2 CFR Part 230 Appendix A General Principles Appendix B Selected Items of Cost Chief Operational Oversight Division Joseph E Baldwin 512 4605292 Project Review February 2014 ID: 714082
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Allowable and Unallowable Costs
2 CFR Part 230Appendix A – General Principles Appendix B – Selected Items of Cost
Chief,
Operational Oversight Division
Joseph E. Baldwin
(512) 460-5292
Project Review: February 2014Slide2
Topics
“Super Circular” Information
Introduction to OMB Circular A-122 (2 CFR 230)Categories of Allowable CostsCategories of Unallowable CostsSlide3
Super
Circular2 CFR Chapter I, and Chapter II, Parts 200,215,220, and 230
The Office and Management and Budget (OMB) has produced its long-awaited “super circular” and has published the final notice on December 26, 2013 in the Federal Register. http://
www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdfThis final guidance supersedes and streamlines requirements from OMB Circulars A-21, A-87, A-110, and A-122 (which have been placed in OMB guidance's); Circulars A-89, A-102, and A-133; and the guidance in Circular A-50 on Single Audit Act follow-up.
Federal agencies have one year to implement the policies and procedures applicable to Federal awards by promulgating a regulation by December 26, 2014."
While the Super Circular took effect on December 26, 2013, Federal agencies have six months to submit draft implementing regulations to OMB, and non-Federal entities have until December 26, 2014, to comply and conform fully to the Super Circular. Slide4
OMB Circular A-122
Why do you have to follow it
Attachment A: General PrinciplesAttachment B: Selected Items of CostSlide5
Segregation of Costs
Costs for each particular cost objective must be segregated
A cost is allocable to a particular cost objective, such as a grant, contract, project, service, or other activity, in accordance with the relative benefits received. A cost is allocable to a Federal award if it is treated consistently with other costs incurred for the same purpose in like circumstances and if it:(1) Is incurred specifically for the award.(2) Benefits both the award and other work and can be distributed in reasonable proportion to the benefits received, or
(3) Is necessary to the overall operation of the organization, although a direct relationship to any particular cost objective cannot be shown.
Any cost allocable to a particular award or other cost objective under these principles may not be shifted to other Federal awards to overcome funding deficiencies, or to avoid restrictions imposed by law or by the terms of the award.Slide6
Allowable Costs
Be
necessary and reasonable, and allocable,Conform to any limitations or exclusions set forth in the cost principles or the award,
Be consistent with policies and procedures afforded all activities of the organization,
Be accorded consistent treatment,
Be determined in accordance with GAAP,Not be against the law,Not already be included in a cost sharing or matching requirement,Be net of applicable credits,Be adequately documented.Slide7
Unallowable Costs
Specifically identified in the
grant/contract as being unallowable.Specifically identified in Circular A-122, as being unallowable.
Does not meet the criteria listed in Circular A-122 to be allowable.Slide8
Sample Unallowable Costs
Alcoholic Beverages,
Bad Debts,Contingency Provisions,Contributions and Donations
Entertainment,
Fines and Penalties,
Fund Raising Costs,Gift Cards,Interest on Borrowed Capital,Lobbying
Costs,
Social Memberships.Slide9
Advertising
Allowable
Recruitment of personnel required for performance of Federal award.Procurement of goods & services for the performance of the award.
Disposal of scrap or surplus acquired in the performance of award.Slide10
Advertising
Unallowable
Costs of promotional items, memorabilia, gifts and souvenirs.Costs of advertising and public relations designed solely to promote the organization.
SWAG – Stuff We All Get.Slide11
Alcoholic Beverages
Unallowable
regardless of circumstance.Slide12
Audit Costs
Audits required by, and performed in accordance with, the Single Audit Act, as implemented Circular A-133 are allowable.
Other audit costs are allowable if included in an indirect cost rate proposal, or if specifically approved by the awarding agency as a direct cost.
