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 Diane Dean, Director Kathy Hancock, Assistant Grants Compliance Officer Joel Snyderman, Assistant Grants Compliance Officer 1
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 2
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 4
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. 5
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 6 o 48 CFR Subpart 31.2 (Federal Acquisition Regulation): For-Profit Institutions
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 costs o Compensation for personal services 7
45 CFR Part 75, Subpart C Preaward Federal 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) 8
Prescribes: Preaward requirements Postaward requirements Also includes requirements for: o o o o o o Payment Matching or Cost sharing Accounting for program income Revision of budget and program plans Non-Federal audits Allowable costs 9 Financial management systems standards Property standards Procurement standards Reports and records
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 10 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 o Applicable to Non-Federal Entity Fiscal Years Beginning on or after 12/26/2014. 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
Recipient Type Summary of Audit Requirements 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 Tribes Institutions of Higher Education Non-Profits 45 CFR Part 75, Subpart C Pre- Federal Award Requirements and Contents of Federal Awards 75.200-75.217 45 CFR Part 75, Subpart E See also 75.416 and 75.417 45 CFR Part 75, Subpart E See also 75.418 and 75.419 45 CFR Part 75, Subpart E 45 CFR Part 75, Subpart F at 75.501 Also applicable to nonprofit Hospitals AND Hospitals 45 CFR Part 75, Appendix IX 45 CFR Part 75, Subpart F For-Profits 45 CFR Part 75, Subpart D Post Federal Award Requirements FAR 31.2 (48 CFR Subpart 31.2) Foreign Organizations 75.300-75.391 Same as above depending on type of institution at 75.501 (h)-(k) and 75.215 Also applicable to forprofit Hospitals 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 15
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. 16
A. The Principal Investigator B. The Departmental Administrator C. The Department Chair D. The Institution 17
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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 19
20 Requires that: o Expenses 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 o ALL 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) 22
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 23
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 24
25 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.
26 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.
27 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.
28 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.
29 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.
30 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.
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. 31
32 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.
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 33
Other Cost Considerations 34
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: 35 o NIH GPS 8.1.2 Prior Approval Requirements
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 37
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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 39 (SNAP Streamlined Non-competing Award Process)
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: 40 See FFR (SF425) Instructions for NIH Grantees available at http://grants.nih.gov/grants/forms.htm
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 41
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 42
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 43
Recipients are strongly encouraged to submit closeout documents electronically through the era Commons; However, Centralized office accepts receipt of all nonfinancial, 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
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 45
Diane Dean, Director, Division of Grants Compliance and Oversight diane.dean@nih.gov 301-435-0949 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