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 Division of Grants Compliance and Oversight Office of Policy for Extramural Research Administration, OER National Institutes of Health, DHHS NIH SBIR/STTR.

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Presentation on theme: " Division of Grants Compliance and Oversight Office of Policy for Extramural Research Administration, OER National Institutes of Health, DHHS NIH SBIR/STTR."— Presentation transcript:

1  Division of Grants Compliance and Oversight Office of Policy for Extramural Research Administration, OER National Institutes of Health, DHHS NIH SBIR/STTR Conference, Albuquerque, NM – October 2014 Kathy Hancock, Assistant Grants Compliance Officer

2 Compliance Basics Compliance Requirements SBIR/STTR Program Requirements Cost Information Grant Award Basics Prior Approval Requirements Grantee Authorities NIH Reporting Requirements Enforcement Actions 2

3 This Division was established on August 28, 2001 and is responsible for managing internal and external compliance activities, both proactive and for-cause. Michelle Bulls Director, OPERA Diane Dean Director, Division of Grants Compliance and Oversight John Burke, Kathy Hancock, Sahar Rais, and Joel Snyderman Assistant Grants Compliance Officers 3

4 The effective management of public funds to maximize research outcomes The avoidance of fraud, institutional mismanagement, and poor management of Federal funds 4

5 It strengthens the relationship of trust that exists between federal sponsor and grant recipient It suggests a presence of the stewardship necessary to properly safeguard the Federal investment in biomedical and behavioral research 5

6 At NIH o Grants Management Officer/Specialist o Program Official o Scientific Review Officer At Institution o Authorized Organizational Representative o Project Director/Principal Investigator 6

7 Unallowable costs Misallocation of costs Excessive cost transfers Inaccurate effort reporting Inadequate subrecipient monitoring Administrative & Clerical costs Noncompliance with Assurances and special terms and conditions of award Delinquent closeout reporting 7

8 Outdated or nonexistent policies and procedures Inadequate internal controls Inadequate management systems (e.g., effort reporting, financial management)  Perception that small grantees do not need to comply  Inadequate resources  Inadequate staff training and education  Perception that internal control systems are not necessary 8 Common Contributors:

9 Compliance Requirements 9

10 Code of Federal Regulations (CFR) 42 CFR Part 52 – Grants for Research Projects 45 CFR Parts 74 and 92 – Public Welfare, Administrative Requirements (74) (92) 45 CFR Part 46 – Public Welfare, Protection of Human Subjects 45 CFR Part 50 Subpart F – Financial Conflict of Interest 10

11 OMB Circulars - Administrative Requirements or Standards: o A-102: Uniform Administrative Requirements for Grants and Cooperative Agreements awarded to State and Local Governments and Indian Tribes o A-110 / 2 CFR Part 215: Uniform Administrative Requirements for Grants and Agreements awarded to Universities, Hospitals, and Other Non-Profit Organizations These include pre-award and post-award requirements 11

12 Cost Principles: Applicable OMB Circulars and CFRs o A-21 (2 CFR Part 220): Cost Principles for Educational Institutions o A-87 (2 CFR Part 225): Cost Principles for State and Local Governments and Indian Tribes o A-122 (2 CFR Part 230): Cost Principles for Non-Profit Organizations o 45 CFR Part 74, Appendix E: Principles for Determining Costs Applicable to Hospitals o 48 CFR Subpart 31.2 (Federal Acquisition Regulation) Applicable to For-Profit Organizations 12

13 Audit Requirements: Applicable OMB Circular and CFR o A-133: Audits of States, Local Governments, and Non-Profit Organizations o 45 CFR Part 74.26 (d): Audits of For-Profit and Foreign Organizations 13

14 Summary of Applicable Regulations Grantee TypeAdministrative Requirements Cost PrinciplesAudit Requirements State & Local Governments A-102 (45 CFR Part 92) A-87 (2 CFR Part 225) A-133 _____________ 45 CFR Part 74.26(d) Colleges & Universities A-110 or 2 CFR Part 215 A-21 (2 CFR Part 200) Non-ProfitsA-122 (2 CFR Part 230) Hospitals45 CFR Part 74, Appendix E For-ProfitsFAR 31.2 (48 CFR Subpart 31.2) ForeignAs stated above for the grantee type NIH GPS, uses 45 CFR Part 74.26(d) 14

