SPONSORED RESEARCH 1

Agenda Federal Regulations – Uniform Guidance National Science Foundation (NSF) Audit Update 2

Federal Regulations: Uniform Guidance  Official Name is the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards  It is the Office of Management and Budget’s (OMB) consolidation of their circulars for costing, administration and audit of Federal awards  It replaces 8 circulars and applies to universities, state and local governments, nonprofits, native tribes  It was issued on December 26, 2013  It was effective on December 26,

Overriding Goal of Guidance Implement the President’s directives to:  streamline guidance for Federal awards to ease administrative burden, and  strengthen oversight to reduce risks of waste, fraud, and abuse Council on Financial Assistance Reform (COFAR) - Council on Governmental Relations (COGR) – 4

What is the Impact?  Biggest change in Federal regulations for sponsored research in 50 years  Some good news, some new administrative burdens  The Federal Agencies implementation of the UG was released December 17, 2014  UG is still being interpreted and clarified 5

Known Effective Dates  Uniform Guidance will apply to:  All new and renewal awards issued on or after 12/26/14 (even if submitted under the old rules)  Single (A-133) Audit for FSU’s FY16 (July 2015 – June 2016)  Old Rules (A-21, A-110, A-133) will apply to:  All active awards that do not get incremental funding or another award action (until they expire)  Uniform Guidance may apply to:  All non-competing awards  (agencies may decide on a case-by-case basis) 6

2 CFR 200 – Basic Layout 6 Subparts A through F  Subpart A, 200.XX –Acronyms & Definitions  Subpart B, 200.1XX –General  Subpart C, 200.2XX –Pre Award - Federal  Subpart D, 200.3XX –Post Award –Recipients  Subpart E, 200.4XX –Cost Principles  Subpart F, 200.5XX –Audit  11 Appendices -I through XI 7

Acronyms & Definitions §200.XX  200.0, Acronyms  through , Definitions  99 separate sections and indexes  Applicable to all requirements (administrative, cost and audit) and all types of grantees  Use of “should” and “must”  Should = best practices/recommended  Must = required 8

General §200. 1XX  , Conflict of interest – NEW  Federal agencies must establish COI policies  NSF and NIH already meet the new standard; no changes anticipated  EPA’s COI is problematic for IHEs  Grantees must disclose in writing any potential COI 9

Post Award Grantees §200.3XX  , Performance Management –  Use standard forms (e.g., RPPR for research awards)  Must relate financial data to performance  Feds are to provide clear performance goals, indicators and milestones  , Internal Controls  Should follow GAO’s Green Book and COSO standards  , Period of performance  No-cost extension may be allowed –agency’s option 10

Post Award Grantees §200.3XX  , Equipment  Property standards (States versus other grantees)  , Supplies  Computing devices (<$5K) are included as “supplies”-NEW  , Procurement Standards – NEW for universities and Non Profits  Modeled after A-102: State uses own policies  Others uses procurement standards in sections

Post Award Grantees §200.3XX  , Requirements for pass-through entities (PTE) – NEW  Includes audit responsibilities (formerly in A-133)  Pass-through entities responsibilities:  Provide subaward information  Provide indirect cost rate  Perform risk assessment for subrecipent monitoring  Verify compliance to audit requirements  Report in accordance to FFATA 12

Procurement – General Standards A. Documented Policies B. Necessary C. Full & Open Competition D. Conflict of Interest E. Documentation i. Cost & Price Analysis ii. Vendor Selection 13

Procurement § Micro Purchases ◦ up to $3K; no quotations; equitable distribution 2. Small Purchases ◦ Up to $150K; rate quotations; no cost/price analysis 3. Sealed Bids ◦ $150K; construction projects; price is a major factor 4. Competitive Proposals ◦ > $150K; fixed price or cost reimbursement ◦ RFP with evaluation methods 5. Sole Source ◦ Unique; public emergency; no competition ◦ authorized by agency or Pass through entity (PTE) 14

Overview of Cost Principles §200.4XX  For any cost to be allowable under a federal award, it must:  Be necessary and reasonable for the performance of the award and allocable thereto;  Conform to any limitations or exclusions set forth in applicable regulations or in the award itself;  Be consistent with policies and procedures that apply uniformly to both federally-financed and other FSU activities; and  Be accorded consistent treatment. 15

