1. OMB Circulars A-21, A-110 & A-133
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2. Overview: OMB Circulars
Difference between award types – grants, contracts and cooperative agreements
Purpose of the circulars
What circulars are we reviewing?
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3. Definition of a Grant
Purpose is to transfer money, property, services or anything of value to recipient in order to accomplish a public purpose
No substantial involvement anticipated between government and recipient
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4. Definition of a Cooperative Agreement
Purpose is to transfer money, property, services or anything of value to recipient in order to accomplish a public purpose
Substantial involvement anticipated between government and recipient
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5. Definition of a Contract
Purpose is to acquire property or services for direct benefit or use of the Federal Government.
Very restrictive
Usually no expectation of cost sharing
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6. Assistance Vs. Procurement
Assistance – generally, what the proposer wants to do. Awards can be either grants or cooperative agreements
Procurement – generally, what the government buys (can include research). Awards are contracts
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7. OMB Circulars
Purpose: To give instructions to the federal agencies affected by the circulars; federal agencies are required to implement.
Federal agencies pass the requirements to institutions
Effect: Set minimum standards for institutions
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8. OMB Circulars applicable to all Awards
A-21 Cost Principles for Educational Institutions
A-110 Grants and Agreements with Institutions of Higher Education: Uniform Administrative Requirements
A-133 Audits of States, Local Governments, and Non-Profit Organizations
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9. Definitions Definition of cost is:
An amount paid or required in payment for a purchase; a price
The expenditure of something, such as time or labor, necessary for the attainment of a goal
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10. Definitions Definition of principle is: A rule or standard
A fixed or predetermined policy or mode of action
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11. Definitions
Cost Principles can be defined as the policy for determining if the cost or expenditure is allowable or not.
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12. OMB Circular A-21 – Cost Principles for Educational Institutions
Purpose: Establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions
Determines what costs can be included in the F&A calculation
Remember: A-21 addresses both direct and F&A (indirect) costs as well as specific allowable costs (Section “J”)
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13. A-21 Constantly Changes
Tighten rules on allowability and allocation of costs
Primary focus on Facilities & Administrative Costs
Promote greater standardization in treatment of costs
Also directed primarily at Facilities & Administrative Costs
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14. How is Allowability Determined?
Allowable: Under the agreement, regulations and public laws
Reasonable: A prudent person would have purchased this item and paid this price
Allocable: They can be assigned to the activity on some reasonable basis
Consistently Treated: Like costs must be treated the same in like circumstances, as either direct or F&A costs
If a cost cannot meet the above criteria, it is NOT ALLOWABLE, no matter what it is for.
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15. Unallowable Costs – Section J (Can not be charged against Federal agreement, used as cost sharing or placed in the F&A cost base)
Unallowable Activities
(something you do)
Lobbying
General public relations & alumni activities
Student Activities
Managing Investments solely to enhance income
Unallowable Objects (something you buy, a line item)
Advertising
Alcoholic beverages
Entertainment
Fines & penalties
Moving Costs if employee resigns within twelve months
Certain recruitment costs
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16. A-21 Revisions, July, 1993
“The salaries of administrative and clerical staff should normally be treated as indirect costs. Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project of activity. Items such as office supplies, and memberships shall normally be treated as indirect costs.” F.6.b.
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17. Cost Principles
“The fact that a cost requested in a budget is awarded, as requested, does not ensure a determination of allowability. The organization is responsible for presenting costs consistently and must not include costs associated with their F&A rate as direct costs.”
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18. Direct and Facilities and Administrative Costs
Direct Costs: Costs which can be identified specifically with a particular sponsored project or that can be directly assigned to such activities relatively easily with a high degree of accuracy
Facilities & Administrative: Costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a sponsored project
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19. Examples of Direct Costs
Salaries and Wages
Fringe Benefits
Travel
Lab Supplies
Subgrants and Subcontracts
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20. F&A Costs are Real
“Any research project must cover two components of costs –
those directly attributed to the project
those incurred for the general support and management of the research
…If the sponsor of research projects do not fully reimburse the costs, they must be paid from other institutional funds.”
*American Council on Education
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21. F&A Cost Pools Operations and Maintenance Library
General Administration
Departmental Administration
Sponsored Projects Administration
Student Services Administration
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22. Consistency is a Problem
Consistency in estimating, accumulating and reporting costs
Consistency in allocating costs incurred for the same purpose
Should be able to compare proposal estimate with actual costs for any “significant” cost
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23. OMB Circular A-110 Uniform Administrative Requirements
Purpose
Subpart A General
Subpart B Pre-Award Requirements
Subpart C Post-Award Requirements
Subpart D After-the-Award Requirements
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24. A-110 Purpose
“Sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education…”
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25. OMB A-110 Sections Subpart A – General Purpose Definitions
Effect on other issues
Deviations
Subawards
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26. OMB A-110 Sections Subpart B- Pre-Award Requirements
Pre-award policies
Forms for applying for Federal assistance
Special award conditions
Certifications and representations
Debarment and suspension
Lobbying
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27. OMB A-110 Sections Subpart C – Post Award Requirements
Financial and Program Management
Standards for financial management systems
Payment
Cost sharing or matching
Program income
Revision of budget and program plans
Allowable costs
Period of availability of funds
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28. OMB A-110 Sections Subpart D – After-the-Award Requirements
Close-out procedures
Subsequent adjustments and continuing responsibilities
Collections of amount due
Appendix A- Contract Provisions
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29. Aspects of A-110 Effect on Issues Deviation Subcontracts
No agency can impose rules that are in conflict with A-110
Deviation
OMB can grant exceptions in unusual circumstances
Subcontracts
A-110 applies to any subcontractors performing work under an award
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30. OMB Circular A-110 Uniform Administrative Requirements
Expanded Authorities under OMB A-110 C.25e
Agencies can waive cost-related and administrative prior approvals
University Sponsored Project Offices can approve
Pre-award costs (up to 90 days prior to award start date)
First no-cost extension up to 12 months
Carry forward of balance
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31. What’s Important for Me as a Departmental Administrator?
