Post Award Accounting at Caltech

1
Post Award Accounting at Caltech

• New Grant Manager Training
• October 28, 2004

2
Overview

• Organization and responsibilities
• Account structure/types
• Monitoring accounts
• Useful expenditure types

3
Post Award Accounting Responsibilities

• PROJECT ACCOUNTING
• Budget Realignments
• Billing
• Cost Transfers
• Cost sharing
• Financial reporting
• Closeouts (financial)
• Fabrication accounts
• JPL/Caltech accounting interface
• NIH Salary cap
• Monitoring awards
• (in conjunction with campus)
• Responding to internal and external audits

• COST STUDIES
• Payroll Distribution (aka effort reporting)
• FA rate development and negotiation
• Service centers
• Space surveys

4
Organization Chart
5
Organization

• Who is the Accounting Specialist on a particular
  award?
• http//www.atc.caltech.edu/support/queries.html
• POETA-Alias Queries
• Award Information
• Type in award number
• Award Detail summary screen will appear
• Scroll down to Award Personnel
• Note This screen is also useful because it
  includes all linked awards

6
Account Structure/Type

• Structure
• Cost Sharing
• JPL Research accounts
• JPL Service accounts
• Fabrication accounts

7
Account Structure - What is POETA?

• Project - Projects are funded by Awards
• (Two kinds of Projects, Capital and Non-Capital)
• Organization in POETA, will default to Caltech
• Expenditure Type
• Task - A Project is made up of one or more
• tasks. All expenditure occurs at the task
  or sub- task (i.e., breakdown of a task into a
  smaller unit of work) level
• Award - Awards fund Projects

8
Account Structure What Is Work Breakdown
Structure?
Organization of an activity into a hierarchy of
one project and one or more tasks
9
Cost Sharing

• Committed cost sharing on a sponsored project is
  a binding obligation that must be satisfied in
  accordance with the sponsors requirements
• Offer cost sharing only when required by the
  sponsor
• http//atc.caltech.edu/Finance/pa_policies.htm

10
Types of Cost Sharing

• Committed
• Must be tracked, documented, and in some cases,
  reported
• Uncommitted
• Does not have to be tracked or recorded

11
Cost SharingFederal Requirements

• Do not use federal funds
• Use only once
• Costs must be verifiable, necessary, allowable
  and reasonable for the award on which they are
  being claimed

12
Cost SharingProcedure

• Establishing a linked account or specific task
  within a PTA to track cost sharing is not
  mandatory under the terms of Caltechs policy
• Depends on the Division
• In all cases a manual worksheet, the Committed
  Cost Sharing Worksheet, will be prepared and
  distributed by OSR (based on information included
  in the proposal and the award document)

13
Cost SharingProcedure

• PA will contact the grant manager on an annual
  basis to obtain an update of the status of cost
  sharing and to review any supporting
  documentation
• Will require account detail of where the cost
  sharing was charged and require specific costs to
  be identified within that account
• PA will submit any financial reports due to
  agency or prime contractor

14
JPL Interdivisional Authorizations

• What is an Interdivisional Authorization?
• Authorization for Caltech to incur expenses for
  providing a service to JPL and a means for
  billing JPL for those services (i.e.,
  transferring funding from JPL to Caltech)

15
JPL Interdivisional Authorizations

• There are 2 types of IAs
• Research IA
• Service IA
• Set-up process depends on the type of IA

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JPL Research IAs

• Generally involve a member of the Caltech faculty
  
• Set-Up
• Must prepare a budget and statement of work that
  is reviewed by Caltechs Office of Sponsored
  Research
• Should conform to all the usual requirements for
  proposal submission, e.g., Divisional Approval
  Form

17
JPL Research IAs

• JPL Contract Management Office (CMO) will only
  issue an IA to authorize payment for the work
  after the proposal has been submitted and
  reviewed
• For more information refer to OSR website
• http//atc.caltech.edu/OSR
• Billings and Close-Outs
• Processed by Project Accounting
• Divisional teams

18
JPL Service IAs

• Generally do not involve, or are not supervised
  by, a member of the Caltech faculty e.g.,
  services provided directly to JPL by MPS,
  technicians, shops, service centers, etc.
• Set-Up
• Complete template detailing budget and statement
  of work
• Submit to Lisa Frenchie in Project Accounting
  (M/C 211-15)
• Template and instructions are available on the
  Project Accounting website under forms
• http//atc.caltech.edu/Finance/pa_forms.htm

19
JPL Service IAs

• Reviewed by Project Accounting to verify
• Salary rates (JPL will not accept a different
  salary rate than Caltech rate)
• Correct overhead rate
• Work performed at campus (59.3)
• Work performed at JPL (26)
• Staff benefit rate