Prior Approvals  New emphasis on agency prior approvals can slow down research activities  Not clear that Federal agencies have adequate staffing to respond quickly  Examples where prior approval is required:  Unrecovered F&A as cost sharing  Fixed price subawards  Charging administrative salaries  Participant support costs on research awards  Unusual cost items 16

Cost Principles §200.4XX  , Indirect (F&A) Costs  Must accept approved negotiated rates, except  Allowed by Federal statute or regulation  Approved by agency head or delegate and OMB notified of deviations  10% de minimis IDC rate (MTDC)  First timers and new grantees only  Can be used indefinitely  One time four-year extension of current approved rate (final and pre-determined rates only) 17

Cost Principles §200.4XX  , Compensation –personal services – NEW  Removed A-21 examples  Internal controls are KEY  (i) –9 standards for documenting personnel  E.g., supported by system of IC, budget estimates may be used  Substitute systems are allowed (430 (i) (5))  Blended and braided funds allowed, with Fed approval (430 (i) (7))  Use of institutional base salary for Institutions of Higher Education (IHEs) 18

Cost Principles §200.4XX , Compensation – Fringe Benefits , Conferences ◦ Costs are appropriate, necessary and minimized to the Federal award 19

Cost Principles §200.4XX  , Interest  Section (b)(2), allows financing costs associated with patents and computer software  effective January 1, 2016  , Materials and Supplies  Section (c) –may be charged as direct costs  Include computing devices (defined in ) 20

Administrative/Clerical Salaries § /430  The salaries of administrative & clerical staff should normally be treated as indirect costs.  Direct charging of these costs may be appropriate only if all of the following conditions are met:  Administrative/clerical services are integral* to a project;  Individuals involved can be specifically identified with the project or activity; and  Such costs are explicitly included in the budget or have the prior written approval of the federal awarding agency *Integral is defined as essential to the project’s goals and objectives, rather than necessary for the overall operation of the institution. 21

Impact on Budget  If all requirements are met, include justification statement in proposals to facilitate the required agency approval  If not included in the proposal budget, agency approval will be required at the post-award stage 22

Computing Devices §  Computing devices costing less than $5,000 that are essential and allocable may be direct charged  They may be charged 100% to an award (in rare circumstances), may be allocated to several awards or split between sponsored/non-sponsored funds  While no prior agency approval is required, computing devices should be itemized in the proposal budget  In addition, the project must not have reasonable access to other devices or equipment that can achieve the same purpose  Devices may not be purchased for reasons of convenience or preference 23

Impact on Budget Proposal Stage:  Include the request for computing devices in the proposal budget and justification.  The detailed justification should include an explanation of why and how the device is essential for and beneficial to the performance of the project, and that no existing resources are reasonably available. Award Stage:  If the need for a computing device was not known and included in the proposal budget, then SRA approval must be obtained. 24

Participant Support Costs § /  Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects.  These costs must now be accepted by agencies as allowable costs, but still require prior agency approval.  These costs are excluded when calculating the Modified Total Direct Costs (MTDC) to determine the overall project’s F&A costs. 25

Impact on Budget Proposal Stage:  Include the request in the budget and justification  Exclude the costs from the MTDC base Award Stage:  If the request for participant support was included in the proposal, then a subproject will be set up to separate these funds from the other project funds.  If there is a need to rebudget and move any of the participant support funds out of the category into another budget category, then prior approval from the sponsor must be received 26

Subawards §  More prescriptive requirements  Perform a risk assessment of the subrecipient  Add a lengthy list of elements to the subaward terms  Establish a monitoring plan for the subrecipient  Financial review (SRA responsibility)  Programmatic review (PI responsibility)  Maintain documentation of monitoring efforts!  Must use subrecipient’s negotiated F&A rate or provide a 10% “de minimis” rate  Possibility of delays in issuing subawards 27

Latest Developments SRA working through the agency implementation of UG NSF Guidelines NIH Interim Grant Conditions COGR recommendations to COFAR 28

NSF Proposal and Award Policies and Procedures Guide (PAPPG)  Section B, Forward, contains the implementation statement for 2 CFR § 200, Uniform Guidance  If the AAG is silent on a specific area covered by 2 CFR § 200, the requirements specified in 2 CFR § 200 must be followed  NSF 2 month rule for Senior Personnel igchanges.jsp 29

