1. COGR Costing Policies Committee Update
2016 Meeting of the
National Conference on College Cost Accounting
The Westin San Diego
November 3, 2016
An association of research universities

5. COGR Overview
Council on Governmental Relations (COGR) ( established in 1948
190+ Member Institutions
Staff of 6 and 4 Committees:
1) Costing, 2) RCA, 3) CIP, and
4) Research & Regulatory Reform
Active Board and Committees, comprised of 25 individuals from Member institutions
Regular Collaboration with many Partners

6. COGR Mission Statement
COGR is an association of leading universities and research institutions. We provide information, analyses, advice, policy perspective, and historical context to our members in the areas of research administration and compliance, financial oversight, and intellectual property. COGR communicates the viewpoint and concerns of its members and fosters productive relationships between the research community and federal policymakers, advocating for innovation and change that avoid unnecessary regulatory burden.

7. What’s Up? Costing Policies Committee
Some “Non-Traditional” Costing Issues
- SFA and the Single Audit
- Direct charging the Single IRB (sIRB)
The “Never-Say-Die” Uniform Guidance
- Procurement
- FAQs
- HHS Grants Policy
Lots of stuff with an F&A Flair

8. Student Financial Aid (SFA) and the Single Audit
The Department of Education maintains that an annual compliance audit of the SFA Cluster is required, despite the fact that this appears to be inconsistent with the requirements under the Higher Education Act of 1965, the Single Audit Act Amendments of 1996, and the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (2 CFR Part 200).

9. Student Financial Aid (SFA) and the Single Audit
COGR is working with NACUBO, the National Association of State Auditors, Comptrollers and Treasurers (NASACT), the AICPA, and other stakeholders to elevate this issue to senior leaders at OMB and ED. We expect the 2017 Compliance Supplement to be the vehicle to provide official, final, and fair guidance, and we will engage, accordingly, as the 2017 Compliance Supplement is being developed.

10. Direct Charging the sIRB
NIH-OD : Scenarios to Illustrate the Use of Direct and Indirect Costs for Single IRB Review under the NIH Policy on the Use of Single IRB for Multi-site Research
Primary (conducting ethical review of protocol at sites and informed consent template)
Secondary (PI quals, institutional capability, state/local regulatory requirements, community ethos)
In general, primary activities should be charged as indirect costs if those activities are included in an organization’s Federally-approved indirect cost rate agreement. Secondary activities may be charged as direct costs, with appropriate budget justification.

11. Direct Charging the sIRB
In-house IRB versus out-source to Commercial?
COGR position (9/23/2016 letter to OMB and NIH):
… flexibility to direct charge the full costs of sIRB review, both primary and secondary, … regardless of which entity conducts the review … And as institution's are forced to reevaluate their entire IRB enterprise, flexibility in costing models will be necessary ...
2 CFR 200 Appendix III C.8.b: Institutions should not change their accounting or cost allocation methods if the effect is to change the charging of a particular type of cost from F&A to direct …
NIH-OD : May 25, 2017 implementation ???

12. Uniform
Guidance
(2 CFR 200)

13. Procurement (2 CFR )
An extension of the grace period for implementation of 2 CFR is expected to be approved (FY 2019; July 1, 2018 for most institutions)
A Federal Register Notice will invite comments specific to 2 CFR (a), Procurement by micro-purchases (early November 2016)
Over the remainder of 2016 and into the first-half of 2017, the rulemaking process will unfold (Public Comment period, Final Rule)

14. COGR Proposed FAQs (August 26, 2016)
Safe Harbor for Pass-through Entities and their Subrecipients (2 CFR )
Use of the 10% De Minimis Rate and Flow-down of F&A Rate (2 CFR & 2 CFR )
Public Advertisement of Competitive Bids (2 CFR )
DS-2 Approval Process (2 CFR )
Foreign Subrecipients and Single Audit Expectations (2 CFR )
Late Issuance of Management Decision Letters by a Federal Agency (2 CFR )
Process to Implement Changes to UCA (Appendix III)

15. HHS Office of Grants Policy: Lots of Questions?
HHS Closeout Workgroup report: December?
120-day grant closeout model across all HHS Operating Divisions (ODs)?
Address functionality of the Payment Management System (PMS)?
Other HHS ODs to join the Research Terms and Conditions?
Applicability of the 10% deminimis rate to foreign recipients and training grants?

16. F&A Flair

17. COGR F&A Survey (Reports in early 2017)
Rates (On, Off, OSA, etc.) by Institution, FY12 – FY20 ; available to COGR Members
Executive Summary Report:
- Rate Trends
- Stats by Cognizance (HHS-ONR) & Region
- Treatment of Clinical Trials, Fringe Benefits, etc.
- F&A proposal questionnaire/methodologies
Negotiation Experiences by Cognizance & Region (de-identified) ; available to COGR Members
Next? Effective F&A, by Sponsor type, Internal Distribution, etc.

