sponsored projects: financial compliance and audit -...
TRANSCRIPT
Arizona’s First University.
Sponsored Projects: Financial Compliance and Audit
Jing Liu Assistant Director, Sponsored Projects 626-6442, [email protected]
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Topics
• Financial Compliance – Why compliance matters – Consequences of non-compliance – Regulations and policies to comply with – How to ensure compliance – Common areas of financial compliance
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Topics (Cont’d)
• Audit – Why audit – Types of audit – Types of auditor – Audit process – Audit findings – Roles and responsibilities – Audit tips
Arizona’s First University.
Financial Compliance
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Why Compliance Matters?
• Maintain trust between sponsors/public and the University
• Provide stewardship to safeguard research investment
• Avoid consequences of non-compliance
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Consequences of Non-Compliance
• More scrutiny by Federal auditors and increased administrative costs
• Audit findings and cost disallowance • Loss of administrative flexibilities: eg. automatic carryover
and no cost extension • Withholding of future awards • Multi-million dollars to settle lawsuits • Criminal/civil/administrative penalties • Negative publicity and damage to the University’s and PIs’
reputation – Sponsors – Donors – Faculty – Staff – Students
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Examples of litigations and audits
• Multi-million dollar lawsuits – July. 13, Northwestern University, $3 million – Oct. 12, University of the District of Columbia, $0.5 million – Feb. 10, Fort Valley State University, $0.5 million – Dec. 08, Yale University, $7.6 million – July 08, St. Louis University, $1 million – April 06, Clark Atlanta University, $5 million – Jan. 06, University of Connecticut, $2.5 million – Dec. 05, Rush University, $1 million – June 05, Cornell University, $4.3 million
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Examples of litigations and audits (Cont’d)
• Multi-million dollar lawsuits (Cont’d) – June 05, Mayo Foundation, $6.5 million – March 05, Florida International University, $11.5 million – July 04, Harvard University, $2.5 million – March 04, John Hopkins University, $2.6 million – Feb. 04, Lawrence Livermore National Lab operated by UC,
$3.9 million – Sept. 03, University of South Florida, $4.1 million – Feb. 03, Northwestern University, $5.5 million
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Examples of litigations and audits (Cont’d)
• Numerous audits conducted by NIH OIG and NSF OIG or their contracted CPA firms in recent years
• Areas of focus: – Allowability: for example, computer purchases – Cost transfer – Effort reporting – Cost share – Subrecipient monitoring – Administrative costs – Faculty salary – ARRA awards – Service centers
• NIH OIG Audit Reports: – https://oig.hhs.gov/reports-and-publications/oas/nih.asp
• NSF OIG Audit Reports – http://www.nsf.gov/oig/pubs.jsp
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Regulations and Policies to Comply With
• Federal Regulations – OMB Circular A-21: Cost Principles for Educational
Institutions – OMB Circular A-110: Uniform Administrative
Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
– OMB Circular A-133: Audits of States, Local Governments, and Non-Profit Organizations
– FAR: Federal Acquisition Regulation – Agency policy guidelines
• Terms and Conditions of grants and contracts • ABOR and University Policies
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How do we comply?
• Strong internal controls – Establish and maintain policies and procedures
• Current • Compliant • Communicated and understood • Follow the policies and procedures
– Adequate systems – Clearly defined roles and responsibilities – Sufficient training – Monitoring programs – Sufficient documentation – Understand Federal regulations and policies
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Basic Spending Principles
• Allowability • Reasonableness
– Necessary – Arm’s length transaction* – The prudent person test – Consistent with policies and procedures
• Allocability – Chargeable or assignable to a project in proportion to the
benefit received – Reasonable allocation basis without undue effort or cost – May not shift costs to eliminate deficit or for convenience – Documentation
• Consistent Treatment of Costs • See Appendix A: A-21 Section C1-4 * A transaction in which the buyers and sellers act independently of each other and
have no relationship to each other.
