All About Costs A Post-Award Primer

1. All About Costs A Post-Award Primer Division of Grants Compliance and Oversight Office of Policy for Extramural Research Administration, OERNational Institutes of Health, DHHS NIH Regional Seminar – Baltimore, MD – May 2019 Diane Dean, Director Mary Catherine Robinson, Assistant Grants Compliance Officer Joel Snyderman, Assistant Grants Compliance Officer

2. Discussion Topics • Cost Principles • Administrative Standards • Audit Requirements • Grant Award Basics • Award Restrictions • Responsibilities • Accounting Basics • Monitoring Basics • Subrecipient Monitoring • Other Cost Considerations • NIH Financial Reporting Basics • Closeout

3. Federal Requirements

4. HHS Regulations • 45 CFR Part 75 – Public Welfare, Uniform Administrative Requirements, Cost Principles and Audit Requirements for HHS Awards • Effective for all HHS awards made on or after December 26, 2014 • http://www.ecfr.gov/cgi-bin/text-idx?node=pt45.1.75&rgn=div5

5. Compliance Requirements Cost Principles: • 45 CFR Part 75, Subpart E (§ 75.400- § 75.477) • Institutions of Higher Education (IHE), State, Local Governments and Indian Tribes, and Non-profit Organizations • 45 CFR Part 75, Appendix IX • Hospitals • 48 CFR Subpart 31.2 (Federal Acquisition Regulation): • For-Profit Institutions

6. Cost Principles • Establishes principles for determining costs applicable to grants, contracts, and other agreements • Direct costs • F&A/indirect costs • Selected items of cost • Allowable/unallowable costs • Compensation for personal services

7. Administrative Requirements • 45 CFR Part 75, Subpart C – Preaward Federal Award Requirements and Contents of Federal Awards (§ 75.200- § 75.218) • 45 CFR Part 75, Subpart D – Post Federal Award Requirements (§ 75.300- § 75.391)

8. Administrative Requirements Prescribes: • Preaward requirements • Postaward requirements Also includes requirements for: • Payment • Matching or Cost sharing • Accounting for program income • Revision of budget and program plans • Non-Federal audits • Allowable costs • Financial management systems standards • Property standards • Procurement standards • Reports and records

9. Audit Requirements • 45 CFR 75.501:Institutions of Higher Education, States and Local Governments, and Non-Profit Organizations, including Non-Profit Hospitals • 45 CFR 75.501(h) through (k):For-Profits Organizations, including For-Profit Hospitals • NIH Grants Policy Statement:Foreign Organizations must follow the same requirements as For-Profit Organizations

10. All NIH grant recipients that expend $750,000 or more within a year in Federal awards are subject to an audit requirement. For-Profit and Foreign Organization audit requirement: Expend $750,000 under one or more HHS award (as a direct recipient and/or consortium participant) Audits are due within the earlier of 30 days after receipt of the auditor’s report(s) or 9 months after the end of the recipient’s audit period. Recipients delinquent in submitting audits risk the imposition of sanctions and potential loss of Federal funds. Audit Requirements

11. Summary of Audit Requirements

13. Grant Award Basics **************** NOTICE OF AWARD*******************CENTER GRANT Issue Date:05/01/2018 Department of Health and Human ServicesNational Institutes Of Health

14. Read the Notice of Award • Terms of Award – Section III • 45 CFR Part 75 – HHS rules and requirements that govern the administration of grants • NIH Grants Policy Statement (GPS) – policy requirements that serve as the terms and conditions of NIH awards • Special Terms and Conditions – Section IV

15. Award Restrictions (Section IV) • Only applied to a particular grant • Shown on the Notice of Award (NoA) after Section III – Institute and/or Center specific terms of award • Funds usually are not restricted in the Payment Management System • Restricted funds must be tracked by recipient to ensure compliance • EXAMPLE of Award Restriction: Funds may not be used to purchase equipment without the written prior approval of the NIH awarding component.

