2015 Leadership Conference “All In: Achieving Results Together”

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Presentation transcript:

2015 Leadership Conference “All In: Achieving Results Together” Cost Principles Part C Charlie Kniseley, Debra Jennings, Hillary Tabor U.S. Department of Education, OSEP, MSIP

Uniform Guidance Purpose What it is replacing Organization of the guidance Where to find the cost principles (2 CFR §§200.400-200.475)

Cost Principles: Agenda Identify types of monitoring activities and grant issues related to cost principles. Examine effective use of the OMB uniform guidance to research cost principles. Evaluate and apply concepts to determine allowability in real world examples.

Cost Principles: Fundamental Assumptions IDEA Grantees assume responsibility for: Administering IDEA grant funds efficiently and effectively. Managing IDEA funds according to agreements, objectives, and terms of the award. Using accounting practices that are consistent with Uniform Guidance cost principles. Providing adequate documentation for costs charged to the award.

Cost Principles: Purpose To provide clarification about how Federal funds may be used to help to ensure that Federal funds are used in a manner that is compliant with Federal requirements

Cost Principles: Small Group Discussion What costs do you typically charge under the IDEA Part C grant? How do you determine whether a specific cost is allowable under the IDEA Part C grant? What do you do when you have questions about the allowability of a cost under the IDEA Part C grant?

Cost Principles: General Considerations Allowability: Is the cost reasonable and necessary for the program? Do sound business practices support the expenditure? Is the expense in compliance with laws, regulations and grant terms? To what extent is the expense allocable to the grant? Is the price comparable to that of similar goods or services in the geographic area?

Cost Principles: What is “reasonable”? The OMB Uniform Guidance says: “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.” (2 CFR §200.404)

Cost Principles: Brainstorming Activity What characteristics do you associate with a “prudent” person? What are some circumstances that might affect the price of a given item or service?

Cost Principles: Allocability In addition to considerations of reasonableness and necessity, the Uniform Guidance also examines the allocability of expenditures. “If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit.” (2 CFR §200.405(d))

Cost Principles: Allocability (cont’d) Allocability is the degree to which a given cost is an allowable expenditure for the grant award. Can range from: 0%, if the program receives no benefit from the good/service. to 100%, if the program receives all the benefit from the good/service.

Cost Principles: Small Group Activity Discuss the concept of allocability at your table. Discuss an example, either from work or personal experience, in which the concept of allocability was an important consideration.

Cost Principles: Considerations Is the cost generally an allowable expense (not prohibited in the cost principles)? Is the cost necessary for the performance of the grant project? To what extent is the expense allocable to the grant?  

Cost Principles: Considerations (cont’d) Is the cost reflected/aligned in the program’s approved grant budget? For equipment and supplies, does it exist elsewhere in the grantee’s inventory? Is there a less expensive alternative (or justification for selecting the more expensive option)?

Cost Principles (2 CFR §§200.421-200.430) Provisions for (55) Specific Items of Cost Advertising and Public Relations Bonding Costs Collections of Improper Payments Advisory Councils* Alcoholic Beverages Commencement and Convocation Costs Alumni Activities Compensation for Personnel Services* Audit Services* Bad Debt .

Cost Principles (2 CFR §§200.431-200.440) Compensation for Fringe Benefits* Defense and Prosecution of Criminal and Civil Proceedings, Claims, Appeals, and Patent Infringements.* Depreciation Conferences* Employee Health and Welfare Costs Contingency Provisions* Contributions and Donations Entertainment* Equipment and Other Capital Expenditures* Exchange Rates

Cost Principles (2 CFR §§200.441-200.450) Fines, Penalties and Other Settlements* Goods or Services for Personal Use Fund Raising and Investment Costs Idle Facilities and Idle Capacity Gains and Losses on Disposition of Depreciable Assets Insurance and Indemnification Intellectual Property* General Costs of Government* Interest Lobbying

Cost Principles (2 CFR §§200.451-200.460) Memberships, Subscriptions, and Professional Activities Costs* Losses on Other Awards or Contracts Maintenance and Repair Costs* Organization Costs Participant Support Costs Materials and Supplies Costs, Including Costs of Computing Devices Plant and Security Costs Pre-Award Costs* Professional Service Costs* Proposal Costs

Cost Principles (2 CFR §§200.461-200.470) Publication and Printing Costs Scholarships and Student Aid Costs Rearrangement and Reconversion Costs* Selling and Marketing Costs Recruiting Costs* Specialized Service Facilities Relocation Costs of Employees Student Activities Costs* Rental Costs of Real Property and Equipment* Taxes

Cost Principles (2 CFR §§200.471-200.475) Termination Costs Training and Education Costs* Transportation Costs Travel Costs* Trustees

Cost Principles: Small Group Activity Given examples of requests related to the cost principles, determine the allowability of the respective costs using these guiding questions: Which selected item(s) applies to the example? Is the cost in the example allowable, unallowable, or allowable under certain circumstances? Do you need more information in order to make a determination (and if so, what information would be helpful)?

Cost Principles: Types of Costs Direct Costs are costs that can be identified specifically with a program or cost objective: Personnel working directly on a program objective Supplies purchased for a specific program/project Service contract supporting program/project goals Indirect Costs are those costs are typically not readily assignable to a specific program or project: Facility operations/maintenance expenditures Costs for general administrative services Shared data and telecommunications expenses

Cost Principles: Cognizant Agency (CA) The agency that provides the most Federal funding to a grantee is the Cognizant Agency. Grantees negotiate indirect cost rates with the CA. All Federal awarding agencies accept these negotiated rates. ED is usually the CA for State grantees. ED is usually NOT the CA for most colleges and discretionary grants

Cost Principles: Indirect Cost Rates Types of Indirect Cost Rates Provisional Final Predetermined Fixed Use of Rates Unrestricted Restricted

Cost Principles: Key Concepts Reasonable and Necessary Allocability Selected Items of Cost State Contact Considerations Direct v. Indirect

Cost Principles: Questions