NATIONAL COUNCIL OF UNIVERSITY RESEARCH ADMINISTRATORS

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NATIONAL COUNCIL OF UNIVERSITY RESEARCH
ADMINISTRATORS INTRODUCTION TO POST-AWARD
ADMINISTRATION NCURA REGION IV MEETING MAY 4,
2008
Diane Barrett Assistant Director, Pre-Award
Services Research and Sponsored
Programs Telephone [phone] Fax (608)
262-5111 E-Mail barrett_at_rsp.wisc.edu Web Page
www.rsp.wisc.edu Robert Andresen Assistant
Director, Post-Award Services Research and
Sponsored Programs University of
Wisconsin-Madison  Telephone [phone] Fax
[phone]  E-Mail randresen_at_rsp.wisc.edu Web
Page www.rsp.wisc.edu
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Introductions

• Who We Are
• Who You Are

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Fundamentals of Research Administration Web Site

• Bookmark Today http//www.ncura.edu
• Broken into Sections
• Legal Framework
• Pre-Award Research Administration Services
• Pre-Award Proposal/Budget Development, Costing
• Negotiation and Award
• Post-Award Administration
• Compliance

Searchable!
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Welcome to Your New Job

• Congratulations! You are the new Research
  Administrator at the University.
• The previous research administrator left several
  months ago.
• Since her departure, the office has moved into
  new office space.
• Prior to the move, the staff cleaned house and
  got rid of a lot of old and unnecessary
  paperwork.
• Nobody is really sure what happened to your
  predecessors documentation.
• During your first days, you will be meeting
  several faculty members who have been working
  very hard on their sponsored projects.
• Since the previous administrators departure,
  most of the administrative duties have been done
  directly by the faculty members, as time
  permitted.

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Welcome to Your New Office
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Meet Prof. Brown
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Meet Prof. Brown (continued)

• Prof. Brown has been at the University for seven
  years.
• She was personally recruited to the University by
  the Chancellor.
• She is a prolific researcher with many grants
  from Federal and non-Federal sources.
• Prof. Brown is well-known in her field and is a
  self-proclaimed finalist for a Nobel Prize.
• Prof. Brown believes the previous research
  administrator was too detail-oriented,
  inflexible, and uncooperative.
• Typical quotes
• I dont have time to answer your questions right
  now.
• Just charge it to the current grant. All my
  projects are related anyway so it doesnt
  matter.

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The Scenario

• Prof. Brown enters your office with a copy of an
  email from NIH indicating that an FSR is
  delinquent on a project that ended 6 months ago.
• NIH will not act on her grant continuation until
  it receives the FSR.
• Prof. Brown tells you that it must be submitted
  today.
• In reviewing the accounting ledgers for this
  project, you find a large unspent balance.
• In reviewing the accounting ledgers for Prof.
  Browns other projects, you find that they are
  all overspent.
• What do you do?

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Topics for Discussion

• Monitoring Financial Activity
• Cost Transfers
• Financial Reporting

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A-110 Subpart C - Post Award Requirements

• Standards for financial management systems
• Relate financial data to performance data
• Recipients financial system must provide
• Financial results of each sponsored project
• Identification of source application of funds
• Control accountability over all funds, property
  other assets
• Comparison of outlays to budget amounts
• Procedures to minimize time between transfer of
  funds and the disbursement of those funds
• Procedures for determining reasonableness,
  allocability and allowability of costs
• Accounting records supported by source
  documentation

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Cost Transfers

• An after-the-fact reallocation of costs to a
  federally funded award
• NIH Grants Policy Statement
• Cost transfers that represent corrections of
  clerical or booking errors should be accomplished
  within 90 days of when the error was discovered
• The grantee should have systems in place to
  detect such errors within a reasonable timeframe
  untimely discovery of errors could be an
  indication of poor internal controls

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Cost Transfers

• Acceptable reasons
• Reflect correct usage when multiple projects
  benefit
• Transfer pre-award costs
• Remove unallowable costs
• Unacceptable
• To meet deficiencies caused by overruns or other
  fund considerations
• To avoid restrictions imposed by law or by the
  terms of sponsored agreement
• For other reasons of convenience

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Cost Transfers

• Auditor concerns
• Is the main reason for the transfer to maximize
  federal funds?
• Does the organization demonstrate good fiscal
  stewardship of Federal funds?
• Frequent errors in recording costs, and / or a
  delay in the time it takes to identify errors may
  indicate the need for accounting system
  improvements, enhanced internal controls or both
• Is the transfer supported by sufficient written
  justification with appropriate reviews and sign
  offs?
• Are adequate policies and procedures in place?
  Have those policies and procedures been followed?

