FILE: DFEA-P
FEDERAL AWARDS COST ALLOWABILITY PROCEDURES
The Bossier Parish School Board, as a recipient of federal awards either directly or through the State of Louisiana, is responsible for the efficient and effective administration of all federal awards through the application of sound management practices. The Bossier Parish School Board assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award.
GENERAL PRINCIPLES
Direct and Indirect Costs
There are two (2) types of costs in relation to a Federal award, direct and indirect (facilities and administration) costs. Direct costs are those that can be identified specifically with the particular final cost objective of the Federal award or that can be directly assigned to the Federal award relatively easily with a high degree of accuracy. Indirect costs are those that are incurred for a common or joint purpose benefitting more than one cost objective and are not readily assignable to the cost objectives specifically benefitted without effort disproportionate to the results achieved. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs.
The costs of materials and other items of expense incurred in the Federal award are direct costs of the Federal award. If directly related to a specific Federal award, certain costs that would otherwise be treated as indirect costs may also be direct costs. For example, extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities or other institutional service operations. Publication costs are indirect costs unless they are identifiable with a particular cost objective of the Federal award.
The indirect cost rate used by the Bossier Parish School Board for its Federal awards is established by the awarding pass-through entity, i.e. the State of Louisiana, based on the Bossier Parish School Board’s annual financial report which is submitted to the State. The Bossier Parish School Board must accept this negotiated rate.
Identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect costs of the Federal award. Salaries and fringe benefits of administrative and clerical staff is normally treated as an indirect cost. However, such costs may be considered direct if the following criteria are met:
Administrative or clerical services are integral to the Federal award;
Individuals involved can be specifically identified with the Federal award;
Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and
The cost are not also recovered as indirect costs.
Any direct cost that is minor in amount may be treated as an indirect cost for reasons of practicality so long as the accounting treatment of such cost is consistently applied to all Federal awards and non-Federal cost objectives.
Allowability
Generally, and unless otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards pursuant to 2 CFR 200.403, et seq..
Be necessary and reasonable for the performance of the Federal award and be allocable to thereto under these principles:
Costs must be reasonable in nature and amount using a prudent person standard.
Costs must adhere to sound business practices, arm’s length bargaining and to all laws and regulations and the terms and conditions of the Federal award.
Costs must be market prices for the geographic area.
All individuals involved in the cost approval process must be prudent considering their responsibility to the Bossier Parish School Board, it employees, its students and the citizens of Bossier Parish.
Approval of costs must not deviate from established policies and practices.
A cost is allocable to the Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with relative benefits received.
The cost must be specifically incurred for the Federal award.
If the cost benefits both the Federal award and other work of the Bossier Parish School Board that is not supported by a Federal award, the costs must be distributed proportionately using reasonable methods.
The cost must be necessary to the operation of the Bossier Parish School Board and must be assignable to the Federal award.
All activities which benefit from the Bossier Parish School Board’s indirect cost must receive an appropriate allocation of the indirect cost.
Any cost allocable to a particular Federal award may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons, unless a shifting of costs between Federal awards is allowed by Federal statutes, regulations or the terms and conditions of the Federal awards.
If a direct cost benefits two (2) or more projects in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit.
If a direct cost benefits two (2) or more projects and the proportions cannot be determined because of the interrelationship of the work involved, then the costs may be allocated to the benefitted projects on any reasonable documented basis.
If the purchase of equipment or a capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or the capital asset when no longer needed for the purpose for which it was originally required.
Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the Bossier Parish School Board.
Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for by Federal regulations.
Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior-period.
Be adequately documented as required by 2 CFR 200 Subpart D – Post Federal Award Requirements.
All credits applicable to related to allowable costs must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. An applicable credit is a receipt or a reduction-of-expenditure-type transaction that offsets or reduces an expense item. Examples of credits include, but are not limited to, purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges.
If the reasonableness or allocability of a cost is difficult to determine, the Bossier Parish School Board may seek the prior written approval of the cognizant agency for indirect costs or the Federal awarding agency. The absence of prior written approval will not, in itself, affect the reasonableness or allocability of the cost unless prior approval is specifically required.
Some costs may be subject to statutory limitations on the allowability of costs. Costs may not be claimed under the Federal award in excess of those statutory limitations. Payments made under the Federal award for costs determined to be unallowable must be refunded, including interest, to the Federal government.
2 CFR 200.420-475 address the allowability of specific items of cost and should be consulted in determining the allowability of a particular cost.
