Why We’re Here :

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“Basics of Sponsored Projects Financial Administration”

MUSC Grants and Contracts Accounting

Spring 2003

http://research.musc.edu/gca/home.htm

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Why We’re Here :

• Annual Sponsored Awards– FY 2001 = $ 123.9 million– FY 2002 = $ 131.1 million– FY 2003 YTD = $ 129.3 million through

4/2003

• Annual Sponsored Projects Expenditures– FY 2001 = $ 86.9 million– FY 2002 = $ 101.2 million– FY 2003 YTD = $ 96.7 million through

4/2003

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Part IGeneral Topics

• Key Terms (or “Acronym Soup”)

• Roles & Responsibilities at MUSC

• Types of Sponsors, Sponsored Agreements, & Functions

• The Life Cycle of a Sponsored Project

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Part IICosting Topics

• Regulatory Requirements• Allowable and Unallowable Costs• Direct Costs vs. Facilities &

Administrative Costs• Key Budget and Expense Items• Post-Award Monitoring• Reporting to the Sponsor• MUSC Financial Reports• Financial Closeout

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Part IGeneral Topics

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Key Terms• RFP = Request for Proposals = agency’s solicitation for

proposals• Proposal = descriptive narrative and proposed budget

submitted to funding agency• Proposal Data Sheet (The “Blue Sheet”) (MUSC)• NGA = Notice of Grant Award (NIH) = legal award document• GCA Form = Grant & Contract Acceptance Form (MUSC)• Project Period = period of time approved for project

programmatically• Budget Period = incremental period being funded• P.I. = Principal Investigator• Program Administrator = sponsor’s technical official• Grants Specialist = sponsor’s administrative/financial official

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Key Terms

• CAS = Cost Accounting Standards– DS-2 = Disclosure Statement

• OMB Circular A-21• OMB Circular A-110 • CFR = Code of Federal Regulations• FAR = Federal Acquisition Regulations

• UDAK = User-Defined Accounting Key• CAMR = Chart of Accounts Maintenance Request• PEAR = Position/Employee Action Form

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Key Terms

• Prior Approval = written authorization evidencing prior consent of sponsor

• Expanded Authority = delegation of approvals to grantee

• Allowable Costs• Unallowable Costs• Direct Costs• F&A Costs = Facilities & Administrative Costs• MTDC = Modified Total Direct Costs• TDC = Total Direct Costs• Carryover• Cost Sharing• Cost Transfer• Cost Overrun

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Key Sponsoring Agencies & Offices

• OMB = Office of Management and Budget

• DHHS = Department of Health and Human Services– DCA = Division of Cost Allocation (MUSC’s cognizant

audit agency)

• OIG = Office of Inspector General - each federal agency has an OIG responsible for audit, investigations, & inspections

• NIH = National Institutes of Health

• DOD = Department of Defense

• DOE = Department of Energy

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Roles & Responsibilities - Departmental

• Principal Investigator:– Serves as Project Manager– Accountable for the scientific conduct of the project and

expenditure of funds– Responsible for all technical reporting

• Departmental Business Personnel:– Monitors budgets and expenses from proposal to close-

out– Pre-audits expenditures and maintains supporting

documentation– Coordinates department’s activity (effort) reporting

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Roles & Responsibilities - Central

• Office of Research & Sponsored Programs (ORSP):– Coordinates proposal processing, regulatory compliance,

and awards administration– Reviews and processes budget revisions, no-cost

extensions, & other actions requiring sponsor approval

• Grants & Contracts Accounting (GCA):– Sponsor financial reporting, administration, & activity

(effort) reporting– Auditing sponsored projects expenditures– Preparing rate studies & negotiating Facilities &

Administrative (F&A) Cost Rates & Fringe Benefits Rates

– Developing policies and procedures & related training programs to ensure administrative compliance

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Roles & Responsibilities - Central

• Office of Research Integrity (ORI):– MUSC Academic Compliance Assurance Program– Institutional Review Board (IRB)

• Reviews, approves/disapproves research activities involving humans as subjects in accordance with federal regulations

