division of finance office of external audits december 2011
TRANSCRIPT
LPA Recovery for CE Costs
Division of FinanceOffice of External Audits
December 2011
Overview
History & Background Timekeeping Requirements Actual Cost Method Safe Harbor Method Cost Allocation Plan (CAP) Method Approval Process
History & Background
History & Background
OMB Circular A-87 Establishes cost principles that must be
followed on Federally funded projectsAttachment B Section 8(h)
Lists several timekeeping requirements These requirements MUST be followed for CE Labor to eligible for Federal reimbursement
History & Background
LPAs MUST comply with the timekeeping requirements of A-87 for CE labor to be eligible for Federal reimbursement
LPAs are also able to recover fringe benefits and overhead for CE labor – 3 methods
Audit Memo Cost Recovery for Fringe Benefits and Overhead addresses CE reimbursement Memo is in the LPA Manual and on the
LPA Audit website
Timekeeping Requirements
Timekeeping Requirements
Labor rates billed on Federal projects must be based on payrolls The labor rate billed on the project
must match the pay rate actually paid to the employee
Supporting documentation is the payroll report
Employees working on multiple activities must support their time on a timecard if they work on (in a year): More than one Federal project A Federal project and a non Federal
project A direct activity and an indirect activity An unallowable activity and an
allowable activity
Timekeeping Requirements
Timekeeping Requirements
Timecards MUST: Reflect an after the fact distribution
of actual activity of each employee Account for all hours worked plus
any leave time used Be prepared at least monthly and
must coincide with one or more pay periods
Be signed and dated by the employee
Timecard Example
Weekly Timecard
For Week Ending: 10/8/2011
Week #1
Project Name Project #
Monday Tuesday Wednesday Thursday Friday Total
Time Time Time Time Time Weekly Hours
Federal job 1 1 8:00 5:00 PM 8
Federal job 2 2 8:00 12:00 4
Local job 1 3 1:00 5:00 4
local job 2 4 8:00 5:00 8
Admin Time n/a 0
Vacation n/a 8:00 5:00 8
Sick n/a 8:00 5:00 8
Total Daily Hours 8 8 8 8 8 40
Employee Signature Date
Timekeeping Requirements
Summary: In order for CE costs to get reimbursed LPAs
MUST:▪ Track time each day by activity on timecards▪ This must be done by all employees working on multiple activities▪ Timecards MUST be reviewed, signed, and show all hours▪ Only tracking hours worked on Federal projects or only tracking hours while a Federal project is in progress is noncompliant
Actual Cost Method
Actual Cost Method
LPAs are reimbursed for the actual cost of fringe benefits plus the actual labor cost The employer share of the fringe
benefits can be found on the payroll reports.
Note: Fringes do NOT increase for OT hours
LPAs do NOT recover overhead costs
Example
Employee 1
Pay Rate $ 15.80 Reg Total $ 862.00 A
Fringe Rate $ 5.75 OT Total $ 206.15 B
Loaded Reg Rate
$ 21.55
Amt to Invoice $ 1,068.15
Hours Worked 40
Reg Total $ 862.00 A
OT Rate $ 23.70
Fringe Rate $ 5.75
Loaded OT rate
$ 29.45
OT Hours Worked 7
OT Total $ 206.15 B
Actual Cost Method
To use this method you MUST: Obtain approval from ODOT Office of
External Audits – PRIOR to labor being incurred
Include with your CE invoices: Timesheets to support number of
hours worked Payroll summary report(s) to
support pay rate and fringe rate for each employee
Safe Harbor Rate Method
Safe Harbor Rate Method
LPAs are reimbursed for fringe benefits and overhead costs using set rates determined by the Auditor of State Fringe rate is 30% and applied to direct
labor (excluding OT premium) Overhead rate is 38% and is applied to
direct labor (excluding OT premium) plus the fringe cost
Template is available on LPA Audit website▪ http://www.dot.state.oh.us/Divisions/Finance/
Auditing/Pages/LocalPublicAgencies-LPA.aspx
Safe Harbor Rate Example
Direct Labor - In Dollars 712.50$ Less Overtime Premium (37.50)$
Direct Labor Subtotal 675.00$ Fringe Rate @ 30% 30%
Fringe in Dollars 202.50$
Direct Labor (Less Overtime Premium) 675.00$ + Fringe in Dollars 202.50$
Direct Labor + Fringe in Dollars 877.50$ Overhead Rate @ 38% 38%
Overhead in Dollars 333.450$
Direct Labor - In Dollars 712.50$ + Fringe in Dollars 202.50$
+ Overhead in Dollars 333.450$ Total Charged 1,248.45$
Safe Harbor Rate
To use this method you MUST: Obtain approval from ODOT Office of
External Audits – PRIOR to labor being incurred
Include with your CE invoices: Timesheets to support number of
hours worked Payroll summary report(s) to
support pay rate each employee
Cost Allocation Plan (CAP) Method
Cost Allocation Plan Method
LPAs are reimbursed for fringe benefits and overhead costs using rates calculated in accordance with OMB Circular A-87 Rates are calculated based on the LPAs annual
financial information Most complex method All CAP rates are inspected by ODOT All CAP rates are subject to audit by ODOT Template is available on LPA Audit website
http://www.dot.state.oh.us/Divisions/Finance/Auditing/Pages/LocalPublicAgencies-LPA.aspx
Cost Allocation Plan Method
Direct Labor - In Dollars 712.50$ Less Overtime Premium (37.50)$
Direct Labor Subtotal 675.00$ CAP Fringe Rate 32%Fringe in Dollars 216.00$
Direct Labor (Less Overtime Premium) 675.00$ + Fringe in Dollars 216.00$
Direct Labor + Fringe in Dollars 891.00$ CAP Overhead Rate 86%Overhead in Dollars 766.260$
Direct Labor - In Dollars 712.50$ + Fringe in Dollars 216.00$
+ Overhead in Dollars 766.260$ Total Charged 1,694.76$
Cost Allocation Plan Method
To use this method you MUST: Obtain approval from ODOT Office of
External Audits – PRIOR to labor being incurred
Include with your CE invoices: Timesheets to support number of
hours worked Payroll summary report(s) to
support pay rate for each employee
Approval Process
Approval Process
All methods must be approved by ODOT Office of External Audits
Actual Cost and Safe Harbor approvals are valid through 12/31
CAP rates must be submitted to ODOT by 3/31 and are valid through the following 3/31
The approved rates can NOT be applied to labor incurred prior to receiving approval
ODOT Office of External AuditsContact Information
Jana Cassidy, External Audits [email protected]
Send requests, questions and all LPA correspondence to: [email protected]
http://www.dot.state.oh.us/Divisions/Finance/Auditing/Pages/LocalPublicAgencies-LPA.aspx
Ohio Department of Transportation1980 W. Broad St., 4th FloorColumbus, Ohio 43223614-644-7892
Questions?