YouthBuild Financial Management
Jan 16, 2016
YouthBuild
Financial Management
DOL Requirements
• DOL adapted OMB Circular A -102 under 29 CFR Part 97– States follow their own policies and procedures as long as they
are consistent with federal requirements
• DOL adapted OMB Circular A-110 under 29 CFR Part 95
• DOL continues to apply the requirements of 29 CFR Parts 95 and 97 until 2 CFR part 215 becomes final
Department of Labor - ETA GranteesApplicable OMB Circulars and Federal Regulations
OMB Circulars DOL Regulations
Nature of Grantee/Subgrantee
Federal Audit Requirement
s
Federal Cost Principles
Uniform Administrative Requirements
UniformAdministrative Requirements
State/Local, & Indian Tribal Governments
A-133Revised 6/27/03
(effective 12/31/03)
A-87Revised
05/10/04
A-102Amended8/29/97
29 CFR Part 97.20
Institutions of Higher Education
A-21Revised05/10/04
A-110Amended9/30/99
Republished as 2 CFR Part 215
5/11/04
29 CFR Part 95.21
Non-Profits A-122Amended 05/10/04
Hospitals 45 CFR Part 74
For-Profits Per program or grant
agreement
48 CFR Part 31(FAR)
Per program or grant agreement
All Financial SystemsMust Adhere to 7 separate standards
• 1. Financial reporting– System must permit preparation of Federal
financial reports– Must report accruals
• 2. Accounting records– Adequately identify grant funds
• Awards, obligations, assets, liabilities, income and expenditures
– Supported by source documentation– Must be maintained in accordance with GAAP
Financial Standards
• 3. Internal controls– System to protect integrity of funds– Accountability for cash, property & other
assets
• 4. Budget controls– Comparison of actual expenditures (outlays)
to approved budget plan– Compliance with line item requirements– Prevents overspending
More Financial Standards
• 5. Allowable costs– Only allowable costs charged– Only allocable costs charged
• 6. Source documentation– Costs must trace to authorizing document– Proof that costs are allowable & allocable
• 7. Cash management– System to control cash assets
The Four Main Cost Principles
• OMB A-21 Educational Institutions
• OMB A-87 State/Local Governments and Indian Tribes
• OMB A-122 Non-profit Organizations
• 48 CFR 31 Contract Cost Principles and Procedures dealing with Commercial Organizations
Federal Cost Principles
• Purpose – provides that the Federal government bears its fair share of costs except where restricted or prohibited by law– Reasonable & Necessary
• “Prudent Person Rule”
– Allocable• Clearly benefit program• Both direct & indirect costs
Factors Affecting Allowability of Costs
• Authorized or not prohibited
• Consistent with the Federal Rules & Circulars
• Consistent treatment– Across time & program lines– Direct & indirect costs
Allowability
• Not used as match– Unless specifically authorized
• Documented– Traceable to source documentation
• Consistent with GAAP– Accounting standards & treatment
Allowability
• Conform to limitations/exclusions contained in the cost principles
• Net of applicable credits
Allowable Costs
• Associated Real Property Costs
– Rehabilitation of existing structure
– Construction of building.
• Architectural Fees
– Proportionate share
• On-site Training supervisor
• Construction Management
Allowable Costs
• Participant Costs– Payments for work related activities
• Davis-Bacon Act
– Trainees Tools and Clothing– Stipends– Supportive Services– Benefit Costs
Allowable with Conditions
• Examples– Personal services– Advertising of program/grant only– Equipment (with prior approval)– Operating leases for real property– Memberships
• Prior Approval– Needed BEFORE incurring cost– May exist in grant agreement
Unallowable costs
• Acquisition cost for land and building
• Brokerage Fees
• Losses, fines & penalties
• Contingency reserves
• Donations and contributions
Unallowable
• Alcoholic beverages
• Goodwill
• Lobbying
• Legal expenses for prosecution of claims, ALJ audit appeals or civil actions
• Entertainment – Allowable for certain WIA Youth recreation
activities
Direct and Indirect Costs
• Identify costs that are direct and indirect:• Direct Costs – any costs that can be directly
identified with a specific grant• Indirect Costs – any costs shared among
multiple programs for which a definitive amount can not be directly attributed to a specific grant
• Direct and indirect costs can be either administrative or program costs
Direct and Indirect Costs
• For example:• Direct costs – Informational System costs for a
specific grant:• Administrative: all costs directly related to financial recording
and reporting• Program: all costs directly related to performance tracking
and reporting
• Indirect costs – Equipment maintenance and operational costs for an office working with multiple programs
• Administrative: general office copiers and printers• Program: motor vehicles used for transporting participants
Indirect Costs/Rate
• Costs that are not readily identified with a particular cost objective.