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Types of Sponsors

• Federal Agencies– Note: Federal regulations apply to subawards

when the prime award is from a federal sponsor

• State & Local Government Agencies

• Corporations

• Foundations / Charities

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Sponsored Functions at MUSC

• Sponsored Research– Clinical Research– Non-Clinical (Basic) Research– Research Training

• Sponsored Instruction– Education/Training– AHEC = SC Area Health Education Consortium

• Other Sponsored Activities– Public Service– Other Activities

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Types of Sponsored Agreements

• Grant– Purpose is to transfer money, property, services, or

anything of value to a recipient in order to accomplish a public purpose

– No substantial involvement is anticipated between sponsor and recipient during the performance of activity

• Contract / Subcontract– Principal purpose is to acquire property or services for

direct benefit or use of the sponsor

• Cooperative Agreement– Principal purpose is to transfer funds to recipient to

accomplish a public purpose– Substantial involvement is anticipated between sponsor

and recipient during performance of activity

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Types of Sponsored Agreements

• Major Types of NIH Grants:

– "R" series = Research Project Grants (R01)

– Program Project Grants (P01)

– "K" series = Career Development Awards

– NRSA = National Research Service Awards (fellowships and traineeships)

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The Life Cycle of a Sponsored Project

• Pre-Award

PI conducts research and identifies funding opportunities

Internal review and routing of proposal - P.I., Department, ORSP, IRB, etc.

ORSP reviews submission of proposal to sponsor

ORSP negotiates with sponsor

ORSP receives funding/executes award agreement on behalf of MUSC

Refer to “The Grant Cycle” Flowchart.

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The Life Cycle of a Sponsored Project

• Post-Award

GCA establishes UDAK in General Ledger (via CAMR) GCA enters approved budget in G/L P.I. schedules project activities & progress reporting Department transacts against the award & pre-audits

expenditures GCA conducts post-audit of expenditures Report on award – Financial-GCA; Technical-P.I. GCA invoices/collects money from sponsor

Exception: Clinical trials are billed per patient by Department

Department & GCA close award GCA prepares cost analyses and acts as audit liaison

Refer to “The Grant Cycle” Flowchart.

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Part IICosting Topics

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Regulatory Requirements

• OMB Circular A-21:

– “Cost Principles for Educational Institutions”

– Guidelines concerning:

• Cost Accounting Standards

• Determining allowable and unallowable costs on sponsored awards

• Determining direct vs. facilities and administrative costs

• Preparation of facilities and administrative cost rate proposals

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• OMB Circular A-110:

– “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations”

– Guidelines for post-award grant and contract administration covering requirements for:

• Financial reporting

• Procurement

• Property standards

• Cost sharing

• Project close-out

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• NIH Grants Policy Statement:– Grantees’ policy requirements that serve as the

terms and conditions of NIH grant awards– Contains information on expanded authority, prior

approval issues, allowable vs. unallowable expenses, trainee costs, travel costs, etc.

• CFR: Code of Federal Regulations– General & permanent rules published by executive

departments & Federal agencies

• FAR: Federal Acquisition Regulations– Uniform policies for acquisition of supplies & services

by executive agencies

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• Cost Accounting Standards (CAS):– Historically applied to contractors– Applied to educational institutions effective

7/1/1998

– 501 : Consistency in Estimating, Accumulating and Reporting Costs

– 502 : Consistency in Allocating Costs Incurred for the Same Purpose

– 503 : Accounting for Unallowable Costs– 506 : Cost Accounting Period

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• MUSC’s CAS Policies and Procedures approved by the Board of Trustees in April 1999– Web address: http://research.musc.edu/cas/toc.htm

– Affiliates– Clinical Trials– Cost Sharing– Effort Reporting– F & A Costing– Proposal and Rebudgeting– Recharge Centers– Service Centers– Disclosure Statement (DS-2)

• Submitted to DHHS to provide a detailed description of MUSC’s cost accounting practices

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• When in Doubt:

