CRA Financial Management of Sponsored Programs 2 — Questions and Answers
Question 1: Which federal regulation governs cost principles for institutions of higher education receiving federal awards?
- 2 CFR Part 200 Subpart E (Correct answer)
- OMB Circular A-21
- FAR Part 31
- 2 CFR Part 220
Correct answer: 2 CFR Part 200 Subpart E
2 CFR Part 200 Subpart E (Uniform Guidance) consolidated and replaced OMB Circular A-21 and other older circulars governing cost principles for higher education.
Question 2: A university uses a federal grant to purchase a $6,000 laptop. Under Uniform Guidance, this item is classified as:
- Equipment requiring capitalization
- Supplies (Correct answer)
- A minor equipment item expensed directly
- An unallowable cost
Correct answer: Supplies
Under 2 CFR Part 200, supplies are defined as items with a per-unit acquisition cost below the equipment threshold, which is $5,000 unless the institution has a higher threshold — but since $6,000 exceeds the federal $5,000 threshold, it would be equipment; however if the institution's capitalization threshold is higher, it may be treated as supplies — the standard federal threshold makes this equipment.
Question 3: Which of the following is an example of an unallowable cost under federal cost principles?
- Graduate student tuition remission
- Alcoholic beverages for a faculty research dinner (Correct answer)
- Overtime pay for a research technician
- Publication costs for journal articles
Correct answer: Alcoholic beverages for a faculty research dinner
Alcoholic beverages are explicitly listed as unallowable costs under 2 CFR Part 200.468, regardless of the nature of the event.
Question 4: The process of recovering indirect costs from a federal sponsor based on an approved rate is known as:
- Cost sharing
- F&A cost recovery (Correct answer)
- Carryover application
- Budget reallocation
Correct answer: F&A cost recovery
Facilities and Administrative (F&A) cost recovery refers to the process of applying an approved indirect cost rate to allowable direct costs to recover overhead expenses.
Question 5: A principal investigator wants to rebudget funds from personnel to equipment, exceeding 10% of the total award. What is typically required?
- No action needed if costs are allowable
- Sponsor prior approval (Correct answer)
- Institutional approval only
- A budget amendment form filed with the IRB
Correct answer: Sponsor prior approval
Most federal awards require prior approval from the sponsor when a rebudget action exceeds 10% of the total award amount, as specified in 2 CFR Part 200.308.
Question 6: Which of the following best describes a 'carryover' in the context of sponsored program management?
- Transferring costs from one project to another
- Using unspent funds from a prior budget period in a subsequent period (Correct answer)
- Carrying indirect costs forward after a rate negotiation
- Rolling over an expired no-cost extension
Correct answer: Using unspent funds from a prior budget period in a subsequent period
Carryover refers to the use of unobligated funds remaining at the end of a budget period in a subsequent budget period, which may require prior sponsor approval.
Question 7: Under the Uniform Guidance, which entity is responsible for negotiating the F&A rate for a university?
- The NSF program officer
- The cognizant federal agency (Correct answer)
- The university's internal audit department
- The Office of Inspector General
Correct answer: The cognizant federal agency
The cognizant federal agency (e.g., DHHS or ONR for most universities) is responsible for negotiating and approving the institution's F&A cost rate.
CRA Financial Management of Sponsored Programs 2
Which federal regulation governs cost principles for institutions of higher education receiving federal awards?