Fiscal Compliance Requirements for Sponsored Programs

University of MissouriCollege of Agriculture, Food and Natural Resources

December 11, 2009

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Learning Objectives

• To understand:• Compliance requirements related to allowability

of costs• Responsibility of Research Administrator and

Principal Investigator (PI)• Frequent issues and impact of non-compliance

Definitions

• Sponsored Award – Activities funded by an external entity for a specific purpose.

• PI/Co-PI – Principal Investigator. Named by sponsor on award document with overall responsibility for ensuring compliance.

• Research Administrator – The individual assisting the PI with the fiscal management of an award.

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Definitions

• Unallowable costs – Costs charged to a project not meeting the requirements.

• APM – Accounting Policy and Procedures Manual. Codification of accounting policies.

• BPM – Business Policy Manual. Codification of business and administrative policies.

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Compliance Requirements

Who sets the requirements? • Office of Management and Budget (OMB) –

Oversight agency for the federal government• OMB Circulars – The federal rules for how awards are to be

administered.

• Sponsors – Individual sponsors may have additional requirements

• APM and BPM – Policies established jointly by Campuses and UM System

Compliance Responsibilities

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• Department – PI, Research Administrator, Chair, Head• College – Fiscal Officer, Dean • Sponsored Programs Office (OSPA) – Pre and Post

Award• UM System Controller– Compliance oversight and

training• Auditors – Internal and External• Office of Inspector General (OIG) – Final enforcer

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Compliance Requirements

What compliance requirements apply to sponsored programs? • OMB Circular A-21 - Cost Principles for Educational

Institutions• OMB Circular A-110 - Administrative Requirements

for Grants and Agreements• OMB Circular A-133 - Single Audit Requirements• Specific Sponsor Administrative Guides

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Compliance Requirements

When do these requirements apply?• Receipt of direct federal awards• Awards containing federal flow-through dollars• Awards where terms and conditions reference OMB

Circulars

However, the University requires all awards to follow the requirements for federal awards.

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A-21 Overview

Compliance requirements include: • Guidelines for total allowable direct costs• Discusses allowability• Defines direct vs. Facilities & Administration

(F&A)• Sets the rules for F&A costs

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Definitions

• Direct costs must be: • Identified specifically for a particular sponsored

award• Directly assigned with relative ease and a high

degree of accuracy• Consistently treated in like circumstances• Supported by documentation

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Definitions

• F&A is: • Incurred for a common or joint objective (e.g. utilities)• Cannot be easily identified with a particular award

• Facilities: depreciation, interest on related debt, operational, maintenance, and library costs.

• Administration: departmental, sponsored projects, student services, and other general administrative costs.

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A-21Compliance

• Reasonable:• Act with due prudence• Consistent with University policies and procedures• Necessary for performance of the sponsored

award• Arms length and legal transactions

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A-21 Requirements

• Allocable: • Incurred solely to advance the work under the

agreement• Benefits the sponsored program in proportions

that can be reasonably approximated

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A-21 Requirements

• Consistent treatment: • Practices consistent with reporting other costs for:

• same purposes, or • like circumstances

• Conform to limitations or exclusions: • Sponsor may be more restrictive than A-21• Specified in the award

Allowable Direct Charge?

Allowable? No

Probably Not

Maybe

YES!!

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A-21 Compliance

• Certain costs are expressly unallowable: • Alcoholic beverages• Alumni activities• Bad debts• Donations and Contributions rendered• Entertainment• Furnished automobile – personal use • Goods or services for personal use• Housing and personal living• Losses on other sponsored agreements

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A-21 Compliance

• Certain costs are unallowable with exceptions:• Contingency provisions• Fines and penalties• Fundraising and investment costs• Lobbying• Pre-agreement costs• Selling and marketing costs• Student activity costs

• Must be specified in the agreement to be allowable!

A-21 Compliance

• Allowable - Direct charging of F&A costs: • Unlike circumstance must exist• Documentation to support• Include in the budget and agreement• Sponsor approval

• Approval by sponsor without the above does NOT ensure allowability!

