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Financial Management: Allowable Costs

Financial Management: Allowable Costs. Allowable Costs Overview. Reasonable and necessary Allocable Legal under state and local law Conform with federal law and grant terms. Consistently treated In accordance with GAAP Not included as match. Allowable Costs.

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Financial Management: Allowable Costs

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  1. Financial Management: Allowable Costs

  2. Allowable CostsOverview • Reasonable and necessary • Allocable • Legal under state and local law • Conform with federal law and grant terms

  3. Consistently treated In accordance with GAAP Not included as match Allowable Costs

  4. Allowable Costs: Regulations and Guidance • General Education Provisions Act (GEPA) • Program statute and regulations • EDGAR (Education Department) General Administrative Regulations) Sub Part C, §80.22 Allowable Costs

  5. Allowable Costs: Regulations and Guidance • OMB Circular A 87 State, Local, and Indian Tribal Governments • Section C – Basic Guidelines • Attachment B – Selected Items of Cost

  6. Allowable Costs • Helpful Questions for Analyzing Costs: • Is the proposed cost allowable under the relevant program? • Is the proposed cost consistent with an approved program plan and budget?

  7. Allowable Costs • Is the proposed cost consistent with program specific fiscal rules? • Is the proposed cost consistent with EDGAR?

  8. Allowable Costs:Basis for Allowability • Must follow applicable cost principle to determine reasonableness, allowability, and allocability of all costs • All costs must be: • Necessary • Reasonable • Allocable • Legal under state and local law

  9. Allowable Costs:Necessary • A cost is necessary and reasonable if: • Needed for the performance or administration of the grant • Follows sound business practices; arms length bargaining • Reflects fair market prices for comparable goods or services • Is prudent

  10. Allowable Costs:Necessary • Practical aspects of ‘necessary’ • Do I really need this to administer my program? • Is this the minimum amount I need to spend to meet my need?

  11. Allowable Costs:Reasonable • Practical aspects of ‘reasonable’ • Is this targeted to valid programmatic/administrative considerations? • Do I have capacity to use what I am purchasing for this program?

  12. Allowable Costs:Reasonable • Did I pay a fair rate and can I prove it? • If this expense were in the local newspaper “Headlines”, would I be comfortable?

  13. Allowable Costs:Allocable • Practical aspects of ‘reasonable’ • Can I prove the program benefited? • Time/effort records • Inventory management records • Can I prove other programs are not benefiting? • Ensuring only authorized use • Incidental benefit

  14. Allowable Costs:Adequate • Adequately documented • Amount of funds under grant • How the funds are used • Total cost of the project • Share of costs provided by other sources

  15. Allowable Costs:Adequate • Records that show compliance • Records that show performance • Other records to facilitate an effective audit

  16. Allowable Costs:Compensation for Service • Overview of process • Estimate how employee will work • Pay based on estimate • Reconcile estimates to how actually worked

  17. Allowable Costs:Compensation for Service • Necessary documentation • Payroll records • Time and effort records • Semi-annual certifications (single cost objective) • Personnel Activity Reports (PARs) (multiple cost objectives)

  18. Allowable Costs:Things to Consider • Maintenance of Effort • Supplement vs. Supplant • In-Kind Requirements • LEA Match (soft and hard match) • Timely Amendments • Document, Document, Document

  19. Allowable Costs: FAQs • Is there a list of allowable costs that we can look at to analyze a contemplated cost?No. Although lists are available, they are lists of “allowable, but”, they must meet the other tests spoken to earlier

  20. Allowable Costs: Other Resources • MDE • Office of Audits (Auditing Manual • http://www.michigan.gov/mde/0,1607,7-140-6530_9091---,00.html • MDE – Specific Program Office

  21. Allowable Costs: Other Resources • OMB Circular A-21, Cost Principles for Educational Institutions • Part C: Basic Considerations • Part J: General Provisions for Selected Items of Cost

  22. Allowable Costs: Other Resources • OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments • Appendix A: General Principles for Determining Allowable Costs

  23. Allowable Costs: Other Resources • OMB Circular A-133, Compliance Supplement • OMB Circular A-122, Cost Principles for Non-Profit Organizations • Attachment B, Selected Items of Cost

  24. Allowable Costs: More Information • Contacts • MDE: Specific Program Office • ISD:

  25. Resources

  26. Resources All resources identified in this Professional Development module are available on: Michigan LearnPort www.learnport.org Collaboration Center Community Room LEA Financial Management Resources

  27. Committee Membership

  28. MDE/MAISA Monitoring and Compliance Committee • Becky Rocho, Calhoun ISD, (269) 781-5141 rochob@calhounisd.org • Patty Cantú, MDE, Office of Career and Technical Education, (517) 373-3373 cantup@michigan.gov • Mary Ann Chartrand, MDE, Grants Coordination and School Support, (517) 373-8862 chartrandm@michigan.gov • Terri Lynn Giannola, MDE, Office of Career and Technical Education, (517) 373-4670 giannolat@michigan.gov

  29. Allowable Costs Subcommittee • Tony Suszek, ISD Chair Alpena-Montmorency-Alcona ESD (989) 354-3101 ext.117; suszekt@amaesd.k12.mi.us • John Cloft – MDE Co-Chair MDE – Office of Special Education-EIS (517) 335-0475; cloftj@michigan.gov • John Andrejack – MDE Co-Chair MDE – Office of Special Education-EIS (517) 241-4035; andrejackj@michigan.gov • Steve Peffers Marquette-Alger RESA (906) 226-5101; speffers@maresa.org • Gary Schafer MDE – Early Childhood Education (517) 335-2875; schaferg@michigan.gov

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