Post Award Accounting at Caltech

1. Post Award Accounting at Caltech New Grant Manager Training October 28, 2004

2. Overview • Organization and responsibilities • Account structure/types • Monitoring accounts • Useful expenditure types

3. PROJECT ACCOUNTING Budget Realignments Billing Cost Transfers Cost sharing Financial reporting Closeouts (financial) Fabrication accounts JPL/Caltech accounting interface NIH Salary cap Monitoring awards (in conjunction with campus) Responding to internal and external audits COST STUDIES Payroll Distribution (aka effort reporting) F&A rate development and negotiation Service centers Space surveys Post Award Accounting Responsibilities

4. Organization Chart

5. Organization • Who is the Accounting Specialist on a particular award? • http://www.atc.caltech.edu/support/queries.html • POETA-Alias Queries • Award Information • Type in award number • Award Detail summary screen will appear • Scroll down to Award Personnel • Note: This screen is also useful because it includes all linked awards

6. Account Structure/Type • Structure • Cost Sharing • JPL Research accounts • JPL Service accounts • Fabrication accounts

7. Account Structure - What is POETA? • Project - Projects are funded by Awards (Two kinds of Projects, Capital and Non-Capital) • Organization in POETA, will default to Caltech • Expenditure Type • Task - A Project is made up of one or more tasks. All expenditure occurs at the task or sub- task (i.e., breakdown of a task into a smaller unit of work) level • Award - Awards fund Projects

8. Account Structure – What Is Work Breakdown Structure? Organization of an activity into a hierarchy of one project and one or more tasks

9. Cost Sharing • Committed cost sharing on a sponsored project is a binding obligation that must be satisfied in accordance with the sponsor’s requirements • Offer cost sharing only when required by the sponsor http://atc.caltech.edu/Finance/pa_policies.htm

10. Types of Cost Sharing • Committed • Must be tracked, documented, and in some cases, reported • Uncommitted • Does not have to be tracked or recorded

11. Cost SharingFederal Requirements • Do not use federal funds • Use only once • Costs must be verifiable, necessary, allowable and reasonable for the award on which they are being claimed

12. Cost SharingProcedure • Establishing a linked account or specific task within a PTA to track cost sharing is not mandatory under the terms of Caltech’s policy • Depends on the Division • In all cases a manual worksheet, the Committed Cost Sharing Worksheet, will be prepared and distributed by OSR (based on information included in the proposal and the award document)

13. Cost SharingProcedure • PA will contact the grant manager on an annual basis to obtain an update of the status of cost sharing and to review any supporting documentation • Will require account detail of where the cost sharing was charged and require specific costs to be identified within that account • PA will submit any financial reports due to agency or prime contractor

14. JPL Interdivisional Authorizations • What is an Interdivisional Authorization? • Authorization for Caltech to incur expenses for providing a service to JPL and a means for billing JPL for those services (i.e., transferring funding from JPL to Caltech)

15. JPL Interdivisional Authorizations • There are 2 types of IAs • Research IA • Service IA • Set-up process depends on the type of IA

16. JPL Research IA’s • Generally involve a member of the Caltech faculty • Set-Up • Must prepare a budget and statement of work that is reviewed by Caltech’s Office of Sponsored Research • Should conform to all the usual requirements for proposal submission, e.g., Divisional Approval Form

17. JPL Research IA’s • JPL Contract Management Office (CMO) will only issue an IA to authorize payment for the work after the proposal has been submitted and reviewed • For more information refer to OSR website • http://atc.caltech.edu/OSR • Billings and Close-Outs • Processed by Project Accounting • Divisional teams

18. JPL Service IA’s • Generally do not involve, or are not supervised by, a member of the Caltech faculty e.g., services provided directly to JPL by MPS, technicians, shops, service centers, etc. • Set-Up • Complete template detailing budget and statement of work • Submit to Lisa Frenchie in Project Accounting (M/C 211-15) • Template and instructions are available on the Project Accounting website under forms • http://atc.caltech.edu/Finance/pa_forms.htm

19. JPL Service IA’s • Reviewed by Project Accounting to verify • Salary rates (JPL will not accept a different salary rate than Caltech rate) • Correct overhead rate • Work performed at campus (59.3%) • Work performed at JPL (26%) • Staff benefit rate

