WECOME TO “HOT TOPICS” Today’s Presenters: Becky White Triva Woodley Rob Dimmitt Leslie Vogel...

Mike Ludwig

WECOME TO “HOT TOPICS”

• Today’s Presenters:

• Becky White• Triva Woodley• Rob Dimmitt• Leslie Vogel• Mike Ludwig

Becky White

Our Main Attraction…

COST SHARING:Auditable

vs. Non-Auditable

The Battle of the Century!

Becky White

Examples of Auditable…• “In addition to effort requested

from the sponsor, PI will spend 10% effort on the project.”

• “The University will provide 50% of the equipment cost.”

• “The University will provide $5,000 toward the purchase of supplies.”

Becky White

Examples of Non -Auditable • “In addition to effort requested from

the sponsor, PI will devote a significant amount of effort.”

• “The University intends to contribute additional resources to this project including equipment and supplies.”

• Can you see the differences?

Becky White

The Mega Blockbuster…

Form 32Playing at a theatre near you

Becky White

Completion of the FORM 32 - type of cost sharing commitment

http://www.purdue.edu/sps/xls/form32.xls

• Percent effort• Dollar commitment• Percent of sponsor funds• Memo Match

Becky White

FORM 32 Memo Match

• Always stated on Form 32 under memo match explanation

• Third party commitments also are included on Form 32 under memo match.

Becky White

And now, for an encore appearance…

Memo Match

Becky White

Recent A-133 audit

• NSF IGERT project was reviewed• Auditor requested documentation

of memo match• What is considered appropriate

memo match documentation?

Becky White

Annual documentation of memo match

• Expectations (09/01/05 memo from Lucia & Mike)

• http://www.purdue.edu/sps/edprogram/jeff/memomatch.pdf

Becky White

Account Management for Cost Sharing only Minors• Source of funds (other; cost share

reserve; contributed F&A) becomes a pot of money when managing the account.

•http://www.purdue.edu/sps/edprogram/jeff/531-1364-0411.pdf

Becky White

• Focus for BO during the life of the project should be on meeting the mandatory cost sharing commitment.

• Need to determine type of cost sharing commitment when assessing overdrafts and balances

Account Management for Cost Sharing only Minors

Becky White


• If unable to meet the cost sharing commitment, please contact the SPS Account Manager to discuss options.

Becky White


• If cost sharing minor is overdrafted, ALWAYS consider if sponsor funds are available

• If commitment is met, any adjustments needed in closing will be coordinated by SPS

Becky White

Questions???

Triva WoodleyTriva Woodley

Voluntary SupportVoluntary Support

Triva WoodleyTriva Woodley

Online Tools for Processing and Online Tools for Processing and Determining Voluntary SupportDetermining Voluntary Support

Fund Classification Guide:Fund Classification Guide:http://www.purdue.edu/sps/pdf/fundguide.http://www.purdue.edu/sps/pdf/fundguide.

pdfpdfVoluntary Support Application:Voluntary Support Application:

http://www2.itap.purdue.edu/sps/vs/http://www2.itap.purdue.edu/sps/vs/Voluntary Support Processing Guide:Voluntary Support Processing Guide:

http://www.purdue.edu/sps/pdf/vsprocessghttp://www.purdue.edu/sps/pdf/vsprocessguide.pdfuide.pdf

Rob DimmittRob Dimmitt

NTP…it just makes sense!NTP…it just makes sense!Notice to Proceed (NTP) is a tool to get an Notice to Proceed (NTP) is a tool to get an account set up to incur expenses PRIOR to account set up to incur expenses PRIOR to an official award.an official award.

NTP’s can be backed by the Department NTP’s can be backed by the Department OR the University.OR the University.

– Let’s look at the differences…Let’s look at the differences…

– NTP’s = LiabilityNTP’s = Liability


WHY use an NTP?WHY use an NTP?Allows expenses to be certified for Allows expenses to be certified for the project BEFORE an official award the project BEFORE an official award is set up. That’s good!is set up. That’s good!Certification means no Correcting Certification means no Correcting Documents are needed. That’s Documents are needed. That’s better!better!Certification also means avoiding Certification also means avoiding potential “cost transfer” issues. potential “cost transfer” issues. WOO HOO!!WOO HOO!!


Cost Transfers….bad…very baaaaaad!Cost Transfers….bad…very baaaaaad!

COST TRANSFERSCOST TRANSFERS


““Why shouldn’t I just charge it to my Why shouldn’t I just charge it to my department funds and move it later?!department funds and move it later?!

Charges are not correctly certified Charges are not correctly certified when initially incurred!when initially incurred!

This creates extra work! Who wants This creates extra work! Who wants that?that?

Increases the Justification needed!Increases the Justification needed!