The cost of agreed-upon procedures engagements to monitor sub-recipients who are exempted from A-133 are allowable.Slide13
Bad Debts
Bad
debts, including losses (whether actual or estimated) arising from uncollectible accounts and other claims, related collection costs, and related legal costs, are unallowable.Slide14
Compensation for Personal Services
Support of salaries and
wages must include a Personnel Activity Reports (PARs or Time Distribution Reports)
PARs must adhere to the following requirements:
Must reflect after-the-fact determination of activity (not budget estimates
).Must account for total activity for which employee is compensated.Must be signed by the employee or responsible
supervisor.
Must be prepared at least monthly and coincide with one or more pay periods.Slide15
Contributions and Donations
Costs of contributions and donations, including cash, property, and services, from the non – Federal entity to other entities, are unallowable.
The value of services and property donated to the non-Federal entity may not be charged to the Federal award either as a direct or indirect (F&A) cost. The value of donated services and property may be used to meet cost sharing or matching requirements (see § 200.306 Cost sharing or matching). Depreciation on donated assets is permitted in accordance with § 200.436 Depreciation, as long as the donated property is not counted towards cost sharing or matching requirements.Slide16
Depreciation
Depreciation on buildings or equipment furnished by the federal government or purchased through federal grants are not an allowable expense.
This pertains to capital items that are purchased with federal dollars. Compensation for the use of buildings, other capital improvements, and equipment on hand may be made through use allowance or depreciation. This pertains to capital items that were previously purchased with non federal funds. Depreciation is not allowable
on cost sharing. (Assets purchased with Capital Grant 35% Matching Requirement) Slide17
Entertainment
Costs of entertainment, including amusement, diversion and social activities and costs relating to these activities such as tickets, meals, lodging, rentals, transportation and gratuities are
unallowable, unless….. Slide18
Those
cost have a programmatic purpose and are authorized in the approved budget ,
orThose cost have prior written approval from the federal awarding agency.
VA GPD will allow these cost when involving a Veteran population
with a program specific purpose. Limits are set to no more than twice
a year and no more than $20 per person. EntertainmentSlide19
Fines and Penalties
Costs of failures to comply with Federal, state, or local laws are
unallowable.Allowable if incurred as a result of compliance with specific provisions of an award or instructions in writing from the awarding agency.Slide20
Fund Raising
Fund raising and similar expenses incurred
solely to raise capital or obtain contributions are unallowable.
Fund raising activities shall be allocated an appropriate share of indirect
costs.Slide21
Gift Cards
Unallowable
regardless of the circumstance. Slide22
Insurance
Insurance required or approved pursuant to an award is
allowable.Insurance carried by the organization in general conduct of business is allowable subject to the following limitations:Reasonable
coverage,Cost of insurance on officers must represent additional compensation and the organization may not be identified as the
beneficiary.Slide23
Lobbying
Unallowable
:Attempts to influence election outcomes,
Contributing to political causes,
Attempts to influence Federal or State legislation through virtually any communicative
device,Legislative liaison activities when performed in support of unallowable lobbying.Slide24
Maintenance and Repairs
Costs necessary to keep buildings and equipment in efficient operating condition are
allowable.Costs which add to the permanent value or appreciably prolong the life of the asset shall be treated as capital expenditures.Slide25
Meetings and Conferences
Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are
allowable.Costs include meals, transportation, rental of facilities, speakers’ fees, and other items incidental to the meeting or conference.Slide26
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 non-profit organization, are generally allowable if reasonable and not contingent on recovery of costs from the Federal government.Slide27
Recruiting
Generally, advertising and associated costs incurred for recruitment of staff are allowable but
They must meet the test of reasonableness and,They must conform with established practices of the
organization.Slide28
Supplies to Support Veterans
Costs incurred for materials and supplies necessary to carry out a Federal award and are tied to a Veteran’s service / treatment plan are allowable
. Bus TokensWork / school related materials
These costs should be adequately documented and tracked. Slide29
Training Costs
Generally, training and education costs related to employee development, such as, workshops, textbooks, classes, etc. are
allowable.Slide30
Transportation
Allowable as direct if provided for in the
award.Allowable as indirect for equitable distribution to all benefiting activities.Slide31
Travel
Expenses for transportation, lodging, subsistence, and related items incurred by employees on official business are
allowable.Costs
may be charged on an actual basis, per diem or mileage basis or a combination, but must be consistent with those normally allowed by the organization. Slide32
Questions?