Instructor: Tim QuiggAssociate Chair for Administration and FinanceComputer Science Department, UNC-Chapel Hill
[email protected] www.cs.unc.edu/~quigg
SRA International: Quebec CityOctober 15, 2006
WS27: Two Necessary Skills for
Successful Departmental Administration:
Leading People and Managing Money
© Copyright 2006 Timothy L. Quigg All Rights Reserved
Two Necessary Skills
Leading People
Two Necessary Skills
What is the number one reason why people leave
jobs?
Bad Bosses!
Two Necessary Skills
People accept jobs for many reasons:
Salary
Benefits
Reputation of Organization
Work opportunity
Challenge
These things attract people to a job/organization!
Two Necessary Skills
But the analysis of hundreds of thousands of exit interviews/questionnaires shows the singular importance of the immediate supervisor in determining employee morale, productivity and longevity!Bottom line: People may come for the job (package), but how long they stay is directly correlated with the quality of the relationship with their immediate supervisor.
Two Necessary Skills
Common Complaints “He’s always looking over my
shoulder and micromanaging everything I do.”
“She never listens to me.”
“He loves to play games – always trying to show who is the boss.”
“She is always taking credit for my work.”
“He’s not a bad person. He just isn’t a manager.”
“I just don’t think she likes me.”
Two Necessary Skills
There is no “one size fits all” model of management/supervision
Two Necessary Skills
Catalyst – an agent that speeds up the reaction between two substances to create the desired end product.
Catalyst –
Two Necessary Skills
Catalyst – a useful metaphor to understand the primary role of the supervisor.
A supervisor is an agent that “speeds up the reaction” between people, resources and ideas to create the desired end product.
BUT HOW?
Two Necessary Skills
Three Basic Tasks of Supervision
1. Set clear performance expectations
2. Motivate performance
3. Evaluate performance
Two Necessary Skills
Three Basic Tasks of Supervision
Common complaint – “I didn’t know she wanted me to do that.”
Focus on outcomes
Define metrics
1. Set clear performance expectations
Two Necessary Skills
Three Basic Tasks of Supervision
2. Motivate Performance Be positive, focus on strengths but Provide input - suggestions Expect progress reports Redirect when necessary
Help employees to know you want them to succeed!
1. Set clear performance expectations
Two Necessary Skills
Three Basic Tasks of Supervision
No surprises No changes in measurement Don’t “sugar-coat”
1. Set clear performance expectations
2. Motivate Performance
3. Evaluate Performance Honest - Fair
Two Necessary Skills
Three Basic Tasks of Supervision
1. Set clear performance expectations
2. Motivate performance
3. Evaluate performance
Two Necessary Skills
Catalyst Theory of Management
Suggests an Appropriate and
Active Role for Managers.
Effective Managers are not
passive, rather they work to
create desired outcomes.
Two Necessary Skills
Reward People For Solving Problems Without Coming To See You First!
Unconventional Weekly Staff Meetings Agenda – “The Problems You Faced
And The Decisions You Made And, If You Got Help, Who Helped You.”
Builds A Team That Works Together!
Harvard Business Review Case Study: MacGregor
McGregor Played A Lot Of Golf!
Two Necessary Skills
Failure–Tolerant Organizations Encourage Intelligent Risk Taking View Failure As A Pre-Requisite For Invention View Failures As Outcomes To Be Examined,
Understood, And Built Upon Focus On Increasing Their Organization’s
Intellectual Capital Create A Culture Of Collaboration Rather Than
Competition.Richard Farson and Ralph Keyes
The Failure-Tolerant Leader
Two Necessary Skills
Peter Doherty, 1996 Nobel Laureate in Medicine (specificity of cell
mediated immune defense)
“A Good Researcher Failed Every Time But The Last One.”
Two Necessary Skills
Guiding Principles to Remember: Failure is not an accident Neither is success And feedback is the foundation of
success Take notice of feedback in all its
forms Don’t wait for feedback to come to
you – seek it! Put it in a “Curiosity Frame” – ask
yourself how you can use it to avoid failures or repeat successes
Two Necessary Skills
One definition of insanity:
“Doing the same thing over and over and expecting a different
outcome!”
Two Necessary Skills
“If what you are doing isn’t working, maybe you
should try something different.”
PROBLEM: Sometimes managers don’t know its not working because they get limited feedback!
Two Necessary Skills
What is 360° Feedback? Highly effective system used to
enhance employee development Used by over 90% of Fortune 500
companies Anonymous – increases chance for
honest feedback Addition to, not a replacement of,
institutions performance management system
What makes up a 360 Review?
Two Necessary Skills
Why is 360 Valuable to You
Identifies your strengths and weaknesses from the perspective of others.
Improves your productivity and work relationships with those around you.
Improves workplace morale. Provides a means to identify leadership
competencies that need improvement. Provides an opportunity for self
reflection.