BUDGETING FOR THE FEDERAL AWARD
The first step to proper administration of funds is to properly develop a budget during the application process. The budget shall be developed by the personnel responsible for administering the grant including, but not limited to, the appropriate member of the Finance Department and the Director of the program for which the grant is intended. Such personnel shall begin with the award amount as stated by the Federal entity (or the appropriate Federal pass-through entity). All limitations on such award shall be taken in to consideration while developing the budget.
The Finance Department shall provide all financial information necessary to properly develop the budget including, but not limited to, projected salary and employee benefits, historical expense information and a reasonable projection of future expenses. The program Director shall provide a list of employees (including an estimate of the percentage of each employee’s time to be spent on the objective of the Federal award) and a projection of costs necessary to carry out the objectives of the Federal award.
These elements shall be considered by the Finance Department and the program Director to develop a final budget for the Federal award within the confines of the award.
Once the budget is developed and approved by the Federal entity (or the appropriate Federal pass-through entity), each item of cost to be charged to the Federal award shall be reviewed to determine if it is allowable under the Federal award; i.e. that the cost is necessary, reasonable and allocable to the Federal award.
EMPLOYEE COMPENSATION AND FRINGE BENEFITS GENERAL PROVISIONS
Compensation of employees who work on the Federal award and their related fringe benefit costs are direct costs of the Federal award. (See above for the determination of the compensation of administrative and clerical employees as direct costs.) Compensation includes all remuneration, paid or accrued, for services of employees rendered during the period of performance under the Federal award, including, but not limited to wages and salaries. Compensation is allowable for the Federal award as long as the compensation for an individual employee:
Is reasonable for the services rendered and conforms to the established written policy of the Bossier Parish School Board consistently applied to both Federal and non-Federal activities.
The Bossier Parish School Board establishes pay scales for employees based on the employee’s position within the organization, the employee’s level of education and the employee’s level of experience. These pay scales are consistently applied to both the School Board’s Federal and non- Federal activities. Therefore, employee compensation by the Bossier Parish School Board, to the extent that it is properly applied using the appropriate pay scale, is reasonable.
However, if the kinds of employees required for the Federal award are not found in the other activities of the Bossier Parish School Board, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the market in which the Bossier Parish School Board’s competes for the kind of employees involved.
Certain employees of the Bossier Parish School Board are paid by the hour and therefore not in accordance with an established pay scale of the Bossier Parish School Board. Furthermore, certain employees of the Bossier Parish School Board who are paid in accordance with a pay scale are paid an hourly wage for work outside the scope of the scope of the work for which they are paid on the pay scale. Such hourly wages are determined by the program Director under which such employee works and are consistently applied to both Federal and non-Federal activities. Such hourly wages are determined either by the conversion of the employee’s salaried wage to an hourly equivalent or by determining a reasonable wage for the work to be completed based on the type of work and the experience necessary to properly complete such work.
Follows an appointment made in accordance with the Bossier Parish School Board’s rules or written policies and meets the requirements of Federal statutes, where applicable.
Is determined and supported as provided in 2 CFR 200.430(i) (commonly known as time and effort reporting).
Incentive compensation is allowable for the Federal award to the extent that the overall compensation is reasonable and that such compensation is paid or accrued pursuant to an agreement entered into in good faith between the Bossier Parish School Board and the employees before the services were rendered, or pursuant to an established plan followed by the Bossier Parish School Board so consistently as to imply, in effect, an agreement to make such a payment.
The Bossier Parish School Board must follow its policies and practices regarding the permissible extent of professional services that can be provided by those outside of the Bossier Parish School Board for non-Bossier Parish School Board employee compensation.
Notwithstanding the foregoing, the allowable compensation for certain employees may be subject to a ceiling in accordance with statute.
