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University of Georgia - Athens. Cost Accounting Disclosure Statement “What is the Issue”. Agenda. Brief background – why are we doing this? What are we going to do? Who is going to be involved? How will the process move forward? Overview of A-21, Cost Accounting Standards and DS-2

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university of georgia athens
University of Georgia - Athens

Cost Accounting Disclosure Statement

“What is the Issue”

Jim Vitale & Associates, Inc

agenda
Agenda
  • Brief background – why are we doing this?
  • What are we going to do?
  • Who is going to be involved?
  • How will the process move forward?
  • Overview of A-21, Cost Accounting Standards and DS-2
  • Conclusion

Jim Vitale & Associates, Inc

why federal history
Why - Federal History
  • ONR negotiates first set of cost principles with Universities in 1947
  • Original Circular A-21 issued in 1958
  • Many revisions between 1958 and 1994 attempted to impose tougher requirements for accounting for research effort and established standard indirect cost allocation standards. Base changed from S&W to MTDC. Fixed rates.
  • 1994- CASB consistency standards/disclosure statement.
    • Requirement for DS-2 submission
    • Requirement for review and approval by Federal agency
    • Document must reflect current activities

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federal history cont d
Federal History – cont’d
  • 1996 - 2003 Additional changes –
    • F&A cost pools
    • Animal care space
    • Cost sharing
    • Tuition remission
  • 2004 – Codification of A-21
    • DCA selects DCAA to complete OIG’s role
      • Audit scope to be defined
      • Project teams to be defined
      • DCAA staffed differently than OIG

Jim Vitale & Associates, Inc

uga history
UGA History
  • 1995-96 – University prepares and submits DS-2 to Federal agency
  • 1996-2001 – University awaits OIG review of DS-2
    • National review process moves slowly and inconsistently
    • UGA creates training program for A-21
  • Post Sept. 11, 2001 – OIG activities redirected
  • 2001 – UGA management concerned about 6 year old DS-2
    • University hires outside consultant to review DS-2
    • Areas of weakness identified:
      • Direct cost
      • Inconsistent departmental costing
      • Time and Effort
      • Service centers
      • Cost Transfers

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uga history cont d
UGA History – cont’d
  • 2003 – University reviews consultant recommendations and action plan
  • 2004 – UGA implements process to update DS-2 and supporting policies and procedures
    • Retains consultant to provide project training and support
    • Creates core committee to provide project sponsorship, final document review and approval
    • Reaches agreement with DCA that FY1996 DS-2 will be replaced with updated version by December 31, 2004
    • Creates committees to address consultant review issues

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who is going to do this
Who is going to do this?
  • Core team selected based on experience, skills and knowledge
  • Core team provides potential candidates for project committees
  • Cross-campus committees should include where possible faculty participation

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who is going to do this cont d
Who is going to do this? Cont’d
  • Cross-campus teams supported by personnel from Contracts and Grants Sponsored Projects and Accounting
  • Teams will have ongoing access to University’s DS-2 consultant
  • Campus members selected based on experience, skills and knowledge

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uga committees
Core (Res Comm Group)

Alan Darvil

Joe Crim

Steve Beech

Clif Pannell

Jerry Cherry

Jim Sweeney

Regina Smith

Chad Cleveland

Tracy Walters

Dale Wetzelberger

Effort Reporting/Cost Sharing

Mike Padilla

Kathy Shelnut

Tonia Gantt

Paula Tolbert

Mike Mispagel

Vicki Smith

Diana Shelnutt

UGA Committees

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uga committees cont d
Service Centers

Chris King

Jerry Nesmith

Tammy Andros

Bill Stauff

Karen Barger

TBA

Direct Cost

Ted Gragson

Chiki George

Anuj Sinha

Peggy Peters

Kathy Vinson

Debra Rucker

UGA Committees cont’d

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major issues
Time and Effort/Cost Sharing

Timeliness

Accuracy

Appropriate signatures

Transfers

Committed cost sharing vs. uncommitted

Service Centers

User base

Rate discrimination

Costing vs. pricing

Business plan

Rate review and approval

UBIT

Major Issues

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major issues cont d
Major Issues – cont’d

