YouthBuild

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YouthBuild

• Financial Management

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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

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Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations Department of Labor - ETA Grantees Applicable OMB Circulars and Federal Regulations
OMB Circulars OMB Circulars OMB Circulars DOL Regulations
Nature of Grantee/Subgrantee Federal Audit Requirements Federal Cost Principles Uniform Administrative Requirements Uniform Administrative Requirements
State/Local, Indian Tribal Governments A-133 Revised 6/27/03 (effective 12/31/03) A-87 Revised 05/10/04 A-102 Amended 8/29/97 29 CFR Part 97.20
Institutions of Higher Education A-133 Revised 6/27/03 (effective 12/31/03) A-21 Revised 05/10/04 A-110 Amended 9/30/99 Republished as 2 CFR Part 215 5/11/04 29 CFR Part 95.21
Non-Profits A-133 Revised 6/27/03 (effective 12/31/03) A-122 Amended 05/10/04 A-110 Amended 9/30/99 Republished as 2 CFR Part 215 5/11/04 29 CFR Part 95.21
Hospitals A-133 Revised 6/27/03 (effective 12/31/03) 45 CFR Part 74 A-110 Amended 9/30/99 Republished as 2 CFR Part 215 5/11/04 29 CFR Part 95.21
For-Profits Per program or grant agreement 48 CFR Part 31 (FAR) Per program or grant agreement 29 CFR Part 95.21
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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

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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

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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

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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

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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

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Factors Affecting Allowability of Costs

• Authorized or not prohibited
• Consistent with the Federal Rules Circulars
• Consistent treatment
• Across time program lines
• Direct indirect costs

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Allowability

• Not used as match
• Unless specifically authorized
• Documented
• Traceable to source documentation
• Consistent with GAAP
• Accounting standards treatment

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Allowability

• Conform to limitations/exclusions contained in
  the cost principles
• Net of applicable credits

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Allowable Costs

• Associated Real Property Costs
• Rehabilitation of existing structure
• Construction of building.
• Architectural Fees
• Proportionate share
• On-site Training supervisor
• Construction Management

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Allowable Costs

• Participant Costs
• Payments for work related activities
• Davis-Bacon Act
• Trainees Tools and Clothing
• Stipends
• Supportive Services
• Benefit Costs

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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

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Unallowable costs

• Acquisition cost for land and building
• Brokerage Fees
• Losses, fines penalties
• Contingency reserves
• Donations and contributions

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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

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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

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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

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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

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Limitations

• PL 109-234
• 172,200
• Administrative Costs
• 15
• Community and Public Facilities
• 10

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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

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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

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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

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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

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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

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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

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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

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Other Considerations

• Salaries paid by multiple fund sources must be
  allocated and calculated accordingly
• Salaries paid through indirect cost rates must be
  calculated accordingly

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Administrative Limitations

• 20 CFR 672.505(a)
• No more than 15 of grant award

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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)

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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

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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

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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

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Community and Public Facilities

• Maximum 10 of grant award
• Supervision and Training Costs
• Rehabilitation or construction of public or
  community facilities

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Budgets

• Standard Form (SF)-424A
• Initial and Modification

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SF-424A

• Standardized form
• Approved by OMB
• Used by all Federal agencies

Handout
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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

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Keep Needs in Mind

• Administrative costs
• Program costs
• Direct costs
• Indirect costs
• Cost allocation plan

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Section B Budget Categories

• (a) Personnel (f) Contractual
• (b) Fringe Benefits (g) Construction
• (c) Travel (h) Other
• (d) Equipment (j) Indirect Costs
• (e) Supplies

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YouthBuild Cost Items

• Which category?
• Tools
• Equipment
• Construction Supplies
• Construction
• Architectural Fees

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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

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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

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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

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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

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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

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Questions