1. Post Award Accounting at Caltech New Grant Manager Training October 28, 2004

2. 2 Overview Organization and responsibilities Account structure/types Monitoring accounts Useful expenditure types

3. 3 Post Award Accounting Responsibilities PROJECT ACCOUNTING Budget Realignments Billing Cost Transfers Cost sharing Financial reporting Closeouts (financial) Fabrication accounts JPL/Caltech accounting interface NIH Salary cap Monitoring awards (in conjunction with campus) Responding to internal and external audits COST STUDIES Payroll Distribution (aka effort reporting) F&A rate development and negotiation Service centers Space surveys

4. 4 Organization Chart

5. 5 Organization Who is the Accounting Specialist on a particular award? http://www.atc.caltech.edu/support/queries.html POETA-Alias Queries Award Information Type in award number Award Detail summary screen will appear Scroll down to Award Personnel Note: This screen is also useful because it includes all linked awards

6. 6 Account Structure/Type Structure Cost Sharing JPL Research accounts JPL Service accounts Fabrication accounts

7. 7 Account Structure - What is POETA? Project - Projects are funded by Awards (Two kinds of Projects, Capital and Non-Capital) Organization i n POETA, will default to Caltech Expenditure Type Task - A Project is made up of one or more tasks. All expenditure occurs at the task or sub- task (i.e., breakdown of a task into a smaller unit of work) level Award - Awards fund Projects

8. 8 Account Structure – What Is Work Breakdown Structure? Organization of an activity into a hierarchy of one project and one or more tasks

9. 9 Cost Sharing Committed cost sharing on a sponsored project is a binding obligation that must be satisfied in accordance with the sponsor’s requirements Offer cost sharing only when required by the sponsor http://atc.caltech.edu/Finance/pa_policies.htm

10. 10 Types of Cost Sharing Committed Must be tracked, documented, and in some cases, reported Uncommitted Does not have to be tracked or recorded

11. 11 Cost Sharing Federal Requirements Do not use federal funds Use only once Costs must be verifiable, necessary, allowable and reasonable for the award on which they are being claimed

12. 12 Cost Sharing Procedure Establishing a linked account or specific task within a PTA to track cost sharing is not mandatory under the terms of Caltech’s policy Depends on the Division In all cases a manual worksheet, the Committed Cost Sharing Worksheet, will be prepared and distributed by OSR (based on information included in the proposal and the award document)

13. 13 Cost Sharing Procedure PA will contact the grant manager on an annual basis to obtain an update of the status of cost sharing and to review any supporting documentation Will require account detail of where the cost sharing was charged and require specific costs to be identified within that account PA will submit any financial reports due to agency or prime contractor

14. 14 JPL Interdivisional Authorizations What is an Interdivisional Authorization? Authorization for Caltech to incur expenses for providing a service to JPL and a means for billing JPL for those services (i.e., transferring funding from JPL to Caltech)

15. 15 JPL Interdivisional Authorizations There are 2 types of IAs 1. Research IA 2. Service IA Set-up process depends on the type of IA

16. 16 JPL Research IA’s Generally involve a member of the Caltech faculty Set-Up Must prepare a budget and statement of work that is reviewed by Caltech’s Office of Sponsored Research Should conform to all the usual requirements for proposal submission, e.g., Divisional Approval Form

17. 17 JPL Research IA’s JPL Contract Management Office (CMO) will only issue an IA to authorize payment for the work after the proposal has been submitted and reviewed For more information refer to OSR website http://atc.caltech.edu/OSR Billings and Close-Outs Processed by Project Accounting Divisional teams

18. 18 JPL Service IA’s Generally do not involve, or are not supervised by, a member of the Caltech faculty e.g., services provided directly to JPL by MPS, technicians, shops, service centers, etc. Set-Up Complete template detailing budget and statement of work Submit to Lisa Frenchie in Project Accounting (M/C 211- 15) Template and instructions are available on the Project Accounting website under forms http://atc.caltech.edu/Finance/pa_forms.htm

19. 19 JPL Service IA’s Reviewed by Project Accounting to verify Salary rates (JPL will not accept a different salary rate than Caltech rate) Correct overhead rate Work performed at campus (59.3%) Work performed at JPL (26%) Staff benefit rate