15 As part of a larger Federal effort to increase efficiency and reduce waste, on December 26, 2013, the Office of Management and Budget (“OMB”) published a series of significant reforms to the Government’s policies relating to grants and cooperative agreements. This Final Guidance consolidates and supersedes the eight OMB circulars (A-21, A-50, A-87, A-89, A-102, A-110, A-122, and A-133). These new federal policies become effective for new federal awards and new funding for existing awards on Dec 26, 2014. 15

16 Other Compliance Requirements 16

17 Animal Welfare NIH Grants Policy Statement (GPS) Notice of Award (NoA) NIH Guide to Grants and Contracts (for new requirements) 17

18 Grantees are responsible for…. Safeguarding all assets Spending funds in accordance with the authorized purpose Developing and implementing systems to ensure proper stewardship of funds o Financial management systems o Procurement systems o Time & effort reporting systems o Monitoring activities o Adherence to terms & conditions of award 18

19 Develop and Maintain Written Policies and Procedures Organizational Structure Purchasing Accounting/Budgetary Controls Time and Effort Reporting Travel Consulting Property Management Ethics/Conflict of Interest 19

20 Financial Management/Accounting Requirements Accounting system must track costs between o direct and indirect costs (general ledger) o by project (project ledger) Expenses are charged in accordance with o Notice of Award terms and conditions o NIH Grants Policy Statement o Salary Rate Limitations o Cost Accounting Standards o OMB Circulars & CFRs (e.g., 48 CFR Subpart 31.2) Accounting records must be supported by appropriate source documentation (e.g., invoices, payroll slips, time sheets, justifications, explanations, etc.). 20

21 Monitoring Requirements Budgetary controls must be in place to require that: o Actual expenses are periodically compared with budget o Actual expenses are accurate, i.e., reasonable, allocable, allowable and consistently charged o Mischarges are corrected in a timely manner (cost transfers) o Prior approvals are obtained when required o Subrecipient expenses are monitored – (Grantee’s responsibility to monitor expenses) 21

22 Time and Effort Reporting Requirements Commercial organizations must document salaries and wages charged to grants o Maintain a labor distribution system for all employees regardless of function. o Implement a system that accounts for total hours o Charge direct and indirect labor to the appropriate cost objectives to accurately identify labor costs Charges to direct projects Charged to indirect activities Included in the base to which indirect costs are allocated o Establish written procedures o Implement internal controls on labor charges o See the website for more information and sample time sheet submission/time-and-effort-reporting-commercial-organizations 22

23 (FCOI Regulations) 42 CFR Part 50 Subpart F (grants and cooperative agreements) 45 CFR Part 94 (contracts) Applies to Phase II SBIRs and STTRs applicants/awardees (Phase I SBIR/STTRs are exempt) Revised Final Rule published on 8-25-11 23

24 This regulation promotes objectivity in research by establishing standards that provide a reasonable expectation that the design, conduct, or reporting of research funded under NIH grants and cooperative agreements will be free from bias resulting from Investigator financial conflicts of interest. 24

25 Applies to the PD/PI and any individual defined as an “Investigator” under the regulation Investigators disclose “Significant Financial Interests” (SFIs) o Some SFI exclusions include: Salary, royalties, or other remuneration paid by the Institution (i.e., SBIR/STTR awardee) to the Investigator if the Investigator is currently employed or otherwise appointed by the Institution, and Any ownership interest in Institution (i.e., SBIR/STTR awardee) held by the Investigator Institutions must, among other things: o Have a policy that complies with the regulation at the time of application o Train Investigators prior to engaging in NIH-funded research o Solicit disclosures from Investigators and review disclosures o Identify, manage and report identified FCOIs to NIH prior to expenditure of funds, within 60 days of identifying a conflict during the period of award, and annually 25

26 Mailbox for inquiries o Office of Extramural FCOI webpage o Resources include a Tutorial, Webinars, Checklist for Policy Development, FAQs, PowerPoint presentations with case studies, etc. 26