Cost Sharing
Program Income
Revision of Budget and Program Plans
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32. Cost Sharing
Verifiable and not included as contributions on Federal projects
Still have to be allowable
Provided for in the approved budget “when required by the Federal Awarding agency”
Unrecovered indirect costs may be included “with prior approval of Federal awarding agency”
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33. Revision of Budget & Program Plans
Instructions on how to report deviations from budget and program plans
Changes which require sponsor prior approval:
Change in scope
Need for additional Federal funds
Change in key person specified in the application or award document
The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator
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34. Revision of Budget & Program Plans, cont’d.
The transfer of amounts budgeted for indirect costs to absorb increases in direct costs , or vice versa, if required by the Federal awarding agency.
The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.
Unless described in the application and funded in the approved awards, the subaward, transfer or contracting out of any work under the award. Does not apply to purchase of Materials & supplies, equipment or general support services.
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35. OMB Circular A-133
Establishes audit requirements and defines federal responsibilities for implementation and monitoring such requirements for institutions of higher education
Institutions receiving more than $500K in Federal Awards require an audit
Audits shall normally be performed annually
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36. A-133 Emphasis Sets standards for audit consistency and uniformity
Identifies compliance requirements
Establishes criteria for testing internal controls
Tests for reasonable assurance that financial statements are accurate
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37. Audits Question: When do you start preparing for an audit?
Answer: The day you prepare a proposal
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38. Who Audits the University?
Federal Government – US Dept. of Education is SVSU’s cognizant audit agency
A-133 Auditors
Program Auditors
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39. Key to a Successful Audit
Organized Files
Documentation for expenses
Appropriate Approvals
Audit Trails (i.e., documentation)
Knowledge of policies and regulations
If it’s not documented, it didn’t happen….
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40. Audits Document! Document! Document!
When transfers are required – “Defend the Debit”
Auditors want to know why the award was charged for the expense
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41. A Look at Accusations
George Washington University – Engineering professor charged with embezzling almost $600,000 in federal grants by directing the money into his own private companies. Also charged with using University money to pay his cousin’s wife for work that she never did. The court case is still pending. Article taken from the Chronicle of Higher Education, 2/4/05
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42. A Look at Accusations
University of Connecticut engineering professor resigned his tenured position after being accused of spending thousands of hours on his private consulting practice and neglecting his academic work.
Florida Atlantic University professor resigned following accusations that he used state money to give an edge to a company that he had created to make and sell the same mine-detecting submarine that he was studying at the university.
4/22/2019

43. A Look at Settlements Associated with Noncompliance
Northwestern University (~$5M; mischarging Federal Grants, fraud, Time & Effort issues)
Yale University - Tenured Professor forced out for allegedly padding his business travel expenses by approx. $150,000. He has made full restitution and resigned. 1/21/05 article from the Chronicle of Higher Education.
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44. A Look at Settlements Associated with Noncompliance
Florida International University - $11.5M for improperly billing the U.S. Dept. of Energy for scientists’ time, travel and administrative expenses. Article taken from the Chronicle of Higher Education, 2/15/05
The Johns Hopkins University - $2.6M to settle claim that scientists had overstated the amount of time they were spending on projects financed by the federal government. Article taken from CHE, 3/1/04
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45. A Look at Settlements Associated with Noncompliance
University of Chicago ($0.65M; mischarging Federal Grants)
University of Connecticut ($1.3M; training grant issues)
Medical College of Georgia ($10M; theft of research funds related to clinical trials- two investigators with jail time)
University of Minnesota ($32M; program income/clinical trial violations)
Stanford University ($3.1M; unallowable costs)
From Gary Thompson – Director of Grant Compliance NIH – through Ann Holmes from University of Maryland
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46. Words to the Wise
“If you don’t like being audited by an auditor, you will really dislike being audited by an angry auditor.” NCURA
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47. Current Hot Buttons Final Reports Cost Transfers Cost Sharing
Effort Reporting
Departmental Administrative Costs
Subrecipient Monitoring
Program Income
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48. Additional Resources OMB Circulars
Office of Sponsored Programs, located at 365 Wickes Hall
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49. OMB Circulars
Questions?
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