Two Necessary Skills
JOHARI WINDOW What others know
about us
What others don’t know about us
What we know about ourselves
1. COMMON KNOWLEDGE 2. SECRETS
What we don’t know about ourselves
3. BLIND SPOTS 4. UNKNOWN
Opportunity for Self Reflection
Two Necessary Skills
Comments:
Two Necessary Skills
“Learning from feedback means you are more likely to be flexible rather than
rigid in your dealings with yourself and others.
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
“A Team Is A Small Number Of People With Complementary Skills Who Are Committed To A Common Purpose, Set Of Performance Goals, And Approach For Which They Hold Themselves Mutually Accountable.”
Jon R. Katzenbach And Douglas K. Smith
The Discipline Of Teams
Two Necessary Skills
DANGER – “One Best Way” Approach
Frederic Taylor: time-and-motion studies
Madelaine Hunter: seven basic components of an effective lesson plan
Expert Systems
Two Necessary Skills
Remember, unique people with different combinations of knowledge, skill, experience and talent will determine their own way to achieve the desired outcomes!
Reminder: Some lab or experimental work requires closely following certain rules to insure safety, human subject protection, or research integrity.
Two Necessary Skills
What Do We Mean By Talent?
Conventional wisdom – rare ability pertaining to sports or the arts!
Two Necessary Skills
What Do We Mean By Talent?
Myth – with enough hard
work, we can
accomplish anything!
X X
Two Necessary Skills
What We Have Learned From Neuro-Science
synaptic connections form by age 3
strong ones grow/weak ones wither away
may be genetics or Darwinian pruning
by mid-teens – unique set of synapses (about half the number as at age 3)
these synapses define our talents!
Two Necessary Skills
Simply put – the behaviors you find yourself doing most often are your talents.
“A Recurring Pattern Of Thought, Feeling Or Behavior That Can Be Productively Applied.”
Marcus Buckingham & Curt Coffman
First, Break All The Rules
Talents Can Be Defined As
Two Necessary Skills
1. Recognize that people are unique
We are a blend of skills, knowledge, experience and talents!
Characteristics of Successful Managers:
Two Necessary Skills
1. Recognize that people are unique
2. Treat people differently
Figure out what motivates each person and devise a system of
appropriate rewards!
Characteristics of Successful Managers:
Two Necessary Skills
1. Recognize that people are unique
2. Treat people differently3. Manage around a weakness
Characteristics of Successful Managers:
Two Necessary Skills
Remember the 3 basic tasks of supervision? Set expectations Motivate performance Evaluate performance
If you have an otherwise good employee who consistently performs below expectations in one aspect of his job, what should you do?
Are expectations clear? Does she need certain tools? Am I using the right motivation technique? Is the problem a lack of education/skill? If none of these, then the weakness may be a
lack of talent?
Two Necessary Skills
If the problem is a lack of talent:
Accept that you “can’t teach talent”
and
Try to find a way to make the non-talent become irrelevant by managing around it!
Two Necessary Skills
Ways to Manage Around a Lack of Talent
1. Devise a support system 150 million Americans need eye
glasses Poor speller – get spellchecker Forget appointments – computer
reminders Story of mentally handicapped worker
• Cooking chicken at fast food restaurant• Goal – cook 6 at a time• Problem – couldn’t count• Package chicken 6 per container
GOAL – Make the non-talent irrelevant!
Two Necessary Skills
1. Devise a support system2. Find a complementary partner
Most people are good at some things and bad at others
Most jobs require unrealistic combinations of talents
Goal – find a partnership that is well-rounded when the individuals aren’t
Ways to Manage Around a Lack of Talent
Two Necessary Skills
1. Devise a support system2. Find a complementary partner3. Find an alternative role
Sometimes a person just isn’t right for the job but
Sometimes you can move tasks around to better align job assignments with individual talents.
Ways to Manage Around a Lack of Talent
Two Necessary Skills
Employee Motivation is Based Upon:
MOTIVATION
A= Does My Job Contribute To My Personal Goals?
A
B= Am I Confident In My Abilities To Do My Job?
B
C= If I Do A Great Job, Will I Be Recognized And Rewarded?
C
Two Necessary Skills
Key To Success in Management
Recognize you are a unique person who has management responsibilities
Understand your talents
Integrate these insights/approaches into your own style
There is no “one size fits all” model of management
Two Necessary Skills
Two Necessary Skills
1) Delegation
You have been asked to review a collaboration agreement that must go out tomorrow but you are in the middle of finalizing the laboratory budget you promised to give to your supervisor by tomorrow at noon. It is your birthday today and a big party is planned for you this evening. There is only one other person you can give any one of these jobs to in your lab. She is in the middle of an important project and you have already spoken to her about the importance of submitting it to you on time. What do you do?