20. JPL Service IA’s • JPL CMO will only issue an IA to authorize payment for the work after this paperwork has been submitted and reviewed • Billings and Close-Outs • Processed by Project Accounting • JPL team

21. JPL IA’s • Be aware of restrictions on charging to JPL IA’s (both service and research) • Equipment • Must be preauthorized and specifically identified in the IA • Equipment threshold is lower than Caltech’s ($1,000 compared to $5,000) • Foreign travel • Must obtain prior approval

22. JPL IA’s • Deobligations • Not uncommon • JPL CMO will only de-obligate after obtaining written concurrence from Caltech PI • A revised IA will be issued deobligating the funds

23. Fabrication Accounts • Fabrication policy http://www.atc.caltech.edu/finance/ • Fabrication set up form http://www.atc.caltech.edu/finance/

24. Fabrication Accounts Definition • “An equipment fabrication is the transformation of materials, supplies, hardware costs and direct labor (including associated fringe benefits) into an item of equipment that: • Does not currently exist • Meets unique research specifications • Has a total estimated cost in excess of $5,000 • Has an estimated useful life of at least 2 years • When completed, will not be affixed permanently to a building or structure”

25. Fabrication AccountsFiscal Implications • Costs charged to a fabrication account are not burdened (i.e., overhead rate is not applied), regardless of expenditure type • Fabricated equipment that is eventually capitalized in Oracle Fixed Assets will include all costs charged to the fabrication PTA (including labor, travel, etc.)

26. Fabrication AccountsChargeable Costs • Costs charged to a fabrication PTA must be integral to the construction of that fabrication (may include labor costs) • Must be in compliance with OMB Circular A-21 • Must not be prohibited in the awarding document

27. Establishing A Fabrication PTA • Fabrication PTA’s should be established as far in advance as possible to prevent initial costs being charged to a non-fabrication account • Division representative completes an equipment fabrication request form

28. Establishing A Fabrication PTA • Information required on the fabrication set up form includes: • Description • Ownership (Caltech/Gov’t/Other)* • Ultimate destination* • Estimated placed in service date (the best judgment of the PI of the point in time at which an equipment fabrication will become operational) • Estimated cost • Must be signed by the PI or the division representative *It is extremely important that the issue of ownership and final destination be known and appropriately identified at the time of account set up as this directly impacts the type of fabrication account that will be established. If the incorrect type of account is established at set up then all costs charged to that account will ultimately have to be transferred to the corrected account type.

29. Establishing A Fabrication PTA • Completed forms should be sent to Property Services (Ernest Ngalula at M/C 116-6, ext. 4181) • Property Services reviews the form to verify that the proposed fabrication is capable of meeting Caltech’s definition of fabricated equipment then passes the form to Project Accounting

30. Establishing A Fabrication PTA • Project Accounting verifies that the fabrication is allowable under the terms of the grant, contract or co-operative agreement being charged and if prior approval is required • Who actually sets up the account? • If set up at the same time as the main award – OSR • If main award already set up – Project Accounting

31. Establishing A Fabrication PTA • If a significant budget realignment is subsequently requested (more than 20% of the original fabrication budget) PA will work with Property Services and OSR to ensure that the project continues to meet the definition of a fabrication and that it continues to be allowable under the terms of the awarding document

32. Fabrications • Equipment expenditure types should not be used on fabrication accounts • Technically, a component purchased for a fabrication is not a stand alone asset therefore it doesn’t meet the definition of equipment • In practical terms using equipment expenditure types on fabrications impacts Caltech’s reporting to agencies • Remember: Charges hitting a fabrication PTA are overhead free therefore no fiscal implications to using ‘supplies – allocable’

33. Monitoring Awards • Cost transfers • NIH NRSA Fellowships • Budget realignments • NIH salary cap • Foreign travel • Closeouts • Payroll distribution

34. Cost Transfers • Policy on cost transfers to federally funded awards • http://atc.caltech.edu/Finance/policies_costtransfers.htm

35. Cost Transfers • Definition • An after-the-fact reallocation of costs, either labor or non-labor, to a federally funded award • Federal requirements limit the circumstances under which cost transfers are allowed

36. Cost Transfers • Procedures for non-labor cost transfers within 90 days • Fill out cost transfer and justification form • Answer questions 1 through 3 in Section C • Signed by PI or cognizant administrator • Send form and supporting documentation to Project Accounting • Project Accounting will notify if transfer is not approved

