4a. Introduction
What Operating Policies and Procedures Need To Be in Place as a Federal Awardee?
In order to properly maintain accountability at all levels of operation and assure that funds are used for the purposes intended, a HUD grantee must have in place operating policies and procedures that will address the following federal financial management standards:
- Budget controls
- Internal controls
- Accounting controls
Because we assume that Multifamily Housing Program grantees are already functioning in a secure fiduciary environment, we assume that proper budget controls and internal controls are already in place. The focus of this section of the Toolkit is on accounting controls – management of day-to-day accounting and operational functions that will assure accurate record keeping, resource utilization and financial reporting.
What Is the Focus of This Toolkit Regarding Accountability Practices?
Accounting is the process of keeping track of what money is taken in and what money is spent. Having accurate and comprehensive documentation of revenue and expenses is a regulatory requirement, and it is also a necessary part of an agency’s organizational responsibilities.
All accounting activities must be undertaken in accordance with Generally Accepted Accounting Principles (GAAP). These uniform accounting standards exist in order to help ensure consistency and transparency, and can be understood readily by any trained accountant. Most basic accounting software will meet these minimum standards. Most important of all, accounting records must be supported by original source documentation.
How Would You Describe Accounting’s Primary Activities and Priorities?
Fund accounting (See Section 5.a.), the type of accounting required for HUD grantees, is a method of recording financial data based on the sources and uses of funds. Funds must be spent on eligible items and expended from the appropriate grant source. All inflows and outflows of funds must be recorded in detail, including the category of expenditure and the specific funding source. In addition to promoting compliance with HUD regulations, fund accounting can provide useful information regarding individual projects’ and programs’ performance.
Accounting functions, and their associated documentation and records, help ensure that program costs incurred are applied to the proper period and are paid in a timely manner. Accounting controls consist of procedures that enable grantees and sub-recipients of federal funds to maintain accounting records that sufficiently identify the source and application of funds that flow through the agency and, thereby, meet applicable standards.