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NIH Modular Budgets
The following message, dated July 12, 2000, is from Rob Barbret, Associate Director Financial Operations, Sponsored Prgs; and Jim Randolph, DRDA Senior Associate Director:
Most of you have now had some experience with the NIH modular application process. In short, modular applications:
- include proposed budgets in increments (modules) of $25,000
- do not include detailed categorical budget information
- include only a brief justification for several of the intended budget items.
Modular applications result in modular awards. Modular awards are issued without direct cost categorical breakdowns. Without these categorical breakdowns there is no specific "approved budget" against which project expenditures can be compared. In fact, for modular awards, the NIH restriction prohibiting significant rebudgeting has been removed, for obvious reasons.
Cost Account Standards Still Apply
Issuing a modular award does not relieve the grantee institution from its
normal financial management requirements. OMB Circular A-21 cost
principles and the applicable Cost Accounting Standards still apply; all
project charges must be allowable, allocable, reasonable, and consistently
treated; and the University must account for costs related to these awards
by category within our standard accounting system.
Note: The modular application format also simplifies the explicit request/approval for A-21 sensitive items. If you anticipate the need for such expenses during the course of the project, and believe they are allowable under current A-21 interpretations, please include those amounts on the form 7471 (or in an e-mail message) along with a specific justification for each A-21 sensitive item and send to Jim Randolph or Terri Maxwell for review. If approved, DRDA will sign and forward the form to the Financial Operations coordinator to be input.
Budget Breakdown Options
With the recent receipt of the first round of modular awards, we are faced
with the question of whether prospective detailed budgets are necessary to
meet our post-award management responsibilities. The answer is no.
The Project Budget Report (PBR) should be viewed as a management tool for both the PI and his/her administrative staff. It should be an assist device to monitor the costs of the project based on the awarded amounts and actual expenses. Accordingly, Sponsored Programs staff in Financial Operations will no longer require the submission of Project Budget -- Form 7471 at the outset of a project. Rather, investigators and their unit representatives will be given the option to provide the degree of categorical breakdown they prefer to enhance their ability to monitor the project. If a breakdown is desired, please communicate the details to Financial Operations with a form 7471 or a e-mail message to the appropriate Financial Operations coordinator. If no breakdown is desired, all the awarded direct cost funds will be shown in the unallocated line. The other major cost categories will show a "0" to permit expenditures in these categories.
History
The modular grant application idea grew out of the apparent disconnect
between the pre-award and post-award processes. Implementation of the
Federal Demonstration Partnership terms (more generically referred to as
Expanded Authorities) resulted in an inconsistency between the pre-award
application process, which required a detailed prediction of expenditures,
and the post-award process, which permitted the grantee to exercise
considerable rebudgeting authority to accommodate the changing needs of the
project. Rather than withdraw our post-award flexibility, NIH created a
pre-award process that eliminated the apparent precision of the detailed
budget.
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