Time & Effort and Grants Management
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Transcript Time & Effort and Grants Management
Pennsylvania Association of
Community Health Centers
Time & Effort Reporting
Presented by
David Fields, CPA, Senior Manager
October 9, 2013
1 // experience perspective
HEADLINE ISSUE – TIME & EFFORT REPORTING
Significant buzz surrounding cost principles &
allowable cost rules & time & effort reporting
What have you heard?
What are your thoughts regarding issues?
Is room for improvement & if so
most significant areas?
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what are
HEADLINE ISSUE – TIME & EFFORT REPORTING
OIG audits of CHCs
New era of accountability – phrase spoken with
ARRA bill
Seeing fruits of change
Accountability, not new rules
HRSA scrutinized by OIG
OIG audits of CHCs
Significant questioned costs
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WHY ARE AUDITORS CONCERNED?
The risk that
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An “unallowable” cost is paid for with federal grant dollars
Costs charged to the grant are not properly supported
Unreasonable costs are incurred
A CHC expense is charged to wrong federal grant or wrong
amount is allocated
OIG AUDIT TIME & EFFORT REPORTING FINDING
Pursuant to 2 CFR pt. 230, Appendix B, §§ (8)(m)(1) &
(8)(m)(2)(a), the distribution of salaries and wages to
awards must be supported by personnel activity
reports. The reports must reflect an after-the-fact
determination of the actual activity of each
employee. Budget estimates (i.e., estimates
determined before the services are performed) do
not qualify as support for charges to awards
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OIG AUDIT TIME & EFFORT REPORTING FINDING
Continued - Contrary to these Federal requirements,
CHC calculated NAP & IDS payroll costs on basis of
budget estimates & not on basis of actual time
employees worked on grant-approved activities
Specifically, in lieu of tracking actual time employees
worked on grant-approved activities, CHC multiplied
each employee’s salary & benefit cost by predetermined grant FTE allocation. Use of budget
estimates rather than actual costs could result in
improper allocation of Recovery Act grant funding
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OIG FINDINGS 2012 – TIME & EFFORT
Most common & frequent
Some six & seven-figure questioned costs
Examples
Did not work outside of normal hours – IDS
Salaries not supported by personnel activity reports &
improperly allocated
$87,000, $700,000, $785,000, $1.6m, $3m (part of $3m on
next page), $5.2m
No time & attendance approval – $120,000
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OIG FINDINGS 2012
Documentation of expenditures
No separate system to track expenditures
Multiple instance exceeding $3m, $2m, $2m & $350,000
More than half of the 18 reports in 2012 had some
finding
Expected new PIN draft to remind, clarify & address
documentation of & cost principles for CHCs
It did not address time & effort reporting
Why not?
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BLAME GAME – CHC EXCUSES
“No one told me”
Auditor, HRSA site
visit, HRSA grant or
project officer
“No one else is
doing it either…”
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BLAME GAME – CHC EXCUSES
“We take care of indigent population in our
community”
Bad Debt & Sliding Fee more than grant
Grant funds were used for grant purposes
Response from OIG
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WHAT ARE WE GOING TO DO?
Take it seriously
Knowledge is power – understand regulations
Review policies
Reconsider processes
Accept this as a cost of doing business, but adjust as
efficiently & painlessly as possible
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8. COMPENSATION FOR PERSONAL SERVICES
Definition – includes all compensation paid currently
or accrued by organization for services of employees
rendered during the period of award
Fringe, overtime, retirement, bonus, etc.
It must be reasonable, conform with established
policies & be applied consistently
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8. COMPENSATION FOR PERSONAL SERVICES
Costs unallowable under other paragraphs of this
appendix shall not be allowable under this paragraph
just because it is personal compensation (e)
Nonallowable costs addressed in other areas of appendix B
are not allowable just because you call them
compensation
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8. COMPENSATION FOR PERSONAL SERVICES
Overtime, shift premiums, etc., are only allowable with
awarding agency approval unless (f)
Necessary due to emergencies
Indirect functions – admin., maint., & accounting
Continuous nature of job & cannot be reasonably
interrupted or otherwise completed
When lower federal costs to federal government will result
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8. COMPENSATION FOR PERSONAL SERVICES
Fringe benefits are permitted as long as allocated
proportionately to relative amount of time or effort
actually devoted to each cost objective (g)
Pension costs (i) as long as they meet the reasonable, fair &
consistent rules
Personal use automobiles are unallowable fringe
benefit cost, direct or indirect (h)
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8. COMPENSATION FOR PERSONAL SERVICES
Incentive compensation is permissible under criteria
mentioned (j)
Severance pay is only allowable if it is required by law,
employer/employee agreement, established policy
creating an implied agreement or circumstances of
particular employment (k)
Two categories – see terms
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8. SUPPORT OF SALARIES & WAGES (M)
Time & effort reporting
Maintained for all staff members whose compensation is
charged in whole or in part directly to awards or if needed
to facilitate determination of indirect cost rate (2)
Includes hourly & salary
Uses term “personnel activity report”
See required elements on PAR slide
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8. SUPPORT OF SALARIES & WAGES (M)
How is overtime handled?
Charges for salaries & wages of nonexempt employees, in
addition to other supporting documentation, must also be
supported by records indicating total number of hours
worked each day (3)
• e.g., Hours worked by hourly employees must be
captured & allocated
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Know the rules...
Documentation is key!
NO TIME AND EFFORT REPORTING GUIDANCE
Anticipated PIN would address
Lack of explanation implies there will be no relief
Response to PIN has requested guidance on applying
time and effort reporting in a CHC
The OIG has been very critical of the lack of adequate
time and effort reporting in the industry
Hope? – OMB is working on “Super Circular”
20 // experience perspective
PERSONNEL ACTIVITY REPORTS (PARS)
After the fact
Actual
Not budget
Total activity
Signed as accurate
Employee or
Supervisor with firsthand knowledge
Prepared monthly
Coincide with at least one pay period
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MyTown Community Health Center
Personnel Activity Report
Employee Name: Dr. John Smith
Date
Adult Med
HIV
IDS
Admin
Total
Monday
5/2
6
2
8
Tuesday
5/3
6
2
8
Wednesday
5/4
6
2
8
Thursday
5/5
8
Friday
5/6
4
Saturday
5/7
Monday
5/9
6
2
8
Tuesday
5/10
6
2
8
Wednesday
5/11
4
Thursday
5/12
8
Friday
5/13
4
Saturday
5/14
Total
8
4
8
0
4
8
4
4
34
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14
8
4
8
80
PRACTICAL THOUGHTS
The rules are the same, but the approach will vary
based on facts & circumstances
What is your risk profile? Variables to consider:
Out of scope services
Indirect cost rate
How many federal grants
Size of federal grants relative to budget
Others
23 // experience perspective
FINAL THOUGHTS
What are my risks?
Do I have policies in place?
Are existing systems/accounts adequate?
Establish an action plan & execute soon
THANK YOU
Please feel free to contact
David Fields
[email protected]
417.865.8701
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