18. Surveys Completed (Cognizance/Public-Private)
HHS-NY
HHS-DC
HHS-Dallas
HHS-SF
ONR
Public 11 22 28 23 5
Private 17 8 6
Total 30 34 13
Total Responses
128

19. Rates for Clinical Trials
Type of Rate #
No Clinical Trials 47
Off Campus 11
On Campus 12
OSA 14
Separate Rate 24
Other 26
Total Responses
134
Other Rate” – most of these respondents had separate rates for federal clinical trials vs. industry, where rates were typically between 25-28% for Industry, Federal typically used OSA rates.
“Separate Rate” – 18 respondents gave additional data here –Wide aray of responses here. Some used a percentage of TDC, some MTDC. Some chose separate rate when they broke out federal vs. non federal clinical trials. Rates were between 10-30%.

20. GAO , September 2016
The United States Government Accountability Office (GAO) released GAO , Agencies Involved in the Indirect Cost Rate-Setting Process Need to Improve Controls. The report focuses on processes and controls on the rate-setting processes at Cost Allocation Services (CAS-HHS), the NIH Division of Financial Advisory Services (NIH-DFAS), and the Office of Naval Research (ONR-DOD). GAO found that while CAS, NIH-DFAS, and ONR had designed controls for setting indirect cost rates, deficiencies in the design of some of these controls could result in the waste of federal resources. GAO made 12 recommendations to improve controls. While the report is not directed at our community in any manner, institutions should pay attention to the extent that this may impact future F&A rate negotiations.

21. DOJ Settlement (Off-Campus and F&A Rates)
A July 2016 settlement between a research university and the Department of Justice (DOJ) resulted in a $9.5 million settlement related to F&A costs charged to NIH research awards. At issue: the appropriate F&A rate to be charged to NIH research awards taking place in space owned and donated by a third-party entity.

22. Proposed FAQs to OMB (2 CFR 200.419, DS-2 Approval Process)
Q: What cost accounting practice changes are required to be filed as DS-2 amendments to the cognizant agency?
A: As specified in FAQ , IHEs making voluntary changes in cost accounting practices other than those required in the Uniform Guidance should submit their DS-2 (or revised pages) 6 months before the effective date of the proposed change. However, if the cost accounting change is in compliance with policies and practices allowed in the Uniform Guidance, the IHE can proceed with the cost accounting change without approval from the Federal cognizant agency for indirect cost and a DS-2 amendment does not need to be filed … (continued on next page) …

23. Proposed FAQs to OMB (2 CFR 200.419, DS-2 Approval Process)
A: (continued) … A DS-2 amendment should be formally presented to the cognizant agency for indirect cost and may be subject to the approval requirements in (d)(2) only if the cost accounting change is not clearly defined as allowable in the Uniform Guidance. Regardless of whether a DS-2 amendment is required, the IHE and its Federal cognizant agency for indirect cost should work in a collaborative manner to ensure that compliance with the Uniform Guidance is maximized and that the goals of the Uniform Guidance to reduce administrative burden are achieved.

24. Proposed FAQs to OMB (2 CFR 200 – Appendix III, Changes to the UCA)
Q: Appendix III, B.4.c(2)(ii)(B) states that OMB will adjust the EUI numbers from time to time (no more often than annually nor less often than every 5 years). What is the process for IHEs to initiate necessary changes in the EUI, and subsequently, the Utility Cost Adjustment (UCA)?
A: The IHE community should submit proposed adjustments to OMB, and if applicable, to the cognizant agency for indirect costs, to document the basis for the adjustment. OMB, and if applicable, the cognizant agency for indirect costs, will work with the IHE community to implement the fair and equitable adjustments.

25. Software Capitalization (Equipment or Intangible Property?)
§ Capital assets. Capital assets means tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance with GAAP. Capital assets include:(a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and(b) Additions, improvements, modifications, replacements, …
§ Equipment. Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. See also …

26. Software Capitalization (Equipment or Intangible Property?)
§ Information technology systems. Information technology systems means computing devices, ancillary equipment, software, firmware, and similar procedures, services (including support services), and related resources. See also …
§ Intangible property. Intangible property means property having no physical existence, such as trademarks, copyrights, patents and patent applications and property, such as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership (whether the property is tangible or intangible).
ANSWER? Industry, UIDP: Software = Intellectual Property (Intangible Property); GASB 51 and FASB ASC 350 recognize institutions should categorize software as Intangible Property; UG: minimize burden, good internal controls.

27. F&A Rates and Foundations
FasterCures is leading a diverse workgroup of reps from nonprofit disease and research foundations, and research universities, to enhance the partnership. Issues related to data sharing, intellectual property and licensing were among the first to be addressed, and a current initiative is being explored to develop better methodologies for recovering F&A-related costs.

28. Director, Costing Policies
David Kennedy
Director, Costing Policies
COGR
An association of research universities