OMB Circulars A21, A110

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OMB Circulars A-21, A-110 A-133

• Presented by Caroline McMullin, Stuart Taub, and
  Edward Kiewra
• Office of Sponsored Programs Syracuse University

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Credits go to -

• Julie Norris formerly at MIT
• Jane Younger at University of Texas Health
  Science Center at San Antonio
• Ann Holmes from the University of Maryland
• Materials from NCURA 46th annual meeting

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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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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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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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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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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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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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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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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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Definitions

• Definition of principle is
• A rule or standard
• A fixed or predetermined policy or mode of action

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Definitions

• Cost Principles can be defined as the policy for
  determining if the cost or expenditure is
  allowable or not.

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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 FA
  calculation
• Remember A-21 addresses both direct and FA
  (indirect) costs as well as specific allowable
  costs (Section J)

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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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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 FA costs
• If a cost cannot meet the above criteria, it is
  NOT ALLOWABLE, no matter what it is for.

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Unallowable Costs Section J(Can not be charged
against Federal agreement, used as cost sharing
or placed in the FA 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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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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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
  FA rate as direct costs.

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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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Examples of Direct Costs

• Salaries and Wages
• Fringe Benefits
• Travel
• Lab Supplies
• Subgrants and Subcontracts

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FA 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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FA Cost Pools

• Operations and Maintenance
• Library
• General Administration
• Departmental Administration
• Sponsored Projects Administration
• Student Services Administration

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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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OMB Circular A-110Uniform 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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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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OMB A-110 Sections

• Subpart A General
• Purpose
• Definitions
• Effect on other issues
• Deviations
• Subawards

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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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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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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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Aspects of A-110

• Effect on Issues
• 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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OMB Circular A-110Uniform 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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Whats Important for Me as a Departmental
Administrator?

• Cost Sharing
• Program Income
• Revision of Budget and Program Plans

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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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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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Revision of Budget Program Plans, contd.

• 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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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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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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Audits

• Question When do you start preparing for an
  audit?
• Answer The day you prepare a proposal

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Who Audits the University?

• Federal Government US Dept. of Education is
  Syracuses cognizant audit agency
• A-133 Auditors
• Program Auditors

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Key to a Successful Audit

• Organized Files
• Documentation for expenses
• Appropriate Approvals
• Audit Trails (i.e., documentation)
• Knowledge of policies and regulations
• If its not documented, it didnt happen.

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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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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 cousins 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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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.

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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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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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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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Words to the Wise

• If you dont like being audited by an auditor,
  you will really dislike being audited by an angry
  auditor. NCURA

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Current Hot Buttons

• Final Reports
• Cost Transfers
• Cost Sharing
• Effort Reporting
• Departmental Administrative Costs
• Subrecipient Monitoring
• Program Income

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Additional Resources

• OMB Circulars
• http//www.whitehouse.gov/omb/circulars/a021/a21_2
  004.html
• http//www.whitehouse.gov/omb/circulars/a110/a110.
  html
• http//www.whitehouse.gov/omb/circulars/a133/a133.
  html
• Office of Sponsored Programs, located at 113
  Bowne Hall
• http//osp.syr.edu/

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OMB Circulars

• Questions?