1. All About Costs A Post-Award Primer
Division of Grants Compliance and Oversight
Office of Policy for Extramural Research Administration, OER National Institutes of Health, DHHS
NIH Regional Seminar – Baltimore, MD– May 2016
Diane Dean, Director
Kathy Hancock, Assistant Grants Compliance Officer
Joel Snyderman, Assistant Grants Compliance Officer
Samantha Tempchin, Assistant Grants Compliance Officer

2. Discussion Topics Cost Principles Administrative Standards
Audit Requirements
Grant Award Basics
Award Restrictions
Responsibilities
Accounting Basics
Monitoring Basics
Subrecipient Monitoring
Other Cost Considerations
NIH Financial Reporting Basics
Closeout 2

3. Federal Requirements

4. Uniform Regulation Governing Grants, Cooperative Agreements and other Funding Agreements for Federal Agencies
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 (2 CFR Part 200)
This Final Uniform Guidance (2 CFR Part 200) consolidates and supersedes eight OMB circulars (A-21, A-50, A-87, A-89, A-102, A-110, A-122, and A-133).
On December 19, 2014, HHS published in the Federal Register, an Interim Final Rule (45 CFR Part 75) adopting OMB’s final regulation in 2 CFR Part 200 with certain amendments, based on existing HHS regulations, to supplement the regulation as needed for the Department.
Technical amendments to 45 CFR 75 were published on January 20, 2016
45 CFR Part 75 – Public Welfare, Uniform Administrative Requirements, Cost Principles and Audit Requirements for HHS Awards
Effective for all HHS awards made on or after December 26, 2014

5. Compliance Requirements
Cost Principles:
45 CFR Part 75, Subpart E (§ § )
Institutions of Higher Education (IHE), State, Local Governments and Indian Tribes, and Non-profit Organizations
45 CFR Part 75, Appendix IX
Hospitals
48 CFR Subpart 31.2 (Federal Acquisition Regulation):
For-Profit Institutions

6. Cost Principles
Establishes principles for determining costs applicable to grants, contracts, and other agreements
Direct costs
F&A/indirect costs
Selected items of cost
Allowable/unallowable costs
Compensation for personal services

7. Administrative Requirements
45 CFR Part 75, Subpart C – Preaward Federal Award Requirements and Contents of Federal Awards
(§ § )
45 CFR Part 75, Subpart D – Post Federal Award Requirements (§ § )

8. Administrative Requirements
Prescribes:
Preaward requirements
Postaward requirements
Also includes requirements for:
Payment
Matching or Cost sharing
Accounting for program income
Revision of budget and program plans
Non-Federal audits
Allowable costs
Financial management systems standards
Property standards
Procurement standards
Reports and records

9. Audit Requirements
45 CFR : Institutions of Higher Education, States and Local Governments, and Non-Profit Organizations, including Non-Profit Hospitals
45 CFR (h) through (k): For-Profits Organizations, including For-Profit Hospitals
NIH Grants Policy Statement: Foreign Organizations must follow the same requirements as For-Profit Organizations

10. Audit Requirements
All NIH grant recipients that expend $750,000 or more within a year in Federal awards are subject to an audit requirement.
Applicable to Non-Federal Entity Fiscal Years Beginning on or after 12/26/2014.
For-Profit and Foreign Organization audit requirement:
Expend $750,000 under one or more HHS award (as a direct recipient and/or consortium participant)
Audits are due within the earlier of 30 days after receipt of the auditor’s report(s) or 9 months after the end of the recipient’s audit period.
Recipients delinquent in submitting audits risk the imposition of sanctions and potential loss of Federal funds.

11. Summary of Audit Requirements Where to Submit Audit Reports
Recipient Type
Source of Audit Requirement (Non- Federal Entity Fiscal Years Beginning Prior to 12/26/2014)
Source of Audit Requirement (Non- Federal Entity Fiscal Years Beginning On/After 12/26/2014)
Where to Submit Audit Reports
State & Local Governments
OMB Circular A-133
45 CFR
Federal Audit Clearinghouse (See contact information in NIH GPS Part III)
Institutions of Higher Education
Non-Profits, including non-profit hospitals
For-Profits, including for-profit hospitals
45 CFR 74.26(d)
45 CFR (h) through (k) and 45 CFR
National External Audit Review Center (See contact information in NIH GPS Part III)
Foreign Organizations
NIH Grants Policy Statement (same as For-Profits)
NIH Grants Policy Statement  (same as For-Profits)
National External Audit Review Center
(same as For-Profits, see contact information in NIH GPS Part III) .

