BABY YOU CAN DRIVE MY CAR

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Kathryn Osborne
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1 BABY YOU CAN DRIVE MY CAR JUST NOT TO AND FROM THE OFFICE THA Annual Conference CLAIRE E. RUSS, PHM August 2016 MANAGER, TRAINER

2 Please Turn off Cell Phone Ringers Thank You! 2

3 SUPERCIRCULAR Cost Allocation & eligible costs 3

4 Cost principle changes Formerly Circulars A-21, A-87, and A-122 4

5 What is the Super Circular? OMB Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Supersedes eight OMB Circulars A-21, A-50, A-87, A-89, A-102, A-110, A-122, A-133 Effective December 26, 2013 Six months for Federal agencies 12 months for state agencies 5

6 Objectives of the Super Circular Eliminate duplicating and/or conflicting guidance Focus on performance over compliance Provide consistent treatment of cost(s) Limit allowable costs Standardize business processes Increase oversight Increase audit requirements on risk, waste and fraud 6

7 How will this affect your PHA? Two main areas: 1. Cost principles related to agency expenditures 2. Audit requirements regarding the necessary extent and scope of review 7

8 Cost principle changes Formerly Circulars A-21, A-87, and A-122 8

9 Indirect Costs Commonly required when requesting grants Previously, non-federal entities had to establish a negotiated indirect cost rate This created an administrative barrier to Federal financial assistance 9

Direct administrative costs Administrative costs can be charged directly when there is prior approval specific to an award Capital Fund 1410 HCV Admin

10 Direct administrative costs Administrative costs can be charged directly when there is prior approval specific to an award Capital Fund 1410 HCV Admin Fees Updated to include computers! Services must be: Integral to project or activity Specific individuals identified Within the budget and scope for award 10

Prior written approval Details when Authority should seek prior written approval for reasonableness and allocation of unusual costs in advance

11 Prior written approval Details when Authority should seek prior written approval for reasonableness and allocation of unusual costs in advance Formerly: Up to specific Agency to determine when prior approval should be requested Currently: Detailed list for costs that should be considered 11

12 Common expenses addressed Cost sharing Compensation/benefits Equipment/capital Entertainment Fines, penalties or settlements Personal use of goods or services Membership subscriptions and professional costs Selling and marketing Travel 12

13 Compensation and benefits Reasonable for the services rendered Consistent with purpose of the entity Similar to pay for similar work for non-federal entities and open labor market 13

Compensation and benefits Unallowable costs, ceilings and bonuses Unallowable costs can not be used as compensation Employees are subject to compensation

14 Compensation and benefits Unallowable costs, ceilings and bonuses Unallowable costs can not be used as compensation Employees are subject to compensation ceilings instituted by statutes Bonuses and incentive pay allowed Must be established prior to employment/contract agreement Not be a distribution of profits 14

15 Compensation and benefits Back pay Back pay as a retroactive adjustment to past wages is not allowed unless: Employee underpaid for work performed, may need a settlement, order or court decree Change in union labor agreements during negotiations 15

16 Equipment and capital costs Costs for equipment, buildings and land must have approval from Federal awarding agency Capital Fund Annual and Five-Year Plan Costs that substantially improve the value of existing capital assets must also receive approval Depreciated at the time of implementation Capital Fund Assets? Inventory taken every two years 16

17 Entertainment Costs Costs of entertainment are not allowed and include: Amusement activities Social activities Diversion activities Can be allowed if: They have a programmatic purpose and Are authorized by Federal budget approval or in writing prior to expense 17

18 Fines, penalties and damages Not allowable unless the result of complying with provisions of Federal award or with written approval from agency 18

19 Personal use of goods or services Personal use of good(s) or services is unallowable regardless of being reported as taxable income What about cars, cell phones and computers? 19

20 Personal use of automobile Circular is specific: Portion of automobile costs furnished by the entity that relates to personal use by employees (including transportation to and from work) is unallowable as a fringe benefit or indirect cost Unclear Situations: Maintenance person who is on call 24/7 Automobile expenses paid by the non-federal funds How are auditors handling this? Additional guidance from HUD requested 20

Personal use of laptops and cell phones What to avoid While the circular is clear that laptops and cell phones are not to be provided for personal use there are some best practices to avoid issues:

21 Personal use of laptops and cell phones What to avoid While the circular is clear that laptops and cell phones are not to be provided for personal use there are some best practices to avoid issues: Cell phone or laptop as a form of compensation Written agreement allowing use of items for personal use Excess usage of items for personal use (cell data, games, etc.) Having company provided item be only one 21

Personal use of laptops and cell phones Overlap Certain shared functions such as receiving a personal call or email

22 Personal use of laptops and cell phones Overlap Certain shared functions such as receiving a personal call or is to be expected Focus is on costs and purpose Not like taxes where % is used either allowable or unallowable costs 22

23 Memberships and subscriptions Membership in business, technical, and professional organizations are allowable Civic or community organization allowable with prior approval Social memberships such as country clubs are not allowable Lobbying organizations also not allowable 23

Selling and marketing 200.467~ Marketing costs generally not allowed except as direct costs with prior approval by Federal awarding agency 200.