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Common Areas of Financial Compliance
• Cost allowability • Cost transfer • Effort reporting • Cost sharing • Subrecipient monitoring • Recharge centers • Indirect costs and the CAS • Financial report and closeout
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Cost Allowability
• Allowable, reasonable, allocable, and applied consistently • Adequate monitoring
– Document business purpose – Timely review of grant expenditure – Correct errors immediately – Monitor budget to avoid overruns – Sufficiently document direct charging of clerical and
administrative salaries and other admin. costs (see Appendix B)
– PI must be informed of expenses and balances – Manage NIH over-the-cap salary costs – Manage NSF 2-month salary limitation – Avoid excessive cost transfers and untimely transfers: 90
days limit by NIH Grants Policy – Avoid large purchase of equipment and supplies at the end of
a project
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Cost Allowability (Cont’d)
• Useful resources – OMB Circular A-21, Section J – NIH Grants Policy: Cost Considerations – SPS Direct and Indirect Costs Policy – FRS Departmental Manual – Specific sponsor terms and conditions
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Cost Transfer
• Allowable • Allocable: Is the allocation basis reasonable • Timely • Reasons and allocation basis for transfers must be
documented in detail – OMB Circular A-21 – NIH Grants Policy
• LDET: transferring certified costs may be a problem • Useful resources
– OMB Circular A-21 – NIH Grants Policy
See Appendix C
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Effort Reporting
• Reflect actual time spent on projects and other university activities
• 100% university compensated effort included • Include committed cost sharing • Completed timely • Signed by individuals who have the first hand knowledge
or suitable means of verification of the work performed • Designated official’s signature is valid only when after-the-
fact confirmation is obtained
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Effort Reporting (Cont’d)
• Difference between effort reports and payroll distribution adjusted immediately
• Transfers are generally not allowed once effort is certified • Useful resource
– OMB Circular A-21, Section J.10
– UA’s PI Handbook – SPS Effort Reporting Policy and Procedure – SPS online training module
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Cost Sharing
• Commitment met and reported correctly • Allowable • Not funded by other federal sources • Not committed to other grants • Tracked and documented • Third party contribution documented • Prime grantee responsible for meeting the cost sharing • KFS: subaccount required to track UA cost share • Useful resource
– OMB Circular A-110 – NSF Grant Policy Manual – NIH Grants Policy – SPS Cost Sharing Documentation Policy and Procedure
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Subrecipient Monitoring
• Subrecipient adequately monitored – Risk level assessment – Review of A-133 audit report – Review invoices and supporting documents for
allowability and allocability – PI confirms technical progress by approving invoices
before payment is processed – Review cost sharing commitment and supporting
documentation – Periodic desk reviews or on-site audit
• Useful resource – OMB Circular A-110 – OMB Circular A-133: compliance supplement – UA’s Office of Research and Contract Analysis (ORCA)
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Recharge Center
• Operated on a break-even basis • Billing rate(s) should:
– based on actual costs – does not include unallowable costs – reviewed and updated at least biennially – the same for all internal customers – approved by FSO
• Transactions at arm’s length • Useful resource
– OMB Circular A-21, Section J.47. – FRS Departmental Manual, Section 18 – FSO: Rate Analysis Team
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Indirect Costs and the CAS
• Indirect cost proposal documented carefully • Indirect cost rate applied correctly and consistently to
grants • Disclosure Statement (DS-2) consistent with actual
practice • Cost Accounting Standard (CAS) applied to educational
institutions – 501: consistency in estimating, accumulating and
reporting costs – 502: consistency in allocating costs incurred for the
same purpose
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Indirect Costs and the CAS (Cont’d)
– 505: accounting for unallowable costs – 506: consistency in using the same cost accounting
period • Useful resource
– OMB Circular A-21 – FSO: Rate Analysis Team
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Financial Reports and Closeout
• Federal Financial Report (FFR) submitted on time • FFR accurate and complete
– No unallowable costs – Cost sharing captured and reported – Subcontract costs allowable and accurate – Program income included – Indirect costs charged correctly
