KSG/OSP Training and Information Session

1. KSG/OSP Training and Information Session May 17, 2007

2. Overview: Agenda Welcome - Stew UretskyKennedy School Sponsored Programs Overview - Matt Alper University Office for Sponsored Programs Overview - Ethlyn O’Garro Pre-Award Administration-Proposal review and submission - Charlene Arzigian - Jen Mahoney -Negotiations - Sarah Holtz -- BREAK --    Post-Award Administration-A-21 Key Concepts, Effort Reporting, New Vacation Policy - Judy Ryan      -Cost Transfers, Financial Reporting, Award Closeout - Ana GarciaWrap-up and Final Questions

3. Welcome: Sponsored Programs Management Strong communication and coordination between the Research Centers and/or Departments, the Research Administration Office (RAO), the Office of Financial Services (OFS), and the Office for Sponsored Programs (OSP) is essential. Financial Reporting Effort Reporting Cost Transfers Negotiations OSP RAO RC/ Dept Audits Gift vs. Grant Award Close-Out Sponsored Payment OFS Proposal Development Proposal Review & Submission

4. About OFS: Who We Are Associate Executive Dean & CFO Stewart Uretsky Staff Assistant Marita Terefenko Associate Director for Financial Operations Connie Mugnai Assistant Director of Planning & Systems Nancy Guisinger Assistant Director of Finance Kelly Boyle Financial Analyst Heather Fusco Accounting Associate John Caetano Faculty Awards Accounting Associate Rashida Nisbett Financial Analyst Jeff Hudson Accounting Assistant Wanda Grady IOP, WAPPP & CPL Accounting Assistant Edna Pierre Financial Analyst Lorraine Kiley Accounting Assistant Elaine Romano OSP Liaison; SPOC All other KSG Centers

5. About RAO: Who We Are

6. KSG SPONSORED PROPOSALSFY 2002 – FY 2006

7. KSG SPONSORED PROPOSALS SUBMITTEDFY 2003 – FY 2007 (Q1-Q3) OVERVIEW

8. KSG SPONSORED PROPOSALSFY 2003 – FY 2006 OVERVIEW

9. KSG SPONSORED PROPOSALSFY 2002 – FY 2006

10. KSG SPONSORED PROPOSALSFY 2002 – FY 2006 * Yield Rate refers to new funded awards as a percentage of all new proposals submitted in a given fiscal year.

11. KSG TOTAL SPONSORED PROGRAM EXPENDITURESFY 2003 – FY 2007 (Projected) * These data reflect only those proposals submitted and awards accepted by OSP; the percent change from the prior fiscal year is indicated.

12. Q: Is this a “Gift” or is it a “Sponsored Agreement?” Gifts- administered via Harvard University Recording Secretary’s Office (RSO) • In general, a gift does not have terms that specify how the funding must be spent. • The funding received may be utilized at the full discretion of the recipient. • Unexpended funds not returned to the donor at the expiration of the gift period. • Financial reporting, if any, is limited, and for donor stewardship purposes only. Sponsored Agreements (administered as grants, contracts, or cooperative agreements through OSP) - typically have one or more of the following: • Scholarly terms or Statement of Work to define line of scholarly/scientific inquiry. • Formal deliverables such as annual progress reports or performance objectives. • Specified terms regarding fiduciary responsibility or payment contingencies. • Specified terms regarding disposition of property (including intellectual property) upon conclusion of the project. • Proposal typically submitted in a sponsor-required format.

