DIVISION OF RESEARCH Sponsored Projects - Financial Management for Principal Investigators

1. DIVISION OF RESEARCH Sponsored Projects - Financial Management for Principal Investigators Fall 2009 Kimberly Klatt Research Compliance Officer

2. Agenda • Compliance Overview • Basic Cost Principles • Allowable/Unallowable Costs • P-card Expense Descriptions • Proportional Charging (allocation) • Costs Transfers • Transactions Requiring DoR Approval • New Fabrication Policy

3. Clarkson University Compliance Program • University Compliance Committee (UCC) established in 2005. • UCC formed to ensure compliance facing the University. • UCC consists of six sub-committees. • Committee responsible for handling, reviewing, monitoring and enforcing all University compliance matters. • Research compliance represents one of the six sub-committees.

4. Clarkson University Compliance Committee Structure

5. Research Compliance Regulations http://www.clarkson.edu/dor/compliance When sponsored funding is accepted by the institution we agree to comply with federal and state regulations: • OMB A-21 - Cost Principles • OMB A-110 - Uniform Administrative Requirements • OMB A-133 - Audits • Assurances, Certifications, & Representations

6. Why is Research Compliance Important? Non-compliance can place Clarkson and the Principal Investigator at significant risk and can result in: • Damage to the University’s or your reputation and integrity • Severe fines/penalties to the institution • Designation as a “high risk” institution • Suspension/debarment from receiving federal funds (University and PI’s) • Criminal Prosecution

7. Realities of Compliance • Compliance is a collaborative responsibility of the administration, faculty, and staff. • We have a legal responsibility to comply with federal and state requirements. • Our daily activities and responsibilities often have an underlying purpose regarding compliance. • Conflict of Interest Forms • P-card Reconciliations • Cost Transfers • Constitution Day • Hiring Practices • Etc...

8. Award Execution Upon full execution of the award the DoR will: • Prepare a Notice of Award that includes, but not limited to: • Funding agency • Budget period • Report requirements • Technical contact • Awarded amount • Special Terms & Conditions/Compliance Obligations • Prepare a budget according to the approved budget • Establish an account number for the award • Send the Principal Investigator a copy of the Notice of Award, approved budget, congratulations letter, and a copy of the award agreement. • Send the Comptroller’s Office a copy of the Notice of Award, approved budget, and a copy of the award agreement. • Send your Dean, Department Chair, and the Provost a copy of the Notice of Award.

9. PI Responsibilities The responsibilities or obligations that PIs agree to when accepting an award include the following: • Commitment: Review all documentation including referenced materials within the award documents and comply with the terms and conditions. • Communication: Review the roles and responsibilities of all parties involved in the project and assure that they are aware of their obligations. • Technical Management: Manage the technical aspects of the program and comply with the deadlines and reporting requirements in award documents or the statement of work. • Supervision: Staff the project and supervise project personnel. • Financial: Charge to the research account only those expenditures directly related to the technical completion of the project that are allowable, allocable, and reasonable, as defined by OMB Circular A-21. • Accuracy: Review the monthly accounting statements to verify that all charges to that account are appropriate.

10. OMB A-21 Basic Cost Principles Direct vs. Indirect Direct Costs: Allowable costs that can be identified specifically with a particular sponsored project(s) and be assigned easily with a high degree of accuracy. Indirect Cost (F&A): Allowable costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with one or more sponsored project.

11. OMB A-21 Basic Cost Principles “How to Distinguish Between Direct and Indirect Charges” http://www.clarkson.edu/dor/grant_mgmt • Defines what costs are allowable to sponsored projects. • Requires institutions to classify allowable costs either as direct or indirect costs. • Allowable costs must be consistently treated as direct or indirect. • Consistent treatment of costs assures that the same types of costs are not charged both as direct and indirect costs. • Costs classified as indirect cannot be charged directly to your sponsored project, unless they qualify as an “unlike or unique circumstance”.

12. How To Determine a Allowable Direct Cost “How to Distinguish Between Direct and Indirect Charges” http://www.clarkson.edu/dor/grant_mgmt Direct Charges must pass meet the following criteria: Allowable:Permitted as a charge per OMB Circular A-21. Necessary:to accomplish the scope of work of the project. Reasonable:nature of the cost, and the price paid, reflects the action that a prudent person would have taken. Allocable: the cost can be allocated specifically with one research project or if the cost benefits more than one project it can be allocated based on proportional benefit or a reasonable basis. Consistently Treated:Costs must be classified as a direct charge by the University. Charges must meet all criteria above. If not, they must be charged to a non-research account.

