Changes to Sponsored Prog. Effective 6/1/01
MEMORANDUM
Executive President and Provost Vice
May 16, 2001
To: Deans
Department Chairs
From: Luis Glaser, Ph.D.
Executive Vice President and Provost
Subject: Allowable Costs and Grants
The enclosed memorandum from our Controller, Aida Diaz-Piedra, describes in detail changes in the allowable costs on federal grants. This represents a set of guidelines, which we must follow, and I ask that you bring these guidelines to the attention of all relevant individuals in your school who deal with Sponsored Programs.
I have asked the Controller to put this material on the web so that faculty can be fully Cognizant of the changes that are coming. Please make the utmost effort to make sure that everyone complies. Thank you for your help.
LG/mc
Enclosures
P.O Box 248033
Coral Gables, Florida 33124-4628
305-284-3536
Fax: 305-284-6758
MEMORANDUM
May 16, 2001
TO: Vice Presidents, Deans, Principal Investigators, Division
Heads, Directors, Department Heads and Administrators
FROM: Aida Diaz-Piedra
Controller
SUBJECT: Important Changes to Sponsored Programs Effective June 1, 2001
The University must change the way it charges some expenses to all currently active federal and federal pass-through* grants and contracts effective June 1, 2001. This memorandum will detail the expenses that are now considered unallowable on grants and contracts and will give a brief background on the reasons for the change.
I. Charges no longer allowed on a grant or a contract starting June 1, 2001.
The following charges cannot be processed on federal and federal-pass through * grants and contracts, even if included in the budget proposal, justified and approved by the agency:
+ Clerical and administrative salaries
+ Office and instructional supplies
+ Local telephone charges, including lines and sets, voice mail, beepers, and mobile phones
- Local network charges, including monthly network fees
+ Postage (except Federal Express or similar freight charges when shipping research samples)
+ Photocopying, and library services
+ Subscriptions to technical publications if there is no direct and demonstrable relationship to the specific grant or contract charged
+ Equipment repairs and equipment maintenance unless the equipment is considered special purpose equipment and it is used on the grant or contract
+ Expenses of a general and administrative nature that are not directly related to a grant or contract
Exceptions to the above rule:
A. The items above can be charged to a federal or federal-pass through* grant or contract
IF the grant or contract falls under one of the exceptions below:
1. Large complex programs, such as the General Clinical Research Center, North/South Center, Primate Centers, Program Projects and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions,
2. 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),
3. Projects that require making travel and meeting arrangements for a large number of participants, such as conferences and seminars,
4. Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports),
5. Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects and other research field sites that are remote from campus,
6. Individual projects requiring project-specific database management, individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.
7. These examples are not exhaustive. Nor are they intended to imply that direct charging of administrative or clerical salaries and other general costs would always be appropriate for the situations illustrated in the examples. Please contact the Sponsored Office of
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Expenditure Compliance in each campus if there are questions about the exceptions. You should know that we do not have a great deal of flexibility in making exceptions. Typically, awards that primarily fund an investigator’s individual research project do not qualify under the above exceptions.
* The term federal pass-through is used when the University receives an award from the State or Local governments or a private agency (another university, a corporation, a foundation, etc.) where the primary source of funds originates with the federal government. Federal-pass through grants must comply with all rules and regulations of the federal government. Examples of federal-pass through are the Ryan White Title I grant received from Miami-Dade County. This award is received directly from the county, but the funds originate with the federal government. Similarly a subcontract received from another university or entity, the primary source of funds for which is federal, qualifies as federal pass-through. For example, the University receives a grant from Duke University where the primary source of funds to Duke is a federal award, the award to the University would be considered federal-pass through. For quick reference, the accounting system (FRS) denotes federal-pass through awards in a number of screens (06A, 019, 09F, 652)
Additional exceptions include:
B. State, local and/or private grants or contracts that do not contain federal-pass through dollars IF the agency has approved the reimbursement of direct administrative costs in lieu of indirect cost support. The approval will be noted in agency guidelines and in the allowance of such costs by the agency in the proposal budget provided.
