FISCAL TRAINING FOR LPA SUBRECIPIENTS COLUMBUS, OHIO MARCH 13, 2018 - - PowerPoint PPT Presentation

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FISCAL TRAINING FOR LPA SUBRECIPIENTS COLUMBUS, OHIO MARCH 13, 2018 FISCAL TRAINING FOR LPA SUBRECIPIENTS Michael Miller Lead Auditor LPA Audit Program Office of External Audits 2 | Fiscal Training for LPA Subrecipients IN TRANSITION

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FISCAL TRAINING FOR LPA SUBRECIPIENTS

COLUMBUS, OHIO • MARCH 13, 2018

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FISCAL TRAINING FOR LPA SUBRECIPIENTS

Michael Miller Lead Auditor – LPA Audit Program Office of External Audits

Fiscal Training for LPA Subrecipients

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IN TRANSITION

  • The Office of External Audits is

committed to identifying and implementing procedures which reduce administrative burden while still maintaining compliance with Federal requirements.

Fiscal Training for LPA Subrecipients

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AGENDA FOR THIS SESSION

  • Regulations & Definitions
  • ODOT – LPA Project Agreement
  • REVISED Sect. 15.1 Cost Recovery Options
  • REVISED Sect. 15.2 Federal Reporting
  • NEW - Effective Periods of Fringe

Benefit and Indirect Cost Rates

  • REVISED - Extensions of Prior ODOT

Approved Rates

Fiscal Training for LPA Subrecipients

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TOPICS FOR FUTURE WEBINAR SESSIONS

  • What is Needed for Adequate

Documentation of LPA’s Labor Costs on ODOT Projects?

  • What Documentation is Needed to

Obtain an Approved Fringe Rate?

  • What Documentation is Needed to

Obtain an Approved Indirect Rate?

Fiscal Training for LPA Subrecipients

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REGULATIONS & DEFINITIONS

Fiscal Training for LPA Subrecipients

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2 CFR PART 200

  • UNIFORM ADMINISTRATIVE

REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

Fiscal Training for LPA Subrecipients

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§200.74 PASS-THROUGH ENTITY

  • Pass-through entity means a non-

Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program.

Fiscal Training for LPA Subrecipients

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§200.92 SUBAWARD

  • Subaward means an award

provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a Federal award received by the pass-through entity.

Fiscal Training for LPA Subrecipients

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§200.93 SUBRECIPIENT

  • Subrecipient means a non-Federal

entity that receives a subaward from a pass-through entity to carry

  • ut part of a Federal program.

Fiscal Training for LPA Subrecipients

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§200.430 COMPENSATION—PERSONAL SERVICES

  • Compensation for personal

services . . . of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and

  • salaries. . .

Fiscal Training for LPA Subrecipients

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§200.430 COMPENSATION—PERSONAL SERVICES

  • Continued . . .
  • Charges to Federal awards for

salaries and wages must be based

  • n records that accurately reflect

the work performed. . .

Fiscal Training for LPA Subrecipients

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§200.431 COMPENSATION—FRINGE BENEFITS

  • Fringe benefits are allowances and

services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans.

Fiscal Training for LPA Subrecipients

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§200.431 COMPENSATION—FRINGE BENEFITS

  • Continued . . .
  • Except as provided elsewhere in these

principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity- employee agreement, or an established policy of the non-Federal entity.

Fiscal Training for LPA Subrecipients

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PROJECT AGREEMENT

Recovery of LPA’s Allocable Project Direct Labor, Fringe Benefits, and/or Indirect Costs

Fiscal Training for LPA Subrecipients

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4 COST RECOVERY OPTIONS

Sorted in Ascending Order

Option 1 = No Recovery Option 2 = DL + De Minimis Option 3 = DL + Fringe + De Minimis Option 4 = DL + Fringe + Indirect

Fiscal Training for LPA Subrecipients

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OPTION 1

  • 1. No cost recovery of LPA’s project

direct labor, fringe benefits, or

  • verhead costs.

Fiscal Training for LPA Subrecipients

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OPTION 1 - EXPLAINED

(A) The LPA does not currently maintain an ODOT approved federally compliant time- tracking system, and

Fiscal Training for LPA Subrecipients

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OPTION 1 - EXPLAINED

(B) The LPA does not intend to have a federally compliant time- tracking system developed, implemented, and approved by ODOT prior to the period of performance of this project, and/or

Fiscal Training for LPA Subrecipients

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OPTION 1 - EXPLAINED

(C) The LPA does not intend to pursue recovery of these project direct labor, fringe benefits, or

  • verhead costs during the period
  • f performance of this project

agreement.