24 Selling and marketing ~ Marketing costs generally not allowed except as direct costs with prior approval by Federal awarding agency ~ Costs of advertising and other outreach costs are allowed if necessary to meet the requirements of federal award Considered necessary for Public Housing availability 24

25 Travel costs 25

Travel costs Travel costs encompass expenses related to transportation, lodging, subsistence and related items by employees in travel status on official business of entity

26 Travel costs Travel costs encompass expenses related to transportation, lodging, subsistence and related items by employees in travel status on official business of entity Actual costs basis Per diem basis Combination method (for whole trip) Overall charges must be consistent with expectations and the entity s written travel reimbursement policies 26

27 Travel costs Lodging and subsistence Must be reasonable and not in excess of guidance in travel policy Direct award charges must be approved with written documentation to support Participation of individual must be logical and related to Federal award 27

28 Travel costs Dependents Covering transportation, lodging or subsistence for dependents is not allowed Travel for spouses, friends and others must be paid by individual If period is over six months and approval received it can be covered (temporary relocation costs) 28

Default Travel Rates In the absence of an official approved written travel policy by the Agency, rates under 5. U.S.C. 5701-11 or by the Administrator of General Services will apply The U.S. General Services Administration provides rates on website http://www.

29 Default Travel Rates In the absence of an official approved written travel policy by the Agency, rates under 5. U.S.C or by the Administrator of General Services will apply The U.S. General Services Administration provides rates on website ory/ Location for travel is entered and lodging and meals/incidentals daily rates are provided 29

30 Travel Costs GSA website 30

31 31

32 Procurement 32

33 Procurement Majority of original procurement guidance from OMB Circular A-102 OMB saw conflicting language regarding procurement policies in A-102 compared to A-133 Requested feedback from Council on Financial Assistance Reform (COFAR) and found that A-102 language was clearer and better able to mitigate risk of waste, fraud and abuse Additional comments from COFAR resulted in modifications 33

34 Procurement hierarchy OMB Super Circular Old HUD CFR Part 85 State Law HUD Procurement Handbook PHA policy Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards aka Super Circular (issued December 26, 2013) Administrative Requirements for Grants & Cooperative Agreements to State, Local & Federally Recognized Indian Tribal Gov ts State established purchasing thresholds Most recently issued in 2007 Guides agencies in establishing policies Often mirrors HUD handbook 34

General procurement standards Policies and oversight Must adhere to entity s own documented procurement process which reflects applicable state/local laws HUD

35 General procurement standards Policies and oversight Must adhere to entity s own documented procurement process which reflects applicable state/local laws HUD increased sealed bid requirements to $150,000 Must maintain oversight to ensure proper performance of work Previously required to establish system for performance 35

Procurement Conflicts of interest Written standards regarding conflict of interests No employee, officer or agent may have decision power if a conflict

36 Procurement Conflicts of interest Written standards regarding conflict of interests No employee, officer or agent may have decision power if a conflict exists Family, friend, favors or other benefits considered conflict Standards may be set for unsubstantial and unsolicited items Certain items deemed de minimus 36

General procurement standards Efficiency Avoid acquisition of unnecessary or duplicative items Promote shared services as much as possible

37 General procurement standards Efficiency Avoid acquisition of unnecessary or duplicative items Promote shared services as much as possible Similar vendors that could be filled for multiple needs Use existing or surplus items prior to new equipment Careful with crossing programs 37

General procurement standards Responsible vendors, documentation and claims Must be responsible and not suspended or debarred vendor Documentation

38 General procurement standards Responsible vendors, documentation and claims Must be responsible and not suspended or debarred vendor Documentation on history or procurement process must be maintained Common audit issue! Also include detailed rationale for choice Resolve any conflicts or claims 38

Competition in procurement Full and open competition is required in a way that does not provide any advantages Unreasonable requirements for firms Unnecessary experience or excessing bonding

39 Competition in procurement Full and open competition is required in a way that does not provide any advantages Unreasonable requirements for firms Unnecessary experience or excessing bonding Noncompetitive pricing practices between affiliated companies Specifying a Brand Name Any arbitrary action No geographical preferences Clearly list all evaluation factors and allow qualifying of bids 39

Acquisition Threshold $150,000 unless needed to support a contingency operating or to facilitate

40 Procurement Methods Small purchases Micro-purchase Under $3,000 Must be a reasonable price Soliciting competitive bids not required Small Purchases Less than determined Simplified Acquisition Threshold $150,000 unless needed to support a contingency operating or to facilitate defense from nuclear, chemical or biological attack Obtain rates from adequate number of solicited sources 40

Procurement Methods Sealed bids Sealed Bids Formal advertising Administer invitations to bid Preferred method for construction Adequate

41 Procurement Methods Sealed bids Sealed Bids Formal advertising Administer invitations to bid Preferred method for construction Adequate number of suppliers solicited Generally more than two responders preferred Publicly opened and awarded Awarded to lowest responsible bidder 41

42 Procurement Methods Noncompetitive Only available from a single source Existing emergency does not allow for competitive solicitations Deadlines or damages After solicitation of a number of sources, competition determined inadequate Must document process and conclusion 42

43 Audit Changes 43

44 What is a Single Audit? The Single Audit Act (also known as OMB-A-133) started in 1990 Extended audit requirements from financial statements to include: Management and operations Internal Control Systems Compliance with Federal Assistance award stipulations 44

Planning for a single audit Prior to Update, entity with over $500,000 of Federal awards were required to have a single audit New threshold is $750,000 Relieve approximately

45 Planning for a single audit Prior to Update, entity with over $500,000 of Federal awards were required to have a single audit New threshold is $750,000 Relieve approximately 5,000 agencies Effective for fiscal years beginning after December 26, 2014 December 31, 2015 will be the first year-end for PHAs that this applies to What exactly does this mean? 45

46 Questions? Thank you for your time 46

The Procurement Paw. Presented by: Clint Everhart, CPA Senior Manager

The Procurement Paw. Presented by: Clint Everhart, CPA Senior Manager The Procurement Paw Presented by: Clint Everhart, CPA Senior Manager Learning Objectives: Explain each of the five purchase types in the Uniform Guidance (Sections 200.317-.326) Explain the written policies