Two Necessary Skills
2) Evaluating Performance
Three months ago you hired a new lab tech, and he is not working out as well as you expected. He started out fine but he has called in sick the last two Mondays and has had to leave early on a number of days. You want to schedule a meeting with him to review his performance but feel a bit reluctant to do so because he is such a nice person and you do not want to antagonize him. What you do not realize is that he has a very sick parent to care for.
Two Necessary Skills
3) Scientists and the Human Resource
Dr. Roy, your institution’s most senior research scientist appears at your desk on Monday morning with a new research associate he has just hired. He has not advised anyone at your institution about this and wants to charge this new RA’s salary to a grant account that was closed two months ago. How do you respond to him and what steps do you take to straighten things out?
Two Necessary Skills
Rules For Effective Goal Setting
1. Set Goals That Are Important/Challenging
Related To Mission
Significant
Push You To Achieve
Highly Motivated
Two Necessary Skills
Focus On What You Want – Not What You Don’t Want
Keep A Mental Image of Success
“Imagination Is More Important Than Knowledge.”
Albert Einstein
2. State Your Goals In Positive, Not Negative, Terms!
Two Necessary Skills
Focus On What You Want – Not What You Don’t Want
Keep A Mental Image of Success
Stay Away From Negative Thinking
“Obstacles Are Those Frightful Things You See When You take Your Eyes Off The Goal.”
Henry Ford
2. State Your Goals In Positive, Not Negative, Terms!
Two Necessary Skills
“Dreams Are Just Thoughts. They Become Tangible Goals When We Write Them Down.”
3. Write Your Goals Down.
Helps To Crystallize Thinking
Be Precise
Helps Spot Contradictory Goals
Increases Commitment
Two Necessary Skills
“Goals Are Just Dreams With Deadlines.” Diana Scharf Hunt
Creating Deadlines Is A Powerful Management Technique
4. Make Your Goals Time Specific
Two Necessary Skills
5. Review Your Goals Regularly!
My Approach: Plastic-Covered Sheet In Telephone Book Drawer
Reviewing Keeps You Focused
Be Willing To Modify/Clarify When Appropriate
Two Necessary Skills
6. Don’t Give Up. Continue Until You Achieve Your Goals!
Two Necessary Skills
Responsible Delegation
A Manager Must Learn To Delegate Responsibility And Authority In Order To Build An Effective Team!
1. Time To Look At “Big Picture”/Plan2. Greater Staff Involvement = Higher
Morale/Investment3. More Gets Done When Manager Isn’t “Funnel”4. Creativity
Payoffs
Two Necessary Skills
Responsible Delegation
1. Inconsistent Application of Policy2. Strain When Manager Feels That An
Employee Is Doing Something Wrong And Has To Confront Him/Her
3. Accountable For Decisions You Don’t Make
4. Asking Employees To Do Too Much – They May Be Resistant (“Don’t Dump on Me”)
5. “I Could Have Done It Myself Faster”6. “Loose Touch With Operations”
Risks/Problems
Two Necessary Skills
We are all negotiators Traditional approaches (hard–soft)
• Hard• Contest of wills-desire to win• Take extreme positions – hold out longer• Other party responds in kind• Harms relationships• Exhausting
• Soft• Desire to avoid conflict – maintain
relationship• Makes concessions readily• Often feels exploited, bitter• Harms relationships
Effective Negotiation Techniques
Two Necessary Skills
1. Focusing on positions (rather than interests) can result in unwanted/unwise agreements Bargaining over positions causes us to
“defend against attack” The more you defend, the harder to
change Ego gets involved Example – JFK and Soviets
• Ban on nuclear testing
• Roadblock – number of inspections
• Problem – hadn’t defined an inspection
Problems with Traditional Negotiations
Two Necessary Skills
2. Arguing over positions is inefficient Taking extreme positions Holding on stubbornly Making small concessions Deceiving the other party as to your true
views Takes time, effort and interferes with
reaching agreement Dragging one’s feet, threatening to “walk-
out” increases time and cost and Increases risk of no agreement being
reached!
