1 Fiscal Compliance Requirements for Sponsored Programs University of Missouri – St. Louis College of Education March 6, 2009

2 Learning Objectives To understand: –Compliance requirements related to allowability of costs –Responsibility of Fiscal Officer and Principal Investigator –Frequent issues and impact of non- compliance

3 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

4 Compliance Requirements What compliance requirements determine allowability on a sponsored program? –OMB Circular A-21 - Cost Principles for Educational Institutions Allowable Direct Costs + Allocable Facilities & Administration –Specific Sponsor Administrative Guides

5 A-21 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

6 A-21 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.

Importance of F&A How are support staff paid? What is the source of funding for the building where my lab is located? How are the utilities paid? How is research infrastructure paid for? Who prepares my financial reports? 7

8 A-21Requirements Reasonable: –Act with due prudence –Consistent with University policies and procedures –Necessary for performance of the sponsored award –Arms length and legal transactions

9 A-21 Requirements Allocable: –Incurred solely to advance the work under the agreement –Benefits the sponsored program in proportions that can be reasonably approximated

10 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? 11

12 A-21 Compliance Certain costs are expressly unallowable: –Alcoholic beverages –Alumni activities –Bad debts –Donations and Contributions rendered –Entertainment –Furnished automobile –Goods or services for personal use –Housing and personal living –Losses on other sponsored agreements

13 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! 14

15 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

Documentation Requirement 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? –Retain for 3 years or longer per sponsor 16

Points to Remember Allowability considerations throughout: –Proposal and budget –Monthly Managerial review –Cost Transfers –Cost Sharing –Subaward payments –PI Certification at end of award 17

18 PI Responsibility Be knowledgeable of compliance requirements and restrictions Shares administrative management responsibility with the Fiscal Officer Ensuring all charges are: –Allowable –Authorized –Documented The PI has ultimate responsibility for an award

19 Fiscal Officer Responsibility Shares administrative management responsibility with the PI The Fiscal Officer should be aware of: Compliance requirements Unique restrictions by sponsor Budget Alert PI of potential or known compliance issues Contact ORA for assistance

20 Fiscal Officer Responsibility Ensure transactions are properly recorded Specific responsibilities include: - Processing expenditures - Providing monthly budget variance reports - Preparing timely cost transfers - Closing of award and deliverables - Ensure documentation exists for all charges

Frequent Issues Unallowable costs directly charged to award Lack of supporting documentation Purchases late in the award period Costs outside period of availability Unlike circumstances not set out in sponsor agreement 21

22 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 Appropriately documented Timely review budget and costs Make timely and allowable cost transfers 23

24 References Where can I get more information? –Reference Guide for Sponsored ProgramsReference Guide for Sponsored Programs –University Controller’s Office Policies – APM – Section 60APM – Section 60 –OMB Circular A-21OMB Circular A-21 –Facilities & Administration Fiscal Misconduct Reporting LineFiscal Misconduct

25 Contact Information Tina Hyken Business and Fiscal Operations Specialist Karen Boyd Manager, Business/Fiscal Operations