Leading Excellence in Research Costing Practices PRESENTATION FOR NATIONAL CONFERENCE ON COLLEGE COST ACCOUNTING Presenters: Arif “Mak” Karim, Director Janet Turner, National Specialist U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES Program Support Center, Grants Finance & Administration Services Leading Excellence in Research Costing Practices General Conference: 11/2 – 11/4, 2016

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES PROGRAM SUPPORT CENTER FINANCIAL MANAGEMENT PORTFOLIO GRANTS FINANCE AND ADMINISTRATION Cost Allocation Services (CAS)

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) New York Bethesda Dallas San Francisco

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) Director: Arif “Mak” Karim 214-767-3600 (Dallas, Texas) Arif.Karim@psc.hhs.gov Deputy Director: Darryl Mayes 301-492-4852 (Bethesda, Maryland) Darryl.Mayes@psc.hhs.gov

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) CAS BRANCH CHIEFS BY REGION/OFFICE New York San Francisco Michael Stack (S/L) Naomi Tamashiro (S/L) 212-264-0944 415-437-7822 Michael.Stack@psc.hhs.gov Naomi.Tamashiro@psc.hhs.gov Louis Martillotti (C/U, NP &H) Patrick Smith (C/U, NP &H) 212-264-0918 415-437-7834 Louis Martillotti@psc.hhs.gov Patrick.Smith@psc.hhs.gov Dallas Bethesda Matthew Dito (C/U, NP & H) Steven Zuraf (C/U, NP & H) 214-767-3764 301-492-4858 Matthew.Dito@psc.hhs.gov Steven.zuraf@psc.hhs.gov State, Local and Tribal Governments (S/L) Colleges/Universities (C/U) Non-Profits (NP) Hospitals (H)

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) CAS NATIONAL SPECIALISTS COLLEGES/UNIVERSITIES - New York Office Michael Leonard 212-264-4301 Michael.Leonard@psc.hhs.gov STATE, LOCAL & TRIBAL GOVERNMENTS – San Francisco Office Janet Turner 415-437-7859 Janet.Turner@psc.hhs.gov PUBLIC ASSISTANCE COST ALLOCATION PLANS – Dallas Office Terry Hill (Retiring 11/30/2016) 214-767-3263 Terry.Hill@psc.hhs.gov NOT-FOR-PROFIT ORGANIZATIONS & HOSPITALS VACANT

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) CAS AS COGNIZANT AGENCY REVIEWS AND APPROVES Facilities & Administration Cost Rate for Institutions of Higher Education State-Wide Central Services Cost Allocation Plans Public Assistance Cost Allocation Plans State & Local Government Departmental Rates Hospital Patient Care Rates Non-Profit Organizations Audit Resolutions Cost Allocation Standards Board’s Disclosure Statement (DS- 1&2)

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) PRESIDENTIAL TEAM IS VISITING HHS AS PART OF THE TRANSITION PROCESS PSC/CAS - Provided Updates on: GAO Report Legal Issues Involving Appeals Congressional Inquiries Audit Issues Organizational Structure

GAO RECOMMENDATIONS (4) GAO REPORT 16-616 GAO RECOMMENDATIONS (4) IMPROVE DESIGN OF INTERNAL CONTROLS TO PERIODICALLY REVIEW AND UPDATE POLICY AND REGULATORY CHANGES STANDARDIZED DOCUMENTATION SUPERVISORY AUDIT REVIEW STEPS SIMPLIFIED METHOD BASE INFORMATION ON WEB ABOVE WILL BE COMPLETED BY DATE 12/31/2016

COST ALLOCATION SERVICES EFLOW PROJECT – PAPER REDUCTION ACT Mak Karim Director, Cost Allocation Services COST ALLOCATION SERVICES EFLOW PROJECT – PAPER REDUCTION ACT

