Office of Sponsored Research

SPONSORED PROGRAMS
COMPLIANCE:

Getting There, Staying There

Ron Abraham
Glenn Davis
Al Giacchetti
Julie Norris

June 8, 2006
Sponsored Programs Compliance: Getting There, Staying There

What we will do today:

Learn about the current compliance climate

Review compliance requirements
Explore current issues and vulnerabilities
Identify keys to compliance
Non Compliance Brings Damage to Reputations

University of Michigan Johns Hopkins Effort

University of Minnesota
Chief Urologist charged Reporting $9 mil
Misuse federal grants with
$32 mil Conflict of Interest
$100,000 penalty
Miscellaneous Scientific 1 year probation
Misconduct New York University Medical
Johns Hopkins Center
Harvard (2) Public Demand Inflated research grant costs
Yale
for $15.5 mil
Improved Control
Harvard University Stanford University
conflict of interest Inflated research overhead costs
$34 million $1.2 mil

University of Chicago Harvard University $2.4 Northwestern University

Research fraud and abuse million questioned costs Committed Time/Effort
$650,000 whistleblower
$5 m
Remember, when you accept one dollar of federal funds you also
accept a host of compliance requirements…..
How do you know what compliance rules to follow?

Determining factors
Type of agreement
Applicability of OMB circulars
Applicability of regulatory and statutory requirements
Types of Agreements: Understanding the terminology

Assistance
Generally what the proposer wants to do
Grants or cooperative agreements
Procurement
Generally what the government buys (can include research
Contracts
Other Transaction Award
Neither grant nor contract
Standard terms do not apply
Grant

Appropriate agreement to be used when:

Principal purpose is transfer of money, property, services
or anything of value in order to accomplish a public
purpose
No substantial involvement is anticipated between the
government and the recipient
Cooperative Agreement

Appropriate agreement to be used when:

Principal purpose is transfer of money, property, services
or anything of value in order to accomplish a public
purpose
Substantial involvement is anticipated between the
government and the recipient
Contract

Appropriate agreement to be used when:

Principal purpose is acquisition for the direct benefit of the
government
Substantial involvement is anticipated between the
government and recipient and an executive agency
determines in a specific instance that a procurement
contract is appropriate
Other Transaction Agreement

Appropriate agreement to be used when government decides it

has sufficient cause to make an award not subject to the
standard terms and conditions used for one of the other types
of agreements
Used sparingly
Example: Awards subject to ITAR; NIST awards not
subject to 37 CFR 401
Why does this matter?

Determines what regulations apply to any specific award

Establishes time frames for submission of reports (technical
and financial)
Establishes degree of independence/control of PI in carrying
out work
Determines if cost sharing may be required
OMB Circulars: purpose and effect

Purpose:
Instructions to the federal agencies
Agencies required to implement
Not directly applicable to recipients; only applicable
through agency implementation
Effect:
Provide guidance
Maximum requirements for government
Minimum standards for institutions
OMB Circulars Website

http://www.whitehouse.gov/omb/circulars/index.html
http://www.access.gpo.gov/nara/cfr/cfr-table-search.html
OMB Circular A-21 (2 CFR 220)
Cost Principles for Educational Institutions

Defines often-used terms

Defines methods of F&A cost calculation
Defines allowable and unallowable costs (the “J” section)
Includes cost accounting standards
OMB Circular A-21
Cost Accounting Standards

501: Consistency in estimating, accumulating and

reporting costs
502: Consistency in allocating costs incurred for the same
purpose
505: Accounting for unallowable costs
506: Consistency in using the same accounting period
CASB Disclosure Statement (DS-2)
Audits of DHHS DS-2’s by DCAA
OMB Circular A-21
Cost Principles for Educational Institutions

Applicability
All assistance awards (cited in OMB A-110 -- 2 CFR 215.27)
Cost-reimbursement contracts (cited in FAR 31.3)
OMB Circular A-110 (2 CFR 215)
Uniform Administrative Requirements

Sets maximum requirements for the government

Sets minimum standards for institutions
Individual agencies implemented
Emphasizes
• Systems
• Written procedures
OMB Circular A-110
Contents

Subpart A, General
Definitions, effect on other issuances, deviations, subawards
Subpart B, Pre-Award Requirements
Preaward policies, forms, debarment and suspension,
special award conditions, metric system, RCRA,
certifications and representations
OMB Circular A-110
Contents (cont)

Subpart C, Post-Award Requirements

Financial and Program Management
Standards for financial management systems, payment,
cost sharing and matching, program income, revision of
budget and program plans, non-federal audits,
allowable costs, period of availability of funds
OMB Circular A-110
Contents (cont)

Subpart C, Post-Award Requirements

Property Systems
Insurance coverage, real property, federally owned and
exempt property, equipment, supplies and other
expendable property, intangible property, trust
relationships
Procurement Standards
Recipient responsibility, codes of conduct, competition,
procurement procedures, cost and price analysis,
procurement records, contract administration, contract
provisions
OMB Circular A-110
Contents (cont)

