Financial Procedures Handbook

The Michigan Humanities Council (MHC) is pleased to welcome you as a Fiscal Officer for a Third Coast Conversation Grant award.  Made possible with funding from the National Endowment for the Humanities, Third Coast Conversation Grants will be a series of statewide public conversations taking place in 20 communities over two years that focus on the cultural, social, historical, and environmental factors that connect Michigan’s people to their water. Michigan Humanities Council (MHC) has prepared this handbook to assist you with the financial requirements of MHC Third Coast Conversations Grant.  This handbook contains answers to the questions most often asked by our grantees and will alert you to potential problems which might delay payment on your grant.  Please feel free to contact the MHC office if you have questions that the handbook does not address:

Michigan Humanities Council
119 Pere Marquette Drive, Suite 3B
Lansing, Michigan 48912-1270
517.372.7770

GENERAL INSTRUCTIONS

You must maintain a separate general ledger account, records, and other documentation relating to costs incurred and revenues acquired under the grant.  Your system of accounting should be in accordance with generally accepted accounting principles and must be applied in a consistent manner so that the project expenditures can be clearly identified by line item.  A separate checking account is recommended.  In cases where the grantee is a large institution handling many accounts, a separate general ledger account number must be assigned.

All disbursements must be supported by an original invoice, sales slip, cash register receipt, time sheet, etc., as well as by checks or vouchers.  These items of supporting evidence must be retained as part of the accounting records.

All accounting ledgers, invoices, and other documentation must be retained by the grantee for a period of four (4) years after the project termination date.  In the event that the sponsoring organization is dissolved or does not have an appropriate place to store these records, please contact MHC.

Michigan Humanities Council may select grant recipients for an audit of their financial records.  The grant recipient will need to provide to MHC all backup documentation to support the direct expenditures and cost-share expenditures reported on the financial reports.  The audit may happen randomly throughout the year and may be on a final report or interim report.

OBLIGATIONS

Your primary obligation is to maintain accounts and records of monies received and spent by your organization in carrying out the project, in accordance with the budget and project proposal approved by MHC.  Although your system of accounting does not have to be elaborate and complicated, we do require you to do the following:

  1. Follow generally accepted accounting principles.
  2. Open a separate checking account or assign a separate general ledger account number.

You are encouraged to open a separate interest-bearing checking account.  However, if the maintenance costs are prohibitive, your organizational checking account will be acceptable as long as the accounting records for this grant are maintained separately.  (Under no circumstances should the funds be placed in a personal checking account and checks may not be endorsed by an individual on the project even if s/he is a signer on the account.)  You may keep the first $250 of interest earned on grant funds in any one-year period; any additional interest earned must be returned to MHC.  MHC and NEH encourage grantees to use any interest earned on grant funds to further the project. If you are a large institution handling many accounts, you must have a separate general ledger account number set up within the organization.

NOTE: If your organization or institution has received funding from MHC for an earlier project, do not use the old checking account or account number for the funding associated with a new grant covering a new project.  You must establish a new checking account or account number to handle the new grant project.

  1. Keep separate accounting records.

Your accounting records for this grant must be separate from the accounting records kept for your organization’s other projects or general accounts.

  1. Stay within the budget approved by MHC.

If you find that you need to make changes to your budget, see the guidelines on page 5 to make the request.

  1. Keep a record of payments.

Separate accounts must be kept for grant funds spent and cost-share contributions made, whether they are cash or in-kind.

  1. Keep canceled checks, copies of vouchers and all sales slips for a period of four (4) years from the receipt of the final payment on your grant. Do not send them to MHC.

 RESTRICTIONS

  1. Travel and Per Diem

Necessary travel expenses will be allowed at a rate not exceeding the IRS guidelines for privately owned vehicles and the rates of tourist or economy class for airfare.  “Per diem” expenses are meal and lodging costs for speakers, advisors or resource people.  Meal expenses are allowed at the following maximum rates:

Breakfast: up to $8.00     Lunch: up to $12.00     Dinner: up to $26.00

  1. Alcohol

No grant funds may be spent for alcohol.

  1. No funds from this grant may be used for any purpose other than those outlined in the grantees approved budget. No MHC funds may be used for:

Organizational start-up costs, academic courses, donations, scholarships or fellowships, administrative support for ongoing programs, lobbying or action programs, construction or restoration costs, equipment purchases, entertainment, or travel for study or to attend conferences.