Fiscal Training for LPA Subrecipients

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OPTION 2

  • 2. Direct labor plus indirect costs

calculated using the Federal 10% De Minimis Indirect Cost Rate.

Fiscal Training for LPA Subrecipients

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OPTION 2 - EXPLAINED

(A) The LPA currently maintains, or intends to develop and implement prior to the period of performance of this project, an ODOT approved federally compliant time-tracking system, and

Fiscal Training for LPA Subrecipients

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OPTION 2 - EXPLAINED

(B) The LPA does not currently have, and does not intend to negotiate, an ODOT approved fringe benefits rate prior to the period of performance of this project.

Fiscal Training for LPA Subrecipients

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OPTION 3

  • 3. Direct labor, plus fringe benefits

costs calculated using the LPA’s ODOT approved Fringe Benefits Rate, plus indirect costs calculated using the Federal 10% De Minimis Indirect Cost Rate.

Fiscal Training for LPA Subrecipients

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OPTION 3 - EXPLAINED

(A) The LPA currently maintains, or intends to develop and implement prior to the period of performance of this project, an ODOT approved federally compliant time-tracking system, and

Fiscal Training for LPA Subrecipients

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OPTION 3 - EXPLAINED

(B) The LPA currently has, or intends to negotiate, an ODOT approved fringe benefits rate prior to the period of performance of this project.

Fiscal Training for LPA Subrecipients

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OPTION 4

  • 4. Direct labor, plus fringe benefits

costs calculated using the LPA’s ODOT approved Fringe Benefits Rate, plus indirect costs calculated using the LPA’s ODOT approved Indirect Cost Rate.

Fiscal Training for LPA Subrecipients

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OPTION 4 - EXPLAINED

(A) The LPA currently maintains, or intends to develop and implement prior to the period of performance of this project, an ODOT approved federally compliant time-tracking system, and

Fiscal Training for LPA Subrecipients

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OPTION 4 - EXPLAINED

(B) The LPA currently has, or intends to negotiate, an ODOT approved fringe benefits rate prior to the period of performance of this project, and

Fiscal Training for LPA Subrecipients

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OPTION 4 - EXPLAINED

(C) Instead of using the Federal 10% De Minimis Indirect Cost Rate, the LPA currently has, or intends to negotiate, an ODOT approved indirect cost rate prior to the period of performance of this project.

Fiscal Training for LPA Subrecipients

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COMPARISON OF OPTIONS 1 - 4

DIRECT LABOR 0%

  • $

5,000.00 $ 5,000.00 $ 5,000.00 $ FRINGE BENEFITS 0%

  • $

0%

  • $

65% 3,250.00 $ 65% 3,250.00 $ SUBTOTAL

  • $

5,000.00 $ 8,250.00 $ 8,250.00 $ INDIRECT COSTS 0%

  • $

10% 500.00 $ 10% 825.00 $ 20% 1,650.00 $ OTHER PROJECT DIRECT COSTS 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ TOTAL COSTS 10,000.00 $ 15,500.00 $ 19,075.00 $ 19,900.00 $ OPTION 1 OPTION 2 OPTION 3 OPTION 4

Fiscal Training for LPA Subrecipients

Option 1 The LPA has not received approval to bill labor costs to ODOT projects. Accordingly, the fringe and indirect costs are both $0 because the base (direct labor) is $0.

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COMPARISON OF OPTIONS 1 – 4 CONTINUED

DIRECT LABOR 0%

  • $

5,000.00 $ 5,000.00 $ 5,000.00 $ FRINGE BENEFITS 0%

  • $

0%

  • $

65% 3,250.00 $ 65% 3,250.00 $ SUBTOTAL

  • $

5,000.00 $ 8,250.00 $ 8,250.00 $ INDIRECT COSTS 0%

  • $

10% 500.00 $ 10% 825.00 $ 20% 1,650.00 $ OTHER PROJECT DIRECT COSTS 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ TOTAL COSTS 10,000.00 $ 15,500.00 $ 19,075.00 $ 19,900.00 $ OPTION 1 OPTION 2 OPTION 3 OPTION 4

Fiscal Training for LPA Subrecipients

Option 2 The LPA is authorized to bill direct labor costs but has not negotiated a fringe benefits rate. Accordingly, the indirect costs using the 10% de minimis indirect costs rate are 10% of the base (direct labor of $5000).

