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Research Accounting
Frequently Asked Questions (FAQ)
GENERAL:
- How will I be notified when an award has been setup and an index number has been assigned?
- Who do I contact in Research Accounting about my sponsored project?
FEDERAL REGULATIONS:
- What is A-21?
- What is A-110?
- What is A-133?
EXPENSE:
- What are indirect costs (i.e. F&A / overhead)?
- Why can’t I charge Administrative Salaries to my federally sponsored project?
- Why can’t I charge other Administrative Costs to my federally sponsored project?
- How do I determine if an expense can be charged to a grant?
- Who is responsible for approving and monitoring expenditures?
- How do I purchase something that was not in the sponsored approved budget?
- How do I initiate a purchase requisition for a sponsored project?
- How do I determine which account code is appropriate for purchases and expenditures?
- What reports are available to review expenses on my project?
- Costs were charged to the wrong sponsored grant index. How do I correct this?
- Why are excessive Cost Transfers considered a control weakness?
- What should I do if a payroll certification is inaccurate?
- What can I do to ensure financial compliance for federally funded projects?
- What type of expenditure is not allowable at the end of a project?
- Can meals or alcohol be charged to Grants & Contracts?
- How can I reduce the frequency of Cost Transfers?
- How do I expedite expense requests through Research Accounting?
- If an award notification has not been received but the research project needs to start, is there any way we can start incurring costs for the project? What approvals are needed?
COST SHARE:
- What is cost sharing (matching)?
BUDGET:
- Who do I contact concerning on-line budget transfers for grants?
- How do I determine which budget pool is appropriate?
- What banner screen is available to review budget availability?
REPORTS:
- What reports are available to review expenses or encumbrances?
- Who prepares invoices and financial reports for sponsored projects?
CLOSEOUT:
- My project is ending. What do I need to do?
- How long must I keep documents relating to a closed-out project?
AUDITS:
- Who audits Sponsored projects?
- What should I do with an “Audit Confirmation Letter” I received?
- Is a Fixed Price Contract subject to an Audit?
- Why are University re-charges scrutinized by auditors?
GENERAL:
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How will I be notified when an award has been setup and an index number has been assigned?
Research Accounting will send an email notification to the Principal Investigator, business manager and/or budget coordinator. This notification includes the “Research Accounting Datasheet” which provides a summary of all the account and invoice requirements pertaining to the approved contract or agreement.
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Who do I contact in Research Accounting about my sponsored project?
Please refer to http://www.fau.edu/research/ocg/aboutocg/contacts.php
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FEDERAL REGULATIONS:
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What is A-21?
A-21 is short for OMB Circular A-21, a circular issued by the Office of Management and Budget. The full name of this Circular is Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions.
OMB A-21 outlines the cost principles to be used in determining the allowable costs of work performed by colleges and universities under sponsored agreements. The principles are used to determine the costs of work performed under sub grants, cost reimbursement subcontracts, and other awards received under sponsored agreements. The principles are also used as a guide in the pricing of fixed price contracts and subcontracts where costs are used in determining the appropriate price.
Please refer to http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html
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What is A-110?
A-110 is short for OMB Circular A-110, a circular issued by the Office of Management and Budget. The full name of the Circular is Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations. This circular is directed to Federal agencies. Grant policies issued by Federal agencies mirror requirements prescribed by A-110 and are organized in the following four major subparts:
General: Provides purpose and definitions, etc.
Pre-Award Requirement: Prescribes pre-award policies, etc.
Post-Award Requirement: Prescribes policies for financial and program management, property management, procurement, reports and records, and termination and enforcement.
After-the-Award Requirement: Prescribes policies for closeout procedures, subsequent adjustment, continuing responsibilities, and collection of amount due.
Please refer to: http://www.whitehouse.gov/omb/circulars/a110/a110.html
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What is A-133?
A-133 is short for OMB Circular A-133, a circular issued by the Office of Management and Budget. OMB Circular A-133 prescribes standards for audits of states, local governments, and non-profit organizations. This circular is issued pursuant to the Single Audit Act of 1984, P.L. 98-502, and the Single Audit Act Amendments of 1996, P.L. 104-156. Auditors use Circular A-133 as guidelines when they conduct the audit for major Federal programs. The audit for major Federal programs is also called single audit or A-133 audit. A-133 audit is intended to provide a cost-effective audit for entities in that one audit is conducted in lieu of multiple audits of individual programs.
