Federal Reporting -Time & Effort-

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1 Federal Reporting -Time & Effort- Terry Harless, CPA Executive Director Internal Operations Who and Why? Any employee paid from federal funds. Serves as a receipt for federal funds spent. Why is T&E typically problematic? A large percentage of federal funds are used for staffing Staff turnover Complexity Lack of communication No one likes to do it The Great GASB Conference 1

2 Requirements and Guidance Primarily OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments Attachment B, Selected Items of Cost, Item 11, compensation for personnel services Guidance - OMB Circulars A-21 Cost Principles for Educational Insti A-87 Cost Principles for State, Local and Indian Tribal Govt s A-110 Uniform Admin Requirement for Grants and Agreements w Higher Ed, Hospitals & Non-Profits A-122 Cost Principles for Non-Profit Orgs ASMB C-10 Guide for State, Local and Indian Tribal Govt s EDGAR Memos from federal contacts Two Types of Documentation Employees who work solely on a single federal cost objective complete semi-annual certifications Employees who work on more than one cost objective complete monthly Personnel Activity Reports (PARS) The Great GASB Conference 2

3 Single Cost Objective (semi-annual documentation) Example I worked exclusively for a single federal program (no set-asides) Example A federal program and its state/local match Example A school-wide program Multiple Cost Objective (monthly PAR documentation) Example A federal program with set-asides Example Spends time on two different programs Semi-Annual Certification Statement that an employee worked solely on activities related to a single cost objective Completed every six months Signed by employee (per A-87) but highly recommend signature by supervisor too The Great GASB Conference 3

4 WV Dept. Of Education Time and Effort Documentation Semi-Annual Certification In accordance with federal guidelines, when employees work solely on a single federal award or cost objective, charges for the employee's salary and wages must be supported by a certification signed by an employee or supervisory official having first hand knowledge of the work performed by the employee. I hereby cerfify that for the period of January 1, 2010 through June 30, 2010, I worked soley on the single cost objective of: Title I Part B (example) Employee Printed Name Title Employee Signature Date Supervisor Printed Name Title Supervisor Signature Date PAR Documentation (multiple cost objectives) Accounts for total time and activity Prepared and signed at least monthly Reflects actual work performed (not budgeted) Should have supporting documentation (examples-class schedule, number of students, number of minutes) WV Department of Education Daily Time Record Month/Year: January/ Employee: Position: Program(s): Week 1 Week 2 Hours Worked Sick Hours Annual Hours Total Hours Worked Sick Hours Annual Hours Total Monday Monday Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Tuesday Tuesday Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Wednesday Wednesday Grant Grant Grant Grant Grant Grant Grant Grant Grant Grant Thursday Thursday Grant Grant Grant Grant The Great GASB Conference 4

5 Monthly Grand Total Hours Worked Sick Hours Annual Hours Total #REF! #REF! Grant #REF! #REF! Grant #REF! #REF! #REF! #REF! Grant #REF! #REF! #REF! #REF! Grant #REF! #REF! #REF! #REF! Grant #REF! #REF! #REF! #REF! Total #REF! #REF! #REF! #REF! Employee's Printed Name and Title Employee's Signature Date I certify that this report represents a true recording of effort expended for the period indicated and that I have full knowledge of those activities. Supervisor's Printed Name and Title Supervisor's Signature Date WV Department of Education Quarterly Time Record 1st Quarter (January - March) Year Employee : Position: Program(s): January Grand Total February Grand Total Hours Worked Sick Hours Annual Hours Total Hours Worked Sick Hours Annual Hours Total Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Total #REF! #REF! #REF! #REF! Total March Grand Total 1st Quarter Grand Total Hours Worked Sick Hours Annual Hours Total Hours Worked Sick Hours Annual Hours Total Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Grant Grant #REF! #REF! #REF! #REF! Total Total #REF! #REF! #REF! #REF! Employee's Printed Name and Title Employee's Signature Date I certify that this report represents a true recording of effort expended for the period indicated and that I have full knowledge of those activities. Supervisor's Printed Name and Title Supervisor's Signature Date PAR Reconciliations Assumed vs actual must be compared quarterly If the difference is 10% or more, adjustments must be made If the difference is less than 10%, no action is required until year end BUT at year end, adjustments must be made to reflect actual time spent The Great GASB Conference 5

6 The Philadelphia Story - (8 th largest LEA in nation) $138 million in FY06 federal grant funds were either unallowable or inadequately supported 2 ½ year audit Most Significant Finding - Time & Effort $123 million of the $138 million (90%) Philadelphia Defense - Attendance sheet combined with employee job description or classroom assignment is credible alternative documentation The Great GASB Conference 6

7 OIG Response - We disagree Attendance sheets show only the amount of time worked, not the actual activities performed Employees did not always fill them out Supervisors did not always approve them Job descriptions are not adequate supporting documentation because they only include tasks that employees are supposed to perform, not actual time related to tasks Job descriptions did not exist for all positions paid by grant funds Final Report ED-OIG/A03H0010 Time and Effort Certifications We disagree that the TPERs combined with either a staff listing, classroom assignment, or job description provides accurate and adequate supporting documentation of an employee s activities. TPERs document the hours an employee works and show only the amount of time worked, not the actual activity/activities performed. Furthermore, we could not rely on the TPERs because during our audit we noted that PSD did not enforce its own TPER sign-out policy. Therefore, it could not be determined how much time the employee actually worked. Another issue we noted with the TPERs was that they are not regularly approved by managers. As stated in the report (see Finding No. 1, C), we reviewed 26 TPERs and found that 23 did not have an employee sign-out time for all employees listed on the TPER and 14 were not manually approved by the appropriate supervisor. Also, PSD was not able to locate all the TPERs needed for our salary sample. Therefore, TPERs may not be an accurate reflection of actual time worked, verified by appropriate personnel or properly maintained. Further OIG Response - PARS prepared for positions funded by multiple funding sources were completed semi-annually, not monthly as required by A-87 The Great GASB Conference 7

8 T&E FAQ s Q1. Who should sign PARS? A2. A-87 requires employee but both employee AND supervisor is highly recommended Q2. How do I submit 100% of my time when I only work three days a week? A2. If an employee works three days a week, then 60% employed is 100% of the employee s time Q3. Can I use a substitute system? A3. Possibly, but not recommended and must have prior approval T&E FAQ s Q4. What about supplemental contracts, stipends, and overtime? A4. Give each separate consideration Q5. Can superintendents and principals salaries be charged to federal programs? A5. Usually not. Would require good documentation. Probable supplant issue. A6. I am 100% committed to a program but I am occasionally asked a non-program question. And what about time spent at the departmental staff meeting? A6. If a brief amount of time, it is considered de minumus and does not need captured T&E FAQ s Q7.The allocation that my district gets for IDEA Part B does not cover all the costs of the teacher and I am forced to use local (general) funds to fully fund the position. Does this teacher have to complete time and effort documentation because she is paid from IDEA Part B and the general fund, even though the teacher spends the entire time working on special education? A7. No. A semi-annual certification may be completed because the teacher is working on a single cost objective, special education program. The teacher is working within the confines of one program and does not deviate from that objective. Q8. My duties always match my funding. So I don t need to make adjustments, right? A8. Really? Red flag to auditors The Great GASB Conference 8

9 A Word About Terminal Leave Terminal leave costs are not allowable as direct charges to federal awards Terminal leave costs include leave payouts and subsequent employer-paid health care premiums Terminal leave costs may be utilized as an indirect cost though if trackable Indirect, 7.3% Direct, 92.7% The Great GASB Conference 9