Why We’re Here :

1. “Basics of Sponsored Projects Financial Administration”MUSC Grants and Contracts AccountingSpring 2003http://research.musc.edu/gca/home.htm

2. Why We’re Here : • Annual Sponsored Awards • FY 2001 = $ 123.9 million • FY 2002 = $ 131.1 million • FY 2003 YTD = $ 129.3 million through 4/2003 • Annual Sponsored Projects Expenditures • FY 2001 = $ 86.9 million • FY 2002 = $ 101.2 million • FY 2003 YTD = $ 96.7 million through 4/2003

3. Part IGeneral Topics • Key Terms (or “Acronym Soup”) • Roles & Responsibilities at MUSC • Types of Sponsors, Sponsored Agreements, & Functions • The Life Cycle of a Sponsored Project

4. Part IICosting Topics • Regulatory Requirements • Allowable and Unallowable Costs • Direct Costs vs. Facilities & Administrative Costs • Key Budget and Expense Items • Post-Award Monitoring • Reporting to the Sponsor • MUSC Financial Reports • Financial Closeout

5. Part IGeneral Topics

6. Key Terms • RFP = Request for Proposals = agency’s solicitation for proposals • Proposal = descriptive narrative and proposed budget submitted to funding agency • Proposal Data Sheet (The “Blue Sheet”) (MUSC) • NGA = Notice of Grant Award (NIH) = legal award document • GCA Form = Grant & Contract Acceptance Form (MUSC) • Project Period = period of time approved for project programmatically • Budget Period = incremental period being funded • P.I. = Principal Investigator • Program Administrator = sponsor’s technical official • Grants Specialist = sponsor’s administrative/financial official

7. Key Terms • CAS = Cost Accounting Standards • DS-2 = Disclosure Statement • OMB Circular A-21 • OMB Circular A-110 • CFR = Code of Federal Regulations • FAR = Federal Acquisition Regulations • UDAK = User-Defined Accounting Key • CAMR = Chart of Accounts Maintenance Request • PEAR = Position/Employee Action Form

8. Key Terms • Prior Approval = written authorization evidencing prior consent of sponsor • Expanded Authority = delegation of approvals to grantee • Allowable Costs • Unallowable Costs • Direct Costs • F&A Costs = Facilities & Administrative Costs • MTDC = Modified Total Direct Costs • TDC = Total Direct Costs • Carryover • Cost Sharing • Cost Transfer • Cost Overrun

9. Key Sponsoring Agencies & Offices • OMB = Office of Management and Budget • DHHS = Department of Health and Human Services • DCA = Division of Cost Allocation (MUSC’s cognizant audit agency) • OIG = Office of Inspector General - each federal agency has an OIG responsible for audit, investigations, & inspections • NIH = National Institutes of Health • DOD = Department of Defense • DOE = Department of Energy

10. Roles & Responsibilities - Departmental • Principal Investigator: • Serves as Project Manager • Accountable for the scientific conduct of the project and expenditure of funds • Responsible for all technical reporting • Departmental Business Personnel: • Monitors budgets and expenses from proposal to close-out • Pre-audits expenditures and maintains supporting documentation • Coordinates department’s activity (effort) reporting

11. Roles & Responsibilities - Central • Office of Research & Sponsored Programs (ORSP): • Coordinates proposal processing, regulatory compliance, and awards administration • Reviews and processes budget revisions, no-cost extensions, & other actions requiring sponsor approval • Grants & Contracts Accounting (GCA): • Sponsor financial reporting, administration, & activity (effort) reporting • Auditing sponsored projects expenditures • Preparing rate studies & negotiating Facilities & Administrative (F&A) Cost Rates & Fringe Benefits Rates • Developing policies and procedures & related training programs to ensure administrative compliance

12. Roles & Responsibilities - Central • Office of Research Integrity (ORI): • MUSC Academic Compliance Assurance Program • Institutional Review Board (IRB) • Reviews, approves/disapproves research activities involving humans as subjects in accordance with federal regulations