37. Cost Transfers • Procedures for labor cost transfers within 90 days • Campus personnel inputs into Labor Distribution Module • Must address the following • Indicate name of designated/knowledgeable individual who has reviewed and approved the transfer • Explain why the labor expense was posted to the incorrect PTA • Explain why the labor expense should be transferred to the proposed receiving account. How does the receiving account benefit? • Explain why, based on the terms of the receiving award, the charges are allowable and allocable • Will be reviewed and approved by LDU at Caltech • Depending on the Division, a signed cost transfer and justification form may be required

38. Cost Transfers • Procedures for transfers after 90 days • Fill out cost transfer and justification form • Answer questions 1 through 5 in Section C • Must be signed by PI, Division Chair and Project Accounting official • Send form and supporting documentation to Project Accounting • Project Accounting will notify submitter if transfer is not approved • If a labor transfer, PA will forward copy of form to LDU for system approval

39. Cost Transfers • What qualifies as an extenuating circumstance? • Late issuance of appropriate documentation for reasons beyond the control of the requestor, such as late issuance of an award by a funding agency • Failure of another department to take action when supporting documentation had been properly submitted • Transfer of expenditures from an unrestricted account to a federal award that was not in place when the expense was incurred

40. Cost Transfers • What will not qualify as an extenuating circumstance? • Absences of the PI or cognizant administrator • Shortage or lack of experience of the staff administering the awards • Federally funded sponsored accounts used as a holding account for expenditures • If in doubt send PA a draft for review and feedback before obtaining signatures

41. NIH NRSA Fellowships • Use the correct expenditure type to prevent overhead being applied • “Res/Postdoctoral fellows” • Be aware that if a fellow engages in training for less than 6 months of the award year, one half of that years supply allowance must be returned to the NIH

42. Budget Re-alignments • Why does budget sometimes have to be realigned? • Linked awards • There must be budget at the PTA level for an invoice to be generated (may need to transfer funding between the main award and the linked award) • May wish to re-align budget between categories (subject to the terms and conditions of the award)

43. NIH Salary Cap • NIH imposes a limitation on the rate of pay individuals may receive as compensation from NIH funds • For calendar year 2004, the cap is $175,700 per year • NIH also mandates that the portion of the individual’s salary that represents the difference between the capped rate and the actual rate may not be received from federal sources • The rate can and usually does change on an annual basis

44. NIH Salary Cap For example: • PI with a salary of $200,000 per year • 25% paid by an NSF grant; 25% by an NIH grant; 50% by CIT funds • The PI may only be paid $43,920 from NIH funds (he will be paid $50,000 from NSF funds) • The difference of $6,080, which exceeds the NIH cap, can be paid from non-federal sources

45. NIH Salary Cap • At Caltech an excel spreadsheet is available to assist division/center personnel in calculating the appropriate percent of time needed to input into the payroll system in order to maintain consistency with the NIH salary cap • This document also serves the purpose of providing an audit trail http://atc.caltech.edu/Finance/policies.htm

46. NIH Salary Cap Procedure: • Prior to initiation of any payroll transaction from NIH funds, the division determines which employees are above the salary cap • Divisions utilize the NIH salary cap template to determine the percentage of salary that can be charged to relevant NIH grants, and what portion should be charged to non-federal funds • Divisions should retain completed NIH salary cap template as partof the record of that payroll transaction

47. NIH Salary Cap Procedure: • On annual basis, and at the end of each NIH award’s competitive cycle, Project Accounting will run a report on that award to verify that all salary payments were consistent with the NIH salary cap in effect at the time of the payment, and work with the Division/Center to make necessary adjustments

48. Foreign Travel • Prior approval for foreign travel may be required on some awards • In those circumstances, even if the travel benefited the award, the costs will be unallowable on the award unless prior agency approval was obtained

49. Foreign Travel - FDP • Prior approval for foreign travel is sometimes waived on FDP awards - depends on the agency • Prior approval waived for: AFOSR AMRMC DOE NASA NIH NSF ONR USDA • Prior approval required for: • ARO • EPA

50. Foreign Travel – Non-FDP • Look out for : • JPL (prior approval is always required) • Non-FDP grants & co-operative agreements • Contracts • There is a high likelihood that prior approval will be required on these type of awards