DS2

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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

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DS2 - General Information

• Presenter
• LaKeiya Keese, Contracts and Grants
  Division(lakeiyak_at_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

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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

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What you should gain?

• A better communication between CG 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.

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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

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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.

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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.

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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 charges
  original posting date.

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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.

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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.

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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

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DS2- NEW POLICIESCOST TRANSFERS

• No transfers allowed to a restricted account if
  expense is more than a year old
• Except in approved extraordinary
  circumstances.

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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 didnt know where to
  initially put the charge. The charges belonged
  to the mentioned grant.

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Can you guess which is correct?

• The account wasnt 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.

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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

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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.

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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.

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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.

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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.

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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.

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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.
• FA cost and fringe benefit rates will be charged
  on program income at the same rate as the primary
  sponsored project.

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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, CG deposits this revenue into a
  program income account.

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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

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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.

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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

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RESPONSIBILITIES-Departmental Administrators

• Invoice for product or service
• Deliver cash receipts to CG for deposits
• Monitor project expenditure levels to spend
  program income first
• Follow-up with past due receivables
• Assist PI in verifying program income

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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.

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RESPONSIBILITIES-Contracts Grants

• Create program income account using the same FA
  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

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RESPONSIBILITIES-Accounting

• Create departmental Sales and Service account
  for revenue earned after project termination

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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
  Universitys financial system.

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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.

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DS-2 COST SHARE- POLICY

• So, whats 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.

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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.

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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.

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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

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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
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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

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NATIONAL SCIENCE FOUNDATION

• Universitys 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
• FA costs will be calculated on these cost share
  accounts, but not recorded in the financial
  accounting system

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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

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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

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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

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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

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RESPONSIBILITIESContracts Grants

• Create cost share account along with sponsored
  account
• Calculate and report FA costs on cost share
  activity when preapproved by sponsoring agency
• Review cost share expenses for allowability
• Calculate FA on NSF cost share
• Report cost share/match to sponsoring agency

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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

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DS2 Policy Summary

• Effective January 1, 2006
• Cost Transfers (JVs)
• 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

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DS2- Cost Transfers, Program Income Cost Share
Policies

• Questions???