• Closeout – Charges and transfers made near and after the grant
end date should be sufficiently documented and justified
– Overruns to be removed – Unallowable costs to be removed
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Other Areas of Compliance
• Equipment purchases: contact SPS Property Officer • Clinical trials and fixed price contracts
– Price budgeted with costs in mind – Solid billing and A/R systems – Avoid cross-subsidization from other grants – Avoid large percentage of residuals which could trigger
detailed reviews • Specific compliance items worth remembering
– NSF: voluntary cost share is not allowed – NIH: genomic array costs (NOT-OD-10-097) – Fly America Act exception: Waiver form (see Appendix D)
– NIH Cap – NSF 2-month Salary Limitation – Supplemental Compensation (see Appendix E)
Other Areas of Compliance – Cont’d
• Research compliance: VPR’s Office for the Responsible Conduct of Research – Biosafety & Biosecurity – Chemical Safety & Medical Gas Information – Conflict of Interest (COI) – Export Controls (ITAR/ERA) – Health Information Privacy (HIPPA) – Human Subjects Protection – Animal Care and Use – Radiation, Chemical & Biological Safety – Research Integrity – http://orcr.vpr.arizona.edu/
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Recent Areas of Focus by Feds
• ARRA Funding: reporting and allowability • FFATA (Federal Funding Accountability and
Transparency Act) • Conflict of Interests • Recharge Centers • Faculty Base Salary (See Appendix E) • Effort Reporting • Subrecipient Monitoring • Administrative Costs • Research Integrity
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SPS Training Opportunities
• Online training material and other resources: http://sps.arizona.edu/financialcompliance/training/
• Check ISW training web site for live sessions • NCURA tapes or CD-Rom • Subcontracts: contact ORCA
http://www.orca.arizona.edu/subcontracts.html • Indirect cost rate and recharge centers: contact FSO Rate Study
Team • To request training sessions be presented at your location:
contact Marcel Villalobos or Jennifer Brown at 626-6000 or via email messages
• To subscribe RAMTALK, send an email to: [email protected]
Arizona’s First University.
Audit
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Why Audit?
Sponsors love audit because: • Monitor whether we are in compliance
– Are we capable of managing sponsored funding according to the regulations and policies (Internal Control)
– Have we used sponsored funding according to the regulations and policies (Compliance)
• Decide the risk of future funding We need audit because: • Let the public know that we are in compliance and our
financial statements present the University’s financial position fairly
• Establish a good track record and reputation
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Types of Audit
• Financial Statements • A-133 (aka. Single Audit) • Project financial • Program performance • Disclosure Statement – 2 (DS-2) • F&A rate agreement (indirect cost rate) • System and performance audit/review • Special audit: eg. cost sharing, cost transfer, effort
reporting, subcontract costs, administrative salaries, etc. • Desk Review: mostly project specific or pertain to a special area
• Internal audit • Internal review
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Types of Auditors
• Inspector Generals of federal agencies • AZ Auditors General • Federal agencies • Any other sponsors • General Accounting/Accountability Office • HHS DCA (division of cost allocation) • Public accounting firms • ABOR auditors • Internal auditors • Financial Service Office (FSO) and Sponsored Projects
(SPS) financial compliance units
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Audit Process
• SPS receives engagement letter or notice of an audit: (External financial audits are coordinated by SPS and FSO financial compliance officers. )
• SPS and FSO prepare for the audit – Provide financial records and supporting documentation
to the auditor – Provide policy manuals and explain procedures and
practices to the auditor – Notify parties involved (PIs, business officers, etc.)
• Entrance conference – Auditor explains audit scope and purpose – Auditor assesses basic organization information – Audit coordination work arranged
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Audit Process (Cont’d)
• Auditors’ field work – Internal control assessment – Test of transactions – Resolve questions
• Exit conference – Summarize initial findings – Arrange follow-up works
• Management representation letter • Draft report and findings • Final audit report and findings • University response and follow-up actions • Final audit report with the university response published and
distributed
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Audit Findings
• Internal Control: – Material weakness: “…is a deficiency, or combination of
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis."
