This document has been archived. Title: NSF 97-100 -- Prospective New Awardee Guide Date: May 30, 1997 Prospective New Awardee Guide NSF 97-100 NATIONAL SCIENCE FOUNDATION Arlington, Virginia 22230 May 1997 Table of Contents Section A - Overview and Basic Information 1. Overview 2. Federal Requirements 3. NSF Points of Contact Section B - Administrative and Management Information 1. Awardee Organization and Management Summary Form 2. Organizational Establishment and Structure 3. Assurance of Compliance 4. Small Business Declaration or IRS Exemption Letter 5. Listing of Current or Recent Federal Awards Section C - Accounting System Requirements and Auditing Information 1. Accounting Systems Information 2. Time and Effort Reporting 3. Indirect Cost Rate Information and Financial Statements 4. Costs Unallowable on Federal Awards 5. Information on Audits Conducted on Federal Awards Section D - Payments to Organizations with Awards 1. Payments 2. ACH Vendor/Miscellaneous Payment Enrollment Form (SF 3881) 3. Request for Advance or Reimbursement 4. Interest Earned on Advance Payments Appendix 1 - Awardee Organization and Management Summary Form (NSF 357) Appendix 2 - Assurance of Compliance (F.L. 123) Appendix 3 - Small Business Declaration Form Appendix 4 - Information Concerning Financial Management Systems Form Appendix 5 - ACH Vendor/Miscellaneous Payment Enrollment Form (SF 3881) Section A - Overview and Basic Information 1. Overview - The information provided in this guide will assist your organization in preparing documents which the National Science Foundation (NSF) requires to conduct administrative and financial reviews of your organization. This guide also serves as a means of highlighting the accountability requirements associated with Federal awards. You should read this guide in its entirety since it contains information which we have identified, based on past experience with prospective grantees, as being most helpful to them in working with the NSF. 2. Federal Requirements - Various Federal requirements apply to awards made by NSF. These requirements are set forth in the following documents: (1) Federal Cost Principles; (2) Federal Management Standards; and, (3) Federal Audit Requirements. If your organization does not currently have a copy of the documents setting forth the requirements which are applicable to your organization, they should be obtained as soon as possible. Type of Organization & Applicable Federal Cost Principles * Profit Organizations Federal Acquisition Regulations (FAR), Part 31 OMB Circular A-110 Cognizant Federal agency responsible * Educational OMB Circular A-21 OMB Circular A-110 OMB A-133 * Non-Profit OMB Circular A-122 OMB Circular A-110 OMB A-133 * State/Local Government OMB Circular A-87 OMB A-128 These documents can be obtained as follows: NSF Guides Internet Address: http://www.nsf.gov/home/grants3.htm OMB Circulars Phone Contact: Office of Management and Budget (202) 395-7332 Internet Address: http://www.whitehouse.gov/WH/EOP/OMB/html/circular.html FAR, Part 31 Phone Contact: Government Printing Office (202) 783-3238 Internet Address: http://www.gsa.gov/far/90-37/html/31.html 3. NSF Points of Contact - We recommend that you read the entire guide before calling for assistance. Many of the answers to questions organizations have are contained in this document. Division of Grants and Agreements (DGA) Staff in this office are responsible for award of grants and grant administration. This office should be contacted with questions in those areas which are not identified in the offices noted below. See cover letter for name and phone number for contact. Cost Analysis and Audit Resolution Branch (CAARB) (703) 306-1244 Staff in this office are responsible for conducting accounting system reviews, negotiating indirect cost rates, and resolving audit findings. This office should be contacted with questions concerning accounting systems requirements, indirect cost rates and indirect cost proposal preparation, financial statements, and audits conducted on Federal awards. Division of Financial Management (DFM) (703) 306-1283 Staff in this office are responsible for payments and processing of Federal Cash Transaction Reports (FCTRs). This office should be contacted with questions concerning payment forms, advances or reimbursements, and the FCTR if an award is made (see GPM 450). Section B - Administrative and Management Information 1. Awardee Organization and Management Summary Form 357 (Appendix 1) - Self explanatory. Complete Part I only. 2. Organizational Establishment and Structure - Provide an official or published statement of the purpose of your organization and of the powers which have been granted to it to enter into contractual relationships and/or accept awards (e.g. articles of incorporation, by-laws). This should include a brief resume of your organization, and also an organization chart reflecting the structure of your organization. 3. Assurance of Compliance (Appendix 2) - Enter the name of your organization and sign the form certifying that your organization is in compliance. 