Time and Effort The Good, the Bad, the Paperwork

Time and Effort The Good, the Bad, the Paperwork
Tiffany Kesslar, Esq. and Emily Fridman, Esq.

What is Time and Effort Reporting?
Documents time spent on any activity More than HR timekeeping! Not just about source of funds! It’s about the effort of the employee! Brustein & Manasevit, PLLC © All rights reserved.

What is the point of time and effort reporting?
Allocability Any employee funded by federal grants must maintain documentation showing that their time is allocable to a federal program. 2 CFR (a) That documentation must be based on records accurately reflect the work performed. 2 CFR (i) Brustein & Manasevit, PLLC © All rights reserved.

Recent Audit Findings Northeastern University $2.7 million settlement to cover 9 years of mishandling federal research funds - including paying salaries without required documentation Jackson State University $1.17 million settlement over time and effort reporting Brustein & Manasevit, PLLC © All rights reserved.

Detroit Public Schools
$47 million Time and Effort Finding (Audit July 2008) Personnel costs were not supported by adequate and timely time and effort certifications Follow-up Audit (May 2018) During fiscal years 2012, 2013, and 2015, Detroit disclosed findings of incorrect or missing time and effort documentation. Internal policy that supervisors had to approve timesheets. Internal policy was not followed for 22 out of over 3,000 employees. Corrective Action: Update its policies and procedures and information system controls to ensure that supervisory approval for all employees’ timesheets is documented before the employees are paid. Brustein & Manasevit, PLLC © All rights reserved.

Kennesaw State University
Extra Compensation PI required to work 50% in first two award years; maintained full course load 2 CFR (h)(2) Extra compensation must be authorized by awarding agency Exceeded Budgeted Amounts PI worked in excess of budgeted amount in subsequent award years; refused to file time and effort reports Other employees worked beyond percentages included in the budget Missing Supporting Documentation Could not provide records for salary expenses totaling $200k Brustein & Manasevit, PLLC © All rights reserved.

University of California - Riverside
Background: Payroll Certification System Pilot Time and effort is project based Award specific certification verses personnel certification. Relies on PI to certify all salaries are reasonable. PI signs off on one certification for each award. 3 awards, 30 workers. Now certify 3 documents for all employees working under each award. Brustein & Manasevit, PLLC © All rights reserved.

University of California – Riverside (cont.)
“The University’s prior effort-reporting system did not always provide the information needed to confirm that payroll costs had been appropriately allocated to Federal awards, and its current pilot PCS provided less accountability over payroll charges[.]” No suitable verification that charges were reasonable Salary costs charged might not have represented actual costs Unsupported adjustments made after-the-fact No documentation that charges did not exceed 100% of an employee’s salary Recording unsupported payroll transactions Prior reporting system better-verified salary charges Response: Despite OIG’s findings, UCR will continue to use the Payroll Certification System to charge salaries under UGG Brustein & Manasevit, PLLC © All rights reserved.

Personal Expenses Under (i)(1), these records MUST: Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable and allocable; Be incorporated into official records; Reasonably reflect total activity for which employee is compensated; Encompass all activities (federal and non-federal); Comply with established accounting polices and practices; and Support distribution among specific activities or cost objectives. Brustein & Manasevit, PLLC © All rights reserved.

Retains Capturing Time By Cost Objective
What is a cost objective? Activities Mandated set-asides Mandatory minimums Anything that requires separate cost accounting Examples (vii): More than one Federal award, a Federal award and a non- Federal award, an indirect and direct cost activity, etc. 10% administrative set-aside, 1% mandatory minimum, etc. Brustein & Manasevit, PLLC © All rights reserved.

How Many Cost Objectives Do You Work On?
I am the ESSA Title I professional development coordinator. My boss just added parental involvement coordinator to my job duties (lucky me!). Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

I am the ESSA Title I District Administrator who oversees the public and private school Title I, A program. Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

I work on administration of the Perkins program and am paid by the Perkins grant and by the required state match. Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

As the Perkins Director, I oversee the three CTE programs/pathways offered at the college. Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

My Principal Investigator administers the Community Reading Grant between our College and the local school districts. We have 3 grants and she administers all of them, but it’s the same work. Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

I work in a schoolwide school that consolidates federal, State, and local funds, and I am paid with Title I Part A, and Title II admin funds. Single Cost Objective Multiple Cost Objective Not a Cost Objective Brustein & Manasevit, PLLC © All rights reserved.