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COMPARISON OF OPTIONS 1 – 4 CONTINUED

DIRECT LABOR 0%

  • $

5,000.00 $ 5,000.00 $ 5,000.00 $ FRINGE BENEFITS 0%

  • $

0%

  • $

65% 3,250.00 $ 65% 3,250.00 $ SUBTOTAL

  • $

5,000.00 $ 8,250.00 $ 8,250.00 $ INDIRECT COSTS 0%

  • $

10% 500.00 $ 10% 825.00 $ 20% 1,650.00 $ OTHER PROJECT DIRECT COSTS 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ TOTAL COSTS 10,000.00 $ 15,500.00 $ 19,075.00 $ 19,900.00 $ OPTION 1 OPTION 2 OPTION 3 OPTION 4

Fiscal Training for LPA Subrecipients

Option 3 The LPA is authorized to bill direct labor costs and has negotiated a fringe benefits rate of 65%. Accordingly, the indirect costs using the 10% de minimis indirect costs rate are 10% of the base (direct labor of $5000 plus fringe of $3250).

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COMPARISON OF OPTIONS 1 – 4 CONTINUED

DIRECT LABOR 0%

  • $

5,000.00 $ 5,000.00 $ 5,000.00 $ FRINGE BENEFITS 0%

  • $

0%

  • $

65% 3,250.00 $ 65% 3,250.00 $ SUBTOTAL

  • $

5,000.00 $ 8,250.00 $ 8,250.00 $ INDIRECT COSTS 0%

  • $

10% 500.00 $ 10% 825.00 $ 20% 1,650.00 $ OTHER PROJECT DIRECT COSTS 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ 100% 10,000.00 $ TOTAL COSTS 10,000.00 $ 15,500.00 $ 19,075.00 $ 19,900.00 $ OPTION 1 OPTION 2 OPTION 3 OPTION 4

Fiscal Training for LPA Subrecipients

Option 4

The LPA is authorized to bill direct labor costs and has negotiated both a fringe benefits rate of 65% and an indirect cost rate of 20%. In this case, the base for the indirect cost rate is direct labor plus fringe benefits. Accordingly, the indirect costs using the 20% negotiated indirect cost rate are 20% of the base (direct labor of $5000 plus fringe of $3250).

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PROJECT AGREEMENT

Financial Reporting and Audit Requirements

Fiscal Training for LPA Subrecipients

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§200.92 SUBAWARD

§200.302 Financial management §200.303 Internal controls

Fiscal Training for LPA Subrecipients

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§200.501 AUDIT REQUIREMENTS

(a) Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.

Fiscal Training for LPA Subrecipients

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AUDITOR OF STATE BULLETIN 2000-008

  • Federal and State funds expended

to or on behalf of a subrecipient must be recorded in the accounting records of the LPA subrecipient.

Fiscal Training for LPA Subrecipients

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SEFA PREPARATION

  • CFDA 20.205
  • Highway Planning & Construction
  • Project Name
  • ODOT PID Number
  • Federal Funds Expenditures

Fiscal Training for LPA Subrecipients

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SEFA CORRECTIONS

  • Accuracy Matters
  • LPA should have a documented

process to ensure consistent, accurate reporting.

  • $ reported are used to determine

Major Federal Programs for Single Audit testing.

Fiscal Training for LPA Subrecipients

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AGREEMENT AMENDMENTS

Fiscal Training for LPA Subrecipients

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CONSISTENT COST RECOVERY

  • As applicable, for LPAs with multiple

projects in a fiscal year, the Office of Local Programs and Office of External Audits are permitting [Actually Encouraging] amendments to Section 15.1 of current LPA Project Agreements to achieve more consistent cost recovery methodology.

Fiscal Training for LPA Subrecipients

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EFFECTIVE PERIODS OF APPROVED RATES

Standardizing Effective Periods for LPA’s Fringe and/or Indirect Cost Rates

Fiscal Training for LPA Subrecipients

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SAMPLE SCHEDULE OF EFFECTIVE PERIODS

Fiscal Year End of LPA Subrecipient's Audited Cost Data (Basis for Proposed Rates) Due Date for LPA's Submission of Indirect Cost Proposal to ODOT (Refer to Appendix VII to 2 CFR Part 200) Due Date for LPA's Submission of Audited Financial Statements to Federal Government (Refer to §200.512) Applicable Fiscal Year for LPA's Approved Fringe Benefit and/or Indirect Cost Rates (Fiscal Year Rate Applied)

