1 Module 3: Overview of Regulations and Compliance (Part 1) Office of Research and Sponsored...

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Module 3: Overview of Regulations and Compliance (Part 1)

Office of Research and Sponsored ProgramsThe University of Mississippi

100 Barr Hall ~ 662-915-7482www.research.olemiss.edu

Updated October 2009 2

Part 1 of Module 3 will cover federal, state, and other

regulations governing grants, cooperative agreements, and

contracts.


What are federal regulations?Federal regulations are detailed explanations

about how federal laws are to be carried out.


Applicable Standard Federal Regulations for Grants and

Cooperative Agreements with Higher Education Institutions Administrative OMB Circular A-110*

(2 CFR Part 215)

Cost Principles OMB Circular A-21(2 CFR Part 220)

Audit Requirements OMB Circular A-133

*Agency-specific implementation can be found in the applicable Code of Federal Regulations (CFR). The CFR should be consulted first, particularly in individual areas of costing and administrative policy.


To determine which regulations apply to your award,

read the award document.


Why are federal regulations important? When we accept external funding as anything

other than a gift, there are strings attached. There are penalties for non-compliance:

Vulnerability to audit Large settlements/fines Administrative sanctions Loss of public confidence Damage to reputations of the investigator and the

university


Which federal regulations apply?The type of award . . .

grant (assistance agreement) cooperative agreement (assistance agreement) contract (procurement agreement)

. . . determines the general federal regulations that apply.


Grant

Idea originates with the recipient No substantial involvement in project

performance between sponsor and recipient Purpose is to transfer funds, property,

services, or anything of value to the recipient to accomplish a public purpose


Cooperative agreement

Idea may originate with the recipient Substantial involvement in project

performance between sponsor and recipient Purpose is to transfer funds to the recipient to

accomplish a public purpose


Procurement agreement (contract) Idea originates with the sponsor May be substantial involvement between

sponsor and recipient Principal purpose is to acquire goods or

services for direct benefit or use of the sponsor

Note: A purchase order is a type of contract.


OMB Circular A-110

Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations Subpart A: General (definitions) Subpart B: Pre-award (applying for funding) Subpart C: Post-award (managing award) Subpart D: After the award (closeout) Appendix A: Contract provisions


OMB Circular A-110Subpart A - General Explains the purpose of the circular Gives definitions of key terms Explains effect on other issuances (other

agency rules can’t conflict with A-110 without OMB’s approval)

Applies to subawards with institutions of higher education, hospitals, and non-profits


OMB Circular A-110Subpart B – Pre-Award Requirements Pre-award policies Forms for applying for federal assistance Debarment and suspension Special award conditions Metric system of measurement Resource Conservation and Recovery Act Certifications and representations, for example:

Certification and Disclosure Regarding Lobbying Small Business Program Representations Affirmative Action Compliance


OMB Circular A-110Subpart C – Post-Award Requirements Prescribes standards for financial and program

management of sponsored research awards: Methods of payment Cost sharing Program income Revision of budget and program plans Allowable costs Period of availability of funds Non-federal audits

GET TO KNOW THIS SECTION


OMB Circular A-110Subpart C – Post-Award (continued) Prescribes standards governing management

and disposition of property furnished by the federal government or acquired with federal funds: Insurance coverage Real property (real estate) Federally owned and exempt property Equipment Supplies and expendable property


OMB Circular A-110Subpart C – Post-Award (continued) Prescribes standards governing management

of intellectual property that was developed using federal funds: Copyrights Patents and inventions Research data

Contact the Office of Technology Management


OMB Circular A-110Subpart C – Post-Award (continued) Provides standards for establishing

procedures for procurements (purchasing things) with federal funds: Recipient responsibilities Codes of conduct Competition Procurement procedures Cost and price analysis Contract administration and provisions


OMB Circular A-110Subpart C – Post-Award (continued) Provides procedures for monitoring and

reporting on financial and program performance, standard reporting forms, records retention: Performance reporting Financial reporting Records retention and access


OMB Circular A-110Subpart C – Post-Award (continued) Provides uniform suspension, termination

and enforcement procedures: Procedures for who can terminate and when Consequences for non-compliance