13. What Can’t Be Charged Directly to a Sponsored Award? • Office Supplies • Administrative and Clerical Staff Salaries • Basic Line Telephone Charges • Administrative Office Equipment (i.e. copiers, office computers and printers) • General Use Software (Word, Excel, Access, or equivalent) • General Use or janitorial Items (paper towels or soap) “How to Distinguish Between Direct and Indirect Charges” http://www.clarkson.edu/dor/grant_mgmt

14. Exception to the Rule Costs normally considered indirect can be charged as direct if they qualify as an: Unique Circumstance or Unlike Circumstance Both circumstances must be properly justified and documented.

15. What are Unique and Unlike Circumstances Unique Circumstance: • Use exceeds amount typically required for a project. • Purpose is not different from University norm. • i.e. Researcher needs to prepare 10,000 surveys for distribution; requiring additional paper, toner, envelopes, and postage. Unlike Circumstance: • Research purpose is differentfrom University norm. • i.e. Scope of work is analyzing the composition of toner; requiring additional toner cartridges for analysis. “How to Distinguish Between Direct and Indirect Charges” http://www.clarkson.edu/dor/grant_mgmt

16. How Do You Justify and Document Unique or Unlike Circumstances? New Proposals • Justify the expenditure in the budget justification. • Let Todd Travis know during the proposal process you have an unique or unlike circumstance. • If you receive the award the DOR will notify Accounts Payable that such charges are allowable. Active Awards • You can notify the Research Compliance Officer (RCO) at ext. 4441. • RCO will quickly document the circumstance and notify Accounts Payable that the charges are allowable. If unique or unlike circumstances are not properly justified and documented Accounts Payable will send out a Direct Cost Justification Form requesting reallocation or justification.

17. What Can Be Charged Directly to a Sponsored Award? • Laboratory Supplies (i.e. chemicals and glassware) • Long Distance Telephone Calls • Laboratory Equipment (>$5000 with agency approval) • Equipment maintenance or repair • Computers, Printers and Networking Supplies (for research data collection or processing only) • Specialized Software (Computational) • Travel “How to Distinguish Between Direct and Indirect Charges” http://www.clarkson.edu/dor/grant_mgmt

18. Examples of Unallowable Food & Beverage Charges • Any cost related to entertainment • Any cost not necessary to accomplish the objectives of the grant program • Receptions • Hospitality Room • Pizza for graduate students • Lunch for students during a local research activity. • Meals with colleagues to discuss research • Lunch during weekly meetings to discuss the progress on a project

19. Allowable Food & Beverage Charges • Food and beverages may be allowable if allthe following tests are satisfied: • Food and beverages are not directly related to entertainment or social event. • Food and beverages are integral in order to provide continuity to a work related activity (i.e. conference, professional meetings, formal training) and considered mandatory for the attendees if they are to receive the full benefit of participation in the event. • Costs of the food and beverages are considered reasonable.

20. Examples of Allowable Food & Beverage Charges • Food & beverage cost for an employee on travel status when travel is necessary to accomplish the objectives of the grant program. • An individual is recruited to fill a position on a research grant and he/she travels to Clarkson. Her/his meal may be charged to the grant since she/he is on travel status, but the PIs meal may not. • Meals or refreshments for a formal advisory committee meeting mandated or designated to meet periodically as part of project management (should be included as part of the proposal, utilizes formal agendas and includes participants from different locations).

21. P-Card Reconciliations You must provide adequate justification to determine if the charge is allowable: • Attach itemized receipts • Use appropriate account codes (object codes) • “Expense Descriptions” should indicate the benefit to the project or scope of work (i.e. What is the item used for ?, Why do you need the item?). • Provide documented evidence to auditors that costs are necessary for the performance of the project. • Remember to proportionally charge expenses used for more than one project or educational activity. If the cost benefits one project only, then simply indicate the item is used for that project only. • Federal auditing regulations require that “Expense Descriptions” are reviewed by the Accounts Payable Staff. • Proper “Expense Descriptions” will minimize the need for Accounts Payable to request additional information (i.e. Direct Cost Justification Form) • This methodology also applies to purchase requisitions, disbursement orders, and travel expense accounts.

22. Some Expenditures Are More Scrutinized By Auditors and May Include: General Lab Supplies (i.e. gloves) Computers & Printers Networking Supplies & Software Travel & Books • Expense descriptions and proportional charging are often scrutinized by auditors on these types of expenditures. • These need additional justification in the P-card expense description line (See provided direct cost justification forms for the questions to ask yourself. Include the answers in your expense description.) • If the cost benefits one project only, then simply indicate the item is used for that project only. Otherwise, charge proportionally. • This additional documentation will minimize the need for Accounts Payable to contact you. (i.e. Direct Cost Justification Form).

