Texas Tech University Sponsored Programs Accounting and Reporting Brown Bag – Lunch and Learn “Justification, Documentation and Compliance….Oh My!” June 12, 2012

Presentation Topics Compliance, Documentation and Justification related to: Cost Transfers Purchase Orders Travel Vouchers 2

Federal Compliance: Office of Management and Budget Circulars A-21: Established principles for determining costs applicable to sponsored projects with educational institutions. Costs, including those charged to cost share funds, must conform to any limitations or exclusions specifically set forth in the A-21 Circular (Comprehensive List) or in the sponsored project award. Ex: alcohol and entertainment – not allowed. A- 21: Sets standards for obtaining consistency and uniformity among federal agencies in grant administration. Reasonable Allocable/Allowable Consistent 3

Cost Standards To be allowable, costs must be reasonable, allocable, and given consistent treatment OP Reasonable costs are those in which the nature and amount of the expense reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. A cost is allocable to a particular project if it is incurred to advance the scope of work and is assignable to the project in proportion to the relative benefit received in accordance with the federal cost principles and the terms and conditions of the award. Consistent treatment refers to treating costs incurred for similar purposes in like circumstances in a like manner. Cost must be within the performance period of the award. 4

Unallowed Direct Charging Practices OP 65.04/65.08 Purchasing items or transferring costs to projects simply to spend down unobligated balances. Charging an expense exclusively to a single award when the expense has supported other activities. Allocating or charging the budgeted amount, as opposed to amounts based on actual usage, for recharge center activity and shared inventory. Charging costs to one project with the intent of transferring charges to another project when the award is received and budgeted. Costs, including those charged to cost share funds, also must conform to any limitations. OOPOP5

Criteria for Cost Transfers OP Benefit to the project Correct data entry errors Remove unallowed expenses Reallocation of salary to reflect actual expended effort Transfer pre-award expenses from non-sponsored FOP Sponsored project should not be used as a holding account for expenses that will eventually need to be transferred. Clear-up charges on overspent sponsored projects to non-sponsored accounts Allocation of shared services or service center charges 6

Documentation: Cost Transfers Involving Sponsored Projects and Cost Share Funds SPAR – January Bulletin/OP Cost transfers must be approved by the PI. Business managers will assist with submitting the transfer request and supporting documentation. PI approval is required before SPAR can process the transfer. This is for the PI’s protection, ensuring he/she is aware of all cost transfers posted to his/her awards. Late cost transfers are defined as those requested more than 90 days after the original transaction was posted in Banner. Late cost transfers will only be allowed in extenuating circumstances. Late cost transfers must be approved by the department Chairperson or Director. The cost transfer justification forms for both payroll and non-payroll transfers must accompany the cost transfer form. The justification forms have been updated and are accessible at Cost transfers are considered to be a very high-risk area – Since labor redistributions are also considered cost transfers they must meet this same criteria. 7

Documentation: Purchase Orders Direct Charge to Sponsored Projects – SPAR Top 10 List: Purchases from non-scientific suppliers such as Office Max, Staples, Target, Wal-Mart, etc. need an additional explanation. Please be sure that purchases from these vendors are directly related to the project scope and are clearly documented in the comment or attachment section of the purchase order. 8

Documentation: Purchase Orders Direct Charge to Sponsored Projects – SPAR Top 10 List/OP 63.08: When equipment is purchased on federal funds, you must complete the Federal Equipment Form in TechBuy to ensure the requisition is routed to the Office of Research Services (ORS) for prior approval. Equipment purchased within the last 90 days of the project end date is closely scrutinized. Please be sure you have provided justification for how the purchase benefits the grant so close to the end of the award period. It is TTU policy that equipment for a federally sponsored project will not be purchased unless 60 days or more remain until the final project expiration date. Exceptions to this policy will be made only in special cases and only with the approval of the associate vice president for research. 9

Documentation: Purchase Orders The following list of controlled equipment (OP 63.08) require additional explanation when purchased on a sponsored project: Data projectors Stereo systems Cameras Video recorders/laserdisc players (TV, VCR, camcorder) Desktop CPUs - not Apple Printers - not portable Desktop CPUs - Apple Portable CPU laptops – not Apple Portable Apple CPUs/laptops Software – not controlled property 10

Justification: Travel Direct Charge to Sponsored Projects – SPAR Top 10 List/OP Travel on sponsored projects must be directly related to the scope of the project. A detailed statement describing the benefit to the project must be provided, and expenses must otherwise comply with university travel-related policies. A detailed statement is required on all travel vouchers describing the benefit of the travel to the scope of the project. It is not sufficient to simply state “travel to this conference benefitted my research project.” Ensuring this additional documentation is provided on your vouchers on the front-end will reduce the back and forth s and allow us to more efficiently review and move them through the approval queues. 11

Justification: Travel SPAR – July Bulletin In addition to the University-required statement of benefit on travel vouchers, travel funded from sponsored project funds must include a more detailed explanation of benefit. Please include a statement of benefit that directly ties the PI’s travel to the scope of the project being charged. This will allow us to more efficiently review travel vouchers and move them through the approval queues. Travel to this conference will benefit research at Texas Tech. (The statement needs additional information. Although we agree travel to conferences can benefit research endeavors at the University, this alone is not sufficient to support the direct charge to the particular grant.) Travel to this conference will benefit my research project at Texas Tech. (Although an improved statement, additional information is still needed. The conference has been tied directly to the specific project. However, additional information is still needed to document the benefit to the project.) I travelled to this conference to present the final results of my xyz research conducted under the xyz project. (This example is ideal, giving detailed supporting information.) 12

Travel Voucher Examples Travel to ____________ to attend ___________Conference on May 20 th - 24 th Dr. __________ presented a paper entitled ______________. The conferenced will provide an opportunity to meet with other delegates and agencies which will benefit Grant #__________. One of the grants key objectives is the dissemination of acquired information and findings on this grant. Picked up equipment that belonged to Texas Tech. 13

Fly America Act SPAR – December Bulletin A checklist has been posted to our website to assist you in determining if the air travel meets any of the allowable waivers, including, but not limited to. No U.S. flag air carrier service on a particular leg of your route. U.S. flag air carrier involuntarily re-routes traveler on a foreign air carrier. Use of a U.S. flag air carrier on a nonstop flight between U.S. and another country extends travel time by 24 hours or more. Service on a foreign air carrier is three hours or less but the use of a U.S. flag air carrier doubles en route travel time. Use of a U.S. carrier increases the number of aircraft changes outside the U.S. by two or more. 14

Fly America Act The completed checklist should accompany your travel vouchers for international trips, including Canada and Mexico on federal funds. In the event it is determined that the appropriate air carrier was not used, travel expenses will need to be covered from departmental, non-sponsored funds. To check to see if an airline is part of the “Airline Open Skies Agreement” go to 15

Purpose Establish policies regarding financial controls to reduce the risk for unallowable charges to sponsored projects. To reduce the risk of noncompliance with federal regulations, terms of the award, and institutional policy. 16