1. KEYS TO SUCCESS NCURA Region IV Spring Meeting April 27 – 30, 2014 © 2014 National Council of University Research Administrators Cost Principles: It Depends! National Council of University Research Administrators

2. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Charlie Giese, Research Program Manager University of Wisconsin-Madison giese@biostat.wisc.edu 608.263.7848 Diane Hillebrand, CRA, Grant & Contract Officer University of North Dakota-School of Medicine & Health Sciences diane.hillebrand@med.und.edu 701.777.2808

3. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators OMB Circular A-21 Cost Principles Allowable vs Unallowable Omni Circular Questions

4. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators OMB Circular A-21 Principles for determining costs applicable to grants, contracts, and other agreements with educational institutions

5. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Brief History  Originally issued in 1958  Significant changes made in 1996:  Raised threshold for capitalizing equipment to $5,000  Established use of Facilities & Administration (F&A) rate(s) in effect at start of sponsored agreement over life of agreement  Incorporated four Cost Accounting Standards (CAS)  Required educational institutions to submit a Disclosure Statement (DS-2) regarding cost accounting practices  Omni Circular to take effect 12/26/2014  Streamline eight Federal regulations into single policy guide

6. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Objective Establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. Principles deal with the subject of cost determination. Principles were designed to ensure that the Federal Government pay for its fair share of total costs, determined in accordance with generally accepted accounting principles, except where restricted or prohibited by law.

7. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Direct Costs  Can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or can be directly assigned to such activities relatively easily with a high degree of accuracy  Where an institution treats a particular type of cost as direct cost of sponsored agreements, all costs incurred for same purpose in like circumstances must be treated as direct costs of all institutional activities

8. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Indirect Costs Costs incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, instructional activity, or any other institutional activity

9. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators OMB Circular A-21 Cost Principles Allowable vs Unallowable Omni Circular Questions

10. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Cost Principles Costs are reimbursed by the Federal Government if the meet the follow criteria Allowable Allocable Reasonable Permissible Necessary Consistent Cost that can not meet these requirements are considered unallowable no matter the expense

11. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Allowable Allowability of costs is defined specifically in OMB Circular A-21 Section J “General Provisions of the Cost Principles” Must be reasonable Cost must be Allocable to project Consistently treated in like circumstances Conforms to limitations or exclusions set forth by A-21

12. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Allocable Cost is incurred solely to advance the work of the project Application of cost is in proportions that can be approximated through reasonable methods. Cost is necessary to the objectives of the institution and deemed assignable to the project.

13. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Reasonable If the cost is generally recognized as necessary for the operation of the project Whether there are restraints imposed by factors such as the terms of the agreement or applicable law If individuals act prudently in similar circumstances in acquisition of costs The extent to which costs are constant with established institutional policies and practices

14. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Permissible Costs must be permissible under the applicable law(state, federal, etc.) Costs must be permissible under terms/conditions set forth in the award or referenced thereof

15. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Necessary For a cost to be necessary it must be essential to achieve or complete a certain result or results. Costs applied to the project MUST be necessary to accomplish the scope of work.

16. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Consistent Cost that are similar must be treated the same in like circumstances and must be done consistently Costs should be treated as either direct or indirect, not both

17. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators OMB Circular A-21 Cost Principles Allowable vs Unallowable Omni Circular Questions

18. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Allowable vs Unallowable OMB Circular A-21 Section J defines 54 specific categories of costs and assigns them to the categories of allowable and unallowable. Section J instructs grantees on the acceptable treatment of allowable costs as either direct costs or F&A costs.

19. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Allowable Costs Section J instructs that an allowable cost may be: – normally treated as a direct cost; – normally treated as an F&A cost; or – normally treated as an F&A cost, except in “unlike” circumstances under which it may be treated as a direct cost. Note that such “unlike” circumstances must be documented during the institutional CAS review and approval process.

20. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Unallowable Costs Section J instructs that an institution is required to separately track and account for all unallowable costs to ensure that they are not charged to Federal awards either as direct costs or as part of the institution’s F&A cost rate calculations. – Examples: Alcoholic Beverages, Alumni Activity, Commencement Costs, Bad Debts, etc. Costs that are named in Section J as unallowable are unallowable in any circumstance.

21. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Typically Treated as Indirect 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 Dues and Memberships Office Supplies

22. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Typically Treated as Indirect Costs continued 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, networking costs, or other IT services Staff recruitment and relocation

23. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators OMB Circular A-21 Cost Principles Allowable vs Unallowable Omni Circular Questions

24. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Omni Circular Also known as the Super Circular, Omni Guidance, or Uniformed Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Implementation set for December 26, 2014 Replaces A-21 and seven other OMB Circulars Organized into the following Subparts: Subpart A — Acronyms and Definitions Subpart B — General Provisions Subpart C — Pre-Federal Award Requirements and Contents of Federal Awards Subpart D — Post Federal Award Requirements Subpart E — Cost Principles Subpart F — Audit Requirements

25. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Section E Differences between this section and the A-21 will include the following: Direct cost allocation Indirect Cost Rate Requirement Compensation Idle Facilities Cost Accounting Standards and Disclosure Statement Materials and Supplies Utility Cost Adjustment

26. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Omni Circular Differences Direct Cost Allocation – Administrative cost may be charged directly when specifically allocated to one award Indirect Costs Rates – Federal agencies will be required to accept a negotiated indirect cost rate – de minimis Rate for non federal entities Compensation – Provides alternative accounting methods for salaries Idle Facilities – Allows for these costs when necessary

27. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Omni Circular Differences continued Cost accounting Standards and Disclosure Statement New threshold at $50 million Materials and Supplies Computers can now be allowable Utility Cost Adjustment Recovery of utility costs associated with research

28. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Review Goals and Objectives Questions

29. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Charlie Giese, Research Program Manager University of Wisconsin-Madison giese@biostat.wisc.edu 608.263.7848 Diane Hillebrand, CRA, Grant & Contract Officer University of North Dakota-School of Medicine & Health Sciences diane.hillebrand@med.und.edu 701.777.2808