Raises major Raises major RED FLAGSRED FLAGS with an with an auditor! (Have you seen auditors auditor! (Have you seen auditors with RED FLAGS…not pretty)with RED FLAGS…not pretty)


QUESTIONS?QUESTIONS?

Leslie Vogel

Charging Costs

Heeeeeeere’s Leslie!

Leslie Vogel

UNLIKE CIRCUMSTANCES Federal Regulations require that similar costs be

treated consistently as either direct cost or indirect costs, in like circumstances.

Therefore, this imposes a requirement on the University to implement institutional decisions to consistently treat certain costs as indirect costs even though at any given time a particular transaction may otherwise legitimately appear to be a direct cost to a sponsored program i.e. The University’s Cost Study

Leslie Vogel

UNLIKE CIRCUMSTANCES Definition of a direct cost per A-21

Those costs that can be identified specifically with a particular sponsored project or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Salaries and Wages of Faculty, technicians, RAs Fringe benefits Equipment Long Distance phone charges Travel Materials Subcontracts Other direct costs such as consultants

Leslie Vogel

UNLIKE CIRCUMSTANCES Definition of indirect costs per A-21

Those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project

Salaries and wages of administrative and clerical personnel Office supplies (paper, pens, pencils, staplers) Local telephone charges Costs associated with providing the general computing

environment such as the Purdue Data Network (PDN) or the Engineering Computer Network (ECN)

Leslie Vogel

UNLIKE CIRCUMSTANCES Situations exist (unlike circumstances)

where costs that are normally treated as an indirect costs may actually be considered direct costs to the project, meaning that there can be direct benefit shown to the sponsored program.

Leslie Vogel

UNLIKE CIRCUMSTANCES Examples of situations where unlike circumstances

may apply

Large complex multi-disciplinary projects that entail assembling and managing teams of investigators from within the institution as well as from a number of institutions

Projects which involve extensive data accumulation and entry, searching literature and reporting

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

Leslie Vogel

UNLIKE CIRCUMSTANCES More situations where unlike

circumstances exist

Projects that are geographically inaccessible to normal department administrative services

Off campus site

Individual projects requiring project specific database management; individual manuscript preparation, etc..

Leslie Vogel

UNLIKE CIRCUMSTANCES When these type of circumstances exist,

or other unusual situations exist that can likewise be documented, the cost of items required for the conduct of the project must be budgeted and FULLY justified in the proposal budget justification to the federal sponsor in order to be subsequently charged to the project.

Leslie Vogel

UNLIKE CIRCUMSTANCES Items that are normally considered as indirect

costs must be included in the award, or subsequently approved in accordance with the funding agency regulations, in order to be allowable charges to the project.

The University will consider the costs approved if the agency awards the proposed budget in full, or does not explicitly remove the budget line item for those costs

Leslie Vogel

UNLIKE CIRCUMSTANCES Who is responsible

Individuals in the academic departments (PI, Co-PI) are responsible for demonstrating the direct cost-benefit relationship which would reduce the risk of audit disallowance and to enhance compliance with the federal regulations

However, the Dean, Director, or Department head remains ultimately responsible for those costs that are determined disallowable costs to the sponsored program projects in their respective areas

Leslie Vogel

Guidelines for Charging Costs to Sponsored Projects

Federal

State Projects with Federal

Flow Through

State Projects with no federal flow through

Industrials and

Foundations Voluntary Support Comments

Clerical & Administrative Salaries

Only as an approved unlike circumstance

Only as an approved unlike circumstance OK OK OK

Office Supplies



Annual Phone & Data Connections



High risk category during audit

Food

Only as approved in the budget



Only as approved in the budget OK

Alcohol No No No No No

Renovation



Yes, if in proposal & approved by the sponsor

Yes, if in proposal & approved by the sponsor OK

Important Website: CLASSIFICATION OF COST ITEMS - Governmental Blue Book

Leslie Vogel

Questions, Reaction, Observations?

Mike Ludwig

OVER DRAFTSOVER DRAFTS

Mike Ludwig

OverdraftsOverdraftsEver thought this? Ever thought this? • ““Why does everyone bug me about Why does everyone bug me about

overdrafts? I will make sure it gets overdrafts? I will make sure it gets cleared but there are more pressing cleared but there are more pressing things today/this week/ this month?”things today/this week/ this month?”

• ““I don’t want that account locked I don’t want that account locked because that only creates more work because that only creates more work for me that I don’t have time to do?”for me that I don’t have time to do?”

Mike Ludwig

What happens when a What happens when a project overdrafts?project overdrafts?