Direct Costing

  • Clerical salaries
  • General purpose equipment
  • Office supplies (inc computers & supplies
  • P-cards
  • JV – 90 days/explanations
  • Account close out
  • Exceptions – major projects

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what are we going to do cont d
What are we going to do? Cont’d
  • Modify documents based on campus input
  • Prepare final draft for core committee review
  • Modify policies and procedures based on core committee feedback
  • Outline training goals for implementation of new policies and procedures

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what are we going to do cont d1
What are we going to do? Cont’d
  • Prepare new DS-2 document reflecting current practices
  • Submit DS-2 to DCA by December 31, 2004
  • Prepare campus training programs for rollout of new policies and procedures
  • Plan for Federal audit of new DS-2
  • Maintain departmental compliance with UGA policies and procedures

Jim Vitale & Associates, Inc

how will the process move forward
How will the process move forward?
  • Select project team members
  • Assign committee specific areas of policies and procedures to review
  • Provide DS-2 and A-21 training to core and project committees
  • Project committees will set timing for initial meeting

Jim Vitale & Associates, Inc

how will the process move forward cont d
How will the process move forward? Cont’d
  • Initial team meeting
    • Select team leadership
    • Identify resources
    • Review team objectives
    • Discuss DS-2 review report with UGA consultant
    • Provide team members copies of policies and procedures
    • Establish timeline for 12/04 submission
    • Assign member responsibilities

Jim Vitale & Associates, Inc

how will the process move forward cont d1
How will the process move forward? Cont’d
  • Team members review policies and procedures
  • Compare current practices to existing policies and procedures
  • Draft new policies and procedures to comply with Federal and State regulations
  • University consultant will review policy drafts
  • Make changes to draft based on consultant input

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how will the process move forward cont d2
How will the process move forward? Cont’d
  • Submit revised draft to core committee for review and comment
  • Prepare final post-core committee draft for approval and adoption
  • Outline plan for implementation and training of campus on new policies and procedures
  • Design ongoing monitoring system to ensure compliance with new policies and procedures

Jim Vitale & Associates, Inc

how will the process move forward cont d3
How will the process move forward? Cont’d
  • Assemble new policies and procedures
  • Prepare draft DS-2 statement for review by Core Committee
  • Finalize DS-2 language
  • Prepare final DS-2 document package
  • Submit DS-2 to cognizant Federal agency
  • Wait for audit and approval

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a 21 and ds 2 overview
A-21 and DS-2 Overview
  • This segment is designed to give project committee members a broad look at what drives this process of updating University financial policies and procedures
  • The Cost Accounting Standards and the DS-2 requirement are contained in A-21

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objectives of omb circular a 21
Objectives of OMB Circular A-21
  • Establish standards for cost allocation
  • Establish standards for cost allowability
  • Identify Federal fair share of total costs
  • Require consistent treatment of costs
  • Clarifications
  • Does not supersede limitations imposed by law
  • Does not dictate how funds received should be spent
  • Does not dictate organizational form or management
  • Does not provide for recovering losses resulting from indirect cost reimbursement

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general standards for cost allowability
General Standards for Cost Allowability
  • Reasonable costs
  • Prudent person test
  • Necessary for the operation of institution or project
  • Consistent with established policies and procedures
  • Allocable costs
  • Benefits sponsored project whole or in part (equipment).
  • Direct cost determined without undue effort or on any reasonable basis.
  • Consistent treatment - direct only or indirect only
  • Conform to limitations or exclusions under A-21 or NGA

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a 21 terms
A-21 Terms
  • F&A – facilities and administrative (replaced indirect cost)
  • Facilities component – calculated share of buildings, movable equipment, land improvements, interest, operation and maintenance and library.
  • Administrative component – share of system, central, research, student and departmental administrative costs
  • MTDC – modified total direct cost base is the adjusted direct dollars that the facil. And admin. costs are applied to calculate a rate.

