Post AwardMUHAS, Dartmouth, UCSF

Terms & Conditions; Policies & procedures for effort reporting, cost

transfersTuesday October 21, 2014

AgendaO Policies and proceduresO Cost accounting standardsO Effort reportingO Cost transfers

Policies – what does MUHAS have?

Polices for MUHAS are posted here: http://www.muhas.ac.tz/index.php/policy-documents OMUHAS Audit Committee Charter 2013OMUHAS Internal Audit Charter 2013OMUHAS Financial Regulations 2012OResource Mobilization and Cost

Containment – Operational Policy and Procedures Draft 2014

Policies: What other policies should MUHAS consider developing?

O Conflict of Interest O Allowable effort on federally funded

sponsored projectsO Cost accounting standards (CAS) guidelines:

Charging practices for sponsored projectsO Deficit monitoring and resolutionO Effort reporting of federally sponsored

projectsO Cost transfersO Cost sharing

Conflict of InterestO Researchers must submit financial disclosure

forms at the time of proposal submission for research funding, when research gift funding is received, and when an application for protocol is submitted for a clinical study. “Funding” includes money and/or materials.; “Conflicts” include intellectual property (“IP”), income, investments, service on a Scientific Advisory Board (or its equivalent), member of Board of Directors, employee of a company or entity, ownership of a company, and so forth. Conflicts must be reviewed and approved before funding can be accepted and the research can begin.

Conflict of Interest

Federal Demonstration Partnership websitehttp://sites.nationalacademies.org/PGA/fdp/PGA_061001 O CONFLICT OF INTEREST MODEL

POLICYO Financial Interests Report

Allowable effort on federally funded sponsored projectO Some sponsor agencies, such as

agencies of the U.S. federal government (e.g. NIH), prohibit faculty from devoting 100% of their effort to sponsored activities when their academic appointment requires them to be engaged in non-sponsored activities.

Cost accounting standards (CAS) guidelines: Charging practices for

sponsored projectsO Federal regulations mandate that universities establish

consistent practices for defining and charging costs either directly or indirectly

O Cost Principles for Educational Institutions, sets forth the principles for determining the costs – direct vs. Facilities & Administrative (F&A), allowable vs. unallowable, etc. – applicable to federally sponsored projects and acceptable allocation methodologies.

O The allowability of a particular charge to a particular Award-Project-Fund always depends on specific facts, circumstances, terms, conditions, restrictions, and policies in effect at the time of the charge. 

Cost accounting standards (CAS) guidelines: Charging practices for

sponsored projectsO In order for an expense to be considered allowable as a direct cost, the cost must

be:

Allowable – The cost must be allowable under the terms and conditions of the sponsored award, under applicable sponsor regulations (OMB Circular A-21, C2), and under University policies.

Reasonable– The cost may be considered reasonable if the nature of the goods or services acquired, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. (OMB Circular A-21, C3)

Allocable – The cost must benefit the project and be directly attributable to the project or activity being performed.  The cost can only be assigned and allocated to the project(s) based on that portion of the expense that represents the direct benefit to the project. (OMB Circular A-21, C4)

Consistently treated – Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs.   (OMB Circular A-21, C10) and (OMB Circular A-21, C1

Deficit monitoring and resolution

O Campus administrative officials, including vice chancellors, deans, department chairs and principal investigators, have a fiscal responsibility to monitor financial results of departments or programs under their control, ensuring that sufficient revenue, allocations, or reserves are available to support their activities.  All monies must be spent in accordance with University policy and sponsors' terms and conditions.

O Deficits generated on sponsored projects generally result from a timing issue, when billing/revenue recognition lags behind recording expenditures.  Billing and revenue recognition is dictated by the terms and conditions detailed in the award document and resulting deficits are permitted during the life of the award.

Deficit monitoring and resolution

O Expenditures incurred must be allowed in accordance with University policy, project terms and conditions and, when applicable, as defined by Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions.

O Project principal investigators must incur expenditures within the performance period as outlined in the award documents. Exceptions may be authorized only by the appropriate division of the Office of Sponsored Research or by the appropriate official of the funding agency.

O Project general ledgers must be reviewed regularly to ensure budgetary control and appropriate recording of expenditures. For federally funded projects, ledgers must be reviewed monthly.

O Project principal investigators must ensure that the expenditures inccured are within the total authorized budget. In the event of a cost overrun, the principal investigator is responsible for the transfer of such overrun out of the project.

Effort reporting of federally sponsored projects – some definitions

O Effort is the portion of time spent on a Federal research activity and expressed as a percentage of the total professional activity for which an individual is employed by the University of California. Total professional activity includes research, teaching, patient care, administrative and other University appointed activities

O Effort Reporting is a process required by Title 2 Code of Federal Regulations (2 CFR), part 220 to verify that salary and wages charged to federally sponsored projects are reasonable estimates in relation to the actual work performed. An effort report is an “after the fact” certification of all professional activities for which the employee was compensated by the institution.

