KEYS TO ADMIN COST COMPLIANCE

CFR & HRSA Guidance for

Administrative Cost ReimbursementGina S Surgeon – Fulton County Grants Administration Division

What is Grant Compliance?

Grant compliance is strong internal control structure to ensure that all the requirements of the award are achieved.

Fiscal Compliance ensures that the finance related requirements are met to ensure the success of the program requirements. Fiscal Compliance standards for the HRSA Ryan White Part A program include:

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• Limitation on Uses of RWHAP Part A Funding • Cost Principles

• Non-Allowable Costs • Auditing Requirements

• Income from Fees for Services Performed • Maintenance of Effort

• Imposition and Assessment of Client Charges • Fiscal Procedures

• Financial Management • Monitoring Sub-recipients

• Property Standards • Reporting Requirements

Areas of Focus Today: Administrative Costs

ALLOWABLE BUDGET VS. ACTUAL BACKUP DOCUMENTS

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Allowable Costs

As Subrecipients, you are reminded that you are responsible to be fully cognizant of limitations on uses of funds as outlined in programmatic statute, 45 CFR Part 75, the HHS Grants Policy Statement, and applicable HAB Policy Clarification Notices.

◦ Standard: Adherence to 10 % cap on administration cost for subrecipients (PHS Act 2604(h)(2); 45 Code of Federal Regulations (CFR) 75.302, 352, 361, and Subpart E; HAB Policy Clarification Notice(PCN) 15-01 and FAQ.◦ Allocate administration cost direct or indirectly◦ Report properly documented in sufficient detail to assure

expenses are allowable?◦ If reimbursed by unit cost, verify the break down to assure the

expenses that make the unit cost?

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Allowable Costs

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•Salaries and Benefits•Services and supplies•Approved costs to provide services

•Subcontracts•Conflict of interest•Valid Bid process•Meet the standards of EMA

Reimbursement of actual expended costs only

•Non-eligible clients or other recipients of services;•Purchase of real property;•Services that have been reimbursed by third-party payer;•Administrative costs in excess of 10%;•Salaries above Executive Level II•Indirect costs without a HRSA approved rate;•Lobbying activities;•Non-targeted outreach;•International travel;

No unallowable costs

Allowable Costs

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Allowable Costs must be:

ReasonableAllocableAdequately DocumentedBe accorded consistent treatment

Administrative Costs variables – Allowable up to 10% of grant award

• Direct • Allocated - assignable to that

Federal award or cost objective in accordance with relative benefits received.

Allowable Costs - Time

TimeTime sheets or other approved methodology required if time is split between charge activities or programs.

What to Document:

◦ Grantees must maintain monthly “after the fact” certification of the actual activity for each employee working on Federal Awards (2 CFR part 230, Appendix B §§ 8.b and 8.m)

◦ Records must accurately reflect the work performed.

◦ Backup must support the distribution of the employee’s salary or wages among specific activities or costs. (45 CFR § 75.430 (i)(1))

Other “Cost Drivers”Cost Drivers are generally used to assign overhead (admin) costs

◦ Square Footage

◦ Clients per program

Documentation: The methodology for allocating costs should be documented. This includes time studies, functional time sheets, and related procedures.

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Allowable Costs - Time

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Allowable Costs - Invoice

Invoice - 45 CFR §75.403 – 75.405Allocation: Allocation is the process of splitting certain expenses between activity centers (cost centers). Nonprofit organizations typically use allocation for common costs on financial statements. They may also use allocation as a method of recovering administrative costs in grants or contracts. 2 CFR Title 2, Subtitle A, Chapter II, Part 200, Subpart A, §200.4

What to Document:

◦ Records must accurately reflect costs paid.

◦ Backup must support the distribution of costs among specific cost (activity) centers.

◦ Documentation must show 100% of the distribution of the assigned cost.

◦ Must be documented in the form of a policy or procedure.

Cost Drivers◦ Reasonable: Ordinary and necessary to accomplish

the purpose of the RWPA contract and comparable to market prices.

◦ Allowable: As per the circular and Fulton County Agreement.

◦ Allocable: They must benefit the cost objective.

◦ Consistently applied: You cannot switch methods to generate more revenue or treat one cost as direct for one contract and indirect for another government contract.

◦ Documented: The methodology for allocating costs should be documented. This includes time studies and functional time sheets

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Budget vs Actual CostsBudgets should be based on past actual cost experience.

Budgets should be compared to actual cost activity at least annually.

Adjustments in billing should be made based on significant differences between budget and actual costs

Budget does not substitute for cost allocation procedures in the billing/reimbursement process.

Budget vs Actual – Supporting DocumentsType of Cost Allocation Consideration

Accounting services to the full organization, which has 3 distinct programs offered to clients.

1. Clients/program2. Square Footage of the facility3. Amount awarded in the grant4. Employees

Nurse is budgeted that provides supervisory services to the full organization but sees clients for the RWPA program only for part of their time.

1. Timesheet2. Timestudy3. Clients served4. Align with budget estimate

Professional services for an eligible client by an employee of the organization

1. Invoice2. Contract3. TimesheetFulton County - Finance Department: Grants Administration Division 11

Supporting Documents

◦ Expenditure Verification

◦ Invoices (with notated allocations as required)

◦ Receipts

◦ Timesheet / Time study / Time Certification

_____Monthly invoices should be accompanied by sufficient supporting documents to determine if the expenses claimed: a) are for eligible clients, reasonable, and allowable under the grant; and b) can be used as suitable backup and auditable files.

◦ The documentation should provide the means to verify proper segregation of spending between various Federal awards and non-Federal expenditures.

◦ This point is central to making sure funds are obligated and spent as they were intended by the Federal award.

◦ The extent of the documentation required is affected by the size and complexity of the organization or governmental unit, and the existing control mechanisms.

◦ The type of the documentation needed may also vary depending on the relationship between the activities and specific internal controls.

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Back It Up!When in doubt, contact your program Officer to discuss the best way to provide proof of costs with your invoice.

Available Resources for Proper Financial Management of your Grant:

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• 45 CFR Part 75

• HHS Grants Policy Statement (HHS GPS)

• Policy Information Notice (PIN) 2013-01 - Health Center Budgeting and Accounting Requirements

HRSA Presentation: Recording & Supporting Grant Expenditures – April 2019

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Fulton County wants you to succeed!

Project Officers

Grants Administration Division

Keys to Admin Cost Compliance

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