TIME AND EFFORT DOCUMENTATION REQUIREMENTS AND CHANGES IN LIGHT OF THE OMB SUPERCIRCULAR TIFFANY R. WINTERS, ESQ. TWINTERS@BRUMAN.COM @TRWINTERS BRUSTEIN & MANASEVIT, PLLC WWW.BRUMAN.COM NASTID 2014 1 EDGAR AND THE OMB CIRCULARS OMB cost principles (and the time and effort rules) are current in different circulars A-21 Educational Institutions A-87 State, Local & Indian Tribal Governments A-122 Non-Profit Organizations 48 CFR pt. 31 For-Profit Organizations Incorporated into the Super Circular or Omni Circular 2 TIME AND EFFORT DOCUMENTATION 101 3 1
OMB CIRCULAR A-87 TIME AND EFFORT RULE If federal funds are used for salaries, then time distribution records are required. How staff demonstrate allocability If employee paid with federal funds, then must show that the employee worked on that specific federal program cost objective. 4 WHO MUST PARTICIPATE? All employees paid with federal funds!! Some employees paid with non-federal funds When salaries are used for match purposes NOT contractors 5 TIME DISTRIBUTION RECORDS STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES Must be maintained for all employees whose salaries are: Paid in whole or in part with federal funds 200.430 (i)(1) Used to meet a match/cost share requirement 200.430(i)(4) 6 2
DOES MY EMPLOYEE HAVE TO KEEP TIME AND EFFORT RECORDS? Is she an employee? Yes No I don t know Is she paid with federal funds? No T&E Required Ask HR Yes No T&E Required Is her salary used for match? No Yes No T&E Required T&E Required 7 REQUIRED TIME DISTRIBUTION DOCUMENTATION Current Rule: Type of documentation depends on how many cost objectives the employee worked on These cost objectives must be connected to the employee s salary source 8 COST OBJECTIVES What is a cost objective? 200.28 (slightly changed) Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate the measure the cost of processes, products, jobs, capital projects, etc. 9 3
COST OBJECTIVES (CONT) Multiple Cost Objectives 200.430(vii): 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. 10 OCFO Clarifications Re: single cost objective OCFO: The criteria for whether an employee may document time and effort using a semiannual certification or must fill out a monthly PAR can be confusing. 11 OCFO GUIDANCE (CONT.) 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. 12 4
OCFO GUIDANCE EXAMPLES OF SINGLE COST OBJECTIVES: Title I, Part A funds and State compensatory education funds An LEA supports a supplemental math teacher to serve low-achieving students with 50 percent Title I, Part A funds and 50 percent State compensatory education funds. Since her support is fully chargeable to Title I, Part A she is working on a single cost objective. 13 OCFO GUIDANCE EXAMPLES OF SINGLE COST OBJECTIVES: Title I, Part A funds and CEIS (comprehensive early intervening services) funds under IDEA A teacher works with low-achieving students and is supported with 60 percent Title I, Part A funds and 40 percent CEIS funds. Teaching low-achieving students is a single cost objective because it can be fully supported under both Title I, Part A and CEIS. 14 OCFO GUIDANCE EXAMPLES OF SINGLE COST OBJECTIVES: Title I, Part A funds and local funds An LEA supports an elementary school teacher with local funds but pays her with Title I, Part A funds to provide afterschool tutoring for low-achieving students. The portion of her time spent on after-school tutoring is easily separated from her teaching position by her schedule. 15 5
TIME AND EFFORT (CURRENT A-87 RULE) Semi-Annual Certifications If an employee works on a single cost objective: Semi-Annual Certification After the Fact Account for the total activity Signed by employee or supervisor Every six months (at least twice a year) Personnel Activity Report (PAR) If an employee works on multiple cost objectives: PAR or equivalent documentation After the fact Account for total activity Signed by employee Prepared at least monthly and coincide with one or more pay periods 16 17 18 6
SUBSTITUTE SYSTEMS 19 SUBSTITUTE SYSTEMS GENERALLY Substitute systems may be used in place of these reports if approved by the cognizant agency. These systems are subject to approval if required by the cognizant or oversight agency. May include random moment sampling, rolling time studies, case counts, or other quantifiable measures of employee effort. 20 TIME AND EFFORT ADVANCED TOPICS 21 7