1.1. Notification of the O/D to SPS and Notification of the O/D to SPS and Business OfficeBusiness Office

2.2. SPS contact BO for okay to lockSPS contact BO for okay to lock3.3. Lock AccountLock Account4.4. Clear O/DClear O/D5.5. Clear suspense entriesClear suspense entries6.6. SPS review at month end to see if O/D SPS review at month end to see if O/D

cleared/contact BOcleared/contact BO7.7. SPS prepare “interim” final reportSPS prepare “interim” final report8.8. SPS prepare final reportSPS prepare final report9.9. University resources consumed to fund University resources consumed to fund

overdraftoverdraft

Mike Ludwig

What is the cost?What is the cost?1.1. Notification of the O/D to SPS and Notification of the O/D to SPS and

BOBO

2.2. SPS contact BO for okay to lockSPS contact BO for okay to lock

3.3. Lock AccountLock Account

4.4. Clear O/DClear O/D

5.5. Clear SuspenseClear Suspense

6.6. SPS review to see if O/D cleared/SPS review to see if O/D cleared/

contact BOcontact BO

7.7. SPS prepare “interim final report”SPS prepare “interim final report”

8.8. SPS prepare final reportSPS prepare final report

(10 min review)(10 min review)

(10 min review account history (10 min review account history and communicate)and communicate)

(5 min data entry)(5 min data entry)

(30 min identify transactions to (30 min identify transactions to clear, ID new source of funds, clear, ID new source of funds, and prepare document)and prepare document)

(20 min identify new source of (20 min identify new source of funds and prepare document)funds and prepare document)

(5 min if cleared/ 15 min if not)(5 min if cleared/ 15 min if not)

(30 min check with BO on “final” (30 min check with BO on “final” estimate and prepare report)estimate and prepare report)

(15 min prepare report) (15 min prepare report)

Mike Ludwig

What is the cost?What is the cost? (C(Cont’d)ont’d)

Total…………………135 min. per Total…………………135 min. per overdraftoverdraft

TimesTimes (X) (X) 15 new 15 new overdrafts per dayoverdrafts per day

Times (X)Times (X) 260 work days260 work days

TimesTimes (X)(X) $15/hour$15/hour

EqualsEquals = = 9000 hours of 9000 hours of work/$135,000 work/$135,000

9. University resources consumed University resources consumedAverage daily overdraft………$1.7 Average daily overdraft………$1.7

millionmillionInterest 4 %................................ Interest 4 %................................

$68,000$68,000

Mike Ludwig

OK, so we won’t ever be able to OK, so we won’t ever be able to stopstop all overdrafts, right? What all overdrafts, right? What can we save through timely clearing of O/D and following can we save through timely clearing of O/D and following

account lock guidelines?account lock guidelines?

1.1. Notification of the O/D to SPS and Notification of the O/D to SPS and BOBO

2.2. SPS contact BO for okay to lockSPS contact BO for okay to lock

3.3. Lock AccountLock Account

4.4. Clear O/DClear O/D

5.5. Clear SuspenseClear Suspense

6.6. SPS review to see if O/D cleared/SPS review to see if O/D cleared/ contact BOcontact BO

7.7. SPS prepare “interim final report”SPS prepare “interim final report”

8.8. SPS prepare final reportSPS prepare final report

(10 min review)

(10 min review account history and communicate)

(5 min data entry)

(30 min identify transactions to clear, identify new source of funds, and prepare document)

(20 min identify new source of funds and prepare document)

(5 min if cleared/ 15 min if not)

(30 min check with BO on “final” estimate and prepare report)

(15 min prepare report)

Mike Ludwig

NOW… what is the cost?NOW… what is the cost?

TotalTotal 135 135 6565 min/overdraft min/overdraft

TimesTimes 15 new overdrafts per day15 new overdrafts per day

Times Times 260 work days260 work days

TimesTimes $15/hour$15/hour

EqualsEquals 9000 9000

45004500 hours of work $135,000 hours of work $135,000

$ 67,500$ 67,500

9.9. University resources consumedUniversity resources consumed

Average daily overdraftAverage daily overdraft $1.7M $1.7M $.5 $.5 millionmillion

Interest 4%Interest 4% $ 68,000 $ 68,000 $20,000$20,000

Mike Ludwig

REACTIONS?REACTIONS?

Mike Ludwig

Cost AllocationsCost Allocations

Mike Ludwig

Cornell UniversityCornell University

Cornell agreed to pay $4.38 million to Cornell agreed to pay $4.38 million to settle claims it over billed for NIH grant settle claims it over billed for NIH grant from 1995 to 2003. It is alleged that from 1995 to 2003. It is alleged that Children’s CRC at Weill Medical College Children’s CRC at Weill Medical College used federal grant dollars to pay full used federal grant dollars to pay full salaries of several employees salaries of several employees notnot involved with research.involved with research.

