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(M5) Finance
Contractor Assurance

​​​​​​​​​​​​​Management System Owner: Chief Financial Officer

Revision Number:              2.2          Date:      January 2, 2019

1.0   Purpose

The objectives of the Finance Management System are to assure efficient, effective financial operations (including Travel) in support of the laboratory’s high energy physics program in accordance with all applicable laws, regulations, and DOE requirements as set forth in the Contract. The Finance Management System is a set of interrelated elements that Fermilab uses to assure that financial management is executed in accordance with the Contract, and to improve how financial policies, objectives, processes, and procedures are established, implemented and monitored to provide such assurance.

2.0   Roles and Responsibilities

Title

Responsibilities

Laboratory Director
  • ​Annual assurance to DOE that internal controls are in place and functioning, in accordance with DOE O413.1B.
  • Delegates authority to the CFO.
Chief Financial Officer (CFO)
  • Management System Owner (MSO).
  • Development, execution, and control of all laboratory financial management assurance activities under the Contract. This position is identified to DOE as the A-123 Project Sponsor, and the A-123/FMFIA POC.
Chief Accounting Officer
  • Development, execution, and control of all assurance activities within the scope of laboratory accounting activities under the contract.
  • Leads management's internal control assessment in accordance with DOE's A-123 requirements.
  • This position is identified to DOE as the A-123 Project Manager.
CFO Budget Group
  • Senior management oversight of, and participation in, budget formulation and execution processes.
Division/Section Heads
  • Assure implementation in their line organizations.
Financial Field Managers
  • Assist CFO and line management in implementation of assurance activities as subject matter experts.
A-123 Process Owners
  • Annual update of process descriptions, risks, and key mitigating controls for A-123 assessment.
​Travel Manager
  • Executes the requirements of official FRA/Laboratory travel in accordance with the applicable Federal Travel Regulations, the DOE contract, and the Laboratory Travel Policy.
  • Responsible for Travel procedures and disseminating relevant information throughout the Laboratory.

3.0   Primary Requirements

3.1   M&O Contract 

DOE Prime Contract No. DE-AC02-07CH11359 for the Management and Operation of the Fermi National Accelerator Laboratory (Fermilab) specifies that the Contractor …

  • . . . is expected to effectively and efficiently manage and operate the Laboratory through best-in-class management practices . . . (C.3.1.4)
  • . . . shall maintain a financial management system responsive to the obligations of sound financial stewardship and public accountability.  The overall system shall include an integrated accounting system suitable to collect, record, and report all financial activities; a budgeting system which includes the formulation and execution of all resource requirements needed to accomplish projected missions and formulate short- and long-range budgets; an internal control system for all financial and other business management processes; and a disbursements system for both employee payroll and supplier payments. (C.4(c)(5)(ii))
  • . . . shall comply with Cost Accounting Standards. (I.46, I.47, I.120)
  • . . . shall reasonably assure that resources are safeguarded against waste, loss, and mismanagement, unauthorized use, or misappropriation; all transactions and assets are properly recorded, managed, and reported; and financial, statistical, and other reports necessary to maintain accountability and managerial control are accurate, reliable, and timely. (I.87(a))
  • . . . shall incur only allowable costs in accordance with FAR 31.2. (I.117(j), I.118(j))
  • . . . shall maintain a separate and distinct set of accounts, in accordance with generally accepted accounting principles consistently applied. (I.118(a))
  • . . . shall comply with all cost and encumbrance ceilings set forth in DOE financial plans. (I.119(d))
  • . . . shall maintain an integrated accounting system that is linked to DOE's accounts through the use of reciprocal accounts and that has electronic capability to transmit monthly and year-end self-balancing trial balances to DOE. (I.123)