FEDERAL STIPENDS If a State-funded employee is paid a stipend with federal funds for attending professional development, does time and effort documentation have to be kept? A. Yes B. No 22 FEDERAL STIPENDS Federal funds can generally be used to pay for stipends for professional development or other extra-curricular activities. Time and Effort documentation must be kept. Maryland January 2013 ARRA Audit - Documentation not kept for employees partially funded with federal funds. 23 DE MINIMUS BENEFIT If a teacher works on a single cost objective but also has limited other responsibilities, such as cafeteria or bus duties. This teacher must keep: A. Monthly PARs B. Semi-annual certifications 24 8
DE MINIMUS BENEFIT Limited work on another cost objective does not need to be captured in time and effort records. Employees may work 5% or less on another cost objective. The work performed on these limited duties cannot deprive a benefit from the intended beneficiaries. The Montana Compact on Time Distribution, at p. 8, Q11. 25 SUBSTITUTE TEACHERS Are substitute teachers paid with federal funds required to track their time? A. Yes B. No 26 PART-TIME EMPLOYEES Are part-time employees required to track their time? A. Yes B. No 27 9
BLANKET CERTIFICATION Multiple employees working on the same single cost objective can be identified on a single semi-annual certification. A. True B. False 28 BLANKET CERTIFICATION Approved by USDE. Provides flexibility. Identifies multiple employees working on the same single cost objective. Must be prepared at least semi-annually. Signed and dated by supervisor with firsthand knowledge of the employees work. The Montana Compact on Time Distribution, at p. 3. 29 BLANKET CERTIFICATION EXAMPLE This is to certify that the following individuals have worked 100% of their time on the 21 st CCLC Programmatic cost objective for the months of March 1, 2013 to August 31, 2013. Position Teacher Teacher Guidance Counselor Tutor Name Lisa Muller Tim Allery Mary Smith Bob Ross Signed: /s/ September 10, 2013 30 10
CONTRACTORS V. EMPLOYEES The district has a Title I, Part A funded contract with a vendor for afterschool tutoring of Title I students. Do the contractor s employees need to keep time and effort records? A. Yes B. No 31 CHARACTERISTICS OF A CONTRACTOR Provides goods or services within normal business operations. Provides similar goods or services to others. Operates in a competitive environment. Provides goods or services that support the Federal program. Subject to terms of a contract but not compliance requirements of program. OMB Circular A-133(B).210(c) 32 TIME AND EFFORT FLEXIBILITY An employee teaches a special education classroom during school hours and provides additional instruction at the school s after-school program. The regular school position is paid for with IDEA funds while Title I, Part A funds pay for the afterschool position. The employee must keep a PAR. A. True B. False 33 11
EXAMPLES - RIGHT OR WRONG? 34 PAR EXAMPLE I certify that for the month of August 2013 I, Michelle Obama, spent my time working on the following programs: Title I, Admin 20% State programs 30% Total 50% Signed: /s/ September 10, 2013 35 SEMI-ANNUAL CERTIFICATION EXAMPLE I, Britney Spears, certify that I worked 100% of my time on IDEA, Part B from February 1, 2013 to July 31, 2013. Signature of Employee /s/ Date: August 1, 2013 36 12
SEMI-ANNUAL CERTIFICATION EXAMPLE I, Taylor Swift, certify that I worked 100% of my time on Title I, Part A Administration from January 1, 2013 to June 30, 2013. Signature of Employee /s/ Date: June 20, 2013 37 SEMI-ANNUAL CERTIFICATION I certify that for the month of October 2013 I, Orlando Bloom, spent 60% of my time working on Title I, Admin. I certify 100% that the above information is accurate. Signed: /s/ November 5, 2013 38 BLANKET CERTIFICATION EXAMPLE This is to certify that the following individuals have worked 100% of their time on the following cost objectives for the months of March 1, 2013 to August 31, 2013. Position Name Cost Objective Teacher Mary Kay Title I, Part A - Programmatic Teacher Charles Dickens IDEA, Part B Programmatic Guidance Counselor Arnold Smith Title III, Equitable Services Tutor Ray Teller 21 st CCLC - Programmatic Signed: /s/ September 10, 2013 39 13
