OMB Circulars: Guidebooks to Grants Management National Extensions and Research Administrative Officers’ Conference May 19, 2010

Presenters Rebecca Bound, Research Administrator, College of Agricultural & Life Sciences Research Division Petra Schroeder, Assistant Dean, Office of Research Services, The Graduate School Ron Ravel, Managing Officer, Research and Sponsored Programs,

The OMB Circulars  A-21: Cost Principles for Educational Institutions (“Why”)  A-110: Uniform Administrative Requirements for Grants & Agreements with Institutions of Higher Education, Hospitals and Other Non- Profit Organizations (“How”)  A-133: Audits of States, Local Governments, and Non-Profit Organizations (“What”)

Why do we have Circulars? Guide and inform Sponsored Project Management Maintains relationship of trust between sponsors, institution and public (stewardship), and reputation with colleagues Future awards depend on it Audit findings and cost disallowances Criminal, civil and administrative penalties (compliance)

Where can I find the Circulars?  OMB website:  Mini guides available from NCURA (National Council of University Research Administrators):

A-21: Purpose  Applies to grants, contracts, and other agreements with educational institutions  Principles established in A-21 are designed to provide that the Federal Government bears its fair share of total costs, determined in accordance with generally accepted accounting principles, except where restricted or prohibited by law

A-21: Key Ideas  Institutions must treat similar costs consistently as either Direct costs or F&A (Facilities and Administration, also known as Indirect) costs.  Certain types of costs will be included in the institution’s F&A cost rate and will not be charged as Direct costs to Federal projects.

A-21: Key Ideas  A-21 Section C: In order for costs to be reimbursable by the Federal Government, they MUST BE: Necessary Reasonable Allocable Allowable Permissible Consistently Treated

Necessary  Costs applied to the project MUST be necessary to accomplish the scope of work.  To be necessary, the cost applied must be absolutely essential to achieve a certain result or results.

Reasonable  If the nature of the goods or services acquired or applied to the project reflect the action that a “prudent person” would take under similar circumstances.  Emphasis would be upon one acting in good judgment.  Not excessive or extreme; fair.  “Man on the street” test

Allocable  Cost is incurred solely for advancement of work on the project  Application of cost is in proportions that can be approximated through reasonable methods.  Cost is necessary and deemed assignable to the project

Allowable  Allowability of costs is defined specifically in OMB Circular A-21 Section J General Provisions of the cost principles.  Note: Section J does not indicate whether the cost should be treated as a direct cost or an F&A cost.

Consistently Treated  Like costs must be treated the same in like circumstances… consistently  Costs may be treated as direct costs only or as F&A costs only.

Permissible  Costs must be permissible under the law AND  Costs must be permissible under terms/conditions of the award

Costs normally treated as F&A Costs  Administrative and Clerical Salaries  Telecommunications -- Local Telephone Service Including phone equipment such as telephones, cell phones, pagers, fax machines, and line charges  Postage Including U.S. Postal Service, Federal Express, UPS  Office supplies  Dues and memberships

Costs normally treated as F&A Costs (cont’d.)  Subscriptions, Books, and Periodicals  General Purpose Equipment Non-research equipment which may be used for general office purposes such as desktop computers, laptop computers, printers, fax machines, copy machines, and office furniture.  General computer services and networking costs  Staff recruitment and relocation

Exceptions: When is a cost eligible?  A cost normally treated by your university as an F&A cost may be appropriate as a direct cost on a Federally sponsored project if: The cost is necessary, reasonable, allocable, allowable, and permissible under the law, terms/conditions of the award, and the circumstances are “unlike.” “Unlike” circumstances may be determined by the nature of the project, such as those detailed in Exhibit C of OMB Circular A-21.

Exceptions: Documentation  Investigators should provide clear justification in Federal project budgets for direct cost items that normally are treated as F&A costs.  The fact that the sponsoring agency allows such costs to remain in the awarded budget may not be interpreted as approval for these items as CAS exceptions.

F&A Rate Calculation Facilities Costs + Admin Costs (capped at 26%) Organized Research Base* = F&A Rate *Organized Research Base = All direct expenses related to organized research, including: Sponsored Project Costs University-funded competitive awards Overdrafts Committed Cost Sharing

OMB A-110  Sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations  Includes many pre-award, post-award and after the award requirements related primarily to institutional infrastructure (i.e., purchasing system, draw down of federal funds, etc.)

A-110 Subpart A (General)  Purpose: To ensure consistency.  Definitions: From a to oo.  Effect on other issuances: A-110 supersedes all other regulations.  Deviations: Allows for conditions under which exceptions may be granted.  Subawards: Also subject to requirements

A-110 Pre-award  Forms and instructions SF-424 series  Grant, Contract, Cooperative Agreement Use is mandated Cooperative Agreement = Substantial involvement of the executive agency Contract = Acquisition of property or Services, a Deliverable

Cost Sharing or Matching  Portion of project or program costs not borne by the Federal Government. Mandatory (required by Sponsor for eligible submission) Voluntary (not required by Sponsor)  Quantifiable commitments in budget justification or proposal  May be encouraged in RFP

Cost Sharing or Matching  Criteria: Verifiable from the recipient's records. Not included as contributions for any other federally- assisted project or program. Necessary and reasonable for proper and efficient accomplishment of project or program objectives (A-21). Allowable under the applicable cost principles (A-21). Not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching. Provided for in the approved budget when required by the Federal awarding agency.

A-110 Post-award requirements  Financial and Program Management  Property Standards  Procurement Standards  Reports and Records  Termination and Enforcement

Standards for financial management systems  Recipient’s financial system must provide: - Financial results of each sponsored project -Identification of source & application of funds -Control & accountability for all funds, property and other assets -Comparison of outlays to budget amounts -Written procedures

Revision of Budget and Program Plans  Prior Approval Required for: Change in scope or objective of the project Change in key personnel listed in the application or award document The absence for >3 months or 25% reduction in time by the PI The need for additional Federal funding The transfer of amounts budgeted for indirect costs to account for increases in direct costs (if approval for such is required)

Revision of Budget and Program Plans  Prior approval may not be required for: Pre-award costs 90 calendar days prior to award One-time extension of the expiration date of the award for up to 12 months (with written request at least 10 days before the current project expiration) Carry forward of unobligated balances to subsequent funding periods

After the Award Requirements Establishes procedures for close-outs, disallowances, and Adjustments  All financial, performance, and other reports as required to be submitted 90 calendar days after the date of completion of the award  Unless extended, all obligations incurred under the award shall be liquidated within 90 calendar days after the funding period/completion date  Agency must make prompt payment  Recipient should refund any unobligated cash advance

After the Award Requirements The closeout of an award does not affect: The right of the Federal awarding agency to disallow costs and recover funds on the basis of a later audit or other review The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions Audit Requirements Record retention

A-133: Audit Requirements  Sets forth standards for obtaining consistency and uniformity among federal agencies for the audit of States, local governments, and other non-profit organizations receiving federal funds  Defines federal responsibilities for implementation and monitoring of such requirements

Thank You!