HigherEd004

[HigerEd004]

Help with deferred pay, Government contracts and total time accounting!

We have several DoD projects and US sponsored Grants and use total time accounting.  How do bill deferred pay and it is allowable to do so under the FAR and DFARS acceptable accounting system?

[Neil Roberts]

@HigerED004, can you explain with an example, what the problem or issue seems to be? There are several different concepts mentioned in your post. Examples: use of the word "allowable" infers a cost reimbursement arrangement, Grants are different from FAR federal contracts (are your "projects" federal contracts?), total time accounting system for recording hours does not, to me, have a clear relationship with "deferred pay" (and who is being paid on a "deferred" basis, your entity from the Government or a supplier to your entity).

[HigerEd004]

Faculty have 9 or 10 month contracts where they can choose to have their pay deferred (accrued) to stretch over 12 months.  We are a large research university and have both DoD projects, Government Grants, as well as various other projects and non-Gov Grants.  example: 9 month contracted faculty employee makes 120k a year.  They work their 9 months and receive 13.33k a month.  The choose the deferral option and get paid $10k a month during the time they work, then in the summer while they are not under contract they continue to get paid at $10k.

Currently we only bill the months the employees enter time in Costpoint, our Accounting system, while they continue to get paid in the summer at their deferred amount.  Any contract type other than FFP we are under billing our Customer/Sponsor for the work performed as we only bill the months they have hours in CP.  

This does not seem correct to me but our leadership has pointed out:  FAR 52.216-7 Allowable Cost and Payment b) reimbursing costs i)Those recorded costs that, at the time of the request for reimbursement, the Contractor has paid by cash, check, or other form of actual payment for items or services purchased directly for the contract; and under DFARS 252.242-7006 Accounting System Administration (c) System criteria. The Contractor’s accounting system shall provide for— (4) A logical and consistent method for the accumulation and allocation of indirect costs to intermediate and final cost objectives; (7) Approval and documentation of adjusting entries; (9) A timekeeping system that identifies employees’ labor by intermediate or final cost objectives; (11) Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account; (16) Billings that can be reconciled to the cost accounts for both current and cumulative amounts claimed and comply with contract terms

I am trying to justify billing the months they are not working but so far my argument is not working!  

[Neil Roberts]

@HigerEd004, your post now seems ready for a response. There are some members on this site that are experts at contractor accounting systems and allowable cost and payment requirements. 

[Neil Roberts]

@HigerEd004, my take is as follows:

Costpoint appears to have some kind of programming software of its system for deferred compensation. Have you presented your detailed scenario to them and if so, what was the response? If not, perhaps installation of it resolves the matter. If you already have installed this Costpoint deferred compensation programming, and the accounting system was reviewed and found to be adequate, whatever results it yields as to recorded/incurred costs and employee timekeeping entries/timing should yield acceptable deferred compensation results that comply with 52.216-7 (when it is included in a contract.) Ask them if it does and the extent to which Cost Accounting Standards 48 ECFR 9904.415-50 may be applicable and included in its deferred compensation program.

 

     

[C Culham]

11 hours ago, Neil Roberts said:

@HigerEd004, my take is as follows:

Costpoint appears to have some kind of programming software of its system for deferred compensation. Have you presented your detailed scenario to them and if so, what was the response? If not, perhaps installation of it resolves the matter. If you already have installed this Costpoint deferred compensation programming, and the accounting system was reviewed and found to be adequate, whatever results it yields as to recorded/incurred costs and employee timekeeping entries/timing should yield acceptable deferred compensation results that comply with 52.216-7 (when it is included in a contract.) Ask them if it does and the extent to which Cost Accounting Standards 48 ECFR 9904.415-50 may be applicable and included in its deferred compensation program.

 

     

@HigerEd004 Others may weigh in but I agree with @Neil Roberts   especially the "ask them" part of his response.

You have mentioned "large  research university" and both grants and contracts.   The references lead me to think that  2 CFR 200.401(b) or (c) applies?  If so it supports that   as indicated by Neil 48 CFR 9904 would be the guide as you have both both contracts and grants.   This said the reference in Subpart E of 2 CFR 200.430(h) is noted just in case.   

[Neil Roberts]

@HigerED004, paying faculty wages during the summer does not strike me as something new even in the world of government contracts/grants. I believe your university should consider bench marking other large research universities for possible solutions. Large research universities seem to maintain an office of contracts and grants to assist proposals and financial execution of grants and contracts.

[Retreadfed]

On 7/5/2023 at 11:28 AM, HigerEd004 said:

We are a large research university and have both DoD projects, Government Grants, as well as various other projects and non-Gov Grants. 

I don't know what you mean by "projects" in this context, but the FAR, DFARS and CAS do not apply to grants.  Instead, grants are covered by 2 CFR 200 as implemented by the agencies through the promulgation of regulations that apply to grants.  As for the applicability of the CAS to contracts awarded to IHE's, remember not all the CAS apply to IHEs.  Instead, only 4 CAS specifically written for IHEs apply to IHEs.  CAS 415 is not one of them.  Further, the CAS only deal with the measurement, assignment and allocation of costs to contracts.  The allowability of costs allocated to contracts by the CAS is determined by the cost principles applicable to the contract.  In this case, that would be the cost principles in 2 CFR 200, as amended by the agency awarding the contract.  Carl has pointed you in the right direction by referencing 2 CFR 200.430(h).

However, if you have any cost reimbursement contracts subject to the FAR, look at FAR 52.216-7(b)(ii)(C).  That might help you.  Also, you did not say how you are calculating the faculty labor costs you include in your budgets, submitted in regard to grant applications or contract proposals.