Problems with Traditional Negotiations
Two Necessary Skills
3. Arguing over positions endangers an ongoing relationship When there are winners and losers
relationships suffer Anger and resentment are side-effects
4. Simply “being nice” is no answer Can leave you vulnerable May not produce a wise agreement O. Henry’s Gift of the Magi
Problems with Traditional Negotiations
Two Necessary Skills
Technique developed by Roger Fisher and William Ury, Harvard Negotiation Project
Four key points1. Separate the people from the problem
2. Focus on interests, not positions
3. Invent options for mutual gain
4. Insist that the result be based on some objective standard
Alternative: Principled Negotiation
Two Necessary Skills
When egos get involved, you often fail to address the problem
Goal – parties should see themselves working side-by-side, attacking the problem, not each other
1. Separate the people from the problem
Two Necessary Skills
A negotiating position often obscures what you really want
Compromising between positions can produce an unsatisfactory agreement
Discuss what you want in an agreement (including relationship issues)
2. Focus on interests, not positions
Two Necessary Skills
Pressure of negotiations can make it difficult to see optimal solutions
Set aside time outside of negotiations to brainstorm for possible solutions
• Separate
• With other party
• With third party
3. Invent options for mutual gain
Two Necessary Skills
Seek agreement on a fair, independent standard
• Market value
• Expert opinion
• Trusted 3rd party
Prevents either party from having to “give-in” to the other
4. Insist that the result be based on some objective standard
Two Necessary Skills
1. If there are any non-negotiable issues, make them clear up front
2. Consider the impact of the negotiation process on both:
Relationship with other party Next negotiation
Other key issues:
Two Necessary Skills
Key To Success in Management
Recognize you are a unique person who has management responsibilities
Understand your talents
Integrate these insights/approaches into your own style
There is no “one size fits all” model of management
Two Necessary Skills
Managing Money!
Two Necessary Skills
Departmental Administration –
“Where the Rubber Meets the Road”
Transactions are initiated by DA Policy compliance is monitored by DA Financial management is
implemented by DA Basic records are maintained by DA Central administration relies on DA Internal control depends on DA!
“In the real world, the DA strives to provide quality support to the research enterprise while following all of the applicable policies and rules. It’s not always as easy as it sounds!”
Faculty
Sponsored Programs Office
Purchasing Office
Funding Agencies
Health and Safety Office
Human Resources Office
Two Necessary Skills
But the Consequences of Poor DA Can Be Disastrous: Research activities slow down Projects run out of money Key resources may not be
available when needed (equipment, personnel)
Audit exposure exists
Two Necessary Skills
Arguing with an Auditor is LikeWrestling with a Pig in Mud...
After a while, you realize the pig ENJOYS it!
Two Necessary Skills
Five Financial Management Challenges for the DA!!
Transaction processing - timely and accurate
Compliance and policy enforcement Expense classification Conformity to award documents Fiscal control
Two Necessary Skills
Timely Transaction Processing
This is one area that you can control (But how?)
Issues to consider• Staffing
– By transaction type (travel, purchasing)– By project– Implications, cross-training, staff vacancies
• Sequencing– First in - First out– Something else (tagging of urgent transactions)
Two Necessary Skills
Timely Transaction Processing• Pre-audit for compliance
– Goal - perfect transactions processed immediately every time!
– Reality - the more detailed the pre-audit, the longer the processing time.
– Dilemma - how to balance?
• Tracking after transaction leaves department– Do you wait for the faculty member to yell
when he hasn’t gotten travel advance?
Two Necessary Skills
Compliance/Policy Enforcement
“The DA has the toughest job in the policy hierarchy because real-life interpretations and daily enforcement happen in the department.”
Two Necessary Skills
Compliance/Policy Enforcement
The DA is expected to assure compliance at all levels:
• Regulatory• Specific Agency• Institutional• Departmental
Two Necessary Skills
Compliance/Policy Enforcement
• Research administration• Human resources• Safety• Employee benefits• Travel• Expenditure control• Procurement
And for every aspect of the institution's compliance program:
An impossible task?
Two Necessary Skills
“Without clear written guidelines, the enforcement task is impossible to carry out in a consistent and reliable way.”
An Old DA Proverb:
Two Necessary Skills
Expense classification Expenses charged to correct
activity/account/project Clear demarcation between direct
and indirect costs Consistent application of costs to
be in CAS conformity Identification of cost sharing and
proper treatment
Two Necessary Skills
Conformity to Award Documents
Expenses charged within the proper project period
Observation of prior approval requirements
Expenditures within budget limits
Two Necessary Skills
Fiscal Control
“The best way for a DA to get yelled at is to ignore fiscal control”
To avoid:• Stay within budget• Be certain that the nature of the
expenditure matches the purpose of the fund
Two Necessary Skills
Really Big Departmental Administration “No-Nos”
Cost transfers with weak (or no) documentation. (“The expenses were transferred to use up the balance of the award”).
Failure to maintain labor certification records.
Two Necessary Skills
Really Big Departmental Administration “No-Nos”
Mis-match of labor charged to effort expended (“Just charge my labor to project B so I can buy a computer from project A”)
Two Necessary Skills
Financial Planning
Question 1: Where are we now?
Two Necessary Skills
Financial Planning
Question 1: Where are we now?
Having an accurate, detailed view of current financial status (by project and department-wide)
• Can we rely upon institutional accounting records? or
• Do we need a departmental system (“shadow accounting”)?
