research admin. forum: compliance challenges (ppt) - cat forum

Accounting & Financial Services1

Research Administration Forum

May 26, 2004

Compliance Challenges:

Allocation of Costs to Sponsored Projects


Today’s Agenda

• Define our major research compliance challenges and the opportunities they afford– Staff and faculty awareness of the rules—sponsored research

is a rapidly expanding enterprise– Federal activism on a few major issues– Under-recovery of faculty compensation

• Outline our response—improve effectiveness of our research administration infrastructure– Increase awareness—training and consultation– Improve systems– Maximize grant recovery

• Working together to deal with these challenges


Building the Research Enterprise

• UC Davis Vision– Discovery

• Growth in the level of extramural funding across all disciplines



• Research expenditures have nearly doubled in the last 10 years from $167 mm in 1994 to $324 mm in 2003

• Growth in sponsored project funding (awards) has increased $160 mm in 1994 to $426 mm in 2003

• With increased funding comes increased scrutiny by regulators

• Growth in the infrastructure to support increased research has not kept pace



• UC Davis Vision – Engagement

• Strengthen research at all levels by facilitating the application for and management of grants of all sizes across all disciplines

– Development of training opportunities to facilitate more effective fiscal management of grants


FOR IMMEDIATE RELEASETHURSDAY, FEBRUARY 6, 2003WWW.USDOJ.GOV

CIV(202) 514-2007

TDD (202) 514-1888

WASHINGTON, D.C. — Northwestern University will pay the United States $5.5 million to settle allegations that the school violated the False Claims Act with regard to claims in connection with federally-sponsored medical research grants, the Justice Department announced today. The government alleged that Northwestern misled the United States into paying more money than the Chicago-area school was lawfully entitled to receive.

http://www.usdoj.gov/opa/pr/2003/February/03_civ_076.htm


Components of an Effective Compliance Program

• NIH OIG issued a notice in the Federal Register regarding the elements considered necessary for a comprehensive compliance program. (68 FR52783-52784 September 5, 2003)

1. Implement written policies and procedures

2. Designate a compliance officer and committee

3. Conduct effective training and education

4. Develop effective lines of communication

5. Conduct internal monitoring and auditing


Components of an Effective Compliance Program

• NIH OIG issued a notice in the Federal Register regarding the elements considered necessary for a comprehensive compliance program. (68 FR52783-52784 September 5, 2003)

6. Enforce standards through well publicized disciplinary guidelines

7. Respond promptly to detected problems, taking corrective action, and report to Federal agencies

8. Define roles responsibilities – oversight responsibility


Accountability – Risks

• Ten compliance risks in research administration1. Effort reporting

2. Direct vs. indirect cost charging practices

3. Recharge center / service center rates

4. Fixed price agreements

5. Financial status reports

6. Charging costs at the end of a grant period

7. Appropriate charging of costs to benefiting grants

8. Mandatory cost sharing

9. Protection of human subjects

10. Protection and charging of animal subjects


Accountability – Major Risks

• Compliance risks identified by the Federal Government1. The proper allocation of charges to grant

projects

2. Time and effort reporting, including accurate reporting of the commitment of effort by researchers

3. Use of program income


Accountability – Cost Allocation

• Allowable costs– Reasonable

• Arm’s length transaction?• Necessary

– Allocable

– Consistent treatment• Like treatment in like circumstances

APPROVED



• Unallowable costs– Administrative and clerical salaries

• Major Project?

– Don’t make allowable costs unallowable, or when good costs go bad

• Flat assessments (5%)

• Rates not approved by Campus Rate Committee

– General purpose equipment?

– Meals?



