H OW TO T RACK E MPLOYEES ’ S ALARIES AND B ENEFITS U NDER THE N EW EDGAR MIKE BENDER, ESQ. BRUSTEIN & MANASEVIT, PLLC FALL FORUM 2015.

HOW TO TRACK EMPLOYEES’ SALARIES AND BENEFITS UNDER

THE NEW EDGARMIKE BENDER, ESQ.

[email protected] & MANASEVIT, PLLC

FALL FORUM 2015

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. 200.405 (p. 132)

2

DOCUMENTATION FOR PERSONNEL EXPENSES 200.430(i) (p. 139)

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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

3

WHO MUST PARTICIPATE? 200.430(i)(1) AND (i)(4) (p. 141-142)


Semi-Annual Certifications

If an employee works on a single cost objective: After-the-fact Account for the total

activity Signed by employee or

supervisor Every six months (at

least twice a year)

Personnel Activity Reports (PARs)

If an employee works on multiple cost objectives: After-the-fact Account for total

activity Signed by employee Prepared at least

monthly and coincide with one or more pay periods

4

THE PRIOR A-87 RULE (SEAS AND LEAS)


Plan Confirmation Budgeted allocations for

professional/professorial staff

Updated to reflect any significant changes in actual work

After-the-Fact Activity Reports

Professional/Professorial staff keep records every six months

All other employees keep monthly records

Signed by employee, principal investigator, or responsible official using suitable means of verification

Must reflect activity applicable to each sponsored agreement and to each category needed to identify F&A costs

5

THE PRIOR A-21 RULE (INSTITUTIONS OF HIGHER ED.)

Variety of records kept in combination at least monthly

Multiple Confirmation Records


After the fact Account for total activity Signed by employee or supervisor

with firsthand knowledge Prepared at least monthly and

coincide with one or more pay periods

6

THE PRIOR A-122 RULE (NON-PROFIT ORGANIZATIONS)

Personnel Activity Reports


These records MUST:Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated

Be incorporated into official recordsReasonably reflect total activity for which employee is compensatedPercentages may be used for distribution of total activities

Not to exceed 100%

7

PART 200 STANDARDS200.430(i)(1) (p. 141-142)


• Encompass all activities (federal and non-federal)

• Comply with established accounting policies and practices

• Support distribution among specific activities or cost objectives

8

PART 200 STANDARDS200.430(i)(1) (p. 141-142)


Budget estimates alone do not qualify as support for charges to Federal awards

May be used for interim accounting purposes if:Produces reasonable approximationsSignificant 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

9

USE OF BUDGET ESTIMATES200.430(i)(1)(viii) (p. 142)


There has always been confusion regarding cost objectives What is a cost objective?

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.

Categories include: set-aside, caps, etc. Examples: schoolwide, administration, program

costs, parental involvement, professional development

10

PART 200 COST OBJECTIVES200.28 (P. 89)


Do you track funding source or track what employee is working on?

For example, Project Director of 21st CCLC after school program working 100% of her time on the 21st CCLC program but is paid 75% with 21st CCLC funds and 25% with State funds.

Unclear guidance in the past from various Federal agencies.

11

NEED FOR CLARIFICATION


12

HELP!

Time and Effort Guidance by OCFO!!! (p. 231)

http://www2.ed.gov/policy/fund/guid/gposbul/time-and-effort-reporting.html







It is possible to work on a single cost objective even if an employee works on more than one Federal award or on a Federal award and a non-Federal award.

The key to determining whether it is a single cost objective is whether the employee’s salary and wages can be supported in full from each of the Federal awards on which the employee is working or from the Federal award alone if the employee’s salary is also paid with non-Federal funds.

13

OCFO GUIDANCE


“It is recognized that teaching, research, service, and administration are often inextricably intermingled in an academic setting. When recording salaries and wages charged to Federal awards for IHEs, a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected.”

14

FOCUS ON IHES200.430(i)(1)(x) (p. 142)


States, local governments and Indian tribes encouraged to adopt “substitute systems” if approved by cognizant agency for indirect cost.

Still acceptable to allocate sampled employees’ supervisors, clerical and support staffs, based on the result of the sampled employees

15

SUBSTITUTE SYSTEMS200.430(i)(5) (p. 142)


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 UGG’s standards.

16

ALTERNATIVE PROPOSALS200.430(i)(6) (p. 142)


A non-Federal entity may submit performance plans that incorporate funds from multiple Federal awards and account for their combined use based on performance-based metrics, if approved.

Must submit a request for a waiver that includes certain information, including the method of charging costs.

17

BLENDED FUNDING200.430(i)(7) (p. 142)


NEW: All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.

18

RECONCILIATION200.430(i)(1)(viii)(C) (p.

142)


NEW: If records 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)

19

COMPLIANCE200.430(i)(2) (p. 142)


BUT, if records of grantee do not meet new standards, awarding agency may require PARs, including prescribed certifications or equivalent documentation that support the records as required by Part 200.

However, PARs are not defined!!!

20

NON-COMPLIANCE200.430(i)(8) (p. 142)


21

NOW WHAT???


Strong internal controls are key!No matter what system you use, must have strong, reliable internal controls“Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated.”

22

BASELINE FOR ALL TIME AND EFFORT

SYSTEMS


By focusing more on internal controls, the rule “mitigates the risk that a non-Federal entity… will focus on prescribed procedures...which alone may be ineffective in assuring full accountability.”

Uncovering weaknesses in internal controls or instances of fraud is goal. Not audit findings.

23

COFAR COMMENTS ON NEW RULE


Safe Harbor of the Prior Circulars Includes flexibility described by the OCFO guidance

Explicit Regulatory FlexibilitySubstitute SystemsAlternative Proposals – Outcomes and Performance

Alternative Proposals – Blended FundingExamples of Blended Funding: Schoolwide Funding Consolidation and ESEA Consolidated Admin

24

DEFINITE OPTIONS


Modified Methods (based on Prior Circulars) Non-profits using semi-annual certifications for

single cost objective employees PARs signed by supervisors

Extended Certification Periods Annual certifications for single cost objectives; and

Also applies to professional and professorial staff at IHEs Quarterly (or Every Other Month) PARs

Quarterly certifications for all other employees at IHEsElectronic Signatures/Click The Box

25

MOST LIKELY


Allocating Effort on Basis Other than TimeExample – An accountant’s salary could be allocated based on the number of transactions processed under each funding source If the work performed by an employee benefits

multiple cost objectives in a way that is inextricably intermingled, the non-federal entity may determine an appropriate method to allocate using any reasonable basis. 200.405(d) (p. 143)

Also, ED 1992 Guidance (but unclear if still applies) Remember, strong internal controls are a

must!26

MOST LIKELY


Annual PARs?

New Ideas Moving Forward ….Districtwide Activities as single cost objective??

Statewide Activities as single cost objective??Using Job Descriptions??State-level blended funding??

Any other ideas???27

UNSURE (UNLIKELY??)


Disclaimer

This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.

28 Brustein & Manasevit, PLLC © 2015. All rights reserved.

H OW TO T RACK E MPLOYEES ’ S ALARIES AND B ENEFITS U NDER THE N EW EDGAR MIKE BENDER, ESQ. BRUSTEIN & MANASEVIT, PLLC FALL FORUM 2015.

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