1	FEDERAL AWARDS
2	FEDERAL AWARDS Federal awards are governed by standardized rules and regulations. Office of Management & Budget Circulars Federal Acquisition Regulations Subject to Audit. Future funding could be withdrawn. Financial Reports Required. Technical Reports Required. Funding can be withheld due to reports not filed.
3	OMB CIRCULAR A-21 The cost must be ALLOWABLE under both the provisions of the Circular AND under the terms of the particular award. The cost must be ALLOCABLE, i.e. the project which paid the expense must benefit from it. The expense must be REASONABLE, i.e. a "prudent person" would have paid this much. If costs are not allowable, allocable and reasonable, then they may NOT be charged to a sponsored project.
4	HIERARCHY OF TERMS The terms of an individual award take precedence over the provisions of A-21. For example, although travel is not defined as unallowable in A-21, your particular award may designate travel, or more likely foreign travel, as unallowable. In that case, you may not charge those expenses to that project. Similar types of provisions may pertain to the acquisition of equipment.
5	CONSIDERATIONS Is the cost an allowable direct cost? How do I allocate this cost to awards? Is the cost necessary? Does the cost support the specific purpose and activity? When is the award terminating? What is the remaining balance on this award? What are the budget restrictions?
6	ADMINISTRATIVE COSTS The September 1, 1994 revision of Circular A-21 established the principle that administrative and clerical expenses are normally indirect costs. The Circular permits them to be charged directly to federal sponsors when: 1) The expense is for the performance of one or more the of activities or projects defined as “MAJOR”. 2) The expense is specifically identified with and directly benefits the project. 3) The expense is specifically budgeted and approved by the sponsor. 4) The expense is supported by an explicit budget justification in the project proposal. A-21 defines the term "major projects" to mean "administratively intensive," where the nature of the technical work requires administrative/clerical support significantly above the routine level.
7	MAJOR PROJECTS EXAMPLES 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.
8	OTHER ADMINISTRATIVE CHARGES OBM CIRCULAR A-21, Section F.6b: “Items such as office supplies, local telephone costs, postage, computer network, computer supplies, and memberships shall normally by treated as indirect costs.” They may be charged directly only under “special circumstances.”
9	SPECIAL CIRCUMSTANCES These costs may be directly charged only where they meet ALL of the following requirements: The project has a special need for the item or service that is beyond the level of services normally provided by departmental administration. The cost can be specifically identified to the technical scope of work conducted under the project and is appropriately documented. The cost is specified in the proposed budget of the sponsored agreement, and the special circumstances requiring direct charging are justified in the proposal. The sponsoring agency accepts the cost as part of the project’s direct cost budget (i.e., does not specifically disapprove the cost in the award or other notification to the University).
10	EXAMPLES OF SPECIAL CIRCUMSTANCES Membership fee required in order to attend a conference, where the conference is part of the agreement. Membership fee required in order to subscribe to a journal, where the subscription is necessary for the agreement. Postage for reprints, only in unusual circumstances, e.g., very large volume of reprints. Express mail. Shipping costs. Lab notebooks, pens, and other office-type supplies stored and used only in the laboratory or field for the technical work.
11	OTHER REQUIREMENTS For federal grants, OMB Circular A-110 requires prior approvals of changes in P.I. status (including reduction of effort by 25% or more) or significant changes in scope of work. Award notices specify requirements for reports. PIs who fail to submit timely technical or progress reports, for example, risk losing their own funding, and jeopardize the funding of other UT Dallas PIs.
12	COST TRANSFERS OMB CIRCULAR A-21 mandates that all cost transfers to Contracts & Grants must be well documented and should be done within 120 days of the original charge. Late, frequent, or inadequately documented cost transfers suggest poor financial management and could lead to audit disallowances.
