Transcript DS2- NEW POLICIES COST TRANSFERS

DS2 – Departmental
Administrators/ Manager
Training
Overview of UGA Policies and Procedures for
Cost Transfers, Program Income, and Cost
Share in complying with OMB Circular A-21
DS2 - General Information
 Presenter:
LaKeiya Keese, Contracts and Grants Division
([email protected])
Disclosure Web Site:
www.busfin.uga.edu/disclosure
All Policies and Procedures related to the University
Disclosure Statement may be found under the
Disclosure Policies and Disclosure Procedure links
 Policies are effective January 1, 2006
DS2 - AGENDA
 What is the new Cost Transfer Policy?
 What is the new Program Income Policy?
 What is the revised Cost Share Policy?
 Summary
 Questions
What you should gain?
 A better communication between C&G and
departmental administrators/business
managers concerning the new policies.
 A better understanding of the requirements
for a cost transfer.
 A better knowledge of what is considered
Program Income.
 A better understanding of the revised cost
share policy.
DS2- NEW POLICIES
COST TRANSFERS
 What is a cost transfer?

A cost transfer is the movement of expense(s)
between two different university accounts.
 A Journal Voucher
When does this policy apply?
 On expense transfers to a restricted account.
 Does not apply on transfer to or between state
accounts
DS2-NEW POLICIES
COST TRANSFERS
Types of Transfers or Corrections
 Correction of Errors
Correction of clerical errors must be made promptly after errors are
discovered. The transfer must be supported by written text explaining
how the error occurred (i.e., obvious typographical error, etc.).

Unallowable Cost
If the cost is not appropriate on the grant/contract and is to be paid
from state funds or discretionary restricted funds, simply state this fact.
Once a transfer is made, further transfers of the same cost to yet
another (i.e., a third) account are not allowable.

Closely Related Work
When closely related work is supported by more than one funding
source, a cost transfer may be made between those accounts, provided
it is a proper charge and the transfer is supported by a written
explanation.
DS2-NEW POLICIES
COST TRANSFERS
 Cost transfers are exceptional activities and should
not occur frequently. (NIH Grant Policy)
 Cost transfers to or from grants/contracts should
represent corrections and must be made promptly
after the error is discovered.
 The transfer must be supported by a written
explanation of how and why the error occurred and a
certification of the correctness of the new charge.
 The explanation: “to correct error” or “to transfer
to correct project” is not sufficient.
DS2-NEW POLICIES
COST TRANSFERS
Conditions for a Cost Transfer
 The cost is proper and allowable by Sponsor
and University policies.
 Justification for the transfer is documented
on the journal voucher form
 **Transfers are made within 90 days of
discovery.
**The Principal Investigator must personally sign all cost
transfer documents submitted more than 90 days after the
charge’s original posting date.
DS2-NEW POLICIES
What is not considered a cost transfer?
 Monthly redistribution of effort on the initial
PAR is not a cost transfer.
 P-card distribution under the WORKS system
allow charges to post to correct account. This
correction is not a cost transfer.
DS2- NEW POLICIES
COST TRANSFERS
 Appropriate justification entails:
- When the error was discovered
- What the charge was for
- Why the charge was incorrectly made
- How it specifically relates to the
restricted account to which it will be
transferred.
DS2-NEW POLICIES
COST TRANSFERS
 Conditions for not Allowing Cost Transfer
-No benefit to project can be demonstrated
-Cost overruns are being transferred to an
account with budget available
-Charges are being “Parked” on one account
with the intention of being moved to another
DS2- NEW POLICIES
COST TRANSFERS
 No transfers allowed to a restricted account if
expense is more than a year old
**Except in approved extraordinary circumstances.
Can you guess which is correct?
1. Through review of account, discovered
charges that are applied to incorrect
account.
2. To charge to the proper account.
3. The PI was in Germany at the time charges
hit the account, the accountant didn’t know
where to initially put the charge. The
charges belonged to the mentioned grant.
Can you guess which is correct?
The account wasn’t set up yet, so we had to use a
similar account RR000-XXX. Now the award is
here, we want to transfer funds to the correct
account.
6. In recent review of the July account status report,
the order placed to Fisher Scientific for
electroanalytic testing sets were in fact utilized on
account RR250-003. These testing sets were
utilized to accomplish the specific aims of micro
analysis as described in the awarded proposal. The
charge was misappropriate charged to RR250-006
in error due to the similarities between the two
projects.
5.
DS2 – New Policies
Cost Transfers
 Committee Members
 Ted Gragson, Anthropology
 Chicki George, Pharmacy
 Anuj Sinha, Forest Resources
 Peggy Peters, Arts & Sciences
 Kathy Vinson, Cellular Biology
 Debra Rucker, CAES Business Office
DS2- NEW POLICIES
PROGRAM INCOME
 What is Program Income?

