Standards for Documentation of Personnel Expenses

Notice Number: NOT-OD-18-108

Key Dates
Release Date:   November 30, 2017

Related Announcements
None

Issued by
National Institutes of Health (NIH)

Purpose

The purpose of this Notice is to acknowledge and remind recipients that NIH implemented the provisions of 45 CFR 75.430(i), Standards for Documentation of Personnel Expenses.  This section of the NIH Grants Policy Statement (Sec. 7.9.1 – Selected Items of Cost) addresses compensation for personal services and the various certification systems and other forms of documenting personnel expenses that incorporate the flexibilities provided by OMB’s Uniform Guidance. 

Background

In accordance with Section 2034(e) of the 21st Century Cures Act, P.L. 114-255, enacted December 13, 2016, Reducing Administrative Burden for Researchers, NIH is clarifying the applicability and flexibility of the requirements for documentation of personnel expenses for its grants and cooperative agreement recipients.   To that end, NIH supports recipients’ systems that document personnel expenses charged to NIH grants and cooperative agreements that are consistent with the regulatory flexibilities discussed below.

Standards for Documentation of Personnel Expenses.

In accordance with 45 CFR 75.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, as follows (in part):

Records of personnel expenses must:
Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
Be incorporated into the official records of the non-Federal entity;
Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (or Institutional Base Salary for Institutes of Higher Education);
Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy;
Comply with the established accounting policies and practices of the non-Federal entity
Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.

Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that they meet the standards required in 45 CFR 75.430 paragraph (i)(1)(viii).Because practices vary as to the activity constituting a full workload (or Institutional Base Salary for Institutes of Higher Education), records may reflect categories of activities expressed as a percentage distribution of total activities.
It is recognized that teaching, research, service, and administration are often inextricably intermingled in an academic setting. When recording salaries and wages charged to Federal awards for Institutes of Higher Education, a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected.

For records which meet the required standards, the non-Federal entity will not be required to provide additional support or documentation for the work performed, other than that referenced in 45 CFR 75.430 paragraph (i)(3).

In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day.

Salaries and wages of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner as salaries and wages claimed for reimbursement from Federal awards.

For states, local governments and Indian tribes, substitute processes or systems for allocating salaries and wages to Federal awards may be used in place of, or in addition to, the records personnel expenses described above, if approved by the cognizant agency for indirect cost. Such systems may include, but are not limited to, random moment sampling, “rolling” time studies, case counts, or other quantifiable measures of work performed.

Cognizant agencies for indirect costs are encouraged to approve alternative proposals based on outcomes and milestones for program performance where these are clearly documented. Where approved by the Federal cognizant agency for indirect costs, these plans are acceptable as an alternative to the requirements for records of personnel expenses.

For Federal awards of similar purpose activity or instances of approved blended funding, a non-Federal entity may submit performance plans that incorporate funds from multiple Federal awards and account for their combined use based on performance-oriented metrics, provided that such plans are approved in advance by all involved HHS awarding agencies. In these instances, the non-Federal entity must submit a request for waiver of the requirements based on documentation that describes the method of charging costs, relates the charging of costs to the specific activity that is applicable to all fund sources, and is based on quantifiable measures of the activity in relation to time charged.

For a non-Federal entity where the records do not meet the required standards, the Federal Government may require personnel activity reports, including prescribed certifications, or equivalent documentation that support the records as required in this section.

Inquiries

Please direct all inquiries to:

Division of Grants Policy
Office of Policy for Extramural Research Administration (OPERA)
Telephone: 301-435-0949
Email: GrantsPolicy@od.nih.gov