N E W S H E A D L I N N E W S H E A D L I N E S E S

Thursday, June 23, 2005

Mike Ludwig

N E W S H E A D L I N N E W S H E A D L I N E S E SMayo ClinicMayo Clinic

Friday, May 27, 2005

Mayo paid $6.5 million to settle allegations that it misspent millions of dollars in federal research grants over more than a decade. The government contends that, from 1992 to 2003, Mayo routinely took federal money that was supposed to be used for specific research projects, and used it for other projects that were running short of money. That allowed the clinic to avoid refunding unused grant money, as required by law, the government alleged.

Mike Ludwig

N E W S H E A D L I N N E W S H E A D L I N E S E SFlorida International

UniversityTuesday, February 15, 2005

Florida International U. agrees to $11.5 million settlement with Government over grants accounting and accusations that university improperly billed the government for scientists’ time, travel, and administration expenses. A 2003 audit found that the university had not properly documented whether faculty members had spent the percentage of time they had promised to spend on research projects financed by the grants.

Mike Ludwig

N E W S H E A D L I N E SN E W S H E A D L I N E S

Harvard UniversityHarvard University

Friday, July 2, 2004

$3.3 million settlement involving allegations that Harvard and an affiliated hospital overcharged NIH research and training grants by seeking reimbursement for the salaries of researchers who did not work on the grant.

Mike Ludwig

N E W S H E A D L I N N E W S H E A D L I N E S E S

Johns Hopkins UniversityJohns Hopkins University

March 12, 2004

$2.6 million settlement of allegations that JHU had knowingly overcharged the Government by overstating the amount of time researchers worked on Federal research projects and in at least one case charging for more than 100% of an individual’s salary.

Mike Ludwig

Is Purdue at Risk ???????????Is Purdue at Risk ???????????Have you ever heard statements like

these about cost allocation:1.1.I want to charge 100% of my summer salary to my I want to charge 100% of my summer salary to my

NSF grant.NSF grant.

2.2.I’m taking a research leave next semester and I’m taking a research leave next semester and want my salary charged to my DOD project.want my salary charged to my DOD project.

3.3.I want to conserve my industrial funds so move all I want to conserve my industrial funds so move all of my grad students over to the new NIH award. of my grad students over to the new NIH award.

4.4.My EPA project is expiring soon and if we don’t My EPA project is expiring soon and if we don’t spend what’s left, I’m going to lose those funds. spend what’s left, I’m going to lose those funds. Can you transfer all of the charges from my other Can you transfer all of the charges from my other projects for the last two months to EPA account?projects for the last two months to EPA account?

Mike Ludwig

What should Business Office andWhat should Business Office andSPS staff do?SPS staff do?

• Know all of the sponsored projects, funds Know all of the sponsored projects, funds available, end dates, and who is paid available, end dates, and who is paid from which account.from which account.

• Analyze the situation; does it make sense Analyze the situation; does it make sense that the PI can work 100% on one project that the PI can work 100% on one project when he/she has three other active when he/she has three other active projects? (Are they REALLY that good?!)projects? (Are they REALLY that good?!)

• Ask questions, “If you are working 100% Ask questions, “If you are working 100% during the summer on your NSF grant, during the summer on your NSF grant, then who is supervising the grad then who is supervising the grad students you have working on other students you have working on other projects? Hmmmmmmm?”projects? Hmmmmmmm?”

Mike Ludwig

• Help the faculty understand why these Help the faculty understand why these questions are being asked and what the questions are being asked and what the risk is to themrisk is to them by charging unrelated by charging unrelated expense to a federal project.expense to a federal project.

• Be extra careful in situations where a Be extra careful in situations where a faculty member’s time is charged 100% faculty member’s time is charged 100% to sponsored research during the summer to sponsored research during the summer or while on a leave of absence. Are they or while on a leave of absence. Are they really really onlyonly working on those projects? working on those projects?

What to do… (continued)What to do… (continued)

Mike Ludwig

What to do… (continued)What to do… (continued)

• The new Research Faculty positions The new Research Faculty positions are an are an example of where we need to be very example of where we need to be very careful that careful that what they are doing matches with what they are doing matches with where they are where they are paid from.paid from.• DocumentDocument their responses to your their responses to your questions in questions in files, forms, correcting documents, files, forms, correcting documents, etc. Be very etc. Be very thorough in your documentation.thorough in your documentation.• Seek assistance from supervisors, Seek assistance from supervisors, department department heads, and SPS staff if you are heads, and SPS staff if you are uncomfortable uncomfortable with the response. with the response. You can get help!!You can get help!!

Mike Ludwig

Auditors Welcome!

Mike Ludwig

Questions? Reactions? Questions? Reactions? Observations?Observations?

WECOME TO “HOT TOPICS” Today’s Presenters: Becky White Triva Woodley Rob Dimmitt Leslie Vogel...

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