NSF PAPPG Administrative and Clerical Salaries:  May be direct charged if the following conditions are met: (1)Administrative or clerical services are integral to a project; (2)Individuals involved can be specifically identified with the project; (3) Such costs are explicitly included in the approved budget or have the prior written approval of the cognizant NSF Grants Officer; and (4) The costs are not also recovered as indirect costs. Computing Devices:  Computing devices are considered supply items and may be included as direct costs for devices that are essential and allocable, but not solely dedicated, to the performance of the NSF award. Subawards:  Inclusion of a subaward or contract in the proposal budget or submission of a request after issuance of an NSF award to add a subaward or contract will document the organizational determination required. 30

NIH Interim General Grant Conditions  Terms & Conditions for grant awards until new RTCs are available  Effective for NoAs issued on or after 12/26/14 that obligate new or supplemental funds 31

Cost Related Prior Approvals NIH prior approval is not required for areas below unless there is a change in the scope of work:  Incur pre-award cost  Initiate a one-time no-cost extension  Carryforward Unobligated balances  Rebudget among budget categories  Rebudget between direct and F&A costs  Provide subawards based on fixed amounts  Direct charge the salaries of administrative and clerical staff if conditions in 45 CFR § are met 32

COFAR FAQs Resolved Some Issues  Procurement rules to be delayed 1 year  COI rules determined to be conflicts in procurement only  Program income rule about including royalties in the definition of what has to be tracked conflicts federal law –Bayh Dole Act  Profit definition clarified to exclude legitimate unexpended balances under fixed price awards/subawards  DS-2 statements submitted after 12/26/14 to true-up charging practices to new rules 33

NSF Audit Update Phase One conducted in September 2014 ◦ Transaction selection included travel, equipment, cost transfers, other charges Onsite fieldwork conducted 9/22 – 10/1/14; internal control interviews with management Follow up questions in November 2014; more data provided Phase Two conducted in March 2015 ◦ Transaction selection focused primarily on computers and foreign travel 34

NSF Audit Update Phase Three – Current request received last week  More follow up questions from previous data provided  NSF senior personnel data request involving 277 employees 35

NSF Audit: Questions Asked by Auditors General ◦ Explain why this purchase was necessary for and how it benefited the award Late purchases ◦ How did this transaction benefit the award given the limited time remaining on the award? ◦ Explain why the purchase was necessary. Cost Transfers ◦ Provide an explanation of the award/fund this transaction was transferred to or from. Include the identity of the award and whether it was another federal award. 36

NSF Audit: Questions Asked by Auditors Cost Transfers (cont’d) ◦ Provide the reason for the transfer and why it was necessary. ◦ Provide the reason for why the transfer was necessary so late in the award (if applicable). ◦ What was the budget amount and the remaining balance at the time of the transfer? ◦ Was there a cost overrun on the award transferred to or from? 37

NSF Audit: Questions Asked by Auditors Travel ◦ Explain why this travel was not included in the NSF proposal budget, if applicable. ◦ How did this travel benefit the award given the limited time remaining on the award? ◦ Why was this travel necessary for the award? ◦ If allocated, provide the allocation methodology and a list of the other projects in the allocation ◦ If applicable, why was this trip taken when it was specifically removed from the original budget? 38

NSF Audit: Questions Asked by Auditors Equipment ◦ Explain why this equipment was not included in the NSF proposal budget, if applicable. ◦ How did this equipment purchase benefit the award given the limited time remaining on the award? ◦ Was this equipment used exclusively on this NSF award? ◦ If allocated, provide the allocation methodology and a list of the other projects in the allocation. 39

NSF Audit: Questions Asked by Auditors Equipment (cont’d) ◦ If applicable, why was this purchase required when you indicated that you had all the necessary equipment and/or facilities? ◦ If applicable, why was the equipment purchased when it was specifically removed from the original budget? 40

NSF Audit: Potential Issues Equipment purchased late in the award; not adequately justified or allocated. Computers, computers, computers! ◦ Not included in budget and lacking robust justification for purchase ◦ Not allocated 41

Sponsored Research Administration SRA Post Award Angie Rowe