OSP has posted updates to our Budget Development Guidelines which provides guidance on the standard budget categories, budget justification, and Frequently Asked Questions. A summary of changes follows:

• In case you missed it, helpful information and tools for international projects can be found at the following link: https://osp.msu.edu/PL/Portal/DocumentViewer.aspx?cga=aQBkAD0ANAAyADEA
• Update – Research Associate (i.e. postdoc) Salaries: Per the memo issued by Provost Youatt on December 21, 2016, the minimum salary for research associates has been raised to $42,500 (AN) / $34,772 (AY) with the intent to raise all research associates salaries to $47,484 by July 2018. Therefore, all new proposals going forward are to budget at a minimum of $42,500 now and $47,484 by July 2018. Inflationary increases after July 2018 follows the standard 2-4% range.
• New Clarification – Intra-Institution of Higher Education (IHE) Consulting (also referred to as Overload) by faculty is assumed to be undertaken as part of their normal duties requiring no additional compensation to their Institutional Base Salary (IBS). However, in unusual cases where consultation is across departmental lines [different last 3 digits in the CUC code] or involves a separate or remote operation, and the work performed by the faculty member is in addition to his or her regular responsibilities, additional compensation above their IBS may be allowable with sponsor approval. The IHE consulting arrangements must be included in the Budget Justification, with the name of the individual receiving the IHE consulting payment specified. The IHE consulting rate should be budgeted at the faculty member's estimated hourly rate with 7.65% for fringe benefits.
• New Clarification – Institutional Review Board (IRB) fees are only budgeted on non-governmental sponsored projects. See MSU HRPP Manual for more detail.
• NEW FAQ – Q: If an RFA indicates that the project could be funded by a different Federal agency (e.g. "an interagency partnership between NSF and USDA/NIFA"), what applicable F&A rate should be used? A: The full F&A rate should be used unless the RFA states otherwise. If considered for funding by another agency, normally the PI will be instructed by the agency to withdraw their original pro-posal and resubmit it in accordance with instructions provided by the applicable agency’s Program Officer. This frequently happens with USDA/NIFA funding since their F&A reimbursement might be limited by legislation and the budget may need revision to be compliant.

MSU's "Office of Sponsored Programs Subrecipient Commitment Form" (Form) is an effective tool for performing due diligence before executing a subaward. We have put together some tips for completing the form to help expedite your project’s subaward set-up. *Please Note: Due to the FDP Expanded Clearinghouse initiative, we will soon issue a revised Subrecipient Commitment form. The information below will still be applicable.

Supplemental Pages are Important

If a Subrecipient's budget includes a Fringe Benefit rate or Facilities and Administrative Cost (F&A) rate other than a federally negotiated rate or de minimis rate, it is important that the Subrecipient provides a description of the basis on which the rates were calculated. A well-written description can help expedite MSU’s determination of the allowability of the Fringe Benefit and F&A rates requested by the Subrecipient organization.

Don't Forget the FWA & AWA Numbers

When a Subrecipient's work will involve Human Subjects, a Federal Wide Assurance (FWA) number is required. Through the FWA, an institution commits to the U.S. Department of Health and Human Services (HHS) that it will comply with the requirements in the HHS Protection of Human Subjects regulations at 45 CFR Part 46. If the Subrecipient organization does not yet have an FWA number, one may be obtained through the U.S. Department of Health & Human Services website. Likewise, when a Subrecipient’s work will involve the use of animals, a Public Health Service Animal Welfare Assurance (AWA) number is required. The AWA confirms that a Subrecipient has committed to complying with the U.S. Public Health Service Policy, with the Guide for the Care and Use of Laboratory Animals, and with the Animal Welfare Act and Regulations. If the Subrecipient organization does not yet have an AWA number please visit the National Institutes of Health website or call 1-301-496-7163 for information on how to obtain one.

DUNS Number

A DUNS number is a nine-digit number used to identify an organization. It is required by the U.S. Government for recipients (including subrecipients) of federal funding. If the Subrecipient organization does not have a DUNS number, it will need to register for one by visiting the Dun & Bradstreet (D&B) website or calling 1-866-705-5711. Registering is free and it only takes 1-2 business days to receive the number.

If you have any questions about the Subrecipient Commitment Form or suggestions for how to improve it, please feel free to contact Adam Stone (stonead@osp.msu.edu) or James Bliss (blissjam@osp.msu.edu).

It’s time to return to the basics, so let’s review how MSU can continue its long-standing track record of clean audits.

