The Medical University of South Carolina

Affiliates Policies and Procedures
Revised 6/11/99

Table of Contents
 

1.0 INTRODUCTION AND PURPOSE

General Statement

These policies and procedures apply to Affiliate expenditures on grants and contracts accepted by the Medical University of South Carolina (MUSC), direct expenditures used for cost sharing on MUSC federal awards, and Facilities and Administrative (indirect) expenditures included in MUSC's federal Facilities and Administrative (indirect) cost rate.

1.1 Purpose

As a recipient of federal funds, the Medical University of South Carolina (MUSC) is required to follow certain federal regulations for the acceptance and disbursement of those funds. The requirements are described in the Office of Management and Budget Circular A-21 and Circular A-110. Circular A-21 describes the cost principles and Circular A-110 describes the administrative requirements MUSC must follow as a recipient or "grantee" of federal funds.

A principal requirement of these regulations is that MUSC must follow consistent accounting practices throughout its organization. In addition, other MUSC-related entities that receive federal funds must establish policies and procedures which comply with Circulars A-110 and A-21. 

These policies and procedures describe accounting practices MUSC Affiliates as "segments" or "components" of MUSC are required to follow for (1) grants and contracts accepted by MUSC, (2) direct expenditures used for cost sharing on MUSC federal awards, and (3) Facilities and Administrative (indirect) expenditures included in MUSC's federal Facilities and Administrative (indirect) cost rate. These policies and procedures also describe circumstances when Affiliates should consult MUSC central offices when external funds are requested.

1.2 Description of Affiliate Segment or Component of MUSC

The Medical University of South Carolina is a fiscally independent entity of the State Government. Included in this entity are the University (primary entity) and all its component units. These component units or "affiliates" are:

1. Charleston Memorial Hospital
2. University Medical Associates of the Medical University of South Carolina
3. Medical University Facilities Corporation 
4. Pharmaceutical Education and Development Foundation
5. MUSC Foundation for Research Development
6. Health Sciences Foundation

These component units are separately identified for financial reporting purposes due to the significance of their operational or financial relationships with MUSC. The Veterans Administration Hospital is not an Affiliate of MUSC. 

These policies and procedures will refer to the above component units as "Affiliates".

2.0 Grants and Contracts

2.1 Guidelines for Proposal Applications

When an Affiliate contemplates submitting a proposal application for external funding, whether from a federal or non-federal sponsor, which will be accepted by MUSC on behalf of the Affiliate or which will include a subcontract to MUSC, the individual preparing the proposal should contact the Office of Research and Sponsored Programs (ORSP). ORSP will discuss the proposal application with the individual to jointly determine if it requires signatory approval by the appropriate MUSC official. If MUSC signatory approval is required, the ORSP administrator will work with the individual to ensure that the appropriate MUSC and sponsor administrative requirements are met.

All individuals submitting a grant or contract application within the above criteria must meet MUSC requirements to be designated as a "principal investigator" and be responsible for conducting the work and complying with federal and MUSC requirements under the sponsored program.

Institutional Base Salary and Workload

Most grant applications require that the effort of individuals participating on the proposed project be estimated. The salary cost proposed would be equal to the percent effort proposed on the project times the individual's institutional base salary. If an employee is paid salary by MUSC and the Affiliate, institutional base salary should consist of the combined salary. However, incentive payments should be excluded.

It is the responsibility of the department chair to determine the institutional effort or departmental workload required for the base salary. Faculty effort on Affiliate projects should be part of institutional effort when it is part of the faculty member's departmental workload. It is the responsibility of the Affiliate to ensure that the department chair has approved proposed work to be conducted by the faculty member for the Affiliate.

Affiliate Subcontracts with MUSC for Faculty Effort

Affiliates may subcontract with MUSC for faculty effort only after approval is given by the MUSC department chair. To be consistent with MUSC effort reporting practices, faculty effort that is part of the departmental workload must be part of institutional base salary. Salary supplements to MUSC faculty for effort on Affiliate projects may be made providing it is within the departmental guidelines that establish the extent to which faculty can engage in consulting activities whether with an Affiliate or with a non-affiliated entity, e.g., another university, private company, etc. 