3.2   Fermilab Performance Evaluation and Measurement Plan (PEMP)

  • Goal 6.0: Deliver Efficient, Effective, and Responsive Business Systems and Resources that Enable the Successful Achievement of the Laboratory Mission(s).;
  • Objective 6.1: Provide an Efficient, Effective, and Responsive Financial Management System.
  • Objective 6.2 Part 1: Acquisition Management System

3.3   Other Required DOE Orders and Instructions

  • D130.1—Budget Formulation
  • 413.1B—Internal Controls Program
  • 534.1B—Accounting​
  • DOE Order 551.1D  Official Foreign Travel
  • Federal Travel Regulations

3.4   FRA Contract Mapping to Management Systems

https://fermipoint.fnal.gov/org/ood/cas/SitePages/Home.aspx

4.0   Management System Descripti​​on Overview

The processes included within the Finance Management System are described below:

4.1 Accounting

4.1.1 Payroll

Payroll is reponsible for tax filings, weekly/monthly payroll, W2 processing, and third party remittances.

4.1.2   Accounts Payable

Account Payable is responsible for paying invoices and 1099 processing.

4.1.3   General Disbursements

The General Disbursements group manages all of the following activities: File uploads; travel reimbursements; petty cash disbursements; cashier function; employee/visitor reimbursement; CERN team account maintenance (invoices); and is involved in system testing.

4.1.4   Financial Analysis

Financial Analysis is comprised of the following activities: Monthly closings; annual audit support (including retirement planning); property accounting; report generations and reconciliations; oversight of STARS activities; inventory accounting; banking; benefits accounting; DOE service accounts; and fringe benefit rate formulation.

4.1.5   CAS Compliance A-123

This activity involves A-123 activities, CAS Disclosure Statement, and POC for Americas Systems.

4.1.6   Oversight

This activity includes oversight of banks/wires, approval for America system, and OMB Max system (initiator) – DOE financial statement audit.

4.1.7   System Administrator

The system administrator is responsible for maintenance of the accounting systems and oversight of data.

4.2   Budget

4.2.1   Systems

This process includes the following activities: BPS management and oversight/administration; BPS testing and weekly data loads; BPS enhancements and defects; and task approval in EBS.

4.2.2   Rate Formulation

Rate Formulation handles indirect costs development.

4.2.3   Budget Formulation

Budget Formulation processes include: BPS activities; budget execution and oversight; and monthly reporting.

4.2.4   Budget and Strategy Analysis

Budget and Strategy Analysis includes annual budget prep and reporting and financial analysis (project accounting.

4.2.5    FWP (Field Work Proposal)

FWP activities include FWP oversight and submission, and PAMS submissions.

4.2.6   Other Activities

Over activities that the Budget group oversees include: IEWOs flowing out to sister labs; FFM for operations sections; FFM for IARC; FFM for LDRD; Pass-thru rate approval (EBS); and Service type approvals (control activity).

4.3   Sponsored Programs & Corporate Accounting

4.3.1   Pre Award Administration for SPPs/CRADAs

Pre Award Administration includes the following activities: Policy/procedures development for sponsored award work; joint appointment process; and surveys including Prime Contract oversight on federal proposals.

4.3.2   Post Award Administration for SPPs/CRADAs

Post Award Administration includes the following activities: Financial admin and oversight of all non-DOE funded user R accounts; financial admin and oversight of all reimbursable work agreements (fed/non-fed); and Policy/procedures development implementation and training re sponsored awards (proposal development, costs estimates, OFA electronic proposal submission, post award admin, cost allowability).

4.4   Travel

The Travel Office provides travel reservations and airline ticketing for all official travel at the Laboratory. This is done in compliance with the DOE contract, Federal Travel Regulations, DOE Orders, and other DOE executive-level guidance. Cooperation with the Accounting department is ongoing to ensure costs are deemed reasonable and allowable. The Travel Department complies with the DOE Foreign Travel Management System, as well as maintains a Conference Travel data base for the Laboratory to comply with 2012 OMB Conference guidelines. Continuous internal process improvement, including automated enhancements, is what drives efficiency and accuracy in an area that is highly complex and subject to rapidly changing interpretations of the rules.

