Expenditure Management & Cost Sharing on Sponsored Programs - PowerPoint PPT Presentation

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Expenditure Management & Cost Sharing on Sponsored Programs

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  1. Expenditure Management & Cost Sharing on Sponsored Programs October 27, 2006

  2. Expenditure Management

  3. Costing Basics • As a condition of receiving award funds from federal sponsors, OU is required to follow basic government regulations and Cost Accounting Standards (CAS) • Agency regulations include the following: - OMB Circular A-21 - 2 CFR Part 215 (formerly OMB Circular A-110) - OMB Circular A-133 - CAS 501, 502, 505, and 506

  4. Circular A-21 • Defines the rules for “Direct” and “Indirect” (Facilities & Administrative) costs • Provides principles for determining if costs are allowable, allocable, and reasonable • Sets forth standards for Effort Reporting

  5. Circular A-110 (2 CFR Part 215) • Defines reporting requirements • Sets forth acceptable forms of cost sharing • Defines procurement standards and procedures • Explains when prior approvals are required for revisions to budget or program plans • Sets forth accounting standards for equipment

  6. Circular A-133 • Provides the standards for consistency and uniformity in the auditing of states, local governments, and non-profit organizations receiving and expending federal funding

  7. Cost Accounting Standards • CAS 501, 502, 505 and 506 were developed to create consistency in the following areas: - Estimating, accumulating, and reporting costs ( CAS 501) - Allocating costs incurred for the same purpose in like circumstances (CAS 502) - Accounting for unallowable costs (CAS 505) - Cost accounting periods (CAS 506)

  8. Indirect Cost • A-21, Section B • Indirect costs are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an institutional activity, or any other institutional activity. Indirect costs are synonymous with Facilities and Administrative (F&A) costs.

  9. Direct Costs • A-21, Section D • Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity; or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

  10. The Cost Must Be Reasonable • A-21, Section C3: “A cost may be considered reasonable if the nature of the goods or services acquired, and the amount involved, reflect the action that a prudent person would have taken under like circumstances.”

  11. Cont. Reasonable • “Prudent Person” Test: • Necessary • Consistent with established institutional policies and procedures

  12. The Cost Must Be Allocable • A-21, Section C4: “A cost is allocable to a sponsored agreement if (1) it is incurred solely to advance the work of the sponsored agreement; (2) it benefits the sponsored agreement; or (3) it is necessary to the overall operation of the sponsored agreement.”

  13. Allocable Cont. • “But For” Test: But for this project, this cost would not be incurred.

  14. The Cost Must Be Allowable • Terms & Conditions • A21, Section J • State Laws • University Policy and Procedures

  15. Procedures for Charging Direct Costs • Administrative Affairs Guide to Services • http://www.ou.edu/fis/ • Purchasing Web Site • http://www.ou.edu/purchasing/home/index.htm

  16. Small Dollar Policy • University departments may purchase products and services directly from a vendor when the cost of the acquisition is $5,000 or less.

  17. Exceptions- Small Dollar Policy • Certain purchases, even if $5,000 or less, must be processed through the Purchasing Department: • If the purchase involves a contractual document of any kind. • If the purchase involves radioactivity • If the purchase involves a laboratory animal • Computer Purchases

  18. Cont. Exceptions- Small Dollar Policy • To the degree University Auxiliary Services (i.e., Printing Services, Physical Plant, Motor Pool) are able to support your needs- they must be utilized. • Mandatory Contracts (i.e., Travel Agencies, Corporate Express)

  19. ALL charges/expenses on a grant or contract must be sent through PAFS for approval. Travel Claims Appointments PAFS Approval! • Invoices • Requisitions • JVs

  20. Approval Process • Department Sponsor must assign a department number • Department Sponsor must sign for payment • Cannot sign own reimbursement • Dept Sponsor should clarify what budget line item expense should be taken from (i.e.: Participant vs. Supply)

  21. Book Exchange Payment Net Printing Services Motor Pool Aramark Corporate Express Physical Plant Telecommunications Central Mail Automatic Billings The following are automatic billings to your G & C. If these costs are determined to be unallowable they will be transferred, by PAFS, to a residual or responsible department number

  22. PCard Transactions • If you distribute a PCard Expense to a sponsored agreement you must: • Include a justification/explanation in the “Transaction Notes” field of the PaymentNet system adequate for PAFS to determine allowability. A more detailed explanation is required for non-scientific vendors, such as Target, Wal-Mart, and Corporate Express. • Department must keep copies of all receipts for PCard Transactions for audit purposes.

  23. Discussion Questions • Can I order equipment within the last 90 days of my sponsored program? • Can I pay for a lunch/dinner for a meeting with lab personnel working on the project? • My grant is ending and I have some unspent funds, can I purchase some lab supplies for general use in my lab?

  24. Discussion Questions, cont. • What happens if I forget to send an invoice to PAFS first? • What happens if an auditor disallows a cost on my grant? • Can I purchase office supplies on my grant?

