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 projects

Attachment 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 ExampleWeekly 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 7OT 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 AdministratorJana.cassidy@dot.state.oh.us

Send requests, questions and all LPA correspondence to: DOT.LPAQuestions@dot.state.oh.us

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?