05/31/2012 Page 1 Financial Management: Timekeeping

05/31/2012 Page 2 Timekeeping: Overview  Written Policies and Procedures  Multiple Activities or Cost Objectives  Single Federal award or Cost Objectives  Estimations  Quarterly Comparisons  Adjustments and Revisions

05/31/2012 Page 3 Timekeeping: Regulations  2 CFR 225 (formally OMB Circular A-87, Attachment B, Item 8h)

05/31/2012 Page 4 Timekeeping: Definitions and Terms  Award – means grants, cost reimbursement contracts and other agreements between a State, local and Indian government and the Federal Government

05/31/2012 Page 5 Timekeeping: Definitions and Terms  Cost Objective - a function, organizational subdivision, contract, grant, or other activity for which cost data are needed and for which costs are incurred

05/31/2012 Page 6 Timekeeping: Definitions and Terms  Personnel Activity Report (PAR) - record maintained by employee working on more than one activity or cost objective which is prepared after the fact, reflecting the actual total activity of the employee, prepared at least monthly and signed and dated by the employee

05/31/2012 Page 7 Timekeeping: Definitions and Terms  Semi-Annual Certification - certification that employee worked on a single federal award or cost objective. Must be prepared at least semi-annually, signed, and dated by employee or supervisory official having firsthand knowledge of the work performed

05/31/2012 Page 8 Timekeeping: Content Financial Management System (FMS) Federal Timekeeping Requirements

05/31/2012 Page 9 Timekeeping: Components of a Good FMS  Written Policies and Procedures  New Staff/Position Training  Adherence to Approved Policies and Procedures  Annual Review and Training Updates  Timely

 Policies commit to compliance with state and federal requirements  Procedures have sufficient detail to guide employee compliance, and… Require training Identify accountability or consequences for compliance, and Require coordination between the program office and business office Characteristics of good policies and procedures 05/31/2012 Page 10

 Training is required when… An employee is first assigned to a grant funded position, the employee is trained An employee makes an error, the employee is retrained Procedures are revised, all affected employees are retrained A general risk of error is detected, all affected employees are retrained Characteristics of good policies and procedures 05/31/2012 Page 11

05/31/2012 Page 12 Timekeeping: Payroll Components  There are written policies and procedures governing payroll administration  Personnel Costs (salaries and benefits) from the Financial Expenditure Report (formerly DS-4044) agree with the district’s general ledger payroll accounts for all federal grant programs

05/31/2012 Page 13 Timekeeping: Payroll Components  All personnel costs for work performed are within the grant period  Personnel costs must comply with the employment contract which indicates the annual salary scale for the grant period

05/31/2012 Page 14 Timekeeping: Written Policies and Procedures  There are written policies and procedures on recording time distribution for employees who work on one or more federal awards or cost objectives

05/31/2012 Page 15 Timekeeping: Single Federal Award or Cost Objective For employees working solely on a single federal award OR cost objective:  The district has semi-annual certifications or a blanket certification show that the employees worked solely on a single federal award or cost objective

05/31/2012 Page 16 Timekeeping: Single Federal Award or Cost Objective  The certifications are prepared at least semi-annually  The certifications are signed by the employees or a supervisor with first- hand knowledge of the work performed by the employees and are completed and dated after the fact

05/31/2012 Page 17 Timekeeping: Single Federal Award or Cost Objective  The certifications are records of actual work performed and not prepared in advance of the time period covered or based on budget estimates.

05/31/2012 Page 18 Timekeeping: Multiple Activities or Cost Objectives For employees working on multiple activities OR cost objectives:  The district has Personnel Activity reports (PARs)  The PARs are prepared at least monthly

05/31/2012 Page 19 Timekeeping: Multiple Activities or Cost Objectives  The PARs are signed and dated by the employee  The PARs account for the staff person’s actual total activity

05/31/2012 Page 20 Timekeeping: Multiple Activities or Cost Objectives  The PARs must reflect an after-the-fact distribution of the actual activity of each employee

05/31/2012 Page 21 Timekeeping: Implementation There are only four (4) possible options to consider when determining whether to complete a semi-annual certification or personnel activity report. All possible circumstances will apply to one of the four options.

