Preparing your AAA Area Plan Budget & Cost Allocation Plan. Fiscal Track AM Workshop Session May 29, :30 AM - Noon

Transcription

1 Preparing your AAA Area Plan Budget & Cost Allocation Plan Fiscal Track AM Workshop Session May 29, :30 AM - Noon 1

2 Why is Cost Allocation Important? What are the State and Federal requirements governing the funding received? What are allowable or un-allowed costs? What is a Cost Allocation Plan? What is the difference between Direct and Indirect Costs? How does this impact my AAA? 2

3 Learning Objectives Basic Terminology Basic Guidelines for Costs Direct and Indirect Costs Cost Allocation Overview Cost Allocation Plan and its Relationship to the Area Plan Budget Reporting of Staff Time and Effort New Super Circular - COFAR Questions 3

4 Basic Terminology Cost Objective: A particular award, contract, grant, project, service or other activity of an organization for which cost data are desired and for which a provision is made to accumulate and measure the cost. Direct Cost: Costs that can be identified specifically with a particular final cost objective. Indirect Cost: Cost incurred for a common purpose, benefiting more than one cost objective, and are not readily assignable to a specific cost objective. 4

5 Basic Terminology (continued) Allocation Base: The methodology or statistical measure by which indirect costs are distributed to other benefiting cost objectives. The method must be quantifiable. Example Full Time Equivalent (FTE) Staff or Occupied Square Footage Subrecipient: A legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided. Example The State of WA is the recipient of an award and the AAA is a subrecipient of a portion of the total award, subaward. 5

6 Basic Guidelines for Cost COSTS MUST BE ALLOWABLE Costs Must: Be reasonable and necessary for the performance of the award, Conform to any limitations or exclusion imposed, Be applied consistently with policies and procedures that apply uniformly to both federally-financed and other activities of the organization, Be in accordance with GAAP, Not be used to meet matching requirements of any other federally financed program, and Be adequately documented. 6

7 Basic Guidelines for Cost (cont.) COSTS MUST BE REASONABLE Costs Must: Be ordinary and necessary, Conform to sound business practices, Exercise prudence - Do costs exceed that which a prudent person would incur? and Not significantly deviate from the organization s established practices. 7

8 Basic Guidelines for Cost (cont.) COSTS MUST BE ALLOCABLE Costs Must: Be allocated in accordance with the relative benefits received, Be treated consistently with related like costs, and Not be shifted to other Federal awards to overcome funding deficiencies, or to avoid restriction by law or by terms of the award. 8

9 Direct and Indirect Costs Total Cost = Sum of the allowable direct costs and the allocable indirect costs less any applicable credits. Direct Costs Costs that can be identified specifically with a particular final cost objective. Indirect Costs Cost incurred for a common purpose, benefiting more than one cost objective, and are not readily assignable to a specific cost objective. 9

10 Cost Allocation Overview OMB Circular A-87 or 2 CFR Part 225 Applicable Sections: Attachment A General Principles for Determining Allowable Costs Attachment B Selected Items of Cost Attachment D Public Assistance Cost Allocation Plans 10

11 Cost Allocation Overview (cont.) A HELPFUL RESOURCE Implementation Guide for Office of Management and Budget Circular A-87 (AKA) ASMB C-10 Provides guidance for interpretation and implementation of OMB Circular A-87 11

12 Cost Allocation Overview (cont.) What is a Cost Allocation Plan? A process to determine the total cost of a cost objective. Achieved by distributing or apportioning costs to benefiting cost objectives. A quantifiable method that measures the usage of a service or the relative benefit received. 12

13 Cost Allocation Overview (cont.) What is the Purpose of a Cost Allocation Plan???? It is often the only way to determine the total cost of program operations. It allows an organization to ensure that it is recovering all allowable costs incurred by the organization. It can provide valuable management data to an organization regarding funding levels and time spent on activities. 13

14 Cost Allocation Overview (cont.) What is an Allocation Base? The methodology or statistical measure by which indirect costs are distributed to other benefiting cost objectives. The method must be quantifiable. Examples: Dollars Disbursed Number of FTE Staff Effort Case/Person Counts Number of Transactions/Contracts 14

15 Cost Allocation Overview (cont.) Is it permissible to use grant revenue or available federal grant or contract funds as an allocation base? 15

16 Cost Allocation Overview (cont.) Is it permissible to use grant revenue or available federal grant or contract funds as an allocation base? NO! Cost must be allocated on the basis of cost or expenditures incurred, not on funding received. 16