13. Q: If this looks like a Gift, where do I turn for help? A: The KSG Gifts Policy Committee (GPC)! Q: Great! What the heck is that? The GPC includes senior representatives of the KSG Financial Services, External Affairs, and Research Administration Offices. The GPC meets regularly and advises the Dean, Academic Dean, Executive Dean, Centers, and faculty on financial and administrative matters related to selected gift opportunities. The GPC is charged with reviewing certain gift proposals and term sheets, and advising the Dean and others on questions of donor affiliation and stewardship, financial analysis, connection to and consistency with the KSG mission, and other risk management or compliance-related concerns. Q: Sounds great. How do I find out more? A: Glad you asked. For more information, see: http://www.ksg.harvard.edu/research/gifts_policy.htm

14. About OSP: Who We Are VP for Finance Beth Mora Director, OSP Bev Simmonds Director, Cost Analysis and Compliance Judy Ryan Business Process Training Specialist Amy Maltzan/Victoria Wallace Associate Director Ethlyn O’Garro Associate Director Judy McSweeney Grants.Gov Business Process Manager Simone Alpen Lifecycle Teams Sponsored Programs Officer and Manager – Cash Management Diane Harwood Sponsored Programs Officer and Manager – FAS Life Sciences Scott Blackwell Sponsored Programs Officer and Manager – FAS Phys/Soc Sciences Helia Morris Sponsored Programs Officer and Manager – HMS Min Xiao Sponsored Programs Officer and Manager – SPH Roseann Luongo Sponsored Programs Officer and Manager – GSIA Jen Mahoney G&C Officers Sr. Financial Analysts Sr. G&C Specialists G&C Specialists Financial Analysts Sponsored Programs Administrators Sponsored Programs Coordinators G&C Officers Sr. Financial Analysts Sr. G&C Specialists G&C Specialists Financial Analysts Sponsored Programs Administrators Sponsored Programs Coordinators G&C Officers Sr. Financial Analysts Sr. G&C Specialists G&C Specialists Financial Analysts Sponsored Programs Administrators Sponsored Programs Coordinators Sr. Financial Analysts Financial Analysts Sr. Financial Analysts Financial Analysts Financial Analysts

15. About OSP: What We Do • Support effective management of awards throughout their lifecycle • Provide institutional signature on all University-area proposals • Receive, review and negotiate awards • Act as primary liaison with Sponsor, along with Principal Investigator (PI) • Assist in interpretation of policies; disseminate information on new policies • Provide institutional signature on all sponsored financial reports for entire University

16. OSP GOALS/INITIATIVES • Operations/Data Integrity • Client Outreach • On-line Trainings GMAS • System of Record • Electronic Action Memos

17. Proposal Development ID Funding & Write Proposal Institutional Clearances Sponsor Review Not Funded: Reviewers’ Comments and Resubmit Funded: Award Terms & Conditions Establish Project Account Incur Award Expenses Accounting and Monitoring Request Additional Funding! Sponsor Reports and Close-out The Award Lifecycle and Related Policies This diagram shows how the policies we’ll discuss in this session relate to the Award Lifecycle. Submission Policy and Provost’s Review Criteria Financial Reporting Award Closeouts Gifts vs. Grants Effort Reporting Cost Transfers Direct Charging (OMB A-21) UPAS

18. Proposal Development ID Funding & Write Proposal Institutional Clearances Sponsor Review Funded: Award Terms & Conditions Establish Project Account Incur Award Expenses Accounting and Monitoring Request Additional Funding! Sponsor Reports and Close-out Submission Policy and Provost’s ReviewCriteria

19. RAO Proposal Review Process • The Dean’s Approval Form (DAF) is the internal Harvard document that must be attached to all proposals. • The RAO reviews proposals for compliance with KSG and Harvard University policies and procedures. RAO obtains OFS approval of the budget and KSG approval of the proposal from the Academic Dean, via signatures on the DAF. • A fully-signed DAF represents KSG approval of a proposal and is required in order for OSP to submit a proposal.

20. Elements of RAO Proposal Review • Proposal conforms with KSG and Harvard policies, and all applicable sponsor guidelines. • Budget is accurate, including salary, fringe benefit and overhead calculations. • All requested costs are reasonable and allowable, particularly on federal proposals where not all usual direct costs are allowable under A-21 regulations. • Overhead less than 20% requires approval by the Academic Dean.