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) EFLOW PROCESS CAS PROPOSAL SUBMISSION AND REVIEW PROCESS PAPERLESS. NON-FEDERAL ENTITIES MUST SUBMIT PROPOSAL ELECTRONICALLY ENHANCEMENTS TO THE SYSTEM – WIP PORTAL ACCESS – F&A PROPOSAL SUBMISSION DIRECTLY INTO EFLOW BY SPRING OF 2017 FOR PROFIT GROUP AT NIH/DFAS (DIVISION OF FINANCIAL ADVISORY SERVICES) WILL DEPLOY EFLOW BY 2017 (CAS MODEL) CAS TO HOST FEDERAL RATE AGREEMENTS

COST ALLOCATION SERVICES (FORMERLY, DIVISION OF COST ALLOCATION) OFFICE OF MANAGEMENT & BUDGET DUE END OF NOVEMBER - 2016

ADMINISTRATIVE CONTRACTING OFFICER (ACO) COST ALLOCATION STANDARDS BOARD (CASB – Disclosure Statement DS-2) APPROVAL LETTER - CAVEAT However, the CASB DS-2 Section 2.5.2 requires disclosure of the Salary and Wage Cost Accumulation System.  In accordance with 45 CFR 75.430, Federal approval of the salary and wage cost accumulation system is not required.  Therefore, we express no opinion on the University’s salary and wage cost accumulation system.  Approval of your DS-2 is subject to the following condition:  The information provided by the Institution of Higher Education is not later found to be materially incomplete or inaccurate by the Federal Government.

GASB – STATEMENT No. 68 During our review of your proposal, it was disclosed that the University’s actuarially determined pension contributions exceeded the Governmental Accounting Standards Board (GASB) Statement No. 68 calculated pension expense.  However, 2 CFR 200.431(g)(3) only allows pension plan costs determined in accordance with GAAP (i.e., GASB 68) The Office of Management and Budget (OMB) is aware of the issue, and may publish proposed rule to delete 2 CFR 200.431(g)(3) soon Since a final rule has not been issued, we reserve the right to make an adjustment to the billed pension costs to disallow the pension contributions in excess of the GASB 68 calculated pension expense.

De-Minimis rate - 2 CFR 200.414(f) / 45 CFR 5.414(f) De-Minimis 10% Indirect Cost Rate (10%of Modified Total Direct Costs) New Grantee – Only for those Who Have Never Had a Federally Negotiated Indirect Cost Rate Not available to State/Local Govt. Depts. receiving > $35 million Direct Federal awards May be used indefinitely No documentation required to support

De-Minimis rate - 2 CFR 200.414(f) / 45 CFR 75.414(f) Pass-Thru Entities: NOT PERMISSABLE (Pass-Thru Entities) – to force / entice a proposed subrecipient without a rate to take less than the 10% de minimis rate. Pass-Thru Entities MAY, but are not required to negotiate a rate with a proposed subrecipient with no Direct Federal Funds who asks to do so However, if a Pass-Thru Entity approved actual allowable indirect costs for a subrecipient prior to the Uniform Guidance, they are expected to continue doing so!

Indirect Cost Rate One-Time Extensions 2 CFR 200.414(g)/45 CFR 75.414 (g) Any non-Federal entity that has a current federally negotiated indirect cost rate may apply for a one-time extension of the rates in that agreement for a period of up to four years Requires review and approval by cognizant agency for indirect costs

Indirect Cost Rate One-Time Extensions May not request a rate review until extension period ends At end of 4-year extension, the non-Federal entity must re-apply to negotiate a rate Subsequent one-time extensions (up to 4 years) are permitted IF a renegotiation is completed between each extension request

ANOTHER DAY AT THE OFFICE NEGOTIATIONS ANOTHER DAY AT THE OFFICE

NEGOTIATION PROCESS

Useful Websites & OMB Contact Information http://www.ecfr.gov Current version of Title 2 CFR Part 200 and Title 45 CFR Part 75 http://www.cfo.gov/cofar Links include: 2 CFR 200 (link to ecfr.gov) OMB Contact: Gilbert Tran (202) 395-3993 Hai_M._Tran@omb.eop.gov CAS: rates.psc.gov