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Cost TransfersHigh Risk Transactions

• Red Flags
• Greater than 90 days
• In last two months of award
• Moving overdrafts from one federal award to
  another
• Not following institutional policy
• Inadequate explanations
• Adjustments to effort certifications
• Recent Audits
• Mayo Clinic - 6.5M Fine
• OIG Work Plans

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A-110 Reports And Records

• When required, performance reports (technical
  reports) shall generally contain
• Comparison of actual accomplishments with goals
  established for the period, the finding or both
• Reasons why established goals were not met and
• Other information including, when appropriate,
  analysis and explanation of cost overruns or high
  unit costs.
• Recipient shall notify the federal awarding
  agency when
• Events occur that have a significant impact on
  the project or program and/or
• Problems, delays or adverse conditions occur that
  materially impair the ability to attain program
  objectives.
• Site visits

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A-110 Reports and Records

• Establishes procedures for monitoring and
  reporting financial and program performance (i.e.
  technical reporting) and the necessary reporting
  forms
• Financial reporting
• Financial Status Reports (FSR) (SF-269)
• 30 days after the conclusion of each specified
  reporting period for quarterly and semi-annual
  reports and within 90 days of annual or final
• Report of Federal Cash Transactions (FCTR)
  (SF-272)
• For advances through letter of credit
• Due 15 days after each quarter
• Request for advance or reimbursement (SF-270)
• Used only where letter of credit or predetermined
  advance method is not used.

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Submitting Financial Reports

• Refer to awards terms and conditions.
• Include actual costs only.
• Use appropriate format.
• Online systems are common.

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Meet Prof. Greene
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Meet Prof. Greene (continued)

• Professor Greene is also new to the University.
• This is his first faculty position, although he
  has worked on sponsored projects as a graduate
  student as well as a post-doc.
• Prof. Greene has just received his first Federal
  grant to conduct research in a new field.
• The grant provides funding for a variety of
  items many of which are not typical purchases or
  hires for the department.
• Typical quotes
• I just filled out the forms I wasnt sure what
  to include.
• I didnt know that I was supposed to do that.

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The Scenario

• Prof. Greene comes to your office with a stack of
  purchasing forms that have been returned because
  they were filled out incorrectly and were
  requesting purchases that the University does not
  make.
• Prof. Greene has a copy of his approved budget
  from the sponsor.
• Hes leaving campus to begin his field work at
  the end of the week and would like you to get
  this straightened out today.
• What do you do?

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Topics for Discussion

• Budgeting
• Cost Principles
• Rebudgeting

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Proposal Budget Elements Of Direct Costs

• Salaries and wages
• Fringe benefits
• Equipment
• Expendable supplies and materials
• Travel
• Subcontracts and consultants
• Other

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Budget Construction And Review

• Salaries and Wages
• Institutional Policy on Academic Year Salary
  Recovery
• Summer Salary
• Undergraduate and Graduate Students (salaries or
  stipends?)
• Postdoctoral Research Associates
• Technical and Clerical Support, as justified
• Use Percent of Effort, Not Hourly Wage
• Include Increases for COLA and Merit-based
  Adjustments
• Fringe benefits
• Use Correct Rates (if multi-year rates, are they
  applied correctly?)
• Equipment
• Beware of Potential Differences Between Equipment
  Definitions
• (sponsor / institution)

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Budget Construction And Review (Contd.)

• Expendable materials and supplies
• Travel
• Adhere to Institutional Policy and Agency
  Guidelines
• Distinguish Between Domestic and Foreign Travel
• If Foreign Travel is Sponsored by the Federal
  Government, Use Federal International Per Diem
  Rates
• Subcontracts and consultants
• Proposed Costs should be Reasonable and Allowable
• Authorized Subcontract Representative /
  Consultant should sign the Sub-proposal or a
  Confirmatory Letter.

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Budget Construction And Review (Contd.)