23. Direct Costs Justification Forms

24. Direct Cost Justification Form

25. Direct Cost Justification Form

26. Allocation of Charges Two rules apply when proportionally charging direct costs that Benefit more than one sponsored project or educational activity: • Rule of Proportional Benefit If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. • Rule of Interrelationship If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved the costs may be allocated or transferred to benefited projects on any reasonable basis.

27. Acceptable Allocation Methods • Usage Based: The cost of lab supplies allocated based upon the quantity used on each project or documented usage of equipment. • Time Based: The cost of computer equipment allocated based upon the number of hours used for each project. • Effort Based:The cost of lab supplies proportionately allocated based upon the PIs percentage of effort charged to each project. • Other reasonable methodologies can be developed, provided that they meet the A-21 allocation principles. Contact the DOR for further assistance.

28. Unacceptable Allocation Practices • Shifting expenditures to other sponsored projects in order to meet deficiencies, to avoid restrictions, or for other reasons of convenience • Charging expenses that benefit two projects solely to one project because the other project is almost out of funding • Rotating charges among projects • Charging an expense to one project when the expense has benefited more then one project or other activities

29. Allocation Documentation • Allocation methodologies must be documented and auditable when employed. • Documentation should indicate how the allocation methodology is logically related to the cost being allocated. • Documentation should be retained by PI.

30. Appropriate Reasons for Cost Transfers • Correct errors in processing the original transaction • Reallocate shared services • Reallocation of effort and other non-labor expenses where multiple projects benefited • To shift pre-award costs in accordance with the provision of OMB Circular A-110

31. Unacceptable Reasons for Cost Transfers • Charges from University accounts to externally funded accounts generally are not acceptable. (Exceptions include phone charges, xeroxing or postage normally made to the department) • Cost transfer is solely for the intent of utilizing unexpended funds of a sponsored award • Cost transfer is for the purpose of avoiding a cost overrun by charging another, unrelated sponsored award

32. Transactions Requiring DoR Approval • All Travel Expenses (object codes 2654/2656) • Travel Authorizations (TA) • Expense accounts under which no TA was written • Expense accounts that exceed the amount of the TA • Participant Support Costs (excludes p-card) • Single transactions that exceed $1000.00 • All equipment/fabrication (object codes 2534/2528, excludes p-card) For efficient processing times please send to the DoR initially.

33. New Fabrication Policy • Comptroller’s Office has issued a new policy allowing the use of the Procurement Card for the account code 2528 – Fabrication of equipment. • It can only be used if the appropriate “Fabrication Request Form” has been completed and approved. You will find the new policy and form on the Clarkson University website at the following URL: http://www.clarkson.edu/finance • If you have any questions please contact Connie Klingbeil at the Office of Risk Management and Purchasing at 315-268-7722 or Karen Barrett of the Comptroller’s Office at 315-268-7650.

34. DoR Contact Information Greg Slack Director of Research and Technology Transfer gslack@clarkson.edu ext. 6475 Todd Travis Award Administrator (Pre-Award) ttravis@clarkson.edu ext. 6475 Connie Ferguson Contract & Grant Administrator (Post-Award) cferguson@clarkson.edu ext. 6475 Kimberly KlattResearch Compliance Officer kklatt@clarkson.edu ext. 4441 Adele Pugliese Sr. Dept. Secretary apugliese@clarkson.edu Rebecca Thatcher Sr. Dept. Secretary rthatche@clarkson.edu

35. Comptroller’s Office Contact Information Jim Fish Comptrollerfishj@clarkson.edu ext. 6689 Donna Martell Associate Comptrollerdmartell@clarkson.edu ext. 7258 Sue Scott Chief Accountant scotts@clarkson.edu ext. 6407 Kelly Rathbun Research Accountant krathbun@clarkson.edu ext. 6462 Elizabeth Corbine Accounting Assistant (P-cards) ecorbine@clarkson.edu ext. 3789

36. Comptroller’s Office Contact Information Roberta Chestnut Accounting Assistant (POs) rchestnu@clarkson.edu ext. 3789 Betsy Niles Head Cashier (Aramark) nilesbm@clarkson.edu ext. 6486 Sarah Ellis Accounting Assistant (DOs/Travel) sellis@clarkson.edu ext. 3789 Karen Barrett Endowment/Plant Accountant (Fabrication) kbarrett@clarkson.edu ext. 7650

37. DOR WEBSITE http://www.clarkson.edu/dor • Funding Resources • Proposal Preparation • Grant Management • Compliance • Training • Export Controls • Technology Transfer

38. QUESTIONS?