Time & Effort Under the New Uniform Guidance
The presentation covers the structure of the new uniform guidance, changes in cost principles, old rules under OMB circulars, and factors affecting cost allowability. It also discusses prior rules incorporated into the new guidance, effective dates, and subparts of CFR Part 200.
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Time & Effort Under the New Uniform Time & Effort Under the New Uniform Guidance Guidance Steven Spillan, Esq. Steven Spillan, Esq. 1
Agenda Agenda The Structure of the New Uniform Guidance Cost Principles Time & Effort Old Rules under the OMB Circulars Common Findings New Flexibility under Part 200 New standards Supported by a System of Internal Control What now? 2
2 C.F.R. Part 200 THE NEW THE NEW UNIFORM GUIDANCE UNIFORM GUIDANCE 3
Prior Rules Prior Rules (Incorporated Into the NEW UGG) (Incorporated Into the NEW UGG) A-21 Cost Rules Rules IHEs A-87 Cost Rules State / Local Gov t A-122 Cost Rules Nonprofit A-102 Administrative Rules State / Local Gov t A-110 Administrative Rules IHEs A-133 Audit Rules 4
Effective Dates Effective Dates December 26, 2014 Direct Grants July 1, 2015 State Administered Programs July 1, 2016 Procurement Rules (Two Year Grace Period) Indirect Cost Rates When Due For Renegotiation 5
The The New New 2 CFR Part 200 2 CFR Part 200 Subpart A Definitions Subpart B General Provisions Subpart C Pre Award Requirements Subpart D Post Award Requirements Subpart E Cost Principles Subpart F Audit Requirements 6
Subpart E of Part 200 COST PRINCIPLES COST PRINCIPLES 7
Factors Affecting Allowability of Costs Factors Affecting Allowability of Costs 200.403 200.403 All Costs Must Be: 1. Necessary, Reasonable, and Allocable 2. Conform with federal law & grant terms 3. Consistent with state and local policies 4. Consistently treated 5. In accordance with GAAP 6. Not included as match 7. Net of applicable credits (moved to 200.406) 8. Adequately documented 8
Direct v. Indirect Costs 200.413(c) Direct v. Indirect Costs 200.413(c) NEW: Salaries of administrative and clerical staff should be treated as indirect unless all of following are met: 1. Such services are integral to the activity 2. Individuals can be specifically identified with the activity 3. Such costs are explicitly included in the budget 4. Costs not also recovered as indirect 9
Collection of Unallowable Costs Collection of Unallowable Costs 200.410 200.410 NEW: Payments made for costs determined to be unallowable by either the Federal awarding agency or pass-through must be refunded (including interest) to the Federal government in accordance with instructions from the Federal agency that determined the costs are unallowable. 10
OMB Circular A-122 THE OLD THE OLD RULE RULE 11
Time & Effort (Old A Time & Effort (Old A- -122 Rule) 122 Rule) Personnel Activity Report After-the-activity report Account for the total activity Signed by employee or supervisor with first hand knowledge Prepared at least monthly and coincide with one or more pay periods 12
Common Audit Findings (under old Common Audit Findings (under old rule) rule) Not After-the Fact No affirmation The form should say that the distribution of activity represents a reasonable estimate of the actual work performed by the employee during the periods covered by the reports. No printed name or title of supervisor How do we know they are a supervisor and have first hand knowledge? 13
Common Audit Common Audit Findings, Findings, cont d. cont d. Pre-populated Forms Does not account for total time employee is compensated Example totals 50% Example totals 200% Does not identify cost objective Federal Programs 14
2 C.F.R. 200.430(i) NEW RULES NEW RULES 15
Documentation for Personnel Expenses Documentation for Personnel Expenses 200.430(i) 200.430(i) NEW: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. How staff demonstrate allocability If employee paid with federal funds, then must show that the employee worked on that specific federal program cost objective 200.403(a) 16
Who must participate? Who must participate? 200.430(i)(1) and (i)(4) 200.430(i)(1) and (i)(4) Must be maintained for all employees whose salaries are: Paid in whole or in part with federal funds Used to meet a match/cost share requirement NOT contractors 17
Does X Employee have to keep time Does X Employee have to keep time and effort records? and effort records? Is she/he an employee? Yes No I don t know No T&E Required Is she/he paid with federal funds? Ask HR Yes No T&E Salary used for match? Required No Yes No T&E Required T&E Required 18
Documentation for Personnel Documentation for Personnel Expenses, 200.430(i)(1) 200.430(i)(1) Expenses, cont d. cont d. NEW: These records MUST: 1.Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated; 2.Be incorporated into official records; 3.Reasonably reflect total activity for which employee is compensated; Not to exceed 100% 19
Documentation for Personnel Expenses, Documentation for Personnel Expenses, cont d 200.430(i 200.430(i)(1) )(1) cont d. 2 . 2 4.Encompass all activities (federal and non-federal); 5.Comply with established accounting polices and practices; and 6.Support distribution among specific activities or cost objectives. 20
COFAR Comments on Part 200 Rule COFAR Comments on Part 200 Rule By mitigates the risk that a non-Federal entity will focus on prescribed procedures... ineffective in assuring full accountability. Uncovering weaknesses in internal controls or instances of fraud is goal. Not audit findings. focusing more on internal controls, the rule which alone may be 21