4. Small Business Declaration or IRS exemption letter (Appendix 3) - If you are a for-profit organization, provide a signed copy of the Small Business Declaration form. If you are a non-profit organization, provide a copy of the current Internal Revenue Service tax exemption letter which certifies the organization's non-profit status. 5. Listing of current or recent federal awards - Provide a listing of federal awards to your organization in the past two years. Show agency, amount, and title of project. Section C - Accounting System Requirements and Auditing Information 1. Accounting Systems Information - Organizations receiving awards are required to have an adequate accounting system. Adequate accounting systems provide assurances to the Federal Government that organizations can account for expenditure of federal funds in accordance with applicable regulations, and terms and conditions of the award. At a minimum, adequate accounting systems provide for: * identification of costs (budgeted costs and actual expenses) by project/grant; * identification of costs as direct, indirect, and unallowable; * complete and accurate financial reports (including balance sheets and income statements); and * maintenance of adequate source documentation (purchase orders, invoices, canceled checks, etc.). Organizations being considered for an NSF award are required to support the existence of an adequate accounting system. If an organization has been audited by Defense Contract Audit Agency (DCAA), or has been audited by another Federal Agency, the organization should provide a copy of the review and/or audit report resulting from the audit or review. All organizations should complete and provide the "Information Concerning Financial Management Systems" form, (Appendix 5). This form will be reviewed by the Cost Analysis and Audit Resolution Branch. Possible accounting system deficiencies in your submission, and suggestions for correcting deficiencies, will be discussed with the submitting organization. 2. Time and Effort Reporting - Time and effort records must be maintained for an organization's employees so that salary charges to an award can be verified. An adequate time and effort record contains the following information: (1) the name and signature of the employee; (2) the hours an employee worked each day during a given pay period; (3) the activities of the employee during the pay period (i.e., project, general and administrative, vacation, sick, leave without pay, etc.); and, (4) the name and signature of the employee's supervisor. Corrections to a time and effort record should be in ink and initialed by the employee. Organizations should provide a copy of their time and effort record as an attachment to the "Information Concerning Financial Management System" form. The following sample timesheet is provided to assist you in creating a time and effort record form should your organization not currently maintain these records. (Sample timecard may be obtained from the Cost Analysis & Audit Resolution Branch (703) 306-1244. It is not available in text version.) 3. Indirect Cost Rate Information and Financial Statements - An indirect cost is any cost not readily identified with a particular individual project, but identified with two or more projects (e.g. rent, utilities, accounting fees, etc.) Indirect costs cannot be charged directly to one specific project, but must be allocated in an equitable distribution of indirect costs to direct projects by application of an indirect cost rate to direct costs. Organizations are required to support their indirect cost rate(s) shown on their grant proposal budget by submission of a current indirect cost rate agreement negotiated with a Federal agency (with financial statements for the two most current ended accounting periods), or by submission of an indirect cost proposal and the related financial statements. A sample indirect is not available in the text version of this document. It may be obtained from the Cost Analysis and Audit Resolution Branch. (703) 306-1244. Based on various information available, e.g., historical cost information, and the amount of funding being requested, the Cost Analysis and Audit Resolution Branch will make a recommendation on the funding of indirect costs - either as an amount, or as a rate. Since indirect cost recoveries can be limited on NSF awards, and could require post-award repayments to NSF, organizations receiving awards should ensure that they understand the award conditions relating to indirect cost recoveries. These will be specified in the award letter. Conditions which could be included are as follows: Maximum provisional rate: A maximum provisional rate is a temporary rate established for an award to permit funding and reimbursement of indirect costs pending establishment of a final rate (that rate determined at the end of an accounting period using "actual" direct and indirect cost data). This type of rate limits indirect cost recoveries to the LOWER of the maximum provisional rate established at the time of award, or the final rate, established