Research Administration Forum

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Research Administration Forum
Compliance Challenges Allocation of Costs to
Sponsored Projects
May 26, 2004
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Todays Agenda

• Define our major research compliance challenges
  and the opportunities they afford
• Staff and faculty awareness of the
  rulessponsored research is a rapidly expanding
  enterprise
• Federal activism on a few major issues
• Under-recovery of faculty compensation
• Outline our responseimprove effectiveness of our
  research administration infrastructure
• Increase awarenesstraining and consultation
• Improve systems
• Maximize grant recovery
• Working together to deal with these challenges

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Building the Research Enterprise

• UC Davis Vision
• Discovery
• Growth in the level of extramural funding across
  all disciplines

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Building the Research Enterprise

• Research expenditures have nearly doubled in the
  last 10 years from 167 mm in 1994 to 324 mm
  in 2003
• Growth in sponsored project funding (awards) has
  increased 160 mm in 1994 to 426 mm in 2003
• With increased funding comes increased scrutiny
  by regulators
• Growth in the infrastructure to support increased
  research has not kept pace

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Building the Research Enterprise

• UC Davis Vision
• Engagement
• Strengthen research at all levels by facilitating
  the application for and management of grants of
  all sizes across all disciplines
• Development of training opportunities to
  facilitate more effective fiscal management of
  grants

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WASHINGTON, D.C. Northwestern University will
pay the United States 5.5 million to settle
allegations that the school violated the False
Claims Act with regard to claims in connection
with federally-sponsored medical research grants,
the Justice Department announced today. The
government alleged that Northwestern misled the
United States into paying more money than the
Chicago-area school was lawfully entitled to
receive.
http//www.usdoj.gov/opa/pr/2003/February/03_civ_
076.htm
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Components of an Effective Compliance Program

• NIH OIG issued a notice in the Federal Register
  regarding the elements considered necessary for a
  comprehensive compliance program. (68
  FR52783-52784 September 5, 2003)
• Implement written policies and procedures
• Designate a compliance officer and committee
• Conduct effective training and education
• Develop effective lines of communication
• Conduct internal monitoring and auditing

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Components of an Effective Compliance Program

• NIH OIG issued a notice in the Federal Register
  regarding the elements considered necessary for a
  comprehensive compliance program. (68
  FR52783-52784 September 5, 2003)
• Enforce standards through well publicized
  disciplinary guidelines
• Respond promptly to detected problems, taking
  corrective action, and report to Federal agencies
• Define roles responsibilities oversight
  responsibility

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Accountability Risks

• Ten compliance risks in research administration
• Effort reporting
• Direct vs. indirect cost charging practices
• Recharge center / service center rates
• Fixed price agreements
• Financial status reports
• Charging costs at the end of a grant period
• Appropriate charging of costs to benefiting
  grants
• Mandatory cost sharing
• Protection of human subjects
• Protection and charging of animal subjects

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Accountability Major Risks

• Compliance risks identified by the Federal
  Government
• The proper allocation of charges to grant
  projects
• Time and effort reporting, including accurate
  reporting of the commitment of effort by
  researchers
• Use of program income

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Accountability Cost Allocation

• Allowable costs
• Reasonable
• Arms length transaction?
• Necessary
• Allocable
• Consistent treatment
• Like treatment in like circumstances

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Accountability Cost Allocation

• Unallowable costs
• Administrative and clerical salaries
• Major Project?
• Dont make allowable costs unallowable, or when
  good costs go bad
• Flat assessments (5)
• Rates not approved by Campus Rate Committee
• General purpose equipment?
• Meals?