COMMITMENTS & EXPENDITURES

Commitments of grant funds may only be made during the grant period.  Commitments outstanding as of the official termination date of the grant period must be liquidated within sixty (60) days.  Such commitments must relate to goods and services provided during the grant period and should be shown as payable on your final financial report.

Expenditures are to be made only as authorized in the budget submitted and approved for funding by MHC and must be made in accordance with the terms of the Grant Agreement.  Expenditures may be made only during the grant period, which is determined by MHC.  Please refer to the Grant Agreement to determine the official grant period for your project.  Project expenses incurred 90 days prior to the grant award date are eligible to be covered by grant funds.

PAYMENTS

All checks are made payable to and mailed to your sponsoring organization.  (These checks may not be endorsed by an individual from the project even though s/he is a signer on the bank account.  Use the organization’s endorsement stamp.)

The payment schedule is as follows:

  1. The first installment of 60% of the grant amount will be paid when MHC receives a fully-signed copy of the Grant Agreement and a satisfactory response in writing to any Special Conditions placed on the grant. Special Conditions are detailed in the Grant Agreement.
  2. The second payment of 30% of grant funds is issued upon receipt and approval of the interim financial report. Please allow 15 days for processing of the payment.
  3. The final payment of 10% is issued after all grant obligations have been satisfied. These obligations include submission and approval of the Final Financial Report, all program reports, publicity materials and a copy of all project resources.  The due date for submitting your final report materials is indicated in your Grant Agreement.  In the event that you have not expended all grant funds received, a check for the received funds not spent must also accompany the Final Financial Report.

NOTE: Grantees are not automatically entitled to the full amount of the grant.  Grant payments are based on actual expenditures only.  In practice, this means that your organization may have to pay some bills related to your project and then be reimbursed by the final MHC payment. Please contact MHC if this causes a financial hardship.

BUDGET CHANGES – MHC FUNDS

You are required to carry out the terms of the Grant Agreement and must adhere to the approved budget.  Changes are possible, but must be handled in the appropriate manner as described below:

  1. Changes requiring MHC approval: If shifts between budget categories (1) introduce or eliminate budget categories, (2) exceed either of the budget line items involved in the shift by more than 20% or (3) affect the participation of advisors, a revised budget must be submitted with a written explanation for the changes.  These changes should have written approval from MHC before you act upon them.    The Project Director and the Fiscal Officer should jointly submit a request for a budget change.  The request must be in writing and should include both an explanation for the change(s) and a revised budget.  Written approval must be given by MHC before putting the changes into effect.E-Mail (jrupp@mihumanities.org) requests are acceptable for obtaining approval.
  1. Changes NOT requiring MHC approval: Shifts within budget categories are allowed only when they do not exceed 20% of the involved budget line items, do not introduce or eliminate budget categories and do not affect the participation of advisors.

EXTENSIONS

If it is necessary for you to extend your grant period, please send a written request to MHC stating your reasons for needing an extension.  Do not assume that your grant period has been extended until you receive written approval from MHC.

E-mail requests (jrupp@mihumanities.org) are acceptable.

TERMINATION OF GRANT

If MHC ascertains that the general provisions or special conditions of the Grant Agreement are not being met, it will inform the sponsoring organization through its Project Director or Executive Director.  If, after such notification, failure to conform to the conditions and provisions of the Grant Agreement still persists, MHC can immediately terminate the grant.  Once the grant has been terminated, additional grant funds may not be expended.  All unexpended funds must be returned to MHC with an itemized accounting of all funds expended prior to termination.

AUDIT

Michigan Humanities Council maintains the right to inspect and audit your financial accounts and records, or may designate a qualified person to do so on their behalf, at any time during reasonable business hours and with such frequency as may be necessary.  Inspection may include pre-disbursement visits to determine the adequacy of your accounting system.  In addition, N may conduct inspections and audits when and to the extent it deems necessary.

A FINAL REMINDER

Please do not wait until your cash needs are immediate before submitting a Financial Report and do not anticipate an advance on any grant payment.

The processing of Financial Reports may also be delayed if the report is completed incorrectly or incompletely.  Be sure to provide all requested information and appropriate signatures.