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A Brief Overview of The OMB Circulars With Emphasis On Cost Principles The OMB Circulars: A-21, A-110, and A-133 Regulations which establish: Cost Principles Administrative Requirements Audit Requirements

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a brief overview of the omb circulars
A Brief Overview of The OMB Circulars

With Emphasis On

Cost Principles

James F. Ball, The Ohio State University Research Foundation, April 2001

the omb circulars a 21 a 110 and a 133
The OMB Circulars: A-21, A-110, and A-133
  • Regulations which establish:
    • Cost Principles
    • Administrative Requirements
    • Audit Requirements
  • On federally funded agreements at educational institutions and other non-profit organizations

James F. Ball, The Ohio State University Research Foundation, April 2001

understanding the circulars
Understanding The Circulars
  • Understanding the circulars allows us to better understand the regulatory context in which federally funded sponsored research is conducted so that we as research administrators can make more informed judgments.

James F. Ball, The Ohio State University Research Foundation, April 2001

understanding fosters compliance
Understanding Fosters Compliance
  • Our understanding of the regulations allows the research to be conducted with a minimum of administrative interference to our principal investigators and still comply with the spirit and intent of the guiding regulations.

James F. Ball, The Ohio State University Research Foundation, April 2001

what are the circulars
What Are The Circulars?
  • Published by the Office of Management & Budget
  • Issued by OMB to Federal agencies as instructions or guidance
  • Guides agencies in writing of implementing regulations (A-110)
  • Expected to have continuing effect of two years or more

James F. Ball, The Ohio State University Research Foundation, April 2001

available on the web
Available On The Web!!!
  • The OMB circulars are located at: /www.whitehouse.gov/OMB/circulars/index.html
  • Approximately 200 pages of regulations
    • A-21 is 65 pages
    • A-110 is 25 pages
    • A-133 is 110 pages
  • Keep handy! Print the circulars from the WWW & keep all three circulars in a ring binder.

James F. Ball, The Ohio State University Research Foundation, April 2001

common elements where should i start
Common Elements: Where Should I Start?
  • Cover memo from OMB stating
    • Purpose
    • Authority
    • Applicability
    • Policy
  • Definitions

James F. Ball, The Ohio State University Research Foundation, April 2001

a 21 cost principles for educational institutions
A-21: Cost Principles for Educational Institutions
  • Establishes principles for determining costs on agreements with educational institutions
  • States that it is designed so that federal government bear its “fair share” of total costs
  • Explicitly states that it does not attempt to identify circumstances or dictate the extent of participation in the financing of a particular project.

James F. Ball, The Ohio State University Research Foundation, April 2001

a 21 cost principles for educational institutions9
A-21 Cost Principles for Educational Institutions
  • Applies to all agencies that sponsor research and development, training, and other work at educational institutions
  • Requires a “mutual understanding” between representatives of educational institutions and of the Federal Government as to their scope, implementation, and interpretation.

James F. Ball, The Ohio State University Research Foundation, April 2001

slide10
A-110: Uniform Administrative Requirements For Grants & Agreements With Institutions of Higher Education
  • Standards for obtaining consistency and uniformity in the administration of grants to institutions of higher education, hospitals, and other non-profit organizations.
  • Applicable to all federal agencies and applied to recipients and subrecipients (if the organizations are institutions of higher education, hospitals, and other non-profit organizations).

James F. Ball, The Ohio State University Research Foundation, April 2001

slide11
A-110 Uniform Administrative Requirements For Grants & Agreements With Institutions of Higher Education
  • The circular states that federal agencies shall not impose additional or inconsistent requirements unless specifically required by statute or executive order.
  • Gives agencies the ability to incorporate all of the FDP expanded authorities into agency terms and conditions delegating authority to the institution

James F. Ball, The Ohio State University Research Foundation, April 2001

a 110 organized in cradle to grave fashion
A-110 Organized In “Cradle To Grave” Fashion
  • Pre-award requirements
  • Post award requirements
  • After the award requirements

James F. Ball, The Ohio State University Research Foundation, April 2001

slide13

A-110 Recent Issues

  • Freedom of Information Act (FOIA)
  • Cost Sharing documentation
  • Time And Effort Reporting
  • Graduate Student Tuition & Fees

James F. Ball, The Ohio State University Research Foundation, April 2001

a 133 state local government non profit organization audits
A-133: State, Local Government, & Non Profit Organization Audits
  • Created by the 1984 Single Audit Act
  • Standards for consistency and uniformity among federal agencies for audits of states, local governments, and non-profits expending Federal awards

James F. Ball, The Ohio State University Research Foundation, April 2001

a 133 where does it apply
A-133 Where Does It Apply?
  • Provisions apply to non-federal entities whether recipients or subrecipients
  • Does not apply to non-US based entities expending federal awards received directly as a recipient or indirectly as a subrecipient

James F. Ball, The Ohio State University Research Foundation, April 2001

a 133 items of importance
A-133 Items Of Importance
  • __.105 Definitions--40 terms
  • __.210 Subrecipient & vendor determinations
  • __.300 Auditee Responsibilities
  • __.320(e) Additional submission by subrecipients

James F. Ball, The Ohio State University Research Foundation, April 2001

a 133 auditee responsibilities
A-133 Auditee Responsibilities
  • Requires Auditee to Identify (as applicable)
    • Federal awards received and expended
    • Federal programs under which they are received
    • CFDA title and number
    • Award number and year
    • Name of Federal agency
    • Name of pass through entity

James F. Ball, The Ohio State University Research Foundation, April 2001

a quick overview of all three
A Quick Overview of All Three
  • Focus on direct cost matters one might see every day
  • Departmental administrators or central office administrators making decisions about allowability of costs
  • Demonstrate importance of understanding cost principles

James F. Ball, The Ohio State University Research Foundation, April 2001

applying the cost principles

Applying The Cost Principles

Fostering the Research Process

James F. Ball, The Ohio State University Research Foundation, April 2001

charges to sponsored projects must be
Charges To Sponsored Projects Must Be:
  • Reasonable
  • Allocable
  • Allowable

James F. Ball, The Ohio State University Research Foundation, April 2001

like costs in like circumstances
Like Costs In Like Circumstances

Direct Cost

F&A Cost

Federal

Non-

Federal

James F. Ball, The Ohio State University Research Foundation, April 2001

like costs in like circumstances22
Like Costs in Like Circumstances

“Special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or F&A costs.”