• Other direct costs
• Communications
• Publications
• Animal Care Costs
• Human Subject Costs
• Shop Charges
• Maintenance / Service Contracts
• Computer Costs
• Graphic Arts / Photographic Services
• Rental / Lease of Facilities
• Construction / Renovation / Remodeling Costs
• Remember Include Inflationary Adjustments

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Budget Justification

• Include a narrative budget justification to
  briefly describe how the expenditures relate to
  the project.
• Include relevant information such as fringe
  rates, salary increase percentages, inflationary
  adjustments.
• If requesting unusual expenditures, explain the
  need.
• Be careful when including effort estimates and
  cost sharingthis become binding commitments.
• EXAMPLE
• Salaries and wages
• Senior Personnel The P.I. is on a full-time
  teaching appointment in the Department of
  Physics. This request is for 10 salary during
  the academic year and two months summer salary
  (when 100 time is available) for each of the
  three years of the project. A 3 cost of living
  increase has been built in to years 2 and 3.
• Data Assistant The staff position will perform
  data entry, analysis, report preparation and data
  coordination with the subcontractor.
• Fringe benefits Benefit rates for the P.I. and
  staff are set at 25 of salaries for Year 1 26
  for Year 2 and 27 for Year 3. The student
  rate is 10 for all years.
• Equipment The Textronics Model 1245 recorder and
  translator provides instantaneous readouts with
  improved sensitivity. The PIs laboratory has
  access to a Model 1240, which is unable to
  perform the sensitive analyses required for this
  research.

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Budget Summary Of General Points

• Include both direct and FA costs
• Should be detailed (at least in first year)
• Include only allowable costs
• As required, include matching or cost-sharing
• Remember Be consistent with sponsor
• policies and requirements

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Direct Costs

• Costs that can be identified specifically with a
  particular sponsored project, an instructional
  activity, or any other institutional activity or
• That can be directly assigned to such activities
  relatively easily with a high degree of accuracy
• Examples of Direct Costs
• Salary of researcher (including benefits costs)
• Laboratory supplies purchased for project
• Technician

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Facilities and Administrative (FA) Costs
(Indirect Costs)

• Costs that are incurred for common or joint
  objectives, and, therefore, cannot be identified
  readily and specifically with a particular
  sponsored project, an instructional activity, or
  any other institutional activity (Section E.1)
• Examples of FA Costs
• Salary of department administrator
• Building utility and maintenance costs
• President, Provost, and CFOs offices

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Total Project Costs

• Direct Costs (Directly benefit a specific
  sponsored project)
• FA Costs (Cannot be attributed to a specific
  project)
• ------------------------------
• Total Project Costs

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What Is An Allowable Cost?

• An allowable cost must be
• REASONABLE A prudent business person would have
  purchased this item and paid this price.
• ALLOCABLE It can be assigned to the activity on
  some reasonable basis.
• CONSISTENTLY TREATED Like costs must be treated
  the same in like circumstances, as either direct
  or FA costs.
• CONFORM TO TERMS In A-21 or the Sponsored
  Agreement.
• Cost must meet all four standards to be
  considered allowable!

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What Does Reasonable Mean?

• A cost is reasonable if
• The nature of the good or service and the amount
  involved reflect the action of a prudent person.
• Considerations in determining reasonableness
• Necessary for the performance of the sponsored
  agreement
• Determined by arms length bargaining of a
  prudent person
• In accordance with the sponsored agreement terms
  and conditions
• Consistent with established Institution policies
  and practices

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The Front Page of the Newspaper Test
Contemplating any business act, an employee
should ask himself whether he would be willing to
see it immediately described by an informed and
critical reporter on the front page of his local
paper, there to be read by his spouse, children,
and friends. --- Warren E.Buffet
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Allocability

• A cost can be allocable as a direct or an
  indirect cost
• A cost is allocable as a direct cost if the goods
  or services provided are assignable in accordance
  with the relative benefits received.
• It is incurred solely to advance the work under
  the sponsored agreement
• It benefits both the work under the sponsored
  agreement and other work of the institution in
  proportions that can be approximated
• - Allocate costs based on benefit to projects

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Allocating Direct Costs

• Proportional benefit
• Cost benefits two or more projects in proportions
  that can be determined without undue effort or
  cost
• Any reasonable basis
• Proportional benefit between projects cannot be
  determined because of the interrelationship of
  the work involved allocate costs between
  projects on any reasonable basis
• Who determines reasonable basis?