4.4.1   Foreign

The Foreign Travel Management System (FTMS) is the official DOE system for tracking, monitoring, reporting, and securing approval of all foreign travel conducted by Federal and contractor employees. Consistent with the DOE Foreign Travel Order 551.1D, all official foreign travel requests must be entered in the FTMS and must obtain approval in the FTMS prior to traveling. The Lab foreign travel process is designed to ensure compliance as noted in the Order.

  • Approvals - The Office of Science has delegated the Laboratory the authority to approve all trips to non- sensitive countries. The Fermilab Travel Office has established appropriate internal controls to ensure accountability and reviews of foreign trip requests for accurate reporting; ensures available funding, and reports to DOE if the trip is determined to be a conference before routing the trip request to the Lab COO for final Lab approval. Foreign trips to sensitive countries are further routed to the DOE Site Office and the DOE Office of Science Program Office for further approval. The Travel Office ensures that each trip request receives country clearance from the U.S. Embassy in the country to be visited before the start of the travel.

  • Arrangements - Travel funds, typically for airfare, can be obligated when the trip request is approved by the Division Head or Designee and the Funding Officer, and reviewed and approved by the Travel Office.

4.4.2   Domestic

  • Approvals – Official travel requests require the approval of the Division/Section/Project Head or his/her designee, who determines if the purpose of the trip is necessary to meet the Laboratory's mission requirements and in accordance with Laboratory policy. Each Division/Section/Project has a person(s) appointed who acts as a conference regulator. The conference regulator reviews all travel authorizations to determine whether the travel is to an official conference.

  • Arrangements – Airline and rental car reservations for official Laboratory travel for employees and Fermilab paid trips for visitors should be made through the Laboratory's designated travel agency. Tickets purchased and billed through the Laboratory's designated travel agency are the property of the Laboratory. Any cancellations must be reported to the travel office prior to departure time.

4.4.3   Systems

This process involves TA management & oversight/administration and Task approval in TA.

4.4.4   Booking

The booking function includes booking lodging, airfare, car rentals, and assisting with relocations & visitor housing.

4.4.5   Travel Clearances

Travel clearances include coordinating & obtaining activities relating to foreign travel clearances.

4.4.6   Reimbursements

Reimbursements include the following: Assistance with Travel reimbursements for employees, contractors, & visitors; monitoring outstanding documentations for reimbursements; and oversight for direct billing (hotels, rental cars, airline).

4.4.7   Travel Card

This process involves Travel Card program oversight and monitoring aged payments.

 

4.4.8  Service

Service from the Travel Office includes the following: Offer assistance with foreign trips & other requirements  for traveling; providing trainings (departmental & one-on-one); preparing itineraries; Overseeing accommodations (seating upgrades, room accommodations, etc.); Negotiating rates for airfare, lodging, & car rentals; operating outside of normal business hours; and reporting.

4.4.9   Fermilab Travel business process

Travel booking processPre-trip authorization process 

4.5  Assurance

Continuous improvement is integrated into the finance operations. Errors are analyzed for root cause, and controls are developed or altered to prevent future errors, or to detect future errors on a timely basis if preventive controls are not practical, cost-effective, and/or efficient.

Internal controls over financial operations are executed in line organizations across the laboratory. Each organization has a Field Financial Manager (FFM) who is responsible for assisting the CFO in implementation of financial control activities labwide, with the support of their respective DSC Head. FFMs and their staff members meet with Budget, Accounting, and IT groups each month to discuss financial management issues. In addition, senior FFMs from the Divisions meet with the CFO, Budget Officer, and Chief Accounting Officer each month to address policy matters and other high-level issues. 

Processes supporting the Finance Management System fall into the following categories: Measures, Assessments, Issue Management and Corrective Actions, Continuous Improvement, and Communications.