21. Elements of RAO Proposal Review • If use of human subjects is involved, what is status of approval? • Is cost-sharing involved, and if so, is a form required? • If there is direct charging of administrative salaries to federal grants, is a checklist completed? • Does proposal require approval of the KSG Faculty Committee on Projects and Proposals (FCOPP)?FCOPP is a senior faculty advisory committee to the Dean that assesses a subset of proposals for potential risks to the University, the School, and its faculty, staff and students.

22. Items Likely to Complicate Proposal Review Common Problems • Last-minute proposals • Lack of editing/proofreading by preparer • Inattention to University and sponsor budget guidelines, requirements, and instructions • Insufficient information provided to RAO/OSP, e.g., a copy of the program announcement or other instructions

23. Items Likely to Complicate Proposal Review Missing Items • Subcontractor participation without documentation of institutional commitment • Human subjects approval or exemption • Conflict of Interest Form • Approval of appropriate Dean(s) for faculty participation from other Harvard Schools

24. Items Likely to Complicate Proposal Review Budget Issues • Overhead shortfall (<20% ) issue not addressed and resolved • Incorrect fringe benefit rates • Salary and vacation fringe calculations incorrect • Inconsistencies between budget and budget justification/lack of budget justification or detail.

25. Proposal Submission • Proposals receive final review and are formally submitted by duly authorized representatives of Harvard in OSP. • CAUTION! OSP is the only office authorized to submit proposals to external sponsors on behalf of the President and Fellows of Harvard College and its faculty members. • A PI can submit a proposal (which should be labeled as preliminary) directly to a non-federal sponsor, but it will not be considered a formal Harvard University proposaluntil it has been submitted through the KSG Dean's Approval process to OSP.

26. Award Negotiation/Account Set Up • If a proposal is funded, OSP negotiates the terms and conditions of the award with the sponsor. RAO serves as liaison between OSP and Center/Program and is kept up to date on status of negotiations. • An Advance Account may be requested to set up an account string during award negotiation. This is done at the risk and request of the Center/Program. • When negotiations are complete, OSP accepts the award on behalf of the University and sets up an account for the award.

27. OSP Staff • Sponsored Programs Officer and Manager – Jen Mahoney • Grants and Contracts Officer – Sarah Holtz • Sr. Grants and Contracts Specialist - Debby Dunlap • Sponsored Programs Administrator – Wendy Cazavelan • Financial Analysts - Leela Joseph - Ana Garcia

28. Submission Policy: Timeline and Purpose 5/3 Day Memo from Steve Hyman and Beth Mora can be found on the ERA website: http://isites.harvard.edu/fs/docs/icb.topic38276.files/5daymemo.pdf *Local dept./school review time not included Timely proposals assured priority over late submissions which are reviewed after “on time” submissions in order received.

29. Considerations in Proposal Review OSP will also review against sponsor guidelines (e.g. font size, page limit, etc.) and advise PI of any potentially problematic issues, but will not edit or hold signatures based on such items (PI decides if/how to address these).

30. Vice Provost for International Affairs Criteria • Review Criteria - Proposed budget exceeds KSG threshold $1.1 Million - Proposed project supports the establishment of any new international site - Proposed project is deemed unusual, complex or high risk - The project includes travel to countries on the Dept. of State Warning List http://travel.state.gov/travel/cis_pa_tw/tw_1764.html

31. Provost Review Criteria

32. OSP Review of Grant Award • Before accepting an award on behalf of the University, OSP reviews all terms and conditions in an award • Reviews terms with PI and Department Administrators • Reviews terms for consistency with proposal submitted • Budget • Project Dates • Deliverables

33. OSP Review of Grant Award • Reviews terms for compliance with University’s sponsored research policies, including: • Payment Terms • Acceptance of Deliverables • PI Independence • Termination • Audit • Indemnification and Insurance • Use of Harvard’s Name • Intellectual Property • http://www.fas.harvard.edu/~research/greybook/patents.html • Publication Restrictions • Confidentiality • Anti-terrorism Language • Export Control