Florida Atlantic University is subject to an A-133 audit on an annual basis. The A-133 audit report for the University is combined with the A-133 audit report for the State of Florida. Refer to http://www.fau.edu/research/ocg/generalinfo/fau-links.php for the most current audit completed.
Please refer to: http://www.whitehouse.gov/omb/circulars/a133/a133.html
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EXPENSE:
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What are indirect costs (i.e. F&A / overhead)?
Indirect costs, also known as overhead and officially know as Facilities and Administrative costs (F&A) are costs that are incurred for common or joint objectives and therefore, cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity. They are real costs incurred by the institution that cannot be billed to individual projects. Examples of indirect costs include, but are not limited to, utilities to heat, cool and illuminate laboratories, library resources, central purchasing and payroll services, etc. A federally negotiated indirect cost (F&A) rate has been established to cover these expenditures.
In addition, OMB Circular A-21 requires that certain costs be normally treated as indirect cost which means that they cannot be charged to a federally sponsored project. These costs include administrative and secretarial salaries, postage, office supplies, local telephone costs, memberships and subscriptions, general purpose equipment, and general purpose software.
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Why can’t I charge Administrative Salaries to my federally sponsored project?
OMB Circular A-21 states that “the salaries of administrative and clerical staff should normally be treated as F&A costs.” Therefore, direct charging of administrative salaries is usually not allowed.
Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity.
A CAS 502 Exception Form http://www.fau.edu/research/ocg/ocgforms/cas502.php must be submitted to Research Accounting for approval in order to determine if a grant is considered a major project.
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Why can’t I charge other Administrative Costs (office supplies, dues, postage, etc.) to my federally sponsored project?
OMB Circular A-21 states that “items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs. Therefore, direct charging of administrative costs is usually not allowed.
Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative costs that can be specifically identified with the project or activity.
A CAS 502 Exception Form http://www.fau.edu/research/ocg/ocgforms/cas502.php must be submitted to Research Accounting for approval in order to determine if administrative costs are permissible.
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How do I determine if an expense can be charged to a grant?
Direct costs must meet the allowability, allocability and reasonableness guidelines described in OMB Circular A-21 and consistency in OMB A-110, along with any sponsored agreement specific requirements.
Allowability: The direct cost must be allowable under the terms and conditions of the award, including the authorized budget and applicable regulations.
Allocability: The direct cost of goods or services must benefit the award charged. Costs of good or services shared by more than one project are allocable for the proportions that can be approximated through actual use. For example, if you are charging Project A for 50% of an item purchased, Project A “must” receive half the benefit or use of that item.
Reasonableness: A direct cost may be considered reasonable if the nature of the goods or service acquired and the amount paid, reflect the action that a prudent person would have taken at the time the decision to incur the cost was made. Costs should be reasonable in price, as well as in quantity, in order to accomplish the project’s objectives.
Consistency: The application of direct costs must be given consistent treatment within established University policies and procedures including Generally Accepted Accounting Principles and Cost Accounting Standards as issued by the Federal Cost Accounting Standards Board.
Timely: Direct costs that benefit the project should be incurred throughout the life of the award. Direct costs submitted within the last 30 days of the project period may be considered to be “arbitrary” if direct costs are: (1) not necessary for the completion of the project, (2) used to expend the remaining balance of the project funds or (3) used to cover costs from another project.
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Who is responsible for approving and monitoring expenditures?
Principal Investigators and their designees are responsible for:
- Reviewing and approving direct costs to ensure that the expense is included in the approved budget or in an approved re-budget request
- Assuring that the cost is necessary to carry out the scope of work
- Verifying funds are available in the FAU Project Account
- Ensuring transactions are allowable, allocable and reasonable for the project and properly documented;
- Initiating and signing the request
The Principal Investigator, Dean, Director or Chair of the department who delegates responsibilities and decision making authority for direct costs must ensure that the employees responsible for sponsored projects are qualified and are properly fulfilling their responsibilities.