– Review the award’s specific terms and conditions– Review the original approved budget– Review the proposal budget justification– Reference the sponsor’s regulations– Reference MUSC’s CAS policies/procedures and DS-2– Contact Grants and Contracts Accounting

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Allowable and Unallowable Costs

• Costs are reimbursable by the federal government only if they are:

– Reasonable– Allocable– Allowable– Consistently Treated

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– Reasonable:• A prudent business person would have purchased

this item and paid this price• Example - Purchase of first class airfare tickets

when coach tickets are available is unreasonable

– Allocable:• Expenses can be assigned to the activity on some

reasonable basis• Example - Charging projects based on availability

of funds does not have a reasonable allocation basis


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– Allowable:• Expenses must be allowable or not specifically

excluded as specified by government regulations

• Costs that the sponsor is willing to reimburse

– Consistently Treated:• Like costs must be treated the same in like

circumstances as either direct or F&A costs• Why? To help ensure that all costs are assigned

correctly by requiring that they be assigned consistently and to avoid inappropriate charges to the federal government & other sponsors


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Direct Costs

• Costs which can be identified specifically with a project, program, or activity at MUSC

• Must be included in the award budget, or have prior approval of sponsor– Examples: Salary of researcher, laboratory

supplies purchased for project, and animal care costs

• Refer to “Direct and Facilities and Administrative Costs Reference Table”

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Facilities & Administrative Costs

• Costs that benefit multiple projects or activities at MUSC, and cannot be easily identified with a specific project, program, or activity

– Examples: Administrative and clerical salaries, office supplies, and equipment depreciation

• Costs must be consistently treated - expenses for similar purposes must be treated the same under like circumstances

• Refer to “Direct and Facilities and Administrative Costs Reference Table”

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Post-Award Monitoring

• Monitor expenditures for allowability

• Monitor changes requiring prior approval of sponsor (or approval by ORSP under “Expanded Authorities”):

– Change in scope

– Change in key personnel

– Carryover of unobligated balances to next budget period

– No-cost extension

– Subcontracting

– Budget revisions

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Post-Award Monitoring

• Monitor cost transfers

– Follow MUSC and NIH Cost Transfer Policies

– Thorough written justification & GCA approval is required for transfers to Sponsored UDAKs

– Use PEAR Form “General Remarks” section for justification for salary transfers

• Monitor subrecipients to ensure:

– Technical compliance (P.I.’s responsibility)

– Financial compliance (shared responsibility of P.I., Department, & GCA)

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Key Budget and Expense Items

• Salaries & Fringe Benefits• Equipment • Supplies• Travel• Subawards• Cost Sharing• F&A Costs

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Salaries & Fringe Benefits• Salary expenditures charged via PEARs must accurately reflect the

time and effort expended on the award

• Key personnel should maintain the proposed level of effort

• Salary charges must be supported by Activity Reports– Monthly-paid employees certify effort on a quarterly after-the-fact basis– Bi-weekly-paid employees report effort via time-cards

• Fringe Benefits– MUSC charges fringe benefits to Sponsored Projects using fixed Fringe

Benefits Rates based on employment type (effective 7/1/02)

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Salaries & Fringe Benefits

• Combined Salary– Institutional base salary combining MUSC + Affiliate salary– Incentive pay must be excluded for all Federal awards

• NIH Salary Cap– Institutional base salary used to calculate salary charges

to NIH may not exceed Executive Level I salary level (currently $171,900 per year)

– Establish a NIH Salary Cap UDAK to account for effort in excess of cap (Department submits CAMR)

• Affiliate (UMA) Salaries– Submit Affiliate Worksheet with PEAR Form– Web address: http://research.musc.edu/gca/forms.htm

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Equipment

• Equipment = An article of non-expendable, tangible property having a useful life of more than two years and costing at least $5,000

– Special purpose equipment includes items that are generally usable only for research, medical, scientific, or technical purposes

• Can normally be charged as direct costs

– General purpose equipment includes such items as office equipment, heating and cooling units, and computing devices

