Division of Grants Compliance and Oversight

Office of Policy for Extramural Research Administration, OER

National Institutes of Health, DHHS

NIH Regional Seminar – San Diego, CA – October 2015

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Diane Dean, Director

Kathy Hancock, Assistant Grants Compliance Officer

Joel Snyderman, Assistant Grants Compliance Officer

• Cost Principles

• Administrative

Standards

• Audit Requirements

• Grant Award Basics

• Award Restrictions

• Responsibilities

• Accounting Basics

• Monitoring Basics

• Subrecipient

Monitoring

• Other Cost

Considerations

• NIH Financial

Reporting Basics

• Closeout

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• As part of a larger Federal effort to increase efficiency and reduce waste, on December 26, 2013, the Office of Management and Budget (“OMB”) published a series of significant reforms to the Government’s policies relating to grants and cooperative agreements. 2 CFR Part 200

• This Final Uniform Regulation (a.k.a. Guidance) (2 CFR Part 200) consolidates and supersedes the eight OMB circulars (A-21, A-50, A-87, A-89, A-102, A-110, A-122, and A-133).

• These new federal regulations became effective for new federal awards and new funding for existing awards on or after Dec 26, 2014.

• For more information on 2 CFR Part 200 see: http://www.gpo.gov/fdsys/pkg/FR-2014-12-19/pdf/2014-28697.pdf

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• On December 19, 2014, HHS published in the Federal Register, an Interim Final Rule (45 CFR Part 75) adopting OMB’s final regulation (a.k.a. guidance) in 2 CFR Part 200 with certain amendments, based on existing HHS regulations, to supplement the guidance as needed for the Department.

• HHS made this interim final rule effective on December 26, 2014.

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Cost Principles:

o 45 CFR Part 75, Subpart E (§ 75.400- § 75.476)• Institutions of Higher Education (IHE), State, Local

Governments and Indian Tribes, and Non-profit Organizations

o 45 CFR Part 75, Appendix IX • Hospitals

o 48 CFR Subpart 31.2 (Federal Acquisition Regulation): • For-Profit Institutions 6

• Establishes principles for determining costs applicable to grants, contracts, and other agreements

• Direct costs

• F&A/indirect costs

• Selected items of cost

o allowable/unallowable costso Compensation for personal services

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• 45 CFR Part 75, Subpart C – PreawardFederal Award Requirements and Contents of Federal Awards

(§ 75.200- § 75.217)

• 45 CFR Part 75, Subpart D – Post Federal Award Requirements (§ 75.300- § 75.391)

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Prescribes:

• Preaward requirements• Postaward requirements

Also includes requirements for:

o Payment

o Matching or Cost sharing

o Accounting for program income

o Revision of budget and program plans

o Non-Federal audits

o Allowable costs

• Financial management systems standards

• Property standards

• Procurement standards

• Reports and records9

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o 45 CFR 75.501: Institutions of Higher

Education, States and Local Governments,

and Non-Profit Organizations, including Non-

Profit Hospitals

o 45 CFR 75.501(h) through (k): For-Profits

Organizations, including For-Profit Hospitals

o NIH Grants Policy Statement: Foreign

Organizations must follow the same

requirements as For-Profit Organizations

All NIH grant recipients that expend $750,000 or more within a year in Federal awards are subject to an audit requirement.

o Applicable to Non-Federal Entity Fiscal Years Beginning on or after 12/26/2014.

o For-Profit and Foreign Organization audit requirement: • Expend $750,000 under one or more HHS awards (as a

direct recipient and/or consortium participant)

• At least one award is an HHS grant

• Audits are due within the earlier of 30 days after receipt of the auditor’s report(s) or 9 months after the end of the recipient’s audit period.

• Recipients delinquent in submitting audits risk the imposition of sanctions and potential loss of Federal funds. 11

Summary of Audit Requirements

Recipient

Type

Source of Audit

Requirement (Non-

Federal Entity Fiscal

Years Beginning Prior

to 12/26/2014)

Source of Audit

Requirement (Non-

Federal Entity Fiscal

Years Beginning

On/After 12/26/2014)

Where to Submit

Audit Reports

State & Local

Governments

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse

(See contact information in NIH GPS

Part III)

Institutions of

Higher Education

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse

(See contact information in NIH GPS

Part III)

Non-Profits,

including non-profit

hospitals

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse

(See contact information in NIH GPS

Part III)

For-Profits,

including for-profit

hospitals

45 CFR 74.26(d) 45 CFR 75.501(h) through

75.501(k) and 45 CFR 75.215

National External Audit Review

Center

(See contact information in NIH GPS

Part III)

Foreign

Organizations

NIH Grants Policy Statement

(same as For-Profits)

NIH Grants Policy

Statement (same as For-

Profits)

National External Audit Review

Center

(same as For-Profits, see contact

information in NIH GPS Part III)

.