• May be defined as a % of base such as salaries but never the total federal grant award
• Always indirect but may include program costs
Limitations
• PL 109-234 – $172,200
• Administrative Costs– 15%
• Community and Public Facilities– 10%
PL 109-234
• Applies to all ETA appropriated funds– All grants, contracts and interagency
agreements
• Limits salary and bonus payments to individuals
• Implementation guidance in TEGL 5-06
Who is covered?
• Individuals paid with ETA appropriated funds
• Direct recipients and all subrecipients
• Direct costs
• Costs paid through an Indirect Cost Rate
• Vendors are not subject to limitation
Sub-recipients & Vendors
• Sub-recipients & vendors can:– Receive funds directly from a Federal agency – Receive funds through a sub-award or pass-
thru from a grantee
• Difference between sub-recipients & vendors is:– Critical in determination of applicable Federal
grant management requirements & rules• Sub-recipients must follow such rules & vendors
do not
What is subject to limitation?
• Covered individuals– Anyone receiving wages or bonus payments from
sub-recipients from ETA appropriations
• Salaries paid at a specific rate• Bonus payments paid to the individual• Exclusions
– Fringe benefits– Non-monetary compensation such as a car
Salaries
• Wages paid to an individual in accordance with IRS instructions– Included in W-2– Full Time RATE not exceed Executive Level II– 2007 maximum is $168,000– 2008 maximum is $172,200– Adjusted annually by OPM
• Expressed as annual or hourly amount
• Calendar year basis – IRS definition
Bonuses
• Included in IRS form W-2– Reported as income on form 1040
• Includes monetary awards, bonus payments, and monetary prizes
• Calendar year application – same as salaries
• Excludes non-monetary compensation and corporate profit
Profits and Profit Sharing
• Corporate profits paid on per share basis that have required investment are excluded
• Profit sharing, when part of personnel policies, as supplement to salary are included
• Sole proprietor or partnership– Income realized on Schedule C or E, IRS
Form 1040
Other Considerations
• Salaries paid by multiple fund sources must be allocated and calculated accordingly
• Salaries paid through indirect cost rates must be calculated accordingly
Administrative Limitations
• 20 CFR 672.505(a)
• No more than 15% of grant award
Administration Costs (WIA Definition)
• 20 CFR 667.220 – applies to all grants and programs receiving WIA Title 1 funds
• Allocable portion of necessary and reasonable costs that are not related to direct provisions of workforce services
• Coordination of and provision of general administrative functions (continued)
Administration Costs (WIA Definition)
• Financial and cash management
• Procurement and purchasing
• Personnel and property management
• Payroll, audit and general legal services
• Oversight and monitoring activities
• Costs of information systems related to administrative functions
Administration Costs (WIA Definition)
Awards or contracts solely for the performance of administrative functions i.e. a contract to a CPA firm to perform financial
monitoring of subrecipients
Allocating costs of personnel who performs both administrative and program services such as: Salaries for executive staff Travel for program or administrative purposes
Administration Costs
Total expenditures equals All program costs which includes:
All direct and indirect costs not defined as administrative expenditures
Plus
All administrative costs which includes: All direct and indirect costs identified as
administrative expenditures
Community and Public Facilities
• Maximum 10% of grant award– Supervision and Training Costs– Rehabilitation or construction of public or
community facilities
Budgets
Standard Form (SF)-424A
Initial and Modification
SF-424A
Standardized form Approved by OMB Used by all Federal agencies
Handout
SF-424A
• Section A – Budget summary
• Section B – Budget categories
• Section C – Non-Federal resources
• Section D – Cash needs
• Section E – Future funding
• Section F – Other budget information
Keep Needs in Mind
• Administrative costs
• Program costs
• Direct costs
• Indirect costs
• Cost allocation plan
Section B – Budget Categories
(a) Personnel (f)Contractual
(b) Fringe Benefits (g) Construction
(c) Travel (h) Other
(d) Equipment (j) Indirect Costs
(e) Supplies
YouthBuild Cost Items
• Which category?– Tools– Equipment– Construction Supplies – Construction– Architectural Fees
Budget Narrative
• Clearly written narrative
• Links appropriate resources to meet project objectives
• Budget in line with resources requested
• Qualifications of key staff sufficient to assure proper direction, management and completion of the project
Why Do We Track Costs?
• Is the grant “on-track” financially
• Is there a potential need for a modification
• Are costs proportionate to outcomes
• Is match generated as required
• Are budget controls in place and followed– Financial management standards
Budget Modification
• Submit to Grant Officer in writing• Any changes to
– Salaries – Fringe benefits– Indirect costs
• Changes to all other budget categories– Resulting in an increase or decrease by 20
percent or more
Budget Modification
• Complete the worksheets– Documents the need for change
• Revise the SF-424A– Reflects new totals– Incorporates all changes
• Revise the budget narrative
• Submit to the FPO
Resources
• Where to find the OMB Circulars and Code of Federal Regulations
• OMB Circulars:
www.whitehouse.gov/omb/circulars/index.html
• 29 & 48 CFR:
www.access.gpo.gov
Questions