12. Summary of Federal Requirement References
Recipient Type
Administrative Requirements
Cost Principles
Audit Requirements
State & Local Governments and Indian Tribes
45 CFR Part 75, Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards §
§75.217
AND
45 CFR Part 75, Subpart D – Post Federal Award Requirements
§ §75.391
45 CFR Part 75, Subpart E
See also § and §75.417
45 CFR Part 75, Subpart F
at §75.501
Also applicable to non-profit Hospitals
Institutions of Higher Education
See also § and §75.419
Non-Profits
Hospitals
45 CFR Part 75, Appendix IX
at § (h)-(k) and §75.216
Also applicable to for-profit Hospitals
For-Profits
FAR 31.2
(48 CFR Subpart 31.2)
Foreign Organizations
Same as above depending on type of institution
Per NIH GPS use
45 CFR Part (h)-(k)

13. Grant Award Basics
**************** NOTICE OF AWARD******************* CENTER GRANT Issue Date:06/01/2015
Department of Health and Human Services National Institutes Of Health

14. Read the Notice of Award
Terms of Award – Section III
45 CFR Part 75 – HHS rules and requirements that govern the administration of grants
NIH Grants Policy Statement (GPS) – policy requirements that serve as the terms and conditions of NIH awards
Special Terms and Conditions – Section IV

15. Award Restrictions (Section IV)
Only applied to a particular grant for cause
Shown on the Notice of Award (NoA) after Section III – Institute and/or Center specific terms of award
Funds usually are not restricted in the Payment Management System
Restricted funds must be tracked by grantee to ensure compliance
EXAMPLE of Award Restriction: Funds may not be used to purchase equipment without the written prior approval of the NIH awarding component.

16. Who is Responsible for Post-Award Financial Management?
A. The Principal Investigator
B. The Departmental Administrator
C. The Department Chair
D. The Institution

17. Accounting Basics

18. Accounting Administrative Standards in 45 CFR 75 requires:
Separate account is established for each project
Program Income is identified and accounted for by project
Program Income is used in accordance with the appropriate alternative, i.e.,
Additive
Deductive
Combination
Matching

19. Accounting (cont.) Requires that:
Expenses are charged in accordance with:
NoA Terms and Conditions
NIH Grants Policy Statement
Including addenda in effect as of the beginning date of the budget period
Salary Cap / Rate Limitation
Cost Accounting Standards
Federal regulations
All expenses are appropriately documented

20. Monitoring Basics

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

22. Budget vs. Actual
Actual expenses should be compared to the budget to ensure:
Total funds on the grant have not been exceeded
Total funds are used appropriately
Total funds for any cost category have not been exceeded if restricted on the NoA

23. Accurate Charges
Actual expenses should be reviewed to ensure they are accurate and allowable
Reasonable (including necessary)
Allocable
Consistently applied
Conforms to any limitations or exclusions

24. What does “reasonable” mean?
A cost may be considered reasonable if the nature of the goods or services acquired or applied reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.

25. Example – Reasonable?
Dr. Grant needed a specialized microscope for his research supported by an NIH grant from the National Cancer Institute. When deciding on the model that would best suit his needs, he received several price quotes on various models that were all within the same general price range. However, one microscope in particular appealed to him – it met all of the necessary specifications plus many additional features. Although it was about $10,000 more than the others, he ordered it.

26. What does “allocable” mean?
A cost is allocable to a specific grant if it is incurred solely in order to advance work under the grant and is deemed assignable, at least in part, to the grant.

27. Example – Allocable?
When Dr. Grant’s microscope finally arrived, he found that equipment funds for his National Cancer Institute grant were fully expended. Since the microscope was for use on an NIH grant, he decided to charge the cost to another one of his NIH grants that was funded by the National Eye Institute.

28. What does “consistently applied” mean?
Recipients must be consistent in assigning costs to cost objectives.
Costs may be charged as either direct costs or F&A costs, depending on their identifiable benefit to a particular project or program.
All costs must be treated consistently for all work of the organization under like circumstances, regardless of the source of funding.

29. Example – Consistently Applied?
Dr. Grant’s lab was running low on office supplies and postage stamps. Since he couldn’t wait any longer for his institution to provide the supplies, he purchased them and charged them to his NIH grant account.

30. What does “conformance” mean?
A cost is allowable if it is reasonable, allocable and conforms to the cost principles and the sponsored agreement AND is not prohibited by law, regulation or term of award.
Conformance varies by type of activity, type of recipient, and other characteristics of individual awards.

31. Example – Conformance?
Dr. Grant decided to host a very important Departmental meeting at his home and serve beer and pizza hoping that everyone would attend. The purpose of the meeting was to discuss changes in NIH grants policy, which affected the work of the entire Department. Therefore, he decided to charge the cost of the beer and pizza to his grant, especially since he was providing the use of his home.

