1. What Every Departmental Administrator Needs to Know about F&A Proposals Diane Winter, University of Michigan Julie Jarvis, University of Illinois

2. Overview of Cost Accounting Standards (CAS) CAS 501 – Consistency in estimating, accumulating and reporting costs Consistent application of cost accounting practices; comparable transactions treated alike; facilitates reliable proposal budgets; important basis for reliable financial control… CAS 502 – Consistency in allocating costs incurred for the same purpose …in like circumstances; each type of cost allocated once and only on one basis; same criteria for all cost objectives; guards against overcharging and double counting… CAS 505 – Accounting for unallowable costs Costs expressly unallowable or mutually agreed to be unallowable shall be identified and excluded from any federal billing or claim… CAS 506 – Cost Accounting Period Educational institutions should generally use their fiscal year as their cost accounting period; reduces the effect of variations in the flow of costs within each cost accounting period; enhances objectivity, consistency, and verifiability; promotes uniformity and comparability …

3. 3 FACILITIES AND ADMINISTRATION (F&A) COST CALCULATION MODIFIED TOTAL COSTS Depreciation of Building & Equipment Operations & Maintenance (e.g. utilities, janitorial, repairs, security, grounds) General & Administrative (e.g. President’s Office, Controller, HR, Payroll, Legal) Departmental Administration (e.g. Academic Dean’s Offices, Dept Chairs, admin & clerical staff, office supplies) Sponsored Project Administration (e.g. Pre-award office, Post-award office) Student Services Administration (e.g. Admissions, bursar, Registrar, Student Health Instruction (e.g. Prof. Salaries, TA, Training) Organized Research (e.g. R&D costs separately budgeted & accounted for) Other Sponsored Projects (e.g. community service projects, workshops, non- federal drug studies) Other Institutional Activities (e.g. athletics, dining halls, dorms, theaters) DIRECT COST BASES These become the denominator (base) in the rate calculations F&A COST POOLS After cross- allocations – these become the numerator in the rate calculations Library (e.g. purchase of books & materials, librarian salaries)

4. Overview of F&A Components Facilities Utilities Equipment Buildings Debt Space Administration Central Departmental Unallowables F & A Costs Research Base = Rate

5. Calculation of Research F&A Rate F&A Costs (overhead) = F&A Rate Organized Research Base (includes University Research) 5 University-funded competitive awards Overdrafts Committed Cost Sharing Salaries Over the Cap Sponsored project costs All direct expenses (MTDC) related to Organized Research

6. F&A ComponentF&A DollarsMTDC BaseUn-Capped RateCapped Rate General Admin 11,799160,3097.36 Departmental Admin 29,337160,30918.30 Sponsored Project Admin 3,825154,6332.47 Student Services Admin 167160,309.10 Sub-Total ADMIN 28.2326.00 Bldg Use Allow/Depreciation 3,565120,2702.96 Equipment Use/Depreciation 2,564120,2702.13 Building Interest 1,234120,2701.03 Operation & Maint. Plant 19,973120,27016.61 Library 2,846136,3382.09 Sub-Total FACILITIES 24.82 Total On-Campus 53.0550.82 Total Off-Campus 28.2326.00 Fiscal Year 2012 Rate Schedule - Research

7. What Every Administrator Needs to Know About F&A Rates & Calculations F&A are real costs to the institution – To waive IC on grants/contracts is giving money away – It is NOT a tax Space Survey is the major driver to allocate Facility Costs (uncapped) Impact of Cost Sharing on the F&A Rate Allowable vs. Unallowable (2 CFR, Part 220 / OMB Circular A-21, Section J) Consistency Optimizing institutional financial structure – object codes, functions Impact of organization decisions on F&A

8. What Every Administrator Needs to Know About F&A Rates & Calculations Dept Admin’s are a valuable institutional resource Dept Admin’s are key component of internal controls Dept Admin’s are key part of internal control systems – Help drive institutional standards like separation of duties, integrity, objectivity, consistency – IC is essential to the partnership, strength of compliance and F&A proposal quality – In decentralized environments well structured accounting systems is an element of good IC Dept Admin’s can positively or negatively impact institutional risk/exposure Dept Admin’s with F&A knowledge can take federal cost reimbursement to a higher level Institutions who look for Dept Admin’s with F&A knowledge for key leadership positions have a strategic advantage to institutions who do not

9. QUESTIONS