federal cost principles
DESCRIPTION
Federal Cost Principles. Georgia Department of Education School Nutrition Program Finance & Budget Unit Edward Dung. Statutory Authorization. Title 2 Part 225 Code of Federal Regulation (CFR) OMB Circular A – 87 Title 2 Part 230 Code of Federal Regulation (CFR) OMB Circular A – 122 - PowerPoint PPT PresentationTRANSCRIPT
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Federal Cost Principles
Georgia Department of Education
School Nutrition Program
Finance & Budget UnitEdward Dung
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Statutory Authorization
Title 2 Part 225 Code of Federal Regulation (CFR) OMB Circular A – 87
Title 2 Part 230 Code of Federal Regulation (CFR) OMB Circular A – 122
– Appendix A
– Appendix B
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Importance of Cost Principles
In order to be chargeable to the Child Nutrition Program, a cost (whether a direct or indirect cost) must be allowable under federal guidelines for the administration and operations of the CNP.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Objectives
Restrict the use of program funds to ensure expenses are incurred to meet ONLY the needs of the intended program {Child Nutrition Program (CNP)}.
Ensure compliance with government-wide and specific rules and regulations.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Factors To Consider In Deciding Allowable Costs
A cost item is allowable if it is:– Necessary– Reasonable– Allocable– Not prohibited under state or local laws– Conform to the limitations of the Federal Award
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Factors To ConsiderIn Deciding Allowable Costs
A cost item is allowable if it is:– Consistently treated as a direct or indirect cost– Determined in accordance with GAAP– Net of applicable credits– Adequately documented
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
What Costs areReasonable & Necessary
Could the SNP operations be carried out without incurring this cost?
Would a prudent person find the cost to be reasonable under the circumstances?
Is the cost recognized as ordinary and necessary for the operation of SNP?
How does the cost contribute to achieving SNP objectives?
Could the SFA defend this purchase to the SA, the media, auditors, and other SNP stakeholders?
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
What Costs are Allocable
The CNP must benefit, directly or indirectly, from the cost incurred.
Each cost objective must be charged its fair share of the cost and adequate documents retained.
Costs may not be billed to the SNP to overcome fund deficiencies in other Federal Program(s) or School District or to avoid certain regulatory limitations.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Points To Remember
The list of cost items in Appendix B is extensive but not exhaustive.
A cost item may be unallowable, based on the application of Appendix A, even though it is listed as allowable in Appendix B.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Cost Principles
Example 1: Murals A school cafeteria is renovated and
the cost includes expenditures for a mural. Is this cost allowable?
It depends
A mural would be allowable if it conveys some sort of message that promotes the program. Otherwise, it will be unallowable. Carefully consider the reasonableness of the mural.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Cost Principles
Example 2: Lunch Room Monitors An SFA pays a fee to individuals to monitor students in
the cafeteria. Is the fee paid to the lunch room monitors allowable?
Yes Fees for lunch room supervision can be considered an
allowable cost of operations. FNS Instruction 782-6
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Cost Principles
Example 3: Construction A new school is built and part of the
cost of building the cafeteria is billed to the SNP. Is the cost assigned to the SNP allowable?
No
7CFR 210.14 Specifically disallows the purchase or constructing a building or the purchase of land unless prior approval is obtained from FNS.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Cost Principles
Example 4: Renovations/Remodeling/Reconstruction A section of the cafeteria is reconstructed to properly
locate the POS system to comply with meal count requirements. Is this cost of the reconstruction an allowable cost? What if the cost adds to the value of the cafeteria or prolongs its intended life?
Yes
It is a cost incurred to comply with federal requirements for the operations of SNP. However, it should not add to the value of the property or prolong its intended life.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Cost PrinciplesOther Examples
Promotional Items
SNP Employee Incentives
Vehicles
Charges
Not Allowable
Allowable
Allowable
Not Allowable
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Federal Cost Principles Apply to
Indirect Costs
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Meaning of Indirect Cost
Indirect cost are costs incurred for the benefit of multiple programs, functions, or other cost objectives.
Indirect cost billed to the SNP must first be allowable cost for reasonable and necessary operations of the SNP.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Indirect Cost vs. Direct Cost
• An indirect cost in one given circumstance could be a direct cost in another.
A cost item cannot be treated as a direct cost to the SNP if the same cost is treated as a indirect cost in other federal programs.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
School Improvement
Finance Office
Georgia Power
Title 1
InstructionsSchool Nutrition
GNG Water AT&T
Invoice
Invoice
Indirect Cost
SNP Allocation
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
School Improvement
Finance Office
Georgia Power
Title 1
InstructionsSchool
Nutrition
GNG Water AT&T
Indirect Cost
SNP Allocation
Direct C
ost to
SNP
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Application of Indirect Cost
The general fund often bills the food service for its share of the indirect by applying the State-approved indirect cost rate to the SNP adjusted cost base OR allocates indirect cost based of a more reasonable methodology.
The billed amount generated is the amount of indirect cost properly allocable to the school food service.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
SFA must not overpay!
An SFA is NOT allowed to pay any amount in excess of the properly billed indirect cost with funds from the nonprofit school food serviced account.
SFAs paying indirect cost MUST be provided the necessary tools to verify and validate costs when necessary
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Retroactive Billing Of Indirect Cost Is Unallowable
It is unallowable to bill the nonprofit school food service account for indirect costs that were paid from the general fund in prior years.
Unless an agreement exists indicating it was a loan to the SNP.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Shifting Indirect Cost IsUnallowable!
• Shifting indirect cost to SNP because other programs do not have enough funds is NOT an option.
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
Edward DungAuditor
School Nutrition Program
Finance and Budget Unit
Dr. John D. Barge, State School Superintendent“Making Education Work for All Georgians”www.gadoe.org
In accordance with State and Federal Law, the Georgia Department of Education prohibits discrimination on the basis of race, color, religion, national origin, sex, disability, or age in its educational and employment activities. Inquiries regarding the application of these practices may be addressed to the General Counsel of the Georgia Department of Education, 2052 Twin Towers East, Atlanta, Georgia, 30334, (404) 656-2800.
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