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Examples Allocability of Costs

• Travel by PI to conference (not related to
  specific project)
• Not allocable as direct charge to sponsored
  award may be allocable as FA cost
• Salary of research technician
• Allocable as direct cost, not as FA cost
• Salary of administrative assistant
• Allocable as FA, not normally allocable as
  direct charge to a sponsored project
• Proposal preparation costs
• Not allocable as direct charge to sponsored
  award, allocable as
  FA cost

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Examples of When Costs May Not Be Allocated

• Costs MAY NOT be allocated
• To meet deficiencies caused by overruns,
• To avoid restrictions imposed by law or terms of
  the sponsored agreement, or
• For other reasons of convenience
• Because one project has more funds!

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Other Allowability and Allocability
Considerations Cost Accounting Standards
(Appendix A)

• Each Institution Shall Follow Four CAS Standards
  
• CAS 501 consistently follow its established
  cost accounting practices when estimating
  (proposal costs), accumulating (incurred costs)
  and reporting costs
• CAS 502 consistently allocate costs incurred
  for the same purpose, in like circumstances, as
  either direct or FA costs as they relate to the
  final cost objective
• CAS 505 identify and exclude unallowable costs
  from proposals and claims (i.e. FA rate
  proposal)
• CAS 506 consistently use the same cost
  accounting period for purposes of estimating,
  accumulating and reporting costs.

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Costs that should normally be treated as FA
Costs

• Costs normally treated as FA costs cannot be
  charged directly to a sponsored project unless
  the specific activities related to the project
  are clearly different in type or significantly
  different in scale from the Institutions norm.
  Costs normally charged as FA costs may be
  charged directly when "unlike or unusual"
  circumstances exist.
• Items such as office supplies, postage, local
  telephone costs, and memberships shall normally
  be treated as FA costs. (A-21 F.6.b)

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Implications of F.6.b. Guidance

• OMB Direct charging.may be appropriate where
  a major project or activity explicitly budgets
  for administrative or clerical services
• Do we explicitly budget for these costs in the
  research proposal?
• Does the the proposal include a written
  justification (i.e. why the normally indirect
  costs are necessary for project performance)
• Is this a major project as defined in Exhibit C
  of A-21?

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Major Projects

• A-21 definition a project that requires an
  extensive amount of administrative or clerical
  support, which is significantly greater than the
  routine level
• Projects may be major, regardless of their size.

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Examples of Major Projects

• Those which require or involve
• Large, complex programs
• Extensive data accumulation, analysis, entry...
• Large amount of travel/meeting arrangements
• Preparation of manuals, large reports, books...
• Geographically inaccessible project locations
• Conditions including human or animal protocols,
  multiple-investigator coordination
• Examples are not exhaustive nor are they intended
  to imply that direct charging of admin / clerical
  salaries would always be appropriate in the
  situations illustrated.

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Criteria for Direct Admin Charging
1. Performance of a Major Project or activity
(See A-21 examples)
2. Identified with and directly benefiting the
project
3. Budgeted and approved by the sponsor
4. Supported by a budget justification
When all criteria are met, you can charge
directif its Allowable, Allocable, Reasonable,
and Consistent!!
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Unallowable Cost

• An unallowable cost is one that is not eligible
  for reimbursement by a Federal sponsor, either
  directly or indirectly (through the FA rate)
• Costs that are unallowable for reimbursement by
  Federal sponsors may still be permissible charges
  against Institute funds
• Care should be taken to specifically categorize
  such costs (usually by specific object code or
  expenditure type) so that while it may still be
  reimbursed by the Institute it will not be passed
  on to the Federal government through the FA rate

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Examples of Unallowable Transactions and
Activities
Can these be essential institutional activities,
YES! Can your institution pay for them, YES! Can
you charge these activities to the Federal
Government, NO!