– Significant deficiency: “…is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
• Compliance with applicable laws, regulations, and policies • Questioned Costs
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Roles and Responsibilities
• Central – Coordinates financial audits – Provides files, books, and support for transactions – Work with departments and PIs to provide additional
information – Provides response to audit findings – Ensures follow up actions are implemented
• Departments and PIs – Be ready for interviews and questions – Provide files not maintained by central – Work with central financial to implement auditor’s
recommendations – Coordinate project performance reviews and site visits from
sponsors
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Roles and Responsibilities (Cont’d)
• Auditors – Clarify audit scope and objectives – Conduct audit – Issue audit opinions – Provide recommendation to improve internal controls – Follow up with implementation of recommendation
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Audit Tips
• Documentation is the key: business purposes • Audit interview: it’s a risk assessment process
– Be prepared: have all documents ready – Be professional and well organized – Be serious about internal control
• Do tell the truth • Answer what is asked • Contact SPS or FSO financial compliance officer when
– Contacted directly by auditors for questions and documentation (except SAS 99 fraud detection interviews)
– Aware of problems or issues
• Notify SPS financial compliance officer for project performance site visit (because most performance visits involve financial reviews.)
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Useful Web Sites
• PI Handbook: http://www.sps.arizona.edu/handbook/ • Financial Policy and Procedure Manuals: http://policy.fso.arizona.edu/ • Direct and Indirect Cost Policy:
http://www.sps.arizona.edu/postaward/directindirectcostpolicy.htm • A-21: http://www.whitehouse.gov/omb/circulars_a021_2004 • A-110: http://www.whitehouse.gov/omb/circulars_a110 • NIH Grants Policy: http://grants.nih.gov/grants/policy/nihgps_2012/ • NSF Grants Policy:
http://www.nsf.gov/publications/pub_summ.jsp?ods_key=papp • FSO Compliance & Internal Control:
http://www.fso.arizona.edu/compliance • AZ A-133 audit reports: http://www.gao.az.gov/financials/ • UA annual financial reports:
http://www.fso.arizona.edu/financial-management/annual-reports
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List of Attachment
• Appendix A: A-21 Section C.1-4 • Appendix B: A-21 Section F.6 and Exhibit C • Appendix C: Federal cost transfer policies • Appendix D: Fly America Act Waiver Checklist • Appendix E: UA Compensation Definitions for Faculty and
Appointed Professionals
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Questions?
Appendix A Page 1 of 2
OMB Circular A-21 Section C.1-4
C. Basic considerations.
1. Composition of total costs. The cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs of the institution, less applicable credits as described in subsection 5.
2. Factors affecting allowability of costs. The tests of allowability of costs under these principles are: (a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods provided herein; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.
3. Reasonable costs. A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, 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. Major considerations involved in the determination of the reasonableness of a cost are: (a) whether or not the cost is of a type generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement; (b) the restraints or requirements imposed by such factors as arm's length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions; (c) whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the institution, its employees, its students, the Federal Government, and the public at large; and, (d) the extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
4. Allocable costs.
a. A cost is allocable to a particular cost objective (i.e., a specific function, project, sponsored agreement, department, or the like) if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored agreement if (1) it is incurred solely to advance the work under the sponsored agreement; (2) it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods, or (3) it is necessary to the overall operation of the institution and, in light of the principles provided in this Circular, is deemed to be assignable in part to sponsored projects. Where the purchase of equipment or other capital items is specifically authorized under a sponsored agreement, the amounts thus authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.
b. Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
c. Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally sponsored agreements.
