Asset Controls
When Smart Start funds are used to purchase assets for a DSP, subcontractor, or grantee, the DSP is required to have adequate controls and procedures in place to monitor the assets, and the DSP is required to ensure that subcontractors and grantees also have adequate controls and procedures in place to monitor the assets. For purposes of Smart Start policies, assets are defined as durable items (such as furniture or equipment) when the cost is over $500.
The Smart Start Asset Ledger is used to track assets purchased with Smart Start funds (any expenditures reported on line 39 or line 40 of the FSR). The DSP is required to take a physical inventory at least once a year of Smart Start assets held by the DSP and any subcontractors or grantees, and to reconcile the results of the physical count to the Smart Start Asset Ledger. The annual inventory may be conducted any time between July 1 and June 30; and an updated Smart Start Asset Ledger as of June 30 is due to the Partnership no later than July 8. When the due date falls on a weekend or a holiday, the form should be submitted on the last working day prior to the due date.
Assets purchased with Smart Start funds must be tagged individually with a permanent identification number that also identifies the asset as belonging to the Partnership. Please contact the Contracts Manager to obtain an asset tag for newly-purchased items. A control system must be in place to ensure adequate safeguards against loss, damage or theft of assets. Any loss, damage or theft must be reported in writing to the Partnership within 10 days of its occurrence. Adequate maintenance procedures must be implemented to ensure that equipment is maintained in good condition. Adequate insurance must be maintained on all assets, and insurance coverage must be reviewed annually to determine adequacy.
The DSP must obtain prior written approval from the Partnership to dispose of assets purchased with Smart Start funds. If the item is sold, at least two bids should be obtained. The proceeds of the sale are treated as program income. If the asset is not sold, it must be donated to a public or non-profit agency that provides services to young children. If the item is considered to have no value, it may be discarded with prior written approval from the Partnership.
Competitive Bidding
The state of N.C. requires that competitive bidding procedures be in place for significant expenditures of Smart Start funds. At a minimum, the following procedures are required:
- For amounts equal to or less than $3,000, routine suppliers can be used;
- For amounts greater than $3,000 or up to and including $5,000, three verbal quotes must be obtained;
- For amounts greater than $5,000 but less than $15,000, three written quotes must be obtained;
- For amounts of $15,000 or more but less than $40,000, a Request For Proposal (RFP) process must be initiated; and
- For amounts of $40,000 or more, a Request For Proposal and advertising in a major newspaper must be initiated.
Since the state of N.C. requirements do not specify if the minimums are on a per order or per year basis, it is recommended that you obtain three quotes of like or similar items that you will purchase from any vendor that you anticipate spending more than $3,000 in a year. Orders should not be split to reduce the threshold total.
The competitive bidding requirements also apply to independent contractors that are hired with Smart Start funds. If a contractor is paid over $3,000 per year, these procedures apply. If a contract is executed with an independent contractor in an amount greater than $3,000, these procedures apply (even if the contractor invoices for less than $3,000).
Fiscal Monitoring
The Partnership is required to perform formal on-site fiscal monitoring of its funded activities. The monitoring is performed by the Partnership’s staff that is familiar with the contracts management and is normally scheduled in advance with the DSP. The monitoring involves a review of procedures used to process Smart Start-funded expenditures and income used to meet the Smart Start matching requirement.
As part of the monitoring visit, the Partnership will also check to see that the DSP has complied with the revised requirements of N.C.G.S. 143-6.2, entitled “Nonprofits State Funds Accountability Act - Reports on Use of State Funds by Non-State Entities”.
The monitoring also includes a review of accounting records to determine that cash receipts from the Partnership are properly reflected in the accounting records, and cash disbursements reported on FSRs are supported by adequate documentation.
All activities will have an on-site fiscal monitoring visit at least one time during the fiscal year. DSPs will be notified when a site visit is planned. DSPs that have difficulty complying with fiscal reporting requirements may have more than one fiscal monitoring visit within the year. All new activities will be visited within the first six months of operation.
Upon completion of the on-site monitoring visit, the formal report of findings and recommendations will be prepared that summarizes the results of the review. A copy of the report is provided to the primary contact person at the DSP. In the case of findings, a written response to the report, outlining the DSP’s plans to address the findings, is required within 10 days of receiving the report.
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