Compliance From Ground Zero: Current Issues Facing Administrators in Departmental and Central Office

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Compliance From Ground ZeroCurrent Issues
Facing Administrators in Departmental and Central
Offices NCURA Region 1 Annual MeetingMay 17,
2005, Mystic CT.
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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Presented by
• Vivian Holmes- Harvard Medical School
• Mark Daniel- Partners Healthcare System Inc.

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We Are in a Target-Rich Environmentand

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We re Often Between a ROCK and a HARD PLACE
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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Compliance What do we really mean?
• Polices, Procedures, and Business Processes
• Systems
• Checks and Balances
• Roles and Responsibilities
• Training
• Documentation
• Stewardship of Sponsored Funds
• Federal Regulations and Policies

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• What Are The Kinds of Compliance Issues We Deal
  With Every Day?
• Departments
• Central Offices
• Institutional

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Outline Common Compliance Issues
• I. Financial
• Budgeting
• Standards for Costs
• Expense Approval and Monitoring
• Cost Transfer
• Cost Sharing
• Effort Reporting
• Financial Status Reporting

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• II. Other Common Compliance Issues That We Deal
  With
• Recharge/Service Centers
• Subrecipients
• Clinical Research Billing
• Documentation Standards, Records
• Non-Financial Reporting
• Humans and Animals
• Ethics
• Roles and Responsibilities
• III. Guidance/Federal Regulations and Audits
• IV. Training

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• I. Financial Compliance Issues
• Budgeting
• The need for budgets
• Responsibilities of the parties in the budgeting
  process
• Are annual budgets developed for sponsored
  projects and adjusted as needed?

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Standards For Costs
• Consistency
• Allocability
• Allowability
• Reasonableness
• Documentation, Support
• CAS

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Expenditure Monitoring
• Grant expenditures must be reviewed, by
  Department Administrators each month and
  variances understood
• Late expense monitoring is inefficient and
  creates risk
• PIs must be kept informed of expenses and
  balances
• Shadow Systems
• Institutional Systems

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Cost Transfers
• Retroactive transfers of expenditure from one
  account to another as a result of errors,
  oversight, re-budgeting, etc..
• Frequent and/or undocumented and unjustified cost
  transfers may indicate problems
• Must be managed
• Must be allowable, allocable, documented,
  justified, and authorized
• Cant transfer expenses from overspent grants to
  other grants
• Late- over 90 days old
• Cost transfers should be used to correct errors
  not to manage the grant funds.

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Cost Sharing
• Project costs not borne by the sponsor
• Commitments made in proposal that support the
  project but is not paid for by the sponsor
• May be required by the sponsor as part of the
  grant program (Mandatory) or voluntarily offered
  by the grantee (Voluntary)
• Impacts calculation of indirect costs
• All parties must understand the total costs
• Policies

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Effort Reporting
• Determines and supports salary (and FB) costs
  (including cost shared effort) charged to
  sponsored agreements
• Involves programmatic and cost compliance issues
  and both direct and indirect costs
• Acceptable methods
• Certified Effort vs Charges to sponsored
  agreements

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• Financial Reporting
• Financial Status Reports
• Cash Reports
• 90 day timeframes

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• II. Other Common Compliance Issues That We Deal
  With
• Recharge/Service Centers
• Monitoring Our Subcontractors
• Clinical Research
• Billing Patient Care Costs
• Clinical trial budgets and costs, including PI
  effort
• Documentation and Records
• Policies and Procedures What to Save and for How
  Long
• Source documents, paper trail vs. electronic
• Non-Financial Reports progress, inventions,
  equipment
• Inventory

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• II. Other Common Compliance Issues That We Deal
  With
• Human Subjects IRB
• Animals
• Conflict of Interest, RCR

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• II. Other Common Compliance Issues That We Deal
  With (cont)
• Roles and Responsibilities
• Faculty and Research Administrations perceptions
  and understanding about their respective roles
  often differ
• some faculty understand / want their role to be
  limited to scientific or technical issues
• some think PI should have total control
• Departmental Administrators are often unsure
  about their role and responsibilities or abdicate
  them. (caught between a rock and hard place)
• Research Administrations and Research
  Accountings perceptions about their respective
  roles sometimes overlap contributing to
  bottlenecks, confusion, frustration.

