2OMB The federal Office of Management and Budget (OMB) has issued circulars that define the principles and standards for sponsored projects funded by federal agencies.OMB circulars A-21, A-110, and A-133 provide instructions for handling federal funds.
3WHAT IS OMB A-21?This section outlines the principles and policies that must be followed regarding the accounting principles, arrangements, and exemptions for any training or work produced under the contract as agreed upon by the Federal Government.A-21 defines the cost principles applicable to grants and contracts at educational institutionsCost Accounting Standards (CAS)Direct vs. Indirect (F&A) CostsAllowable vs. Unallowable CostsEffort Reporting
4CAS Cost Accounting Standards Consistency in estimating, accumulating, and reporting costsConsistency in allocating costs incurred for the same purposeAccounting for unallowable costsCost accounting period (fiscal year)
5DIRECT COSTS Salaries, wages, and fringe benefits Supplies Services Direct Costs are costs must be:Allowable, Allocable Reasonable, ConsistentDirect Costs can be directly associated with a particular sponsored project, an instructional activity, or any other institutional activity.Examples of Direct Costs:Salaries, wages, and fringe benefitsSuppliesServicesTravelEquipment
6INDIRECT COSTSIndirect Costs are often referred to as facilities and administrative costs (F&A) or overhead. HCC has an approved indirect rate of 39%.
7Allowable Costs Must be reasonable Must be allocable Must be treated consistentlyMust conform to any limitation or exclusion“Prudent person” test
8Allowable and Unallowable Costs Section J specifies which costs are allowable and unallowable as both direct and indirect costsExamples of Allowable CostsEquipment, Professional Services, TransportationExamples of Unallowable CostsAlcohol, Entertainment, Lobbying, MarketingAnything outside the scope of these costs is typically not allowed unless it falls under one of the specifically mentioned exceptions within the circular.
9Time and Effort Time and Effort Reporting The purpose of an effort reporting system is to provide a reasonable basis for distributing salary charges among direct and indirect activitiesHCC uses an after-the-fact effort reporting system
10WHAT IS OMB A-110A-110 sets forth standards for uniform administrative requirements for grants and agreements among federal agencies in the administration of grants to and agreements with institutions of higher education.
11Cost SharingCost Sharing must be more than a token amount (e.g. more than 1% of project costs)Cost Sharing represents institutional commitment to the projectMandatory Cost Sharing is required by the sponsor as a condition of making the awardVoluntary Cost Sharing is not required by the sponsor but may become legally binding as a commitment reflected in the proposed budgetCommitted (e.g. over salary cap)Uncommitted
12Cost Sharing Verifiable and documented in recipient records Acceptable Cost Sharing must be:Verifiable and documented in recipient recordsNot included as matching for any other federal projects, nor paid from other federal awardsNecessary and reasonableAllowable under applicable cost principlesAppropriate to all OMB Circular A-110 provisions
13Program Income Registration fees for a training or conference award Program Income applies to funds earned during a project periodProgram Income includesRegistration fees for a training or conference awardProducts or materials purchased on an award and sold after research has been conductedSale of information produced or acquired under the award
14Program Income Added to funds committed to the project Program Income may be:Added to funds committed to the projectDeducted from total project allowable costsApplied to non-federal share of project costsRecipient has no obligation to the Federal Government for funds earned after the project period unless the agency’s regulations or terms and conditions provide otherwise
15Program Income Added to funds committed to the project Program Income may be:Added to funds committed to the projectDeducted from total project allowable costsApplied to non-federal share of project costsRecipient has no obligation to the Federal Government for funds earned after the project period unless the agency’s regulations or terms and conditions provide otherwise
16Property Control Conduct a physical inventory every two years Management of property should:Conduct a physical inventory every two yearsSafeguard against damage, loss, and theftProvide adequate maintenanceMaintain insuranceSell competitively at highest return, when authorized
17Reports & RecordsA-110 sets forth procedures for monitoring and reporting financial and program performance and the required reporting forms, including requirements for record retention
18Retention of RecordsFinancial records, supporting documents, statistical records and all other records must be retained for three years from the date of final report, except when:Litigation requires retention until matters have been resolvedRecords are transferred to the agency, in which case retention requirements endOther record retention requirements apply
19The PI and Grants Accounting Award recipients are responsible for managing and monitoring each project, program, function and activity supported by the awardAward recipients are responsible for ensuring that sub-recipients have also met all audit requirements
20Technical ReportsTechnical reports must be completed not more than quarterly and not less than annuallyReports must contain:Comparison of actual accomplishments with set goals for the periodIf applicable, reasons that goals were not metExplanation for any cost over-runs or high unit costs
21Close Out the Grants All reports submitted within 90 days Close-Out RequirementsAll reports submitted within 90 daysAll obligations liquidated within 90 daysPrompt payment by awarding agencyRecipient refund of unobligated cash advancesAccounting for real and personal propertyAgency right to recover disallowances
22SUMMARY OF OMB A-133A-133 sets forth standards for consistency in audits of organizations spending federal awards.A-133 defines the requirements of an audit and explains the responsibilities of the institution, the agency and the auditor.A sample of Federal awards and their direct cost transactions is selected and examined to determine if expenditures and procedures were appropriateA-133 requires an annual external audit of all non-federal entities expending $500,000 or more annually in Federal funds
23Websites A-21 http://www.whitehouse.gov/omb/circulars_a021_2004 A-110 A-133The federal audit reports for the entire state of Florida are rolled up into one report that fulfills the A-133 requirement. This report is copied and sent to the feds as needed.