Cost Objectives Cost Objectives 200.28 200.28 Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc. 22
Cost Cost Objectives, Objectives, cont d. 200.430(i)(1)(vii) 200.430(i)(1)(vii) cont d. More than one Federal award. A Federal award and a non-Federal award. An indirect cost activity and a direct cost activity. Two or more indirect activities that are allocated using different allocation bases. An unallowable activity and a direct or indirect cost activity 23
Allocable Costs Allocable Costs 200.405(c) 200.405(c) Any cost allocable to a particular Federal award under the principles in Part 200 may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal Statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non- Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal award. 24
Allocable Allocable Costs, 200.405(d) 200.405(d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on proportional benefit. If cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then notwithstanding 200.405(c), the costs may be allocated or transferred to benefited projects on any reasonable documented basis. Costs, cont d. cont d. 25
Use of Budget Estimates Use of Budget Estimates 200.430(i)(1)(viii) 200.430(i)(1)(viii) Budget estimates alone do not qualify as support for charges to Federal awards. May be used for interim accounting purposes if: Produces reasonable approximations Significant changes to the corresponding work activity are identified in a timely manner Internal controls in place to review after-the-fact interim charges based on budget estimates 26
Reconciliation Reconciliation 200.430(i)(1)(viii)(C) 200.430(i)(1)(viii)(C) NEW: All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. 27
Percentages Percentages 200.430(i)(1)(ix) 200.430(i)(1)(ix) NEW: Because practices vary as to the activity constituting a full workload, records may reflect categories of activities expressed as a percentage distribution of total activities. 28
Alternative Proposals Alternative Proposals 200.430(i)(6) 200.430(i)(6) NEW: Cognizant agencies for indirect costs are encouraged to accept alternative proposals based on outcomes and milestones for program performance. These plans are acceptable as alternatives to the Part 200 standards. 29
Compliance Compliance 200.430(i)(2) 200.430(i)(2) NEW: For records which meet the standards, the non-federal entity will not be required to provide additional support or documentation for the work performed. DOL regulations for Fair Labor Standards Act must still be met (i.e. charges must be supported by records indicating the total number of hours worked each day). 30
Noncompliance Noncompliance 200.430(i)(8) 200.430(i)(8) For a non-Federal entity where the records do not meet these standards: HHS may require personnel activity reports (PARs), including prescribed certifications or equivalent documentation that support the records as required in this section. PARs are not defined!! 31
Internal Controls Internal Controls 200.302(b)(4) 200.302(b)(4) Essentially same as prior 80.20(b)(3): Effective control over and accountability for: All funds Property Other assets Must adequately safeguard all assets Use assets solely for authorized purpose 32
The Definition of Internal Controls The Definition of Internal Controls 200.61 200.61 Internal controls means a process, implemented by a non-Federal entity, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Effectiveness and efficiency of operations; Reliability of reporting for internal and external use; and Compliance with applicable laws and regulations. 33
Internal Controls Internal Controls 200.303 200.303 a. Non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurances that the entity is managing the award in compliance with federal statutes, regs, and terms of the award. NEW: Internal controls should be in compliance with: The U.S. Comptroller General s Standard for Internal Control Integrated Framework; and Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 34
Internal Internal Controls, cont d. Controls, cont d. 200.303 200.303 b.Comply with Federal statutes, regs, and the terms and conditions of the Federal awards. c.Evaluate and monitor the non-Federal entity's compliance with statutes, regs and the terms and conditions of Federal awards. d.Take prompt action when instances of noncompliance are identified including in audit findings. e.Take reasonable measures to safeguard protected personally identifiable info (PII) and other information designated or deemed sensitive 35
WHAT NOW? WHAT NOW? 36
Moving Forward Moving Forward No Frame of Reference: No common audit findings Little/no guidance Chance of feds requiring PARS Advice: Just Wait 37
QUESTIONS QUESTIONS? ? 38
~ Legal Disclaimer ~ ~ Legal Disclaimer ~ This presentation is intended solely to provide general information and does not constitute legal advice. Attendance at the presentation or later review of these printed materials does not create an attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. 39
CIL CIL- -NET NET Attribution Attribution Support for development of this technical assistance information was provided by the Department of Health and Human Services, Administration for Community Living under grant number 90TT0001-02-00. No official endorsement of the Department of Health and Human Services should be inferred. Permission is granted for duplication of any portion of this information, providing that the following credit is given to the project: Developed as part of the IL-NET, an ILRU/NCIL/APRIL National Training and Technical Assistance Program. 40