Appendix A Page 2 of 2
d. Allocation and documentation standard. (1) Cost principles. The recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles. (2) Internal controls. The institution's financial management system shall ensure that no one person has complete control over all aspects of a financial transaction. (3) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding subsection b, the costs may be allocated or transferred to benefited projects on any reasonable basis, consistent with subsections d. (1) and (2). (4) Documentation. Federal requirements for documentation are specified in this Circular, Circular A 110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non Profit Organizations," and specific agency policies on cost transfers. If the institution authorizes the principal investigator or other individual to have primary responsibility, given the requirements of subsection d. (2), for the management of sponsored agreement funds, then the institution's documentation requirements for the actions of those individuals (e.g., signature or initials of the principal investigator or designee or use of a password) will normally be considered sufficient.
Appendix B Page 1 of 3
OMB Circular A-21 Section F. 6
6. Departmental administration expenses.
a. The expenses under this heading are those that have been incurred for administrative and supporting services that benefit common or joint departmental activities or objectives in academic deans' offices, academic departments and divisions, and organized research units. Organized research units include such units as institutes, study centers, and research centers. Departmental administration expenses are subject to the following limitations. (1) Academic deans' offices. Salaries and operating expenses are limited to those attributable to administrative functions. (2) Academic departments:
(a) Salaries and fringe benefits attributable to the administrative work (including bid and proposal preparation) of faculty (including department heads), and other professional personnel conducting research and/or instruction, shall be allowed at a rate of 3.6 percent of modified total direct costs. This category does not include professional business or professional administrative officers. This allowance shall be added to the computation of the F&A cost rate for major functions in Section G; the expenses covered by the allowance shall be excluded from the departmental administration cost pool. No documentation is required to support this allowance. (b) Other administrative and supporting expenses incurred within academic departments are allowable provided they are treated consistently in like circumstances. This would include expenses such as the salaries of secretarial and clerical staffs, the salaries of administrative officers and assistants, travel, office supplies, stockrooms, and the like.
(3) Other fringe benefit costs applicable to the salaries and wages included in subsections (1) and (2) are allowable, as well as an appropriate share of general administration and general expenses, operation and maintenance expenses, and depreciation and/or use allowances. (4) Federal agencies may authorize reimbursement of additional costs for department heads and faculty only in exceptional cases where an institution can demonstrate undue hardship or detriment to project performance.
b. The following guidelines apply to the determination of departmental administrative costs as direct or F&A costs. (1) In developing the departmental administration cost pool, special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or F&A costs. For example, salaries of technical staff, laboratory supplies (e.g., chemicals), telephone toll charges, animals, animal care costs, computer costs, travel costs, and specialized shop costs shall be treated as direct cost wherever identifiable to a particular cost objective. Direct charging of these costs may be accomplished through specific identification of individual costs to benefiting cost objectives, or through recharge centers or specialized service facilities, as appropriate under the circumstances.
Appendix B Page 2 of 3
(2) The salaries of administrative and clerical staff should normally be treated as F&A costs. 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. "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 services provided by academic departments. Some examples of major projects are described in Exhibit C. (3) Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs.
c. In the absence of the alternatives provided for in Section E.2.d, the expenses included in this category shall be allocated as follows: (1) The administrative expenses of the dean's office of each college and school shall be allocated to the academic departments within that college or school on the modified total cost basis. (2) The administrative expenses of each academic department, and the department's share of the expenses allocated in subsection (1) shall be allocated to the appropriate functions of the department on the modified total cost basis.
OMB Circular A-21 Exhibit C
Exhibit C -- Examples of "major project" where direct charging of administrative or clerical staff salaries may be appropriate.
* Large, complex programs such as General Clinical Research Centers, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
* Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical records studies).
* Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
* Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
* Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research fields sites that are remote from campus.
* Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.
Appendix B Page 3 of 3
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. For instance, the examples would be appropriate when the costs of such activities are incurred in unlike circumstances, i.e., the actual activities charged direct are not the same as the actual activities normally included in the institution's facilities and administrative (F&A) cost pools or, if the same, the indirect activity costs are immaterial in amount. It would be inappropriate to charge the cost of such activities directly to specific sponsored agreements if, in similar circumstances, the costs of performing the same type of activity for other sponsored agreements were included as allocable costs in the institution's F&A cost pools. Application of negotiated predetermined F&A cost rates may also be inappropriate if such activity costs charged directly were not provided for in the allocation base that was used to determine the predetermined F&A cost rates.