34. OSP Review of Grant Award • Review of award terms may require input from: • Office of the Provost • Office of the General Counsel • Office of Technology Development • Risk Management and Audit Services

35. OSP Review of Grant Award Examples of Recent Issues At Proposal Stage: • NSF/Department of Homeland Security: Students Supported by Project must be U.S. Citizens or Permanent Residents At Award Stage: • USAID and MacArthur Foundation: Compliance Plans for Checking Suspected Terrorist Lists • USAID: Requirement to have “Policy Opposing Prostitution and Sex-Trafficking”

36. Intermission

37. Proposal Development ID Funding & Write Proposal Institutional Clearances Sponsor Review Funded: Award Terms & Conditions Establish Project Account Incur Award Expenses Accounting and Monitoring Request Additional Funding! Sponsor Reports and Close-out Incur Award Expenses

38. A-A-R-C Direct Cost Analysis Allowability Allocability Reasonableness Consistency Conclusion Does A-21 say this type of cost is allowable? Does this item or activity specifically benefit the project? Would a prudent person have paid this price? Has this cost been double-counted as both a direct and indirect cost? Is the cost allowable as a direct cost?

39. May the cost of this item or activity be treated as a DIRECT cost? A-A-R-C Direct Cost Analysis Allowability Does A-21 say this type of cost is allowable? Allocability Does this item or activity specifically benefit the project? Reasonableness Would a prudent person have paid this price? Consistency Has this cost been double-counted as both a direct and indirect cost? Conclusion Is the cost allowable as a direct cost? Explicitly NOT Allowable (e.g., J3. Alcoholic Beverages) STOP Reasonable Test: Would a prudent person pay this price for this item or activity for the performance of the sponsored agreement? If YES then the cost is Reasonable. Consistency Test: 1. Have you used different practices for estimating costs in the proposal budget and for accounting/billing/ reporting costs? 2. Have you charged the same cost both indirectly and directly when it is incurred for the same purpose and circumstance? If NO to both questions, then the cost passes the Consistency Test. The cost is allowable as a direct cost in the measure to which it benefits the project Allocability Test: 1. Was the cost incurred solely to advance the work under the sponsored agreement? If YES, then the cost is allocable. 2. Does the cost benefit the work under the sponsored agreement and other projects as well? If YES, then the cost must be allocated in the measure to which it benefited the work under the sponsored agreement and a written allocation plan must be in place. Allowable as Direct Cost (e.g., J31. Materials & Supplies) NOT explicitly in A-21 (e.g., Specific Gizmos) Different Purpose & Circumstance Test: 1. Is this a non-federal grant? OR 2.a. Can the cost be identified specifically with the project? b. Is it required by the project’s scope? c. Is it a line item in the proposal budget and included in the budget justification? If YES to 1 or 2 ( all 3 questions), the cost is allowable and allocable as a direct cost. Normally allowable only as an indirect cost (e.g., F6. Departmental Administration)

40. Federal and Non-Federal • Both are audited and reviewed • Multiple reviews last year – agencies and foundations • A-133 audit now includes non-federal awards • Both rely on University systems such as payroll, effort reporting, equipment management • Both will be considered as part of SAS 112 Communicating Internal Control Related Matters Identified in an Audit

41. Florida International UnivEffort Certification & Direct Costs$11.5 million Johns Hopkins UnivEffort Certification$2.7 million University of MinnesotaMisuse federal funds$32 million Univ California/San Francisco Animal Care Allegations$92,500 fine New York University Medical CenterInflated research grant costs$15.5 million Univ of Southern CaliforniaQuestioned Costs HHS/OIG Audit$400,000 Results of Non-Compliance: Significant Audits/Settlements Mayo FoundationMischarging federal grants$6.5 million East Carolina UnivQuestioned Costs HHS/OIG Audit$2.4 million Cornell MedicalClinical Research Issues$4.4 million Univ Alabama/BirminghamEffort Certification & Clinical Research Billing$3.4 million Harvard/BIDMC Costing Issues Self-Reported$3.25 million Northwestern University Committed Time/Effort $5 million

42. Sub-recipient Monitoring A-133 D400d(3). Monitor the activities of sub-recipients as necessary to ensure that Federal awards are used for the authorized purposes in compliance with laws, regulations, and the provisions of the contracts or grant agreements and that performance goals are achieved.

