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Core Facilities – Federal R egulations & Audit Focus

Core Facilities – Federal R egulations & Audit Focus. Jennifer Wei, CRA Director of Cost Studies Jennifer-wei@northwestern.edu January 2014 Core Facilities Workshop. Agenda. Compliance Focus Audit Findings Federal Regulations or Clarifications NIH Core Facilities FAQs

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Core Facilities – Federal R egulations & Audit Focus

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  1. Core Facilities –Federal Regulations & Audit Focus Jennifer Wei, CRA Director of Cost Studies Jennifer-wei@northwestern.edu January 2014 Core Facilities Workshop

  2. Agenda • Compliance Focus • Audit Findings • Federal Regulations or Clarifications • NIH Core Facilities FAQs • New Uniform Guidance & OMB A-21 • Other regulations • Financial Management Focus • iLab Cores Benchmarking Report • Research Subsidy & Indirect Cost (F&A) Recovery

  3. Core Facility is also a Service Center (Recharge Center) • Published April 8, 2013: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-053.html • Defines Core Facilities as “centralized shared research resources that provide access to instruments, technologies, services, as well as expert consultation and other services to scientific and clinical investigators“ (1.a.) • Similar operating principles with other Recharge Centers (1.a.) • Recovers the costs in the form of user fees (1.a.)

  4. Core Facility is also a Service Center (Recharge Center)Categories of Service Centers: Specialized Service Facility (Direct + Indirect = Fully loaded costs) e.g. , Solar farm, wind tunnel Core Facilities (Shared resources with a research aim) e.g., Genomics Service Center University-wide Service/Recharge Center (Managed by Central – e.g., Facility Management) Department Recharge Center (Operated by a department) e.g., Machine shop

  5. Compliance Focus Relating to Recharge • Recent Audit Findings • Iowa State University, April 2013 • No documentation to support certain charges • Direct vs. Indirect costs; Incorrect calculations in worksheets • IG and NIH did not agree on all findings • HHS-OIG, A-07-11-06024 • Florida State University, July 2012 • Centers included unallowable costs: memberships & office supplies • Specialized Service Facilities (SSF) costs • HHS-OIG, A-04-11-01095

  6. Compliance Focus Relating to Recharge • “Summary of Report on Audits of Recharge Centers at 12 Universities”, January 1994 • oig.hhs.gov/oas/reports/region9/99204020.pdf • Surplus funds not used to analyze/adjust billing rates • Inventory not consumed during the year of purchase • Revenues used for unrelated purposes • e.g., Renovating academic offices • Inconsistent billing rates; Federal research overcharged • Did not establish or adhere to policies and procedures • Did not maintain adequate accounting system • Did not conduct annual cost studies or monitor recharge centers on a regular basis

  7. Federal – NIH Core Facilities FAQs (continued) • Recharge rates must be based on actual costs and actual usage (2.a.), using a documented method (2.b.) • Clarifies what costs can be included in the rates: applicable direct costs and indirect costs that do not bear F&A recovery (2.c.) • Allowable vs. Unallowable in the rates: follow A-21 • Treatment of equipment costs specifically defined (6) • Annual depreciation (purchase cost divided by useful life) if not funded by NIH (6.b.) • Charging external customers • Should include F&A Costs; may include additional fee • Not mentioned: Unrelated Business Income Tax (UBIT)

  8. Federal -New Uniform Guidance (Latest 12/26/2013) • Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards • Supersedes 8 circulars, including OMB A-21 • 200.468 Specialized Service Facilities • Equivalent to OMB A-21, Section J. 47 • No major changes at the first glance

  9. Federal – Other Regulations • IRS Publication 598 • Tax on Unrelated Business Income (UBIT) of Exempt Organizations • Northwestern Tax-exempt status – 501 (c)(3) • University’s Accounting Practices • NU’s Disclosure Statement (DS-2)

  10. Financial Management Focus • iLab 2012 Cores Benchmarking Study • 33% - Institutional support (Subsidy) • 48% - Customer Revenue • Using Established Recharge Rates • 11% - Grants Support (e.g. P30) • 8% - others URL: www.ilabsolutions.com/wp-content/uploads/2012/07/20120725-BMS2012M1.pdf • Research Subsidy – the Reality • Indirect Costs (F&A) are not fully reimbursed by the Fed • Administrative Rate Capped at 26% (unchanged for over 20 years) • Negotiated Indirect Cost (F&A) Rate is Lower than the Actual Rate • Research subsidized by non-sponsored sources • Importance of financial management and strategic planning

  11. Questions? CONTACT: Jennifer Wei, CRA jennifer-wei@northwestern.edu 847.467.2473

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