Appendix C Page 1 of 1
OMB Circular A-21 Section C.4.b
Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience. NIH Grants Policy Statement, Part II, Subpart A (10/12)
7.5 Cost Transfers, Overruns, and Accelerated and Delayed Expenditures
Cost transfers to NIH grants by grantees, consortium participants, or contractors under grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the grantee, consortium participant, or contractor. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Grantees must maintain documentation of cost transfers, pursuant to 45 CFR part 74.53 or 92.42, and must make it available for audit or other review (see Administrative Requirements—Monitoring—Record Retention and Access). The grantee should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, grantees are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. NIH also may require a grantee to take corrective action by imposing additional terms and conditions on an award(s).
The GMO monitors grantee expenditure rates under individual grants within each budget period and within the overall project period. The funding that NIH provides for each budget period is based on an assessment of the effort to be performed during that period and the grantee's associated budget, including the availability of unobligated balances. Although NIH allows grantees certain flexibilities with respect to rebudgeting (see Administrative Requirements—Changes in Project and Budget), NIH expects the rate and types of expenditures to be consistent with the approved project and budget and may question or restrict expenditures that appear inconsistent with these expectations.
The GMO may review grantee cash drawdowns to determine whether they indicate any pattern of accelerated or delayed expenditures. Expenditure patterns are of particular concern because they may indicate a deficiency in the grantee’s financial management system or internal controls. Accelerated or delayed expenditures may result in a grantee's inability to complete the approved project within the approved budget and period of performance. In these situations, the GMO may seek additional information from the grantee and may make any necessary and appropriate adjustments.
7.6 Allocation of Costs and Closely Related Work
When salaries or other activities are supported by two or more sources, issues arise as to how the direct costs should be allocated among the sources of support. In general, a cost that benefits two or more projects or activities in proportions that can be determined without undue effort or cost should be allocated to the projects on the basis of the proportional benefit. A cost that benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved may be allocated or transferred to the benefiting projects on any reasonable basis as long as the costs charged are allowable, allocable, and reasonable under the applicable cost principles and the grantee’s financial management system includes adequate internal controls (for example, no one person has complete control over all aspects of a financial transaction).
FLY AMERICA ACT WAIVER CHECKLIST
(To assist in determining qualification for a waiver of the restrictions of the Fly America Act under 41 CFR Part 301-10, check the applicable statement(s) below.)
______ Foreign air travel on a non-U.S. air carrier is financed by U.S. Government, or will be claimed
as costs under an award. (If you do not check this block, the restrictions of the Fly America Act do not apply. Check at least one of the statements below to qualify for a waiver of the restrictions of the Fly America Act.)
______ Use of foreign air carrier is a matter of necessity because of. (Must check one below) ______ U.S. flag air carrier cannot provide the air transportation needed, e.g. ______ Use of foreign air carrier is necessary for medical reasons.
______ Use of foreign air carrier is required to avoid unreasonable risk to traveler’s safety. (See 41 CFR 301-10.138(b)(2) for supporting evidence needed.)
______ Seat on U.S. air carrier in authorized class of service is unavailable, seat on foreign air carrier in authorized class of service is available.
______ Other (Provide detailed explanation.) ______ Use of U.S. flag air carrier will not accomplish the Department’s mission.