13	COST SHARING Cost sharing is defined in the federal regulations as project costs not borne by the sponsor. Keep auditable records at the department level for all types of cost share. Do not match or cost share federal funds with other federal funds on the same project unless specifically approved by all federal funding agencies involved. If an expense is normally unallowable for reimbursement under federal rules e.g. entertainment, then it is not allowable as a cost shared expense.
14	PRE-AWARDS A pre-award is an account that is set up when the award documents are late and the principal investigator needs to begin spending before the award document is fully executed. The principal investigator must request a pre-award account by making arrangements with the Dean. A pre-award is a guarantee that the Dean will cover expenditures charged to the account in the event that the award does not come through. Sponsored Projects will set up an account on authority of a pre-award, provided that it is fully approved by the Dean.
15	WHY DO WE HAVE TIME & EFFORT CERTIFICATION REPORTS? In order to comply with the Office of Management & Budget Circular A-21, “Principles of Determining Costs Applicable to Grants, Contracts and other Agreements with Educational Institutions,” Time & Effort Reports must be maintained. These reports are designed to verify that the employees paid from federally funded projects have actually worked on that specific project and in the same percentage as they were paid.
16	TIME & EFFORT REPORTING - Time & Effort Reports are generated on a monthly basis for Federal and State Contract & Grant Accounts. - The reports must be certified by Principal Investigators. - The reports are sent out on a monthly basis and should be turned in with the monthly time sheets to the Payroll office.
17	CONSEQUENCES OF NOT MAINTAINING TIME & EFFORT CERTIFICATION REPORTS During the audit phase of a Contract or Grant, if the Time & Effort Report is not available or properly certified, the Federal agency can request a refund of funds and impose penalties on the University. Future funding from Federal Agencies may be withheld.
18	OVERVIEW OF THE BRIEF THE BRIEF PROVIDES AN OUTLINE OF IMPORTANT INFORMATION CONTAINED IN THE CONTRACT 1) BUDGETED AMOUNT VS. AMOUNT FUNDED 2) START & STOP DATES 3) INDIRECT COST RATE AND BASE 4) WHAT COSTS ARE ALLOWABLE AND UNALLOWABLE? 5) TECHNICAL REPORT DUE DATES 6) SPONSOR INFORMATION 7) ACCOUNTING INFORMATION
19	WHAT ARE INDIRECT COSTS? Indirect costs, otherwise known as facilities and administrative costs are a negotiated rate of return of costs 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 associated with performing a sponsored research project. The rate is negotiated every three years and the calculations are based on a very intensive Space Survey.
20	COMPONENTS OF F&A RATE Facilities: Building Use Allowance 3.90% Equipment Use Allowance 6.40% Operations & Maintenance 9.60% Interest 2.80% Library .80% Total Facilities: 23.50% Administration (26% Cap) General Administration Departmental Administration Sponsored Projects Administration Total Administration 26.00% On-Campus Rate = 49.5% Off-Campus Rate = 26%
21	HOW TO CALCULATE INDIRECT COSTS Indirect costs are applied on a monthly basis at the time that we close the books for the month. They are based on the indirect cost rate, the indirect cost base and the direct costs for the month. The following is an example of how to calculate indirect costs, based on the Modified Total Direct Cost base.
22	EXAMPLE: MODIFIED TOTAL DIRECT COSTS The indirect cost rate is 49.5% The monthly expenditures are: Salaries $2,500.00 Benefits $ 500.00 Travel $1,000.00 Maintenance & Operations $1,500.00 Scholarships $1,000.00 Total Direct Costs $6,500.00 Indirect costs would be applied on $5,500.00. ($6,500.00 - $1,000.00 for Scholarships, leaves $5,500 to apply IDC). The $5,500.00 would be multiplied by 49.5%, charging $2,722.5.00 in indirect costs for the month. Total costs for the month would be $6,500.00 plus $2,722.50, which would be $9,222.50.
23	WHO TO CALL Mary Carter Supervisor of Contracts & Grants Accounting Ext. 2173 Paula Gosling Accountant III Ext. 4831