We’ve been tracking the unfortunate situation at a Pennsylvania non-profit having their grant funding frozen after $20 million in spending was out of compliance.
It is a very sad story.
Lots of audit findings, lots of areas of non-compliance.
Not to mention lots of heads rolling in the organization after the grant management…or lack of it was revealed.
Don’t Just Wing Personnel and Fringe Benefit Costs
Grant Management that is in compliance with the Administrative Requirements charges for salaries and wages must be based on documented payrolls approved by a responsible official of the organization.
The charging of salaries to Federal awards must be backed up with personnel activity reports.
Are You Making These Mistakes?
Unfortunately, the recent audit of this organization revealed:
• Charges to the grant for wages were based on budget amounts, not actual costs
• Contractor payments were charged as to the grants as part of the salaries category
• Employees were unaware that they were working on a grant project and didn’t understand the time-tracking requirements
• The total time that each employee was compensated for was not tracked
• Time sheets were not signed by the employee, nor approved by a supervisor
• Time amounts allocated to the federal grant could not be substantiated
• Expenditures were not supported by payroll records
Turn This Lemon into Lemonade
Let’s learn from their mistakes and see what their corrective action plan can show us about building a time and attendance process.
Here are 5 shortcuts to having a time and attendance process that meets the requirements for charging the federal grant for salaries.
Shortcut #1 Have a Timekeeping Policy
The organization should have a policy in place to ensure that all time spent on grant-related activities is accurately tracked and approved.
Shortcut #2: Have a Process for Timecard Submission and Approval
• When each employee must submit their timecards
• What hours must be reported-(Hint: All hours must be reported even if not worked on the grant.)
• Who must approve the timesheet and by when
• Certification by both the employee and their direct supervisor that the hours were spent in accordance with approved grant budgets
Shortcut #3 Have a Training Process-Including Refresher Training
Make sure that employees receive adequate training on what the requirements are for charging time to the grant and maintaining adequate timekeeping records in compliance with the Administrative Requirements.
• Refresher training should be held at periodic intervals for all employees and for instances of non-compliance.
Shortcut #4 Have a Communication Process
Make sure that regular communication and information from the Finance Department or other Grant Management professionals are flowing back to the employees working on the grant and supervisors reviewing and approving timecards.
This communication should include:
• The amount of time the employee is expected to devote to the grant activities for each time period.
• A comparison of actual spending to date against the grant budget so the certifying supervisor can ensure that actual spending is in accordance with the approved grant spending plan.
Shortcut #5 Limit Expenditures to Approved Personnel
The ability to enter grant time on an employee’s timesheet should be limited to employees listed on the approved grant budget.
• The supervisor should verify that the employee is authorized to charge time to the specific grant prior to approving the timesheet.
• The Finance Department or other responsible Grant Professionals should reconcile the timesheets so that only employees who are authorized to charge time to the federal award are doing so and that spending is in-line with the approved grant budget.
What About Your Organization?
What about your time-keeping process?
Would it stand this level of scrutiny?
Now is a great time to review and update your time and attendance policies and procedures for your organization!
Lucy Morgan CPA, MBA
CEO, Compliance Warrior
Want to learn the basics of grant management? Sign up for our free 5-part series “Grant Management Basics” today.