Fiscal Management

Statutes and Regulations | Program Integrity | State Documents

Statute

Regarding fiscal management, the LIHEAP statute, Sections 2605(b) (10) and 2605(e) say:

(The state agrees to) provide that such fiscal control and fund accounting procedures will be established as may be necessary to assure the proper disbursal of and accounting for Federal funds paid to the State under this title, including procedures for monitoring the assistance provided under this title, and provide that the State will comply with the provisions of chapter 75 of title 31, United States Code (commonly known as the "Single Audit Act");

Each State shall, in carrying out the requirements of subsection (b)(10), obtain financial and compliance audits of any funds which the State receives under this title. Such audits shall be made public within the State on a timely basis. The audits shall be conducted in accordance with chapter 75 of title 31, United States Code.

The LIHEAP regulations stipulate the following:

Block grant regulations at 45 CFR 96.30(a)

(a) Fiscal control and accounting procedures. Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the block grant. (See also: LIHEAP IM 2013-2, dated December 21, 2012: "Financial Reporting Requirement for All LIHEAP Grantees - SF 425 Report")

Block grant regulations at 45 CFR 96.31(a)

(a) Basic rule. Grantees and subgrantees are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, "Audits of State, Local Governments, and Non-Profit Organizations.'' The audits shall be made by an independent auditor in accordance with generally accepted Government auditing standards covering financial audits.

Block grant regulations at 45 CFR 96.31(b)

(b) Subgrantees. State or local governments, as those terms are defined for purposes of the Single Audit Act Amendments of 1996, that provide Federal awards to a subgrantee, expending $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall:

(1) Determine whether subgrantees have met the audit requirements of the Act. Commercial contractors (private for-profit and private and governmental organizations) providing goods and services to State and local governments are not required to have a single audit performed. State and local governments should use their own procedures to ensure that the contractor has complied

Fiscal Management and Program Integrity

The overarching purpose of fiscal management is to maintain and enhance
program integrity. According to the 2012 report of the LIHEAP Program Integrity Working Group (LPIWG), proper fiscal management will help to "ensure that all LIHEAP funds are properly spent and accounted for." (Starting on page 16)

The group considered the following to be critical components of sound fiscal management:

  • State fiscal controls: Policies and procedures are in place to comply with federal regulations and guidelines.


  • Local agency fiscal controls: Policies and procedures are in place to ensure compliance with state and federal law, policies and procedures, and relevant contract provisions.


  • Local agency training: Training is in place to prevent or detect improper payments and administrative errors, as well as separation of duties to prohibit the same employee from both processing applications and authorizing benefits.


  • Vendor fiscal controls: Vendor authenticity and eligibility are validated through licensing, certification, Tax ID numbers, and other means as determined by the state, and vendors' adherence to stipulations of vendor agreement and applicable law, policies and procedures is ensured.


  • Benefit payment and tracking: Systems are in place to properly allocate, track and verify payments, detect and address duplicate and improper payments, and identify anomalies in the payment process. To the extent possible, system tracking should be proactive, i.e., problems are identified before a payment is made, rather than reactive, i.e., problems discovered during the program audit or after the payment has been made.

As a minimum requirement under fiscal management, the group recommended that states:

Require a contract (or state regulations) with LAA (local administering agencies) that establishes: rights and responsibilities of local agencies and ensures that they follow generally accepted accounting principles and have appropriate financial audit

As a best practice, the report said states should:

Require a contract (or state regulations) with local agencies that establishes rights and responsibilities of local agencies and ensures that they follow generally accepted accounting principles and have an appropriate financial audit. Require local agency to develop a comprehensive local plan for fulfilling responsibilities that details internal training, evaluation, monitoring, and technical assistance as needed.

Fiscal Management: State Documents

LAA Planning, budget documents

MN: EAP Local Plan

FL Subgrantee Agreement Package

MA LIHEAP Fiscal Procedures

MA LIHEAP Budget Summary Spreadsheet

FL Segregation of Duties Form

Grantee Risk Assessment documents

Ohio Subrecipient Risk Assessment
Form


Texas Risk Assessment Form

Grantee checklists

Internal Control Evaluation Checklist (ME CSBG)

FL LAA Financial Review, Analysis, Assessment Forms