Subpart C, Post-Award Requirements

Reports and Records
Monitoring and reporting program performance,
financial reporting, retention and record access
After the Award Requirements
Purpose, closeout procedures, subsequent adjustments
and continuing responsibilities
Termination and Enforcement
Appendix A, Contract Provisions
Applicability
Grants & cooperative agreements only
Federal Acquisition Regulations

FAR
Applies to contracts (procurement)
For universities, regulations at Part 31.3 reference OMB
Circular A-21
Establishes terms and conditions for contracts
Agencies also issue supplements to the FAR (DFAR,
HHSFAR, etc)
OMB Circular A-133
Audits of States, Local Governments & Non-Profit Organizations

Establishes audit requirements

Defines federal responsibilities
Provides guidance for institutions on audit issues
Annual compliance supplement
Subrecipient monitoring
Cost-sharing
Reporting
Recap: what are the compliance requirements?

OMB Circulars
A-21, Costing Principles (rev 5/10/04)
A-110, Administrative Requirements (2 CFR 215)
A-133, Audit
Federal Acquisition Regulations (FAR)
Other Compliance Requirements
Order of Precedence

Specific award special terms/conditions

Specific award general terms/conditions
RFP/BAA requirements
Program requirements
General agency terms/conditions
A-110 or FAR, as appropriate
A-21
Who Sponsors Research and Why

Who:
Government – Federal, State, Local
Foundations and other Non-Profits
For-Profit Corporations and Industry
Why:
“Furtherance of public good” government mission
Targeted mission of foundations/non-profits
Products, profits, pipeline & public relations for
corporations
Sponsored Project vs. Gift

Sponsored Project
Commits to a particular program/project
Specific tasks
Specific time frames
Specific personnel and effort
Detailed budget
Reporting requirements (technical, financial)
Rights in property, including intangible property
Other requirements (warranties, indemnification, insurance,
human subjects, etc.)
Sponsored Project vs. Gift

Restricted and Unrestricted Gifts

General support of an area or activity or use totally at
discretion of institution
Stewardship reports
All property (tangible, intangible) generated or purchased
owned by institution
Pre-award Research Administration

Funding opportunities
Proposal preparation, review and submission
Award negotiation
Award set-up
Why go through OSR?

Awards are made to the Institute, not the PI

Knowledge of institutional and sponsor requirements
Resource in “grantsmanship”
Funding Opportunities

Community of Science
Other Notices
Proposal Preparation, Review and Submission

Notification
Interpretation and Feedback
Proposal Routing and Approval
Submission
Routing Sheet
Award Negotiation

Point of contact with sponsor

Revisions to scope of work and/or budget
Terms and conditions
Other requirements
Pricing documentation/certification
Representations and certifications
Pre-award Audits
Small business subcontracting plan
Signature – Authorized Institutional Official
Award Set-Up

Pending account request/establishment

Award document review
Regular account established
Summary of Research Agreement (SRA) prepared and
distributed
Electronic Research Administration

Fastlane
Grants.gov
Other

COEUS
Award management system
Proposal development and submission system

OSR Website
Other Compliance Regulations:
ANTIDISCRIMINATION (employment-related)

Civil Rights Act of 1964

Rehabilitation Act of 1973
Americans with Disabilities Act
Sex Discrimination
Age Discrimination
Equal Employment Opportunity
Affirmative Action
Other Compliance Regulations:
ANTIDISCRIMINATION (procurement-related)

Utilization of Small and Small Disadvantaged Business

Concerns
Utilization of Women-Owned Business Concerns
Utilization of Labor Surplus Area Concerns
Utilization of Historically Underrepresented Businesses
Utilization of Vietnam-era Veterans
Other Compliance Regulations:
Privacy

Privacy Act of 1974

Freedom of Information Act
HIPAA
Other Compliance Regulations:
Protection Issues

Protection of Living Things

Human subjects compliance
Use of animals in research
Research involving recombinant DNA
Protection of the Environment
Clean Air Act
Clean Water Act
Hazardous materials
Aquatic nuisances
Other Compliance Regulations:
Fraud, Waste, and Abuse

Misconduct in Science
Procurement Integrity
Debarment and Suspension
Conflict of Interest
Anti-Kickback Act of 1986
Other Compliance Regulations:
Employee Directives and Conduct

Employee Conduct
Drug Free Workplace
Drug Free Schools and Communities Act
Lobbying
Hatch Act
Compensation and Safety
OSHA
Davis-Bacon, Walsh-Healy, Contract Work Hours and
Safety Standards
Bloodborne Pathogens
Other Compliance Regulations:
General Requirements

Patriot Act and other Bioterrorism Legislation

Rights to Inventions (Bayh-Dole)
Debarment and Suspension
Delinquent Federal Debt
Student Aid
Campus crime reporting
Graduation statistics (athletics)
Salary caps
Training in Human Subjects
Want More information?