27 27 **************** NOTICE OF AWARD******************* SBIR GRANT Issue Date:06/01/2014 Department of Health and Human Services National Institutes of Health **************** NOTICE OF AWARD******************* SBIR GRANT Issue Date:06/01/2014 Department of Health and Human Services National Institutes of Health

28  A legally binding agreement with the government  Official notice that an award has been made  NoA includes:  Funding level (amount available for project)  Periods of support (Project and budget period)  Terms and conditions (Restrictions/requirements)  NIH contact information 28

29 Grant awards are made to institutions/organizations Recipients of NIH grant funds must comply with all applicable Federal statutes, regulations and policies By drawing down funds from the HHS Payment Management System, grantees agree to the terms and conditions of the grant award. DHHS Division of Payment Management 29

30 Terms of Award – Section III o 45 CFR Part 74 or 92 - HHS rules and requirements that govern the administration of grants o NIH Grants Policy Statement – policy requirements that serve as the terms and conditions of NIH awards (latest version 10/01/13) o Program legislation o Appropriation acts o Program regulations 42 CFR Part 52 - Grants for Research Projects o Carryover authority 30

31 Section IV - Special Terms and Conditions o Includes Institute and/or Center (IC) specific terms o Restrictive/Requirement/Informational Terms. Examples include: Restriction on the use of funds Requirement of a grantee to take action (F&A rate negotiations, obtain assurances associated with human or animal use, etc.) Provide information to ensure compliance with Federal requirements. Final year term, if applicable Restricted funds must be tracked by grantee to ensure compliance o EXAMPLE of Award Restriction: Funds may not be expended for the purchase of equipment without the written prior approval of the NIH awarding component. 31

32 Compliance with NIH Prior Approval Requirements What actions require NIH prior approval? 32

33 Change in scope or objective of a project Change in Scope is a change in direction, type of training, or other area that constitutes a significant change from the aims, objectives, or purpose of the originally approved project 33

34 Some actions likely to be considered a change in scope thus requiring NIH Prior Approval include: Change in Senior/Key personnel Named in the Notice of Award Significant rebudgeting Purchase of a unit of equipment exceeding $25,000 Change in the specific aims approved at the time of award Substitution of one animal model for another Any change from the approved use of animals or human subjects Shifting research emphasis from one disease area to another Applying a new technology; i.e., changing assays from those approved to a different type of assay Transferring the performance of substantive programmatic work to a third party through a consortium agreement, by contract, or any other means 34

35 Change in PD/PI or Senior/Key personnel identified by NIH and specifically named in the Notice of Award (NoA) o Must notify NIH if the PD/PI or other Senior/key personnel named in the NoA will: withdraw from the project entirely be absent for 3 months or more reduce time devoted to the project by 25% or more o Must request approval of a substitute PD/PI or other Senior/Key personnel named in the NoA Note: Must notify the awarding office GMO in writing if grantee wishes to terminate the award because it cannot make suitable alternate arrangements. 35

36 Preaward costs > 90 days prior to the effective date of the initial budget period of a project period for a new or competing continuation award Deviation from award terms and conditions Activities disapproved or restricted as a condition of the award Change of grantee organization Second extension without additional funds Change of Grantee Organizational Status o Merger o Successor-in-interest o Name change For more information see NIH Grants Policy Statement at 36

37 All requests for NIH awarding office prior approval must be: o made in writing (includes submissions by e-mail) o sent to the designated GMO identified on the NoA o made no later than 30 days before the proposed change o signed by the Authorized Organizational Representative Note: Approval must be obtained from the GMO through a revised NoA or other written communication 37

38 in advance Whenever you are contemplating significant postaward changes and you are uncertain about the need for prior approval, consult in advance with: Your business official NIH awarding component’s Grants Management Officer/Specialist identified on the Notice of Award 38

39 What authorities do grantees have? 39

40  Carryover of funds from one budget period to the next. Authority is provided as a term on the Notice of Award (NoA) (Section III).  Phase I SBIR/STTR awards – carryover does not apply  Phase II SBIR/STTR awards - carryover authority generally applies  Cost-related prior approvals – Allows the rebudgeting of funds for any direct cost item provided there is no change in scope  A rebudgeting action greater than 25% of the total cost awarded is a potential indicator of a change in scope 40