• UCD Cost Accounting Standards Disclosure Statement (DS-2)– Required by A-21 – Filed by UCD on December 31, 1996 (Revised March 30, 2000)

• Identifies UCD accounting practices, policies, and procedures for assigning costs to federally sponsored programs and to attest to the consistent treatment of those practices

– Charging Practices for Federally Funded Grants and Contracts 1997

• http://accounting.ucdavis.edu/EX/


Accountability

Mrak Hall


Accountability – Other Issues

• Cost Sharing– Any program or project cost that is not supported by the

sponsor– Must meet A-21 cost principles: allowable, allocable,

reasonable• Committed: Mandatory & Voluntary (non-federal sources)

– Mandatory: Stipulated as a condition of the agreement.– Voluntary: Discretionary use of matching funds from gifts,

departmental (19900) funds, academic year salaries

– Must be documented in the University’s financial records.– Academic year salaries charged to project?– Project Overruns:

• Must be tracked and accumulated (reported as research)• Cannot be charged to departmental administrative account


Accountability – Other Issues

• Review of monthly ledgers– Does the PI know what’s been charged to the project?

• Do expenditures match the project plan?

• Cost transfers– Cost transfers completed within 90 days?

• Moving expenditures results in inaccurate reports and is a red flag

– Cash management issues

• Effort Reporting– Is the PI signing? – Are necessary payroll transfers made?


Maximizing Grant Recovery

• PI’s are expending effort on sponsored projects during the academic year

• Not charging their effort to Federally sponsored projects can create compliance problems– Effort Reporting– Voluntary Cost Sharing

• Recovering actual costs could provide resource options


2002-03 Ladder Rank Salaries

Total Ladder

SalariesPercent Charged

All Fund Sources to Gen Funds

CAES $15,983,796 99%

DBS 9,650,504 96%

COE 18,565,985 87%

HArCS 12,854,367 100%

MPS 14,108,208 89%

DSS 17,600,956 99%

Education 1,162,511 98%

GSM 3,814,411 70%

Law 3,930,483 100%

SOM 60,193,823 28%

SVM 10,646,654 92%

Total Salaries $168,511,698



• Consider charging academic year salaries to sponsored projects– By reducing the percentage of salaries on

general funds to 80% (excluding SOM)

$21.7 million in general fund savings would be available for re-budgeting on a current year basis

– At the same time, reduces the risks associated with voluntary cost sharing



• Myths about charging AY salaries– Charging AY salaries is against OP

Policy

– The sponsor does not care how much time is accounted for

– Charging salaries does not benefit the school/college/dept

– Salary funds revert to OP if not used



• Facts about charging AY salaries– General fund savings can be re-budgeted on a

current year basis– Not charging AY salaries when work is

performed on the project exposes the University to compliance risks

• Effort Reporting• Cost sharing

– Could overstate UCD’s F&A Rate

• CAS 501 – Consistency Estimating, Accumulating, and Reporting Costs


$$$$$$$

Washington, DCWashington, DC



• Where do we go from here?– Increase proposal budgets to

include AY salaries– Create incentives

• Distribution of 19900 balances

– Avoid compliance problems associated with not charging AY salaries to grants:• Cost sharing• Effort reporting


Providing an Effective Environment for Research Administration

• Enhance the infrastructure to support growth– Training

• Certificate Series in Grants Administration

• Web based courses

– Systems• Electronic Research Administration

• Effort Reporting System

• Cost Sharing


Providing an Effective Environment for Research Administration

• Protect our good reputation– Avoid legal/compliance problems

• Provide an effective compliance environment– UCD Task Force on University

Compliance• Charged August 7, 2003


Impact

• Risks of Non-Compliance– Cost Disallowances, Penalties

– Withholding of Payments

– Withholding of Future Award

– Designation as a High Risk Organization

– Special Monitoring and Corrective Action Plans

– Personal Liability

– Criminal prosecution


Impact

• What we don’t want– Too much control

• Lack of balance– Cost vs. benefit

– Gotcha type of approach

– No, what’s the question?

– Risk averse– Redundant processes


Impact

What we don’t want:Vice Chancellor Klein

to end up in jail.


Impact

• What to remember– Know the rules, play by the rules

– Be prepared to provide documentation that supports your action• A project/award is like your tax return


We Need Your Help

• Set the “Tone-at-the-Top”

• Designate officials within your unit who will be responsible for coordinating compliance efforts

• Would serve as a point of contact that we can communicate with regarding compliance issues

• Reinforce the elements necessary for a compliance program

• Encourage participation in training programs


Questions?

research admin. forum: compliance challenges (ppt) - cat forum

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