Transcript Financial Rep Meeting - Florida State University

Financial Rep Meeting
July 14, 2011
SPONSORED
RESEARCH
ROBERTA MCMANUS
2
Department of Health and Human Services
(DHHS) Audit
Section
3
DHHS Audit Process







Entrance conference December 2010
Audit Period = October 1, 2008 – September 30, 2010
Audit Focus = charging F&A costs directly
Audit Population = expenditures for all DHHS agency
awards for the audit period
Sample selection = 100 salary/100 non-salary items
Exit Conference = May 27, 2011
Report draft in process – 2 findings
◦ Improve monitoring of policies and procedures
◦ Questioned costs and financial impact
Why Audits?

Assure adherence to applicable rules and
regulations

Assure that controls are in place to limit
the probability of fraud, waste, and abuse.
5
Federal Demonstration Project

FDP “nomenclature” no longer valid
◦ Research Terms and Conditions (RTC)

Provides budget flexibility
NOT A BLANK CHECK!!!
6
Key Items to Note re: RTC

OMB Circular A-21 still applies
◦ Allowable
 Per A-21 AND Award terms and conditions
◦ Allocable
 Amount charged directly benefits award
 Cost relates to the objectives of research
◦ Necessary and Reasonable
 Reasonable person standard
 Cost and benefit to award
◦ Consistent
 All costs are incurred for the same purpose, in like
circumstances either treat as direct OR indirect costs

Examples of each included in posted ppt
7
Example – Allowable

Goldie, Lab Assistant, works in Dr. Spear’s lab. Dr. Spear has one
Federal award and all of the research is conducted in this
one lab. There is no non sponsored funding that supports this
lab. To show her appreciation for the hard work that Goldie does,
Dr. Spear buys her a ticket to a Seminole soccer match and pays for
it with Grant dollars (“It’s only five bucks!”). What is the issue with
this scenario?
◦ Entertainment costs are unallowable (A-21, J17).
L&L Hot Topics
8
Example – Allocable

Garnett, Lab Assistant, works in Dr. Seminole’s lab. Dr. Seminole
has three Federal awards (X,Y, Z) and all of the research is
conducted in this one lab. There is no non sponsored
funding that supports this lab. The only research occurring in the
lab are for Dr. Seminole’s sponsored projects. Garnett trains all
research students doing experiments in that lab and also conducts
experiments for all projects as assigned by Dr. Seminole. Each
student conducts experiments for a particular project. Garnett’s
salary and benefits are allocated 100% to Project Z. What is
the issue with this scenario?
◦ Since Garnett’s work benefits all awards, then her salary should
be allocated to all three projects on a reasonable basis. (A-21,
C4. Allocable costs)
L&L Hot Topics
9
Example – Reasonable/Necessary

Dr. Suzy purchased a specialized microscope that was needed on
Project B for $25,000. Project B included federal demonstration
terms and conditions. However, when it was time to purchase the
equipment, some equipment funding had been used for other supplies and
hiring another lab assistant. As a result, there was only $15,000 available
for the microscope. Dr. Suzy had another Project C that did not
include equipment in the budget. However, this was a federal
demonstration project as well so Dr. Suzy directed staff to use $10,000
from Project C and $15,000 from Project B. Dr. Suzy did intend on using
the microscope for both projects, but Project C did not need the
specialized microscope as a regular microscope would have
yielded the same results. What is the issue with this scenario?
◦ The $10,000 charged to Project C would be deemed unallowable. Even
though this is federal demonstration (now Research Terms and
Conditions), the specialized microscope was not reasonable or
necessary for Project C. (A-21, C3. Reasonable costs)
L&L Hot Topics
10
Example – Consistent

Gold, Lab Researcher, for Dr. Osceola who has 3 labs. Dr. Osceola
has sponsored funding in 2 labs (2 Federal awards) and uses
lab 3 for departmental research. Gold’s duties are to
manage all 3 labs, order supplies for all research
experiments, hire/appoint all personnel that will be
working in Dr. Osceola’s labs, and reconcile both project
and non-project funded ledgers. Gold is charged 100% to a
Federally sponsored award. What is the issue with this
scenario?
◦ The majority of Gold’s responsibilities are administrative in
nature. Therefore, none of her salary should be charged to a
sponsored funding source as she is part of administrative
costs. Gold should be funded with E&G, Auxiliary or SRAD
dollars. (A-21, F6b(2). Departmental administration
expenses)
L&L Hot Topics
11
Facilities and Administrative Costs

Costs normally treated as indirect per A-21F6b(2)
and F6b(3):
◦
◦
◦
◦
◦
◦
◦
◦

Administrative and Clerical Salaries
Postage
Local Telephone
Office Supplies
Data Processing/Computer Supplies
General Purpose Software
Memberships
Subscriptions
If charge direct:
◦ Unlike circumstances (A-21Exhibit C)
◦ Cost Accounting Standard (CAS) Exemption
12
DO NOT CONFUSE
CAS EXCEPTIONS
WITH THE QUESTION OF
ALLOWABILITY!
L&L Hot Topics
13
Cost Transfers

Improper cost transfers
◦ Cover overruns
◦ Spend available balance close to end of project
◦ Transfer of unallowable cost from one project to another
◦ Circumvention of award limitation/restriction
◦ Charge costs to one project that belong to an award not yet executed
Advance policy enacted for this reason!
Section
14
Allowable transfers:
To correct erroneous charge
To allocate portion of charge
that applies to the project (e.g.
split purchases)
*Timely (90 days)
*Form with Justification
15
Service/Recharge Centers
Aka Auxiliaries at FSU
 OMB Circular A-21 J47
 Direct charge must be based on actual
usage using standard rates

◦ May only recover aggregate costs of the
service
◦ Cannot discriminate against federally
supported activities of the institution

Rate adjustments at least every two years!
Common Sense
Don’t go on a spending spree during the last
days of a grant
 Don’t appoint your only lab assistant 100% to
one Award, when you have been awarded
multiple awards
 Don’t appoint your post doc for a very limited
number of hours on a major, multi-year Award
(which happens to be the number he needs to
qualify for a fellowship)
 Don’t order a large shipment of pipettes for
your lab, and charge 100% to a modest Federal
Award

Contact

Roberta McManus
◦ [email protected]
◦ 645-2485
Sponsored Research
18