PAR EXAMPLE I certify that for the month of October 2013 I, Justin Beiber, spent my time working on the following programs: 21 st CCLC, Admin 20% State programs 30% Annual Leave 50% Total 100% Signed: /s/ November 10, 2013 40 PAR EXAMPLE I certify that for the month of October 2013 I, Barack Obama, spent my time working on the following programs: 21 st CCLC, Admin 85% State programs 15% Total 100% Signed: /s/ November 15, 2013 41 THE OMNI CIRCULAR 42 14
THE OMNI CIRCULAR: WHAT IS COVERED? A-102: Administrative Rules State and Local Govts Part 80 EDGAR A-110: Administrative Rules IHEs and Nonprofits Part 74 EDGAR A-87: Cost Principals State and Local Govts A-21: Cost Principals IHEs A-122: Cost Principals Nonprofit Orgs A-133: Audit Rules 43 REASONS FOR THE CHANGE? 1. Simplicity 2. Consistency 3. Obama Executive Order on Regulatory Review Increase Efficiency Strengthen Oversight 44 WHO IS COVERED? All nonfederal entities expending federal awards 45 15
KEY DATES: Feb 1, 2013 Dec 19, 2013 Dec 26, 2013 April 2014 June 26, 2014 Dec 26, 2014 Notice of Proposed Rulemaking Final Rule Released Federal Register Published Rule New OMB Compliance Supplement ED Draft EDGAR Changes Final EDGAR Published 46 INCONSISTENCY BETWEEN PROGRAM STATUTE AND CIRCULAR If federal program statute or regulation differs from Omni Circular, then statute / regulation governs. 47 MOST SIGNIFICANT CHANGES Shift from focus on Compliance to focus on PERFORMANCE!!! Auditors (A-133 + Federal OIG) and Monitors (Federal and State Pass Through) must look more to outcomes than to process The Omni Circular adds significant flexibility to way grantees / subgrantees can adopt their own processes 48 16
MOST SIGNIFICANT CHANGES (CONT.) The Omni Circular has a MAJOR emphasis on strengthening accountability by improving policies that protect against waste, fraud and abuse 49 NEW: REQUIRED CERTIFICATIONS 200.415 NEW: Official authorized to legally bind the non-federal entity must certify on annual and final fiscal reports or vouchers requesting payment: By signing this report, I certify to the best of my knowledge and belief that the report is true, complete and accurate and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the federal award. I am aware that any false, fictitious, or fraudulent information or the omission of any material fact, may subject me to criminal civil or administrative penalties for fraud, false statements, false claims, or otherwise. 50 NEW: MANDATORY DISCLOSURES 200.113 Non federal entity must disclose in writing in timely manner to federal agency or passthrough all violations of federal criminal law involving fraud, bribery or gratuity violations potentially affecting federal award 51 17
NEW: STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES 200.430 Charges for salaries must be based on records that accurately reflect the work performed 1. Must be supported by a system of internal controls which provides reasonable assurance charged 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% 52 NEW: STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES 200.430 (CONT) 4. Encompass all activities (federal and non-federal) 5. Comply with established accounting polices and practices 6. Support distribution among specific activities or cost objectives 53 NEW: STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES 200.430 (CONT) Budget estimates alone do not qualify as support for charges to Federal awards 200.430(i)(1)(viii) Percentages may be used for distribution of total activities 200.430(i)(1)(ix) 54 18
NEW: STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES 200.430 (CONT) Grantees encouraged to adopt substitute systems if approved by cognizant agency for indirect cost 200.430(i)(5) Acceptable now to allocate sampled employee s supervisors, clerical and support staffs, based on results of sampled employees 55 NEW: STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES 200.430 (CONT) If records meet the standards: the non-federal entity will NOT be required to provide additional support or documentation for the work performed 200.430(i)(2) BUT, if records of grantee do not meet new standards, ED may require PARs 200.430(i)(8) PARs are not defined!! 56 SO WHAT DOES ALL THIS MEAN?? 57 19
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. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. 58 20