Affiliate agreements with MUSC must include provisions which address issues related to Conflicts of Interest and all related parties, e.g., department chair, faculty member, and MUSC administration are aware of the faculty member's consulting activity with the Affiliate.

2.2 Guidelines of Acceptance

The Office of Research and Sponsored Programs usually will be notified along with the individual submitting the proposal application that an award to MUSC on behalf of the Affiliate will be made. In this case, payment under the award will be made to MUSC and received by GCA and forwarded to the Bursar.

2.3 Administration Policies

All awards made to MUSC on behalf of an affiliate must follow the policy guidelines established by ORSP and the Grants and Contracts Accounting (GCA) office. These policy guidelines may be requested from either office and are summarized below.

Acceptance of the Award

When an award is made to MUSC, ORSP will notify the principal investigator, and summarize the award conditions and sponsor reporting requirements.

Establishing an MUSC Account

A copy of the award document will be forwarded by ORSP to GCA. GCA will establish a separate account to which all revenue received and expense incurred to conduct the project will be applied. The principal investigator or the designee will be notified of the account number and the effective period by GCA.

Project Expenditures

Project expenditures may be incurred after an account is established and during the effective period of the account. All expenditures must be allowable under MUSC and sponsor guidelines.

Monitoring Project Expenditures

The principal investigator or the principal investigator's designee will receive monthly financial status reports of the project from GCA. The principal investigator or designee should review all expenditures to verify that they were incurred to advance the work on the project. The principal investigator or designee should contact GCA about any expenditure that appears questionable or cannot be identified.

Project Reporting

During the performance period of the project, some sponsors may require technical or financial progress reports. The principal investigator is responsible for preparing the technical reports and submitting them to the sponsor. Grants and Contracts Accounting will prepare the financial reports, request that the principal investigator or designee review them for reasonableness, and then GCA will submit them to the sponsor.

Project Close-out

When the effective period of the project has expired, the project must be closed within a specified period of time, usually 90 days after its expiration date. GCA and ORSP will work with the principal investigator or designee to review project revenue and expenditures, ensure all technical reports have been submitted and prepare the final financial status report.

3.0 Expenditure Guidelines 

3.1 General Disbursement Guidelines for Grants and Contracts

All expenditures charged to grants and contracts must meet the requirements described in OMB Circular A-21. Circular A-21 requires that the costs be:

1. Reasonable
2. Allocable and
3. Allowable.

Reasonableness refers to actions a prudent person would take given a set of circumstances prevailing at the time the decision to incur the cost was made. For example, the purchase of first class airfare tickets when coach tickets are available would not be reasonable.

Allocability refers to the benefit a project received from the expenditure. For example, all costs that benefit a specific project should be charged to that project. It is inappropriate to charge projects for expenditures to which there is no benefit, i.e., charging projects based on fund availability.

Allowability refers to costs the sponsor is willing to reimburse. Under no circumstances should unallowable costs be charged to sponsored projects. Unallowable costs are defined in MUSC document entitled "A Guide For Determining Allowable Costs to Sponsored Agreements".   An award may also specifically identify otherwise allowable costs as unallowable. Therefore, the award document should also be reviewed for costs defined as unallowable by the principal investigator. 

3.1.1 Direct and Facilities and Administrative Costs

Costs that benefit a research project are defined as direct or facilities and administrative (F&A) costs. Direct costs are those costs that can be specifically identified to a project relatively easily with a high degree of accuracy. Examples of direct costs include salary and wages of principal investigators and technical staff, laboratory supplies, travel, and animal and animal care costs.

Facilities and Administrative (indirect) costs are those costs that benefit multiple projects or activities and therefore cannot be readily and specifically identified with a sponsored project or activity. Examples of Facilities and Administrative (indirect) costs include plant operation and maintenance, equipment depreciation, administrative and clerical salaries, and office supplies.

It is important that MUSC maintains consistent costing practices to avoid double charging the Government. Costs charged to sponsored projects must be consistently treated as direct costs only or Facilities and Administrative (indirect) costs only with respect to the sponsored project. These costing practices are described in MUSC's policy, "Direct and Facilities and Administrative Costing Policies and Procedures."