Use of Budget Estimates 200.430(i)(1)(viii)
Budget estimates alone do not qualify as support for charges to Federal awards. May be used for interim accounting purposes if: Produces reasonable approximations Significant 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 Brustein & Manasevit, PLLC © All rights reserved.

Flexibility for IHEs “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.” (i)(1)(x) Brustein & Manasevit, PLLC © All rights reserved.

How do we allocate costs? 200.405
Any cost allocable to a particular Federal award may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. =Cost Shifting! But, still can shift costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal award. Brustein & Manasevit, PLLC © All rights reserved.

What do we do when a cost benefits two or more projects?
Cost should be allocated to the projects based on proportional benefit. If you can determine this without undue effort or cost If proportions cannot be determined, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Brustein & Manasevit, PLLC © All rights reserved.

Percentages 200.430(i)(1)(ix)
Because practices vary as to the activity constituting a full workload, records may reflect categories of activities expressed as a percentage distribution of total activities. Brustein & Manasevit, PLLC © All rights reserved.

Do Time and Effort Policies and Procedures Have to Be In Writing?
YES!!!! Written policies and procedures are essential to implementing an effective time reporting system. – Draft Cost Allocation Guide Brustein & Manasevit, PLLC © All rights reserved.

ED Cost Allocation Guide Draft
Develop instructions for: The completion of time and attendance reporting; The approval cycle that is required; The processing of personnel charges to federal awards; and The internal review process that will be established to ensure effective internal control over the Federal award. Generally, the information should be in sufficient detail to permit an understanding of how the system will operate from the point the time is expended, to the point the time is recorded in the accounting records and charged to federal awards. Brustein & Manasevit, PLLC © All rights reserved.

Will Prior OMB Circular Rules Comply with UGG?
Yes! If your agency had a compliant system under A-21, A-87, or A-122 that should meet the requirements under the UGG. Brustein & Manasevit, PLLC © All rights reserved.

The Old Time and Effort Rule OMB Circulars A-21, A-87, A-122
Brustein & Manasevit, PLLC © All rights reserved. 28

Prior OMB A-87 Rule Semi-Annual Certifications
Personnel Activity Reports (PARs) 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 Brustein & Manasevit, PLLC © All rights reserved.

Prior OMB A-122 Rule Personnel Activity Reports (PARs) After the fact
Account for total activity Signed by employee or supervisor with first hand knowledge Prepared at least monthly and coincide with one or more pay periods Brustein & Manasevit, PLLC © All rights reserved.

Prior OMB A-21 Rule Plan Confirmation Based on budgeted, planned, or assigned work activity Updated to reflect any significant changes in work distribution Includes annual verification signed by PI, employee or other responsible official(s) After-the-fact Activity Report (similar to A-87 requirements) At least every six months for professional and professorial staff Monthly for all other staff Multiple Confirmation Records Most flexibility offered, signed report once every six months (at least) Brustein & Manasevit, PLLC © All rights reserved.

Can you change your current time and effort practices from the OMB Circular rules?
Yes! Any new system would be compliant assuming it meets the new 6 requirements.

UGG Flexibility Substitute Systems (i)(5) Must be approved by cognizant agency for indirect cost. No longer applies to nonprofits. Alternative Proposals (i)(6) Cognizant agencies for indirect costs are encouraged to accept alternative proposals based on outcomes and milestones for program performance. Blended Funding (i)(7) 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. Brustein & Manasevit, PLLC © All rights reserved.

AEFFA Proposed T&E Flexibility
The Association of Education Federal Finance Administrator's (AEFFA) Proposals for New Time and Effort Systems (June 15, 2016) Certification of Actual Time Worked Blanket Certification Official Record of Employee Activities Electronic Submissions/Approvals Roll-up Time and Effort Tracking Allocation of Effort Using a Basis Other than Time Located at: Brustein & Manasevit, PLLC © All rights reserved.

Reconciliation 200.430(i)(1)(viii)(C)
All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Brustein & Manasevit, PLLC © All rights reserved.

Compliance (i)(2) For records which meet the standards, the non-federal entity will not be required to provide additional support or documentation for the work performed. Brustein & Manasevit, PLLC © All rights reserved.

Noncompliance (i)(8) For a non-Federal entity where the records do not meet these standards: USED may require personnel activity reports (PARs), including prescribed certifications or equivalent documentation that support the records as required in this section. PARs are not defined!! Brustein & Manasevit, PLLC © All rights reserved.

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. Brustein & Manasevit, PLLC © All rights reserved.

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