Two Necessary Skills
Financial Planning
Question 2: Where are we going?Projecting expenditure/revenue forecasts into the future (for fiscal year)
• Special attention to personnel– Plan to cover soft money people for year– Note institutional policy for “layoffs”
• Special attention to fixed expenses– Equipment (or software) maintenance
contracts, rent
Name Funding Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunWashington, G. GRIP 24% 14th
Lincoln, A. DOE-F 15%GRIP 60% 14thMIP 10%STC/Teleimmersion 15%
Jefferson, T. DOE-F 12.5%I-FLOW 50%NANO 25%STC/Teleimmersion 12.5%DOE-F 50%STC/Teleimmersion 50%100%
Clinton, B. GRIP 100% 14th
Ford, G. DOE-F 20%STC/Teleimmersion 13%
Eisenhower, D. MIP 100%
Johnson, L. STC/Teleimmersion 100%
Truman, H. GRIP 100% 14th
Reagan, R. MIP 100%
Roosevelt, F. DOE-F 30%I-FLOW 20%NANO 10%MIP 10%STC/Teleimmersion 30%
Personnel Funding Chart
Name Funding Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunLarry DOE-F 20%
STC 8%MCNC 5%STC 28%MCNC 33%ITR-F 14%(NEW)DOE-F 14%ITR 5%ITR-F 38%(NEW)DOE-F 38%
Curley TRUST 20%STC 60%STC 35%MCNC 5%GRIP 20%ONR 20%ITR-F 20%(NEW)DOE-F 5%ITR-N 35%KECK-OVHD 35%ONR 10%ITR-F 40%(NEW)DOE-F 30%
Moe TRUST 10%STC 72%MCNC 18%STC 32%DOE-M 100%ONR 20%GRIP 23.5% (NEW)DOE-F 33%ITR 23.5%
Personnel Funding Chart
Name Salary Funding Acct. # Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunKiser, S. $150,000 State (100%) 2-32761
Lawrence, S. $15,586 State (100%) 2-32761
Quigg, T. $12,207 State (100%) 2-32761
Vrana, S. $150,000 State ( 69%) 2-3276125% on grants Kenan Professor (6%)6-60024
CISMM (10%) 5-31865CISMM (8%) 5-32690IBR (7.5%) 5-37125IBR (9.5%) 5-37125ITR (7.5%) 5-47737
Wdowik, M. $20,348 State (100%) 2-32761
Vargas, A. $457,318 Federico Gil (18%) 6-6230133% on grants Neurosurgery (3%) 5-51788
CS 51788 (2%) 2-32761DARPA (10%) 5-35751State (45%) 2-32761NLM (6%) 5-55807CS 55807 (2%) 2-32761Livermore (14%) 5-42519NLM (33%) 5-55807CS 55807 (15%) 2-32761State (5%) 2-32761State (14%) 2-32761NLM (37%) 5-55807CS 55807 (16%) 2-32761State (39%) 2-32761NLM (20%) 5-55807CS 55807 (8%) 2-32761
Personnel Funding Chart
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01
Incr Budget Cum Exp Proposal Budget Total Budget Cum + Proj
End Date
Maximum Award Amount
Incremental Funding
Project Budget
Actual Expense
Burn Rate
Comparison – Direct Grants to Institutional Funds
Grant Volume
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000
Inst.
Funds
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
0 500 1000 1500 2000 2500 3000 3500
Comparison – Space to Actual Indirect Recovery
Square Feet
Actual
Indirect
Two Necessary Skills
1. Rules – the DA must know or know where to find
Federal OMB circulars• A21
Specific sponsor• NIH guide
• NSF Grant Policy Manual
Specific institution rules (policies)• Travel
• Consulting
Two Necessary Skills
Two Necessary Skills
Applicable OMB Circulars
A-21 Establishes principles for determining costs applicable to grants, contracts, and other agreements
with educational institutions
A-110 Uniform administrative requirements for grants and agreements with institutions of higher education, hospitals and other non-profit institutions
A-133 Audit standards for states, local governments and non-profit organizations
Two Necessary Skills
A-21 Cost Principles: Definitions
Direct Cost – any cost which is identified specifically with a particular sponsored agreement or other institutional function.
Facilities and Administrative (F&A) Costs – costs incurred for common or joint objectives that cannot be readily/specifically identified with a particular sponsored project or other institutional function.
Composition of Total Costs – the total cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs of the institution.
Two Necessary Skills
Sample Budget2 Graduate Students $40,000 $40,000Fringe Benefits $6,950 $6,950Equipment $50,000 $50,000Travel $7,500 $7,500Supplies $6,000 $6,000Computer Services $8,000 $8,000Other (maintenance, communication, tuition) $2,950 $15,000 $17,950Total Direct $96,400 $65,000 $161,400F&A (46% of MTDC $44,344 $44,344Grand Total $205,744
MTDC = Modified Total Direct Costs
(TDC-Equipment-Tuition)*
*Also minus any SubK costs > $25,000
Two Necessary Skills
A-21 Cost Principles
University accounting systems must allow for the assignment of costs to various institutional functions consistent with A-21 definitions.