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f a rate
F&A Rate
  • Facilities and Administrative Cost Rate Formula

(Facilities and Administrative* components)

(Sponsored Research MTDC)

Equals

The Calculated F&A (indirect cost) Rate

* Administrative caps – 3.6% on faculty administrative salaries (1986) and 26% maximum admin. Component (1993)

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cost accounting standards
Cost Accounting Standards
  • Nothing New!
  • OMB Circular A-21 requires:
    • Consistency
    • Allowability
    • Certification

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cost accounting standards1
Cost Accounting Standards

Standards

501 Consistency in estimating, accumulating and reporting costs

Are proposal costs consistent with actual cost accumulations?

502 Consistency in allocating costs incurred for the same purpose

How is the expense related to the project?

505 Accounting for unallowable costs

Will the sponsor pay for the expense?

506 Cost accounting period

Is the full fiscal year used in estimating and accounting for costs?

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what is a disclosure statement
What is a Disclosure Statement?
  • Documents cost accounting practices
  • Required to be submitted to cognizant agency and cognizant audit agency.
  • Supported by Policies and procedures, instructions, and guidelines for individual investigators, department heads, and administrators need to be made available because it is their responsibility to understand and know them.

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what is a disclosure statement cont d
What is a Disclosure Statement? Cont’d
  • A living document that is a timely reflection of University operations.
  • Identifies formal guidelines for “charging costs to sponsored awards”
    • Direct and Indirect costs
    • Cost-sharing policies
    • Time and effort reporting policies and procedures
    • Policies for “Service Centers”

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slide29

Central systems and Group Expenses

Direct Costs

Disclosure Statement is a Fiscal Roadmap

A comprehensive description of an organization’s cost accounting practices

General Information

CASB

Deferred Compensation/ Insurance Costs

Indirect Costs

Depreciation and Use Allowances

Leave Costs and Applicable Credits

dhhs ds 2 bulletin
DHHS DS-2 Bulletin!
  • DHHS has recently streamlined the Disclosure Statement (CASB Form DS‑2) approval process.
  • DHHS has contracted with DCAA.
  • DCAA will soon begin working through the backlog and is contacting the colleges to perform audits of the DS‑2s.
  • UGA is part of the backlog and an audit letter was received.
  • UGA DS-2 on hold effective June 8, 2004 submission January 2005.

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major audit issues
Major Audit Issues
  • Documentation of time and effort
  • Cost transfers – 90 days
  • Cost sharing
  • NIH Cap = cost sharing
  • Consistent treatment of clerical and admin. Salaries
  • Service/Recharge Centers

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cost sharing
Cost Sharing
  • January 5, 2001 interpretation-
    • Mandatory and voluntary committed cost sharing is specifically pledged in the proposal’s budget or award. Does not include general expressions of support in proposal narrative or current and pending support pages. Does include “% of effort” in NIH modular grant applications. Some level of faculty effort is expected and will be imputed, if absent.
    • Voluntary uncommitted cost sharing is faculty effort that is over and above that which is committed and budgeted for in a sponsored agreement.

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clerical and administrative salaries
Clerical and Administrative Salaries
  • Examples of Clerical and Administrative functions

Typing and mailing correspondence

Accounting and budgeting

Purchasing and tracking purchasing orders

Non-scientific software and system development

Processing vouchers

Routine travel related planning

Routine data entry and database maintenance

Typing newsletters and brochures

Typing applications for awards

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work project meetings
Work/Project Meetings
  • Kick-off Week 8/16
    • Time and Effort/Cost Sharing

Tues. 8/17 3pm

    • Service Center Wed. 8/18 3pm
    • Direct Costing Thurs. 8/19 3pm

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work project meetings1
Work/Project Meetings
  • Initial meeting
    • Web-page
      • DS-2
      • A-21
      • PowerPoint Presentations
      • Meeting minutes
    • Work group specific issues
    • Example policies

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conclusion
Conclusion
  • A-21 sets the standards for consistency and allowability
  • Cost Accounting Standards require the University to certify their processes and be audited to those standards
  • Policies and Procedures are the heart of the process
  • Policies and Procedures need to reflect University operations and regulatory compliance
  • This is an important project that needs to be completed on time
  • Questions?

Jim Vitale & Associates, Inc

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