The portion of an employee’s compensation and fringe benefits that are allocated to the Federal award must be based on records that accurately reflect the work performed. The internal control policy of the Bossier Parish School Board shall support the time and effort reporting and provide reasonable assurance that the charges are accurate, allowable, and properly allocated. The employee’s time and effort records:
Shall be incorporated into the official records of the Bossier Parish School Board;
Must reasonably reflect the total activity for which the employee is compensated by the Bossier Parish School Board;
Must account for all federally assisted and all other activities compensated by the Bossier Parish School Board;
Must comply with the established accounting policies and practices of the Bossier Parish School Board; and
Must support the distribution of the employee’s salary among specific activities or cost objectives for both Federal awards if the employee works on more than one Federal award; a Federal award and a non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim account periods if:
The system for establishing the estimates produces reasonable approximations of the activity actually performed;
Significant changes in the corresponding work activity are identified and entered into the records in a timely manner. Short term (one or two months) fluctuation between workload categories need not be considered as long as the distribution of compensation is reasonable over the long term;
The Bossier Parish School Board’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
TIME AND EFFORT REPORTING
The Bossier Parish School Board adheres to the following policy for determining the proper allocation of an employee’s salary and the corresponding fringe benefits to a Federal award:
Initially the budget shall be used to allocate an employee’s salary and corresponding fringe benefits to a Federal award. The budget shall be established by the director of the Federal program taking into consideration the employees necessary to complete the objectives of the Federal award. Historical data for the Federal award shall be taken into consideration as well. The Finance Department shall provide an accurate estimate of the amount of salary and corresponding fringe benefits for each employee based on the time and effort determination made by the director so that the budget can be established.
For any employee who spends 100% of his/her time completing the objectives of one Federal award, a semi-annual certification shall be completed.
The semi-annual certification shall document that the employee has worked solely in activities that are necessary to complete the objectives of the Federal award and shall indicate the Federal award the objectives of which the employee has worked.
The semi-annual certification shall be completed and submitted to the Director of the Federal program by January 15, for the period of July 1 through December 31; and by July 10, for the period of January 1 through June 30. The Director of the Federal program shall then sign the certifications and forward copies to the Finance Department within 5 days of receipt of the certification from the employee.
The semi-annual certification must be signed and dated by the employee and a supervisor of such employee having first-hand knowledge of the work performed by such employee.
If at any time during the year, the nature of the employee’s work changes so that the employee is no longer spending 100% of his/her time completed the objectives of a single Federal award, the employee and his/her supervisor shall notify the Finance Department. The employee then shall follow the time and effort rules pertaining to that employee’s current situation.
For any employee who spends only part of his/her time completing the objectives of a single Federal award, a monthly report shall be completed. This applies to an employee regardless of whether his/her time is divided amongst the objectives of more than one Federal award or the objectives of a Federal award and objectives not supported by a Federal award.
The monthly report shall report the portion of the employee’s time spent on the objectives of each Federal award and objectives not supported by a Federal award.
The monthly report shall account for 100% of the time for which the employee is compensated.
The monthly report shall be completed and submitted to the Director of the Federal program by the 5th of the month following the month for which the report is being submitted. The Director of the Federal program shall then sign the certifications and forward copies to the Finance Department within five (5) days of receipt of the certification from the employee.
The monthly certification must be signed and dated by the employee and a supervisor of such employee having first-hand knowledge of the work performed by such employee.
A certification included as part of an hourly employee’s monthly time sheet that otherwise meets the requirements of this section shall suffice.
If at any time during the year, the nature of the employee’s work changes so that the employee is spending 100% of his/her time completing the objectives of a single Federal award, the employee and his/her supervisor shall notify the Finance Department. The employee then shall follow the time and effort rules pertaining to that employee’s current situation.
Stipends may be paid to employee’s who may not otherwise work directly in the completion of the objectives of a Federal award for particular work that is in direct support of an objective of a Federal award. For example, a teacher may spend time outside of school hours to review a course pacing guide which is in support of an objective of Title II. A stipend paid in that situation meets the time and effort reporting requirement if the request for payment of the stipend being signed by the employee, a supervisor having first-hand knowledge of the work performed for which the stipend is paid signs the request and the request is signed by the Director of the Federal program.
Substitutes for employee’s who may not otherwise work directly in the completion of the objectives of a Federal award may be paid as part of a Federal award if the employee for whom a substitute is working is attending professional development that is directly in completion of the objectives of the Federal award. Compensation for a substitute in that situation meets the time and effort reporting requirement if proof is submitted that the employee attended the appropriate professional development program is signed by the employee and a supervisor having first-hand knowledge of the employee’s attendance (e.g. sign-in attendance logs for professional development) and the request for payment of the substitute is signed by a supervisor having first-hand knowledge that the substitute worked in place of such employee. Furthermore, both the proof of the employee’s attendance at the professional development and the request for pay for the substitute must be signed by the Director of the Federal program.