32. Cost Transfers Used to correct: Must be well documented
Erroneous charges
Unreasonable charges
Unallocable charges
Inconsistently applied charges
Unallowable charges
Must be well documented
Must be made within 90 days from the time error was discovered

33. Other Cost Considerations33

34. Selected Items Requiring Prior Approval
NIH Grants Policy Statement defines actions requiring NIH prior approval.
Some prior approval actions include the following:
Carryover of funds (if required-see Section III of NoA)
Incurrence of pre-award costs greater than 90 days
Deviation from award terms and conditions
Activities disapproved or restricted as a condition of award
For a complete listing of NIH prior approval requirements see:
NIH GPS Prior Approval Requirements

35. Carryover of Funds
Requests for carryover of funds should be signed by Authorized Representative.
Request must be sent to GMO and include:
Detailed budget by direct cost category with F&A cost information (base and rate). If personnel costs are requested, include:
a detailed breakdown of personnel costs
base salary
salary requested
effort to be spent on the project
A scientific justification for the use of funds
The reason for the unobligated balance

36. NIH Financial Reporting Basics

37. Federal Financial Report (FFR)(SF-425)
Financial Reporting
Federal Financial Report (FFR)(SF-425)
Expenditure Data
Timely - Must adhere to submission deadlines:
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 1/31/2016 – FFR due 6/30/16
(90 days after the end of the CQ of 3/31/16)
Final (End of Competitive Segment) – (SNAP and Non-SNAP Awards)
FFR submitted within 120 days following the end of the project period
(SNAP – Streamlined Non-competing Award Process)

38. Financial Reporting FFRs should be submitted timely and accurately
Reported expenses and program income must agree with institutional accounting records
Routine Revisions to correct FFRs are not appropriate
Information related to Financial Reporting:
See FFR (SF425) Instructions for NIH Grantees available at

39. Final Closeout Reporting
Projects ending on or after October 1, 2014, recipients must submit the following document within 120 calendar days of the end of the period of performance:
Final Federal Financial Report (FFR) SF-425 Expenditure Data (submitted through eRA Commons)
Final Progress Report
Final Inventions Statement & Certification

40. New HHS Closeout Requirements
Closeout Reminders
New HHS Closeout Requirements
New HHS policy requires NIH to initiate unilateral closeout procedures – i.e., closeout without receipt of acceptable reports -- within 180 days of the period of performance end date if grantee has not submitted an acceptable report for each required final report.
See: NOT-OD

41. Closeout Reminders
Recipients must ensure there are no discrepancies between final FFR expenditure data (in eRA Commons) and the FFR cash transaction data (in Payment Management System [PMS]).
The FFR module in eRA Commons will display a text reminder before submitting the Final FFR
Failure to submit an acceptable final FFR in a timely manner may result in disallowed costs or federal debt
If a grantee fails to submit a final FFR expenditure data report:
NIH must use the last recorded quarterly cash disbursement level
If the final FFR expenditure data does not match the amount reported on last FFR cash disbursement report to PMS:
NIH must use the lower amount
Unilateral Closeout emphasizes the need for TIMELY and ACCURATE reporting

42. Closeout: NIH Centralized Processing Center
Recipients are strongly encouraged to submit closeout documents electronically through the
eRA Commons; However,
Centralized office accepts receipt of all non-financial, paper-based closeout documents:
Final Progress Report
Final Invention Statement and Certification
If not using eRA Commons Closeout Module, mail closeout documents to:
NIH Centralized Processing Center
6705 Rockledge Drive, Suite 5016, MSC 7986
Bethesda, MD (for regular or US Postal Service Express mail)
Bethesda, MD (for other courier/express mail only)

43. Reminder: Submit Timely Reports
Progress Reports, financial and final reports should be submitted on time to avoid consequences.
Failure to submit timely reports may adversely affect future NIH funding to:
The Grantee Institution
The Principal Investigator
NIH may impose sanctions on institutions that do not meet these reporting requirements, including: 
Corrective actions
Removal of expanded authorities
Delay or withholding of future awards to the project or program

44. A Rule of Thumb
Whenever you are contemplating a significant post award change, and you are uncertain about the need for prior approval, consult in advance with:
The Notice of Award (terms and conditions)
Your Office for Sponsored Research/Projects
NIH awarding component Grants Management Officer/Specialist

45. Questions?
Diane Dean, Director, Division of Grants Compliance and Oversight
Kathy Hancock, Assistant Grants Compliance Officer
Joel Snyderman, Assistant Grants Compliance Officer
Samantha Tempchin, Assistant Grants Compliance Officer