSES that the subrecipient is exempt from such requirement.

Subrecipients are required to submit a single or program-specific audit or a Single Audit Certification Form stating they are exempt from the requirement*

  • This audit requirement applies to the subrecipient (example: county, city, town...) and not the implementing agency.
  • Subrecipients are subject to the single audit requirement if they expend $750,000 or more in federal funding from ALL FEDERAL SOURCES during their fiscal period. Therefore, this does not only apply to the amount of expended DHSES funds.
  • Few, if any, counties are exempt from this audit requirement. If your organization, county or municipality is exempt, the Single Audit Certification Form should be completed by checking exempt and indicating which fiscal year/period (example: 01/01/2019-12/31/2019) the exemption is applicable to.*

It is recommended that you notify your municipality's/entity's fiscal department (example: county, city or town Treasurer, Comptroller, or Finance office) of this requirement and request that DHSES be added to the distribution list for the single audit reports.

Additionally, subrecipients should continue to submit a Single Audit Certification Form* or a copy of their single audit report (if applicable) after every fiscal year that falls within their DHSES contract period. Federal agencies no longer grant extensions for single audit submissions. If the auditee or auditor wishes to inform the federal agency they will be late, he or she may do so by contacting the Federal Oversight or Cognizant Agency for the audit. DHSES is not authorized to grant extensions. However, DHSES should be notified of any late single audit submissions.

The Single Audit Report or Certification Form can be submitted to:
New York State
Division of Homeland Security and Emergency Services
Fiscal Monitoring Unit
State Campus, Building 7A
1220 Washington Avenue
Albany, NY 12226

Electronic copies or a link to the report or form is acceptable and can be directed to: DHSES.FMU@dhses.ny.gov

*An email response submitted to DHSES.FMU@dhses.ny.gov indicating that your entity or municipality is exempt and indicating the fiscal period the exemption is applicable, is acceptable as well.

Monitoring Visits

Monitoring visits provide a reasonable assurance that grant funds are administered in compliance with federal and State financial and programmatic management requirements and help to ensure amounts reported are accurate, allowable, supported by documentation, and properly allocated.

Although monitoring is an ongoing process, the Fiscal Monitoring Unit will consider monitoring needs at various milestones:
Initial Award: Monitoring may begin at the time a contract is executed. A new subrecipient may be unfamiliar with the financial reporting and management requirements of the grant. Therefore, technical assistance at the initial execution of the contract for new subrecipients may be beneficial.
Periodic Monitoring: On-going monitoring will be conducted of grant subrecipients. The types and frequency of the monitoring will depend on the awarded grants and subrecipient performance.
Completion of contract: If a subrecipient will no longer receive funding from DHSES, a final fiscal review may be conducted at the completion of the last grant. This will depend on the total grants awarded and subrecipient performance.
What to expect: The Fiscal Monitoring Unit will call the subrecipient's and/or implementing agency contacts to establish a date for an onsite visit. Once a date is established, a confirming e-mail is sent and typically includes: some background information, resources, the transactions selected for review, and a request for some information from the implementing agencies to be provided in advance of the visit.

Once on site, the FMU staff typically: conducts an entrance meeting to review the site visit process and answer questions; reviews the required documentation; examines equipment property records; and physically inspects the selected pieces of equipment. When possible, it is the goal of the FMU to resolve any deficiencies with the subrecipient during the visit. At the conclusion of the visit, it is customary to have an exit meeting to summarize the visit and identify any outstanding observations.

If it is not practicable to conduct an on-site exit meeting on the last day of the field visit, the FMU will make arrangements to conduct the exit meeting on a later and mutually agreed upon date. Normally, if there are still outstanding documentation/information after the exit meeting is completed, the FMU will give subrecipient an additional week to provide any outstanding items. Based on the circumstance and the outstanding issue, if subrecipient is able to resolve any issues before the draft report is issued, the FMU may either exclude the issue from the draft report or provide a brief explanation of the issue in the "Other Issues" section of the report.

Following the site visit, a draft fiscal monitoring report is sent to the subrecipient with copies to the implementing agency contacts. If any observations are identified, a response is requested within 30 days from the date of the draft report. The response should include the corrective actions taken or planned to be taken, with time frames, to resolve the observations. The response is reviewed, and a final report is then issued. If no observations are identified during a site visit, a final report summarizing the visit will be sent in place of a draft report.

Supporting Documentation:

Below is the typical documentation expected to be made available during a fiscal monitoring visit for each category and transaction selected for review. However, it is not an exhaustive list and additional documentation may be requested during the review. If these records are readily available during our monitoring visit, the review will go quicker and may take less time.