In all cases, the signature of the Director of the Federal program on the time and effort documentation is an indication that the Director has determined that the employee is working for the objectives of the Federal award in the percentage indicated by the time and effort documentation. It is the responsibility of the Finance Department to ensure that the compensation charged to the Federal award is in accordance with the time and effort documentation.
FRINGE BENEFITS
Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages, including but not limited to the costs of leave (vacation, family-related, sick or military), the employer portion of employee insurance, pensions and retirement, the employer portion of payroll taxes, and unemployment benefit plans. The costs of fringe benefit plans are allowable in the Federal award provided that they are reasonable and are required by law, a Bossier Parish School Board – employee agreement, or an established policy of the Bossier Parish School Board.
The fringe benefits provided by the Bossier Parish School Board that are allowable to a Federal award are Medicare tax, Social Security tax, the employer portion of all retirement plan contributions (including, but not limited to Teacher’s Retirement System of Louisiana, the Louisiana State Employees Retirement System and the Optional Retirement Plan offered by the Teacher’s Retirement System of Louisiana), and the employer portion of an employee’s health insurance plan, dental insurance plan and/or life insurance policy. In addition, costs of leave for sick, vacation, sabbatical, family-related or military are allowable to the Federal award to the extent that no substitute employee’s compensation is paid and allocated to the Federal award. Payments for unused leave when an employee retires or terminates employment are allowable in the year paid.
All fringe benefits provided by the Bossier Parish School Board are allocated to each employee based on the employee’s compensation and are calculated through the payroll system. Fringe benefits are allocated to a Federal award in the same manner as compensation is allocated to a Federal award.
Such allocation is based on the time and effort reporting as prescribed above and shall only be applied to the fringe benefits attributed to an employee in the payroll system.
Allocability of Salary and Fringe Benefits
As for salaries and fringe benefits, the percentage of the employee’s time estimated by the Director to carry out the objectives of the Federal award shall initially be allocated in the payroll system to the appropriate Federal award. A review of each employee’s time and effort shall be conducted by the Director of the program in accordance with 2 CFR 200.430(i). Adjustments to the allocation in the payroll system shall be made as necessary upon review of each employee’s time and effort. Only the actual percentage of each employee’s time and effort that has been used to carry out the objectives of the Federal award shall be allocated to the Federal award. Any adjustments in the accounting system necessary to ensure that only the proper amount of salary and benefits are allocated to the Federal award shall be made by the Finance Department.
COSTS OTHER THAN COMPENSATION AND FRINGE BENEFITS
Costs other than compensation and fringe benefits shall be subject to the following process to determine the allowability of such costs in the Federal award.
The Purchasing procedures of the Bossier Parish School Board shall be followed in all purchases made under a Federal award.
An employee working on the objectives of the Federal award shall submit a request to purchase items needed to meet the objectives of the Federal award to the employee’s coordinator.
The coordinator shall then complete a requisition in the form prescribed by the Purchasing Department and submit such requisition to the supervisor.
The requisition shall be reviewed by the supervisor and the supervisor shall determine if the items requested are effective to meet the objectives of the Federal award and meet all requirements and restrictions of the Federal award. If such determination is made, the supervisor shall sign the requisition and submit it to the Director of the program for the Federal award.
The program Director shall review the requisition to determine if the items requested are effective to meet the objectives of the Federal award, meet all requirements and restrictions of the Federal award and are within the budget of the Federal award. Keeping in mind the factors above, the program Director shall determine if the cost is allowable under the Federal grant. If such determinations are made, the program Director shall then assign an account code to the requisition and the appropriate Education Improvement Category (EIC) code from the Federal award and sign the requisition and submit it to the Purchasing Department. A copy of such requisition shall also be submitted to the Finance Department.
Upon receipt of a requisition, the Finance Department will review the requisition to ensure that the correct account code is assigned to the requisition. The Finance Department will also ensure that the requisition has been approved by the Director of the Federal award and that the purchase is within the budget of the Federal award.
The Purchasing Department will find an appropriate vendor for the items requested in accordance with the Bossier Parish School Board’s Purchasing Procedures.
The Purchasing Department will then produce a Purchase Order in accordance with the Purchasing procedures of the Bossier Parish School Board and such Purchase Order will then be entered into the accounting system. All Purchase Orders are subject to a chain of approval based on the account code to which the Purchase order is assigned.
The Finance Department shall approve the Purchase Order in the accounting system upon ensuring that the proper account code is assigned and that the purchase is within the budget of the Federal award.
