Compliance From Ground Zero: Current Issues Facing ...

Compliance From Ground Zero:Current Issues Facing Administrators in

Departmental and Central Offices NCURA Region 1 Annual Meeting

May 17, 2005, Mystic CT.

Compliance From Ground Zero Current Issues from Departmental and Central Office Perspectives

Presented by:

Vivian Holmes- Harvard Medical School

Mark Daniel- Partners Healthcare System Inc.

We Are in a Target-Rich Environment…and …

We’ re Often Between a ROCK and a HARD PLACE


Compliance: What do we really mean? Polices, Procedures, and Business Processes

Systems

Checks and Balances

Roles and Responsibilities

Training

Documentation

Stewardship of Sponsored Funds

Federal Regulations and Policies


What Are The Kinds of Compliance Issues We Deal With Every Day?

Departments

Central Offices

Institutional


Outline: Common Compliance Issues

I. Financial

Budgeting

Standards for Costs

Expense Approval and Monitoring

Cost Transfer

Cost Sharing

Effort Reporting

Financial Status Reporting


II. Other Common Compliance Issues That We Deal With:

Recharge/Service Centers

Subrecipients

Clinical Research Billing

Documentation Standards, Records

Non-Financial Reporting

Humans and Animals

Ethics

Roles and Responsibilities

III. Guidance/Federal Regulations and Audits

IV. Training


I. Financial Compliance Issues

Budgeting

The need for budgets

Responsibilities of the parties in the budgeting process

Are annual budgets developed for sponsored projects and adjusted as needed?


Standards For Costs

Consistency

Allocability

Allowability

Reasonableness

Documentation, Support

CAS


Expenditure Monitoring

Grant expenditures must be reviewed, by Department Administrators each month and variances understood

Late expense monitoring is inefficient and creates risk

PIs must be kept informed of expenses and balances

Shadow Systems

Institutional Systems


Cost Transfers Retroactive transfers of expenditure from one account to another as a result

of errors, oversight, re-budgeting, etc..

Frequent and/or undocumented and unjustified cost transfers may indicate problems

Must be managed

Must be allowable, allocable, documented, justified, and authorized

Can’t transfer expenses from overspent grants to other grants

Late- over 90 days old

Cost transfers should be used to correct errors not to manage the grant funds.


Cost Sharing

Project costs not borne by the sponsor

Commitments made in proposal that support the project but is not paid for by the sponsor

May be required by the sponsor as part of the grant program (Mandatory) or voluntarily offered by the grantee (Voluntary)

Impacts calculation of indirect costs

All parties must understand the total costs

Policies


Effort Reporting

Determines and supports salary (and FB) costs (including cost shared effort) charged to sponsored agreements

Involves programmatic and cost compliance issues and both direct and indirect costs

Acceptable methods

Certified Effort vs Charges to sponsored agreements


Financial Reporting

Financial Status Reports

Cash Reports

90 day timeframes



Recharge/Service Centers

Monitoring Our Subcontractors

Clinical Research Billing Patient Care Costs

Clinical trial budgets and costs, including PI effort

Documentation and Records

Policies and Procedures: What to Save and for How Long

Source documents, paper trail vs. electronic

Non-Financial Reports: progress, inventions, equipment

Inventory



Human Subjects; IRB

Animals

Conflict of Interest, RCR


II. Other Common Compliance Issues That We Deal With (cont):

Roles and Responsibilities:

Faculty and Research Administration’s perceptions and understanding about their respective roles often differ

some faculty understand / want their role to be limited to scientific or technical issues

some think PI should have total control

Departmental Administrators are often unsure about their role and responsibilities or abdicate them. (caught between a rock and hard place)

Research Administration’s and Research Accounting’s perceptions about their respective roles sometimes overlap; contributing to bottlenecks, confusion, frustration.

Compliance From Ground Zero - Finding Guidance

III. Things to remember about OMB Circulars and Certain Other Federal Agency Polices:

In many cases they provide “guidance” to the agencies

Often allow for some interpretation

Many agencies often have their own implementation standards that may differ from each other

Agencies generally may not be more restrictive, add additional requirements, or reduce minimum requirements unless authorized by law or approved by OMB.

Compliance From Ground Zero

What are we complying with?

Key guidance is contained in a number of different federal regulations including:

OMB Circular A-21 Cost Principals for Higher Education

OMB Circular A-110 Uniform Administrative Requirements..

OMB Circular A-133 Single Audits

NIH and NSF Grants Policy Manuals

Other Federal Policies, Regulations and Guidelines


OMB Circular A21 and Other Cost Principle Basics

Basic Cost Principles for Organizations Receiving Federal Awards

Educational Institutions: OMB Circular A21

Non-Profit Organizations: OMB Circular A122

Hospitals

These regulations establish principles for determining costs applicable to grants, contracts, and other agreements.

The principles are designed to provide that the Federal Government bear its fair share of total costs………..

Agencies are not expected to place additional restrictions on individual items of cost.


Cost Principles e.g. A21 (continued)

Direct Costs

Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Indirect Costs

Indirect Costs, also sometimes referred to as F&A (facilities and administrative) costs F&A ( INDIRECT COSTS ) costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.


OMB Circular A110- Uniform Administrative Requirements:

Establishes Administrative Standards that Grantees Must Comply With. For example:

Records that identify adequately the source and application of funds for federally sponsored projects

Effective controls over and accountability for all funds, property and other assets.

Comparisons of outlays with budget amounts for each award.

A-110, cont.

A110 Uniform Administrative Requirements (continued):

Written procedures to minimize the time elapsing between the transfer of funds to the recipient from the U.S. Treasury and the issuance or redemption of checks, ..

Written procedures for determining the reasonableness, allocability and allowability, of costs in accordance with the provisions of the applicable Federal cost principles and the terms and conditions of the award.

Accounting records including cost accounting records that are supported by source documentation.

Equipment Management standards..

Close-out standards..


OMB Circular A133: Audit

— Single Audit Act consolidates federal audits

— One annual audit

— Initiated during FY1992 ( first year covered 2 FYs); circular has been updated several times since then

— Grantees retain outside firm to conduct audit of compliance with federal regulations

— Grantees, federal agencies and auditors went through a learning process during first few audit cycles

— Data collection forms sent to Federal Clearinghouse

— Internal auditors may perform some of the field work

NIH Grants Policy Statement

NIH Grants Policy Statement contains information in addition to the OMB circulars which is specific to NIH awards and grantees such as:

SNAP guidelines

modular budgets

salary cap information

application of rates

prior approval requirements

roles and responsibilities of the parties

other

Updated periodically

Knock - knock…..

III. Audits and Site Visits:

OMB Circular A-133

Federal Agencies

Internal Audits

Non-Federal Audits

Whistle Blower Audits

Fraud Audits

Site visits

Compliance

IV: Training

Compliance Training Programs

Compliance Office

Questions:

Compliance From Ground Zero: Current Issues Facing ...

Documents

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