• Organized Fund Raising
• Lobbying
• Commencement Convocation
• General Public Relations Alumni Activities
• Student Activities
• Prosecuting Claims Against the Federal Government
• Student Housing
• Campus Bookstore
• Athletics
• Certain Travel Costs (i.e., First Class)
• Cash Donations To Other Parties (Such as
  Donations to Other Universities)

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A-110 Budget and Program Changes

• Budget and Program Plan Revisions
• Deviations must be reported and prior approval
  requested
• Prior approval required in non-construction
  awards as follows
• Change of scope
• Change of Key Personnel
• Absence of 3 months or 25 reduction in time of
  Key Personnel
• Additional funding
• Transfer of FA to direct or vice versa
• Inclusion of costs requiring prior approval in
  Circulars
• Transfer of funds allotted for training
• Subawards

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A-110 Budget and Program Changes (continued)

• No other prior approvals can be imposed
• Agencies authorized to waive approvals except
  for
• Change in scope of work
• Additional funding
• Transfers between budget line items may be
  restricted if award is 100,000 or more and
  transfer exceeds 10 of approved budget
• Agency should respond to request within 30 days
  from the date of receipt of the request

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FDP and Expanded Authorities

• Federal Demonstration Partnership
• Group of Universities, Federal Agencies, and
  Others (including NCURA) focused on improving
  Federal grants management.
• Expanded Authorities delegated approvals to the
  grant recipients in 7 areas
• Pre-award Costs
• Domestic Travel
• Foreign Travel
• Equipment
• Carry-Over of Funds
• No-Cost Extensions
• Rebudgeting
• Not all agencies or programs have delegated these
  approvals.
• http//thefdp.org/EA_Summary.pdf

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Meet Professor Grey
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Meet Professor Grey (continued)

• Prof. Grey has been with the University for
  thirty-four years.
• He has been scaling back his extensive research
  operations in recent years, but plans on
  continuing research activity for the foreseeable
  future.
• Prof. Grey and the previous research
  administrator worked very well together for many
  years. She would frequently complete tasks and
  sign paperwork for himoften without him having
  to ask for assistance.
• Typical quotes
• Why are you asking me to do this?
• In my thirty-plus years, I never had to do this
  before.
• Where does it say that I have to do this?

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The Scenario

• Prof. Grey comes to your office with a copy of an
  email requesting that he certify his effort using
  the Universitys new effort reporting system.
• Prof. Grey hands you the email and says
• Here you need to take care of this for me
  today.
• What do you do?

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Topics for Discussion

• Roles and Responsibilities
• Effort Reporting
• Cost Sharing

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Roles and Responsibilities

• Central Research Administration
• Deans Offices
• Departmental Administrator
• Prinicipal Investigator

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Central Research Administration Office

• Provides institutional leadership through
  on-going training and advising
• Assures compliance with federal, state and
  University regulations
• Manages campus systems for extramural support.
• Submits invoices and financial reports on behalf
  of the Institution
• Identifies changes in sponsors terms and
  conditions for grants
• Negotiates and signs grant, contracts and
  subagreements
• So what does everyone else do????

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Dean/Designee(School/College Post-Award
Administrator)

• Provides general oversight for sponsored project,
  including budget and expenditure review.
• Verifies approval of regulatory compliance
  protocols
• Approves cost-sharing/matching
• Approves requests for space
• Approves substantive modifications and
  rebudgeting
• Assures timely resolution of overdrafts and
  revenue shortfalls

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Department Administrator

• Department Administrator is used loosely.
• Assists in management of awards
• Manages expenditures.
• Assists in gathering of subrecipient paperwork.
• Acts as primary contact between the PI and
  central administration.

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Principal Investigator

• Identifies funding opportunity
• Prepares Proposal
• Technical description
• Budget
• Electronic versions of agency forms
• Standard Budget Template
• Supporting Documentation
• (e.g. matching commitment, consortium agreement,
  regulatory compliance approvals)

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Principal Investigator (continued)

• Reviews and accepts terms and conditions of award
• Manages the administration and science of the
  award(s)
• Certifies effort for staff working on project.
• Initiates requests for payroll appointments and
  non-salary expenditures.
• Monitors fiscal status of project.
• Reviews invoices from sub-recipients and approves
  payment.

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Effort Reporting

• Required by OMB Circular A-21 (Section J.10)
• Certifies that salaries wages charged to
  sponsored agreements are reasonable in relation
  to the work performed

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Effort Reporting - What is it?