The Director of the Federal program will also approve the Purchase Order in the accounting system upon ensuring that the Purchase Order matches the requisition or that any deviations from the requisition are acceptable and that the purchase is within the budget of the Federal award.
When the Purchase Order has been fully approved, the Purchasing Department shall initiate the purchase of the items in accordance with the Purchasing procedures of the Bossier Parish School Board.
Upon receipt of the purchased items, the Receiving Department shall enter the items as received in the accounting system. If the purchased items are delivered elsewhere than the warehouse, the employee receiving such items shall complete a receiving report in a form prescribed by the Receiving Department and forward such to the Receiving Department for entry into the accounting system.
Upon receipt of an invoice for items, the Accounts Payable Department shall compare the invoice to the Purchase Order system to ensure that the items invoiced have been received. Upon such determination, the Accounts Payable Department will assign the account code to the invoice that is indicated in the Purchase Order system. The Accounts Payable Department shall then forward the invoice to the Finance Department. The Finance Department shall then forward the invoice to the Director of the Federal program.
The Director of the Federal program shall review the invoice for accuracy and, upon determination that the invoice is accurate, shall approve the invoice for payment and forward it to the Finance Department.
The Finance Department will then review the invoice for accuracy, ensure that the appropriate account code is assigned and that the purchase is within the budget of the Federal award.
Upon such determination, the Finance Department shall return the invoice to the Accounts Payable Department for payment in accordance with the procedures of the Bossier Parish School Board.
The maintenance of the budget of the Federal award is ultimately the responsibility of the Finance Department. The Finance Department shall track all purchases, from the point of requisition to payment of invoice, to ensure adherence to the budget of the Federal award. The Director of the Federal program is ultimately responsible for ensuring that all purchases under the Federal award are necessary to meet the objectives of the Federal award and otherwise meet all constraints and requirements of the Federal award. The Director of the Federal program also is primarily responsible for determining that a certain item of cost is allowable under the Federal award. The Finance Department shall also inspect each item of cost to concur in the determination of the allowability of such cost under the Federal award.
The following are some guidelines for specific items of cost that may apply to a Federal award:
Professional Service Costs
Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the Bossier Parish School Board, are allowable when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal government. The following factors must be considered when determining allowability of such costs:
The nature and scope of the service rendered in relation to the service required.
The necessity of contracting for the service, considering the Bossier Parish School Board’s capability in the particular area.
The pattern of such costs, particularly in the years prior to Federal awards.
The impact of Federal awards on the Bossier Parish School Board (i.e., what new problems have arisen).
Whether the proportion of Federal work to the non-Federal work is such as to influence the non-Federal entity in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under Federal awards.
Whether the service can be performed more economically by direct employment rather than contracting.
The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non-Federally funded activities.
Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of the time required, rate of compensation, and termination provisions.)
Travel Costs
Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the Bossier Parish School Board as long as such travel relates to the objectives of the Federal award. Travel costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two (2) provided that the method used is applied consistently to an entire trip. The charges to the Federal award must also be consistent with charges normally allowed in like circumstances in the Bossier Parish School Board’s non-Federally funded activities and in accordance with the Bossier Parish School Board’s written travel reimbursement policies. Travel costs are considered reasonable and otherwise allowable only to the extent such costs do not exceed charges normally allowed by the Bossier Parish School Board in its regular operations pursuant to the Bossier Parish School Board’s written travel policy. Documentation of travel costs shall justify that:
Participation of the individual is necessary to the Federal award; and
The costs are reasonable and consistent with the Bossier Parish School Board’s established travel policy.
Temporary dependent care costs above and beyond regular dependent care that directly results from travel to conferences is allowable provided that:
The costs are a direct result of the individual’s travel for the Federal award;
The costs are consistent with the Bossier Parish School Board’s documented travel policy for all travel; and
Are only temporary during the travel period. Travel costs for dependents are not allowable.
Airfare costs in excess of the basic least expensive unrestrictive accommodations class offered by commercial airlines are not allowable except when such accommodations would:
Require circuitous routing;
Require travel during unreasonable hours;
Excessively prolong travel;
Result in additional costs that would offset the transportation savings; or
Offer accommodations not reasonably adequate for the traveler’s medical needs. (Proper documentation is needed in each case.)
New procedure: February 2, 2017
Ref: 2 CFR 200.302 (Financial Management)
2 CFR 200 Subpart E (Cost Principles)
Board minutes, 2-2-17
Bossier Parish School Board