Two Necessary Skills
A-21:Major Institutional Functions
1. Instruction – all teaching/training activities• Institution Funded• Sponsored Instruction/Training• Departmental Research (No separate budget)
2. Organized Research – All R&D activities that are budgeted and accounted for separately
• Sponsored Research• University Research
Two Necessary Skills
A-21: Major Institutional Functions
3. Other Sponsored Activities• Health Service• Community Service
4. Other Institutional Activities• Residence and Dining Halls• Hospitals• Athletics• Book Stores• Museums
Two Necessary Skills
A-21: Major Institutional Functions
1. Instruction
2. Organized Research
3. Other Sponsored Activities
4. Other Institutional Activities
TASK: To allocate (assign) each cost incurred by the institution to one or more function (cost or objective) in reasonable/realistic proportion to the benefits provided or other equitable relationship.
Two Necessary Skills
Account Numbers
5 – 12345 – 0 – 110 - 32765 – 12345 – 0 – 110 - 3276
Ledger Account Budget
(Fund Source)
Purpose Department
A-21 Cost PrinciplesA-21 Cost PrinciplesTotal Institutional Costs
1. Instruction 3. Other Sponsored Activities2. Organized Research 4. Other Institutional Activities
Allowable* Unallowable*
Direct
Costs
Indirect
Costs
(F&A)
* For Federal Participation
Two Necessary Skills
A-21 Cost Principles
Tests of Allowability: in order to be allowable as either a direct or indirect cost, a cost must be:
Reasonable
Two Necessary Skills
A-21 Tests of Allowability
Reasonable: a cost may be considered reasonable if it’s nature and amount reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision was made.
Generally recognized as necessary
“Arm’s-length” bargaining
Acted with due prudence
Consistent with institutional policies applicable to all of the institution’s work
Two Necessary Skills
A-21 Cost Principles
Tests of Allowability: in order to be allowable as either a direct or indirect cost, a cost must be:
Reasonable
Allocable under A-21 principles/methods
Two Necessary Skills
A-21 Tests of Allowability
Allocable: a cost may be considered to be allocable to a particular project if it:
is incurred solely to advance work under the sponsored agreement or
it benefits both the sponsored agreement and other work of the institution, in proportions that can be
approximated using reasonable methods or
it is necessary to the overall operation of the institution and is, consistent with A-21, deemed assignable in part to the sponsored agreement.
Two Necessary Skills
A-21 Cost Principles
Tests of Allowability: in order to be allowable as either a direct or indirect cost, a cost must be:
Reasonable
Allocable under A-21 principles/methods
Treated consistently
Two Necessary Skills
A-21 Tests of Allowability
Consistent Treatment
In estimating, accumulating and reporting costs
• the format and definitions used in the proposal budget should be consistent with that used in both the institution’s accounting system and on financial reports submitted to the agency
In allocating costs incurred for the same purpose
• All costs incurred for the same purpose, in like circumstances, are either direct costs only or indirect costs only
Two Necessary Skills
A-21 Cost Principles
Tests of Allowability: in order to be allowable as either a direct or indirect cost, a cost must be:
Reasonable
Allocable under A-21 principles/methods
Treated consistently
Conform to limitation/exclusions under A-21 and sponsored agreements
Two Necessary Skills
A-21 Tests of Allowability
Limitation/Exclusions under A-21 and sponsored agreements
A-21 defines in Section J (50 items) unallowable costs that include:
• Alcoholic beverages• Alumni activities• Bad debts• Commencement costs• Lobbying costs• Fines and penalties• Goods/services for personal use• Losses on other sponsored agreements/contracts• Student activity costs
Two Necessary Skills
A-21 Tests of Allowability
Limitation/Exclusions under A-21 and sponsored agreements
Sponsored agreements may be subject to statutory limits on allowance of costs
Unallowable costs shall be identified in accounting system
A-21 Cost PrinciplesA-21 Cost Principles
Allowable*• Reasonable• Allocable• Consistent• Not excluded
Unallowable*• Don’t meet A-21 test
• Specifically not allowable in Section J
• Specifically not allowable in award
Direct Costs
• Specific to project
Indirect Costs(F&A)
• Common objective• Not Specific to project
* For Federal Participation
Total Institutional Costs1. Instruction 3. Other Sponsored Activities2. Organized Research 4. Other Institutional Activities
Two Necessary Skills
Facilities & Administrative Costs
“Costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project or other institutional function.”
