Returning Value Blog

Charging Personnel Costs to Federal Awards

Salary costs represent the bulk of dollars from federal grants and often pose compliance risks and challenges to new and experienced recipients alike. One question we are often asked by clients is, "how can we maintain compliance with federal regulations regarding accurately supporting and recording personnel costs when not all of our employees complete and submit timesheets?"

In this article, we will discuss the federal requirements for charging personnel costs to awards, alternatives to timesheet processes, and common challenges and pitfalls to avoid when charging labor costs to federal grants.

When asked what is at the top of their finance department’s “to-do” list, many nonprofits name the need for an updated cost allocation plan. An effective cost allocation strategy is essential to organizations’ understanding of how their resources are being deployed. It is also integral to performing cost analyses, such as evaluating funding requirements and comparing actual versus budgeted costs.

On September 17, the Financial Accounting Standards Board (FASB) issued an accounting rule that will provide more detailed information about noncash contributions charities and other not-for-profit organizations receive known as “gifts in kind.” Here are the details.

August 3, 2020, President Trump signed the legislation to assist nonprofits and government entities into law.

Now present on every continent except Antarctica, COVID-19 has infected more than 125,000 people and is responsible for more than 4,600 deaths. With the number of cases in the U.S. continuing to climb, individuals and companies alike are taking steps to prepare for a pandemic. From a shortage of masks and hand sanitizer to CDC-imposed travel restrictions and the cancellation of conferences and other large events across the globe, this public health emergency is rapidly evolving and all sectors are having to navigate its impact and uncertainty around what the future holds.

When the Financial Accounting Standards Board (FASB) updated its rules for recognizing revenue from contracts in 2014, it only added to the confusion that nonprofits already had about accounting for grants and similar contracts.

Recent Tax Court cases have demonstrated the Internal Revenue Service’s (IRS) increase in strict compliance with the substantiation requirements for charitable donations. For example, a $64.5 million charitable contribution was recently disallowed because there was no written acknowledgment from the recipient at the time the return was filed.

The Financial Accounting Standards Board (FASB) released the Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities on Aug. 18, and you can read the full ASU here.