20
JPL Service IAs

• JPL CMO will only issue an IA to authorize
  payment for the work after this paperwork has
  been submitted and reviewed
• Billings and Close-Outs
• Processed by Project Accounting
• JPL team

21
JPL IAs

• Be aware of restrictions on charging to JPL IAs
  (both service and research)
• Equipment
• Must be preauthorized and specifically identified
  in the IA
• Equipment threshold is lower than Caltechs
  (1,000 compared to 5,000)
• Foreign travel
• Must obtain prior approval

22
JPL IAs

• Deobligations
• Not uncommon
• JPL CMO will only de-obligate after obtaining
  written concurrence from Caltech PI
• A revised IA will be issued deobligating the
  funds

23
Fabrication Accounts

• Fabrication policy http//www.atc.caltech.edu/fina
  nce/
• Fabrication set up form
• http//www.atc.caltech.edu/finance/

24
Fabrication Accounts

• Definition
• An equipment fabrication is the transformation
  of materials, supplies, hardware costs and direct
  labor (including associated fringe benefits) into
  an item of equipment that
• Does not currently exist
• Meets unique research specifications
• Has a total estimated cost in excess of 5,000
• Has an estimated useful life of at least 2 years
• When completed, will not be affixed permanently
  to a building or structure

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Fabrication AccountsFiscal Implications

• Costs charged to a fabrication account are not
  burdened (i.e., overhead rate is not applied),
  regardless of expenditure type
• Fabricated equipment that is eventually
  capitalized in Oracle Fixed Assets will include
  all costs charged to the fabrication PTA
  (including labor, travel, etc.)

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Fabrication AccountsChargeable Costs

• Costs charged to a fabrication PTA must be
  integral to the construction of that fabrication
  (may include labor costs)
• Must be in compliance with OMB Circular A-21
• Must not be prohibited in the awarding document

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Establishing A Fabrication PTA

• Fabrication PTAs should be established as far in
  advance as possible to prevent initial costs
  being charged to a non-fabrication account
• Division representative completes an equipment
  fabrication request form

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Establishing A Fabrication PTA

• Information required on the fabrication set up
  form includes
• Description
• Ownership (Caltech/Govt/Other)
• Ultimate destination
• Estimated placed in service date (the best
  judgment of the PI of the point in time at which
  an equipment fabrication will become operational)
• Estimated cost
• Must be signed by the PI or the division
  representative
• It is extremely important that the issue of
  ownership and final destination be known and
  appropriately
• identified at the time of account set up as this
  directly impacts the type of fabrication account
  that will
• be established. If the incorrect type of account
  is established at set up then all costs charged
  to that
• account will ultimately have to be transferred to
  the corrected account type.

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Establishing A Fabrication PTA

• Completed forms should be sent to Property
  Services (Ernest Ngalula at M/C 116-6, ext. 4181)
• Property Services reviews the form to verify that
  the proposed fabrication is capable of meeting
  Caltechs definition of fabricated equipment then
  passes the form to Project Accounting

30
Establishing A Fabrication PTA

• Project Accounting verifies that the fabrication
  is allowable under the terms of the grant,
  contract or co-operative agreement being charged
  and if prior approval is required
• Who actually sets up the account?
• If set up at the same time as the main award
  OSR
• If main award already set up Project Accounting

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Establishing A Fabrication PTA

• If a significant budget realignment is
  subsequently requested (more than 20 of the
  original fabrication budget) PA will work with
  Property Services and OSR to ensure that the
  project continues to meet the definition of a
  fabrication and that it continues to be allowable
  under the terms of the awarding document

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Fabrications

• Equipment expenditure types should not be used on
  fabrication accounts
• Technically, a component purchased for a
  fabrication is not a stand alone asset therefore
  it doesnt meet the definition of equipment
• In practical terms using equipment expenditure
  types on fabrications impacts Caltechs reporting
  to agencies
• Remember Charges hitting a fabrication PTA are
  overhead free therefore no fiscal implications to
  using supplies allocable

33
Monitoring Awards

• Cost transfers
• NIH NRSA Fellowships
• Budget realignments
• NIH salary cap
• Foreign travel
• Closeouts
• Payroll distribution

34
Cost Transfers

• Policy on cost transfers to federally funded
  awards
• http//atc.caltech.edu/Finance/policies_costtransf
  ers.htm

35
Cost Transfers

• Definition
• An after-the-fact reallocation of costs, either
  labor or non-labor, to a federally funded award
• Federal requirements limit the circumstances
  under which cost transfers are allowed