Personal Services & Fringe Benefits:

  1. Payroll registers and timecards/sheets
  2. Overtime authorization forms (if applicable)
  3. Overtime worked forms (if applicable)
  4. Proof of attendance at trainings - sign-in sheets, or any other authorized method that individuals participated in the training
  5. Contractual agreements for salary rates
  6. Contractual agreements for fringe benefits payable
  7. Disbursement information (check register, cancelled checks or record of electronic funds transfer (EFT))
  8. Personnel Activity Reports or Certifications
  9. Rates for fringe benefits calculations

Note: Salary and Fringe rates must be substantiated.

Consultants:

  1. Procurement policy and procedures and files - competitive bid documentation (Request for Proposals, advertisement, bidders list, methodology to score bids (selection process), notice of selection of winning bid; proposals from bidders, or record of phone quotes or written vendor quotes etc.)
  2. Consultant agreement and purchase order, if required
  3. Proof of services received
  4. Billing information and payments (invoices, check register, cancelled checks or record of electronic funds transfer (EFT))

Equipment:

  1. Procurement policy and procedures and files - competitive bid documentation (Request for Proposals, advertisement, bidders list, methodology to score bids (selection process), notice of selection of winning bid; proposals from bidders, or record of phone quotes or written vendor quotes etc.)
  2. Purchase order or contract, if required
  3. Receiving or packing slips (with date received, description of the item(s) and who received)
  4. Billing information and payments (invoices, credit card statements, check register, cancelled checks or record of electronic funds transfer (EFT))
  5. Equipment Property Records
    • Records must include:
      • description of the property
      • a serial number or other identification number
      • identification of funding source (e.g. SHSP FY2020 and contract #)
      • who holds title
      • acquisition date
      • total cost of the property
      • percentage of federal participation in the property (e.g. 60% of the total cost of the property was purchased with grant funds)
      • location of the property
      • use and condition of the property
      • disposition data: date of disposal and sale price of the property
    • Physical Inventory
      1. inventory must be taken at least once every two years
      2. reconcile with property records

Supplies:

  1. Procurement policy and procedures and files - competitive bid documentation (Request for Proposals, advertisement, bidders list, methodology to score bids (selection process), notice of selection of winning bid; proposals from bidders, or record of phone quotes or written vendor quotes etc.)
  2. Purchase order
  3. Receiving or packing slips (with date received, description of the item(s) and who received)
  4. Billing information and payments (invoices, credit card statements, check register, cancelled checks or record of electronic funds transfer (EFT))

Travel:

  1. Travel policy and procedures
  2. Travel authorizations
  3. Training agenda
  4. Reimbursement request documentation
  5. Credit card statements, check register, cancelled checks or record of electronic funds transfer (EFT)
  6. DHSES pre-approval for out of state travel

Alterations & Renovations:

  1. Procurement policy and procedures and files - competitive bid documentation (Request for Proposals , advertisement, bidders list, methodology to score bids (selection process), notice of selection of winning bid; proposals from bidders, or record of phone quotes or written vendor quotes etc.)
  2. Contract and purchase order, if required
  3. Schematics/blueprints, if applicable
  4. Billing information and payments (invoices, credit card statements, check register, cancelled checks or record of electronic funds transfer (EFT)

All Other Expenses:

  1. Procurement policy and procedures and files - competitive bid documentation (Request for Proposals , advertisement, bidders list, methodology to score bids (selection process), notice of selection of winning bid; proposals from bidders, or record of phone quotes or written vendor quotes etc.)
  2. Purchase order
  3. Receiving or packing slips (with date received, description of the item(s) and who received)
  4. Billing information and payments (invoices, credit card statements, check register, cancelled checks or record of electronic funds transfer (EFT)

Note:

  1. Procurement folders must be made available for all the transactions selected for review. If these records are not available at the location where the review is being conducted, arrangements must be made in advance of the monitoring visit for DHSES staff to access these records.
  2. Please provide documentation to support items that are purchased on State or municipal contract.
  3. Please provide documentation of single or sole source DHSES pre-approval for selected transactions not competitively bid.

Supplanting

Determining Supplanting

The critical question in determining whether there has been a supplanting violation is whether federal funds were used instead of funds from non-federal sources. Subrecipients will have to show the federally funded activity would not have been funded by State or non-federal sources.

When reviewing compliance with non-supplanting rules, the following test is often used: What would the subrecipient have done in the absence of the federal funds? If the subrecipient would have carried out the project anyway with non-federal funds, there will be a presumption of supplanting. During the appeal process, the subrecipient would be required to submit evidence to disprove that presumption. On the other hand, if there was evidence that in the absence of those federal funds, the subrecipient would not have carried out that specific activity or program; there would be no presumption of supplanting.