Program Income is gross income earned by the
recipient that is directly generated by a supported
activity or earned as a result of the award.
EXAMPLES OF PROGRAM
INCOME
 income from fees for services performed, such as
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laboratory tests.
money generated from the use, sale, or rental of
equipment purchased with project funds.
proceeds from the sale of supplies or equipment
purchased or fabricated with project funds.
proceeds from the sale of software, tapes, or
publications.
income from the sale of research materials such as
animal models.
**Refer to Program Income Policy Hand-out for more examples.
REPORTING PROGRAM INCOME

Reportable program income revenue can be
handled in one of four ways, depending on sponsor
policy:
•
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Matching - income is used to finance the nonsponsor or nonfederal share of the project.
Addition - income is added to the amount allowable
for project costs.
Deduction - income is deducted from the amount
reimbursed by the sponsor.
Add/Deduct - the addition method is used up to an
agency dollar limit. After that point, the deduction
method is used.
EXAMPLE– REPORTING /
AWARDING METHODS
Example: A sponsor awards $100,000 for a
project. The project generates an income of
$30,000.
●
●
Matching: if the University were required to
supply matching funds, e.g., $50,000, the
University would now have to provide $20,000
because the $30,000 in program income is
considered match.
Addition: the total project cost would be
$130,000.
Example, continued
● Deduction: the sponsor will now only fund $70,000 of
the project's costs.
● Add/deduct: if the sponsor limit is $25,000, then
$5,000 will be added to the total project cost, but
$5,000 will be deducted from the sponsor's payment
to reduce it to $95,000. The total amount available is
$125,000.
USING PROGRAM INCOME
 Program income must be utilized in a manner
that is allocable, allowable, and reasonable to
the project. Expenses that are unallowable
on the main project account are also
unallowable on the program income account.
 F&A cost and fringe benefit rates will be
charged on program income at the same rate
as the primary sponsored project.
WHICH TO USE?
The sponsor may address anticipated
program income revenue as part of the
award. For example, conference fee revenue
might be included as part of the awarded
budget. Even if the sponsor does not label
this revenue as “program income,” it is
program income according to University and
federal definitions of the term. If it is
reportable, C&G deposits this revenue into a
program income account.
PROJECT TERMINATION
 Project-related revenue that is earned on or
before project termination is program income
 Project-related revenue earned after project
termination is a departmental sale and
service activity
 Restricted program income account tied to
the sponsoring restricted account will be
closed at the same time as the restricted
sponsored account
DS2 – New Policies
Program Income
 Federal Sponsors
 Use program income funds before sponsor funds.
 If funds remain in the project or program income account
after the project has terminated, balances will revert to
sponsor.
 If the PI wishes to retain these funds, he or she must
write a letter to the sponsor requesting to use these
funds, and outlining a plan for their use.
 Letter must be sent to OSP for endorsement and
forwarding to the sponsors for approval.
 Non-Federal Sponsors
 In many cases, the sponsor does not have an established
program income policy. If the sponsor is silent on this
issue, the income is not reportable and is handled as a
departmental sale or recharge activity.
RESPONSIBILITIES
Principal Investigator
 Identify potential sources at proposal stage, note on
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transmittal and application
Plan for use, prepare budget for program income
accounts
Verify program income on reports
Address account balance issues at project
termination
Request creation of departmental sale account if
income continues to be generated after project ends
Must write a letter to Sponsor if he/she wishes to
retain the remaining funds
RESPONSIBILITIESDepartmental Administrators
 Invoice for product or service
 Deliver cash receipts to C&G for deposits
 Monitor project expenditure levels to spend
program income first
 Follow-up with past due receivables
 Assist PI in verifying program income
RESPONSIBILITIESOffice of Sponsored Programs
 Review proposal and
Transmittal Form for
anticipated Program
Income
 Determine whether
program income is
reportable to sponsor or
non-reportable
 Review PI letters of
request to retain
Program Income funds.
RESPONSIBILITIESContracts & Grants
 Create program income account using the
same F&A rate and summary object codes
as main account
 Monitor levels against any limits set by the
sponsor
 Deposit program income and prepare budget
amendment to increase operating supply
(71000) summary object code
 Report program income as required by
sponsor
RESPONSIBILITIESAccounting

Create departmental
Sales and Service account
for revenue earned after
project termination
DS-2
COST SHARE
 What is cost sharing?

Cost Sharing/Matching is any expenditure
necessary to complete a project that is borne,
not by the sponsoring agency but by the
University.
 What are in-kind costs?