  25. Deposits to Sponsored Programs • Should only be made by Post Award Financial Services • Checks the Department receives that are for the grant/contract should be sent to our office to deposit • If the check is refunding, rebating or reimbursing something the grant paid for please include a note with the check with an explanation

  26. Cost Transfers

  27. Cost Transfer • What is a Cost Transfer? • After-the-fact transfer of a cost previously incurred • Purpose • Allow for reassignment of costs from one dept. number to another

  28. Cost Transfer Policy • See Attached Policy • This policy does not apply to Cost Distributions or account code corrections

  29. Cost Transfer Coding • Who entered the CT in PeopleSoft • RSP = Research Services • CSP = CCE • T = FSS • All cost transfers are imaged in Acorde under FSS Transfers

  30. Cost Transfer Policy • Types of Transfers • Error Correction • Typographical error • Pre-Award Costs • Before the grant or contract was set up in accounting system • Closely-Related Accounts • Parent/ Child depts • Cost sharing depts

  31. Cost Transfer Policy • Documentation • Non-Labor • Journal Voucher/Transfer Form • Cost Transfer Request (PAFS-1) • Copy of the original invoice • Copy of appropriate University Financial Report

  32. Cost Transfer Policy • Documentation • Labor • Cost Transfer Request (PAFS-1) • Payroll Expense Transfer Request Form • Payroll Extract

  33. Cost Transfer Policy • Unacceptable Cost Transfers • Undocumented transfers • Inadequately justified transfers • An explanation that merely states “to correct error” or “to transfer to correct dept” is not sufficient • Costs transferred from a Fixed Price Dept in an overrun status to a Cost Reimbursable Dept in an under-run status

  34. Cost Transfer Policy • Timeliness of Processing • Non-Labor • Transfers need to be processed no later than 90 days after the item posted to the financial statement • If requested after 90 days additional justification (PAFS-1, item 7) is required and transfer is subject to approval by the Assistant Director of PAFS or the Executive Director of ORS

  35. Cost Transfer Policy • Timeliness of Processing • Labor • Transfers need to be processed no later than 90 days after the pay period for which the salary was recorded • Previously confirmed labor charges require additional justification and are subject to approval by the Assistant Director of PAFS or the Executive Director of ORS

  36. Red Flags • Transfers older than 90 days • Transfers in the last month of the award or after the award has expired • Explanations that raise more questions than answers • Frequent transfers from same office

  37. Discussion Questions • I have a grant that is ending and need to spend the remaining funds, can I do an expense transfer to move expenses to this grant? • Do I need to fill out a PAFS-1 and attach to the JV for copies I made using the department copy machine? • I have a new grant that was just set up. I have been paying expenses, for this project, on the departmental number (some more than 90 days old) can I do an expense transfer to move these expenses to my new grant? • I confirmed labor on grant A, but now decided it should be on grant B, can I do a payroll expense transfer?

  38. What is Cost Sharing? • A-110 defines Cost Sharing as any project or program costs that are not borne by the sponsoring agency • Costs could be anything identified in the narrative or budget that will support the project but is not paid for by the sponsoring agency

  39. What is Cost Sharing?, cont. • Contributed costs must be allowable, reasonable, and necessary to accomplish the objectives of the sponsored agreement during the project period • Cost sharing must be verifiable and accounted for to the extent it was committed • Cost sharing may not be counted toward more than one sponsored agreement

  40. Examples of Cost Sharing • Employee time, including fringe benefits • Equipment (purchased during the time frame of grant or contract) • Travel • Supplies & Services • Volunteer time or other contributed items • Unrecovered F & A • Unrecovered Tuition Remission

  41. Types • Mandatory • Required by the sponsor as a condition of the award • Voluntary • Costs in excess of mandatory requirements • Not required by the sponsor, but will become a legally binding commitment if reflected in the proposal & must be documented

  42. Sources • Cash • University funds • E&G • SRI Funds • VPR Match – a separate 1X5 dept will be established • Third party cash contributions • Other externally-funded agreement • Program income • OU Foundation

  43. Sources, cont. • In-Kind • The value of non-cash contributions provided by third parties • May include donated goods, services, real property, and non-expendable equipment

  44. Timing • Cost share must be expenditures incurred or services rendered during effective award dates • Some agencies expect/require cost sharing expenditures to occur at same pace as grant dollars

  45. Documentation • Cash • Salary/Wages • Signed “Confirmation of Contributed Direct Labor” form • Fringe Benefits • Calculated at OU Negotiated Rates • Goods and Services • Copy of Invoice with paying dept number

  46. Documentation, cont. • Cash, cont. • Travel • Copy of Travel Claim or Payment Net Travel with paying dept number • Equipment • Copy of Invoice with paying dept number • Indirect Costs • Calculated at OU Negotiated Rate

  47. Documentation, cont. • In-Kind • Goods and Non-Expendable Equipment • Signed letter from donor describing items and their fair market values • Services • Signed letter from donor or volunteer describing services performed, time period, rate of pay for job performed, and total amount of contribution • Third party employer may include fringe benefits, but not indirect costs

  48. Documentation, cont. • In-Kind, cont. • Real Property • Certified, independent appraisal co-signed by University official • Donor should be able to provide the basis for determining the valuation for goods, non-expendable equipment, services and real property if required

  49. Undocumented Cost Share • Treated as unmet cost share • May require reduction of reimbursable grant expenses • May reduce SRI funds to department • May effect future funding