41  Grantee may extend (without additional funds) the final budget period of the project up to 12 months via the eRA Commons up to 90 days prior to the end date of the award under certain conditions.  Transfer performance of substantive programmatic work to a third party by means of a consortium agreement.  For more information see NIH Grants Policy Statement at panded_Authorities 41

42 Compliance with NIH Reporting Requirements 42

43  RPPR Webpage: / /  Includes links to o RPPR Application Guide o RPPR Guide Notices o Frequently Asked Questions o Training o Contacts 43

44 RPPR required for ALL type 5 progress reports (SNAP and non-SNAP) submitted on or after October 17, 2014 - NOT-OD-14- 092 ( files/NOT-OD-14-092.html) files/NOT-OD-14-092.html o NIH continues development of the RPPR for final progress reports and for administrative extensions (Type 4s; e.g., SBIR/STTR Fast-Track Phase II application) o NIH will update the community as progress is made. 44

45 SBIR/STTR Fast-Track Phase II applications (SBIR/STTR Fast-Track Phase I final progress reports) use o Non-Competing Continuation Progress Report PHS 2590 at 45

46 Phase IIs are generally subject to the SNAP – See Section III of NoA. o Follow (SNAP) instructions within RPPR. o SNAP progress reports (e-SNAP) are due 45 days prior to anniversary start date and are sent electronically through eRA Commons at o SNAP eliminates need for annual submission of budget with progress report and annual Federal Financial Report (FFR). o All progress reports for awards subject to SNAP must be submitted electronically using the eRA Commons eSNAP module (see 093.html) 46

47 Federal Financial Report (FFR) (SF-425) Two types of financial reports used: Federal Cash Transaction Report (PMS) Federal Expenditure Report (NIH) Cash Transaction data submitted quarterly to the Payment Management System (PMS), HHS Expenditure data submitted annually or at the end of a project to NIH through eRA Commons – see NoA 47

48 Timely - Expenditure report submission deadlines: o Annual – (Non-SNAP Awards) FFR submitted for each budget period no later than 90 days after the end of the calendar quarter (CQ) in which the budget period ended. Budget period ends 1/31/2014 – FFR due 6/30/14 (90 days after the end of the CQ of 3/31/14) o Final - (End of Competitive Segment) – (SNAP Awards) FFR submitted within 90 days following the end of the project period (SNAP – Streamlined Non-competing Award Process) 48

49  FFRs should be submitted accurately  Reported expenses and program income must agree with institutional accounting records  Routine Revisions to correct FFRs are not appropriate See FFR (SF425) Instructions for NIH Grantees available at See NIH Guide, January 4, 2011, Implementation of Federal Financial Report – Upcoming Mandatory Use of the Federal Financial Report System in the eRA Commons beginning February 1, 2011 See NIH Guide, February 22, 2001, FINANCIAL STATUS REPORTS: REMINDER AND INFORMATION ON TIMELINESS AND ACCURACY REQUIREMENTS 49

50 Failure to submit timely final reports may affect future funding to the organization o Final Federal Financial Report - Expenditure Data No discrepancies between final FFR expenditure data and cash transaction data o Final Invention Statement and Certification o Final Progress Report Final Reports are due within 90 days of the end of grant support. April 2, 2008, NIH Announces New Centralized Processing Center for Receipt of Grant Closeout Documents and Reminds Grantees of Required Closeout Reports for NIH Assistance Awards June 17,2005, NIH Announces New Closeout Feature in the eRA Commons and Reminds Grantees of Required Closeout Reports for NIH Assistance Awards 50

51 Closeout reports and 90 day submission requirements remain the same. Final guidance dependent on HHS implementation of Uniform Guidance. Anticipated changes: Shorter timeframe to complete process New requirements for NIH to initiate “unilateral” closeout if reports are missing or unacceptable New requirements which may result in a debt obligation to the grantee For details see NOT-OD-14-084 and Closeout FAQs 51

52 Special terms and conditions of award Loss of carryover authority Cost disallowances Closer Monitoring Special or More Frequent Reporting Suspension, termination, and Withholding of Support Opportunity for improved grantee systems and policies to assure compliance 52

53 Thank You! Division of Grants Compliance and Oversight Office of Policy for Extramural Research Administration National Institutes of Health 301.435.1962 E-mail: QUESTIONS? 53

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