05/31/2012 Page 22 Timekeeping: Implementation Decision Making Tools:  Decision Making Rubric  Decision Making Graphic

05/31/2012 Page 23 Timekeeping: Decision Making Rubric When to do a Semi-Annual Certification or a Monthly PAR ? Cost Objective Single Multiple Grant Awards (or funding source) SingleDo Semi- Annual Certification (A) Do Monthly PAR (C) MultipleDo Semi- Annual Certification (B) Do Monthly PAR (D)

Timekeeping: Decision Making Graphic 05/31/2012 Page 24

Example A: Single Award/ Single Cost Objective A school district could have an employee funded with a single federal award and working on a single cost objective In Career and Technical Education, a health occupations teacher working all their time at the career center, a semi-annual certification is required. Example – Semi Annual Certification 05/31/2012 Page 25

05/31/2012 Page 26 Example A

Example B-1: Multiple Awards/ Single Cost Objective A school district could have an employee funded with more than one federal award working on a single cost objective, where the awards support the cost objective In IDEA, Part B Sec. 611 supports students ages 3-21 and Sec. 619 supports ages 3-5. If the employee works with only ages 3-5 on both awards, a semi annual certification is appropriate. Example – Semi Annual Certification 05/31/2012 Page 27

 Example B-2:  Multiple Awards/ Single Cost Objective  A school district could have an employee funded with more than one federal award or a federal and state award working on a single cost objective, where both awards support the cost objective  A district with a Migrant summer school program supports the teacher’s costs with both Migrant Education federal funds and an allowable non- federal award, a semi-annual certification is appropriate Example – Semi Annual Certification 05/31/2012 Page 28

05/31/2012 Page 29 Example B

Example C: Single Award/ Multiple Cost Objectives A school district could have an employee funded with a single federal award and working on multiple cost objectives A teacher paid 100% with Title I funds spends 80% of his time providing supplementary math instruction to students in a Targeted Assistance school, and 20% of his time developing and conducting Parent engagement (a required set aside). Example - PAR 05/31/2012 Page 30

05/31/2012 Page 31 Example C

Example D: Multiple Awards/ Multiple Cost Objectives A school district could have an employee funded with multiple federal awards and working on multiple cost objectives In IDEA, Part B Sec. 611 supports students ages 3-21 and Sec. 619 supports ages 3-5. If the employee works with students 3-5 and 6-21 a PAR is required Example - PAR 05/31/2012 Page 32

05/31/2012 Page 33 Example D

05/31/2012 Page 34 Timekeeping: Estimations  At beginning of year, use budget estimates for salary allocations Initially, use budget estimates or other distribution percentages determined before the services are performed  But these do not qualify as PARs!  May be used for interim accounting purposes

05/31/2012 Page 35 Timekeeping: Comparisons and Adjustments  Compare budget estimates to actual data and make adjustments If difference between actual cost and budgeted cost is 10% or greater, then make adjustment quarterly If difference is less than 10%, then make adjustment annually

05/31/2012 Page 36 Timekeeping: Budget Revisions  Budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances

05/31/2012 Page 37 Timekeeping: Sample Certifications and Reports  Semi-annual certifications  Personnel activity reports

05/31/2012 Page 38 Place to attach link to sample forms

05/31/2012 Page 39 Timekeeping: FAQs  What are the audit requirements? Your auditor will take a sample of expenditures and request timekeeping documentation for anyone charged to federal funds. If your records are insufficient, the auditor will include a finding in the audit report and may question costs. See the Michigan School Auditing Manual for further information

05/31/2012 Page 40 Timekeeping: FAQs  What happens if you cannot produce the documentation for the single audit? Auditor will question 100% of salaries and fringes. The penalty is a repayment

05/31/2012 Page 41 Timekeeping: Other Resources  The Michigan School Auditing Manual

05/31/2012 Page 42 Timekeeping: Other Information  Contacts MDE: Office of Audits MDE program offices ISD:

05/31/2012 Page 43 Committee Membership

05/31/2012 Page 44 MDE/MAISA Monitoring and Compliance Committee  Becky Rocho, Calhoun ISD, (269)  Patty Cantú, MDE, Office of Career and Technical Education, (517)

05/31/2012 Page 45 Timekeeping Subcommittee  Stephanie Murray – ISD Chair Traverse Bay Area Intermediate School District (231) ;  Margaret Madigan, MDE Co-Chair MDE – Office of Field Services (517) ;  Kathy Weller – MDE Co-Chair MDE – Office of Audits (517) ;

05/31/2012 Page 46 Timekeeping Subcommittee  David Gray MDE - Office of Field Services (517) ;  Pat Meaux MDE – Office of Field Services (517) ;  Harvey Vermeesch Lapeer County ISD (810) ;