The fiscal activities relating to a grant account are primarily handled in the Grants Accounting Office. This includes all invoicing and financial reporting to the sponsor as well as all financial audits by external sponsors and auditors.
The Principal Investigator (PI) responsible for the project is accountable for all purchases made with grant money and must follow federal, state, and University guidelines, as well as specific guidelines and restrictions set forth by the granting agency. The PI’s and their departments must monitor project budgets against actual expenditures and correct expenditures in excess of total available funds.
The Grants Accounting Office reviews purchases made with grant money for such guidelines/restrictions. Purchases made not in accordance with grant restrictions are reviewed by Grants Accounting and/or the Office of Research and Sponsored Programs (ORSP). If the purchase is not deemed acceptable, it must be charged to an unrestricted account.
All extension requests and modifications or budget adjustments must be made through ORSP. The department must make these requests in writing and provide adequate justification for the changes.
All internal usage fees must be approved by the Grants Accounting Office.
A cost may be charged to a sponsored agreement only if it meets the following criteria:
- Project costs may be considered reasonable if the nature and amount of the goods or services acquired or applied reflect a prudent person's decision under similar circumstances to incur such costs. (See OMB Circular A-21.C.3 and 2 CFR 200.404)
- Costs must be specific to the project and the proportionate benefit of the cost can be allocated to the project relatively easily with a high degree of accuracy.
- Costs must advance, benefit, or be necessary for the sponsored agreement. Allocable costs are expenses which may be assigned or charged to one or more sponsored project cost objectives, in accordance with the relative benefits received or other equitable relationship. (See OMB Circular A-21.C.4. and 2 CFR 200.405.)
- Treated consistently
- Federal guidelines specifically require consistency to ensure that the same types of costs are not charged to grants as both direct (project specific) and F&A costs (general use items routinely purchased/provided by the University). This requirement ensures that the federal sponsor is not paying twice for the same costs in like circumstances. (A-21.C.11.a. and 2 CFR 200.403)
- University departments must consistently treat costs incurred for the same purpose, in like circumstances, as either direct or F&A costs. Identification with the sponsored work rather than the nature of the goods and services involved is the determining factor in distinguishing direct from F&A costs of sponsored agreements. Where the University treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose, in similar circumstances, must be treated as direct costs.
- For example, the cost of materials supplied from stock or services may be included as direct costs of sponsored agreements, provided such items are consistently treated, in like circumstances, and are charged under a recognized method of computing actual costs and conform to generally accepted cost accounting practices consistently followed by the University.
- Conform with the terms and conditions of the award.
Cost Transfer Guidance
The Principal Investigator and their department are responsible for initiating and processing cost transfers and ensuring that cost transfers are completed in compliance with Uniform Guidance, University guidelines and the sponsored award. Grants Accounting reviews entries and notifies the department of entries that will be reversed due to noncompliance.
Uniform Guidance states what costs can be allocated to an award. These costs must be for work identified for that specific award. The work must benefit that award and must be charged in proportion to its benefit. For example, if a graduate student is working on two separate awards, the student can only be charged in proportion to the work that benefits each award.
Therefore, the reason for the allocation to the award cannot be due to an award being overspent or due to costs not being allowed for a specific award. Overspent balances and unallowable costs must be charged to an unrestricted account.
2 CFR 200.405 Allocable Costs, Uniform Guidance states:
(a) A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost:
(1) Is incurred specifically for the Federal award;
(2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and
(3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart.
(b) All activities which benefit from the non-Federal entity's indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs.
(c) Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non-Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards.
Allowable Cost Transfers to Sponsored Awards
To correct an erroneous charge
To allocate a portion of the cost
Unallowable Expense Transfers to Sponsored Awards
Corrections over 60 days
To utilize the remaining funds at the end of an award
Overspent balances and unallowable costs must be charged to an unrestricted account
- Itemized receipt from the vendor for all transactions
- Justification provided for each transaction