1. KEYS TO SUCCESS NCURA Region IV Spring Meeting April 27 – 30, 2014 © 2014 National Council of University Research Administrators Introduction to the Uniform Guidance National Council of University Research Administrators

2. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Jennifer Rodis, Interim Policy & Planning Analyst, University of Wisconsin – Madison Bonniejean Zitske, Managing Officer, University of Wisconsin – Madison

3. NCURA Region IV Spring Meeting April 27 – 30, 2014 @ 2014 National Council of University Research Administrators Overview 1.History of the Uniform Guidance 2.What is the intention of the UG? 3.What are the next steps? 4.What are the big changes?

4. Background November 23, 2009: E. O. 13520 – Reducing Improper Payments and Eliminating Waste in Federal Programs February 28, 2011: Presidential Memorandum on Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments May 2011: A-21 Task Force established October 2011: COFAR created © 2014 National Council of University Research Administrators

5. Recent History February 28, 2012: Advance Notice of Proposed Guidance: Reform of Federal Policies Relating to Grants and Cooperative Agreements; Cost Principles and Administrative Requirements (including Single Audit Act) February 1, 2013: Proposed Guidance June 2013: OMB/COFAR receive 300+ responses December 26, 2013: Final Uniform Guidance released © 2014 National Council of University Research Administrators

6. What’s in a name Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards OmniGuidance (OmniCircular) 2 CFR Part 200, et al. or 2 CFR Part 200 Uniform Guidance or UG © 2014 National Council of University Research Administrators

7. 2 CFR 200, et al. replaces OMB Circulars: A-21: Cost Principles for Educational Institutions A-87: Cost Principles for State, Local, and Indian Tribal Governments A-110: Uniform Administrative Requirements for Awards and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations A-122: Cost Principles for Non-Profit Organizations A-89: Federal Domestic Assistance Program Information A-102: Awards and Cooperative Agreements with State and Local Governments A-133: Audits of States, Local Governments, and Non-Profit Organizations A-50: sections related to audits performed under the Single Audit Act © 2014 National Council of University Research Administrators

8. https://www.federalregister.gov/articles/2013/12/26/2013- 30465/uniform-administrative-requirements-cost-principles- and-audit-requirements-for-federal-awards © 2014 National Council of University Research Administrators Where to find Uniform Guidance

9. Overall Structure Subpart A – Acronyms and Definitions Subpart B – General Provisions Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards Subpart D – Post Federal Award Requirements Subpart E – Cost Principles Subpart F – Audit Requirements Appendices I, II, & III © 2014 National Council of University Research Administrators

10. Effective/Applicability Dates See 200.110 Federal agencies must submit draft implementing regulations to OMB by 6/26/2014. For new and incremental funding awarded December 26, 2014 and after (except Subpart F) Subpart F, Audit Requirements, first FY beginning after December 26, 2014 No guidance on F&A rate proposals © 2014 National Council of University Research Administrators

11. NCURA Region IV Spring Meeting April 27 – 30, 2014 Crosswalks/ Text Comparisons Link to sign up for COFAR mailing list http://www.whitehouse.gov/omb/ grants_docs

12. Resources https://cfo.gov/cofar/ Frequently Asked Questions: https://cfo.gov/wp- content/uploads/2013/01/2-C.F.R.-200-FAQs- 2-12-2014.pdf https://cfo.gov/wp- content/uploads/2013/01/2-C.F.R.-200-FAQs- 2-12-2014.pdf Questions or comments: cofar@omb.eop.govcofar@omb.eop.gov © 2014 National Council of University Research Administrators

13. COFAR Webcasts COFAR Training Intro: http://www.youtube.com/watch?v=SOET4b- 7my8&feature=youtu.be http://www.youtube.com/watch?v=SOET4b- 7my8&feature=youtu.be COFAR Training Administrative Requirements: http://www.youtube.com/watch?v=BP3l3PjI1JQ&featu re=youtu.be http://www.youtube.com/watch?v=BP3l3PjI1JQ&featu re=youtu.be COFAR Training Cost Principles: http://www.youtube.com/watch?v=q0rWXdy2ICM&fea ture=youtu.be http://www.youtube.com/watch?v=q0rWXdy2ICM&fea ture=youtu.be COFAR Training Audit Requirements: http://www.youtube.com/watch?v=g-U8HGbbC- Y&feature=youtu.be http://www.youtube.com/watch?v=g-U8HGbbC- Y&feature=youtu.be © 2014 National Council of University Research Administrators