20. 20 JPL Service IA’s JPL CMO will only issue an IA to authorize payment for the work after this paperwork has been submitted and reviewed Billings and Close-Outs Processed by Project Accounting JPL team

21. 21 JPL IA’s Be aware of restrictions on charging to JPL IA’s (both service and research) Equipment Must be preauthorized and specifically identified in the IA Equipment threshold is lower than Caltech’s ($1,000 compared to $5,000) Foreign travel Must obtain prior approval

22. 22 JPL IA’s Deobligations Not uncommon JPL CMO will only de-obligate after obtaining written concurrence from Caltech PI A revised IA will be issued deobligating the funds

23. 23 Fabrication Accounts Fabrication policy http://www.atc.caltech.edu/finance/ http://www.atc.caltech.edu/finance/ Fabrication set up form http://www.atc.caltech.edu/finance/

24. 24 Fabrication Accounts Definition “An equipment fabrication is the transformation of materials, supplies, hardware costs and direct labor (including associated fringe benefits) into an item of equipment that: Does not currently exist Meets unique research specifications Has a total estimated cost in excess of $5,000 Has an estimated useful life of at least 2 years When completed, will not be affixed permanently to a building or structure”

25. 25 Fabrication Accounts Fiscal Implications Costs charged to a fabrication account are not burdened (i.e., overhead rate is not applied), regardless of expenditure type Fabricated equipment that is eventually capitalized in Oracle Fixed Assets will include all costs charged to the fabrication PTA (including labor, travel, etc.)

26. 26 Fabrication Accounts Chargeable Costs Costs charged to a fabrication PTA must be integral to the construction of that fabrication (may include labor costs) Must be in compliance with OMB Circular A-21 Must not be prohibited in the awarding document

27. 27 Establishing A Fabrication PTA Fabrication PTA’s should be established as far in advance as possible to prevent initial costs being charged to a non-fabrication account Division representative completes an equipment fabrication request form

28. 28 Establishing A Fabrication PTA Information required on the fabrication set up form includes: Description Ownership (Caltech/Gov’t/Other)* Ultimate destination* Estimated placed in service date (the best judgment of the PI of the point in time at which an equipment fabrication will become operational) Estimated cost Must be signed by the PI or the division representative *It is extremely important that the issue of ownership and final destination be known and appropriately identified at the time of account set up as this directly impacts the type of fabrication account that will be established. If the incorrect type of account is established at set up then all costs charged to that account will ultimately have to be transferred to the corrected account type.

29. 29 Establishing A Fabrication PTA Completed forms should be sent to Property Services (Ernest Ngalula at M/C 116-6, ext. 4181) Property Services reviews the form to verify that the proposed fabrication is capable of meeting Caltech’s definition of fabricated equipment then passes the form to Project Accounting

30. 30 Establishing A Fabrication PTA Project Accounting verifies that the fabrication is allowable under the terms of the grant, contract or co-operative agreement being charged and if prior approval is required Who actually sets up the account? If set up at the same time as the main award – OSR If main award already set up – Project Accounting

31. 31 Establishing A Fabrication PTA If a significant budget realignment is subsequently requested (more than 20% of the original fabrication budget) PA will work with Property Services and OSR to ensure that the project continues to meet the definition of a fabrication and that it continues to be allowable under the terms of the awarding document

32. 32 Fabrications Equipment expenditure types should not be used on fabrication accounts Technically, a component purchased for a fabrication is not a stand alone asset therefore it doesn’t meet the definition of equipment In practical terms using equipment expenditure types on fabrications impacts Caltech’s reporting to agencies Remember: Charges hitting a fabrication PTA are overhead free therefore no fiscal implications to using ‘supplies – allocable’

33. 33 Monitoring Awards Cost transfers NIH NRSA Fellowships Budget realignments NIH salary cap Foreign travel Closeouts Payroll distribution

34. 34 Cost Transfers Policy on cost transfers to federally funded awards http://atc.caltech.edu/Finance/policies_costtransfers.htm

35. 35 Cost Transfers Definition An after-the-fact reallocation of costs, either labor or non-labor, to a federally funded award Federal requirements limit the circumstances under which cost transfers are allowed

36. 36 Cost Transfers Procedures for non-labor cost transfers within 90 days Fill out cost transfer and justification form Answer questions 1 through 3 in Section C Signed by PI or cognizant administrator Send form and supporting documentation to Project Accounting Project Accounting will notify if transfer is not approved

