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Are unanticipated costs associated with recipient employees teleworking due to COVID-19 social distancing requirements and/or state-local stay at home orders allowable?

Yes, provided the costs meet regulatory requirements for adequate documentation, internal controls, reasonableness, allocability, and consistency.

Under 2 CFR 200.302(a) states “ . . . must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds” subject to, among other requirements, records that permit “. . .  the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.” Other recipients must maintain financial records in compliance with 2 CFR 200.302(b)(3) and (4) which require:

(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.

(4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. [consistent with internal control requirements at  2 CFR 200.303]

Recipients must establish teleworking policies that ensure that these requirements are met and include justifications for specific purchases in their files.  These policies must apply equally to employees whose compensation is supported by EPA funding and employees compensated from other sources to meet the reasonableness requirement of 2 CFR 200.404(e). Additionally, the teleworking costs must be allocated to EPA grants in proportion to the relative benefits EPA grants derive from the employees’ work. For example, if an employee works 100% of the time on EPA grant(s), all costs associated with ensuring the employee is able to continue to work through teleworking would be allocable to the EPA grant(s). Telework costs for employees who work on EPA grants and other activities must be prorated equitably. Finally, as required by 2 CFR 200.412 grantees must classify costs as direct or indirect consistently to avoid double charging of the same costs.

Prior EPA approval for telework related purchases is not required unless as provided by 2 CFR 200.308 the amount of the award exceeds the 2 CFR 200.88 Simplified Acquisition Threshold (currently $250,000) and the cumulative amount of funding transfers among direct budget categories (e.g. from “Other” to “Supplies” or “Equipment”) exceeds 10% of the total budget. Recipients must submit requests for required prior approvals to the Grant Specialist and Grants Management Officer for their agreement.

Return to Frequent Questions about Grants and Coronavirus (COVID-19).