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Accountability Cost Allocation

• UCD Cost Accounting Standards Disclosure
  Statement (DS-2)
• Required by A-21
• Filed by UCD on December 31, 1996 (Revised March
  30, 2000)
• Identifies UCD accounting practices, policies,
  and procedures for assigning costs to federally
  sponsored programs and to attest to the
  consistent treatment of those practices
• Charging Practices for Federally Funded Grants
  and Contracts 1997
• http//accounting.ucdavis.edu/EX/

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Accountability
Mrak Hall
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Accountability Other Issues

• Cost Sharing
• Any program or project cost that is not supported
  by the sponsor
• Must meet A-21 cost principles allowable,
  allocable, reasonable
• Committed Mandatory Voluntary (non-federal
  sources)
• Mandatory Stipulated as a condition of the
  agreement.
• Voluntary Discretionary use of matching funds
  from gifts, departmental (19900) funds, academic
  year salaries
• Must be documented in the Universitys financial
  records.
• Academic year salaries charged to project?
• Project Overruns
• Must be tracked and accumulated (reported as
  research)
• Cannot be charged to departmental administrative
  account

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Accountability Other Issues

• Review of monthly ledgers
• Does the PI know whats been charged to the
  project?
• Do expenditures match the project plan?
• Cost transfers
• Cost transfers completed within 90 days?
• Moving expenditures results in inaccurate reports
  and is a red flag
• Cash management issues
• Effort Reporting
• Is the PI signing?
• Are necessary payroll transfers made?

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Maximizing Grant Recovery

• PIs are expending effort on sponsored projects
  during the academic year
• Not charging their effort to Federally sponsored
  projects can create compliance problems
• Effort Reporting
• Voluntary Cost Sharing
• Recovering actual costs could provide resource
  options

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2002-03 Ladder Rank Salaries
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Maximizing Grant Recovery

• Consider charging academic year salaries to
  sponsored projects
• By reducing the percentage of salaries on general
  funds to 80 (excluding SOM)
• 21.7 million in general fund savings would be
  available for re-budgeting on a current year
  basis
• At the same time, reduces the risks associated
  with voluntary cost sharing

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Maximizing Grant Recovery

• Myths about charging AY salaries
• Charging AY salaries is against OP Policy
• The sponsor does not care how much time is
  accounted for
• Charging salaries does not benefit the
  school/college/dept
• Salary funds revert to OP if not used

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Maximizing Grant Recovery

• Facts about charging AY salaries
• General fund savings can be re-budgeted on a
  current year basis
• Not charging AY salaries when work is performed
  on the project exposes the University to
  compliance risks
• Effort Reporting
• Cost sharing
• Could overstate UCDs FA Rate
• CAS 501 Consistency Estimating, Accumulating,
  and Reporting Costs

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Washington, DC
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Maximizing Grant Recovery

• Where do we go from here?
• Increase proposal budgets to include AY salaries
• Create incentives
• Distribution of 19900 balances
• Avoid compliance problems associated with not
  charging AY salaries to grants
• Cost sharing
• Effort reporting

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Providing an Effective Environment for Research
Administration

• Enhance the infrastructure to
  support growth
• Training
• Certificate Series in Grants Administration
• Web based courses
• Systems
• Electronic Research Administration
• Effort Reporting System
• Cost Sharing

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Providing an Effective Environment for Research
Administration

• Protect our good reputation
• Avoid legal/compliance problems
• Provide an effective compliance environment
• UCD Task Force on University Compliance
• Charged August 7, 2003

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Impact

• Risks of Non-Compliance
• Cost Disallowances, Penalties
• Withholding of Payments
• Withholding of Future Award
• Designation as a High Risk Organization
• Special Monitoring and Corrective Action Plans
• Personal Liability
• Criminal prosecution

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Impact

• What we dont want
• Too much control
• Lack of balance
• Cost vs. benefit
• Gotcha type of approach
• No, whats the question?
• Risk averse
• Redundant processes

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Impact

• What we dont want
• Vice Chancellor Klein to end up in jail.

Jail
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Impact

• What to remember
• Know the rules, play by the rules
• Be prepared to provide documentation that
  supports your action
• A project/award is like your tax return

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We Need Your Help

• Set the Tone-at-the-Top
• Designate officials within your unit who will be
  responsible for coordinating compliance efforts
• Would serve as a point of contact that we can
  communicate with regarding compliance issues
• Reinforce the elements necessary for a compliance
  program
• Encourage participation in training programs

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Questions?