O Effort certification is to verify that effort supported (paid) by a federal project has been performed as agreed, and that effort expended in support of a federal project but not paid by the project has been performed as agreed (committed cost sharing).

Effort reporting of federally sponsored projects

O All personnel paid from, or with effort committed to, a federal-sponsored project sponsored (including federal flow-through subcontracts that the campus receives as a second-tier contractor of the federal agency) are required to review, correct, complete and certify effort reports on a regular basis. Exceptions are pre and postdoctoral individuals supported 100% by a fellowship (stipends) with no additional employment compensation and College Work Study employees.

O An effort certification is required semiannually (six-month period ending June 30 and December 31) for academic and non-academic employees.

O Academic employees must certify their effort report either by themselves or by another responsible academic official who has first-hand knowledge of the work performed.

Effort reporting of federally sponsored projects

O Non-academic staff, postdoctoral scholars and students, however, cannot certify effort reports. Their effort must be certified by a responsible official who has firsthand knowledge of the effort using a suitable means of verification that the work was performed.

O Any committed cost shared effort must be considered in the effort report. Committed cost sharing also must be documented based on the commitment made in the proposal and/or the award in accordance with the sponsor's terms and conditions.

O Timely certification of effort reports is a condition of acceptance of federal funding when direct salary charges are contemplated and incurred or cost shared salary is proposed on an award. The effort report should be certified within 120 days of the end of the reporting period.

Cost transfersO Expenses should be charged directly to the fund

to which they pertain. Occasionally cost transfers may be necessary to ensure that charges are made to the appropriate funding source. Federal guidelines state that frequent, tardy, and unexplained (or inadequately explained) cost transfers should be avoided, particularly in cases involving funds with significant budget overruns or unexpended fund balances. Such adjustments could raise serious questions regarding both the propriety of the adjustments themselves and the overall reliability of the accounting system and internal controls.

Conditions Under Which Cost Transfers Are Appropriate

Once an expense entry has been reported, it is appropriate to make cost transfers only in the following situations:O to correct an erroneous recording, such as instances in

which the original source document(s) (e.g., invoice, purchase order) cited an incorrect fund, FY or account;

O to record a change in original decisions regarding the use of goods or services (e.g., a case of beakers originally ordered for and charged to a teaching program should be subsequently transferred to the research project that actually used them). In requesting a cost transfer, a cost transfer preparer should exercise caution and bear in mind that the original recording was duly certified as proper and legitimate against the fund, FY, and account cited; this original certification is now being invalidated and a new certification is being made that the second designated set of fund, FY, and account is the correct one to charge;

O to clear an overdraft of a sponsored fund to a discretionary fund.

Cost transfer criteriaWhere possible, the cost transfer must relate to individual items of expenditures (e.g., a cylinder of oxygen or fraction thereof) incurred by the department requesting the adjustment and must be:O in the same amount originally recorded in the general ledger or;

the appropriate fraction of the charge based on usage or benefit to the fund the cost is being transferred to.

O The cost transfer must be fully explained, justified, and approved by the appropriate authorized officials to ensure adequate review and legitimacy of the transfer. For government funds, the explanation should indicate how the error occurred and why the expense is being transferred to the fund now being charged.

O The cost transfer must be in compliance with applicable campus and UC policies and terms of funding source agreements.

O For any transfer involving federal funds, the transfer must be recorded in the general ledger within 120 days of the original charge appearing in the ledger. If, due to unavoidable circumstances, an adjustment has to be made beyond the 120-day period, the preparer must provide a full explanation including a well-documented statement of events leading to the late adjustment.

Cost sharingO Cost sharing is a commitment of University resources or

funding that supplements externally sponsored projects. Mandatory cost sharing is that which is required by the sponsor and also quantified and committed in the proposal. Voluntary committed cost sharing is not formally required by the sponsor but is committed in the proposal and becomes mandatory once the award is made, requiring administrative tracking and reporting. These costs are not reimbursed by the sponsor or charged to the sponsored project and therefore must be supported by University funds.

O Committed cost sharing is a contribution of effort or other costs, which are quantified in the proposal narrative, budget, budget justification, or in the award document. Committed cost sharing may be either mandatory or voluntary.

Cost sharingO Cost sharing commitments on sponsored project proposals

or awards should be limited to situations where it is in the best interest of the University. The interest of the University should be considered in terms of the value of the endeavor to the overall mission of the university and the extension of its scientific knowledge base. Mandatory cost sharing policy of the sponsor or the University's determination that such commitments are necessary to ensure the success of specific competitive proposals may be considered, but should not be the sole or over-riding determiner in concluding that the commitment is in the best interest of the university. Principal Investigators and departments should refrain from making commitments to cost share whenever possible.