As stewards of federal funds, the IRS as an awarding agency awards funds to organizations capable of achieving project goals and objectives, but which are also capable of upholding their responsibility for properly managing federal funds as they achieve these objectives. Financial monitoring is an ongoing process that allows the federal agency to determine the adequacy of a particular applicant’s ability to properly manage federal funds.

A more in-depth monitoring process is the financial review. The review also allows the federal agency to identify areas of weakness that the applicant can rectify, or that require increased oversight and appropriate award terms and conditions to facilitate that oversight. A financial review involves examining the financial management policies, procedures, and controls maintained by an organization, particularly those aspects that affect incurred costs.

With financial oversight being an on-going process, the TCE Program financial monitoring has been categorized into four phases

All of these phases that encompass the financial monitoring aspect of the program are outlined within the TCE Financial Review Guidelines which can be obtained from SPEC headquarters.

The pre-award phase of financial monitoring is conducted by the SPEC Headquarters TCE Program Office through the submission of the organization’s application package for participation in the upcoming year’s TCE Program. Each year a ranking panel convenes, comprised of field and headquarters employees, to conduct a thorough review & ranking of the TCE Program grant applications that have been submitted for participation in the program.

Prior to selection into the TCE Program the SPEC Headquarters TCE Program Office reviews each organization’s Employer Identification Number (EIN) to ensure that it is a valid and confirms non-profit status and reviews the organization’s most current Form 990, Return of Organizational Exempt from Income Tax (requirement for organization’s to submit this form with their application).

The financial monitoring phase begins upon an organization’s selection into the TCE Program whereas the SPEC Headquarters TCE Program Office continuously reviews the program and financial aspects of the TCE grant. This process is known as monitoring and can be formal or informal. There are factors that will determine the monitoring level for each TCE sponsor such as the experience of the grant recipient, the award amount of the grant and the program visibility.

SPEC headquarters monitors the TCE sponsors to ensure the organizations are operating under the TCE program requirements and following the General Accepted Accounting Principles (GAAP) for proper management of their federal appropriated grant funds. SPEC headquarters is accountable for the TCE grant appropriation distributed to the TCE sponsors and for the program oversight and management capabilities for ensuring sponsors are managing their grant funds appropriately. SPEC’s financial monitoring focuses on a financial review of Form 8654 —Tax Counseling for the Elderly Program Quarterly/Final Program Report, the Payment Management System (PMS) Cash by Appropriation (CBA) Reports, grant receipts, volunteer reimbursement (stipends), and sponsors Single Audit Reports.

The SPEC Headquarters TCE Program Office is responsible for the financial monitoring of all TCE sponsoring organizations to ensure grant expenditures are expended in ways that meet the provisions of the statute, regulations, TCE program goals and administrative requirements, and the Office of Management and Budget (OMB) Circular A−122, Cost Principles for Non-Profit Organizations. The SPEC Headquarters TCE Program Office will act as the program technical advisor during the financial site review stage of monitoring.

Financially monitoring the organizations use of awarded funds involves reviewing available sources of information such as the Single Audit Reports, CBA Report, Form 8654, etc. to determine whether funds are administered and spent in accordance with the program guidelines. The most common financial auditing tool used in monitoring Federal grants is the Single Audit report required under OMB Circular A−133 and it is performed by an independent auditor. The TCE Grant Program Guidelines require the TCE sponsors to submit a Single Audit Report to IRS if they expend $500,000 or more in grant funds. The TCE grant sponsor must arrange for this type of audit that should be in accordance with the Government Auditing Standards developed by the Comptroller General of the United States. The Government Auditing Standards and General Accepted Auditing Standards is designed to provide assurance that the financial statements are fairly presented. Sponsors who are under the $500,000 threshold are not required to submit a Single Audit Report to the IRS. However, all sponsors are expected to maintain accounting records of their grant expenditures and volunteer reimbursements.

SPEC headquarters reviews the CBA report monthly to analyze grant expenditures being drawn from the sponsors through the Payment Management System (PMS). The sponsor’s reimbursements should be made as service is rendered. SPEC headquarters will enter receipt and acceptance for the TCE grant expenditures monthly and notify the Beckley Finance Office when the task is completed.

Upon review of all the reports, SPEC Headquarters TCE Program Office will determine the risk classification for each TCE sponsor. The sponsors are classified as low, moderate, or high risk (more on risk classifications below).

As stewards of federal funds TCE sponsoring organizations are responsible for determining their actual program costs and activities pursuant to the Generally Accepted Accounting Principles (GAAP). Their budgets are flexible plans for achieving the intended TCE Program goal. Their budget will reflect 70% of expenses used for volunteer reimbursement and 30% of expenses used for allowable administrative expenses. Sponsors who exceed the maximum amount of their grant award are responsible for the overrun of expenses. Sponsors can request additional funding at the end of the grant period from the Stakeholder Partnerships, Education and Communication (SPEC) Headquarters office. The SPEC headquarters office will grant the request if funding is available.