For example, if a subrecipient, prior to applying to participate in the grant program, had committed to purchase 10 new radios, then the subrecipient must purchase those 10 radios in addition to any radios requested for the grant program. Funds currently allocated to purchase equipment may not be reallocated to other purposes nor refunded, should a grant be made. Non-federal funds for such equipment must remain available for and devoted to that purpose, with grant funds serving as a supplement to those non-federal funds.

A reduction in State or local funds for an activity specifically because federal funds are available (or expected to be available) to fund that same activity is another example of supplanting. Federal funds must be used to supplement existing State or local funds for program activities and may not replace State or local funds that have been appropriated or allocated for the same purpose. Additionally, federal funding may not replace State or local funding that is required by law. In those instances where a question of supplanting arises, the applicant or subrecipient will be required to substantiate that the reduction in non-federal resources occurred for reasons other than the receipt of federal funds.

Equipment

Equipment Defined
(From 2 CFR Part 200 §200.33 Definitions)

Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity (State, local government, Indian Tribe, institution of higher education (IHE), or nonprofit organization) for financial statement purposes, or $5,000.

Equipment Management*
(From 2 CFR Part 200 §200.313 Equipment)
(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place will, as a minimum, meet the following requirements:

  1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.
  2. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.
  3. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated.
  4. Adequate maintenance procedures must be developed to keep the property in good condition.
  5. If the non-federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.

*DHSES does not prescribe any one system subrecipients should use to be compliant with this requirement. Subrecipients should review their current inventory systems and records to determine if they are compliant with 2 CFR Part 200 of the Code of Federal Regulations. A basic Excel Property Record Template has been created as an option for subrecipients to establish their property records and track inventories if their current system is not fully compliant.

Personnel Charges

Payroll - Personnel Activity Reporting and Certifications
(From 2 CFR Part 200 §200.430(i) Standards for Documentation of Personnel Expenses(1)(vii) and From DHSES Contract Appendix A-1 Section V(K) Adequate Documentation)

Where employees work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having firsthand knowledge of the work performed by the employee.

Sample Payroll Certification

Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation unless a statistical sampling system or other substitute system has been approved by the cognizant federal agency. Such documentary support will be required where employees work on:
(a) More than one federal award,
(b) A federal award and a non-federal award,
(c) An indirect cost activity and a direct cost activity,
(d) Two or more indirect activities which are allocated using different allocation bases, or
(e) An unallowable activity and a direct or indirect cost activity.

Personnel activity reports or equivalent documentation must meet the following standards:
(a) They must reflect an after-the-fact distribution of the actual activity of each employee,
(b) They must account for the total activity for which each employee is compensated,
(c) They must be prepared at least monthly and must coincide with one or more pay periods, and
(d) They must be signed by the employee.
(e) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that:

(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed;

(B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and

(C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated.

View Sample Personnel Activity Report

Common Observations Made

  • Lack of property records as required by Federal Guidelines (see 2 CFR Part 200 §3.13)
  • Lack of Certifications for payroll charges (see DHSES Contract Appendix A-1)
  • Lack of Personnel Activities reports for payroll charges (see DHSES Contract Appendix A-1)
  • Lack of Procurement documentation (see DHSES Contract Appendix A-1, 2 CFR Part 200 §200.318(i))
  • Lack of prior written approval from DHSES for purchases from a particular vendor without competitive bidding (see DHSES Contract Appendix A-1)

Additional Observations Made

  • Lack of documentation to support purchase order dates and received dates as reported on the Fiscal Cost Report (FCR)
  • Copy of check and/or cancelled checks/cleared EFT records not available
  • Equipment not installed/placed in service and operational years after the grant award was closed
  • Request for Proposals (RFP) are not advertised when procuring items and/or services when competitive bidding is required
  • One bid received in response to an advertised Request for Proposal and no other vendors were solicited or contacted to determine if the price is reasonable
  • Request for Proposals/Bids received in response to an advertisement posted for a previous grant awarded and is used for subsequent grant awards
  • All Request for Proposals/Bids received were not evaluated

Note: For additional guidance please refer to the DHSES Contract Appendix A-1 and 2 CFR Part 200 links noted in the Resources Section below.

Resources

How to contact the Fiscal Monitoring Unit

  • New York State
    Division of Homeland Security and Emergency Services
    Fiscal Monitoring Unit
    State Office Campus, Bldg. 7A
    1220 Washington Ave.
    Albany, NY 12226

  • Phone: 518-402-2123
  • Email: DHSES.FMU@dhses.ny.gov