14. NCURA Webcast The OMB Uniform Guidance: Key Issues for Universities May 14, 2014, 1:00 - 3:30 pm EDT Moderator: Kim Moreland, Associate Vice Chancellor for Research and Sponsored Programs, University of Wisconsin - Madison Panel: Michelle Christy, Director, Office of Sponsored Programs, Massachusetts Institute of Technology Mark Davis, Vice President for Higher Education, Attain Cindy Hope, Assistant Vice President for Research, The University of Alabama David Kennedy, Director of Costing Policies and Studies, Council on Governmental Relations Jim Luther, Assistant Vice President, Research Costing Compliance, Duke University http://www.ncura.edu/Education/OnlineEducation/Webcast.aspx © 2014 National Council of University Research Administrators

15. Streamline guidance for Federal Awards to ease administrative burden Strengthen oversight over Federal funds to reduce risks of waste, fraud, and abuse © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Objectives of Uniform Guidance

16. Non-Federal entity classifies the subrecipient or contractor Subrecipient characteristics: – Eligibility determined by the pass-through – Performance measured by program objectives – Responsible for programmatic activities – Adheres to Federal program requirements – Uses the funds for a public purpose, not to provide good or services for the benefit of the pass-through entity © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.330 Subrecipient Monitoring Subrecipient and Contractor

17. Contractor characteristics: – Provides the good/services within normal business operations – Provides good/services to many purchasers – Operates in a competitive environment – Provides goods/services that are ancillary to the operations of the Federal program – Is not subject to compliance requirements of the Federal program as a result of the agreement © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.330 Subrecipient Monitoring Subrecipient and Contractor

18. Required to pass through multiple data elements to subrecipient, including: – Federal award ID – Subrecipient name – match with DUNS – FAIN number – Period of performance – Federal Award project description (FFATA) – Total amount of the Federal award – CFDA number and name – Identification of award as R&D or not – Indirect cost rate or de minimis rate – Many other elements © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.331 Pass-through Entities

19. Monitoring must include: – Review of financial & programmatic reports – Follow-up with deficiencies detected through audits, on-site reviews, and other means – Issue a management decision for audit findings related to the Federal award – Use additional monitoring tools if necessary (tools may be useful) Training and technical assistance On site review Agreed-upon-procedures engagements © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.331 Monitoring the Subrecipient

20. New limitations – Requires prior written approval from the Federal agency – Fixed Price subawards up to the Simplified Acquisition Threshold ($150,000) – Subawards meet the requirements of 200.201 Project scope is specific Cost or unit pricing data is available Non-Federal entity will realize no increment above actual cost Cannot be used if there is mandatory cost sharing © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.332 Fixed Amount Subawards

21. Contract – 200.22 – A legal instrument by which a non-Federal entity purchases property or services – NOT a legal instrument when the substance of the transaction meets the definition of award or subaward Subaward – 200.92 – Award to a subrecipient to carry out part of a Federal award received by a pass-through. Does not include payments to a contractor. May be any form of agreement, including a contract. © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Contract, Subaward, Vendor?

22. Federal award 200.38 – Federal financial assistance received directly from a Federal agency or through a pass-through – A cost-reimbursement contract under FAR received directly or through a pass-through So, what is a vendor? – Might be a contractor, but not a cost-reimbursement contractor under FAR regs – Since pass-through entities can determine the nature of the subaward, are we OK treating a vendor as a vendor and charging F&A? © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Confused?

23. Participant Support costs are now a standard exclusion Not new but, lack of definition for “subcontract” is increasingly problematic – MTDC excludes “the portion of each subaward and subcontract in excess of $25,000” – Some agencies insist vendor agreements/contracts for purchased services, supplies, etc. are “subcontracts” © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Modified Total Direct Costs (MTDC)

24. Acknowledgement of computing devices as a supply cost New Definition – “Supplies means all tangible personal property other than those described in § 200.33 Equipment. A computing device is a supply if the acquisition cost is less than the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000, regardless of the length of its useful life.” © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.94 Definition of Supplies

25. Computing devices means machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information. (200.20) In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award. (200.453) © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Computing Devices

26. Preamble on pages 78601 – 78602: – COFAR balanced universities’ input and auditors’ perspective – More flexibility but a requirement to “comply with a stringent framework of internal control objectives and requirements” 200.303 Internal Controls – These internal controls should be in compliance with… COSO framework – COSO: Integrated Framework of Control Environment, Risk Assessment, Control Activities, Information and Communication, & Monitoring Activities © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.430 Compensation – Personal Services