In-Kind costs are borne by an external
organization. Funds do not flow through the
University’s financial system.
DS-2
COST SHARE
What are two types of cost share?
1.
2.
Committed Cost Share can be either mandatory (required by
agency) or voluntary cost sharing, matching, or in-kind funds
quantified in the proposal budget, budget justification, or stated
in the awarding documents.
Uncommitted Cost Share is voluntary cost sharing,
matching, or in-kind funds not pledged in the proposal and
subsequently not stated on award documents. This type of
cost sharing is more than what is agreed to as part of the
award. This is commonly referred to as voluntary uncommitted
cost sharing and does not have to be documented or reported.
DS-2
COST SHARE- POLICY
So, what’s the policy?
 The policy of the University of Georgia is
to limit its cost sharing on externally
funded projects to the amount specifically
mandated in the application guidelines of
the sponsor.
DS-2
COST SHARE- POLICY
UGA will support cost share when:
 All cost shared amounts are specified on the Office of
Sponsored Programs Transmittal Form, and
 Each cost shared amount is approved on the OSP
Transmittal Form by the relevant dean, director, or
department head. Approval signatures are binding
and indicate a willingness to provide cost share
resources in support of the proposed project.
DS-2
COST SHARE- POLICY
 The University places no conditions on third-
party matches. Such cost sharing must,
however, be guaranteed by the offering
sponsor in writing at the time of proposal
submission.
DS-2
COST SHARE
What is not eligible for cost share?
 Unallowable Costs
 Salary Dollars in excess of NIH CAP,
currently $183,500 ($180,100 in ‘05)
 University Facilities (i.e., lab space)
 Depreciation on equipment
 Overdrafts
 In general, if not allowed on the restricted
account, not allowed on the cost share
account
DS-2
COST SHARE- PROCEDURES
 Companion Accounts are established for
each project with committed cost share
 Unique tie in to sponsored account:
Sponsored Project Cost Share
State Funds
10-21-RR163-006
10-21-CR163-006
10-25-GR163-000
10-11-RH163-007
10-11-CH163-007
10-11-GH163-000
10-31-RE163-008
10-31-CE163-008
10-31-GE163-000
25-21-RC279-128
25-21-CC279-128
25-26-GC279-000
10-21-PR696-XXX
10-26-KR696-000
10-21-BR302-XXX
10-26-AR000-000
10-21-MR516-XXX
10-26-LR516-000
DS-2
COST SHARE- PROCEDURES
 Costs must be readily identifiable as
benefiting project and treated identically to all
other operating costs
 Source of funds can be any education and
general fund account (G, A, K or L) except
Hatch-funded accounts
 Source of funds typically departmental
research
NATIONAL SCIENCE
FOUNDATION
 University’s 1% statutory cost share
obligation to NSF flows down to each funded
project (Unsolicited Research)
 Exceptions: solicited proposals, grants for
participant support only or dissertation
 F&A costs will be calculated on these cost
share accounts, but not recorded in the
financial accounting system
RESPONSIBILITIES
Principal Investigator
 Carefully consider cost share before including
in proposal
 Identify source of cost share funds and
ensure they are not federal (unless
authorized by statute)
 Monitor budget and expenditures on cost
share account
 Ensure accuracy of cost sharing/matching
RESPONSIBILITIES
Department Head
 Review and approve all cost share on
proposals
 Explain and approve cost share from private
or state sponsors for related studies
 Ensure accuracy of cost sharing/matching
RESPONSIBILITIES
Departmental Administrator
 Ensure all cost share transactions are
initiated and completed in a timely manner
 Justify and complete any cost transfers prior
to fiscal year-end
 Ensure accuracy of cost sharing/matching
 Obtain adequate documentation from third
parties for in-kind matching commitments
RESPONSIBILITIES
Sponsored Programs
 Ensure proper approvals for cost share
commitments are obtained on transmittal
form
 Review proposals for narrative commitments
of cost share where no budget is quantified
 Review source of cost share funds and
ensure they are not federal (unless
authorized by statute)
 Review cost share arrangements to ensure
that fulfilling the commitment can be
documented adequately
RESPONSIBILITIES
Contracts & Grants
 Create cost share account along with
sponsored account
 Calculate and report F&A costs on cost share
activity when preapproved by sponsoring
agency
 Review cost share expenses for allowability
 Calculate F&A on NSF cost share
 Report cost share/match to sponsoring
agency
DS-2
COST SHARE- POLICY
 Committee Members
 Tonia Gantt, Family & Consumer Science
 Mike Mispagel, Veterinary Medicine
 Mike Padilla, Education
 Diana Shelnutt, Institute for Behavioral
Research
 Kathy Shelnutt, Public Health
 Vicki Smith, CAES Business Office
 Paula Tolbert, Veterinary Medicine
DS2 – Policy Summary
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Effective January 1, 2006
Cost Transfers (JV’s)
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Must be performed within 90 days of charge. Otherwise
will require PI signature
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Must have adequate explanation/justification.
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No transfers to a restricted more than a year old.
Program Income
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Used before sponsored funds or must have approved
authorization, routed through Sponsored Programs, from
sponsor allowing UGA to retain.
Cost-Share
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Try to limit and specify on Sponsored Program Transmittal
Form
DS2- Cost Transfers, Program
Income & Cost Share Policies
Questions???