Facility Costs Building depreciation and use allowances (50 year use)
Interest on debt associated with certain buildings Equipment depreciation and write offs Operations and maintenance Library
Two Necessary Skills
Facilities & Administrative Costs
Administrative Costs (capped at 26% - can take 24% fixed allowance)
General administration
Departmental administration
Sponsored project administration
Student administration and services
Two Necessary Skills
Types of Support
Federal Assistance
Mandatory – block grants, formula-driven Discretionary – competitively awarded
Modes of Support Grants – assistance Contracts – procurement/acquisition Cooperative Agreements – assistance but with
strings attached
Two Necessary Skills
Grant
a legal instrument for transferring money, property, or services to the recipient in order to accomplish a public purpose of support or stimulation where there will be no substantial involvement between the federal agency and the recipient during performance.
31 U.S.C. 6304
Two Necessary Skills
Grants
• Broad Agency Announcements (BAA), Program Solicitation• Financial Assistance Award• Made for stated purpose (proposal/award)• Made for stated period of time (project period)• Made to an organization in the name of a Principal
Investigator (PI)• No substantial programmatic involvement by awarding
agency• Funding may be annual, multi-year or for entire budget
period• Minimum of limiting conditions
Two Necessary Skills
FAR 2.101 defines a contract as a mutually binding legal relationship that obligates the seller to furnish supplies or services and the buyer to pay for them.
Contract
an agreement, enforceable by law, between two or more competent parties, to do or not do something not prohibited by law, for a legal consideration.
Two Necessary Skills
Contracts
RFP and IFB Mutually binding legal relationship that binds the seller to deliver
certain specified goods or services (deliverables) in exchange for certain specified consideration (e.g., money)
Terms are usually detailed and specific Activities frequently dictated by sponsor (buyer) Less latitude to modify scope of work and line-item expenditures Funding may be incremental, tied to work components, final payment (e.g. 10%) may be held till “acceptance” of deliverables Process governed by the FAR (Federal Acquisition Regulation)
Two Necessary Skills
Cooperative Agreement
a legal instrument for transferring money, property, or services to the recipient in order to accomplish a public purpose of support or stimulation where substantial involvement is expected between the government agency and the recipient.
–31 U.S.C. 6305
Two Necessary Skills
Cooperative Agreements
Financial Assistance Award Similar to grant except
• There is substantial programmatic involvement by awarding agency.
• Principal purpose is to transfer money or something of value to recipient in order to accomplish a public purpose.
Two Necessary Skills
Cooperative Agreements
Agencies have substantial freedom to structure the terms and conditions (T&Cs)
• Agencies must issue CA regulations
• Often differ from standard assistance regulations and may even resemble acquisition regulations
Two Necessary Skills
3 P’s – Patron (Grant): Partner (Co-op Agreement): Purchaser (Contract)
• Idea for the project is initiated by the investigator.
• No substantial involvement between the grantor and grantee.
• Grantor has no expectation of a specified service or end product
Grant
DISTINGUISHING CONTRACT, GRANTS AND COOPERATIVE AGREEMENTS
Research Requirement
Procurement Contract
YESNO
Principally forPublic supportOr stimulation
Co-op Agreement (SubstantialRelationship)
Two Necessary Skills
Cost Transfers The transfer of expenditure from
one account to another • Allowable – costs that can be specifically
identified with a particular project or activity• Allocable – cost can be quantified
Red Flags • Transfers older than 90 days• Transfers in the last month of the award or
after the award has expired• Round numbers• Explanations that raise more questions than
answers
Two Necessary Skills
What Auditors look for Transfer must be supported by
documentation that gives full explanation of how the error occurred
• Stating ‘to correct error or ‘transfer to correct project’ is not sufficient
• State how the item being transferred benefits the account being charged
• State how error occurred• Identify steps to prevent future errors
Frequent errors in the recording of costs may indicate the need to review the accounting system and/or internal controls
Two Necessary Skills
Surviving an AuditAudits - Auditors Pre-award – sponsor agency F&A - DHHS Grant/contract – sponsor agency Contract closeout – sponsor agency or
cognizant audit agency * System – UNC-CH Internal Audit, N.C.Office of the State Auditors,
cognizant audit agency * A-133 - N.C. Office of the State
Auditors* most common types of audits
Two Necessary Skills
Types of Audits System Audit
• Budgeting process, recharge center, purchasing procedures, time and effort/cost sharing
A-133 Audit• Compliance and internal controls • Review financial transactions, payroll, effort
reporting• Looking at how we have used the research
dollars and how we have allocated costs to specific projects
Two Necessary Skills
What Auditors Test For Compliance to program guidelines Unallowable costs (cost transfers) F&A rate and calculation Timeliness and accuracy of reports
• Progress, Financial, Patent and Invention, and Special reports
Program Income Sub-recipient monitoring Time and Effort Reporting
(compensation and certification) Cost Sharing
Two Necessary Skills
When Things Go Wrong Reach an understanding of the terms
and conditions Communicate roles and
responsibilities before problems arise Involve all responsible parties Follow up – don’t let time slip away Involve Sponsored Programs Office
sooner than later Who accepts the financial burden
Two Necessary Skills
When do you start planning for the closeout process?
a. At the time the proposal is developed.
b. At the time the award is accepted.
c. At the time modifications, extensions or supplements are approved.
d. Just prior to the expiration of an award.
e. At the time of expiration of an award.
f. All of the above.