The SPEC Headquarters TCE Program Office will do a risk assessment of each sponsor focusing on the sponsor’s stability, geographic problems, amount of award, fraudulent reporting, whether the sponsor is new to the program and if the sponsor is under any public or congressional scrutiny. In determining the risk classification for an organization, SPEC headquarters will review the performance reports, single audit reports, CBA Reports, e-mails, telephone conversations and program site visit reports conducted by the SPEC territory office. The SPEC Headquarters TCE Program Office will determine if a sponsor is misusing grant funds after reviewing grantees financial reports and determining the risk classification/category for each sponsor. There are three risk categories: Low, Moderate and High. The classification of each phase is outlined within the Financial Review Guidelines.

The Financial Review Phase involves examining the financial management policies, procedures, and controls maintained by an organization, particularly those aspects that affect incurred costs. The IRS designated site reviewer within the SPEC headquarters Quality Assurance staff will conduct financial site reviews to ALL TCE sponsors that are classified under the High Risk classification. In addition, a statistically valid sampling will be conducted by Statistic of Income (SOI) of the organizations within the Low and Moderate Risk classification sections. Organizations selected via the sample selection method will also be reviewed. The list of those organizations that are to be reviewed will be provided to the SPEC headquarters Quality Assurance staff manager by the SPEC Headquarters TCE Program Office.

The IRS site reviewer on the Quality Assurance staff will be engaged with the SPEC Headquarters TCE Program Office to ensure he/she is well-versed in the program/statutory requirements and expectations of the TCE Program. The site reviewer will be provided with copies of the grant expenditures on the monthly CBA Report, quarterly Forms 8654, performance reports, Single Audit Reports, and program site visitation reports of the high risk sponsors that he/she will be conducting a financial site review visitation. They will ensure sponsors are adhering to OMB Circular A−122 and determine if grant funds spent on administrative expenses are allowable.

The IRS Site Reviewer on the Quality Assurance Staff will prepare a final financial monitoring report of the visitation. The report will describe the findings and recommendations of the sponsor’s administration of the grant funds such as the financial records and receipts, its fiscal operations, and stipend reimbursement to volunteers. The report will also inform the TCE Program Office of any discrepancies with the grant funding and determine if an audit is required on the sponsor. If it is determined during the visit that there is fraud, waste, or abuse of the TCE grant funds, the site reviewer will notify the SPEC Headquarters TCE Program Office of their findings and provide their findings to the Treasury Inspector General Tax Administration (TIGTA). The sponsors grant funds should be managed in accordance with the program guidelines, SPEC’s policy requirements and OMB Circular A−122.

The Post-Site Review Phase begins once the financial site review visit has been conducted. The IRS Site Reviewer on the Quality Assurance Staff should prepare a report of their findings and submit the report to the SPEC Headquarters TCE Program Office upon returning to the office. Details of what should be contained in this report are outlined within the Financial Review Guidelines.

The SPEC Headquarters TCE Program Office will establish and maintain a record system for all financial monitoring visits that are recommended. The record system will list the sponsors name and address; names, titles, and phone numbers of recipient officials who were contacted; monitoring action performed; financial findings; recommended actions to designated officials; signature of the official performing the monitoring activity; and the date of the report. This information will be stored in the official grant file that has been established for each organization.

The SPEC Headquarters TCE Program Office will issue a copy of the Financial Monitoring Site Report to the TCE sponsor on the findings and recommendations with regards to the sponsor’s management of the grant funds, fiscal operations, financial statements, receipts for supplies, stipend reimbursements records for the TCE volunteers, and Single Audit Reports (if applicable) reviewed during the financial visitation. SPEC Headquarters Office will place a copy of the Financial Monitoring Site Report in the sponsors official grant file and review the corrective action plan submitted by the TCE sponsor. SPEC Headquarters TCE Program Office will approve the corrective action if the action complies with the TCE program/financial guidelines.

SPEC headquarters will request the SPEC territory office to follow-up on corrective actions to ensure the sponsor manages the grant funds in accordance with the TCE Grant Guidelines and OMB Circular A−122. If the grant recipient fails to implement corrective actions, SPEC Headquarters TCE Program Office will determine the appropriate sanction based on the recommendations of the SPEC territory office and IRS Site Reviewer findings. SPEC Headquarters TCE Program Office would require the sponsor to return the grant funds allocated and remove the sponsor from the TCE Program. If the sponsor has received some of their grant funds, IRS would notify PMS to freeze the remaining grant funds.

SPEC Headquarters TCE Program Office will withdraw a non-compliant sponsor from the TCE Grant Program if the financial records/reports are fraudulent, results from evaluations or during a financial monitoring visit to the grant recipient indicate grant funds are not being administered properly to comply with the guidelines set forth for the TCE Grant Program.

SPEC Headquarters TCE Program Office will follow-up with the SPEC territory office on any corrective actions that are recommended by IRS Site Reviewer for the TCE sponsor who receives a financial site visit. Grant Application Package, Grant Agreement, TCE Program Guidelines, Program responsibilities and Certification - Publication 1101, Application Package and Guidelines for Managing a TCE Program contains the current program guidelines, TCE Cooperative Agreement Form, certification documents, and other materials needed for the preparation and assembly of a tax assistance application. Publication 1101 (catalog #46965G) may be ordered from the NDC or can be downloaded at IRS.gov.

