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A Brief Overview of The OMB Circulars

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  1. A Brief Overview of The OMB Circulars With Emphasis On Cost Principles James F. Ball, The Ohio State University Research Foundation, April 2001

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. Applying The Cost Principles Fostering the Research Process James F. Ball, The Ohio State University Research Foundation, April 2001

  20. Charges To Sponsored Projects Must Be: • Reasonable • Allocable • Allowable James F. Ball, The Ohio State University Research Foundation, April 2001

  21. Like Costs In Like Circumstances Direct Cost F&A Cost Federal Non- Federal James F. Ball, The Ohio State University Research Foundation, April 2001

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. 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

  37. 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

  38. 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