Closing Out an Award
Two Necessary Skills
Project Closeout Responsibilities Final Reports
• Technical, progress, narrative (Principal Investigator)
• Patent / Inventions (Sponsored Research & Technology Development Offices)
• Property (Sponsored Research & Asset Management Offices)
• Financial (Sponsored Research Office)• Sub-recipients (Sponsored Research
Office and PI) ** Reports from sub-recipients needed in
advance in order to incorporate into reports to sponsor
Two Necessary Skills
Send notices of expiring awards well in advance of expiration date
Create reports to track closing awards Require written request from department if deadline cannot be met
Develop a policy for writing off small balances
“Freeze” award once final financial report is sent
Solutions to Meeting the Deadlines
Two Necessary Skills
Closeout Checklist Submit final reports Report all final financial obligations Reconcile outstanding cash advances,
imprest cash, and advances for gift cards to study subjects
Cancel or change account for open orders
Prepare personnel actions to transfer to new source
Document required cost sharing Record program income
Two Necessary Skills
Post-Term Charges Costs incurred after termination
date of the project/award Must be explained and justified for
allowability Common post-term charges
• Payroll expenses• Procurement card charges• Telephone costs• Copy services• Service center charge
Two Necessary Skills
Deficits / Over DraftsOccur when cumulative expenses exceed amount awarded
• May be considered voluntary uncommitted cost sharing
• Deficits must be transferred out of sponsored award no later than 90 days after termination date
Two Necessary Skills
What is Cost Sharing?
A-110:• A.2(i) Cost Sharing or matching is the portion of project or program costs not borne by the Federal Government.
Two Necessary Skills
Definitions
Cash: The recipient’s cash outlay; contributions under the direct control of the recipient.
In-Kind: Value of non-cash contributions provided by non-Federal third parties.• Webster’s definition:
– “with goods or produce rather than money”
Two Necessary Skills
Cash Contributions A-110 Definition: “the recipient’s cash
outlay, including money contributed to the recipient by third parties.”• Salaries & benefits of University
employees• University purchased equipment or
supplies or travel or other allowable expense
• Facility & Administrative costs on the above
• Waived F&A costs (with permission of the sponsor)
Two Necessary Skills
Sources of “Cash” Contributions
University unrestricted funds contributed to project:• State funds• Gift accounts• Endowment funds• F&A recovered and returned to
departments• Program income
Two Necessary Skills
Third Party In-Kind
Volunteer Services:• Based on rates paid for similar
work• Includes associated Benefits• *can not include F&A see A-110
c23(e) Donated Equipment & Supplies:
• At current fair market value
Two Necessary Skills
Acceptable Cost Sharing (A-110 C.23)
Must be verifiable from the official University records
Not be used as cost sharing for any other Federal sponsored program or project
Be necessary and reasonable for proper and efficient accomplishment of the project
Allowable under A-21, the agreement, and public laws
Two Necessary Skills
Acceptable Cost Sharing contd.
Be incurred during the effective dates of grant
Not be paid by Feds under another award (except where authorized by Federal statute to be used for cost sharing or matching)
In the approved budget when required by the Federal awarding agency
Two Necessary Skills
Documentation of Cost Sharing
Salary & benefits – Payroll records and effort reports
Non-payroll – PO#, check #, AJ-1 #, object code & dates of expenditure posting in FRS on supporting source152
Two Necessary Skills
Documentation of C/S contd.
In-Kind Documentation:• Cash Contribution – sworn statement
by financial officer, copy of check or receipt for payment
• Equipment – vendor invoice showing total item cost
• In-Kind Other – Letter of support detailing support (time, place, value)
Two Necessary Skills
F & A / Indirect Cost Sharing
Unrecovered Indirect:• Reduced or waived F&A• Example: federal funded award using 10%
– Negotiated F&A rate of 46%– F&A Costs cost shared 36%– F&A Costs paid by sponsor 10%
Indirect Cost – F&A on the non-sponsored projects cost (cost sharing source) may be used for additional cost sharing
Two Necessary Skills
Effort Reporting
Effort Certification• Required by Federal regulation: OMB
Circular A-21, section J.10• Provides support for salary & benefits
charges to grants & contracts• Documents that effort commitments
have been met• Documents cost share
Two Necessary Skills
What is 100% Effort Effort required to meet obligations
of a faculty member. Usually described in appointment letter.
Hours will be different for different faculty members, and may vary during the year
40 hours is NOT the standard for faculty
For Faculty & Staff (exempt & non-exempt employees) effort % is based on total hours worked