UGG - EDGAR …Taking another look … Model Policies & Procedures AAFC Fall Conference 2016 UGG - EDGAR …Taking another look … Model Policies & Procedures Kimberly Glass, Springdale & Anita Farver, LRSD

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The Administrator’s Handbook on EDGAR AAFC Federal Grant Technical Manual Addendum to Manual Hmmm

AGENDA Federal Grant Technical Manual Addendum UGG/EDGAR Addendum A: Determining Allocability of Costs B: Procurement Standards C: Documentation of Personnel Expenses (Time & Effort) D: Record Keeping UGG/EDGAR

ADDENDUM SECTION A: Determining Allocability of Costs

(I.) WRITTEN ALLOWABILITY PROCEDURES 200.403 NEW: Written procedures for determining allocability of costs in accordance with Subpart E – Cost Principles Procedures can not simply restate the Uniform Guidance Subpart E Should explain the process used throughout the grant development and budget process Once complete, should be used as a training tool and guide for employees

“Factors Affecting Allocability of Costs” § 200.403 All Costs Must Be: Necessary, Reasonable and Allocable Conform with federal law & grant terms Consistent with state and local policies Consistently treated In accordance with GAAP Not included as match Net of applicable credits (moved to § 200.406) Adequately documented 7

DIRECT V. INDIRECT COSTS 200.412-200.414 Indirect Cost must be classified within two broad categories: “Facilities” and “Administration” Facilities is defined as depreciation on buildings, equipment and capital improvement….pg 147 Administration is defined as general administration and general expenses such as the director’s office, personnel and all other types of expenditures not listed specifically under on of the subcategories of “Facilities”. 8

DIRECT V. INDIRECT COSTS 200.412-200.414 NEW: Salaries of administrative and clerical staff should be treated as “indirect” unless all of following are met: Such services are integral to the activity Individuals can be specifically identified with the activity Such costs are explicitly included in the budget Costs not also recovered as indirect Cost incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. (200.405 allocable costs) *The salaries of administrative and clerical staff should normally be treated as indirect costs. Direct charging of these cost may be appropriate only if all the conditions are met as detailed in UGG CFR beginning at 200.413 (c) (1) on page 146.

ADDENDUM SECTION B: PROCUREMENT STANDARDS

Procurement Standards NEW: All nonfederal entities must have documented procurement procedures which reflect applicable Federal, State, and local laws and regulations. § 200.318(a) Open competition Conflict of Interest Solicitation Cost/Price Analysis Vendor Selection Required Contract Provisions Contract Administration Protest Procedures State, Local and Tribal Governments: States may use their own procurement policies and procedures to procure equipment. Still provides flexibility for States; all other nonfederal entities follow policies and procedures under Section 200.318-200.326. 11

Examples that would restrict competition: Awards that would create organizational conflicts of interest. (2 CFP 200.319 (a)(5) Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance of other relevant requirements of the procurement. (2 CFP 200.319 (a)(6) Any arbitrary action in the procurement process. (2 CFP 200.319 (a)(7) Federal Register Vol. 80, No 211 dated Monday, November 2, 2015 - “brand name”

CONFLICT OF INTEREST If the non-federal entity has a parent, affiliate, or subsidiary organization that is not a state or local government the entity must also maintain written standards of conduct covering organization conflicts of interest! 200.318(b)(2) NEW: All non federal entities must establish conflict of interest policies, and disclose in writing any potential conflict to federal awarding agency in accordance with applicable Federal awarding agency policy. 200.112

Conflict of Interest Policy Include: Definition Chain for reporting potential conflicts Alternate if reporting to employee involved in potential conflict Definitions and examples of nominal items Sanctions Signed certification that employee received and understands conflicts policy Training on policy

Procurement: Helpful Questions to Ask What is your conflict of interest policy? What are State and/or agency-specific requirements that must be followed? Approval for contracts? Service contracts vs. Contracts for goods? Contract thresholds and process for entering into contracts within each threshold amount? Evidence that entity meets sole-sourcing exception? What clauses and/or certifications must be in each contract? How do you ensure that the terms of the contract are met? 15

ADDENDUM SECTION C: Personnel Expenses Time & Effort Documentation of Personnel Expenses ADDENDUM SECTION C: Personnel Expenses Time & Effort 16

OMB CIRCULARS TIME AND EFFORT RULE New Name: Time Distribution Records “Standards for Documentation of Personnel Expenses” If federal funds are used for salaries, then time distribution records are required. How staff demonstrate allocability 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) COST OBJECTIVES 200.28 What is a cost objective? (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 and measure the cost of processes, products, jobs, capital projects, etc.

TIME & EFFORT (Old A-87 RULE) Semi-Annual Certifications Personnel Activity Report (PAR) 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) 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

“STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES” 200 “STANDARDS FOR DOCUMENTATION OF PERSONNEL EXPENSES” 200.430 (8)(i) – (viii) Must be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable and properly allocated Be incorporated into official records Reasonably reflect total activity for which employee is compensated NEW: Percentages may be used for distribution of total activities Not to exceed 100% Encompass all activities (federal and non-federal) Comply with established accounting polices and practices Support distribution among specific activities or cost objectives Budget estimates alone do not qualify as support for charges to Federal awards 200.430(i)(1)(viii) Grantees encouraged to adopt “substitute systems” if approved by cognizant agency for indirect cost 200.430(i)(5) Acceptable to allocate sampled employees’ supervisors, clerical and support staffs, based on results of sampled employees NEW: 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!!

ADDENDUM SECTION D: Record Keeping RECORDS AND REVIEWS ADDENDUM SECTION D: Record Keeping CFR 200.333, 200.335 Statute of Limitations 3-5 years State Policy Agency Policy

Record Keeping Procurement Documentation Documentation must be maintained for each step in the procurement process to sufficiently detail the history of the procurement. This documentation includes, but is not limited to, the rationale for the methods of procurement, independent estimates, cost/price analysis, solicitations, ids, proposals, justifications, profits, bidder list, approvals, contracts, etc. (200.318)(i)

Record Keeping Procurement Documentation At a minimum, all procurement records must be retained for three year after final disposition of the item procured. If any litigation, audit, or claim is initiated involving the item procured during the three-year retention period, the procurement records must be retained until resolution of all issues and final action is taken or until the end of the three-year retention period; whichever is later. For example, the retention period for procurement documentation on a five-year lease starts at the end of the lease, not from the date the lease was procured. (CFR 200.333)

Record Keeping Methods for collection, transmission and storage of information CFR 200.335 NEW: When original records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided they: Are subject to periodic quality control reviews, Provide reasonable safeguards against alteration; and Remain readable.