36
Cost Transfers

• Procedures for non-labor cost transfers within 90
  days
• Fill out cost transfer and justification form
• Answer questions 1 through 3 in Section C
• Signed by PI or cognizant administrator
• Send form and supporting documentation to Project
  Accounting
• Project Accounting will notify if transfer is not
  approved

37
Cost Transfers

• Procedures for labor cost transfers within 90
  days
• Campus personnel inputs into Labor Distribution
  Module
• Must address the following
• Indicate name of designated/knowledgeable
  individual who has reviewed and approved the
  transfer
• Explain why the labor expense was posted to the
  incorrect PTA
• Explain why the labor expense should be
  transferred to the proposed receiving account.
  How does the receiving account benefit?
• Explain why, based on the terms of the receiving
  award, the charges are allowable and allocable
• Will be reviewed and approved by LDU at Caltech
• Depending on the Division, a signed cost transfer
  and justification form may be required

38
Cost Transfers

• Procedures for transfers after 90 days
• Fill out cost transfer and justification form
• Answer questions 1 through 5 in Section C
• Must be signed by PI, Division Chair and Project
  Accounting official
• Send form and supporting documentation to Project
  Accounting
• Project Accounting will notify submitter if
  transfer is not approved
• If a labor transfer, PA will forward copy of form
  to LDU for system approval

39
Cost Transfers

• What qualifies as an extenuating circumstance?
• Late issuance of appropriate documentation for
  reasons beyond the control of the requestor, such
  as late issuance of an award by a funding agency
• Failure of another department to take action when
  supporting documentation had been properly
  submitted
• Transfer of expenditures from an unrestricted
  account to a federal award that was not in place
  when the expense was incurred

40
Cost Transfers

• What will not qualify as an extenuating
  circumstance?
• Absences of the PI or cognizant administrator
• Shortage or lack of experience of the staff
  administering the awards
• Federally funded sponsored accounts used as a
  holding account for expenditures
• If in doubt send PA a draft for review and
  feedback before obtaining signatures

41
NIH NRSA Fellowships

• Use the correct expenditure type to prevent
  overhead being applied
• Res/Postdoctoral fellows
• Be aware that if a fellow engages in training for
  less than 6 months of the award year, one half of
  that years supply allowance must be returned to
  the NIH

42
Budget Re-alignments

• Why does budget sometimes have to be realigned?
• Linked awards
• There must be budget at the PTA level for an
  invoice to be generated (may need to transfer
  funding between the main award and the linked
  award)
• May wish to re-align budget between categories
  (subject to the terms and conditions of the
  award)

43
NIH Salary Cap

• NIH imposes a limitation on the rate of pay
  individuals may receive as compensation from NIH
  funds
• For calendar year 2004, the cap is 175,700 per
  year
• NIH also mandates that the portion of the
  individuals salary that represents the
  difference between the capped rate and the actual
  rate may not be received from federal sources
• The rate can and usually does change on an annual
  basis

44
NIH Salary Cap

• For example
• PI with a salary of 200,000 per year
• 25 paid by an NSF grant 25 by an NIH grant
  50 by CIT funds
• The PI may only be paid 43,920 from NIH funds
  (he will be paid 50,000 from NSF funds)
• The difference of 6,080, which exceeds the NIH
  cap, can be paid from non-federal sources

45
NIH Salary Cap

• At Caltech an excel spreadsheet is available to
  assist division/center personnel in calculating
  the appropriate percent of time needed to input
  into the payroll system in order to maintain
  consistency with the NIH salary cap
• This document also serves the purpose of
  providing an audit trail
• http//atc.caltech.edu/Finance/policies.htm

46
NIH Salary Cap

• Procedure
• Prior to initiation of any payroll transaction
  from NIH funds, the division determines which
  employees are above the salary cap
• Divisions utilize the NIH salary cap template to
  determine the percentage of salary that can be
  charged to relevant NIH grants, and what portion
  should be charged to non-federal funds
• Divisions should retain completed NIH salary cap
  template as part of the record of that payroll
  transaction

47
NIH Salary Cap

• Procedure
• On annual basis, and at the end of each NIH
  awards competitive cycle, Project Accounting
  will run a report on that award to verify that
  all salary payments were consistent with the NIH
  salary cap in effect at the time of the payment,
  and work with the Division/Center to make
  necessary adjustments

48
Foreign Travel

• Prior approval for foreign travel may be required
  on some awards
• In those circumstances, even if the travel
  benefited the award, the costs will be
  unallowable on the award unless prior agency
  approval was obtained

49
Foreign Travel - FDP

• Prior approval for foreign travel is sometimes
  waived on FDP awards - depends on the agency
• Prior approval waived for
• AFOSR AMRMC DOE NASA
• NIH NSF ONR USDA
• Prior approval required for
• ARO
• EPA

