National Science Foundation (NSF)
The National Science Foundation normally awards grants to various types of organizations. The cost principles applicable to the awardee vary depending upon the type of organization. For instance, commercial firms are normally held to the Federal Acquisition Regulations (FAR) for cost principles (FAR Part 31) and financial management systems that comply with OMB Circular A-110, Subpart C.21 (2 CFR §215.21).
The NSF SBIR/STTR program is usually governed by a special set of NSF regulations (Phase I and Phase II) found on the NSF website. The NSF also allows the applicant for Phase I awards to budget up to $10,000 to set-up a compliant accounting system. As an awardee, it is imperative that your set-up and maintain a compliant accounting system for your NSF Ph I award. With the submission of cost reports, and the final report, the government wants you to declare, under penalty of perjury, that the money spent was in accordance with the proposed budget. The only way to prove this is to have a job cost accounting system, and a properly maintained labor distribution & timekeeping system. You also need to ensure this system was properly maintained throughout the duration of the grant.
The NSF CAP Review
Before a small business receives its Phase II award, Cost Analysis & Pre-Award (CAP) Branch Auditors will need to verify that the Phase I spending was made in accordance with FAR Part 31. Meaning, you must produce a Ph I spending report (as if the award were a cost-type contract, instead of fixed price). If you fail to produce this report correctly, you will not receive the phase II funding!
In order to pass the CAP review, you must certify that this is how you keep your books and records. With ReliAscent’s help, your small business can set up and maintain a compliant accounting system, and pass your CAP review (our experts have a 100% success rate helping clients pass their CAAR/CAP reviews). While most CAP Reviews can be completed in just a few days, it is important to contact ReliAscent® as soon as you have been notified that a CAP Review is required, as you only have a 10-day window to complete the CAP and we often have dozens of companies needing help in the same timeframe. In the meantime, after you have submitted your Ph II proposal, we highly recommend that all grantees begin reviewing the NSF's CAP Review Checklist and compiling the items they need (or knowing what they are expected to have and where to find that information). This will help you prepare for the CAP and can help reduce the cost of a CAP review (most CAP reviews will cost between $4,000 - $8,000 depending on the state of your books and how prepared you are--if you are not already a ReliAscent® accounting client).
NSF SBIR/STTR Ph I Accounting Services & Products
The National Science Foundation has increasingly encouraged SBIR/STTR participants to set-up, and operate, a compliant accounting system even during a Phase I award. This is evidenced by their recommendation in each solicitation to add up to $10,000 as a direct cost under Detailed Proposal Instructions, section 6, Line G6 for reviewing accounting for compliance and/or adding a compliant accounting system. ReliAscent® recommends that Phase I applicants utilize this part of the budget to start a "building block" approach to compliant accounting. The foundation for this program sets the company up to be using a general ledger system that not only segregates direct costs and allocates them to projects (the SBIR being one project) but also sets up the company in compliant timekeeping that is required
by the NSF. The system also identifies what the government and NSF consider "unallowable" costs that they will not pay for. By doing this in Phase I, the awardee is poised for successful bidding on Phase II proposals, successful participation in the Phase II CAP review and then successful accounting during Phase II. It also establishes good accounting habits during the short period of performance of a Phase I award. This approach will help insure the awardee can avoid scrutiny by the Inspector General's office. Contact ReliAscent for Program Pricing