(Provide detailed justification) ______ Bilateral or multilateral air transportation agreement. U.S. is a party and Dept. of
Transportation determines agreement meets requirements of Fly America Act. ______ No U.S. flag air carrier provides service on a particular leg of your route (Travelers can only use
foreign air carrier to or from the nearest interchange point to connect with a U.S.carrier). ______ A U.S. flag air carrier involuntarily reroutes traveler on a foreign air carrier. ______ Service on a foreign air carrier is three hours or less, and use of U.S. flag air carrier doubles en
route travel time. ______ Air travel is between the U.S. and another country and use of a U.S. carrier on a nonstop flight
extends travel time by 24 hours or more. ______ Any other air travel. (You must check at least one of the following statements to qualify for a waiver of the Fly
America Act restrictions in this section) ______ Use of a U.S. carrier increases the number of aircraft changes outside the U.S. by two or
more. ______ Use of a U.S. carrier extends travel time by six hours or more. ______ Use of a U.S. carrier requires a connecting time of four hours or more at an overseas
interchange point. Remember, you must use a U.S. flag air carrier on every portion of the route where it provides service unless you qualify for a waiver.
Compensation Definitions for Faculty and Appointed Professionals
Effective July 1, 2010
Institutional Base Salary (IBS)
Definition:
The total annual cash compensation paid by the institution for an employee’s appointment for
time spent performing teaching, research, service and administrative activities. The IBS
consists of the regular assignment, additional jobs/titles and related components of pay. The
IBS is used to determine an employee’s Annual Base Benefits Rate (ABBR) for life and short-
term disability insurance amounts, and is also used to calculate an employee’s Supplemental
Compensation Max Earnings.
Components of Institutional Base Salary (Components of Pay in UAccess)(Based on 1.0 FTE)
may include:
Regular fiscal or academic base salary
Fiscal Salary Conversion amount
Administrative Stipend (under conditions of administrative service, UHAP Chapter 5)
Other Stipend – includes, interim and acting assignments
Provost Approved Annual Performance Based Component
Sabbatical Compensation – amount above the UA 60% commitment
Deans, Directors, and Department Heads are responsible for determining annually the duties
and activities that constitute a full-work load. Faculty members are required to teach,
conduct research and scholarly activities, and perform service and administrative duties as set
forth in their appointment. The IBS is the base salary for performing a full-work load.
Supplemental Compensation
Definition:
To ensure compliance with federal and sponsor guidelines, certain services rendered related
to a grant or contract, and for specific instructional activities, must be identified as
supplemental compensation and are subject to established limits. Duties or services assumed
to be an employee’s obligation to the University are generally not allowable for additional
compensation. Exceptions to the criteria below must be approved by the President or his
designee.
Academic Appointment Criteria
May not exceed one-third (3/9) of the academic year salary
May only occur outside the appointment period for faculty
Fiscal Appointment Criteria
May not exceed one-twelfth (1/12) of the fiscal year salary
Faculty may not earn supplemental compensation on grant or contract funds
Employees hired under the Conditions of Administrative Service may not receive
supplemental compensation in any amount from the University without the prior approval
of the President or his designee.
Compensation Definitions for Faculty and Appointed Professionals
Effective July 1, 2010
Examples:
Summer assignments paid an hourly rate; positive reporting required (any source of
funding)
Intra-University Consulting (Hourly)
o Paid on sponsored grant, specifically approved by the sponsor AND is outside
discipline and crosses department lines. Examples include: foreign language
translation services; computer services (developing a specific algorithm to
support a project)
Summer/Winter Session (Bi-Weekly)
Other Professional Service Compensation
Definition:
Other Professional Services consist of fixed-fee assignments for services not tied to hours, not
covered by the institutional base salary (IBS) and that do not count toward an employee’s
maximum Supplemental Compensation Authorized Earnings. Work is performed outside the
employee’s regular assignment and compensation is not paid on sponsored accounts.
Examples:
Outreach/Distance Courses
Credit Courses
o Evening/Executive MBA
Non Credit Courses
o CESL; Executive Education
Incidental work
o Assignment outside job/home dept
o Singular in nature – short period of time (generally 1 pay period)
o Minimal payment – generally under $1000
o Example: Manuscript review for University of Arizona Press
Project-specific work for a limited duration (non-sponsored)
o Similar to Incidental work but longer in duration