• Cannot normally be charged as direct costs

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Supplies

• Materials & Supplies– Expendable items that are consumed or

expended when put to use, or have an expected service life of one year or less

– Medical/scientific/laboratory supplies– Equipment under $5000

• Office Supplies– Unallowable as a direct cost unless there are

unlike (special) circumstances

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Travel

• MUSC employees are subject to State of South Carolina travel regulations regardless of the source of funds being charged

• Limited to individuals named on or supported by the award

• Travel expenses incurred by consultants & private entities are subject to the Federal Joint Travel Regulations (FJTR)

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Subawards

• Contracting out substantive programmatic project work to another institution or entity

• If subcontracting becomes necessary after the award is issued, prior approval from the sponsor is required

• Account 50261 - First $25,000 of each new subaward; included in F&A cost calculations

• Account 50262 - Expenditures in excess of $25,000 for each subaward; excluded from F&A cost calculations

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Cost Sharing

• Cost Sharing (or “Matching”) represents the use of institutional funds to supplement project costs not borne by the sponsor

• Must be reported to the sponsor

• Administrative requirements for Cost Sharing are itemized in Circular A-110– Verifiable– Not counted toward more than one federal program– Necessary & reasonable– Allowable under applicable cost principles– Not funded by other Federal funds, unless authorized– Provided for in the approved budget

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Cost Sharing• Types of Cost Sharing:

– #1 - Mandatory• Required by the sponsor• Department must establish a Cost Share UDAK (Department

submits a CAMR)

– #2 - Voluntary Committed• Not required by sponsor but becomes mandatory when

included in proposal• Department must establish a Cost Share UDAK

– #3 - Voluntary Uncommitted• When actual effort (for senior personnel only) exceeds

committed effort

• Separate UDAK should not be established!

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F&A Cost Rates *

• If more than 50% of a project is performed in facilities not owned by the institution or rent is directly allocated to the project, then the Off-Campus Rate is applicable.

• The F&A cost rates apply to MTDC = Salaries & wages, fringe benefits, materials & supplies, services, travel, fixed charges, & the first $25,000 of each subcontract.

* Effective Period 7/1/2001 - 6/30/2004

On-Campus

Off-Campus

OrganizedResearch

Capped Uncapped

46.0%

49.0%

26.0%

29.0%

OtherSponsoredActivities

30.0% 26.0%

Instruction 35.9% 26.0%ClinicalTrials 25.0%

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Reporting to the Sponsor

• Financial Reports– Federal Financial Status Report (SF269)– Federal Report of Cash Transactions (SF272)– Invoice– Special reports as required by agreement

• Technical Reports– Progress Reports– Final Report

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• Federal Financial Status Reports (SF269)

– NIH SNAP (Streamlined Noncompeting Award Process) Awards:

• FSR not required annually, but final FSR must be submitted no later than 90 days after the end of the project cycle

– Non-SNAP Awards:

• Required annually, except for awards that require more frequent reporting

• Must be submitted no later than 90 days after the end of each budget period

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• Subawards under Federal Prime Awards:

– Check subcontracts terms & conditions for report/invoice due dates

– Typically due within 60 days so that prime recipient can meet 90-day reporting deadline

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Financial Closeout

• Final Financial Status Report or Invoice• Final Inventory Statement and Certification• Final Technical Report• All reports must be submitted on a timely basis,

in accordance with grant terms (usually within 60 to 90 days after project termination)

• Refund any unobligated cash advance• Account for real and personal property• Agency retains the right to recover disallowances

until final audit

– Failure to submit timely and accurate reports may affect future funding!

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MUSC Financial Reports• http://finlin1.harborview.musc.edu/NFuse15/html/login.htm

• Available Balance (online)

• Month-End Financial Reports (online)– Budget Transaction– Transaction Detail– Commitment/Encumbrance Report– Project Summary– Unit / Department Summary– Principal Investigator’s Report (new version coming soon)

• Grants & Contracts Management Reports– Active Projects Summary Reports (monthly)– Clinical Trials & Basic Research Projects Reports (monthly)– F&A Cost Recovery Reports (monthly)– Life-to-Date Transaction Report (ad hoc - contact GCA Accountant)

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Questions?

Documents

Why We’re Here :