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Compliance From Ground Zero - Finding Guidance

• III. Things to remember about OMB Circulars and
  Certain Other Federal Agency Polices
• In many cases they provide guidance to the
  agencies
• Often allow for some interpretation
• Many agencies often have their own implementation
  standards that may differ from each other
• Agencies generally may not be more restrictive,
  add additional requirements, or reduce minimum
  requirements unless authorized by law or approved
  by OMB.

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Compliance From Ground Zero

• What are we complying with?
• Key guidance is contained in a number of
  different federal regulations including
• OMB Circular A-21 Cost Principals for Higher
  Education
• OMB Circular A-110 Uniform Administrative
  Requirements..
• OMB Circular A-133 Single Audits
• NIH and NSF Grants Policy Manuals
• Other Federal Policies, Regulations and
  Guidelines

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Compliance From Ground Zero

• OMB Circular A21 and Other Cost Principle Basics
  
• Basic Cost Principles for Organizations Receiving
  Federal Awards
• Educational Institutions OMB Circular A21
• Non-Profit Organizations OMB Circular A122
• Hospitals
• These regulations establish principles for
  determining costs applicable to grants,
  contracts, and other agreements.
• The principles are designed to provide that the
  Federal Government bear its fair share of total
  costs..
• Agencies are not expected to place additional
  restrictions on individual items of cost.

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Compliance From Ground Zero

• Cost Principles e.g. A21 (continued)
• Direct Costs
• Direct costs are those costs that can be
  identified specifically with a particular
  sponsored project,  an instructional activity, or
  any other institutional activity, or that can be
  directly assigned to such activities relatively
  easily with a high degree of accuracy.
• Indirect Costs
• Indirect Costs, also sometimes referred to as FA
  (facilities and administrative) costs FA (
  INDIRECT COSTS ) costs are those 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.

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Compliance From Ground Zero

• OMB Circular A110- Uniform Administrative
  Requirements
• Establishes Administrative Standards that
  Grantees Must Comply With. For example
• Records that identify adequately the source and
  application of funds for federally sponsored
  projects
• Effective controls over and accountability for
  all funds, property and other assets.
• Comparisons of outlays with budget amounts for
  each award.

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A-110, cont.

• A110 Uniform Administrative Requirements
  (continued)
• Written procedures to minimize the time elapsing
  between the transfer of funds to the recipient
  from the U.S. Treasury and the issuance or
  redemption of checks, ..
• Written procedures for determining the
  reasonableness, allocability and allowability, of
  costs in accordance with the provisions of the
  applicable Federal cost principles and the terms
  and conditions of the award.  
• Accounting records including cost accounting
  records that are supported by source
  documentation.
• Equipment Management standards..
• Close-out standards..

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Compliance From Ground Zero Current Issues from
Departmental and Central Office Perspectives

• OMB Circular A133 Audit
• Single Audit Act consolidates federal audits
• One annual audit
• Initiated during FY1992 ( first year covered 2
  FYs) circular has been updated several times
  since then
• Grantees retain outside firm to conduct audit of
  compliance with federal regulations
• Grantees, federal agencies and auditors went
  through a learning process during first few audit
  cycles
• Data collection forms sent to Federal
  Clearinghouse
• Internal auditors may perform some of the field
  work

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NIH Grants Policy Statement

• NIH Grants Policy Statement contains information
  in addition to the OMB circulars which is
  specific to NIH awards and grantees such as
• SNAP guidelines
• modular budgets
• salary cap information
• application of rates
• prior approval requirements
• roles and responsibilities of the parties
• other
• Updated periodically

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Knock - knock..

• III. Audits and Site Visits
• OMB Circular A-133
• Federal Agencies
• Internal Audits
• Non-Federal Audits
• Whistle Blower Audits
• Fraud Audits
• Site visits

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Compliance

• IV Training
• Compliance Training Programs
• Compliance Office
• Questions