Clarkson University Compliance Program

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    Compliance and Sponsored Projects -
Financial Management for Administrative and
               Support Staff

                              Fall 2008

Kimberly Klatt
Research Compliance Officer

  •   University Compliance Overview
  •   Research Compliance Regulations
  •   Basic Cost Principles
  •   Allowable/Unallowable Costs
  •   P-card Expense Descriptions
  •   Proportional Charging (allocation)
  •   Costs Transfers
  •   Transactions Requiring DoR Approval
  •   New Fabrication Policy
Clarkson University Compliance Program

 • University Compliance Committee (UCC)
   established in 2005.
 • UCC formed to ensure compliance facing the
 • UCC consists of six sub-committees.
 • Committee responsible for handling, reviewing,
   monitoring and enforcing all University
   compliance matters.
 • Research compliance represents one of the six
Clarkson University Compliance
Committee Structure

           And Board


           Finance &
                                       Student Affairs

Research Compliance Regulations


   When sponsored funding is accepted by the
   institution we agree to comply with federal
   and state regulations:

   • OMB A-21 - Cost Principles
   • OMB A-110 - Uniform Administrative
   • OMB A-133 - Audits
   • Assurances, Certifications, & Representations
Why is Research Compliance
    Non-compliance can place Clarkson and the
    Principal Investigator at significant risk and
    can result in:
     Damage to the University’s or your
       reputation and integrity
     Severe fines/penalties to the institution
     Designation as a “high risk” institution
     Suspension/debarment from receiving
       federal funds (University and PI’s)
Realities of Compliance
 • Compliance is a collaborative responsibility of
   the administration, faculty, and staff.
 • We have a legal responsibility to comply with
   federal and state requirements.
 • Our daily activities and responsibilities often
   have an underlying purpose regarding
    – Conflict of Interest Forms
    – P-card Reconciliations
    – Cost Transfers
    – Constitution Day
    – Hiring Practices
    – Etc...
PI Responsibilities
   The responsibilities or obligations that PIs agree to when accepting an award
   include the following:

    Commitment: Review all documentation including referenced materials within
     the award documents and comply with the terms and conditions.

    Communication: Review the roles and responsibilities of all parties involved in
     the project and assure that they are aware of their obligations.

    Technical Management: Manage the technical aspects of the program and
     comply with the deadlines and reporting requirements in award documents or the
     statement of work.

    Supervision: Staff the project and supervise project personnel.

    Financial: Charge to the research account only those expenditures directly
     related to the technical completion of the project that are allowable, allocable,
     and reasonable, as defined by OMB Circular A-21.

    Accuracy: Review the monthly accounting statements to verify that all charges
     to that account are appropriate.
DoR & Comptroller’s Office
 Education: Making people aware of the importance of compliance guidelines

 Guidelines: Providing written documentation that clearly reflects the how to be

 Training: Providing indoctrination to guidelines and continual guidance on how to
 be to compliant.

 Oversight: Continuous monitoring of practices such as purchasing consistent with
 the guidelines of the University and sponsoring agency.

 Auditing: Verification of policies and current practices.

 Responsibility: Providing a clear understanding of individual responsibility .

 Communication: Effectively exchanging information.
OMB A-21 Basic Cost Principles

                        Direct vs. Indirect

 Direct Costs: Allowable costs that can be identified
 specifically with a particular sponsored project(s) and
 be assigned easily with a high degree of accuracy.

 Indirect Cost (F&A): Allowable costs that are incurred for
 common or joint objectives and therefore cannot be
 identified readily and specifically with one or more
 sponsored project.
OMB A-21 Basic Cost Principles
           “How to Distinguish Between Direct and Indirect Charges”

 • Defines what costs are allowable to sponsored projects.

 • Requires institutions to classify allowable costs either as direct or
   indirect costs.

 • Allowable costs must be consistently treated as direct or indirect.

 • Consistent treatment of costs assures that the same types of costs
   are not charged both as direct and indirect costs.

 • Costs classified as indirect cannot be charged directly to your
   sponsored project, unless they qualify as an “unlike or unique
How To Determine a Allowable Direct
                     “How to Distinguish Between Direct and Indirect Charges”

 Direct Charges must pass meet the following criteria:

 Allowable: Permitted as a charge per OMB Circular A-21.

 Necessary: to accomplish the scope of work of the project.

 Reasonable: nature of the cost, and the price paid, reflects the action that a prudent
 person would have taken.

 Allocable: the cost can be allocated specifically with one research project or if
 the cost benefits more than one project it can be allocated based on proportional benefit or
 a reasonable basis.

 Consistently Treated: Costs must be classified as a direct charge by the University.

                    Charges must meet all criteria above. If not, they must be charged
                                     to a non-research account.
What Can’t Be Charged Directly to
a Sponsored Award?