Summary of Federal Requirement References

Recipient Type Administrative

Requirements

Cost Principles Audit Requirements

State & Local

Governments and

Indian Tribes45 CFR Part 75,

Subpart C – Pre-

Federal Award

Requirements and

Contents of Federal

Awards §75.200-

§75.217

AND

45 CFR Part 75,

Subpart D – Post

Federal Award

Requirements

§75.300-§75.391

45 CFR Part 75, Subpart E

See also §75.416 and §75.417

45 CFR Part 75, Subpart F

at §75.501

Also applicable to non-

profit Hospitals

Institutions of Higher

Education

45 CFR Part 75, Subpart E

See also §75.418 and §75.419

Non-Profits 45 CFR Part 75, Subpart E

Hospitals 45 CFR Part 75, Appendix IX 45 CFR Part 75, Subpart F

at §75.501 (h)-(k) and

§75.215

Also applicable to for-

profit Hospitals

For-Profits FAR 31.2

(48 CFR Subpart 31.2)

Foreign Organizations Same as above depending on

type of institution

Per NIH GPS use

45 CFR Part 75.501 (h)-(k)

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• Terms of Award – Section III

o 45 CFR Part 75 – HHS rules and requirements that govern the administration of grants

o NIH Grants Policy Statement (GPS) –policy requirements that serve as the terms and conditions of NIH awards

• Special Terms and Conditions – Section IV

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• Only applied to a particular grant for cause

• Shown on the Notice of Award (NoA) after Section III – Institute and/or Center specific terms of award

• Funds usually are not restricted in the Payment Management System

• Restricted funds must be tracked by grantee to ensure compliance

o EXAMPLE of Award Restriction: Funds may not be

used to purchase equipment without the written prior

approval of the NIH awarding component.

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• A. The Principal Investigator

• B. The Departmental Administrator

• C. The Department Chair

• D. The Institution

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• Requires that:

o Separate account is established for each project

o Program Income is identified and accounted for by project

o Program Income is used in accordance with the appropriate alternative, i.e., Additive

Deductive

Combination

Matching

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• Requires that:

oExpenses are charged in accordance with: NoA Terms and Conditions

NIH Grants Policy Statement

Including addenda in effect as of the beginning date of the budget period

Salary Cap / Rate Limitation

Cost Accounting Standards

Federal regulations

oALL expenses are appropriately documented

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• Requires that:o Actual expenses are periodically compared with budget

o Actual expenses are accurate, i.e., reasonable, allocable, allowable and consistently charged

o Mischarges are corrected in a timely manner (cost transfers)

o Prior approvals are obtained when required

o Subrecipient expenses are monitored – (Recipient’s responsibility to monitor expenses)

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• Actual expenses should be compared to the budget to ensure:

o Total funds on the grant have not been exceeded

o Total funds are used appropriately

o Total funds for any cost category have not been

exceeded if restricted on the NoA

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• Actual expenses should be reviewed to ensure they are accurate and allowable

o Reasonable (including necessary)

o Allocable

o Consistently applied

o Conforms to any limitations or exclusions

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• A cost may be considered reasonable if the nature of the goods or services acquired or applied 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.

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• Dr. Grant needed a specialized microscope for his research supported by an NIH grant from the National Cancer Institute. When deciding on the model that would best suit his needs, he received several price quotes on various models that were all within the same general price range. However, one microscope in particular appealed to him – it met all of the necessary specifications plus many additional features. Although it was about $10,000 more than the others, he ordered it.

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• A cost is allocable to a specific grant if it is incurred solely in order to advance work under the grant and is deemed assignable, at least in part, to the grant.

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• When Dr. Grant’s microscope finally arrived, he found that equipment funds for his National Cancer Institute grant were fully expended. Since the microscope was for use on an NIH grant, he decided to charge the cost to another one of his NIH grants that was funded by the National Eye Institute.

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• Recipients must be consistent in assigning costs to cost objectives.

• Costs may be charged as either direct costs or F&A costs, depending on their identifiable benefit to a particular project or program.

• All costs must be treated consistently for all work of the organization under like circumstances, regardless of the source of funding.

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• Dr. Grant’s lab was running low on office supplies and postage stamps. Since he couldn’t wait any longer for his institution to provide the supplies, he purchased them and charged them to his NIH grant account.

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• A cost is allowable if it is reasonable, allocable and

conforms to the cost principles and the sponsored

agreement AND is not prohibited by law, regulation

or term of award.

• Conformance varies by type of activity, type of recipient, and other characteristics of individual awards.

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• Dr. Grant decided to host a very important Departmental meeting at his home and serve beer and pizza hoping that everyone would attend. The purpose of the meeting was to discuss changes in NIH grants policy, which affected the work of the entire Department. Therefore, he decided to charge the cost of the beer and pizza to his grant, especially since he was providing the use of his home.

