Staff Timekeeping

General Principles and Citations

IntroductionDirect vs. Indirect Costs

This training focuses on:osupport for direct costso Support for staff time and donated servicesDifferences between the circulars-some slight and some significant. Read and know the

OMB/CFR Requirements for your organization

General rule-be your toughest critic and ask the hard questions

o Ask yourself about the allowability of each item of expense or in-kind (donated) amount being reported-Go through the 10 criteria of cost allowability from the OMB Circulars.

o Ask what your basis is (from the OMB Circulars, your approved budget, and other requirements) to report the cost or match.

o Dont report the cost until you are able to answer these questions Your funder can help! Consult with your Program/Grants Officers or other appropriate staff.

Web References:

o Office of Management and Budget (OMB) Circulars:http://www.whitehouse/gov/omb/circularso Code of Federal Regulations:

http://www.americorps.gov/pdf/45CFR_chapterXXV.pdfHomework Assignment-Read the citations (and associated references) specific to your organization type related to staffing support in OMB Circulars and CFR.

Non-Profits:o OMB Cost Principles: A-122o OMB Uniform Administrative Requirements: A-110o CFR Uniform Administrative Requirements: 45 CFR 2543State and Local Government, Indian Tribes:

o OMB Cost Principles: A-122o OMB Uniform Administrative Requirements: A-102o CFR Uniform Administrative Requirements: 45 CFR 2541Educational Institutions:

o OMB Cost Principles: A-87o OMB Uniform Administrative Requirements: A-110o CFR Uniform Administrative Requirements: CFR 2543Non-ProfitsFor all employees whose compensation is charged in whole or in part directly to awards:From OMB Circular A-122, Attachment B, Section 8:

Unless a substitute system is approved by your cognizant Federal agency, the distribution of salaries and wages to awards must be supported by personnel activity reports. These reports must:

reflect an after the fact determination (dont use budget estimates)

account for the total activity for which an employee is compensated (not just the time attributable to a specific award)

be signed by the employee or responsible supervisory official having first hand knowledge of the activities performed by the employee

be prepared at least monthly and coincide with one or more pay periodsDonated Services:From OMB Circular A-122, Attachment B, Section 8:

(4) Salaries and wages of employees used in meeting cost sharing or matching requirements on awards must be supported in the same manner as salaries and wages claimed for reimbursement from awarding agencies.

From OMB Circular A-110, Subpart C, Section 23:

(d) Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.

(e) When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.

State, Local, and Indian Tribal Governments:From OMB Circular A-87, Attachment B, Section 8

Where employees are expected to work solely on a single Federal Award or cost objective:charges for their salaries and wages will be supported by periodic certifications that the employee worked solely on the program for the period of the certification

certification must be prepared at least semi-annuallycertification must be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee

Where employees work on multiple activities or cost objectives:A distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation unless a statistical sampling section or other substitute system

has been approved by the cognizant Federal agency

Personnel activity report is required when employees work on:

o More than one Federal awardo A Federal award and a non-Federal awardo An indirect cost activity and a direct cost activityo Two or more indirect activities which are allocated using different allocationbases, or

o An unallowable activity and a direct or indirect cost activity

Personnel Activity Report must meet the following standards:

o Must reflect an after the fact distribution of the actual activity of the employeeo Must account for the total activity for which the employee is compensatedo Must be prepared at least monthly and coincide with one or more pay periodso Must be signed by the employeeo Budget estimates or other distribution percentages determined before the servicesare performed do not qualify as support for charges to Federal Awards, but may

be used for interim accounting purposes providing:

The system establishing the estimates produces reasonable approximations

The percentages used are compared to actuals at least quarterly. Amounts reported must be adjusted when actuals do not equal the percentages used- adjustment may be performed annually if the quarterly comparisons show

the variance between actuals and percentages used to be less than 10 percent

The budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances.

Donated Services:From OMB Circular A-21, Att. B, Section 12

To the extent feasible, donated services will be supported by the same methods used by the governmental unit to support the allocability of regular personnel services.

From 45 CFR 2541.240

(c) Valuation of donated services -- (1) Volunteer services. Unpaid services provided to a grantee or subgrantee by individuals will be valued at rates consistent with those ordinarily paid for similar work in the grantee's or subgrantee's organization. If the grantee or subgrantee does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation.

(2) Employees of other organizations. When an employer other than a grantee, subgrantee, or cost-type contractor furnishes free of charge the services of an employee in the employee's

normal line of work, the services will be valued at the employee's regular rate of pay exclusive of the employee's fringe benefits and overhead costs. If the services are in a different line of work, paragraph (c)(1) of this section applies.

Educational Institutions:From OMB Circular A-21, Section J.10

General Principles:The distribution of salaries and wages, whether treated as direct or F&A costs, will be based on payrolls documented in accordance with the generally accepted practices of

colleges and universities. Institutions may include in a residual category all activities that are neither directly charged to sponsored agreements nor will need to be distributed to more than one activity for the purposes of identifying F&A costs or the activities to

which they are distributed.

The apportionment of employees salaries and wages which are chargeable to more than one sponsored agreement or other cost objective will be accomplished by methods which will:

o Be in accordance with Sections A.2 (Policy Guides) and C (BasicConsiderations);

o Produce an equitable distribution of charges for employees activities; and

o Distinguish the employees direct activities from their F&A activitiesIn the use of any methods for apportioning salaries, it is recognized that, in an academic setting, teaching, research, service, and administration are often inextricably

intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a degree of tolerance is appropriate.

There is no single best method for documenting the distribution of charges for personal services. Methods for apportioning salaries and wages, however, must meet the criteria specified in subsection b.(2). Examples of acceptable methods are contained in subsection c. Other methods that meet the criteria specified in subsection b.(2) also shall be deemed acceptable, if a mutually satisfactory alternative agreement is reached.

Criteria for Acceptable Methods:From OMB Circular A-21, Section J.10.b(2) The payroll distribution system will:o Be incorporated into the official records of the institutiono Reasonably reflect the activity for which the employee is compensatedo Encompass both sponsored and all other activities on an integrated basis, but mayinclude the use of subsidiary records

The method must recognize the principle of after the fact confirmation or determination so that costs distributed represent actual costs, unless a mutually satisfactory alternative agreement is reached. Confirmation may be performed by the employee or other responsible persons

The payroll distribution system will allow confirmation of activity allocable to each sponsored agreement and each of the categories of activity needed to identify F&A costs and the functions to which they are allocable

Practices vary among institutions as to the activity constituting a full workload.

Therefore, the payroll distribution system may reflect categories of activities expressed as a percentage distribution of total activities

Direct and F&A charges may be made initially to sponsored agreements on the basis of estimates made before services are performed. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term, such as an academic period.

The system will provide for independent internal evaluations to ensure the systems

effectiveness and compliance with the above standards

For systems which meet these standards, the institution will not be required to provide additional support or documentation for the effort actually performed.

Examples of Acceptable Methods for Payroll Distribution:Plan Confirmation-distribution of salaries and wages is based on budgeted, planned, or assigned work activity, updated to reflect any significant changes in work distribution

After the Fact Activity Records-distribution of salaries and wages is supported by activity reports

Multiple Confirmation Records-the distribution of salaries and wages will be supported by records which certify separately for direct and F&A cost activities

Donated Services:From OMB Circular A-110, Subpart C, Section 23:

(d) Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent

with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.

(e) When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.

OneStar Foundation 9011 Mountain Ridge Drive, Ste 100 Austin, TX 78759 Ph: 512.287.2000 Fax: 512.287.2039www.onestarfoundation.org