To:                   DASACC Financial Contacts

From:              Paul Carlson

Date:               June 29, 2005      3:39 PM

 

Subject:          A-87 Compliance     re: terminations

 

This memo is being sent to ensure agencies are in compliance with Federal requirements regarding the cost of leave when an employee retires or terminates employment.  OMB Circular A-87, Attachment B, Paragraph 11.d.(3) states: 

 

            When a governmental unit uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. 

            Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment provided they are allocated

            as a general administrative expense to all activities of the governmental unit or component.

 

This means that agencies should not be using grant money to pay sick or vacation leave when an employee retires or terminates from the State.  Agencies should code payments for this leave as an expense to their general administrative activities.   It is not proper for agencies to use the same cost account as the last salary payment. 

 

If you have coded this leave to a Federal grant between July 1, 2004 - June 30, 2005, please notify Lynda Roesler as soon as possible (email:  lroesler@notes.state.ne.us, ph. 471-7737).  You will need to provide her with documentation of the leave payout including BU charged and support for the amount of the payoff.

 

Attached is the new State Accounting Policy regarding Termination Payoff for Employees Working on Federal Grants.

 

If you have any questions, please contact me.  If this email has not been sent to the appropriate person, please forward it to them. 

 

Thank you.

 

Attachment:

 

General Policy # 31

Termination Payoff for Employees Working on Federal Grants – To ensure agencies are in compliance with OMB Circular A-87, Attachment B, Paragraph 11.d(3), agencies shall code sick leave payoffs or vacation leave payoffs for employees who are working on a Federal grant, either part-time or full-time, to an account number under their agency’s general administrative activity.

 

Added:

 

Agencies should use the correct Pay Type for coding leave payouts found at http://www.das.state.ne.us/nis/trainingmanuals/Payroll ,
Lesson 2, Pay Type Descriptions.