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• Used to correct:

o Erroneous charges

o Unreasonable charges

o Unallocable charges

o Inconsistently applied charges

o Unallowable charges

• Must be well documented

• Must be made within 90 days from the time error was discovered

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Other Cost

Considerations

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• NIH Grants Policy Statement defines actions requiring NIH prior approval.

• Some prior approval actions affecting cost include the following:

o Carryover of funds (if required-see Section III of NoA)

o Incurrence of pre-award costs greater than 90 days

o Deviation from award terms and conditions

o Activities disapproved or restricted as a condition of award

• For a complete listing of NIH prior approval requirements see:

o NIH GPS 8.1.2 Prior Approval Requirements35

• Requests for carryover of funds should be signed by Authorized Representative.

• Request must be sent to GMO and include:

o Detailed budget by direct cost category with F&A

cost information (base and rate). If personnel

costs are requested, include a detailed breakdown of personnel costs

base salary

salary requested

effort to be spent on the project

o A scientific justification for the use of funds

o The reason for the unobligated balance 36

Progress Reports, financial and final reports should be submitted on time to avoid consequences.

• Failure to submit timely reports may adversely affect future NIH funding to:

o The Grantee Institution

o The Principal Investigator

• NIH may impose sanctions on institutions that do not meet these reporting requirements, including:

o Corrective actions

o Removal of expanded authorities

o Delay or withholding of future awards to the project or program

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Federal Financial Report (FFR)(SF-425)

Expenditure Data

• Timely - Must adhere to submission deadlines:

o Annual – (Non-SNAP Awards)

FFR submitted for each budget period no later than 90 days after the

end of the calendar quarter (CQ) in which the budget period ended.

Budget period ends 1/31/2016 – FFR due 6/30/16

(90 days after the end of the CQ of 3/31/16)

o Final (End of Competitive Segment) – (SNAP and Non-SNAP

Awards)

FFR submitted within 120 days following the end of the project period

(SNAP – Streamlined Non-competing Award Process)39

• FFRs should be submitted timely and accurately

• Reported expenses and program income must agree with institutional accounting records

• Routine Revisions to correct FFRs are not appropriate

• Information related to Financial Reporting:

See FFR (SF425) Instructions for NIH Grantees available at http://grants.nih.gov/grants/forms.htm

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• Projects ending on or after October 1, 2014, recipients

must submit the following document within 120 calendar

days of the end of the period of performance:

– Final Federal Financial Report (FFR) SF-425 Expenditure Data

(submitted through eRA Commons);

– Final Progress Report;

– Final Inventions Statement & Certification;

• Previously the reporting deadline was 90 days from the

project period end date.

• See NOT-OD-15-111 for more information

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New HHS Closeout Requirements

• New HHS policy requires NIH to initiate

unilateral closeout procedures – i.e., closeout

without receipt of acceptable reports -- within

180 days of the period of performance end date

if grantee has not submitted an acceptable

report for each required final report.

o See: NOT-OD-14-084

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• Recipients must ensure there are no discrepancies between

final FFR expenditure data (in eRA Commons) and the FFR cash

transaction data (in Payment Management System [PMS]).

o The FFR module in eRA Commons will display a text reminder

before submitting the Final FFR (as of late August 2015)

• Failure to submit an acceptable final FFR in a timely manner

may result in disallowed costs or federal debt

o If a grantee fails to submit a final FFR expenditure data report:

NIH must use the last recorded quarterly cash disbursement

level

o If the final FFR expenditure data does not match the amount

reported on last FFR cash disbursement report to PMS:

NIH must use the lower amount

Unilateral Closeout emphasizes the need for TIMELY and ACCURATE reporting

• Centralized office accepts receipt of all non-financial, paper-based closeout documents;o Final Progress Report;

o Final Invention Statement and Certification.

• If not using eRA Commons Closeout Module, mail closeout documents to:NIH Centralized Processing Center

6705 Rockledge Drive, Suite 5016, MSC 7986

Bethesda, MD 20892-7986 (for regular or US Postal Service Express mail)

Bethesda, MD 20817 (for other courier/express mail only) 44

Recipients are strongly encouraged to submit closeout documents electronically through the

eRA Commons; However,

Whenever you are contemplating a significant postaward change, and you are uncertain about the need for prior approval, consult in advance with:

• The Notice of Award (terms and conditions)

• Your Office for Sponsored Research/Projects

• NIH awarding component Grants Management Officer/Specialist

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Diane Dean, Director, Division of Grants Compliance and Oversight

diane.dean@nih.gov301-435-0949

Kathy Hancock, Assistant Grants Compliance Officer

kathy.hancock@nih.gov

301-435-1962

Joel Snyderman, Assistant Grants Compliance Officer

joel.snyderman@nih.gov

301-594-0524

GrantsCompliance@nih.gov