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OFFICE OF (340) 774-4750 THE COMMISSIONER Fax: (340) 776-4028 GOVERNMENT OF THE UNITED STATES VIRGIN ISLANDS Street Address: 76 Kronprindsens Gade Charlotte Amalie, VI 00802 Mailing Address: 2314 Kronprindsens Gade Charlotte Amalie, VI 00802 (Si DEPARTMENT OF FINANCE February 27, 2009 FINANCE MEMORANDUM NO, 0010-09 (REVISED: Memo No. 005-10) TO: ALL DEPARTMENTS/AGENCY HEADS SPECIAL ATTENTION TO: Directors, Business and Administrative Services, Fiscal Officers and Supervisors of Accounts Directors, Federal Programs FROM: Claudette Watson-Anderson, CPA Commissioner Re: Statement of Policies and Procedures #710 — Drawdown of Federal Funds for Vendor Payments (Non-Reimbursable Programs) Over the course of many years, the Single Audit Report’s for the Government of the Virgin Islands (GVI) has reflected recurring internal contro! weaknesses (or deficiencies) related to the “drawdown” of federal funds, which have negatively impacted the GVI’s overall cash management objectives. As a result, the GVI will eliminate these findings through process improvements of the functions surrounding cash management of federal funds. This correspondence, in conjunction with the attached revised Statement of Policies and Procedures (SOPP) #710, outlines the protocol that will be instituted henceforth, when federal funds are employed to make vendor payments. In meeting the requirements of the Cash Management Improvement Act (CMIA) of 1990, the GVI must establish a funding technique (the “Technique”) to drawdown its federal funds. As outlined in the GVI’s Treasury State Agreement for FY’09, the Technique is based upon the “Average Clearance” methodology that elicits a check clearance pattern of four (4) days. More specifically, the Technique utilized by the GVI stipulates that the Department of Finance (DOF) must first disburse a vendor check payment. Next, departments and agencies must immediately drawdown funds supporting the vendor check payment. When this procedure is followed consistently by all departments and agencies, an estimated check clearance pattern of four (4) days will emerge. Every department and agency receiving federal funds must follow the same Technique, unless there are special conditions within a particular grant that allows for an alternate funding technique. That said, the enclosed SOPP #710 will hereafter serve as the GVI’s policies and procedures surrounding the drawdown of federal funds, the substance of which will be strictly enforced. Nevertheless, we welcome the opportunity to incorporate any suggestions that you may have to enhance SOPP #710. Please feel free to contact Ms. Jane Laws, Director of Financial Reporting & Program Assurance, at 774-4750 Ext. 2113, if you have any additional comments, questions or concerns. Thank you for your time and consideration. cc: John P. deJongh, Jr., Governor Mr. Louis Penn, Chief of Staff Encl. SOPP #710: Drawdown of Federal Funds for Vendor Payments SOPP# 710: Drawdown of Federal Funds for Vendor Payments Department of Finance SOPP # 710 (Treasury) Prepared By: Treasury Division Effective Date: 2/27/09 Approved By: Commissioner of Finance Title Drawdown of Federal Funds for Vendor Payments (Non- Reimbursable Programs) Purpose Establish a streamlined approach to enhance and maximize the cash management of federal funds that support vendor payments, in accordance with the Cash Management Improvement Act (CMIA) of 1990. Policies ¢ Agencies and departments are strictly prohibited from the drawdown of federal funds prior to check issuance unless authorized by their grant. ¢ Agencies and departments must proactively perform an inquiry within the ERP to determine the date of check issuance and the subsequent drawdown date for a grant. ¢ Vendor check payments that are supported by federal funds will not be released or disbursed from the Department of Finance, Treasury Division until proper supporting evidence of a request for a drawdown is received via the “Drawdown Report”, which includes the Bank Deposit or Settlement Date, Amount, Pin#, Drawdown Confirmation #, and Dept iD#. “+ Department and agencies must submit all supporting evidence for federal fund drawdown’s in the following order of preference: A. Email (as a “PDF” document): ffddrequest@dof.gov.vi B. Fax: 774-7671 C. In-person: DOF, Treasury Division *» Drawdown of federal funds must be properly recorded within the ERP using the “Miscellaneous Cash Receipts” entry prior to release of any vendor payment. ¢ A separate batch, utilizing the appropriate bank code in the ERP for federal funds, must always be employed. Responsibilities ¥ Departments and Agencies are responsible for: o Drawdown of federal funds in a timely manner, o Proactively inquiring within the ERP to determine when a check has been issued for a properly approved invoice payment, o Properly recording federal funds within the ERP, o Submitting a “Drawdown Report” to the Department of Finance, Treasury Division o Verifying via email correspondence to fiddrequest@dof.gov.vi the date of deposit v¥ The Department of Finance, Treasury Division is responsible for: o Releasing vendor check payments in a timely manner once all supporting documentation is received o Posting all federal funds transactions recorded by departments and agencies in a timely manner SOPP# 710: Drawdown of Federal Funds for Vendor Payments Page 1 of 3 SOPP# 710: Drawdown of Federal Funds for Vendor Payments Department of Finance Procedure ** Under the “GVIl Department Accounts Payable” menu item and upon completion of entering the invoice(s) within AP Invoice Entry the following steps should be performed: 1. Record the batch number associated with the invoices submitted to the Department of Finance for approval, 2. Select |View atch] within AP Invoice Entry, 3. Print the batch for ease of researching the status of payment, ¢ Under the “GVI Department Accounts Payable” menu item, navigate to Vendor Invoice List after all intra-agency/intra- departmental approvals have been completed the following steps should be performed: 4, Using the printed batch from “Step 3” above, search the payment status of the invoice by Document Number (or any other criteria deemed appropriate), 5. If no data is found for the Document Number, the invoice has not yet been submitted for a check run or has been rejected by the Department of Finance, 6. If a data record is found, “Browse” the record and make a notation of the check number and status (i.e., “PD” = Paid), * To the extent possible, invoices that have a valid check number should be grouped together as a single drawdown transaction. Once this is accomplished the following steps should be followed: 7. Drawdown funds that encompass the grouped invoices, 8. Within 24 hours of drawdown, print the “Drawdown Report” and simultaneously record transaction within the ERP using the “Miscellaneous Cash Receipts’, 9. Email the “Drawdown Report” as a “PDF” document to fiddrequest@dof.gov.vi and within the correspondence, indicate the checks that are linked to drawdown which require release, — 10. Contact Treasury Division at 774-4750 Ext. 2280 to ensure that the checks have been released. SOPP# 710: Drawdown of Federal Funds for Vendor Payments Page 2 of 3 SOPP# 710: Drawdown of Federal Funds for Vendor Payments Department of Finance Revision History Revision # Date Description of changes Requested By 0 1/24/2009 Initial Release vc 1 1/30/2009 Update to initial release VC, SK, LJ, JL, CM 2 2/27/2009 Final revisions VC & JL SOPP# 710: Drawdown of Federal Funds for Vendor Payments