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Re: RESADM-L Digest - 15 Mar 2004 to 16 Mar 2004 (#2004-55) R A C S LLC, Res Adm Cons Serv 17 Mar 2004 08:55 EST

Michael,

Chuck is absolutely correct.  This is the same advise
we gave to Joe Flaherty about 4 years ago when he was
with EDC and your audit group didnt listen then.  I
would also agree with Chuck's recommendation to change
auditors.  This is also the same advise we gave Joe.
Unfortunatley no one at EDC at that time agreed with
Joe's advise.  If the audit group doesnt get it they
should get out of auditing organizations that perform
sponsored research and stop looking at auditing 101.

Charlie Tardivo

--- Automatic digest processor <xxxxxx@HRINET.ORG>
wrote:
> There are 3 messages totalling 240 lines in this
> issue.
>
> Topics of the day:
>
>   1. Training grants with 8% indirect cost cap
>   2. Airborne/DHL Services
>   3. Sick Leave Bank
>
>
----------------------------------------------------------------------
>
> Date:    Tue, 16 Mar 2004 08:48:44 -0500
> From:    "Herbert B. Chermside" <xxxxxx@VCU.EDU>
> Subject: Re: Training grants with 8% indirect cost
> cap
>
> Michael, my subconscious has been working on this,
> and the answer popped up!
>
> Your auditors are completely off track.
>
> Federals grants are, by federal law, ASSISTANCE,
> rather than
> procurement.  Their purpose is to assist an
> organization doing what it
> wishes to do, but for which it does not have the
> resources.  By law, the
> federal sponsor is not buying services.  It is
> merely reimbursing you for
> some of your expenses incurred doing something you
> wish to do.  Therefore,
> you cannot be suffering a loss if the grant
> reimburses you for less than
> your total costs.  You merely recover less of your
> expense.
>
> If, in fact, you were selling services to the
> government and recovered less
> than your cost, that could be considered a loss.
> But you aren't selling
> services.
>
> Your organization's purposes  include (from your web
> site), "dedicated to
> enhancing learning, promoting health, and fostering
> a deeper understanding
> of the world."  One of the things you do is to train
> people in certain
> skills, as part of this goal.  It happens that the
> federal government has
> decided through various process (based in statute)
> to ASSIST you in doing
> this training, by reimbursing you for some of your
> costs; because it judges
> that "the public" benefits from your doing this
> training.  In some
> assistance programs the assistance includes
> reimbursement of both  direct
> costs and of indirect costs.  In many cases the
> indirect cost reimbursement
> rate is based on an agreement between your
> accountants and the government's
> accountants; this rate may actually recover most of
> your indirect costs
> (but I bet your accountants can show you reasonable
> indirect costs the
> government refuses to include in that rate!).  It
> just happens that the
> statutory and regulatory authority related to the
> training grants includes
> a rate for indirect cost recovery that is less than
> that "full" rate you
> are allowed to apply to some other projects.
>
> So you are doing something for the public good,
> training, and the
> government has decided to assist you by reimbursing
> some of your costs.  It
> just happens in this case they reimburse a smaller
> portion of those costs
> than if you were doing something else for the public
> good, such as
> conducting research.
>
> Certainly the training program costs you more than
> you get back from the
> government.  But the training program is a cost of
> doing your business, and
> the grant is a reimbursement to help you do it.
> However, no one is
> "buying" that training from you, so the difference
> between cost and
> recovery is part of your cost of doing business but
> NOT a loss.  You never
> had any expectation of recovering 100% of the costs.
>
> If your auditors cannot grasp the difference between
> assistance and
> procurement, you should consider another auditor.
>
> Chuck
>
>
>
> At 10:11 AM 3/10/2004, you wrote:
> >Some time ago I posted a question to the group
> concerning handling of the
> >under-recovery of indirect costs associated with
> training grants.    Our
> >auditors have maintained that the under-recovery
> has to be recognized on
> >the accounting statements as a financial loss, i.e.
> made up from our
> >financial reserves.    I received some information
> that suggested there may
> >be some disagreement on this point.
> >
> >If you have familiarity or experience with this
> issue I would very much
> >like to hear from you.   I also would like to know
> where to look for a
> >definitive answer if there is one.
> >
> >Thanks everyone--
> >
> >Michael Pelletier
> >Associate Director, Office of Sponsored Programs
> >Education Development Center, Inc.
> >(617)618-2227
> >
> >
>
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>======================================================================
>
> Herbert B. Chermside, CRA
> Virginia Commonwealth University
> PO BOX 980568
> Richmond, VA  23298-0568
> Voice:  804-827-6036
> Fax     804-828-2051
> e-mail xxxxxx@vcu.edu
>
>
>
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>
> ------------------------------
>
> Date:    Tue, 16 Mar 2004 10:53:20 -0500
> From:    "Rhodes, Kris E" <xxxxxx@UKY.EDU>
> Subject: Airborne/DHL Services
>
> DHL recently bought out our overnight carrier
> Airborne, since the merger
> we have experienced difficulties with accessing the
> online addressing
> interface.  The problem seems to increase in the
> afternoon.  Has other
> organizations experienced similar problems?
>
> With the exception of the problems with the
> addressing interface, which
> have only surfaced since the merger, we have been
> very happy with
> Airborne's service.
>
> Regards,
>
> __________________________________________
> Kris E. Rhodes, MS CRA
> Associate Director
> Office of Sponsored Projects Administration
> University of Kentucky
> 213 Kinkead Hall
> Lexington, KY 40506
> Phone:  859-257-4826; Fax 859-323-1060
>
>
>
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> ------------------------------
>
>
=== message truncated ===

=====
Charlie Tardivo, Principal
Research Administration Consulting Servics LLC (RACS LLC)
1092 Homewood Drive
Suite 300
Lakewood, OH 44107

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