Dec 31, 2015 Jun 30, 2016 Sep 30, 2016 Jan - Dec, 2017 Dec 31, 2016 Jun 30, 2017 Sep 30, 2017 Jan - Dec, 2018 Dec 31, 2017 Jun 30, 2018 Sep 30, 2018 Jan - Dec, 2019 Dec 31, 2018 Jun 30, 2019 Sep 30, 2019 Jan - Dec, 2020 Dec 31, 2019 Jun 30, 2020 Sep 30, 2020 Jan - Dec, 2021

Fiscal Training for LPA Subrecipients

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SAMPLE SCHEDULE OF EFFECTIVE PERIODS

Fiscal Year End of LPA Subrecipient's Audited Cost Data (Basis for Proposed Rates) Due Date for LPA's Submission of Indirect Cost Proposal to ODOT (Refer to Appendix VII to 2 CFR Part 200) Due Date for LPA's Submission of Audited Financial Statements to Federal Government (Refer to §200.512) Applicable Fiscal Year for LPA's Approved Fringe Benefit and/or Indirect Cost Rates (Fiscal Year Rate Applied)

Dec 31, 2015 Jun 30, 2016 Sep 30, 2016 Jan - Dec, 2017 Dec 31, 2016 Jun 30, 2017 Sep 30, 2017 Jan - Dec, 2018 Dec 31, 2017 Jun 30, 2018 Sep 30, 2018 Jan - Dec, 2019 Dec 31, 2018 Jun 30, 2019 Sep 30, 2019 Jan - Dec, 2020 Dec 31, 2019 Jun 30, 2020 Sep 30, 2020 Jan - Dec, 2021

Fiscal Training for LPA Subrecipients

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FINAL RATE METHOD

(1) Ohio LPA subrecipients are authorized to use only the Final Rate Method as defined in Appendix VII of 2 CFR Part 200.

Fiscal Training for LPA Subrecipients

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BASED UPON ACTUAL COSTS

(2) All fringe benefit and/or indirect cost rates proposed by LPA subrecipients must be based upon audited prior year actual costs.

Fiscal Training for LPA Subrecipients

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INITIAL ONE-YEAR PERIOD

(3) All LPA subrecipient fringe benefit and/or indirect cost rates approved by ODOT will apply for an initial period of one year, which will have direct alignment with the fiscal year of the LPA subrecipient.

Fiscal Training for LPA Subrecipients

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EXTENSION OF UP TO 4 YEARS AVAILABLE

(4) In accordance with 2 CFR §200.414, to relieve administrative burden, the LPA subrecipient may submit a one- time request to extend the effective period for current ODOT-approved rates for up to four (4) additional fiscal years.

Fiscal Training for LPA Subrecipients

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ONLY ODOT APPROVED RATES CHARGED

(5) Only applicable cognizant federal agency or ODOT-approved fringe benefit and/or indirect cost rates may be billed to ODOT- funded LPA administered projects.

Fiscal Training for LPA Subrecipients

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RATE BASE = EMPLOYEE LABOR COSTS

(6) ODOT-approved fringe benefit and/or indirect cost rates are applied to LPA employee labor costs paid by the LPA during the applicable period of the rate.

Fiscal Training for LPA Subrecipients

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LIMITED RETROACTIVE RATE PERIOD

(7) Unbilled LPA employee labor costs, (i.e., costs NOT previously billed to and processed by ODOT), ARE ELIGIBLE for retroactive application of ODOT- approved fringe benefit and/or indirect cost rates.

Fiscal Training for LPA Subrecipients

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LIMITED RETROACTIVE RATE PERIOD

(8) Previously billed LPA employee labor costs, (i.e., costs previously billed to and processed by ODOT), ARE NOT ELIGIBLE for retroactive application of ODOT-approved fringe benefit and/or indirect cost rates.

Fiscal Training for LPA Subrecipients

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ADJUSTMENTS

(9) LPA employee labor costs, fringe benefits, and indirect costs billed to and processed by ODOT are not subject to adjustment unless ODOT determines that adjustment is necessary in accordance with Federal and/or state laws, regulations, program guidance, administrative rules, or other applicable guidance.

Fiscal Training for LPA Subrecipients

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QUESTIONS

Last updated 3/13/2018

Fiscal Training for LPA Subrecipients

Michael Miller Lead Auditor – LPA Audit Program Michael.Miller@dot.ohio.gov