Research Accounting and Sponsored Programs are responsible for reviewing an approving direct cost requests.
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How do I purchase something that was not in the sponsored approved budget (i.e. if you need to travel but travel was not in the proposed budget, or if you need to purchase equipment but equipment was not in the proposed budget)?
Most agencies will allow the University to depart from the original budget provided that:
- expenses are necessary for the successful completion of the project
- expenses are allowable under the governing cost principles and agency specific policies; and
- prior approval is obtained when required
Budget revisions are not allowed for the purpose of relieving financial pressure on a department’s unrestricted budget, or on other sponsored projects in order to charge costs that are not necessary for the completion of the project.
The University requires prior written approval for budget revisions to buy equipment within 90 days of the project end date.
Prior approval requirements for budget revisions from sponsoring agencies are subject to change; the Principal Investigator should contact Sponsored Programs for guidance. When requesting prior approval for budget revisions, the Principal Investigator must submit the budget forms that were used in the application unless the Federal or Non-Federal awarding agency indicates that a letter suffices, following agency procedures.
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How do I initiate a purchase requisition for a sponsored project?
Complete a purchase requisition (including index and account code). Forward the purchase requisition to Research Account ADM 210C for approval. Research Accounting will review the requisition for:
- allowability
- allocability
- reasonableness
- consistency
- timeliness (verify project is not ending)
- budget availability
When a purchase requisition is approved by Research Accounting, it is forwarded to the Purchasing Department. If a purchase requisition is not approved, the purchase requisition will be returned to the department.
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How do I determine which account code is appropriate for purchases and expenditures?
All expenditure requests require account codes to classify goods or services required for research projects.
Refer to the University account code listing for the appropriate expense category available at http://www.fau.edu/research/ocg/files/acctcodes.xls.
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What reports are available to review expenses on my project?
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e~Print Reports
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Description
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Details
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FRRGITD
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Grant Inception to Date
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Provides cumulative to date summary of expenditures posted to the grant
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FGRODTA
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Organization Detail Activity
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Provides Fiscal Year to Date detail of expenditures posted to the grant
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FGROPNE
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Open Encumbrance Report
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Provides details of purchase requisitions and travel encumbrances
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WPRPPEDA
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Payroll Encumbrance – Salary
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Provides details of salary encumbrances
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WPRPPEDO
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Payroll Encumbrance – OPS
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Provides details of OPS encumbrances
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WMTXROO2
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Grant Exemptions Applied
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Provides details of tuition exemptions issued and posted
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Costs were charged to the wrong sponsored grant index. How do I correct this?
When a cost transfer is identified as a necessary reallocation of costs, the following is required in order to process a transfer:
- Cost Transfers must be processed within 90 calendar days of the accounting date.
- Cost Transfers must be properly justified, accompanied with sufficient support documentation and submitted on the appropriate University form.
- Cost Transfers must meet the allowablity, allocability and reasonableness guidelines described in OMB Circular A-21 and consistency in OMB Circular A-110, along with any sponsored agreement specific requirements.
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Why are excessive Cost Transfers considered a control weakness?
Excessive cost transfers may be an indication of too many errors, which should be minimal in a system with proper controls. This may cause auditors to question why and how these costs were charged initially.
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What should I do if a payroll certification is inaccurate?
If there is an error on your payroll certification, complete a Labor Redistribution Form http://www.fau.edu/controller/payroll/PDF/Labor_Redistribution_Form.pdf to correct the error. Attach a copy of the signed payroll certification and provide a detailed explanation and justification of why the redistribution is necessary.
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What can I do to ensure financial compliance for federally funded projects?
The key to financial compliance is to understand and follow OMB Circulars A-21 and A-110, and sponsor regulations. When managing your projects on a daily basis, consider the following questions:
Are you submitting:
- budgets that do not reflect expected project costs?
- budgets that are inflated intentionally?
- charges that are unrelated costs to the project?
- expenditures that are unallowable costs?
- costs that have been shifted from grant to grant to use up the balance?
- contracts for individuals who do not work on the project?
- salary charges that are for more than the actual effort?
- employment contracts over the NIH salary cap?