This meeting held annually (usually in December) provides TCE sponsors that have been accepted into the program (both those returning from the previous year and those new to the program) with information such as program reporting and policy requirements, new information on tax policy, and to discuss local issues. It is the SPEC territory office’s responsibility to conduct this meeting for the TCE sponsors that are in their area. This meeting can be done in conjunction with a Training course or via the telephone. This meeting also gives the TCE sponsors the opportunity to obtain clarification on the expectations of being a sponsor.

The dates, duration and agenda for this meeting will be left to SPEC/territory office’s discretion. However, SPEC area analysts with responsibility for the TCE Program will have oversight and coordination responsibility for this meeting.

Field Operations Oversight and Analysis:

Education and Product Development (E&PD):

Communications & Marketing:

Area Offices

Territory Offices

SPEC territory offices will receive requests for educational seminars, periodically. Requests should include the requestor/sponsor’s name, organization, contact name, telephone number, date, time, location, topic, anticipated audience size, and other pertinent information.

The SPEC Territory Manager must approve requests. The territory manager will consider the basis of each request, availability of resources, business rationale, and potential reach of the event before agreeing to the request.

Tax education outreach is conducted by qualified IRS employees and qualified partners/volunteers.

Whenever possible the SPEC territory office should leverage partners to conduct tax related seminars for taxpayer groups who request specific education from IRS. Speaker resources can include partnering with local CPA and Enrolled Agent Societies. Contact with a local CPA and/or Enrolled Agent Society should be coordinated through the Stakeholder Liaison office. The request should be sent at least one month prior to the speaking engagement via e-mail to the local SL Area Manager listed at http://mysbse.web.irs.gov/CLD/SL/Contacts/SL+Contacts/2302.aspx Other potential volunteer speakers may be leveraged from Universities- Accounting and Law students, Retired Federal Employees Associations and other skilled pools of volunteers.

Ensure that when using a volunteer/partner that their skills meet the needs of the requesting group. Employees and volunteers conducting outreach sessions should be current on the specific topic as well as recent changes in tax law. Provide speakers with information on the specific topic, reporting requirements and opportunity for feedback. Use of an evaluation form is recommended. Have the attendees provide information on the topic presented, method of presentation, instruction and additional comment.

In some cases SPEC will initiate a community outreach event in order to communicate an important tax related message to a targeted audience. This could be an issue that needs to be addressed in a particular community or directed to a specific group of taxpayers. Such seminars can be basic tax law, an awareness initiative for available credits such as Child Tax Credit, Job Loss, Education Credits, W-4 preparation or other tax related issues identified locally or nationally. Identified tax scams/schemes presents an opportunity for SPEC to impact compliance through community outreach tax education initiatives.

All direct outreach sessions must be reported on Form 4913. Partners/Volunteers will use the Form 13315 to report the activity to the territory office. This form should be submitted at the conclusion of the activity. Form 4913 is used by the SPEC employee to report direct program accomplishments and should be completed and input into STARS at the conclusion of the outreach activity.

Available items of reference for this program include:

SPEC's intranet home page can be found at http://win.web.irs.gov/spec.htm

The purpose of this section is to provide guidance in creating an initiative at the territory level that will target outreach and volunteer return preparation efforts to reach typically under-served market segments using a data driven approach. After the under-served market has been identified, headquarters, the area and territory offices will work together in the development and implementation. Historically, initiatives have been identified and implemented at the headquarters level with national partners. Examples of National Initiatives are the Disability Initiative, Rural Initiative, Native American Initiative, LEP Hispanic Initiative and Asset Building Initiative.

The UT application is available to educators to assist in preparing students for their federal tax responsibilities. The key is to emphasize our voluntary compliance system. The UT program examines the mechanics of tax return preparation, as well as the theory and principles of taxation.

To provide teachers with both a current and easy to update resource to increase student awareness of this lifelong economic reality.

To involve governments at the state and local levels in a cooperative tax education effort. Potential partners would include state departments of revenue, local boards of education, state superintendents of education, consumer education groups, adult education specialists and school principals and teachers.

E&PD is responsible for the administration and maintenance of the UT application. Their duties include:

The SPEC Territory Manager is responsible for promotion and incorporation into various campaigns and coalitions as appropriate.

Publication 2181 "Understanding Taxes: Just a Point and Click Away" is the promotional brochure for the Understanding Taxes (UT) website at educational conventions and conferences. This brochure explains the site's layout and provides the web address to access the application.

Publication 2181 (SP) "Understanding Taxes: Just a Point and Click Away (Spanish)." This publication introduces Understanding Taxes online to a Spanish speaking student/teacher audience.

The following sections will discuss:

Key Steps
This section contains the "key" steps that are critical to getting a partnership started. It provides a snapshot of each step from getting started, to developing an action plan with your partnership. Additional detail and examples of various tools (products) for each of these steps can be found on the SPEC website.

Step 1 - Gather Local Information - This step is critical in determining what the potential needs and interests are in the community. A community can be large or small with formal or informal boundaries. It is recommended that it be small enough to have some control, but large enough to have some measurable impact.