Document

Report
OMB Circulars A-21, A-110 &
A-133
7/18/2015
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Overview: OMB Circulars
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Difference between award types – grants,
contracts and cooperative agreements
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Purpose of the circulars
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What circulars are we reviewing?
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Definition of a Grant
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Purpose is to transfer money, property,
services or anything of value to recipient in
order to accomplish a public purpose
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No substantial involvement anticipated between government
and recipient
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Definition of a Cooperative
Agreement
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Purpose is to transfer money, property,
services or anything of value to recipient in
order to accomplish a public purpose
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Substantial involvement anticipated between government
and recipient
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Definition of a Contract
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Purpose is to acquire property or services for
direct benefit or use of the Federal
Government.
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Very restrictive
Usually no expectation of cost sharing
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Assistance Vs. Procurement
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Assistance – generally, what the proposer
wants to do. Awards can be either grants or
cooperative agreements
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Procurement – generally, what the
government buys (can include research).
Awards are contracts
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OMB Circulars
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Purpose: To give instructions to the federal
agencies affected by the circulars; federal
agencies are required to implement.
Federal agencies pass the requirements to
institutions
Effect: Set minimum standards for
institutions
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OMB Circulars applicable to all
Awards
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A-21
Cost Principles for Educational
Institutions
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A-110
Grants and Agreements with
Institutions of Higher Education:
Uniform Administrative
Requirements
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A-133
Audits of States, Local
Governments, and Non-Profit
Organizations
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Definitions
Definition of cost is:
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An amount paid or required in payment
for a purchase; a price
The expenditure of something, such as
time or labor, necessary for the
attainment of a goal
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Definitions
Definition of principle is:
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A rule or standard
A fixed or predetermined policy or mode
of action
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Definitions
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Cost Principles can be defined as the policy
for determining if the cost or expenditure is
allowable or not.
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OMB Circular A-21 – Cost Principles
for Educational Institutions
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Purpose: Establishes principles for
determining costs applicable to grants,
contracts, and other agreements with
educational institutions
Determines what costs can be included in the
F&A calculation
Remember: A-21 addresses both direct and
F&A (indirect) costs as well as specific
allowable costs (Section “J”)
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A-21 Constantly Changes
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Tighten rules on allowability and allocation of
costs
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Primary focus on Facilities & Administrative
Costs
Promote greater standardization in treatment
of costs
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Also directed primarily at Facilities &
Administrative Costs
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How is Allowability Determined?
Allowable: Under the agreement, regulations
and public laws
Reasonable: A prudent person would have
purchased this item and paid this price
Allocable: They can be assigned to the
activity on some reasonable basis
Consistently Treated: Like costs must be
treated the same in like circumstances, as
either direct or F&A costs
If a cost cannot meet the above criteria, it is NOT ALLOWABLE, no matter
what it is for.
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Unallowable Costs – Section J
(Can not be charged against Federal agreement, used as cost sharing or placed in the F&A cost
base)
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Unallowable Activities
(something you do)
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Lobbying
General public relations &
alumni activities
Student Activities
Managing Investments solely to
enhance income
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Unallowable Objects
(something you buy, a line item)
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Advertising
Alcoholic beverages
Entertainment
Fines & penalties
Moving Costs if employee
resigns within twelve months
Certain recruitment costs
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A-21 Revisions, July, 1993
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“The salaries of administrative and clerical staff
should normally be treated as indirect costs. Direct
charging of these costs may be appropriate where a
major project or activity explicitly budgets for
administrative or clerical services and individuals
involved can be specifically identified with the project
of activity. Items such as office supplies, and
memberships shall normally be treated as indirect
costs.” F.6.b.
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Cost Principles
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“The fact that a cost requested in a budget is
awarded, as requested, does not ensure a
determination of allowability. The organization is
responsible for presenting costs consistently and
must not include costs associated with their F&A rate
as direct costs.”
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Direct and Facilities and
Administrative Costs
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Direct Costs: Costs which can be identified
specifically with a particular sponsored project or that
can be directly assigned to such activities relatively
easily with a high degree of accuracy
Facilities & Administrative: Costs incurred for
common or joint objectives and therefore cannot be
identified readily and specifically with a sponsored
project
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Examples of Direct Costs
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Salaries and Wages
Fringe Benefits
Travel
Lab Supplies
Subgrants and Subcontracts
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F&A Costs are Real
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“Any research project must cover two
components of costs –
 those directly attributed to the project
 those incurred for the general support and
management of the research
…If the sponsor of research projects do not
fully reimburse the costs, they must be
paid from other institutional funds.”
*American Council on Education
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F&A Cost Pools
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Operations and Maintenance
Library
General Administration
Departmental Administration
Sponsored Projects Administration
Student Services Administration
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Consistency is a Problem
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Consistency in estimating, accumulating and
reporting costs
Consistency in allocating costs incurred for
the same purpose
Should be able to compare proposal estimate
with actual costs for any “significant” cost
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OMB Circular A-110
Uniform Administrative Requirements
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Purpose
Subpart A General
Subpart B Pre-Award Requirements
Subpart C Post-Award Requirements
Subpart D After-the-Award
Requirements
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A-110 Purpose
“Sets forth standards for obtaining consistency
and uniformity among Federal agencies in the
administration of grants to and agreements
with institutions of higher education…”
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OMB A-110 Sections
Subpart A – General
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Purpose
Definitions
Effect on other issues
Deviations
Subawards
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OMB A-110 Sections
Subpart B- Pre-Award Requirements
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Pre-award policies
Forms for applying for Federal assistance
Special award conditions
Certifications and representations
 Debarment and suspension
 Lobbying
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OMB A-110 Sections
Subpart C – Post Award Requirements
Financial and Program Management
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Standards for financial management systems
Payment
Cost sharing or matching
Program income
Revision of budget and program plans
Allowable costs
Period of availability of funds
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OMB A-110 Sections
Subpart D – After-the-Award Requirements
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Close-out procedures
Subsequent adjustments and continuing
responsibilities
Collections of amount due
Appendix A- Contract Provisions
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Aspects of A-110
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Effect on Issues
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Deviation
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No agency can impose rules that are in conflict
with A-110
OMB can grant exceptions in unusual
circumstances
Subcontracts
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A-110 applies to any subcontractors
performing work under an award
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OMB Circular A-110
Uniform Administrative Requirements
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Expanded Authorities under OMB A-110 C.25e
 Agencies can waive cost-related and
administrative prior approvals
 University Sponsored Project Offices can
approve
 Pre-award costs (up to 90 days prior to
award start date)
 First no-cost extension up to 12 months
 Carry forward of balance
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What’s Important for Me as a
Departmental Administrator?
