Rules Governing Sponsored Projects (aka OMB Circulars) Presented by Beverly Blakeney, Diane Cummings and Julie Macy

Objectives To have an understanding of the OMB Circulars that apply to UVM To understand how different agencies may implement each circular To understand how UVM implements these rules through our policies and procedures SPONSORED PROJECTS TRAINING PROGRAM

OMB Circulars The Office of Management and Budget (OMB) maintains a set of circulars containing requirements federal agencies must follow when issuing federal funds. Each of the funding agencies pass down requirements established under the circulars to the recipients of the federal funds through the implementation of their own sponsor specific policies. SPONSORED PROJECTS TRAINING PROGRAM

OMB Circulars (Continued) The Circulars with which UVM must comply are: OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations OMB Circular A-110, Uniform Administrative Requirements for Grant and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations OMB Circular A-21, Cost Principles for Educational Institutions SPONSORED PROJECTS TRAINING PROGRAM

Sources of Guidance for Sponsored Projects Granting Agency Rules NIH / NSF / USDA Granting Agency Rules NIH / NSF / USDA OMB Circulars UVM Policy and Procedures Rules and Regulations governing grant and sub awards SPONSORED PROJECTS TRAINING PROGRAM

A-21 Cost Principles for Educational Institutions -First it gives instructions and guidance as to what types of costs are allowed to be charged to federal awards. -Secondly, it gives instructions to recipients on how they should develop and apply their facilities and administrative (F&A) cost rates. SPONSORED PROJECTS TRAINING PROGRAM

A-21 Difference between direct and F&A costs ◦ DIRECT COSTS: costs that can be, relatively easily, identified with a particular sponsored project with a high degree of accuracy. ◦ FACILITIES AND ADMINISTRATIVE COSTS (F&A): costs that are incurred for common or joint objectives, and therefore, cannot be readily and specifically identified with a particular sponsored project. (a.k.a. indirect costs or overhead costs) SPONSORED PROJECTS TRAINING PROGRAM

A-21 Four Guiding Principles Is the cost REASONABLE? Is the cost ALLOCABLE to the project? Is the cost CONSISTENTLY TREATED? Is the cost ALLOWABLE? SPONSORED PROJECTS TRAINING PROGRAM

A-21 Four Guiding Principles Reasonable - being necessary for the operation of the project and paying a price that a prudent person would pay for the same item. Allocable – is defined as making sure that the item or service charged to the project benefits the project and advances the work being performed. ◦ It benefits both the work under the sponsored agreement and other work of the institution in proportions that can be approximated. ◦ Example: equipment SPONSORED PROJECTS TRAINING PROGRAM

A-21 Four Guiding Principles Consistently Treated – like costs must be treated the same in like circumstances, as either direct or F&A costs ◦ Must be consistent with all types of funds, public or private ◦ Example – PAS/GCA, PI salary & fringe Allowable – expenses charged to an award must be allowed by the circular, the agreement, public laws and institution policy. ◦ Example – (A)equipment, (U) alcohol, lobbying SPONSORED PROJECTS TRAINING PROGRAM

Administrative Exception OMB Guidance on A-21 Revision to section F.6.b (July 1993) ◦ A-21 defines Department Administrative costs as an F&A cost ◦ “Items such as office supplies, postage, local telephone costs and memberships shall normally be treated as F&A costs.” SPONSORED PROJECTS TRAINING PROGRAM

Administrative Exception (continued) OMB Guidance on A-21 Revision to section F.6.b (July 1993) ◦ Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity. SPONSORED PROJECTS TRAINING PROGRAM

Administrative Exception (continued) OMB Guidance on A-21 Revision to section F.6.b (July 1993) ◦ “Major project” is defined as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such service provided by academic departments. ◦ Examples: (Exhibit C) Program Projects; General Clinical Research Centers; projects that involve extensive data accumulation, analysis and entry; projects that require making travel and meeting arrangements for large numbers of participants; etc SPONSORED PROJECTS TRAINING PROGRAM