37. 37 Cost Transfers Procedures for labor cost transfers within 90 days Campus personnel inputs into Labor Distribution Module Must address the following Indicate name of designated/knowledgeable individual who has reviewed and approved the transfer Explain why the labor expense was posted to the incorrect PTA Explain why the labor expense should be transferred to the proposed receiving account. How does the receiving account benefit? Explain why, based on the terms of the receiving award, the charges are allowable and allocable Will be reviewed and approved by LDU at Caltech Depending on the Division, a signed cost transfer and justification form may be required

38. 38 Cost Transfers Procedures for transfers after 90 days Fill out cost transfer and justification form Answer questions 1 through 5 in Section C Must be signed by PI, Division Chair and Project Accounting official Send form and supporting documentation to Project Accounting Project Accounting will notify submitter if transfer is not approved If a labor transfer, PA will forward copy of form to LDU for system approval

39. 39 Cost Transfers What qualifies as an extenuating circumstance? Late issuance of appropriate documentation for reasons beyond the control of the requestor, such as late issuance of an award by a funding agency Failure of another department to take action when supporting documentation had been properly submitted Transfer of expenditures from an unrestricted account to a federal award that was not in place when the expense was incurred

40. 40 Cost Transfers What will not qualify as an extenuating circumstance? Absences of the PI or cognizant administrator Shortage or lack of experience of the staff administering the awards Federally funded sponsored accounts used as a holding account for expenditures If in doubt send PA a draft for review and feedback before obtaining signatures

41. 41 NIH NRSA Fellowships Use the correct expenditure type to prevent overhead being applied “Res/Postdoctoral fellows” Be aware that if a fellow engages in training for less than 6 months of the award year, one half of that years supply allowance must be returned to the NIH

42. 42 Budget Re-alignments Why does budget sometimes have to be realigned? Linked awards There must be budget at the PTA level for an invoice to be generated (may need to transfer funding between the main award and the linked award) May wish to re-align budget between categories (subject to the terms and conditions of the award)

43. 43 NIH Salary Cap NIH imposes a limitation on the rate of pay individuals may receive as compensation from NIH funds For calendar year 2004, the cap is $175,700 per year NIH also mandates that the portion of the individual’s salary that represents the difference between the capped rate and the actual rate may not be received from federal sources The rate can and usually does change on an annual basis

44. 44 NIH Salary Cap For example: PI with a salary of $200,000 per year 25% paid by an NSF grant; 25% by an NIH grant; 50% by CIT funds The PI may only be paid $43,920 from NIH funds (he will be paid $50,000 from NSF funds) The difference of $6,080, which exceeds the NIH cap, can be paid from non-federal sources

45. 45 NIH Salary Cap At Caltech an excel spreadsheet is available to assist division/center personnel in calculating the appropriate percent of time needed to input into the payroll system in order to maintain consistency with the NIH salary cap This document also serves the purpose of providing an audit trail http://atc.caltech.edu/Finance/policies.htm

46. 46 NIH Salary Cap Procedure: Prior to initiation of any payroll transaction from NIH funds, the division determines which employees are above the salary cap Divisions utilize the NIH salary cap template to determine the percentage of salary that can be charged to relevant NIH grants, and what portion should be charged to non- federal funds Divisions should retain completed NIH salary cap template as part of the record of that payroll transaction

47. 47 NIH Salary Cap Procedure: On annual basis, and at the end of each NIH award’s competitive cycle, Project Accounting will run a report on that award to verify that all salary payments were consistent with the NIH salary cap in effect at the time of the payment, and work with the Division/Center to make necessary adjustments

48. 48 Foreign Travel Prior approval for foreign travel may be required on some awards In those circumstances, even if the travel benefited the award, the costs will be unallowable on the award unless prior agency approval was obtained

49. 49 Foreign Travel - FDP Prior approval for foreign travel is sometimes waived on FDP awards - depends on the agency Prior approval waived for: AFOSRAMRMCDOENASA NIHNSFONRUSDA Prior approval required for: ARO EPA

50. 50 Foreign Travel – Non-FDP Look out for : JPL (prior approval is always required) Non-FDP grants & co-operative agreements Contracts There is a high likelihood that prior approval will be required on these type of awards

