|
|
|
|
Regulations
One key factor in the sound financial management of sponsored funds is the post-audit process which assures compliance with pertinent externally imposed regulations on how sponsored money can and should be used. These regulations are found in:
Cost Accounting Standards (CAS) 501, 502, 505, and 506
- Address consistency in allocating costs incurred for the same purpose as well as other information on the CAS requirements for universities.
- Office of Management and Budget (OMB) Circular A-21
- Establishes university cost principles
- Defines direct and indirect costs
- Impacts indirect cost recovery
- Office of Management and Budget (OMB) Circular A-110
- Addresses administrative requirements
- Lays out documentation standards
- Other sponsor terms and conditions regarding expense allowability, allocability, and reasonableness
Need
Process in PlaceThere is a very high financial and reputational risk whenever Harvard fails to comply with the above regulations. OMB Circular A-133 (Federal Audit Guidelines and Procedures) findings extrapolated across the University would represent a significant amount of disallowed costs. Aside from the financial exposure for the University, there is reputational risk associated with the negative publicity around disallowed costs.
The Office for Sponsored Research performs a risk based approach to conducting post-audit reviews on a monthly basis. The reviews are performed on federal sponsored awards only and focus on high risk expense categories such as consulting fees and costs normally considered indirect costs that are charged to direct costs. The following OMB Circular A-21 criteria are used: OMB Circular A-21:
- Allowability
- Allocability
- Reasonableness
Questionable transactions are faxed/mailed to the departmental administrator for clarification. OSP will require the department to remove expenses from the federal award if the explanations are not sufficient to meet the above criteria. This risk based approach recognizes that department administrators are responsible for monthly review and reconciliation of sponsored award transactions and monitoring of actual spending to budgets.
