OMB Circulars and Beyond

1. OMB Circulars and Beyond Nancy Duncan, Award Analysis Supervisor Sponsored Projects Administration

2. Audience • This course is intended for “department administrative staff”—including department administrators, division managers, department fiscal managers, department effort coordinators, etc.

3. Introduction • The federal Office of Management and Budget (OMB) has issued a number of circulars to define the principles and standards for sponsored projects funded by federal agencies • All three of these Circulars are instructions directed to the agencies but they must still be followed by recipient institutions

4. Introduction • This session will examine the three circulars most significant to sponsored projects at OHSU: • A-21 • A-110 (2 CFR Part 215) • A-133 • The Code of Federal Regulations (CFR) spells out each agency’s implementation of these circulars

5. Introduction • A-21 defines the cost principles applicable to grants and contracts at educational institutions • A-110 sets forth standards for consistency among federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profits • A-133 sets forth standards for consistency in audits of organizations spending federal awards

6. Introduction • Sponsored Projects Administration (SPA) website provides a link to the complete text of each OMB Circular: • http://www.ohsu.edu/research/rda/spa/federal.shtml

7. A-21 Topics • Cost Accounting Standards (CAS) • Direct vs. Indirect (F&A) Costs • Allowable vs. Unallowable Costs • Effort Reporting

8. A-21 Topics • Cost Accounting Standards • Consistency in estimating, accumulating, and reporting costs • Consistency in allocating costs incurred for the same purpose • Accounting for unallowable costs • Cost accounting period (fiscal year)

9. A-21 Topics • Direct Costs are costs that can be directly associated with a particular sponsored project, an instructional activity, or any other institutional activity • Examples of Direct Costs: • Principal Investigator salary • Lab supplies • Scientific equipment

10. A-21 Topics • Indirect (Facilities & Administrative) Costs are costs that are incurred for common or joint objectives and cannot be specifically identified with a particular sponsored project, instructional activity, or other institutional activity • Examples of Indirect Costs: • Libraries • Maintenance • Research Administration

11. A-21 Topics • Allowable Costs • Must be reasonable • Must be allocable • Must be treated consistently • Must conform to any limitation or exclusion • “Prudent person” test

12. A-21 Topics • Section J specifies which costs are allowable and unallowable as both direct and indirect costs • Examples of Allowable Costs • Equipment, Professional Services, Transportation • Examples of Unallowable Costs • Alcohol, Entertainment, Lobbying, Marketing

13. A-21 Topics • Unallowable Costs Case Study

14. A-21 Topics • Time and Effort Reporting • The purpose of an effort reporting system is to provide a reasonable basis for distributing salary charges among direct and indirect activities • OHSU uses a semi-annual, after-the-fact effort reporting system

15. A-21 Topics • Effort Reporting Case Study

16. A-110 Overview • 2 CFR Part 215 (formerly OMB Circular A-110) • Uniform Administrative Requirements for Grants & Agreements • “This circular sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations.”

17. A-110 Topics • Financial Management Systems • Cost Sharing • Program Income • Reports and Records • Termination and Enforcement • Close-Out Procedures

18. A-110 Topics • OHSU is accountable to sponsoring agencies and must demonstrate that appropriate financial management systems are in place • A-110 requires institutions receiving federal assistance to maintain“[e]ffective control over and accountability for all funds, property and other assets. . . and assure they are used solely for authorized purposes.” (Subpart C.21.b.3)

19. A-110 Topics • Cost Sharing is the portion of project costs not borne by the Federal Government • Cost Sharing can include: • Cash (from recipient) • Academic year effort (from recipient) • Third party In-Kind Contributions (from outside the recipient organization)

20. A-110 Topics • Cost Sharing must be more than a token amount (ie, typically more than 1% of project costs) • Cost Sharing represents institutional commitment to the project

21. A-110 Topics • Mandatory Cost Sharing is required by the sponsor as a condition of making the award • Voluntary Cost Sharing is not required by the sponsor but may become legally binding as a commitment reflected in the proposed budget • Committed (eg, over salary cap) • Uncommitted (not tracked by OHSU)

