What Departmental Administrators Need to Know about Post-Award and Cost Analysis

1. What Departmental Administrators Need to Know about Post-Award and Cost Analysis

2. Schedule for the Session • Agenda

3. Schedule for the Session • Format for today’s session, content mini case studies • The Facilities and Administrative Rate • The Root of All Intrigue

4. Schedule for the Session • The Regulations Governing Financial Compliance • OMB A-21, OMB A-110, Cost Accounting Standards

5. Schedule for the Session • Effort Reporting/Cost Sharing - Matching • Cost Transfers

6. Schedule for the Session • The Ultimate Test: The A-133 Audit and Other Audits • Questions & Answers

7. The Facilities and Administrative Rate (F&A)

8. The Root of all Intrigue: R_________________________ R12n112R

9. Financial Compliance is multifaceted and should have a wide impact on how we think about every single transaction we post

10. Compliance touches everything - let’s begin with looking at the mechanics of the Facilities and Administrative Rate (F&A) as much of compliance has a basis here

11. The F&A rate calculation sets the stage for today’s discussion • The F&A Organized Research Rate is expressed as a percentage:Indirect costs of research = F&A%Direct costs of research

12. The F&A rate calculation sets the stage for today’s discussion • =$125 million in unrestrictedincome to Harvard annually • = $85 million in unrestricted to UNC Chapel Hill annually

13. A “Direct” Cost is one that • Can be identified specifically with a particular • sponsored project • instructional activity or

14. A “Direct” Cost is one that • other institutional activity with a high degree of accuracy • PI salary, lab supplies, and scientific equipment are examples of direct costs

15. Conversely, an “Indirect” cost is • Incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or other institutional activity

16. Conversely, an “Indirect” cost is • Examples: library, facilities,maintenance, ResearchAdministration, Cost Analysis

17. See Supplemental Handout #1

18. A-21 provides definitions of the activities • Organized research = R&D activities that are separately budgeted and accounted for to perform data collection, analysis, evaluation, and reporting in the context of hypothesis testing;

19. A-21 provides definitions of the activities • examples: wet and dry lab research • R01 • Program project grants

20. A-21 definitions • Other sponsored activity = programs financed by federal and nonfederal agencies involving work other than research or instruction; examples:

21. A-21 definitions - publications, conferences andsymposia - travel programs, preservation/maintenance/cataloging of collections, archives,equipment grants, public presentations

22. A-21 definitions • Instruction = all teaching and training activities of an institution • Departmental research = research funded with departmental funds not separately budgeted and accounted for; example:

23. A-21 definitions • research funded with University funds • research funded with gift money • for A-21 purposes, Instruction & Departmental Research are classified together

24. The question to be answered with the A-21 function code is: • What are we using the funds for? • Not, what is the source of the funds? • These can be different!!

25. The question to be answered with the A-21 function code is:

26. See Supplemental Handout #2

27. As you can see: • Each direct function has a rate: • Org Res Rate = F&A of research • direct costs of research • Instruction = F&A of instruction • direct costs of instruction

28. As you can see: • Other Sponsored Activities = • F&A of other sponsored • DC of other sponsored • Other Institutional Activity = F&A of OIA • DC of OIA

29. See Supplemental Handout #3

30. See Supplemental Handout #4 F&A Case Study

31. F&A Costs Methods of Distribution Within Universities • All F&A recovery goes directly to Dean/Division for Internal Distribution

32. F&A Costs Methods of Distribution Within Universities • F&A recovery goes to Departments based on Research Volume

33. F&A Costs Methods of Distribution Within Universities • Percentage of F&A recovery goes to Central Administration and then Departments receive a certain percentage of each research project’s F&A recovery • Other Non-formulaic ways

34. How do we collect F&A recovery?Cash Management Types of Sponsor Reimbursement: • Cash with award - Cash is sent when the award is given to the Institution

35. How do we collect F&A recovery?Cash Management Types of Sponsor Reimbursement: • Letter of Credit - Reimbursed by the Federal Reserve Bank for expenditures during the month

36. How do we collect F&A recovery?Cash Management Types of Sponsor Reimbursement: • Automatic Payments - Cash automatically received on a monthly/quarterly (etc.) basis

37. How do we collect F&A recovery?Cash Management Types of Sponsor Reimbursement: • Billings - Payment received after invoice is sent to the sponsor based on expenses or deliverables

38. OMB CIRCULAR A-21 COST PRINCIPLES FOR EDUCATIONAL INSTITUTIONS UNIVERSITY

39. OMB Circular A-21 • Guidelines are both specific to certain costs applicable to sponsored research (e.g. - direct costs) and general (open to interpretation) in other areas such as Facilities & Administrative (F & A) costs

40. OMB Circular A-21 • Successful applications of these cost principles requiresdevelopment of mutual understanding between representatives of universities and of the Federal Government as to their scope, implementation and interpretation

41. OMB Circular A-21Section A • Section gives the objectives of the Circular, general guidelines for the institution and the Government, and the application guidelines (what types of sponsored research this Circular applies to)

42. OMB Circular A-21Section B • Definitions of terms : • Instruction • Organized Research • Other Sponsored Activities • Other Institutional Activities

43. OMB Circular A-21Section C • Basic Considerations - Allowable direct cost and its share of allocable F&A costs • Allowability of Costs • Reasonable Costs

44. OMB Circular A-21Section C • Basic Considerations - Allowable direct cost and its share of allocable F&A costs • Allocable Costs • Guidelines for credits, limitations and unallowable costs

45. OMB Circular A-21Section D • General guidelines on the definition of direct cost • Identified specifically with a sponsored project, an instructional activity, or any other institutional activity

46. OMB Circular A-21Section D • General guidelines on the definition of direct cost • Application to sponsored agreements

47. OMB Circular A-21Section E • Facilities & Administrative Costs • Definition of F&A costs • Cost Groupings • Distribution Methods • Order of Distribution

48. OMB Circular A-21Section F • Definitions and Distribution Methods • Facilities Costs: • Depreciation and Use Allowances

49. OMB Circular A-21Section F • Operations & Maintenance • Interest on Debt

50. OMB Circular A-21Section F • Library Expenses