   • Office Supplies
   • Administrative and Clerical Staff Salaries
   • Basic Line Telephone Charges
   • Administrative Office Equipment (i.e. copiers, office computers
     and printers)
   • General Use Software (Word, Excel, Access, or equivalent)
   • General Use or janitorial Items (paper towels or soap)

          “How to Distinguish Between Direct and Indirect Charges”
Exception to the Rule

           Costs normally considered indirect can
          be charged as direct if they qualify as an:

                Unique Circumstance
                Unlike Circumstance

    Both circumstances must be properly justified and
What are Unique and Unlike

   Unique Circumstance:
   • Use exceeds amount typically required for a project.
   • Purpose is not different from University norm.
   • i.e. Researcher needs to prepare 10,000 surveys for distribution;
     requiring additional paper, toner, envelopes, and postage.

   Unlike Circumstance:
   • Research purpose is different from University norm.
   • i.e. Scope of work is analyzing the composition of toner;
     requiring additional toner cartridges for analysis.

          “How to Distinguish Between Direct and Indirect Charges”
How Do You Justify and Document
Unique or Unlike Circumstances?

 New Proposals
 • Justify the expenditure in the budget justification.
 • Let Todd Travis know during the proposal process you have an
   unique or unlike circumstance.
 • If you receive the award the DOR will notify Accounts Payable that
   such charges are allowable.

 Active Awards
 • You can notify the Research Compliance Officer (RCO) at ext. 4441.
 • RCO will quickly document the circumstance and notify Accounts
   Payable that the charges are allowable.

        If unique or unlike circumstances are not properly justified and
     documented Accounts Payable will send out a Direct Cost Justification
                  Form requesting reallocation or justification.
What Can Be Charged Directly to a
Sponsored Award?
   • Laboratory Supplies (i.e. chemicals and glassware)
   • Long Distance Telephone Calls
   • Laboratory Equipment (>$5000 with agency
   • Equipment maintenance or repair
   • Computers, Printers and Networking Supplies (for
     research data collection or processing only)
   • Specialized Software (Computational)
   • Travel
   “How to Distinguish Between Direct and Indirect Charges”
Examples of Unallowable
Food & Beverage Charges

  • Any cost related to entertainment
  • Any cost not necessary to accomplish the
    objectives of the grant program
       • Receptions
       • Hospitality Room
       • Pizza for graduate students
       • Lunch for students during a local research
       • Meals with colleagues to discuss research
       • Lunch during weekly meetings to discuss the
         progress on a project
Allowable Food & Beverage
  • Food and beverages may be allowable if all the
    following tests are satisfied:

     – Food and beverages are not directly related to
       entertainment or social event.

     – Food and beverages are integral in order to
       provide continuity to a work related activity (i.e.
       conference, professional meetings, formal
       training) and considered mandatory for the
       attendees if they are to receive the full benefit of
       participation in the event.

     – Costs of the food and beverages are considered
Examples of Allowable
Food & Beverage Charges
  • Food & beverage cost for an employee on travel
    status when travel is necessary to accomplish the
    objectives of the grant program.

  • An individual is recruited to fill a position on a
    research grant and he/she travels to Clarkson.
    Her/his meal may be charged to the grant since
    she/he is on travel status, but the PIs meal may not.

  • Meals or refreshments for a formal advisory
    committee meeting mandated or designated to meet
    periodically as part of project management (should
    be included as part of the proposal, utilizes formal
    agendas and includes participants from different
P-Card Reconciliations
You must provide adequate justification to determine if the charge is

•   “Expense Descriptions” should indicate the benefit to the
    project or scope of work (i.e. What is the item used for ?,
    Why do you need the item?).

•   Provide documented evidence to auditors that costs are necessary for the
    performance of the project.

•   Remember to proportionally charge expenses used for more than one project or
    educational activity.

•   Federal auditing regulations require that “Expense Descriptions” are reviewed by
    the Accounts Payable Staff.

•   Proper “Expense Descriptions” will minimize the need for Accounts Payable to
    request additional information (i.e. Direct Cost Justification Form)

•   This methodology also applies to purchase requisitions, disbursement orders,
    and travel expense accounts.
Some Expenditures Are More Scrutinized By
Auditors and May Include:
                             General Lab Supplies (i.e. gloves)
                                  Computers & Printers
                              Networking Supplies & Software
                                      Travel & Books

•   Expense descriptions and proportional charging are often scrutinized by auditors
    on these types of expenditures.

•   These need additional justification in the P-card expense description line (see
    provided direct cost justification forms for the questions to ask yourself).

•   If the cost benefits one project only, then simply indicate the item is used for that
    project only.

•   This additional documentation will minimize the need for Accounts Payable to
    contact you. (i.e. Direct Cost Justification Form).
Direct Costs Justification Forms
Direct Cost Justification Form
Direct Cost Justification Form
Your students are working late and you want to provide them
  dinner. How should you pay for it?