16. Who is Responsible for Post-Award Financial Management? • A. The Principal Investigator • B. The Departmental Administrator • C. The Department Chair • D. The Institution

17. Accounting Basics

18. Accounting • Administrative Standards in 45 CFR 75 requires: • Separate account is established for each project • Program Income is identified and accounted for by project • Program Income is used in accordance with the appropriate alternative, i.e., • Additive • Deductive • Combination • Matching

19. Accounting (cont.) • Requires that: • Expenses are charged in accordance with: • NoA Terms and Conditions • NIH Grants Policy Statement • Including addenda in effect as of the beginning date of the budget period • Salary Cap / Rate Limitation • Cost Accounting Standards • Federal regulations • All expenses are appropriately documented

20. Monitoring Basics

21. Monitoring • Institutions should ensure: • Actual expenses are periodically compared with budget • Actual expenses are accurate, i.e., reasonable, allocable, allowable and consistently charged • Mischarges are corrected in a timely manner (cost transfers) • Prior approvals are obtained when required • Subrecipient expenses are monitored – (Recipient’s responsibility to monitor expenses)

22. Budget vs. Actual • Actual expenses should be compared to the budget to ensure: • Total funds on the grant have not been exceeded • Total funds are used appropriately • Total funds for any cost category have not been exceeded if restricted on the NoA

23. Accurate Charges • Actual expenses should be reviewed to ensure they are accurate and allowable • Reasonable (including necessary) • Allocable • Consistently applied • Conforms to any limitations or exclusions

24. What does “reasonable” mean? • A cost may be considered reasonable if the nature of the goods or services acquired or applied 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.

25. What does “allocable” mean? • A cost is allocable to a specific grant if it is incurred solely in order to advance work under the grant and is deemed assignable, at least in part, to the grant.

26. What does “consistently applied” mean? • Recipients must be consistent in assigning costs to cost objectives. • Costs may be charged as either direct costs or F&A costs, depending on their identifiable benefit to a particular project or program. • All costs must be treated consistently for all work of the organization under like circumstances, regardless of the source of funding.

27. What does “conformance” mean? • A cost is allowable if it is reasonable, allocable and conforms to the cost principles and the sponsored agreement AND is not prohibited by law, regulation or term of award. • Conformance varies by type of activity, type of recipient, and other characteristics of individual awards.

28. Cost Transfers • Used to correct clerical or booking errors: • Erroneous charges • Unreasonable charges • Unallocable charges • Inconsistently applied charges • Unallowable charges • Must be well documented • Must be made within 90 days from the time error was discovered

29. Other Cost Considerations

30. Selected Items Requiring Prior Approval • NIH Grants Policy Statement defines actions requiring NIH prior approval. • Examples of prior approval actions include the following: • Carryover of funds (if required-see Section III of NoA) • Pre-award costs incurred more than 90 days • Deviation from award terms and conditions • Activities disapproved or restricted as a condition of award • For a complete listing of NIH prior approval requirements see: • NIH GPS 8.1.2 Prior Approval Requirements

31. Carryover of Funds • Submit request to GMO or though eRA Commons Prior Approval Module • Request must include: • Detailed budget by direct cost category with F&A cost information (base and rate). If personnel costs are requested, include: • a detailed breakdown of personnel costs • base salary • salary requested • effort to be spent on the project • A scientific justification for the use of funds • The reason for the unobligated balance

32. NIH Financial Reporting Basics

33. Financial Reporting Federal Financial Report (FFR)(SF-425) Expenditure Data • Timely - Must adhere to submission deadlines: • Annual – (Non-SNAP Awards) • FFR submitted for each budget period no later than 90 days after the end of the calendar quarter (CQ) in which the budget period ended. • Budget period ends 1/31/2018 – FFR due 6/30/18 (90 days after the end of the CQ of 3/31/18) • Final (End of Competitive Segment) – (SNAP and Non-SNAP Awards) • FFR submitted within 120 days following the end of the project period (SNAP – Streamlined Non-competing Award Process)

34. Financial Reporting • FFRs should be submitted timely and accurately • Reported expenses and program income must agree with institutional accounting records • Routine Revisions to correct FFRs are not appropriate

35. Financial Reporting Financial Reporting information: • FFR (SF425) Instructions for NIH Recipients available at http://grants.nih.gov/grants/forms.htm • NIH Guide Notices: • NOT-OD-15-136 • NOT-OD-15-135 • NOT-OD-15-111

