(1)A service provider subject to audit under these rules will keep its accounting records consistent with Generally Accepted Accounting Principles. Accounting records will be retained for three years from the date of the expiration of the OYA’s agreement or from the finalization of an audit, whichever comes later. Allocation methods for expenses will be documented. Relevant calculations representing allocations will be shown. The allocation method will reasonably distribute expenses shared by service providers or programs. Charges assessed against a service provider by a related organization will be justified by the related organization as to the method and reason for relevant cost allocation. The expense invoice will list the location where services and supplies purchases are delivered for any item in excess of $1,000.
(2)Record requirements for personal services:
(a)Reports reflecting the distribution of labor of each employee must be maintained for all staff members, professional and nonprofessional, whose compensation is charged in whole or in part to OYA funds. To support the allocation of indirect costs, such reports must also be maintained for other employees whose work involves two or more functions or activities if a distribution of their compensation between such functions or activities is needed in the determination of the organization’s indirect cost rate(s). Reports maintained to satisfy these requirements must meet the following standards:
(A)The reports must reflect an after-the-fact determination of the actual activity of each employee. Budget estimates (i.e., estimates determined before the services are performed) do not qualify as support for charges to OYA funds;
(B)Each report must account for the total activity for which employees are compensated and which is required in fulfillment of their obligations to the organization;
(C)The reports must be signed by the individual employee, or by a responsible supervisory official having first-hand knowledge of the activities performed by the employee, to attest that the distribution of activity represents a reasonable distribution of the actual work performed by the employee during the periods covered by the reports;
(D)The reports must be prepared at least monthly and must coincide with one or more pay periods;
(E)Periodic time studies, in lieu of ongoing time reports, may be used to allocate salary and wage costs. However, the time studies used must meet the following criteria:
(i)A minimally acceptable time study must encompass at least one full week per month of the cost reporting period.
(ii)Each week selected must be a full work week (e.g., Monday to Friday, Monday to Saturday or Sunday to Saturday).
(iii)The weeks selected must be equally distributed among the months in the cost reporting period, e.g., for a 12 month period three of the 12 weeks in the study must be the first week beginning in the month, three weeks the second week beginning in the month, three weeks the third and three weeks the fourth.
(iv)No two consecutive months may use the same week for the study, (e.g., if the second week beginning in April is the study week for April, the weeks selected for March and May may not be the second week beginning in those months).
(v)The time study must be contemporaneous with the costs to be allocated. Thus, a time study conducted in the current cost reporting year may not be used to allocate the costs of prior or subsequent cost reporting years.
(vi)The time study must apply to a specific provider. Thus, chain organizations may not use a time study from one provider to allocate the costs of another provider or a time study of a sample group of providers to allocate the costs of all providers within the chain.
(b)Any person being compensated for services to a service provider who is not an employee of the organization will have a written contract with the service provider. The contract will set forth the specific services being purchased, the contract time period, the rate at which compensation will be paid and an hourly rate where applicable.
(3)Record requirements for capital expenditures:
(a)Depreciation for capital outlay, capital improvements, and capital construction will be documented in a depreciation schedule. The depreciation schedule at a minimum will include a description of the asset, date of acquisition, cost basis, depreciation method, estimated useful life, annual depreciation expense and accumulated depreciation.
(b)Any capital expenditures purchased by a service provider using OYA funds will be listed on an inventory system showing location of item and reference to purchase invoice and payment receipt location. The inventory will be checked annually and verification of the inventory list signed by the inventory control person. All capital items purchased with OYA funds must be used in an OYA approved program.
(4)Reasonable procedures will be established to ensure the security of cash, blank checks, purchase orders, check protector machines, and signature stamps.
(5)A service provider must expend funds consistent with an agreement or direct contract, these rules, the required program or licensing rule, and federal and state requirements. For services contracted with a predetermined rate, OYA funds not used in delivering the service of the required quantity and quality will be classified as carryover. Carryover of OYA administered funds will be spent for OYA services. These funds will be kept in restricted accounts in the financial records. Funds spent on unallowed costs will be considered noncompliance and will be returned to OYA.
(6)All travel expenses will be supported by a system of authorized trip reports, receipts, and/or other documentation. Authorization is indicated by approval of the travel expenditure by the Director (or person with delegated authority) of the service provider.
Rule 416-250-0030 — Expenses,