      You want to buy a computer and a printer with your
      research award. Can you? What about paper and

You’re buying general lab supplies (gloves, soap, centrifuge
Tubes). Can I charge them to my research award. If so,
How do I proportionally charge them?
Allocation of Charges
  Two rules apply when proportionally charging direct costs that
  Benefit more than one sponsored project or educational activity:

  • Rule of Proportional Benefit
    If a cost benefits two or more projects or activities in proportions
    that can be determined without undue effort or cost, the cost
    should be allocated to the projects based on the proportional

  • Rule of Interrelationship
    If a cost benefits two or more projects or activities in proportions
    that cannot be determined because of the interrelationship of
    the work involved the costs may be allocated or transferred to
    benefited projects on any reasonable basis.
Allocation Methods

 • Usage Based: The cost of lab supplies allocated based upon the
   quantity used on each project or documented usage of equipment.

 • Time Based: The cost of computer equipment allocated based upon
   the number of hours used for each project.

 • Effort Based: The cost of lab supplies proportionately allocated
   based upon the PIs percentage of effort charged to each project.

 • Other reasonable methodologies can be developed, provided that
   they meet the A-21 allocation principles.

                    Contact the DOR for further assistance.
Unacceptable Allocation Practices

   • Shifting expenditures to other sponsored projects in
     order to meet deficiencies, to avoid restrictions, or for
     other reasons of convenience

   • Charging expenses that benefit two projects solely to
     one project because the other project is almost out of

   • Rotating charges among projects

   • Charging an expense to one project when the
     expense has benefited more then one project or
     other activities
Allocation Documentation

• Allocation methodologies must be
  documented and auditable when

• Documentation should indicate how the
  allocation methodology is logically related
  to the cost being allocated.

• Documentation should be retained by PI.
Appropriate Reasons for Cost

 • Correct errors in processing the original transaction

 • Reallocate shared services

 • Reallocation of effort and other non-labor expenses
   where multiple projects benefited

 • To shift pre-award costs in accordance with the
   provision of OMB Circular A-110
Unacceptable Reasons for Cost

   • Charges from University accounts to
     externally funded accounts generally are not
     acceptable. (Exceptions include phone
     charges, xeroxing or postage normally made
     to the department)

   • Cost transfer is solely for the intent of utilizing
     unexpended funds of a sponsored award

   • Cost transfer is for the purpose of avoiding a
     cost overrun by charging another, unrelated
     sponsored award
Transactions Requiring DoR
   • All Travel Expenses (object codes 2654/2656)
      – Travel Authorizations (TA)
      – Expense accounts under which no TA was written
      – Expense accounts that exceed the amount of the TA

   • Participant Support Costs (excludes p-card)

   • Single transactions that exceed $1000.00

   • All equipment/fabrication (object codes 2534/2528,
     excludes p-card)

      For efficient processing times please send to the DoR initially.
New Fabrication Policy

 • Comptroller’s Office has issued a new policy allowing the use of the
   Procurement Card for the account code 2528 – Fabrication of

 • It can only be used if the appropriate “Fabrication Request Form”
   has been completed and approved. You will find the new policy and
   form on the Clarkson University website at the following URL:

 • If you have any questions please contact Connie Klingbeil at the
   Office of Risk Management and Purchasing at 315-268-7722 or
   Karen Barrett of the Comptroller’s Office at 315-268-7650.
DoR Contact Information
                     Greg Slack
     Director of Research and Technology Transfer
  ext. 6475

                    Todd Travis
           Award Administrator (Pre-Award)
  ext. 6475

                 Connie Ferguson
      Contract & Grant Administrator (Post-Award) ext. 6475

                   Kimberly Klatt
              Research Compliance Officer
  ext. 4441
DoR Contact Information
                 Adele Pugliese
               Sr. Dept. Secretary
            (MAE, ECE, PPAS, IACUC)

                 Billi Jo Goodfellow
                 Sr. Dept. Secretary
            (CAMP, CBE, BIO, PSY, C&M)

                  Norma Woods
              Administrative Secretary
              (CAMP, CBS, PT, CEE )

                   Heather Kish
               Sr. Dept. Secretary
           (CUSB, PHY, MCS, HSS, IRB)
Comptroller’s Office Contact
                          Jim Fish
         ext. 6689

                       Donna Martell
                  Associate Comptroller
       ext. 7258

                         Sue Scott
                      Chief Accountant
      ext. 6407

                       Kelly Rathbun
                    Research Accountant
     ext. 6462

                      Elizabeth Corbine
                Accounting Assistant (P-cards)
     ext. 3789
Comptroller’s Office Contact
                    Roberta Chestnut
               Accounting Assistant (POs)
   ext. 3789

                       Betsy Niles
                  Head Cashier (Aramark)
    ext. 6486

                       Sarah Ellis
            Accounting Assistant (DOs/Travel)
    ext. 3789

                      Karen Barrett
         Endowment/Plant Accountant (Fabrication)
    ext. 7650

Funding Resources
Proposal Preparation
Grant Management
Export Controls
Technology Transfer