27. More Flexibility – No requirement for “activity/effort reports”, Removed reference to certification/certify or confirmation Eliminated – J.10.c(1)f: requirement for “independent internal evaluation” – Examples of acceptable Methods for Payroll Distribution Added – Institutional Base Salary (IBS) (ii) The non-Federal entity establishes a consistent written definition of work covered by IBS which is specific enough to determine conclusively when work beyond that level has occurred – Allowable activities: Added language to allow for “developing and maintaining protocols”…. “managing and securing project-specific data, coordinating research subjects…” © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.430 Compensation – Personal Services

28. Continued focus on “processes to review after-the- fact.” Must reflect the work performed January 27, 2014 Webinar confirmed: – January 5, 2001 Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing (VUCS) and Tuition Remission Costs – still in place VUCS not included in organized research base …such faculty effort is excluded from the effort reporting requirement in section J.8 …most Federally-funded research programs should have some level of committed faculty (or senior researchers) effort, paid or unpaid by the Federal Government © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.430 Compensation – Personal Services

29. Changes look promising, but details not clear Auditor interpretation Internal Controls Review current system in light of Internal Control standards (COSO)? Written policies Define IBS Solid systems FDP Project Certification pilot may inform/drive the discussion Review audits of pilot institutions © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.430 Compensation – Personal Services

30. “The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met: 1.Administrative or clerical services are integral to a project or activity; 2.Individuals involved can be specifically identified with the project or activity; 3.Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and 4.The costs are not also recovered as indirect costs.” Removal of “major project” requirement and examples Recognition of administrative workload © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.413 Direct Costs (c) Clerical & Admin Salaries

31. “When a non-Federal entity uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable as indirect costs in the year of payment.” © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.431 a(3)(i) Fringe Benefits

32. Was not in the Proposed Guidance Would require a significant change in accounting for unused leave for institutions using the cash basis of accounting Handle as accrual via fringe benefit – could increase 3-10 points “…Payments for unused leave when an employee retires or terminates employment are allowable as indirect costs in the year of payment.” – Should a request for extension be made for this significant change? © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.431 a(3)(i) Fringe Benefits

33. Indirect (F&A) costs - 200.414 – (c) Federal Agency Acceptance – “the negotiated rates must be accepted by all Federal awarding agencies” Some exceptions – statute or regulation, agency head approval – (f) 10% de minimis for entities that have never received negotiated rate – (g) Allows a one-time extension of Federally negotiated F&A rates for up to four years Subject to approval of the cognizant agency for indirect costs. If granted, the institution may not request a rate review until the extension period ends. © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 F&A Rate Administration

34. IHEs receiving $50 million or more in federal awards in a fiscal year – Same four Cost Accounting Standards – Same Disclosure Statement (DS-2) New process for amendments– – File at lease 6 months prior to change – Cognizant agency for indirects can approve, disapprove or ask for more time – If no response from cognizant agency within 6 months, may proceed with change © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.419 Cost accounting standards and disclosure statement

35. “Temporary dependent care costs (as dependent is defined in 26 U.S.C. 152) above and beyond regular dependent care that directly results from travel to conferences is allowable provided that: (i) The costs are a direct result of the individual’s travel for the Federal award; (ii) The costs are consistent with the non-Federal entity’s documented travel policy for all entity travel; and (iii) Are only temporary during the travel period” May require one to rethink Travel Policy Consistency with all funds © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 200.474 (c) (1) Travel Costs

36. Cost Sharing – 200.306 – Restrictions on Voluntary Committed (discussed earlier) – Only mandatory or committed in the BUDGET included in organized research base for computing F&A NIH Salary Cap? How will all of these changes affect the F&A rate calculation? © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 F&A Rate Calculation

37. “(a) Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program- specific audit conducted for that year in accordance with the provisions of this Part.” Increases the threshold from $500,000 in Federal awards per year to $750,000 in Federal awards per year Reduces audit burden for approx. 5,000 non-Federal entities; maintains oversight for over 99% of dollars currently covered by Single Audit © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Audit requirements 200.501

38. Impact of effective dates – Awards issued under new requirements but audited prior to first FY beginning after 12/26/14 – Awards issued under old requirements but audited under Subpart F These issues and many, many more are still being assessed, in large part by the Public Accounting firms. COGR and others intend to collaborate with this group in developing further guidance. © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014 Subpart F – Audit Requirements

39. Questions? Answers? © 2014 National Council of University Research Administrators NCURA Region IV Spring Meeting April 27 – 30, 2014