43. Sub-recipient Monitoring • As prime grantee, KSG and PI are responsible for entire award • PI monitors programmatic performance • PI approves invoices and certifies performance and appropriateness of charges • Grantee could be liable for disallowed costs of subcontractor

44. Effort Reporting Policy Effort : the amount of time spent on a particular award, expressed as a % of the total amount of time spent on work related activities (teaching, research, service) for which the University compensates an individual. Effort reporting is a federal requirement (A-21 Sec. J.10.c): • Effort Reporting is a process mandated by the Federal government to verify that direct labor charges to Federally sponsored projects are reasonable and reflect actual work performed • Faculty and staff salaries charged to sponsored research projects should be commensurate with the direct effort provided to the project • As a requirement of receiving federal funding, institutions must maintain an accurate system for reporting the percentage of time (i.e., effort) that employees devote to federally sponsored projects

45. Effort Reporting: Here at Harvard • In Harvard's decentralized environment, effort reporting and salary certification methods are accomplished in different ways by the Schools. KSG Monthly Salary Certification for Research Staff: http://www.ksg.harvard.edu/ofs/policies_procedures/research.htm

46. Proposal Development ID Funding & Write Proposal Institutional Clearances Sponsor Review Funded: Award Terms & Conditions Establish Project Account Incur Award Expenses Accounting and Monitoring Request Additional Funding! Sponsor Reports and Close-out Cost Transfers

47. Cost Transfers – Policy Overview Cost Transfer Policy can be found in the Policies section of the OSP website: http://vpf-web.harvard.edu/osr/managing/man_cos_transfer.shtml Definition: A cost transfer is a transfer to a federally funded sponsored account of a charge previously recorded elsewhere.

48. Cost Transfers – Purpose of Policy • Federal regulations require that transfers to federally funded sponsored accounts be timely and properly documented (see OMB Circular A21 section C 4 (b)) • To demonstrate that adequate financial controls are in place, cost transfers should be kept to a reasonable minimum • Late, frequent, and inadequately explained cost transfers: • Suggest poor financial management • Lead to questions on the overall reliability of KSG’s internal controls and accounting systems • Cause audit issues • Monthly monitoring of accounts using the Period Expense Report and Detail Listing is encouraged to identify incorrectly allocated expenses

49. Cost Transfers – Policy Overview • The policy addresses ALL debit transfers to Federal Awards that were previously recorded elsewhere • Cost transfers are identified by a journal naming convention, the journal name starts with “CT” • Example: “CT STA Allocate glass washing OCT-04” • The description field of a CT journal indicates that a CT form has been processed or the reason why a CT form is not required is identified • Different procedures are followed for cost transfers made under 90 days and over 90 days from the 15th of the month following that in which the original charge was recorded • There are also special categories of cost transfers that require only a journal entry – see the Cost Transfer policy for more information on these Situations that DO NOT allow for Cost Transfers: • “Zeroing Out” accounts • Solve funding problems • Meet deficiencies caused by cost overruns • Balancing the budget • Shifting costs to avoid budget restrictions

50. Cost Transfers Under 90 Days • Example Original charge posted September 4th • 90 days counted from October 15th • Cost Transfer should be transacted on or before January 12th • Cost transfers made within 90 days of the 15th of the month following that in which the original charge was recorded • Transferred by journal entry at departmental level • Accompanied by the Cost Transfer Explanation Form with questions 1 and 2 answered and signed as indicated • Journal description: “See related Cost Transfer form” • Documentation sent to OSP for review and approval • Returned to originator for posting to GL and retention with other accounting records