4.6 Me​​as​ures​

Measures are an important element of the Finance Management System, particularly with respect to budget execution. Measuring processes support the assurance system in the following areas:

  • Budget Execution and Monitoring. Comparisons of budgets to actual results; budgets to funding available; and funding to actual results are performed monthly and exceptions analyzed and resolved. The CFO meets with senior management twice monthly to address budget execution issues. Funding, plans, actual results, and contract status are presented to the FRA Board of Directors at each meeting.

  • Operational reporting and monitoring. On a periodic basis, various operational measures give managers information on operations, such as aged invoices, travel voucher backlog, or erroneous payments.

  • Deadlines. Deadlines, met and missed, are a measure of on-time performance, which is critical to effective financial operations like payroll or month-end close.

4.7 Assessments

The primary assurance mechanism in the Finance Management System is the annual process controls assessment performed to assist DOE in meeting its obligations under OMB Circular A-123, Appendix A, Internal Control over Financial Reporting. The assessment is performed in accordance with guidance issued by the DOE Chief Financial Officer. The assessment involves process owners across the laboratory, including managers in Finance, Procurement, Property, Human Resources, Travel, ES&H, and IT. The Chief Accounting Officer leads the update, delegating day-to-day management of the process to an A-123 Manager. The assessment includes the documentation of processes by process owners; the identification and evaluation of risks within those processes (risks prescribed by DOE as well as locally-identified risks); the identification of key controls that mitigate those risks to a reasonable level; and the independent testing of the key controls on a risk-based cycle to assure they are functioning. Corrective action plans (CAPs) are developed for all deficiencies found in testing. Deficiencies are reported to DOE and to the FRA Board of Directors Audit Committee at each meeting. DOE and the Audit Committee track CAPs to resolution.

Annual independent audits and assessments are an integral part of the Finance Management System, most importantly the FRA Financial Statement audit, including the A-133 federal grants audit; and the Annual Cost Allowability Audit conducted by Internal Audit as part of the IG's Cooperative Audit Strategy. Issues and findings from audits and assessments, and associated corrective action plans, are reported to the FRA Board of Directors Audit Committee at each meeting, and CARs are tracked to resolution.

4.8 Issue Management and Corrective Actions

Financial findings may result from any of the reviews, audits, or reports noted in 6.0 below. Findings are assigned to a responsible person for resolution, which may require the development of a formal corrective action plan and the execution thereof. Management is responsible for providing resources necessary to resolve the finding. Financial findings are reported to the Audit Committee at every meeting along with the status of corrective actions. CAPs associated with OMB A-123 deficiencies are submitted to DOE, with quarterly status updates on CAP completion.

4.9 Continuous Improvement

Continuous improvement is integrated into the finance operations. Errors are analyzed for root cause, and controls are developed or altered to prevent future errors, or to detect future errors on a timely basis if preventive controls are not practical, cost-effective, and/or efficient. Every known error is followed up, with management’s determining root cause and implementing cost-effective changes to prevent, or timely detect, future errors.

​ 4.10 Communications

The following avenues of communication support the Finance Management System.

  • Board Committee meetings 3 times per year
  • Weekly meeting with FSO Manager and/or Deputy
  • Biweekly meetings with FSO Finance POC/Contracting Officer
  • Weekly teleconference with Director of DOE Office of High Energy Physics
  • Weekly meetings of Director's senior management team
  • Weekly Lab Status Meeting
  • Monthly Senior Management/CFO Meeting
  • Biweekly COO Staff Meeting
  • Monthly FFM Meeting
  • Monthly meeting of CFO and Labwide Finance Leadership

The Finance Management System relies on the operation of the Information, Procurement, Performance Planning, and Governance Management Systems​.

