Cost Allowability & Effort Reporting. Kris Rhodes, MS Managing Director ATM-Grants About The Money

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1 Cost Allowability & Effort Reporting Kris Rhodes, MS Managing Director ATM-Grants About The Money

Kris Rhodes About The Money ATM-Grants Expanding research capacity and providing proposal and award management support for states, universities, hospitals, and nonprofits across the U.S.

2 Kris Rhodes About The Money ATM-Grants Expanding research capacity and providing proposal and award management support for states, universities, hospitals, and nonprofits across the U.S. Improving culture and services, and advancing the growth of research at organizations across the US. Answering the question, are efforts aligned with where the money is? It IS about the money! Working to ensure policies, procedures, support, training, internal controls, and systems support the responsible management of sponsor funds, while advancing research.

3 Cost Allowability & Effort Session Objectives Learning Objectives Why is it important What s expected How to comply

4 Cost Allowability Allowable Necessary Reasonable Consistently Supported Treated by Documentation

5 Cost Allowability Reasonableness Recognized as ordinary and necessary for the operation. In accordance with the restraints or requirements imposed by such factors as: sound business practices; arm s-length bargaining; Federal, state and other laws and regulations; and terms and conditions of the Federal award. Market price. Reflects prudence.

6 Cost Allowability Not Reasonable EXAMPLES Charging of 500 assays to a project, when you only expect to use 200. Buying an ebony and gold-plated pen for recording participant interview notes. Charging hand strengthening balls for staff for use on a laboratory, bench science-based research project to relieve staff tension and exhaustion is not reasonable Leather folios for teachers on a teacher training project Pizza for the lab to celebrate completion of a particularly challenging research milestone

7 Allowability & Consistent Treatment Consistent treatment means treating like costs the same, in like circumstances. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost (2 CFR ).

8 Allowability Consistency in Methodology Estimating, Accumulating, Charging, and Reporting

Normally F&A & Unlike Circumstances Items such as office supplies, postage, local telephone costs, and memberships should normally be treated as indirect costs.

9 Normally F&A & Unlike Circumstances Items such as office supplies, postage, local telephone costs, and memberships should normally be treated as indirect costs. Direct charging of these costs may be appropriate when integral to the project and the costs are explicitly budgeted normally F&A costs which can be specifically identified with the project or activity. CAS Exemption Form is required for costs that are normally F&A. Cost Accounting Standards Guidelines

10 Administrative and Clerical The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met: Administrative or clerical services are integral to a project or activity; Individuals involved can be specifically identified with the project or activity; and Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency.

11 Costs and Prior Approval Requirements Changes in the amount of approved cost-sharing or matching provided ( ). Subawards require prior approval ( ). Issuance of fixed price subawards ( ). Cost increases for fluctuations in exchange rates ( ). Costs of membership in any civic or community organization ( ). Participant support are allowable with the prior approval ( ) Marketing. are unallowable, except with prior approval when necessary for the performance of the award ( ). Charges of a faculty member s salary exceeding the proportionate share of the Institutional Base Salary (IBS) ( ). All equipment purchases (general or specialized) require prior approval ( ) Costs of entertainment, including amusement, diversion, and social activities and any associated costs are unallowable, except where specific costs that might otherwise be considered entertainment have a programmatic purpose ( ). Fund raising costs for the purposes of meeting the objectives are allowable with prior written approval ( ).

12 Meals: A Sensitive Item Meals are allowed, providing the sponsor does not prohibit the cost and all of the following conditions are met: Meeting includes outside/external participants. Meal is served during a formal meeting where the provision of the meal serves to maintain meeting continuity. The activity that the meal is served during is significant and integral to the project. Meals are not provided for awardees own employees. Meals provided are reasonable.

13 Effort & Allowability Federal Language Standards for Documentation of Personnel Expenses

14 Effort Reporting Why is it important? The Federal Government wants proof that: We are following through with our commitments, both financially and scientifically AND The amounts that we are billing are consistent with the effort being reported and exerted.

15 Why? We agree to effort reporting when we accept a federal award. Effort certifications provide documentation that charges are consistent with the work performed. Principal Investigators and the University are ultimately responsible for ensuring that all charges to an award are appropriate, including labor charges.

16 Why is Effort a Big Deal? Labor charges typically represent about a three-fourths or more of direct charges on an award.

17 Standards for Documentation Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; Reasonably reflect total activity compensated, not exceeding 100% of compensated activities (IBS); Encompass both federally assisted and all other activities compensated;

18 Effort Expressed What is 100% effort? It includes ALL institutional activities Because practices vary as to the activity constituting a full workload, records may reflect categories of activities expressed as a percentage distribution of total activities.

19 Budget Estimates to Charge Budget estimates, estimates determined before the services are performed, alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The estimates are expected to produce a reasonable approximations of the activity actually performed; Internal Salary Authorization Form (ISAF) or E1 (Payroll Authorization Form) for monthly pay employees.

20 Changes and Fluctuations Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short term changes (such as one or two months) fluctuations between workload need not be considered as long as the distribution of charges are reasonable over the longer term.

21 Effort Certification A legally binding document that states the reasonable estimate of percentages of actual effort expended on projects and institutional activities for a given period. encompasses all professional institutional activities on an integrated basis. Includes any promised amount of time, EVEN if no salary is charged to the project. It must total to 100% effort.

22 Commitment/Budget Changes Revision of budget and program plans. For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for one or more of the following program or budget-related reasons: The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.

23 Effort Certification Review Are all of my current active awards represented? Are the percentages accurate?

24 Corrections Not necessarily a bad thing What s most important? Billing the correct amount Lots of corrections are an indication of poor business practices

25 How Do You Get It Right Set up your ISAFs (E-3s) timely. Review you effort report for accuracy. If it is not right, modify. Certify timely. Make modifications to your PAF/ ISAF when significant changes in commitments occur. If you are on sabbatical or other extended leave, let DORED know! Ensure it s Right (consistent with) Proposal budget Certified effort Other support

26 Effort Reporting Risks Delinquent effort report submissions Uncertified effort charges Charges to award on which you were not working Percent effort charged is inconsistent with the actual time devoted Reduction in effort from original award setup without prior approval for greater than 25% Sabbatical leaves

27 Summary Why do we have to certify effort? Because it s a federal requirement What is Effort Certification? It s the investigators ok that what the Controller s Office is billing for is accurate

28 Summary What not to forget Do It Certify Your Effort Late effort certifications are an audit target Make adjustments/corrections timely

29 Where do I report my effort?

30 Take Home Process ISEFs timely Review your effort for accuracy Make changes to your effort certification if required. Make changes to ISEFs when significant changes occur Certify timely Secure approval for reductions of 25% or leaves of absence Ensure Other Support accurately reflects your sponsored effort commitments

31 Questions Kris Rhodes, MS Managing Director ATM-Grants, LLC

(c) Prior approval of the Federal awarding agency (e) (3) Prior approval of the Federal awarding agency.

(c) Prior approval of the Federal awarding agency (e) (3) Prior approval of the Federal awarding agency. Prior written approvals 2 CFR 200.407 provides references to all prior approvals required in other sections of the guidance. The budget-related items listed here must not only meet the standard tests of