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A-21 Compliance

• Allowable costs – frequent issues: • Communications (phone, etc)• Federal Express and postage• Administrative Salaries• Equipment - capital and computer• Memberships and/or subscription fees• Materials – office, lab, program• Meetings• Travel

• Documentation and sponsor approval required

Allowability considerations

• Throughout the award process: • Proposal and budget• Monthly Managerial review• Cost Transfers• Cost Sharing • Subaward payments • PI Certification at end of award

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Responsibilities

Activity PI RA Overall Compliance Responsibility X Knowledge of Compliance Requirements X X Attend Training X X Administrative Financial Management X X Authorization of Costs X Allowable Costs X Cost Transfers and Corrections X X Documentation to Support Costs X X Communicate Compliance Issues X

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Impact of Non-Compliance

• Questioned or unallowable costs• Repayments to the sponsor• Fines and/or sanctions• Subject to additional external audits• Jeopardize future funding opportunities• Damage to reputation

Checklist for Success

Ensure costs are: Authorized in the budget & agreement Within the period of availability Charged timely to the project Meet the requirements of allowability

Timely review budget and costs Make timely and allowable cost transfers Appropriately document all costs

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Frequently Asked Questions

• The following Frequently Asked Questions address practical application of these compliance requirements.

Frequently Asked Questions

• What is considered adequate documentation?• Sufficient Documentation should state:

• the charge is allowable, and• the charge directly benefits the related award.

• Substantial Documentation (for cost transfers > 60 days old) should address:

• Who, What, When, Where, and Why?• What will be done to ensure this does not reoccur?

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Frequently Asked Questions

• If the award is from a non-federal sponsor do the OMB Circulars apply?• Yes. The University requires all awards to be

administered consistently and follow the same requirements for federal awards.

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Frequently Asked Questions

• What are some examples of direct costs?• Examples may include:

• PI salary and benefits• Graduate student salary• Animal care• Lab equipment for the award

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Frequently Asked Questions

• Are direct costs always allowable?• No. If they are not included in the

authorized budget and set out in the agreement, they are not allowable.

• For example, a PI’s salary would not be allowable on an equipment-only award.

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Frequently Asked Questions

• What are some examples of F&A costs?• Examples may include:

• General office equipment• General and Sponsored Programs’

administrative salaries• Library support• Utilities• Postage• Office supplies

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Frequently Asked Questions

• Are costs, such as postage, always considered F&A? • No. In certain circumstances, if the cost can

be justified as an unlike circumstance it may be allowable as a direct charge.

• The costs need to be in the agreement and documentation must support the justification.

Frequently Asked Questions

• What is an example of an unlike circumstance?• Postage. • If the award is for the preparation of a large

volume of manuals and mailing to participants, postage may be allowable as a direct charge.

• This needs to be set out in the agreement.

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Frequently Asked Questions

• What is another example of an unlike circumstance?• Administrative Salaries. • If the project requires extensive travel and

meeting arrangements for a large number of participants, some or all of an administrator’s salary may be allowable as a direct charge.

• This needs to be set out in the agreement.

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Frequently Asked Questions

• Can funds be spent on items not included in the award, or for more than the award?• Maybe. Per A-110, section 25; changes in the

budget must be approved before they take place• Under certain conditions the changes will be

allowed. • Work with OSPA office.

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Frequently Asked Questions

• What is OMB Circular A-110? • These are the administrative requirements for

sponsored awards.• Common terms are defined, such as award, cost-

share, and subrecipient.• Requirements for the pre-award, post-award, and

closeout process are addressed.

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Frequently Asked Questions

• To whom does OMB Circular A-133 apply? - A-133 outlines the responsibilities for:

• External Auditors – These are the standards for their review of the University's financial statements

• University – The administrative requirements of federal awards to be followed.

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Contact Information

• Evelyn Lindell • Administrative Manager• 882.8295• LindellE@missouri.edu

• Craig David • Lead Accountant, Gold Team• Office of Sponsored Programs Administration• 882.9570• davidcr@missouri.edu

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References

Where can I get more information?• OMB Circular A-21 • University Controller’s Office Policies –

APM – Section 60 • Reference Guide for Sponsored Programs • Facilities & Administration

Fiscal Misconduct Reporting Line