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Fiscal Compliance Requirements

for Sponsored Programs

University of Missouri – St. Louis

College of Education

March 6, 2009

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Learning Objectives

• To understand:– Compliance requirements related to

allowability of costs– Responsibility of Fiscal Officer and Principal

Investigator– Frequent issues and impact of non-

compliance

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Compliance Requirements

Who sets the requirements? • Office of Management and Budget (OMB) –

Oversight agency for the federal government– OMB Circulars – The federal rules for how awards are

to be administered.

• Sponsors – Individual sponsors may have additional requirements

• APM and BPM – policies established jointly by Campuses and UM System

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Compliance Requirements

What compliance requirements determine allowability on a sponsored program?– OMB Circular A-21 - Cost Principles for

Educational Institutions• Allowable Direct Costs +• Allocable Facilities & Administration

– Specific Sponsor Administrative Guides

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A-21 Definitions

• Direct costs must be: – Identified specifically for a particular

sponsored award– Directly assigned with relative ease and a

high degree of accuracy– Consistently treated in like circumstances– Supported by documentation

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A-21 Definitions

• F&A is: – Incurred for a common or joint objective (e.g. utilities)– Cannot be easily identified with a particular award

• Facilities: depreciation, interest on related debt, operational, maintenance, and library costs.

• Administration: departmental, sponsored projects, student services, and other general administrative costs.

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Importance of F&A

• How are support staff paid?• What is the source of funding for the

building where my lab is located?• How are the utilities paid?• How is research infrastructure paid for?• Who prepares my financial reports?

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A-21Requirements

• Reasonable:– Act with due prudence– Consistent with University policies and

procedures– Necessary for performance of the sponsored

award– Arms length and legal transactions

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A-21 Requirements

• Allocable: – Incurred solely to advance the work under the

agreement– Benefits the sponsored program in

proportions that can be reasonably approximated

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A-21 Requirements

• Consistent treatment: – Practices consistent with reporting other costs

for:• same purposes, or • like circumstances

• Conform to limitations or exclusions: – Sponsor may be more restrictive than A-21– Specified in the award

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Allowable Direct Charge?

Allowable? No

Probably Not

Maybe

YES!!

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A-21 Compliance

• Certain costs are expressly unallowable: – Alcoholic beverages– Alumni activities– Bad debts– Donations and Contributions rendered– Entertainment– Furnished automobile– Goods or services for personal use– Housing and personal living– Losses on other sponsored agreements

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A-21 Compliance

• Certain costs are unallowable with exceptions:– Contingency provisions– Fines and penalties– Fundraising and investment costs– Lobbying– Pre-agreement costs– Selling and marketing costs– Student activity costs

• Must be specified in the agreement to be allowable!

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A-21 Compliance

• Allowable - Direct charging of F&A costs: – Unlike circumstance must exist– Documentation to support– Include in the budget and agreement– Sponsor approval

• Approval by sponsor without the above does NOT ensure allowability!

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A-21 Compliance

• Allowable costs – frequent issues: – Communications (phone, etc)– Federal Express and postage– Administrative Salaries– Equipment - capital and computer– Memberships and/or subscription fees– Materials – office, lab, program– Meetings– Travel

• Documentation and sponsor approval required

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Documentation Requirement

• What is considered adequate documentation?– Sufficient Documentation should state:

• the charge is allowable, and• the charge directly benefits the related award.

– Substantial Documentation (for cost transfers > 60 days old) should address:• Who, What, When, Where, and Why?• What will be done to ensure this does not reoccur?

– Retain for 3 years or longer per sponsor

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Points to Remember

• Allowability considerations throughout: – Proposal and budget– Monthly Managerial review– Cost Transfers– Cost Sharing – Subaward payments – PI Certification at end of award

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PI Responsibility

• Be knowledgeable of compliance requirements and restrictions

• Shares administrative management responsibility with the Fiscal Officer

• Ensuring all charges are:– Allowable– Authorized– Documented

• The PI has ultimate responsibility for an award

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Fiscal Officer Responsibility

• Shares administrative management responsibility with the PI

• The Fiscal Officer should be aware of: • Compliance requirements• Unique restrictions by sponsor• Budget

• Alert PI of potential or known compliance issues

• Contact ORA for assistance

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Fiscal Officer Responsibility

• Ensure transactions are properly recorded• Specific responsibilities include:

- Processing expenditures - Providing monthly budget variance reports- Preparing timely cost transfers- Closing of award and deliverables- Ensure documentation exists for all charges

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Frequent Issues

• Unallowable costs directly charged to award

• Lack of supporting documentation• Purchases late in the award period• Costs outside period of availability• Unlike circumstances not set out in

sponsor agreement

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Impact of Non-Compliance

• Questioned or unallowable costs• Repayments to the sponsor• Fines and/or sanctions• Subject to additional external audits• Jeopardize future funding opportunities• Damage to reputation

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Checklist for Success

Ensure costs are: Authorized in the budget & agreement Within the period of availability Charged timely to the project Meet the requirements of allowability Appropriately documented

Timely review budget and costs Make timely and allowable cost transfers

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References

Where can I get more information?– Reference Guide for Sponsored Programs – University Controller’s Office Policies –

APM – Section 60 – OMB Circular A-21 – Facilities & Administration Fiscal Misconduct

Reporting Line

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Contact Information

• Tina Hyken• Business and Fiscal Operations Specialist• 314.516.5127• Hykent@umsl.edu

• Karen Boyd• Manager, Business/Fiscal Operations• 314.516.5923• boyd@umsl.edu