Regulation and Compliance:

A Compendium of Regulations and Certifications Applicable to

Sponsored Programs
2005 Edition
Published by the National Council of University Research
Administrators in conjunction with Atlantic Information Services, Inc.
Costing & Financial Issues: Cost Sharing & Effort Certification

J.10 sets forth requirements

January 2001 OMB clarification memo
CAS requirements
Audit issue
Costing & Financial Issues: Cost Sharing & Effort Certification

Cost Sharing
Controlled by OMB A-110, __.23
Mandatory vs. voluntary / committed vs. uncommitted
Definitions and specific requirements for what constitutes
cost sharing
Identifiable from recipient’s records
OMB clarification memo, January 2001
Costing & Financial Issues: Cost Sharing & Effort Certification

Stevens policy (draft) on how we manage cost sharing in

research proposals
Accept requirement when mandated by sponsor
Do not encourage cost sharing when not mandated by
sponsor
Creation of companion accounts to track cost sharing
Costing & Financial Issues: Cost Sharing & Effort Certification

Effort Certification
Faculty and professional staff
Clerical staff
“Suitable means of verification”
Includes cost-shared effort
OMB clarification memo, January 2001
Compliance Issues: Cost

Accelerated
expenditures/high balances
Could indicate
Workscope change
Poor management
Beginning and Ending Dates

Established by the award – normally unilateral on grants and

cooperative agreements
Expanded Authorities allow early spending at institution’s
risk (see next slide)
Established by the award – normally on date of both parties
signing on contracts
Preaward costing clause
Rarely will predate contract
Related compliance issues

Expanded Authorities
How does that affect costing and compliance
4 authorities
Preaward spending
Carryforwards
Few restrictions
No-cost extensions
Cost Transfers
www.stevens.edu/fd/policies/cost_transfer_policy.html

Definition: after the fact reallocation of a cost from one account

to another
Late cost transfer: correction made more than 90 days after
month charge appears on FRS account
Processing
Different forms for salary and wage transfers and those for
materials and supplies
Signature requirements
Administrative handling
Cost Transfers

Allowable:
Error correction
Transfers between account expenditure code categories or
between subaccounts of a prime account
When cost benefits more than one activity
Unallowable:
To utilize unspent balances
For costs after end date of sponsored project
Time and Effort Reporting
www.stevens.edu/fd/policies/Time_and_Effort_Reporting_Policy.html

Complies with A-21 for a plan-confirmation system

Requires confirmation on a semester by semester basis for the
work for which the employee is compensated
Reflects 100% of workload distribution
Provides for modifications of salary distribution for significant
(over 5%) changes
Time and Effort Reporting

Manual for Spring and Summer 2006; electronic thereafter

Requires reporting only in two categories:
Organized Research/Other Sponsored Activities
Institutional Activities (including instruction,
administration, departmental research)
Forms available at referenced web site
Reconciling Accounts

Should be performed on monthly basis after each month end

Soon FRS reports will be available electronically rather than in
paper
Errors should be corrected on monthly basis
Questions or help: Contact Research Accounting
Closeout and Audit

Charges should not be made to accounts after end date; such

charges are unallowable
All encumbrances should be cleared within 60 days of account
end
Closeout of fixed price awards
Audits of two types:
System audit
Individual account audits
PI responsible for final technical/patent reports; Institute for
property/financial reports
Overruns

Currently no “stop” on spending on research accounts but PI

still responsible for incurrence of charges
Developing institutional policy on responsibility for overruns
Reference closeout of fixed price awards
Compliance Issues: Administrative

Reporting
Timeliness
Responsibility
Compliance Issues: Administrative

Retention and access to records

How long
In what form
What about scientific
Compliance Issues: Regulatory

Misconduct in science
Humans as research subjects
• training
• conflict of interest
• IRB accreditation
Use of animals in research
Rights to inventions
Embargoes and Exports

International Traffic in Arms regulations (ITAR)

22 CFR 120-130
Export Administration Regulations (EAR)
15 CFR 774
Office of Foreign Assets Control (OFAC)
http://www.ustreas.gov/offices/eotffc/ofac/
Procurement

Requirements for bids

Sole source justifications
Lease vs. Purchase
Trade-in of equipment
Consultants
Consultants

Treated as providing a vendor service, not a subrecipient

Work at direction of Stevens investigator
Any intellectual property developed belongs to Stevens
F&A accrues to all consulting expenses
Property Issues

Definition and application of F&A

Title
Purchases
Split accounts
Bid requirements
Fabricated equipment accounts
Inventory (American Appraisal)
Subrecipient Agreements

Definition
In the Proposal
In the Award
Responsibilities