17 Cost Allocation EXAMPLE Payroll Processing Costs Consist of: Payroll Dept. Salaries & Benefits Payroll Dept. Overhead Rent (based upon square footage) Payroll Dept. Direct Costs Payroll Processing Fee 17

18 Cost Allocation EXAMPLE (cont.) Cost of Payroll Processing: Payroll Dept. Salaries & Benefits = $5,000 Payroll Dept. Rent (based upon sq. ft.) 200 (Sq. Ft used by PR dept.)/ 1,000 total is 20% Monthly Rent = 20% = $ 400 Payroll Dept. Direct Processing Fee = $ 600 Total Monthly Payroll Processing Cost = $ 6,000 18

19 Cost Allocation EXAMPLE (cont.) Allocating the $6,000 Payroll Processing Costs: Grant A has 10 FTE / 30 Total FTE = 34% Grant B has 15 FTE / 30 Total FTE = 50% Grant C has 5 FTE / 30 Total FTE =16% Total FTE 30 FTE Note the allocation base is Full Time Equivalents, (FTE). 19

20 Cost Allocation EXAMPLE (cont.) Allocating the $6,000 Payroll Processing Costs: Grant A 34% of $6,000 Total PR Cost $2,040 Grant B 50% of $6,000 Total PR Cost $3,000 Grant C 16% of $6,000 Total PR Cost $

21 Cost Allocation Overview (cont.) Cost incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect.??? Can contract management staff performing contract monitoring functions be direct charged to TXIX CSCM for TXIX contracts and to the Administrative Cost Pool for non-txix contracts? YES NO 21

22 How CAP & AP Budget Relate Annually AAAs are required to submit: A Written Cost Allocation Plan A Staffing Plan An Organizational Chart An Area Plan Budget Excel Workbook Summary tab Expenditures tab Direct Services Worksheet tabs Reconciliation tab 22

23 How CAP & AP Budget Relate (cont.) Comparisons are made between: The FTE listed in the Staffing Plan, The FTE listed in the Organizational Chart, The FTE listed in the FTE Breakout tab of the Area Plan Budget, and The FTE total summarized in the Reconciliation tab of the Area Plan Budget to ensure all report the same number of FTE. 23

24 How CAP & AP Budget Relate (cont.) A separate Direct Services Worksheet is expected for each Cost Pool and each Cost Objective (each labeled column in the direct charged section) identified on the FTE Breakout worksheet. 24

25 Staff FTE Breakout AREA AGENCIES ON AGING AREA PLAN BUDGET Staff Full Time Equivalent (FTE) Breakout AAA: Enter AAA Name BUDGET PERIOD: January 1 - December 31, 2014 FTE Distribution Cost Pools Direct Charge Position Title Total FTE Payroll Pool Enter Pool Name Non ADS Pool Subtotal Pools Grant A Grant B Grant C Non ADS Cost Center Subtotal Direct Charge Payroll Supervisor 1.00 ok Payroll Clerk 0.50 ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Staff ok Total FTEs

26 How CAP & AP Budget Relate (cont.) Each Direct Services worksheet should include the number of FTE and the related costs identified by funding. 26

27 How CAP & AP Budget Relate (cont.) AREA AGENCIES ON AGING AREA PLAN BUDGET AAA INDIVIDUAL DIRECT SERVICES WORKSHEET AAA: Enter AAA Name BUDGET PERIOD: January 1 - December 31, 2014 COST CENTER OR COST POOL: Full Time Equivalents: Total FTEs 0.00 OLDER AMERICAN'S ACT DSHS ALLOCATED Elder Core Svcs TXIX / Nurse Nurse Svcs Contract Matched State Kinship Senior Other Non - Title Title Title Title Title Abuse Title V Contract Chore Services Contracted Front by SCSA/ Family Caregiver Kinship Farmers ADS ADS TOTAL 3B 3C1 3C2 3D 3E Prevention NSIP SCSEP Management CMNS DDD With HCS Door Local SCSA Caregiver Support Navigator Market Funding (specify) Direct Services: 10 Salaries & Wages Personnel Benefits All Other Costs Interfund Pymnts for Service Total Direct Expenditures Percentage #DIV/0! #DIV/0! #DIV/0! FTE #DIV/0! #DIV/0! #DIV/0! #DIV/0! Funding ADS ADS/Non-ADS Breakout Section Non-ADS Total $ - $ - $ - Correct 27

28 How CAP & AP Budget Relate (cont.) The sum of the information reported on the Direct Services worksheets is summarized on the Reconciliation worksheet. All subcontracted expenditures are to be reported on the Reconciliation worksheet, by funding source. The total for each funding source then must equal the amounts reported on the Expenditure worksheet. 28