Do audits actually occur? Yes they occur and probably, more often than you might think. Last May I made a presentation about MSU sponsored program audits to the MSU Board of Trustees’, Audit Committee. The following data is from that presentation (with the addition of the 2015-16 data) and shows the number of external audits of MSU sponsored programs conducted each fiscal year:

What is an audit, and are they all similar? Audits are a way for the sponsoring agency to verify that we are performing the project according to their regulations. Audits can be focused on performance (technical/scientific) issues, financial issues, or they can be specific investigations as a result of hotline or whistleblower calls.

What should you do if you learn that an agency plans to conduct an audit? Contact CGA immediately! Since we are involved in a lot of audits, we have developed responses to questions that will save you time, and we speak the official language of auditors, e.g., debits and credits, allowability, allocablility, and reasonableness (oh my)!

Why is it important to have clean audits (without findings)?

• To avoid the financial impact of returning money to the federal government. In the Big Ten alone, a couple of substantial past audit settlements have resulted in paybacks of $5,500,000 and $32,000,000.
• To avoid negative publicity. Many of us view MSU as a reputation-based corporation, therefore, anything that reflects MSU in a negative light is to be avoided, whenever possible. From the PI’s perspective, why risk turning a scientifically successful project into a negative, due to accounting rules, not to mention the many hours spent on finding documentation and defending purchasing decisions that occurred years in the past? Record retention is generally 3 years from the date of final report, so records must be available for long periods of time.
• Finally, so that granting agencies have the confidence that awards to MSU will be performed according to the rules specified by the granting agency. While the overwhelming majority of sponsored project awards made to our PIs are based on the excellent science proposed, there are some projects that are so grand, that a critical evaluation factor is the ability of the institution to provide an internal-control structure, to ensure adherence to agency policies.

What do I need to know to successfully pass an audit?

• Spend RC account money only for project activities that are within the scope of work approved by the sponsor. Don't be tempted to use project funds to cover non-project related expenses.
• Know the rules and limitations the sponsor has placed on your award (Fly America Act, salary limits, travel restrictions, food while not in travel status, etc.). Irrespective of how unusual a particular rule might seem, it’s the right of the sponsor to set the rules. It’s also our right to decide to accept the award. Once accepted, we need to honor the established rules.
• Know the most important question to ask when considering a non-standard purchase: “What is the benefit to the project?” If you can document the direct benefit to the project, the costs are proportionately charged, and it’s not explicitly listed as unallowable, i.e., entertainment, fines and penalties, lobbying, etc., the transaction should pass audit. When in doubt, ask CGA!
• What does “documentation” mean? Documentation simply is a method to record why an expense was initiated, and depending on how unusual the type of expense is, how that expense benefits the project. Documentation can take many forms. For example: email, written note from the PI, or written note of a conversation with the PI. This correspondence should be included in the documentation attached in KFS.
• Who is responsible to ensure the project is performed both scientifically and financially? The Principal Investigator (PI). However, the PI has lots of assistance in the form of departmental, college, and central (payroll, purchasing, accounting, CGA) level administrators.
• Who is responsible for repaying expenses that have been disallowed as a result of an audit? The primary responsibility rests with the department. However, depending on the size of the disallowance, it might be shared by the college and, in unusual instances, by central administration.
• Who is responsible for repaying expenses that were reviewed and approved by CGA? CGA relies on prior audit experience to make a judgement about if an expense is likely to be allowable. However, final allowability is determined through the audit process. Since CGA received no benefit from the expense, the disallowance remains the responsibly of the PI’s department.
• Charge expenses to the correct project as they occur. Auditors automatically consider untimely charging of expenses, or expenses that were initially charged to other accounts, as high risk. Auditors also more closely review expenses incurred close to the end of a project to be sure these were truly needed, received and used during the project period.
• Other areas where MSU has experienced audit attention include:
  • Proof of attendance at conferences. Some auditors expect sign-in sheets, but we have used group pictures as documentation of participation.
  • Travel items. Does the purpose of the trip (on the travel voucher) include enough information to support the benefit to the project? Was the rental car necessary? Is the hotel cost reasonable considering the location? Did you include documentation to support the allocation of expenses to the project if the trip includes additional costs related to non-grant or personal segments? If international travel, do you have the appropriate authorizations?
  • Monitoring of our subrecipients, and P-card documentation.

While the above might seem like a long list, it’s important that when given the opportunity to perform sponsored research, we respect the wishes and limitations of those providing the funding.