13. Types of Sponsors • Federal Agencies • Note: Federal regulations apply to subawards when the prime award is from a federal sponsor • State & Local Government Agencies • Corporations • Foundations / Charities

14. Sponsored Functions at MUSC • Sponsored Research • Clinical Research • Non-Clinical (Basic) Research • Research Training • Sponsored Instruction • Education/Training • AHEC = SC Area Health Education Consortium • Other Sponsored Activities • Public Service • Other Activities

15. Types of Sponsored Agreements • Grant • Purpose is to transfer money, property, services, or anything of value to a recipient in order to accomplish a public purpose • No substantial involvement is anticipated between sponsor and recipient during the performance of activity • Contract / Subcontract • Principal purpose is to acquire property or services for direct benefit or use of the sponsor • Cooperative Agreement • Principal purpose is to transfer funds to recipient to accomplish a public purpose • Substantial involvement is anticipated between sponsor and recipient during performance of activity

16. Types of Sponsored Agreements • Major Types of NIH Grants: • "R" series = Research Project Grants (R01) • Program Project Grants (P01) • "K" series = Career Development Awards • NRSA = National Research Service Awards (fellowships and traineeships)

17. The Life Cycle of a Sponsored Project • Pre-Award • PI conducts research and identifies funding opportunities • Internal review and routing of proposal - P.I., Department, ORSP, IRB, etc. • ORSP reviews submission of proposal to sponsor • ORSP negotiates with sponsor • ORSP receives funding/executes award agreement on behalf of MUSC Refer to “The Grant Cycle” Flowchart.

18. The Life Cycle of a Sponsored Project • Post-Award • GCA establishes UDAK in General Ledger (via CAMR) • GCA enters approved budget in G/L • P.I. schedules project activities & progress reporting • Department transacts against the award & pre-audits expenditures • GCA conducts post-audit of expenditures • Report on award – Financial-GCA; Technical-P.I. • GCA invoices/collects money from sponsor Exception: Clinical trials are billed per patient by Department • Department & GCA close award • GCA prepares cost analyses and acts as audit liaison Refer to “The Grant Cycle” Flowchart.

19. Part IICosting Topics

20. Regulatory Requirements • OMB Circular A-21: • “Cost Principles for Educational Institutions” • Guidelines concerning: • Cost Accounting Standards • Determining allowable and unallowable costs on sponsored awards • Determining direct vs. facilities and administrative costs • Preparation of facilities and administrative cost rate proposals

21. Regulatory Requirements • OMB Circular A-110: • “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations” • Guidelines for post-award grant and contract administration covering requirements for: • Financial reporting • Procurement • Property standards • Cost sharing • Project close-out

22. Regulatory Requirements • NIH Grants Policy Statement: • Grantees’ policy requirements that serve as the terms and conditions of NIH grant awards • Contains information on expanded authority, prior approval issues, allowable vs. unallowable expenses, trainee costs, travel costs, etc. • CFR: Code of Federal Regulations • General & permanent rules published by executive departments & Federal agencies • FAR: Federal Acquisition Regulations • Uniform policies for acquisition of supplies & services by executive agencies

23. Regulatory Requirements • Cost Accounting Standards (CAS): • Historically applied to contractors • Applied to educational institutions effective 7/1/1998 • 501 : Consistency in Estimating, Accumulating and Reporting Costs • 502 : Consistency in Allocating Costs Incurred for the Same Purpose • 503 : Accounting for Unallowable Costs • 506 : Cost Accounting Period

24. Regulatory Requirements • MUSC’s CAS Policies and Procedures approved by the Board of Trustees in April 1999 • Web address:http://research.musc.edu/cas/toc.htm • Affiliates • Clinical Trials • Cost Sharing • Effort Reporting • F & A Costing • Proposal and Rebudgeting • Recharge Centers • Service Centers • Disclosure Statement (DS-2) • Submitted to DHHS to provide a detailed description of MUSC’s cost accounting practices