OMB Circular A-110Subpart D – After-the-Award Requirements Establishes procedures for closeouts,

disallowances and adjustments: Closeout procedures Continuing responsibilities after closeout Adjustments after closeout Collection of amounts due


OMB Circular A-110Appendix A – Contract Provisions All subcontracts are to include these provisions as

applicable: Equal Employment Opportunity Act Copeland “Anti-Kickback” Act Davis-Bacon Act (Prevailing Wage) Contract Work Hours and Safety Standard Rights to Inventions Clean Air Act Byrd Anti-Lobbying Amendment Debarment and Suspension

These things are monitored by the University (see this page for definitions and descriptions of each)


Agency-specific implementation of OMB Circular A-110Federal agencies have implemented A-110 in their

own specific grant regulations in the Code of Federal Regulations (CFR), for example:

Agriculture 7 CFR 3019

Commerce 15 CFR 14

Defense 32 CFR 32

HHS 45 CFR 74

Interior 43 CFR 12

See www.whitehouse.gov/omb/grants/chart.html


OMB Circular A-21

Cost Principles for Educational Institutions

Provides principles for determining the costs applicable to research and development, training and other sponsored work performed by colleges and universities under grants, contracts, and other agreements with the federal government


OMB Circular A-21

A-21 is designed to ensure that the federal government bears its fair share of total costs

Agencies are not expected to place additional restrictions on individual items of cost

All federal agencies apply these provisions to grants, subgrants, contracts, and cooperative agreements for research, training, and other programs, AND the principles are also to be used when pricing a fixed price or lump sum agreement


OMB Circular A-21

Contains –Things the Accounting Office needs to

know: What costs can be included in the F&A rate Methods to distribute F&A costs to various

functions of the University Determination and application of F&A rates


OMB Circular A-21

Contains –Things an investigator and/or departmental

administrator needs to know: Allowability principles for the reimbursement of

costs General provisions for selected items of cost


OMB Circular A-21

Gives definitions of key terms, such as Instruction means teaching and training, except for

research training Allocation means assigning a cost to one or more cost

objectives in a reasonable and realistic proportion to the benefit provided

Gives basic considerations, such as What constitutes total cost? What factors affect allowability of costs? How do you determine reasonableness? What are allocable costs? Dictates that no one person within an institution shall have

complete control over all aspects of a financial transaction


OMB Circular A-21 Says we must be consistent throughout the

institution in estimating costs in pricing and in accumulating and reporting costs

Says we must consistently treat “like” costs as either direct or F&A costs throughout the institution

Says the salaries of administrative and clerical staff should normally be treated as F&A costs – direct charging is only appropriate in certain circumstances

These are three reasons why the ORSP tries to watch how investigators list things in proposals: we’re watching from an institutional perspective.


OMB Circular A-21

SECTION J – One of the “most used” parts of the circular

Establishes principles to be applied in establishing allowability of certain items

The list is NOT exhaustive Determination of allowability of items not on the list

should be based on the treatment provided for similar or related items of cost

GET TO KNOW THIS SECTION


OMB Circular A-21

SECTION J – Unallowable activities include Organized fund raising Lobbying General public relations Student activities

This list is NOT exhaustive, but includes some items we are asked about occasionally


OMB Circular A-21SECTION J – Unallowable transactions include Certain travel costs Cash donations Memberships in social, dining, or country clubs Advertising Alcoholic beverages Entertainment (including meals with inadequate substantiation of

business purpose) Memorabilia, promotional materials Moving costs if employee resigns within 12 months Certain recruitment costs

This list is NOT exhaustive, but includes some items we are asked about occasionally


OMB Circular A-21Time and Effort Reporting

The institution’s payroll distribution system: Can utilize one of three acceptable methods of time and effort

certification Must apportion salary and wages to either direct or F&A categories Must reasonably reflect the activity for which the employee is

compensated by the institution Must provide for the modification of salary or effort Must provide for independent, internal evaluation to ensure

compliance Must have at least three steps: departmental verification,

departmental processes corrections, certification signed

A very important topic covered in this circular—presented in a future module


OMB Circular A-21

Other Allowability and Allocability Considerations

Costs that should normally be treated as F&A costs: OMB Guidance on A-21 Revision to Section F.6.b (July 1993)“In developing the departmental administration cost

pool, special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or F&A costs….”