- insufficient documentation for cost transfers?
- reimbursements for subcontractors or consultants without verifying if the service is complete?
If you answered “Yes” to any of these questions, you may not be in financial compliance.
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What type of expenditure is not allowable at the end of a project?
The following is a list of unallowable project costs (this list is not inclusive):
- Costs that are not necessary for the performance of the agreement
- Costs that do not benefit the project
- Advances; no prepayments (for federal grants only)
- Costs based upon a budgeted amount; the amount must be based upon actual usage
- Costs disguised as allowable cost (misclassify account code)
- Costs that are rotated among projects
- Overspent costs transferred to another project to “use up the funds”
- Costs charged arbitrarily to a project with the largest remaining balance
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Can meals or alcohol be charged to Grants & Contracts?
There are no instances when meals or alcoholic beverages would be either appropriate or allowable, unless the awarding agency “specifically” provides approval in the award notice.
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How can I reduce the frequency of Cost Transfers?
To avoid cost transfers, ensure that the following steps are performed regularly:
- The Principal Investigator and/or designee are familiar with the terms and conditions of the grant.
- The Principal Investigator and/or designee know whether the costs incurred benefit the grant.
- The Budget Coordinator and/or Business Manager reconciles the grant account and reviews charges on a monthly basis.
- The Budget Coordinator and/or Business Manager communicates with the Principal Investigator immediately if any charges look improper.
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How do I expedite expense requests through Research Accounting?
All expenditure requests must be submitted to the Grants Specialist in Research Accounting (ADM 210) for approval before the university will officially process the request.
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If an award notification has not been received but the research project needs to start, is there any way we can start incurring costs for the project? What approvals are needed?
A Principal Investigator may request for a project account to be established in anticipation of the official award notice by submitting a request in writing to the Director, Sponsored Programs. The request must include the following:
- Title/Description of the anticipated grant or agreement
- Anticipated award/agreement amount
- Amount/budget requested for the administrative funded account
- Anticipated award period
- A banner index that can be used as collateral in case the new project does not get funded. Note: The index used as collateral cannot be another grant. The index must be a GTAIDS or research overhead account.
- Signatures from the PI, Department Chair and College Dean or representative are required
- Evidence of the sponsor’s intent must be submitted with the request
Note: Approval
- Approval of the request for a project account is subject to review of the information provided.
- Approval of the budget for the project account will be limited to the amount stated as collateral.
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Establishment of a project account by Research Accounting is subject to the approval of the request referred to above. The account will be set up in Banner as if the project was funded, but can only be approved for a period not to exceed six months, unless approved for a longer period by the College Dean or his/her designee and the VP for Research.
Award Notification Received: Once the award letter is received, Research Accounting will review the award letter to assure that no modifications are required in the set up of the account in Banner.
Award Notification “NOT” Received: If the project does not get awarded or the contract is not signed, all expenditures incurred will be transferred to the collateral account.
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COST SHARE:
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What is cost sharing (matching)?
Cost share is the portion of a project that is not funded by the sponsor. Cost share is funded by either (1) University resources or (2) a third (non-federal) party (with specific approval).
Cost share is further classified as either mandatory or voluntary:
Mandatory Cost Share: funding of a sponsored project that is required by the sponsor’s terms and conditions.
Voluntary Cost Share: funding of a sponsored project that is not required by the sponsor.
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BUDGET:
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Who do I contact concerning on-line budget transfers for grants?
Sponsored Programs reviews and approves grant-related budget transfers. Please contact the Sponsored Programs office at 7-4234.
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How do I determine which budget pool is appropriate?
Refer to the University account codes to determine the appropriate budget pool category, code and pool available at http://www.fau.edu/research/ocg/files/acctcodes.xls
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What banner screen is available to review budget availability?
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Banner
Production
Screen
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Description
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Details
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FGIBAVL
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Budget Availability Status
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Provides adjusted budget, YTD activity, Commitments, and Available Budget Balance.
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REPORTS:
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What reports are available to review expenses or encumbrances?