• 1. What is Effort?
• - Effort vs. Payroll Charges
• - Proposed vs. Actual Effort
• 2. Who can Certify?
• - Effort Reports will be signed (certified) by
  the employee, principal investigator, or
  responsible official(s) using suitable means of
  verification that the work was performed.
• - What is "Suitable Means of Verification"

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Top 10 Things a P.I. Should Know about Effort

• Effort is your work on a project, whether the
  sponsor pays your salary or not.
• When you write yourself into a grant proposal,
  you are committing your effort to the sponsor.
• If you reduce your effort, paid or unpaid, on a
  federal grant by 25, you must have agency
  approval. If you reduce your paid effort, you
  may choose to document cost-sharing so that the
  total effort does not decrease.

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Top 10 Things a P.I. Should Know about Effort

• Many activities cannot be charged to a federally
  sponsored project. For example, the time you
  spend on these activities cannot be charged
• Writing a proposal
• Serving on an IRB, IACUC or other research
  committee
• Serving on a departmental or university service
  committee

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Top 10 Things a PI Should Know about Effort

• If you work on a sponsored project, you must
  certify your effort.
• Certifying effort is not the same as certifying
  payroll.
• Certification must reasonably reflect all the
  effort for all the activities that are covered by
  your University compensation.

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Top 10 Things a P.I. Should Know about Effort

• Effort is not based on a 40-hour work week. Its
  not based on hours at all.
• Effort must be certified by someone with suitable
  means of verifying that the work was performed.
• Auditors look for indications that
  certification was based on factors other than
  actual, justifiable effort.

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Effort Reporting

• Why Should We Care?
• - Recent settlements
• - Office of Inspector General Reports
• Complicated Effort Reporting Areas
• - K-Awards
• - VA Appointments
• - Clinical Practice Payments
• - NIH Salary Cap
• - Cost Shared Effort

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Cost Sharing

• represents that portion of the total project
  costs of a sponsored agreement paid for by the
  Institution, rather than by the sponsor.

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Proposing Cost Sharing
Mandatory Cost Sharing is Required by the
sponsor as a condition of obtaining an award.
Voluntary Cost Sharing is Offered to increase
competitiveness against peer institutions for an
award or for other non-mandatory reasons
Committed Once Mandatory or Voluntary Cost
Sharing is Proposed to a sponsor, and Accepted in
an award it becomes committed!
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Examples of Cost Sharing

• Effort - faculty, staff or student
• Example 30 effort with 10 of salary charged
  to the project
• Cash
• Third Party Contributions
• Unrecovered FA costs (can be used if agency has
  approved)
• Establishing values for contributions of services
  and property (in accordance with applicable cost
  principles)
• Volunteer Services Necessary and integral part
  of project
• Other employee services (valued at regular rate
  of pay plus fringe benefits)
• Donated supplies (must be reasonable and at fair
  market value)

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Expenditures That Can NOT Be Proposed as Cost
Sharing

• Unallowable costs
• Salaries over the salary cap
• Cost overruns/overdrafts
• Purchase price of equipment in current inventory
• Other items your institution might prohibit?

If a sponsor wouldnt pay for it anyway, it cant
be proposed as cost sharing.
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Cost Sharing Considerations

• Cash and third party in-kind contributions must
  meet all the following criteria
• Are verifiable from the recipients records
• Cannot be used as cost sharing on other federal
  projects
• Are necessary and reasonable for accomplishment
  of project objectives
• Are allowable under the cost principles
• Are not paid by the Federal government under
  another award
• Are provided for in the approved budget when
  required by Federal agency
• Conform to other provisions of A-110, as
  applicable

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Potential Problems Associated with Cost Sharing

• Can we demonstrate to the funding agency that the
  cost sharing commitment has been fulfilled? Do
  we track cost sharing on a project-by-project
  basis?
• Are we treating cost sharing consistently with
  other project costs, i.e, classify it as
  organized research?
• Are we overstating our FA rate by not capturing
  cost sharing?
• Do effort reports capture cost shared effort
  (both mandatory and voluntarily contributed)?
• Are the same cost sharing funds used to meet the
  matching requirements on more than one project?
• Do we recover cost sharing expenditures through
  our FA rate?