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Cost Sharing
Program Income
Revision of Budget and Program
Plans
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Cost Sharing
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Verifiable and not included as contributions
on Federal projects
Still have to be allowable
Provided for in the approved budget “when
required by the Federal Awarding agency”
Unrecovered indirect costs may be included
“with prior approval of Federal awarding
agency”
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Revision of Budget & Program
Plans
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Instructions on how to report deviations from budget
and program plans
Changes which require sponsor prior approval:
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Change in scope
Need for additional Federal funds
Change in key person specified in the application or
award document
The absence for more than three months, or a 25
percent reduction in time devoted to the project, by
the approved project director or principal investigator
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Revision of Budget & Program
Plans, cont’d.
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The transfer of amounts budgeted for indirect costs to
absorb increases in direct costs , or vice versa, if
required by the Federal awarding agency.
The transfer of funds allotted for training allowances
(direct payment to trainees) to other categories of
expense.
Unless described in the application and funded in the
approved awards, the subaward, transfer or
contracting out of any work under the award. Does not
apply to purchase of Materials & supplies, equipment
or general support services.
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OMB Circular A-133
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Establishes audit requirements and defines
federal responsibilities for implementation
and monitoring such requirements for
institutions of higher education
Institutions receiving more than $500K in
Federal Awards require an audit
Audits shall normally be performed annually
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A-133 Emphasis
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Sets standards for audit consistency and
uniformity
Identifies compliance requirements
Establishes criteria for testing internal
controls
Tests for reasonable assurance that financial
statements are accurate
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Audits
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Question: When do you start preparing for an
audit?
Answer: The day you prepare a proposal
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Who Audits the University?
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Federal Government – US Dept. of Education
is SVSU’s cognizant audit agency
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A-133 Auditors
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Program Auditors
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Key to a Successful Audit
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Organized Files
Documentation for expenses
Appropriate Approvals
Audit Trails (i.e., documentation)
Knowledge of policies and regulations
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If it’s not documented, it didn’t happen….
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Audits
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Document! Document! Document!
When transfers are required – “Defend the
Debit”
 Auditors want to know why the award was
charged for the expense
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A Look at Accusations
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George Washington University – Engineering
professor charged with embezzling almost $600,000
in federal grants by directing the money into his own
private companies. Also charged with using
University money to pay his cousin’s wife for work
that she never did. The court case is still pending.
Article taken from the Chronicle of Higher Education,
2/4/05
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A Look at Accusations
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University of Connecticut engineering professor
resigned his tenured position after being accused of
spending thousands of hours on his private
consulting practice and neglecting his academic work.
Florida Atlantic University professor resigned
following accusations that he used state money to
give an edge to a company that he had created to
make and sell the same mine-detecting submarine
that he was studying at the university.
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A Look at Settlements Associated
with Noncompliance
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Northwestern University (~$5M; mischarging Federal
Grants, fraud, Time & Effort issues)
Yale University - Tenured Professor forced out for
allegedly padding his business travel expenses by
approx. $150,000. He has made full restitution and
resigned. 1/21/05 article from the Chronicle of Higher
Education.
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A Look at Settlements Associated
with Noncompliance
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Florida International University - $11.5M for
improperly billing the U.S. Dept. of Energy for
scientists’ time, travel and administrative expenses.
Article taken from the Chronicle of Higher Education,
2/15/05
The Johns Hopkins University - $2.6M to settle claim
that scientists had overstated the amount of time
they were spending on projects financed by the
federal government. Article taken from CHE, 3/1/04
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A Look at Settlements Associated
with Noncompliance
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University of Chicago ($0.65M; mischarging Federal Grants)
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University of Connecticut ($1.3M; training grant issues)
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Medical College of Georgia ($10M; theft of research funds
related to clinical trials- two investigators with jail time)
University of Minnesota ($32M; program income/clinical trial
violations)
Stanford University ($3.1M; unallowable costs)
From Gary Thompson – Director of Grant Compliance NIH – through Ann Holmes
from University of Maryland
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Words to the Wise
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“If you don’t like being audited by an
auditor, you will really dislike being
audited by an angry auditor.” NCURA
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Current Hot Buttons
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Final Reports
Cost Transfers
Cost Sharing
Effort Reporting
Departmental Administrative Costs
Subrecipient Monitoring
Program Income
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Additional Resources
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OMB Circulars
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http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html
http://www.whitehouse.gov/omb/circulars/a110/a110.html
http://www.whitehouse.gov/omb/circulars/a133/a133.html
Office of Sponsored Programs, located at 365 Wickes Hall
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http://www.svsu.edu/sponsoredprograms
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OMB Circulars
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Questions?
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