51. 51 Award Close-Out 30 day notice prior to end date NCE required? (best to make request prior to the end date otherwise sponsor approval required) 90 days from end date to close out the award

52. 52 Award Close-Out, cont’d Out of period costs Equipment purchased close to the end date Overspends (Don’t wait until the end of the award) Underspends (underspends on fixed price contracts may be transferred to gift awards) Clear commitments

53. 53 Payroll Distribution (aka Effort Reporting) http://atc.caltech.edu/Finance/coststudies.htm Policies & Procedures Payroll Distribution FAQ’s

54. 54 Payroll Distribution OMB Circular A-21 Section J.10.b(2)a The payroll distribution system will … reasonably reflect the activity for which the employee is compensated by the institution… Section J.10.c.(1)(e) At least annually a statement will be signed by the employee, principal investigator, or responsible official(s) using suitable means of verification that the work was performed, stating that salaries and wages charged to sponsored agreements as direct charges…are reasonable in relation to work performed.

55. 55 Payroll Distribution Procedures Report Distribution Every 6 months July and January, for 6 months ending March 31 and September 30, respectively Timing allows for cost transfers to be processed within 90 days Reports distributed to contact person

56. 56 Payroll Distribution Definition Payroll confirmation reporting is the formal verification of the reasonableness of payroll charges to sponsored awards In general each faculty/PI will receive 2 reports to sign Faculty Report (detailing his/her own charges) Award Manager Report (detailing the individuals charging to his/her awards)

57. 57 Payroll Distribution Contact Person Each Faculty and Award Manager Report is associated with a contact person The contact person is responsible for distributing reports to, and receiving from, faculty and/or award managers Contact persons were provided by Division Administrators for the first reporting cycle The Award Set Up Form currently requests that a Payroll Confirmation Contact Person be designated

58. 58 Payroll Distribution Cognizant Signatory Responsibility for confirmation may be delegated to a cognizant signatory A cognizant signatory is any individual who: 1. Has suitable means of verification that work was performed, and 2. Has the knowledge to confirm that the payroll charges were reasonable in relation to the work performed

59. 59 Payroll Distribution Procedures Review the information on the report and confirm that it represents a reasonable distribution of payroll charges for the work performed If there is a disagreement that the work was performed and/or that the distribution is reasonable, Cost Studies should be notified immediately Cost Studies will work with the award manager/contact person to determine the appropriate course of action. A cost transfer request may need to be processed by the Division/center through Project Accounting. The Cost Transfer policy will apply to such requests

60. 60 Useful Expenditures Types Caltech currently has 309 active expenditure types Fortunately,119 are for use by Finance only, 16 are for recharge centers, and 4 are for burden expenditures, But, that still leaves 170 to choose from…. For a complete listing go to: https://fiji.caltech.edu:9013/pls/CNTR/CITWA_EXP.MAIN.PKG.startup

61. 61 Expenditure Types * Entertainment should never be charged to a sponsored award

62. 62 Expenditure Types - Supplies Allocable or unallocable? Is this the type of cost that the Federal Government should be paying for either directly (direct charge to an award) or indirectly (recovered through the F&A rate)? Caltech includes costs categorized as ‘supplies allocable’ in the pool of overhead costs that we, partially, recover from Federal agencies: we exclude costs categorized as ‘supplies unallocable’ from that pool of overhead costs If in doubt use the front page of the newspaper test...

63. 63 Expenditure Types - Equipment

64. 64 Expenditure Types - Determining Title Sources of Information: Oracle: https://fiji.caltech.edu:9013/pls/CNTRL/CITWA_ POTA_PKG.startup https://fiji.caltech.edu:9013/pls/CNTRL/CITWA_ POTA_PKG.startup Type in award number Double click on ‘award detail’ Scroll down to equipment Award summary Office of Sponsored Research

65. 65 Expenditure Types

66. 66 Expenditure Types Travel

67. 67 Expenditure Types Meetings & Conferences

68. 68 Expenditure Types Participant Support Costs Why is it important to use the correct expenditure type? Because participant support costs are overhead free Administrative costs such as room rental, copying, postage, and clerical services do not qualify as Participant Support costs. To rebudget funds from participant support cost category to another category requires Program Officer approval