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Real Problems Associated with Cost Sharing

• Major Medical Center--15 Million Settlement with
  US Department of Justice
• Resulted from whistleblower lawsuit
• Govt alleged that cost sharing data was not
  reflected in FA rate
• Justice Dept Med Center Overcharged the
  Government
• Another University
• Narrative portion of research proposals included
  substantial commitments of PI effort which were
  not tracked
• Contributed effort classified as Instruction, not
  Research

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You Have a Phone Call...
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Meet the Auditors
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The Scenario

• An accounting firm has been hired by the Feds to
  audit a specific grant awarded for the period
  5/1/2001 through 4/30/2006.
• They are requesting an onsite visit beginning two
  weeks from now.
• Prior to their visit, they would like copies of
  all accounting ledgers as well as supplemental
  materials, including certain policies and
  procedures.
• What do you do?

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Topics for Discussion

• Record Retention
• Audit

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A-110 Reports and Records

• Retention And Access Requirements For Records
• Federal awarding agencies shall not impose any
  other record retention or access requirements
  upon recipients.

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Retention of Documents

• Financial records, supporting documents,
  statistical records and all other records shall
  be retained for a period of THREE years, with the
  following exceptions
• Litigation requires retention until all matters
  have been resolved
• Real property and equipment records retained
  three years after final disposition of the
  property
• When records are transferred to the agency, the
  retention requirement ends.
• FA cost rate proposals, cost allocation plans
  have unique requirements

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Retention of Documents

• When does the clock start?
• Awards - Date of submission of the final
  expenditure report or, for awards that are
  renewed quarterly or annually, from the date of
  the submission of the quarterly or annual
  financial report
• FA Costs - Date of submission of a proposal for
  negotiation the end of the fiscal year if not
  submitted for negotiation.
• With agency approval, copies can be substituted
  for original records.
• Access to records by agency, inspector general,
  or comptroller general is allowable.
• Agencies may not limit public access to
  recipients' records without justification.

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OMB Circular A-133

• Establishes audit requirements for state and
  local governments and other non-profit
  organizations receiving Federal funds
• Defines federal responsibilities for
  implementation and monitoring such requirements
• Requirements
• Institutions expending 500K or more a year in
  federal awards require an audit
• Institutions expending less than 500K are exempt
  from annual audit but still subject to review
• Audits shall normally be performed annually but
  some exceptions (e.g., program-specific audits)
  allowed if not less frequently than every two
  years

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OMB Circular A-133 (continued)

• Responsibilities
• Cognizant Agency (for recipients expending more
  than 50 million a year in federal awards)
• Oversight Agency (for recipients expending less
  than 50 million a year in federal awards)
• Auditor
• Recipient (including subrecipients)
• Scope Of Audit and Audit Objectives
• Financial - in accordance with Generally Accepted
  Government Auditing Standards (GAGAS)
• Compliance Reviews - in accordance with OMB
  Circular A-133

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OMB Circular A-133 (continued)

• Covers
• Federal Awards (CFDA - Catalog of Federal
  Domestic Assistance)
• Internal Control
• Compliance
• Financial Statements
• Follow-up and Corrective Action
• Risk Based Approach
• Focus on risk and size, not just size
• Size determines Type A or B Programs
• Auditor judgment determines high risk programs
• Every year OMB updates a Compliance Supplement to
  A-133 that provides detailed instructions to
  auditors as to which areas to audit and the type
  of tests to be performed
• Provides insight into how to structure processes,
  potential risk areas and current hot topics

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OMB Circular A-133 (continued)
14 compliance requirements

• Activities allowed or unallowed
• Allowable costs / cost principles
• Cash management
• Davis-Bacon Act
• Eligibility
• Equipment and real property management
• Matching

• Period of availability of funds
• Procurement, suspension and debarment
• Program income
• Real property acquisition
• Reporting
• Subrecipient monitoring
• Special tests and provisions

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Audit Tips For Central Office

• Consider developing an Audit Liaison Function
• Get all audit requests in writing
• Schedule Entrance Conference with all appropriate
  departments/individuals
• Talk to departments involved about the audit and
  what to expect during it
• Through Exit Conference discuss details of
  problem areas and findings
• Respond to all findings and implement plan to
  correct problem areas
• Close out audit report with agency / sponsor

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Audit Tips For Central Office (continued)

• Documentation is key anticipate that you will be
  audited
• Remember the 3rd party, three years from now rule
• Answer all questions honestly
• Only answer the questions asked of you
• Know what to do if an Auditor/Agent/Law Officer
  shows up at your office/home/vacation spot.

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One Last Thing

• Always be nice to the Pre-award staff. They can
  be a big help in getting things correct from the
  very beginning.

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Questions?