OMB Circular A-21

Continued: OMB Guidance on A-21 Revision to Section F.6.b (July 1993)

“The salaries of administrative and clerical staff should normally be treated as F&A costs. Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for adminis-trative or clerical services and individuals involved can be specifically identified with the project or activity. Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs.” [Ref: A-21:F6(b)]


How do you know if you have a major project?

Examples can be found in OMB Circular A-21

Contact your Program Development Specialist in the ORSP


OMB Circular A-21

What is a “major project” as defined in Circular A-21?

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


OMB Circular A-21


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)


OMB Circular A-21


Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars


OMB Circular A-21


Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports)


OMB Circular A-21


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 to campus


OMB Circular A-21


Individual projects requiring project-specific database management, individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications


OMB Circular A-21These examples are not exhaustive nor are they intended to imply

that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples.

For instance, the examples would be appropriate when the costs of such activities are incurred in unlike circumstances.

It would be inappropriate to charge the cost of such activities directly to specific sponsored agreements if, in similar circumstances, the costs of performing the same type of activity for other sponsored agreements were included as allocable costs in the institutions F&A cost pools.

INSTITUTIONS MUST BE EXTREMELY CAUTIOUS WHEN DIRECT-CHARGING COSTS THAT ARE

NORMALLY CONSIDERED TO BE F&A


Federal Acquisition Regulations (FAR) Uniform policies and procedures governing

procurements by federal executive agencies: Codified (implemented as law) at Chapter 1 of

Title 48 of the Code of Federal Regulations (CFR) Contains 53 parts ~1,900 pages

For assistance in interpreting these clauses, contact the ORSP.


Federal Acquisition Regulations (FAR) Guiding principles of the FAR are to:

Satisfy the government in terms of cost, quality, and timeliness of the delivered product or service

Minimize administrative operating costs Conduct business with integrity, fairness, and

openness Fulfill public policy objectives


Federal Acquisition Regulations (FAR) Key parts of the FAR:

Patent Rights (Part 27) Contract Cost Principles and Procedures (Part 31) Subcontracting Policies and Procedures (Part 44) Government Property (Part 45) Contract Clauses (Part 52)


Federal Acquisition Regulations (FAR) Contract Cost Principles and Procedures

(Part 31.3)

Refers us to OMB Circular A-21: Cost Principles for Educational Institutions


State of Mississippi regulationsUniversity researchers also receive funding

from various state agencies, such as: Mississippi Arts Commission Mississippi Department of Education Mississippi Department of Public Safety Mississippi Development Authority


State of Mississippi regulations There is no uniform set of policies guiding the

administration of sponsored programs funded by state agencies

Specific requirements are detailed in the individual funding agreements

Agency-specific policies are often incorporated into the agreements, such as strict reporting requirements and adherence to the approved budget

When funds are flow-through funds from a federal agency, the regulations governing the prime award (i.e., from the federal agency) apply


Other funding agency regulationsUniversity researchers also receive funding

from various other funding agencies, such as: Private foundations Business and industry Professional associations and societies Foreign entities Other states


Other funding agency regulations There is no uniform set of policies guiding the

administration of sponsored programs funded by other funding agencies

Specific requirements are detailed in the individual funding agreements

Agency-specific policies are often incorporated into the agreements, such as strict reporting requirements and adherence to the approved budget


The University of Mississippi is a non-profit institution organized under the laws of the State of Mississippi. We are bound

by those laws. The Office of Research and Sponsored Programs is the unit authorized to negotiate grants and

contracts for research and sponsored programs on behalf of the University.


Resources OMB Circular A-110: Uniform Administrative

Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

OMB Circular A-21: Cost Principles for Educational Institutions

Federal Acquisition Regulations UM Office of Research and Sponsored

Programs [x7482)

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