25. Regulatory Requirements • When in Doubt: • Review the award’s specific terms and conditions • Review the original approved budget • Review the proposal budget justification • Reference the sponsor’s regulations • Reference MUSC’s CAS policies/procedures and DS-2 • Contact Grants and Contracts Accounting

26. Allowable and Unallowable Costs • Costs are reimbursable by the federal government only if they are: • Reasonable • Allocable • Allowable • Consistently Treated

27. Allowable and Unallowable Costs • Reasonable: • A prudent business person would have purchased this item and paid this price • Example - Purchase of first class airfare tickets when coach tickets are available is unreasonable • Allocable: • Expenses can be assigned to the activity on some reasonable basis • Example - Charging projects based on availability of funds does not have a reasonable allocation basis

28. Allowable and Unallowable Costs • Allowable: • Expenses must be allowable or not specifically excluded as specified by government regulations • Costs that the sponsor is willing to reimburse • Consistently Treated: • Like costs must be treated the same in like circumstances as either direct or F&A costs • Why? To help ensure that all costs are assigned correctly by requiring that they be assigned consistently and to avoid inappropriate charges to the federal government & other sponsors

29. Direct Costs • Costs which can be identified specifically with a project, program, or activity at MUSC • Must be included in the award budget, or have prior approval of sponsor • Examples: Salary of researcher, laboratory supplies purchased for project, and animal care costs • Refer to “Direct and Facilities and Administrative Costs Reference Table”

30. Facilities & Administrative Costs • Costs that benefit multiple projects or activities at MUSC, and cannot be easily identified with a specific project, program, or activity • Examples: Administrative and clerical salaries, office supplies, and equipment depreciation • Costs must be consistently treated - expenses for similar purposes must be treated the same under like circumstances • Refer to “Direct and Facilities and Administrative Costs Reference Table”

31. Post-Award Monitoring • Monitor expenditures for allowability • Monitor changes requiring prior approval of sponsor (or approval by ORSP under “Expanded Authorities”): • Change in scope • Change in key personnel • Carryover of unobligated balances to next budget period • No-cost extension • Subcontracting • Budget revisions

32. Post-Award Monitoring • Monitor cost transfers • Follow MUSC and NIH Cost Transfer Policies • Thorough written justification & GCA approval is required for transfers to Sponsored UDAKs • Use PEAR Form “General Remarks” section for justification for salary transfers • Monitor subrecipients to ensure: • Technical compliance (P.I.’s responsibility) • Financial compliance (shared responsibility of P.I., Department, & GCA)

33. Key Budget and Expense Items • Salaries & Fringe Benefits • Equipment • Supplies • Travel • Subawards • Cost Sharing • F&A Costs

34. Salaries & Fringe Benefits • Salary expenditures charged via PEARs must accurately reflect the time and effort expended on the award • Key personnel should maintain the proposed level of effort • Salary charges must be supported by Activity Reports • Monthly-paid employees certify effort on a quarterly after-the-fact basis • Bi-weekly-paid employees report effort via time-cards • Fringe Benefits • MUSC charges fringe benefits to Sponsored Projects using fixed Fringe Benefits Rates based on employment type (effective 7/1/02)

35. Salaries & Fringe Benefits • Combined Salary • Institutional base salary combining MUSC + Affiliate salary • Incentive pay must be excluded for all Federal awards • NIH Salary Cap • Institutional base salary used to calculate salary charges to NIH may not exceed Executive Level I salary level (currently $171,900 per year) • Establish a NIH Salary Cap UDAK to account for effort in excess of cap (Department submits CAMR) • Affiliate (UMA) Salaries • Submit Affiliate Worksheet with PEAR Form • Web address: http://research.musc.edu/gca/forms.htm

36. Equipment • Equipment = An article of non-expendable, tangible property having a useful life of more than two years and costing at least $5,000 • Special purpose equipment includes items that are generally usable only for research, medical, scientific, or technical purposes • Can normally be charged as direct costs • General purpose equipment includes such items as office equipment, heating and cooling units, and computing devices • Cannot normally be charged as direct costs