36. Final Closeout Reporting • Recipients must submit the following documents, when required, within 120 calendar days of the end of the period of performance: • Final Federal Financial Report (FFR) SF-425 Expenditure Data (submitted through eRA Commons) • Final Research Performance Progress Report (F-RPPR) • Final Inventions Statement & Certification • Timely and accurate closeout reporting is a recipient responsibility

37. Final Research Performance Progress Reports (F-RPPR) The Final Research Performance Progress Report (F-RPPR) has replaced the Final Progress Report (FPR) for closeout • Effective January 1, 2017 for all grants except SBIR/STTR grants • Effective June 30, 2017 for SBIR/STTR Phase I/II final reports. • The general format is the same as the interim/annual RPPR • Recipients are required to report on Project Outcomes. • Due dates have not changed. See NOT-OD-17-022 and NOT-OD-17-085 for additional information

38. Interim-Research Performance Progress Reports (I-RPPR) NIH requires that organizations submit an “Interim-RPPR” while their renewal application (Type 2/Phase II/IIB) is under consideration. • In the event that the Type 2/Phase II/IIB is funded, NIH will treat the Interim-RPPR as the annual performance report for the final year of the previous competitive segment. • If the Type 2/Phase II/IIB is not funded, NIH will treat the Interim-RPPR as the institution’s Final-RPPR. As with the Final-RPPR, recipients are required to report on Project outcomes in the Interim-RPPR. To reduce burden NIH will not require recipients to submit an additional Final-RPPR if the renewal application is not funded See NOT-OD-17-037 and NOT-17-085 for additional information

39. Closeout Requirements • NIH must initiate unilateral closeout as an action of last resort if a recipient does not: • provide timely, accurate closeout reports; or • respond to NIH requests within 270 days after the end date of the period of performance to reconcile discrepancies in grant records • See NOT-OD-18-107 for additional information

40. Unilateral Closeout Reminder • Failure to submit an acceptable final FFR in a timely manner may result in disallowed costs or federal debt • If a recipient fails to submit a final FFR expenditure data report: • NIH must use the last recorded quarterly cash disbursement level • If the final FFR expenditure data does not match the amount reported on last FFR cash disbursement report to PMS: • NIH must use the lower amount • Recipients must ensure there are no discrepancies between final FFR expenditure data (in eRA Commons) and the FFR cash transaction data (in Payment Management System [PMS]) • The FFR module in eRA Commons will display a text reminder before submitting the Final FFR • Unilateral Closeout emphasizes the need for TIMELY and ACCURATE reporting

41. NIH Centralized closeout office still accepts receipt of the HHS 568 Final Invention Statement and Certification via emailed PDF attachment, fax, or mail: NIH Centralized Processing Center 6705 Rockledge Drive, Suite 5016, MSC 7986 Bethesda, MD 20892-7986 (for regular or US Postal Service Express mail) Bethesda, MD 20817 (for other courier/express mail only) NIHCloseoutCenter@mail.nih.gov Fax: 301-480-2304 Closeout: NIH Centralized Processing Center Recipients are required to submit the Final/Interim RPPR and the Final FFR electronically through the Closeout feature in the eRA Commons. Recipients are strongly encouraged to submit the HHS 568 Final Invention Statement & Certification electronically through the Closeout Feature in the eRA Commons.

42. Reminder:Submit Timely Reports Progress Reports, financial and final reports should be submitted on time to avoid consequences. • Failure to submit timely reports may adversely affect future NIH funding to: • The Recipient Institution • The Principal Investigator • NIH may take action(s) when these reporting requirements are not met, including:  • Enforcement action • Special award conditions • Corrective actions See NOT-OD-17-074 for additional information

43. A Rule of Thumb Whenever you have a question regarding compliance with Federal requirements, consult in advance: • The Notice of Award (terms and conditions) • Your Office for Sponsored Research/Projects • NIH awarding component Grants Management Officer/Specialist

44. Questions? Diane Dean Director, Division of Grants Compliance and Oversight diane.dean@nih.gov 301-435-0949 Mary Catherine Robinson Assistant Grants Compliance Officer marycatherine.robinson@nih.gov 301-435-1962 Joel Snyderman Assistant Grants Compliance Officer joel.snyderman@mail.nih.gov 301-594-0524 GrantsCompliance@nih.gov