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DS2 – Departmental Administrators/ Manager Training

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 ( lakeiyak @uga.edu )

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DS2 – Departmental Administrators/ Manager Training

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  1. 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

  2. DS2 - General Information • Presenter: LaKeiya Keese, Contracts and Grants Division(lakeiyak@uga.edu) 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

  3. 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

  4. 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.

  5. 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

  6. 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.

  7. 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.

  8. 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.

  9. DS2-NEW POLICIESWhat 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.

  10. 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.

  11. 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

  12. DS2- NEW POLICIESCOST TRANSFERS • No transfers allowed to a restricted account if expense is more than a year old **Except in approved extraordinary circumstances.

  13. Can you guess which is correct? • Through review of account, discovered charges that are applied to incorrect account. • To charge to the proper account. • 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.

  14. 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. • 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.

  15. 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

  16. 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.

  17. 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.

  18. 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.

  19. 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.

  20. 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.

  21. 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.

  22. 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.

  23. 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

  24. 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.

  25. 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

  26. 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

  27. 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.

  28. 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

  29. RESPONSIBILITIES-Accounting • Create departmental Sales and Service account for revenue earned after project termination

  30. 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.

  31. DS-2 COST SHARE What are two types of cost share? • 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.

  32. 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.

  33. 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.

  34. 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.

  35. 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

  36. DS-2 COST SHARE- PROCEDURES • Companion Accounts are established for each project with committed cost share • Unique tie in to sponsored account:

  37. 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

  38. 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

  39. 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

  40. 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

  41. 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

  42. 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

  43. 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

  44. 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

  45. 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

  46. DS2- Cost Transfers, Program Income & Cost Share Policies Questions???

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