DS2 – Departmental Administrators/ Manager Training Overview of UGA Policies and Procedures for Cost Transfers, Program Income, and Cost Share in complying.

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/disclosureAll 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 POLICIESCOST 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 POLICIESCOST 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 POLICIESCOST 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 POLICIESCOST 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 POLICIESCOST 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 POLICIESCOST 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?

5. 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.

DS2 – New PoliciesCost 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 POLICIESPROGRAM 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

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:

• Matching - income is used to finance the non-sponsor 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 METHODSExample: 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 PoliciesProgram 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.

RESPONSIBILITIESPrincipal Investigator Identify potential sources at proposal stage, note on

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

RESPONSIBILITIES-Departmental 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

RESPONSIBILITIES-Office 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.

RESPONSIBILITIES-Contracts & 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

RESPONSIBILITIES-Accounting

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. 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.

2. 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 CostsSalary Dollars in excess of NIH CAP,

currently $183,500 ($180,100 in ‘05)

University Facilities (i.e., lab space)Depreciation on equipmentOverdrafts 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

RESPONSIBILITIESPrincipal 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

RESPONSIBILITIESDepartment 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

RESPONSIBILITIESDepartmental 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

RESPONSIBILITIESSponsored 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

RESPONSIBILITIESContracts & 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

Effective January 1, 2006 Cost Transfers (JV’s)

Must be performed within 90 days of charge. Otherwise will require PI signature

Must have adequate explanation/justification. No transfers to a restricted more than a year old.

Program Income Used before sponsored funds or must have approved

authorization, routed through Sponsored Programs, from sponsor allowing UGA to retain.

Cost-Share Try to limit and specify on Sponsored Program Transmittal

Form

DS2- Cost Transfers, Program Income & Cost Share Policies

Questions???