Office of Management & Budget

A-21, A-110, A-133

OMBThe federal Office of Management and

Budget (OMB)has issued circulars that define the principles and standards for sponsored projects funded by federal agencies.

OMB circulars A-21, A-110, and A-133 provide instructions for handling federal funds.

WHAT IS OMB A-21?This section outlines the principles and policies

that must be followed regarding the accounting principles, arrangements, and exemptions for any training or work produced under the contract as agreed upon by the Federal Government.

A-21 defines the cost principles applicable to grants and contracts at educational institutionsCost Accounting Standards (CAS)Direct vs. Indirect (F&A) CostsAllowable vs. Unallowable CostsEffort Reporting

CASCost Accounting Standards

Consistency in estimating, accumulating, and reporting costs

Consistency in allocating costs incurred for the same purpose

Accounting for unallowable costsCost accounting period (fiscal year)

DIRECT COSTSDirect Costs are costs must be:Allowable, Allocable Reasonable, Consistent

Direct Costs can be directly associated with a particular sponsored project, an instructional activity, or any other institutional activity.

Examples of Direct Costs:Salaries, wages, and fringe benefitsSuppliesServicesTravelEquipment

INDIRECT COSTSIndirect Costs are often referred to as

facilities and administrative costs (F&A) or overhead. HCC has an approved indirect rate of 39%.

Allowable CostsAllowable Costs

Must be reasonableMust be allocableMust be treated consistentlyMust conform to any limitation or

exclusion“Prudent person” test

Allowable and Unallowable CostsSection J specifies which costs are allowable and

unallowable as both direct and indirect costsExamples of Allowable Costs

Equipment, Professional Services, Transportation

Examples of Unallowable CostsAlcohol, Entertainment, Lobbying, Marketing

Anything outside the scope of these costs is typically not allowed unless it falls under one of the specifically mentioned exceptions within the circular.

Time and EffortTime and Effort ReportingThe purpose of an effort reporting system is

to provide a reasonable basis for distributing salary charges among direct and indirect activities

HCC uses an after-the-fact effort reporting system

WHAT IS OMB A-110A-110 sets forth standards for uniform

administrative requirements for grants and agreements among federal agencies in the administration of grants to and agreements with institutions of higher education.

Cost SharingCost Sharing must be more than a token

amount (e.g. more than 1% of project costs)Cost Sharing represents institutional

commitment to the projectMandatory Cost Sharing is required by the

sponsor as a condition of making the awardVoluntary Cost Sharing is not required by the

sponsor but may become legally binding as a commitment reflected in the proposed budgetCommitted (e.g. over salary cap)Uncommitted

Cost SharingAcceptable 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 reasonableAllowable under applicable cost

principlesAppropriate to all OMB Circular A-110

provisions

Program IncomeProgram Income applies to funds earned

during a project periodProgram 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

Program IncomeProgram Income may be:

Added to funds committed to the projectDeducted from total project allowable

costsApplied to non-federal share of project

costsRecipient 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

Program IncomeProgram Income may be:

Added to funds committed to the projectDeducted from total project allowable

costsApplied to non-federal share of project

costsRecipient 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

Property ControlManagement of property should:

• 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

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

Retention of RecordsFinancial 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 resolvedRecords are transferred to the agency,

in which case retention requirements end

Other record retention requirements apply

The PI and Grants AccountingAward 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

Technical ReportsTechnical 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 periodIf applicable, reasons that goals were

not metExplanation for any cost over-runs or

high unit costs

Close Out the GrantsClose-Out Requirements

All reports submitted within 90 daysAll obligations liquidated within 90 daysPrompt payment by awarding agencyRecipient refund of unobligated cash

advancesAccounting for real and personal

propertyAgency right to recover disallowances

SUMMARY OF OMB A-133 A-133 sets forth standards for consistency in

audits of organizations spending federal awards.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

A-133 requires an annual external audit of all non-federal entities expending $500,000 or more annually in Federal funds

WebsitesA-21http://www.whitehouse.gov/omb/circulars_a021_2004

A-110http://www.whitehouse.gov/omb/circulars_a110/

A-133http://www.whitehouse.gov/omb/circulars/a133_compliance_

supplement_2010

http://www.myflorida.com/audgen/pages/subjects/ea_other.htm

The federal audit reports for the entire state of Florida are rolled up into one report that fulfills the A-133 requirement. This report is copied and sent to the feds as needed.

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