5.0   Policies

6.0   Key Processes, Procedures, and Manuals

  • ProCard Users Guide: https://fermipoint.fnal.gov/org/fin/fin-prc/_layouts/15/WopiFrame.aspx?sourcedoc=/org/fin/fin-prc/Procard%20Documents%20%20Information/ProCard%20Users%20Guide.pdf&action=default

7.0   Approach to Collaboration and Communication

 

8.0   Contractor Assurance Requirements

8.1   Metrics and Key Performance Indicators (KPIs)

8.2    Assessments

    • Annual OMB A-123 Management Assessment - Management's Assessment of Internal Control – Identification and evaluation of risks associated with all processes involving material financial statement activity. Includes identification of mitigating controls and the testing of the effectiveness of those controls on a risk-based cycle.
    • Annual FRA Financial Statement Audit - External GAAP-based audit of FRA's financial statements which include Laboratory revenues and expenses under the Prime Contract with DOE. Auditors are engaged to express an opinion on the fair statement of the financials; and to issue a comment letter to management on internal control issues coming to their attention in the course of the audit.
    • Annual FRA A-133 Audit of Federal Grants - External audit on compliance with OMB Circular A-133 with respect to federal grant funding. Required when federal grant revenue exceeds the defined threshold.
    • Annual Cost Allowability Audit - Internal audit reviews for unallowable costs charged to the contract; audit program formulated as part of the Inspector General's Cooperative Audit Strategy.
    • Annual 401(a) Benefit Plan Audit - External GAAP-based audit of the benefit plan related to FRA contributions to employee accounts. Required to accompany the filing of IRS Form 5500.
    • Annual 403(b) Benefit Plan Audit - External GAAP-based audit of the benefit plan related to employee contributions to employee accounts. Required to accompany the filing of IRS Form 5500.
    • Annual Director's Budget Presentation - Management's self-assessment of program and financial plans by organization for the upcoming budget execution year.
    • Internal Audits - In addition to the Annual Allowable Cost Audit discussed above, other targeted audit areas vary each year and are selected based on a formal risk assessment by the FRA Manager of Internal Audit. CFO participates in risk assessment process with Manager of Internal Audit and DOE.
    • Inspector General Audits - Periodic audits in areas selected by the DOE IG. Statement of Costs Incurred (SCIC) audits, which focus on allowable costs, occur cyclically, currently every 4 years for FRA.
    • Institutional Cost Report (ICR) Peer Review - Periodic reviews (currently every 3 years) of the annual ICR submitted to DOE by teams consisting of contractor and DOE personnel.
    • Travel Authorization/Expense Report
    •  PERT Review
    • Director's Review of Procurement
    • DOE review and approval of Procurement Policies and Procedures Manual
    • Internal Audits—In accordance with IA risk assessment
    • PEMP and Notable Outcome assessment
    • Ongoing DOE review of Procurement procedures and files.

8.3   Approach to Issues Management

8.4   Lessons Learned

8.5   Risk Management

Risks/assessments monitored by:

  • Self-Assessment Program
  • iTrack Procedures and Risk Assignment
  • Corrective Action Plans – in iTrack

9.0   Required Reports and Records

9.1   Required Records

 9.2   Required Reports

     

10.0   Extension of Management System to SDSTA (SURF)

The Finance Management System applies identically to FRA-sponsored work in South Dakota as it does in Batavia and the same points of contact should be used.

11.0   Additional References

DOE Order 481.1C "Work for Others (Non-Department of Energy Funded Work)"

DOE Manual 481.1-1A "Reimbursable Work for Non-Federal Sponsors Process Manual"

DOE Order 483.1A "DOE Cooperative Research and Development Agreements"

DOE Order 413.3(b) Program and Project Management for the Acquisition of Capital Assets

ANSI/EIA-748B Earned Value Management Systems

DOE O 413.2Bchg1 Laboratory Directed Research and Development

Fermilab Travel Guide

Federal Travel Regulations

   

12.0   Acronyms and Terms​​

AcronymDefinition
MSOManagement System Owner
PEMPPerformance Evaluation and Measurement Plan
  
  
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