37. Supplies • Materials & Supplies • Expendable items that are consumed or expended when put to use, or have an expected service life of one year or less • Medical/scientific/laboratory supplies • Equipment under $5000 • Office Supplies • Unallowable as a direct cost unless there are unlike (special) circumstances

38. Travel • MUSC employees are subject to State of South Carolina travel regulations regardless of the source of funds being charged • Limited to individuals named on or supported by the award • Travel expenses incurred by consultants & private entities are subject to the Federal Joint Travel Regulations (FJTR)

39. Subawards • Contracting out substantive programmatic project work to another institution or entity • If subcontracting becomes necessary after the award is issued, prior approval from the sponsor is required • Account 50261 - First $25,000 of each new subaward; included in F&A cost calculations • Account 50262 - Expenditures in excess of $25,000 for each subaward; excluded from F&A cost calculations

40. Cost Sharing • Cost Sharing (or “Matching”) represents the use of institutional funds to supplement project costs not borne by the sponsor • Must be reported to the sponsor • Administrative requirements for Cost Sharing are itemized in Circular A-110 • Verifiable • Not counted toward more than one federal program • Necessary & reasonable • Allowable under applicable cost principles • Not funded by other Federal funds, unless authorized • Provided for in the approved budget

41. Cost Sharing • Types of Cost Sharing: • #1 - Mandatory • Required by the sponsor • Department must establish a Cost Share UDAK (Department submits a CAMR) • #2 - Voluntary Committed • Not required by sponsor but becomes mandatory when included in proposal • Department must establish a Cost Share UDAK • #3 - Voluntary Uncommitted • When actual effort (for senior personnel only) exceeds committed effort • Separate UDAK should not be established!

42. F&A Cost Rates * • If more than 50% of a project is performed in facilities not owned by the institution or rent is directly allocated to the project, then the Off-Campus Rate is applicable. • The F&A cost rates apply to MTDC = Salaries & wages, fringe benefits, materials & supplies, services, travel, fixed charges, & the first $25,000 of each subcontract. * Effective Period 7/1/2001 - 6/30/2004

43. Reporting to the Sponsor • Financial Reports • Federal Financial Status Report (SF269) • Federal Report of Cash Transactions (SF272) • Invoice • Special reports as required by agreement • Technical Reports • Progress Reports • Final Report

44. Reporting to the Sponsor • Federal Financial Status Reports (SF269) • NIH SNAP (Streamlined Noncompeting Award Process) Awards: • FSR not required annually, but final FSR must be submitted no later than 90 days after the end of the project cycle • Non-SNAP Awards: • Required annually, except for awards that require more frequent reporting • Must be submitted no later than 90 days after the end of each budget period

45. Reporting to the Sponsor • Subawards under Federal Prime Awards: • Check subcontracts terms & conditions for report/invoice due dates • Typically due within 60 days so that prime recipient can meet 90-day reporting deadline

46. Financial Closeout • Final Financial Status Report or Invoice • Final Inventory Statement and Certification • Final Technical Report • All reports must be submitted on a timely basis, in accordance with grant terms (usually within 60 to 90 days after project termination) • Refund any unobligated cash advance • Account for real and personal property • Agency retains the right to recover disallowances until final audit • Failure to submit timely and accurate reports may affect future funding!

47. MUSC Financial Reports • http://finlin1.harborview.musc.edu/NFuse15/html/login.htm • Available Balance (online) • Month-End Financial Reports (online) • Budget Transaction • Transaction Detail • Commitment/Encumbrance Report • Project Summary • Unit / Department Summary • Principal Investigator’s Report (new version coming soon) • Grants & Contracts Management Reports • Active Projects Summary Reports (monthly) • Clinical Trials & Basic Research Projects Reports (monthly) • F&A Cost Recovery Reports (monthly) • Life-to-Date Transaction Report (ad hoc - contact GCA Accountant)

48. Questions?