at the end of an accounting period. As an example, if a maximum provisional indirect cost rate of 50% was established at the time of award, but an indirect cost rate of 65% was determined based on actual financial data for an accounting period, indirect cost recoveries would be limited to 50%. However, if a final indirect cost rate of 40% was determined, indirect costs recovered in excess of the 40% rate would need to be removed as charges to the project. Organizations having awards which contain maximum provisional rates are required to submit indirect cost proposals reconciled to financial statements for those periods during which the award is active. The Cost Analysis and Audit Resolution Branch of NSF will review indirect cost proposals and determine the appropriate final indirect cost rate. Predetermined fixed rate: A predetermined fixed indirect cost rate is a permanent indirect rate established for a discrete period of time, usually an organization's fiscal year. Organizations should charge NSF awards at the predetermined fixed rate(s) stipulated in the award document(s). However, if negotiations between the organization and NSF (or the cognizant federal agency, if not NSF) result in changes to the organization's indirect cost rate which are not reflected in an award, the organization may charge the award at the newly negotiated rate in effect when direct cost expenditures are made, subject to the restrictions in GPM 635.1. Fixed dollar amount: A fixed dollar amount limits organizations to that "amount" of indirect costs specified in the approved budget. It is not subject to adjustment. 4. Costs Unallowable on Federal Awards - Certain kinds of costs organizations incur cannot be charged to Federal awards, either as direct or indirect costs. A few examples of these costs are: advertising (except for help wanted), bad debt, contributions and donations, fines, penalties, and independent research and development (IR&D) costs. The applicable cost principles which give more details on allowable costs and unallowables are listed in Section A above. 5. Information on Audits conducted on Federal awards - Information on audit requirements are contained in the GPM 350. In addition to those audits discussed in GPM 350, the NSF Office of the Inspector General (OIG) conducts audits of awards made to for-profit and non-profit organizations receiving Federal funding. Since these audits can result in cost disallowances and require organizations to make repayments to NSF, organizations should understand the importance of having adequate accounting documentation to support that costs charged to NSF awards are actually incurred, reasonable and/or allowable under the applicable cost principles and/or terms and conditions of the award. Audit findings resulting in questioned costs (and, which can require repayment to NSF) have been due to the following: 1. Lack of time records to support salary costs charged to awards. 2. Lack of documentation (invoices, canceled checks, etc.) to support and to determine other direct costs (materials, consultants, equipment) charged to awards. 3. Indirect cost recoveries were in excess of those allowed by the type of awarded indirect cost rate. 4. Certain costs, i.e., participant support cost requiring NSF approval, were not approved in NSF budget, or in post-award period. 5. Interest earned on NSF advances made to organizations was not remitted as required (see Section D below.) 6. Cost sharing was a condition of the award, but cannot be supported by accounting documentation. Resolution of questioned cost audit findings is timely and costly for both the organization and NSF. Therefore, you should contact the NSF Cost Analysis and Audit Resolution Branch (CAARB) at (703-306-1244) if you have any questions concerning audits, and/or supporting documentation to be maintained. Section D - Payments to Organizations with Awards 1. Payments - Information concerning payments can be found in GPM 430. Organizations should become familiar with NSF policies concerning payments to ensure timely receipt of payments, and also timely submission of required financial reports. 2. ACH Vendor/Miscellaneous Payment Enrollment Form (SF 3881) - See GPM 436 information and instructions on completing this form. This form should be sent to NSF, Division of Financial Management, Room 575 as soon as possible after an NSF grant award letter is received by an organization. 3. Request for Advance or Reimbursement - See GPM 432-435 for information regarding NSF's payment requirements. Also see GPM 436, Section C on how to request payments. 4. Interest Earned on Advance Payments - Organizations are generally required to maintain advances of NSF funds in interest bearing accounts and to remit interest earned in excess of $250 per year to the Department of Human Health and Services (HHS). Specific requirements concerning deposits and interest are contained in GPM 443. Appendices-are not available here. They may be accessed from the Division of Contracts, Policy and Oversight, Cost Analysis and Audit Resolution Branch (703)306-1244.