29 How CAP & AP Budget Relate (cont.) Full Time Equivalents: Total FTEs 0.00 OLDER AMERICAN'S ACT DSHS ALLOCATED Elder Core Svcs TXIX / Nurse Nurse Svcs Contract Matched State Kinship Senior Other Non - Non - Non - Title Title Title Title Title Abuse Title V Contract Chore Services Contracted Front by SCSA/ Family Caregiver Kinship Farmers ADS ADS ADS ADS TOTAL 3B 3C1 3C2 3D 3E Prevention NSIP SCSEP Managemen CMNS DDD With HCS Door Local SCSA Caregiver Support Navigator Market Funding (specify) (specify) (specify) Direct Services: 10 Salaries & Wages Personnel Benefits All Other Cost Interfund Pymnts for Service Total Direct Expenditures Total Subcontracted Expenditures Total Expenditures The Total Expenditures line shown above must equal the Grand Total line on the Expenditure/Revenue Detail By Funding Source worksheet. Percentage #DIV/0! #DIV/0! #DIV/0! FTE Funding ADS/Non-ADS Breakout Section ADS Non-ADS Total #DIV/0! #DIV/0! #DIV/0! $ - $ - $ - #DIV/0! Correct Reconciliation Grand Total Line from Expend/Rev Difference Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct If error amount is due to rounding, ignore error amount

30 How CAP & AP Budget Relate (cont.) The information submitted in the Area Plan Budget = Cost Allocation Plan 30

31 Salary and Wage Documentation Payroll Charges to awards for salaries and wages, whether treated as direct costs or indirect costs, will be based upon documented payrolls approved by a responsible official(s) of the organization. Personnel Activity Reports (PAR) Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages must be supported by a PAR or other approved substitute system. 31

32 Reporting of Staff Time & Effort Personnel Activity Reports (PAR): Must reflect an after-the-fact distribution of actual activity Must account for total compensated activity Must be prepared at least monthly and coincide with one or more pay periods Must be signed by the employee 32

33 Reporting of Staff Time & Effort (cont.) Other substitute systems for allocating salaries and wages include: Statistically Valid Random Moment Samples Statistically Valid Time Studies Case Counts Other quantifiable measures All substitute systems are subject to approval. 33

34 New Super Circular COFAR-Council on Financial Assistance Reform Side by Side Comparison If federal program statute or regulation differs from Super Circular, then statute/regulation governs. 34

35 New Super Circular (cont.) Effective Date December 26, 2014 Audit requirement will apply to audits of fiscal years beginning on or after December 26, Administrative requirements and cost principles will apply to new awards and to additional funding (funding increments) to existing awards made after December 26,

36 New Super Circular (cont.) Combines and Supersedes OMB Circulars: A-87 : Cost Principles State & Local Govts A-21 : Cost Principals Educational Institutions A-122: Cost Principals Nonprofit Organizations A-102: Administrative Rules State & Local Govts A-110: Administrative Rules IHE, Hospitals & Nonprofits A-133: Audit Requirements State, Local, and NP 36

37 New Super Circular (cont.) Noteworthy in regards to indirect costs is: Indirect Facilities & Administrative (F&A) Costs Federal acceptance of negotiated indirect cost rates New 10% de minimis rate 37

38 New Super Circular (cont.) Indirect (F&A) Costs (continued) Federal acceptance of approved indirect cost rate(s) Federal awarding agencies must accept approved negotiated indirect cost rates under (c)(1) unless a different rate is required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section. 38

39 New Super Circular (cont.) Indirect (F&A) Costs (continued) New 10 % de minimis rate (f)-any non-federal entity that has never received a negotiated indirect cost rate, except for those non- Federal entities described in Appendix VII to Part may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. 39

40 New Super Circular (cont.) Indirect (F&A) Costs (continued) New 10 % de minimis rate (cont.) (f) (cont.) if chosen, the non-federal entity must apply the 10% rate for all federal awards until the entity chooses to negotiate for an approved rate with their cognizant agency, which the non-federal entity may apply to do at any time. 40

41 New Super Circular (cont.) Indirect (F&A) Costs (continued) New 10 % de minimis rate (cont.) (f) (cont.) As described in Factors affecting allowability of costs, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. 41

42 New Super Circular (cont.) New 10 % de minimis rate (cont.) Modified Total Direct Costs (MTDC) is defined as all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and subawards and subcontracts up to the first $25,000 of each subaward or subcontract. MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward and subcontract in excess of $25,

43 New Super Circular (cont.) New 10 % de minimis rate (cont.) At this point more information and internal discussion is needed regarding how the de minimis rate would be implemented and applied. 43

44 QUESTIONS? 44