C. Pharmaceutical sponsored grants or contracts that do not contain federal-pass through funds.
II. Background: In the mid 90’s the University became subject to Cost Accounting Standards (CAS) promulgated by the Cost Accounting Standards Board, a federal regulatory agency. CAS mandated every not-for-profit organization receiving over $25 million in federal funding not to charge general and administrative expenses to grants and contracts. However, it left a number of exceptions open. In addition, it required that a Disclosure Statement be completed and submitted to the federal government reflecting the accounting practices at each institution. The University complied and submitted its Disclosure Statement in March 1997. The University’s Disclosure Statement reflected our practice of charging general and administrative expenses to federal grants and contracts when the expenses were included in the proposal budget, justified in the proposal narrative and approved by the agency. In May 1997, the Sponsored Programs Research Administration Office (Pre-Award) and the Controller’s Office conducted seminars on this topic for the University community and produced a departmental manual. This was followed by the audit of the Disclosure Statement by the Department of Health and Human Services (DHHS), the University’s cognizant audit agency. The audit took place from August 1999 to December 1999 and included a review of all accounting practices of the University and a review of transactions selected by the auditor. Recently, DHHS issued the final audit report. The University has been found to be non-compliant in its practice of charging administrative and general expenses to grants and contracts. The following corrective action is required if the University is to continue to receive federal funding:
+ change current practices and,
+ file a revised Disclosure Statement.
II. Changes to current practices
Therefore, this memorandum serves as notification to the University community of the changes that must take place starting June 1st, 2001. Expenses of a general and administrative nature can no longer be charged to federal and federal-pass through grants and contracts, even if the items were included in the proposal budget, justified in the proposal narrative, and approved by the agency, unless they fall under one of the exceptions above. It is the responsibility of the
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Principal Investigator and department administrators not to initiate these types of charges against a federal or federal-pass through grant or contract. A revised Disclosure Statement has been completed by the University and has been filed with DHHS.
The revised Disclosure Statement is subject to further review and audit by DHHS. We have once again completed the Disclosure Statement reflecting the practices that we enumerated in this memorandum and that become effective June 1, 2001. If DHHS still finds problems with the accounting practices enumerated, we may have to further restrict the ability to charge general and administrative expenses currently reflected as exceptions under items B and C above. We have given what we believe are sufficient reasons in the Disclosure Statement as to why the exceptions under B and C above are valid. However, if after review DHHS does not approve the Disclosure Statement as revised, we will inform the University community.
In the meantime, please do not hesitate to contact one of the following if you have questions regarding this memorandum:
John Dow, Assistant Controller for Sponsored Programs at jdow@miami.edu
Sue Koger, Director of Sponsored Programs Office of Expenditure Compliance – Gables and South Campus at skoger@miami.edu
Pat Jacobs, Team Leader, Sponsored Programs Team - Rosenstiel School of Marine and Atmospheric Sciences at pjacobs@miami.edu
Aida Diaz-Piedra, Controller at adiazpie@miami.edu
In addition, proposal budgets should be prepared excluding general and administrative expenses unless the proposed project falls under one of the exceptions above. The Office of Research Administration (Pre-Award) currently receives many proposals hours before the due date. Proposal budgets for federal and federal pass-through grants and contracts that do not fall under an exceptional category and that contain items of general and administrative expenses will be returned to the Principal Investigator, thereby delaying the submission process.
Please contact one of the following if you have questions regarding proposal budgets:
Tom Gill – Director Research Administration - School of Medicine at tgill@miami.edu
Sandy Blanco – Director Research Administration – Gables campus at sblanco@miami.edu
Pat Jacobs, Team Leader, Sponsored Programs Team - Rosenstiel School of Marine and Atmospheric Sciences at pjacobs@miami.edu
We urge you to pay close attention to the expenses budgeted on new proposals and to the charges initiated, approved and recorded in active grants and contracts. Please keep in mind that the Office of Sponsored Programs Expenditure Compliance does not review or approve most of the charges for supplies, local telephones, local network, postage and other items of general expenses since these transactions are usually under $5,000, our review limit. Therefore, it is the Principal Investigator and department administrator’s responsibility to ensure that the expenses and charges initiated and approved at the departmental level are correct as reflected in this memorandum and the Disclosure Statement, and that the University is in compliance with federal regulations. The offices of Sponsored Expenditure Compliance will continue to audit accounts and disallow such administrative costs when they occur.
We are working on new educational programs that will help investigators, administrators and central office staff to be cognizant of these and other federal rules.
Please do not hesitate to contact any of those listed above if you have questions.
References: Cost Accounting Standards # 501, 502 & 505 as issued by the Cost Accounting Standards Board
Office of Management and Budget (OMB) Circular A-21 Cost Accounting Principles for Educational Institutions