OMB Circular A-21, Section F.6(b)

James F. Ball, The Ohio State University Research Foundation, April 2001

normally direct costs
Normally Direct Costs
  • Salaries of technical staff
  • Laboratory supplies such as chemicals
  • Telephone toll charges
  • Animals and animal care costs
  • Computer costs
  • Travel costs
  • Specialized shop costs

James F. Ball, The Ohio State University Research Foundation, April 2001

a cost is allocable when
A Cost Is Allocable When…
  • Goods or services are chargeable or assignable to a sponsored agreement in accordance with relative benefits received or other equitable relationship,
  • Incurred solely to advance the work under the sponsored agreement
  • Benefits the sponsored agreement and other work of the institution in proportions that can be approximated through use of reasonable methods
  • It is deemed assignable in part to sponsored agreements

James F. Ball, The Ohio State University Research Foundation, April 2001

normally f a costs
Normally F&A Costs
  • Salaries of administrative and clerical staff
  • Office supplies
  • Postage
  • Local telephone costs
  • Memberships

James F. Ball, The Ohio State University Research Foundation, April 2001

an allowable cost must
An Allowable Cost Must
  • Be reasonable
  • Be allocable to sponsored agreements in accordance with cost principles
  • Be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances, and
  • Conform to any limitations or exclusions set forth in the cost principles or the sponsored agreement

James F. Ball, The Ohio State University Research Foundation, April 2001

a cost is reasonable if it is
A Cost Is Reasonable If It Is…
  • Action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made
  • Necessary for the performance of the sponsored agreement
  • Individuals acted with due prudence in the circumstances
  • Consistent with established institutional policies and practices
  • Within restraints or requirements imposed by law or regulation, or sponsor terms

James F. Ball, The Ohio State University Research Foundation, April 2001

source of funding
Source of Funding

“The principles do not apply to:

Other awards under which the institution is not required to account to the Federal Government for actual costs incurred.”

OMB Circular A-21, Section A.3c.

James F. Ball, The Ohio State University Research Foundation, April 2001

source of funds
Source of Funds

Fixed-

Price

Cost-

Reimbursement

Principles

Apply

Principles

Don’t Apply

Federal

Non-

Federal

Principles

Don’t Apply

Principles

Don’t Apply

James F. Ball, The Ohio State University Research Foundation, April 2001

nature of the research effort
Nature Of The Research Effort
  • Always a factor in making a determination as to what is reasonable, allowable, and allocable
  • Always important in determining alternatives and options

James F. Ball, The Ohio State University Research Foundation, April 2001

unlike circumstances
Unlike Circumstances
  • Large complex programs, such as centers
  • Extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, clinical trials
  • Travel and meeting arrangements for large numbers of participants
  • Principal focus is the preparation and production of manuals or other large reports, books, and monographs
  • Geographically inaccessible to normal department administrative services, research field sites that are remote from campus.

James F. Ball, The Ohio State University Research Foundation, April 2001

what to consider
What to Consider...
  • What is the source of funds?
  • Is it fixed-price?
  • What is the nature of the item of cost?
  • What is the nature of the research effort?
  • Is it basic research?
  • Is it a large center, remotely located, not part of an academic department on campus?
  • Is the item budgeted and approved?
  • Is it reasonable, allocable, and allowable?

James F. Ball, The Ohio State University Research Foundation, April 2001

facilities administrative costs
Facilities & Administrative Costs
  • Costs that are incurred for common or joint objectives (indirect costs)
  • Cannot be readily and specifically identified with a particular sponsored project, instructional activity, or any other institutional activity

James F. Ball, The Ohio State University Research Foundation, April 2001

facilities component of f a
Facilities Component of F&A
  • Depreciation and use allowances
  • Interest on debt associated with certain buildings
  • Equipment & capital improvements
  • Operation and maintenance expenses
  • Library expenses

James F. Ball, The Ohio State University Research Foundation, April 2001

administration component of f a
Administration Component of F&A
  • General administration
  • Departmental administration
  • Sponsored projects administration
  • Student administration and services
  • All other costs

James F. Ball, The Ohio State University Research Foundation, April 2001

compensation for personal services
Compensation for Personal Services
  • Allowable to the extent that total compensation to individual employees conforms to established policies of institution
  • Consistently applied

James F. Ball, The Ohio State University Research Foundation, April 2001

salary rates for faculty
Salary Rates For Faculty
  • Based on regular compensation for continuous period which constitutes the base salary rate
  • Charges cannot exceed the proportionate share of the base salary

James F. Ball, The Ohio State University Research Foundation, April 2001

however in unusual cases
However, In Unusual Cases...
  • Consultation across departmental lines
  • Involves separate or remote operation
  • Work performed is in addition to regular departmental load
  • Charges for extra compensation may be allowable where specifically provided for in agreement or approved in writing by sponsoring agency

James F. Ball, The Ohio State University Research Foundation, April 2001