22. A-110 Topics • Acceptable Cost Sharing must be: • Verifiable and documented in recipient records • Not included as matching for any other federal projects, nor paid from other federal awards • Necessary and reasonable • Allowable under applicable cost principles • Appropriate to all OMB Circular A-110 provisions

23. A-110 Topics • Cost Sharing Case Study

24. A-110 Topics • Program Income applies to funds earned during a project period • Program Income includes • Registration fees for a training or conference award • Products or materials purchased on an award and sold after research has been conducted • Sale of information produced or acquired under the award

25. A-110 Topics • Program Income may be: • Added to funds committed to the project • Deducted from total project allowable costs • Applied to non-federal share of project costs • Recipient has no obligation to the Federal Government for funds earned after the project period unless the agency’s regulations or terms and conditions provide otherwise

26. A-110 Topics • Program Income Case Study

27. A-110 Topics • Property Management applies to property purchased under Federal awards, such as land, structures, equipment • Exempt property is that on which the title vests with the recipient upon acquisition with no further obligations • Property management also applies to supplies

28. A-110 Topics • Property Management systems must: • Conduct a physical inventory every two years • Safeguard against damage, loss, and theft • Provide adequate maintenance • Maintain insurance • Sell competitively at highest return, when authorized

29. A-110 Topics • Reports & Records: A-110 sets forth procedures for monitoring and reporting financial and program performance and the required reporting forms, including requirements for record retention

30. A-110 Topics • Award recipients are responsible for managing and monitoring each project, program, function and activity supported by the award • Award recipients are responsible for ensuring that sub-recipients have also met all audit requirements

31. A-110 Topics • Technical reports must be completed not more than quarterly and not less than annually • Reports must contain: • Comparison of actual accomplishments with set goals for the period • If applicable, reasons that goals were not met • Explanation for any cost over-runs or high unit costs

32. A-110 Topics • Award recipients must notify the awarding agency whenever events occur that have a significant impact on the project or program, or when problems, delays or adverse conditions materially impair the ability to attain program objectives.

33. A-110 Topics • Financial Status Report (FSR) is required on any federally sponsored project • SPA submits financial reports to sponsors • SPA Senior Financial Analyst sends copies of reports to departments for review (eg, End Date Memo, etc)

34. A-110 Topics • Financial records, supporting documents, statistical records and all other records must be retained for three years from the date of final report, except when: • Litigation requires retention until matters have been resolved • Records are transferred to the agency, in which case retention requirements end • Other record retention requirements apply

35. A-110 Topics • With agency approval, copies can be substituted for original records • Electronically imaged records may be substituted for original records provided the institution establishes appropriate procedures

36. A-110 Topics • Access to records is allowed to the agency, the inspector general and the comptroller general • Agencies may not limit public access to the recipient’s records without justification

37. A-110 Topics • Records Retention Case Study

38. A-110 Topics • Types of Award Termination: • By the awarding agency • By the awarding agency with recipient consent • By the recipient • Types of Enforcement: • Remedies for non-compliance • Hearings and appeals • Suspension and termination • Debarment

39. A-110 Topics • Close-Out Requirements • All reports submitted within 90 days • All obligations liquidated within 90 days • Prompt payment by awarding agency • Recipient refund of unobligated cash advances • Accounting for real and personal property • Agency right to recover disallowances

40. A-133 Overview • Effective July 1, 1992 (revised June 24, 1997), A-133 “sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of … non-profit organizations expending Federal awards” • A-133 requires an annual external audit of all non-federal entities expending $500,000 or more annually in Federal funds

41. A-133 Overview • A-133 defines the requirements of an audit and explains the responsibilities of the institution, the agency and the auditor • A sample of Federal awards and their direct cost transactions is selected and examined to determine if expenditures and procedures were appropriate

42. A-133 Topics • At OHSU, departments become involved in annual A-133 audits when SPA requires information on source documentation

43. A-133 Topics • Audit Case Study

44. Summary • This course has examined OMB circulars A-21, A-110, and A-133 • Understanding these federal circulars will help ensure proper stewardship of federal funds

45. For More Information • Come to other Post-award Education Program courses • Visit the Sponsored Projects Administration website: http://www.ohsu.edu/research/rda/spa/ • Contact SPA with questions or concerns about these and other award management issues

46. OMB Circulars Questions?