Welcome to todays webinar on fiscal management and controls. Today we will discuss the proper support documentation for salaries and wages.
Todays discussion will address this topic in a manner that is consistent with auditing requirements for federal grants and generally accepted accounting principles.
This mandatory presentation was developed as a result of a recent audit and was developed to address one the more serious audit findings related to the proper support and charging of compensation for personal services.
The general findings from this recent audit were based on three areas. Number one no documentation or documentation provided for salary expense did not meet Federal standards.
Number two employees charging salary as budgeted rather than as actually worked.
Number three time worked on multiple grants/projects not recorded separately
Lets for a moment discuss the specifics of the audit findings. First what is time and effort reporting according to the general standard.
Time and effort reporting states that any employee funded by federal grants must document the time they spend working on the grant’s objective.
All employees charged to federal grants must maintain time and effort reporting.
And Lastly this documentation must reflect the ACTUAL time spent by employees on the award being charged.
With this being a manditoryn requirement lets look at where the requirement is established.
For non-profit organizations this requirement is located in the OMB Circular under the section relative to compensation for personal services.
As a resource a copy of this particular circular is located a www. Whitehouse.gov/omb/circulars
So now we will discuss compensation in detail. What is compensation for personal services?
Compensation for personal service includes all compensation paid for services of employees rendered during the period of the award, including but not limited to wages, salaries and fringe benefits.
This compensation is allowable so long as the services provided conform to the organizations established policy
And if the charges are documented and supported.
The amount of the compensation is considerer reasonable if it is consistent with that paid for similar work in the orgazization or in the labor market.
Fringe benefits include but are not limited to leave, insuranc, pensions and unemployment benefit plans. These benefits should be provided equitable for all employees under a written policy and will remain consistent with policies of non grant funded activities.
While considering the proper documentation of salaries and wages it is important to note that number 1 time actually worked must remain consistent with the estimated time allocation percentage approved in the original budget.
And number two charges to awards for salaries will be based on document payroll documents approved by a responsible official within the organization.
Within each affiliate location time and effort if recorded for each employee using one o f the following methods.
1. 100% Indirect Activities 2. 100% direct activities 3. Multiple activities
100% indirect activities are when an inividuals salary or wage is not redily assignable to a specific a specific grant. In this case the salary is captured in an approved indirect cost rate.
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100% direct activities occur when all of an individuals salary or wage is paid by a single grant.
When a recipient organization allocates 100% of an individual’s time and effort to one grant, individual timesheets showing daily time recording are not required.
•All that is necessary is a semi-annual certification that is signed by the employee and their supervisor.
•These certifications are statements confirming that the individual’s time and effort were 100%