A-110 Uniform Administrative Requirements for Grant and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations ◦ A-110 tell recipients of federal grants and cooperative agreements the rules they have to follow in administering awards. SPONSORED PROJECTS TRAINING PROGRAM

A-110- Four Defined Parts Subpart A – Ground Work/General Subpart B – Basic Policy / Pre-Award Requirements Subpart C – Post-Award Requirements Subpart D – Closeout Procedures Appendix A – Contract Provisions SPONSORED PROJECTS TRAINING PROGRAM

Subpart C – Post-Award Requirements Financial and Program Management Property Standards Procurement Standards Reports and Records SPONSORED PROJECTS TRAINING PROGRAM

Subpart C – Post-Award Requirements Financial and Program Management: Automobile Rental Cost Transfers on Grants and Contracts Procurement Standards Business Meals and Amenity Travel Etc… SPONSORED PROJECTS TRAINING PROGRAM

Subpart C – Post-Award Requirements ◦ Cost sharing or matching – Portion of the project not borne by the sponsoring agency ◦ Program income – gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. SPONSORED PROJECTS TRAINING PROGRAM

Subpart C - Prior Approvals Change in scope Change in key personnel Absence for more than 3 months or 25% reduction in effort Need for additional federal funds Additional subawards (if not in application) Additional equipment SPONSORED PROJECTS TRAINING PROGRAM

Subpart C - Waiver of Prior Approvals Pre-Award Costs No cost extensions (first time) ◦ Complete the internal form found on the OSP Website under forms no-cost extension request. ◦ PAS will work with Sponsor to determine their requirement. Carry forward of unobligated balance SPONSORED PROJECTS TRAINING PROGRAM

Subpart D – Closeout Procedures Typically 90 days after the date of completion Includes: ◦ Final Financial Report ◦ Final Invention Statement ◦ Final Progress Report SPONSORED PROJECTS TRAINING PROGRAM

A-133 Audits of States, Local Governments, and Non-Profit Organizations ◦ Outlines audit requirements for Universities and other non-profit institutions that receive federal funds. ◦ Ensures the institution can demonstrate compliance with laws, regulations, award conditions, institutional policies, etc. ◦ Ensures that federal funds are managed appropriately and financial reporting is accurate. SPONSORED PROJECTS TRAINING PROGRAM

A-133 Top areas the auditors will review: ◦ Compliance with Federal regulations, sponsor terms & conditions, and University policy ◦ Sufficient internal controls They will accomplish this by reviewing: ◦ Cash (primarily LOC draws) ◦ Accounts receivable activity ◦ Financial status reporting, for accuracy and on-time completion ◦ Cost transfers, both salary and non-salary, with a particular focus on late cost transfers ◦ Expense review, for allowability, allocability, back up documentation ◦ Subrecipient monitoring ◦ Schedule of Expenditures of Federal Awards (SEFA) ◦ Effort Reporting SPONSORED PROJECTS TRAINING PROGRAM

Who is required to have an A-133 audit? Non-Federal entities that expend $500,000 or more in a year in Federal awards either as prime recipient, sub-recipient or both during their fiscal year. What is a major program? It is a grouping (cluster) of closely related programs that share common compliance requirements. At UVM, Research & Development, Smith Lever, Student Financial Aid, and Medicaid are considered major programs. Research & Development awards are audited every year. SPONSORED PROJECTS TRAINING PROGRAM

Audit findings, risks, potential implications Findings may impact sponsor decisions about existing awards, future funding opportunities and/or may prompt sponsors to conduct their own reviews or audits. If a material weakness and/or significant deficiency is found in a major program in one year, that program will be audited the following year. In the event of a finding, a corrective action plan must be prepared and implemented. For example, in FY09, our Journal Approval Workflow was modified to eliminate any self-approvers and ensure that all Journals were reviewed to meet the Cost Transfer Policy requirements prior to approval. SPONSORED PROJECTS TRAINING PROGRAM

Rules Governing Sponsored Projects (aka OMB Circulars) Questions??? SPONSORED PROJECTS TRAINING PROGRAM