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e~Print Reports
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Description
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Details
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FRRGITD
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Grant Inception to Date
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Provides cumulative to date summary of expenditures posted to the grant
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FGRODTA
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Organization Detail Activity
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Provides Fiscal Year to Date detail of expenditures posted to the grant
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FGROPNE
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Open Encumbrance Report
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Provides details of purchase requisitions and travel encumbrances
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WPRPPEDA
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Payroll Encumbrance – Salary
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Provides details of salary encumbrances
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WPRPPEDO
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Payroll Encumbrance – OPS
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Provides details of OPS encumbrances
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WMTXROO2
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Grant Exemptions Applied
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Provides details of tuition exemptions issued and posted
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Who prepares invoices and financial reports for sponsored projects?
Research Accounting prepares invoices and financial reports for sponsored projects.
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CLOSEOUT:
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My project is ending. What do I need to do?
If the end date of your project is approaching you need to work with Research Accounting to ensure all of the charges related to this project are processed in a timely manner. Typically, projects require all final documents 90 days after the end date. However, it is not uncommon for final documents to be due 30 to 60 days after the end date. If is important to anticipate that your end date is approaching. Research Accounting will send you notification that your account is about to expire.
Please work with your College Budget Coordinator to confirm that final project charges and credits are timely processed. Once these final transactions have been processed, notify Research Accounting who will prepare and submit final financial reports, as required. It is important to note that these reports may be due as early as 30, 60, or 90 days after the project end date.
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How long must I keep documents relating to a closed-out project?
Under Federal OMB Circular A-110 the financial records, supporting documents, statistical records, and all other records pertinent to an award shall be retained for a period of three years from the date of submission of the final expenditure report or, for awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual financial report, as authorized by the federal awarding agency. There are exceptions. (Refer to OMB Circular A-110 Sec. C53)
The Florida Department of State has similar record retention guidelines (refer to the General Records Schedule (GS1-SL) and the General Records Schedule for Universities and Community Colleges (GS5) on the Florida Department of State website.
The three year rule should be considered commencing after the final financial report or the quarterly or annual report (for incrementally funded grants) has been submitted. For example, records for an award beginning in 2005 and ending in 2008 should be kept until 2011 if the final financial report was submitted in 2008.
Conservatism generally in retention of records is operative depending on the structure of funding that the specific grant provides. The key work is ?final.?
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AUDITS:
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Who audits Sponsored projects?
Sponsored awards are subject to audits by the following entities:
- Florida Atlantic University’s Inspector General
- State of Florida Auditor General
- Department of Health and Human Services
- Florida Board of Governors; and
- Sponsors (any award may have an external audit if requested)
The official contact for audits of grants is the Director of Research Accounting.
Should you be directly contacted by an external auditor, investigator, or an investigator of law enforcement, first refer them to the Director of Research Accounting so that an authorized audit may proceed.
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What should I do with an “Audit Confirmation Letter” I received?
You may receive three types of audit confirmation letters:
- Letter from sponsors asking the University to confirm that our A-133 audit is completed.
- Letter from sponsors asking the University to confirm award/contract specific information.
- Letter from sponsors asking the University to confirm specific information about subcontracts.
These letters are usually sent by sponsors to Research Accounting directly. Occasionally, sponsors may use department addresses by mistake. If you receive this type of letter, forward them to Research Accounting – ADM 210C.
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Is a Fixed Price Contract subject to an Audit?
A fixed price contract implies that specific contractual conditions have to be met within a specified time period and that the costs can be no more or less than the agreed upon amount stated in the contract. This type of contract is limited in scope with applicable restrictions.
Generally any award may be audited by the sponsor. Sponsors are interested in auditing a fixed price contract for exposure to unallowable, unnecessary or excessive charges.
All sponsored projects including fixed price contracts are required to meet the following guidelines: Allowability, Allocability, Reasonableness, Consistency and Timeliness (refer to questions 9). These requirements stand fast and should not be diminished upon a waiver of Audit requirements.
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Why are University re-charges scrutinized by auditors?
Auditors look for expenditure duplication.
Re-charges are expenditures that are recovered by another department within the University system. They include, but are not limited to, goods and services such as a copy center or telephone.
The service provider, regardless of the department is required by OMB Circular A-21 to operate on non-profit basis.
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