Reforms to Cost Principles
As a follow up from the previous Not-for-Profit alert that was released on Uniform Administrative Requirements Final Guidance, this update focuses on the second part of the reform – Subpart E: Reforms to Cost Principles.
SUBPART E: REFORMS TO COST PRINCIPLES
Major topics of discussion in this sectioninclude direct and indirect costs. New to indirect costs is a de minimis rate of 10% of modified total direct costs for agencies without an approved negotiated rate. 33 selected items of costs are discussed, but we would like to bring your attention to the following few:
Compensation – Personal Services
The final guidance clarifies the standards for documentation required to support personnel services. The non-Federal agency must maintain records that accurately reflect the work performed and be supported by internal controls to provide reasonable assurance that the charges are accurate, allowable and properly allocated. They also affirm the long-standing position that budget estimates alone DO NOT qualify as supporting documentation
Compensation – Fringe Benefits
Detailed guidance is provided for categories such as leave, payroll taxes, unemployment insurance, insurance, automobiles, pension and post-retirement health costs and severance pay.
Depreciation
Clarification was added for the determination of donated assets to reflect the fair market value at the time of the donation when determining the asset’s acquisition cost.
Travel Costs
Additional language is added to address one of the major reforms by including family-friendly policies allowing individuals employed at a non-Federal agency, with dependent care responsibilities, availability to day-care facilities.
Author:Kevin Margiatto, CPA | [email protected]
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The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your individual facts and circumstances.