3.1.2 Sponsor Funded Disbursements

Disbursements from a sponsored project account must meet the criteria stated above for reasonableness, allocability and allowability. In most cases, the Affiliate will be charging direct costs to the sponsored project account. Expenditures normally treated as Facilities and Administrative (indirect) costs would not be charged to the sponsored project account as these are included in the F&A rate for the project. Facilities and Administrative (indirect) cost expenditures would be charged to the Affiliate designated Facilities and Administrative (indirect) cost account.

The individual(s) authorized on the sponsored project may only charge expenditures to the sponsored project account. The individual(s) must have first-hand knowledge that the goods or services charged to the account are necessary to conduct the work. These individuals usually are the principal investigator or the technical staff working on the project. Administrative staff must not charge costs to the sponsored project account without authorization from these individuals. 

3.1.3 Affiliate Funded Disbursements

An Affiliate may support a MUSC research project or MUSC research in general with its own funds. However, it is important that the costs are properly coded as direct, Facilities and Administrative (indirect) or unallowable. 

Affiliate Supported Direct Costs

An Affiliate may supplement sponsor funding for direct costs when sponsor funds are not adequate to complete the project. In this case, Affiliate funds must be transferred to the department's MUSC cost sharing research account and then the expenditures would be charged to that account. 

Affiliate Supported Facilities and Administrative Costs 

Employees may be engaged in both Affiliate and MUSC administrative activities. These costs may be classified as 

General Administration or 

Departmental Administration.

General Administration costs are those that have been incurred for the general executive and administrative offices of the Affiliate and MUSC. 

Departmental Administration costs are those that have been incurred for administrative and supporting services that benefit common activities of the Affiliate, academic dean's offices, academic departments and divisions, and organized research units. 

General and departmental administrative costs include salary and wages and associated fringe benefits in proportion to the effort expended on each activity. Costs supporting each activity are based on the effort report completed by each individual (see effort reporting below).

General and departmental administrative costs may also include non-personnel costs such as office supplies, postage, general computer supplies and software. These costs must be consistently treated as Facilities and Administrative (indirect) costs as defined in MUSC's Policies and Procedures for Direct and Facilities and Administrative (indirect) Costs.

Unallowable Costs

Affiliates must not charge unallowable costs to accounts designated by MUSC as F&A accounts included in MUSC's Facilities and Administrative (indirect) cost rate calculation. Unallowable Facilities and Administrative (indirect) costs should be charged to [a specified account] for exclusion from the Facilities and Administrative (indirect) cost pools. Unallowable direct costs that would otherwise be allowable to research should be charged to the Affiliates departmental cost sharing research account. These costs may include cost over-runs on sponsored projects.

3.2 Payroll

Payroll will be maintained by each Affiliate or by a contractor selected by the Affiliate to perform payroll services. The department chair will determine the guaranteed faculty salary support from the affiliate for each faculty member.   This guaranteed affiliate salary will then be added to the MUSC salary to calculate the faculty's Institutional Base Salary.  For additional information on this subject, a copy of the procedures to account for combining MUSC and affiliate paid salaries may be obtained from the Office of Grants and Contracts Accounting. 

Salary costs will accumulate on the Affiliate's human resource or payroll system. The Affiliate will bill MUSC monthly for the employee's salary and allowable fringe benefits. MUSC Grants and Contracts Office and the responsible MUSC Departmental Administrator will review the Affiliate's invoice for accuracy and completeness. 

A separate account will be established within the MUSC sponsored project to accumulate Affiliate salary when the MUSC sponsored project account is established. 

3.2.1 Effort Reporting

The guidelines for effort reporting are described in the Effort Reporting Policies and Procedures @ http://www.musc.edu/research/cas/pcs.htm.

All individuals who have salary supported by a sponsored project will receive an effort report certification form either monthly or quarterly from MUSC. The effort report will include only that which is part of institutional effort as described above. Salary for faculty effort on Affiliate projects paid through a consulting agreement with MUSC and the faculty member will not be part of the effort certification report when it is for effort which exceeds MUSC institutional effort.

Affiliate employees who perform Facilities and Administrative (indirect) activities, such as general and departmental administration, for MUSC are not required to complete a monthly or quarterly effort report. However, they must complete an annual effort report that notifies Grants and Contracts Accounting of their administrative activities so that their effort may be included in MUSC's Facilities and Administrative (indirect) cost rate study.