50
Foreign Travel Non-FDP

• Look out for
• JPL (prior approval is always required)
• Non-FDP grants co-operative agreements
• Contracts
• There is a high likelihood that prior approval
  will be required on these type of awards

51
Award Close-Out

• 30 day notice prior to end date
• NCE required? (best to make request prior to the
  end date otherwise sponsor approval required)
• 90 days from end date to close out the award

52
Award Close-Out, contd

• Out of period costs
• Equipment purchased close to the end date
• Overspends (Dont wait until the end of the
  award)
• Underspends (underspends on fixed price contracts
  may be transferred to gift awards)
• Clear commitments

53
Payroll Distribution (aka Effort Reporting)

• http//atc.caltech.edu/Finance/coststudies.htm
• Policies Procedures
• Payroll Distribution FAQs

54
Payroll DistributionOMB Circular A-21

• Section J.10.b(2)a
• The payroll distribution system will
  reasonably reflect the activity for which the
  employee is compensated by the institution
• Section J.10.c.(1)(e)
• At least annually a statement will be signed by
  the employee, principal investigator, or
  responsible official(s) using suitable means of
  verification that the work was performed, stating
  that salaries and wages charged to sponsored
  agreements as direct chargesare reasonable in
  relation to work performed.

55
Payroll DistributionProcedures

• Report Distribution
• Every 6 months
• July and January, for 6 months ending March 31
  and September 30, respectively
• Timing allows for cost transfers to be processed
  within 90 days
• Reports distributed to contact person

56
Payroll DistributionDefinition

• Payroll confirmation reporting is the formal
  verification of the reasonableness of payroll
  charges to sponsored awards
• In general each faculty/PI will receive 2 reports
  to sign
• Faculty Report (detailing his/her own charges)
• Award Manager Report (detailing the individuals
  charging to his/her awards)

57
Payroll DistributionContact Person

• Each Faculty and Award Manager Report is
  associated with a contact person
• The contact person is responsible for
  distributing reports to, and receiving from,
  faculty and/or award managers
• Contact persons were provided by Division
  Administrators for the first reporting cycle
• The Award Set Up Form currently requests that a
  Payroll Confirmation Contact Person be designated

58
Payroll DistributionCognizant Signatory

• Responsibility for confirmation may be delegated
  to a cognizant signatory
• A cognizant signatory is any individual who
• Has suitable means of verification that work was
  performed, and
• Has the knowledge to confirm that the payroll
  charges were reasonable in relation to the work
  performed

59
Payroll DistributionProcedures

• Review the information on the report and confirm
  that it represents a reasonable distribution of
  payroll charges for the work performed
• If there is a disagreement that the work was
  performed and/or that the distribution is
  reasonable, Cost Studies should be notified
  immediately
• Cost Studies will work with the award
  manager/contact person to determine the
  appropriate course of action. A cost transfer
  request may need to be processed by the
  Division/center through Project Accounting. The
  Cost Transfer policy will apply to such requests

60
Useful Expenditures Types

• Caltech currently has 309 active expenditure
  types
• Fortunately,119 are for use by Finance only, 16
  are for recharge centers, and 4 are for burden
  expenditures,
• But, that still leaves 170 to choose from.
• For a complete listing go to
• https//fiji.caltech.edu9013/pls/CNTR/CITWA_EXP.M
  AIN.PKG.startup

61
Expenditure Types
Entertainment should never be charged to a
sponsored award
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Expenditure Types -Supplies

• Allocable or unallocable? Is this the type of
  cost that the Federal Government should be paying
  for either directly (direct charge to an award)
  or indirectly (recovered through the FA rate)?
• Caltech includes costs categorized as supplies
  allocable in the pool of overhead costs that we,
  partially, recover from Federal agencies we
  exclude costs categorized as supplies
  unallocable from that pool of overhead costs
• If in doubt use the front page of the newspaper
  test...

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Expenditure Types -Equipment
64
Expenditure Types -Determining Title

• Sources of Information
• Oracle https//fiji.caltech.edu9013/pls/CNTRL/CI
  TWA_POTA_PKG.startup
• Type in award number
• Double click on award detail
• Scroll down to equipment
• Award summary
• Office of Sponsored Research

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Expenditure Types
66
Expenditure TypesTravel
67
Expenditure TypesMeetings Conferences
68
Expenditure TypesParticipant Support Costs

• Why is it important to use the correct
  expenditure type? Because participant support
  costs are overhead free
• Administrative costs such as room rental,
  copying, postage, and clerical services do not
  qualify as Participant Support costs.
• To rebudget funds from participant support cost
  category to another category requires Program
  Officer approval