Presentation Transcript

1. OMB Circulars & Cost Transfers

   James Trotter, SPA Director Charlie Resare, Subrecipient Monitor 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. These Circulars are instructions directed to the agencies but they must still be followed by recipient institutions.
4. Part 1 OMB Circulars Office of Management & Budget
5. OMB Circulars The federal Office of Management and Budget (OMB) has issued a number of Circulars to define the principles and standards for agreements between federal agencies and research institutions. A clear grasp of the central principles of these Circulars is essential for effective sponsored project management. .
6. Introduction The first part of 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.
7. 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.
8. Introduction The 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
9. A-21 Topics Direct vs. Indirect (F&A) Costs Allowable vs. Unallowable Costs Effort Reporting
10. 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
11. A-21 Topics Indirect Costs (Facilities & Administrative) 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
12. A-21 Topics Allowable Costs Must be reasonable Must be allocable Must be treated consistently “Prudent person” test
13. 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
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-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.”
16. A-110 Topics Financial Management Systems Cost Sharing Program Income Reports and Records Termination and Enforcement Close-Out Procedures
17. 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)
18. 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)
19. A-110 Topics Cost Sharing must be more than a token amount (i.e., typically more than 1% of project costs). Cost Sharing represents institutional commitment to the project.
20. 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)
21. 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
22. 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
23. 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.
24. 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.
25. 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
26. 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.
27. A-110 Topics Award recipients are responsible for: managing and monitoring each project, program, function and activity supported by the award. ensuring that sub-recipients have also met all audit requirements.
28. 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
29. 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.
30. 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.).
31. 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.
32. 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.
33. 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.
34. 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
35. A-110 Topics Close-Out Requirements: All reports submitted 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
36. 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.
37. 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.
38. A-133 Topics At OHSU, departments become involved in annual A-133 audits when SPA requires information on source documentation.
39. Part 2 Costing & Cost Transfers
40. Costing & Cost Transfers Project costs get charged to accounts according to accepted principles, policies and federal regulations. Occasionally expenses need to be moved between research projects, expenditure types, or differing funds at OHSU. These are called cost transfers, and are allowable only with proper justification, documentation, and approval. The next part of this course moves step-by-step through general cost accounting standards and the stages involved in a cost transfer.
41. Charging Direct Costs Sponsor funds must be available Costs are allocable to the project Costs are reasonable Costs are allowable Like costs are treated consistently
42. Allocable To be allocable as a direct cost, the expenditure must benefit only one project, or must be easily and proportionally assigned to multiple projects that benefit.
43. Reasonable To be reasonable, costs must pass the “prudent person test”. Would the local press make a story out of the costs you are charging to taxpayer funds? If so, you might want to think again.
44. Allowable For costs to be allowable on a federally sponsored award, “they must conform to any limitations or exclusions set forth in these [federal] principles or in the sponsored agreement as to types or amounts of cost items” (OMB Circular A-21, C.2.d).
45. Consistent “Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.” (OMB Circular A-21, D.1)
46. Consistent Certain items are generally considered “indirect” (F & A) costs—unless a direct relationship to a specific sponsored project can be established, such as: Salaries of departmental staff Office supplies Telephone expenses Photocopying and postage Etc.
47. Cost Transfers Cost Transfer: the process for moving an item of expenditure between sponsored projects, expenditure types, or different types of funds. Cost Transfers need justification, documentation, and approval.
48. Cost Transfer Overview Rules governing Cost Transfers Necessary approvals Walk through of OHSU Adjustment Form Cost Transfers and Audits Strategies for Prevention of Cost Transfers Examples
49. Avoid the Need All project costs should be appropriately charged to accounts according to accepted accounting principles as well as OHSU policies and the regulations applicable to sponsoring agencies. Ideally, completed transactions should not need correction.
50. Transfer When Needed However, in certain circumstances, changes are required to move expenses: Between projects Between expenditure types Between different types of funds Cost Transfers need all of the following: Justification Documentation Authorization
51. Federal Requirements The Federal Government questions the propriety of Cost Transfers on federally funded projects. Cost Transfers can cast doubt on a grantee’s accounting system and internal controls. The Government expects documentation and an authorization process for all Cost Transfers on federally assisted projects.
52. Federal Requirements Under no circumstances may a Cost Transfer be made with the sole intent of using up the unexpended balance in a federal account. Under no circumstances may an expense be ‘parked’ on one federal project while awaiting the award/set up of the ‘correct’ project.
53. SPA Procedure SPA reviews the OHSU Adjustment Form for: Allowability Acceptability Propriety of charges If the request does not meet these criteria, it will be returned to the PI. If the request is approved, SPA forwards the form for processing.
54. Acceptable Reasons Correction of error—but be more specific. Charges benefit more than one program (distribution of costs based on benefits received). Programs involve closely related work.
55. Unacceptable Reasons To reduce overruns if the transfer is from one federal project to another For reasons of convenience To use unspent money in a project Because the bookkeeper was on leave, etc.
56. Walk Through of Form Make Cost Transfers using the OHSU (“Transfer Between”) Adjustment Form: http://www.ohsu.edu/xd/about/services/financial-services/forms/upload/JE_FOMOPPL_POETA_Adjustment_Form.xlsx(link needs correction) Online instructions to this form: http://www.ohsu.edu/xd/about/services/financial-services/forms/upload/JE_Guidelines_CFS.pdf
57. Audits Cost Transfers can be a “red flag” to auditors. Auditors examine: Frequency Justification Remedies
58. Audit Questions Are Cost Transfers supported by documentation which adequately explains and justifies why the transfers were made? Are Cost Transfers caused by work which is supported by more than one funding source? Are there Cost Transfers between projects which are in an overrun condition to those with unexpended balances?
59. Cost Transfer Case Study #1 An OHSU employee transfers expenses from one account to another and annotates the cost transfer “to correct an accounting error”. Is this an appropriate justification? Why or why not?
60. Case Study #1 Answers: If it was an accounting error, the transfer must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organization official. Transfers made solely to cover cost overruns are not allowable.
61. Cost Transfer Case Study #2 You are asked by a PI to stop at an office supply store on your way to work and pick up a few items. The PI also asked you to get donuts for the lab meeting that morning. When you arrive at work, the PI tells you that all the items should be charged to the grant. Your Department Administrator tells you that these purchases must come from departmental funds. Why?
62. Case Study #2 Answers: If the supplies are not specifically allocable to the grant, they are considered general office supplies and should not be charged as a “direct” cost to the grant account. Entertainment, such as food, is unallowable under the provisions of A-21.
63. Cost Transfer Case Study #3 Dr. Miller purchases a much needed piece of specialized equipment for her research on hypertension. When preparing the purchase request, she realizes that the only account with enough money is her grant for research on sleep disorders. Because both grants are funded by NIH, she charges the equipment to the sleep disorder grant. Is this acceptable?
64. Case Study #3 Answer: The purchase must directly benefit the project it is charged to. Dr. Miller must charge the hypertension study, not the sleep study.
65. Cost Transfer Summary Cost Transfer is the process of moving an expenditure between research projects, expenditure types, or different types of funds. Cost Transfers should be an exception, not a standard means of operating. Cost Transfers need justification, documentation, and approval.

66. OMB Circulars & Cost Transfers

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