3.2.2 Fringe Benefits

Fringe benefit costs will be identified specifically to each individual and accumulated by the Affiliate. Fringe benefit costs will be billed as a separate component of the individual's salary costs. 

Fringe benefit costs will be reviewed by GCA for reasonableness to charge federally sponsored research projects. Typical allowable fringe benefits include:

FICA and FUTA

Workers Compensation; and

Traditional health insurance and pension plans.

The allowability of employee tuition remission (employee's dependent tuition remission is not an allowable cost) and pension plans administered outside of MUSC should be discussed with GCA. 

3.3 Purchasing Procedures for Sponsored Project Disbursements

3.3.1 General Expense Requests

All General Expense requests will be forwarded to MUSC Purchasing Department and must contain the following information:

1. Complete account number;
2. Authorized signature for the account; and 
3. Complete and accurate description of the goods or services.

3.3.2 Equipment Purchasing Requests

All equipment requests will be forwarded to Asset Management and must contain the same information as the general expense requests. Affiliates should ensure that 1) equipment charged to a sponsored project is necessary for the conduct of that project and 2) equipment charged to the Affiliate designated F&A account is an allowable and allocable cost for that department.

After the equipment is received, MUSC Asset Management will tag the equipment for identification purposes. The Affiliate is responsible for notifying Asset Management of any changes in the use or the location of the equipment.

3.3.3 Travel and Entertainment

All reimbursement requests for travel expenses must be on a MUSC Travel and Expense report form. Travel expenses reimbursed by the sponsored project account must be specifically related to the project. Travel costs not covered by the sponsored project account should be charged to the Affiliate department cost share account. Travel expenses that can be specifically identified to departmental research administration should be charged to the Affiliate designated F&A account.

3.4 Cost Sharing by Affiliates 

An Affiliate incurs a cost sharing obligation when it supports an MUSC sponsored project and the sponsored funding is not sufficient to meet the project's objective. In this case, the Affiliate funds that support the project in the same manner as the sponsored funds, must be accounted for as cost sharing. Funds used for cost sharing would be charged, or transferred in the case of salaries, to the Affiliate's departmental cost sharing account. 

4.0Direct Purchases by Affiliates

4.1 Procurement (Purchasing) Guidelines

The Affiliate must comply with federal procurement guidelines described in OMB Circular A-110 for goods and services charged directly to a federally sponsored project or to the Affiliate designated Facilities and Administrative (indirect) cost account. The Affiliate may use MUSC purchasing guidelines, however, these guidelines include State purchasing restrictions that may not apply to federally sponsored projects. The Affiliate should contact the Purchasing Department or GCA on questions related to procurement restrictions. 

All Affiliates purchasing goods and services for federally sponsored projects must establish policies and procedures which comply with procurement requirements described in OMB Circulars A-110 and A-21. In general, the policies should include:

1. Avoid purchasing unnecessary items;
2. Perform, where appropriate, an analysis of lease and purchase alternatives to determine which would be the most economical and practical alternative;
3. Provide a clear and accurate description of the item for purchase;
4. Ensure that goods and services to be charged to a project account have been authorized by signature of the person(s) having first-hand knowledge that the goods and services will be used on the project to which they are charged;
5. Ensure that no employee, officer, or agent of the affiliate will participate in the selection, award, or administration of a contract if a real or apparent conflict of interest would be involved; and
6. Ensure that all purchasing transactions are conducted in a manner to provide, to the maximum extent practical, open and free competition.

The Affiliate should contact MUSC Purchasing Department regarding any questions to the above guidelines.

4.2 Equipment Purchases

Affiliates may purchase equipment from Affiliate funds to support its research activities. If an Affiliate purchases equipment directly rather than through an MUSC account to support research either exclusively or in conjunction with other activities, e.g., clinical and research, the Affiliate should contact GCA to set up an asset account to depreciate the equipment and allocate the costs to the benefiting activities. 

Affiliates Working Group

Ken Roozen - Team Coordinator
Al Atkins
Susan Barnhart
John Cooper
Velma Graham
Mike Keels
Eric Lacy
Mac Matthew
Tom Moore
Makio Ogawa
Janet Scarborough
John Sutusky

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