Policies and Procedures: Contracts and grants
- Budget Revisions (DORED -- CG -- 01 -- 083013)
- Budgeting and Establishing a Fund (DORED -- CG -- 02 -- 083013) (under construction)
- Characteristics of Grants, Contracts, and Cooperative Agreements (DORED -- CG -- 03 -- 083013)
- Compliance Responsibility (DORED -- CG -- 04 -- 083013)
- Cost Sharing (DORED -- CG -- 05 -- 083013)
- Cost Transfer (DORED -- CG -- 06 -- 083013)
- Direct Costs (DORED -- CG -- 07 -- 083013)
- Equipment Acquisition (DORED -- CG -- 08 -- 083013)
- Establishing a Contracts and Grants Fund (DORED -- CG -- 09 -- 083013)
- Establishing an Original Budget (DORED -- CG -- 10 -- 083013)
- Expenditure Classifications (DORED -- CG -- 11 -- 083013)
- Expenditure Guidelines (DORED -- CG -- 12 -- 083013)
- Grant Closeout (DORED -- CG -- 13 -- 083013)
- Indirect Costs (DORED -- CG -- 14 -- 083013)
- Order Of Precedence/Conflict In Regulations (DORED -- CG -- 15 -- 083013)
- Overdrafts (DORED -- CG -- 16 -- 083013)
- Overtime Compensation on Contract and Grant Funds (DORED -- CG -- 17 -- 083013)
- Participant Support Costs (DORED -- CG -- 18 -- 083013)
- Paying Salaries from Sponsored Programs and Institutional Trust Funds (DORED -- CG -- 19 -- 083013)
- Payroll Authorization Cut-Off Dates (DORED -- CG -- 20 -- 083013)
- Record Retention (DORED -- CG -- 21 -- 083013)
- Residual Funds on Fixed-Price Contracts (DORED -- CG -- 22 -- 083013)
- Review and Reconciliation of Award Activity (DORED -- CG -- 23 -- 083013)
- Routing of Purchase and Travel Requests (DORED -- CG -- 24 -- 083013)
- Special Payments from Sponsored Program/Institutional Trust Funds (DORED -- CG -- 25 -- 083013)
- Subcontracting (DORED -- CG -- 26 -- 083013)
- Time and Effort Reporting (DORED -- CG -- 27 -- 083013)
Guidelines for revising the budget of a contract or grant are normally provided in the guidelines of the federal agency making the award. If the contract or grant is with the State of North Carolina or a private organization, the terms are normally stated in the award document. If there are no guidelines or regulations covering a particular situation, the Office of Sponsored Programs will be responsible for providing or obtaining the applicable guidelines.
There are several major points to consider when revising a budget.
- Justify in detail on the budget revision form the reason for the revision.
- Anticipate budget needs and obtain prior approval rather than after the fact.
- Overhead should be adjusted as necessary and if allowable.
- Request for a budget revision must follow the college or school's established procedures for approval.
The Office of Sponsored Programs has been delegated the authority to review and approve budget revisions for most agencies. In cases where agency approval is required to revise a budget, the Office of Sponsored Programs will be responsible for obtaining the necessary approval.
Procedures: University Budget Amendment Request
- The principal investigator/project director requesting a budget revision must complete the Request for Allotment Revision form. The completed form should be forwarded to the Office of Sponsored Programs if the fund was processed through the Division of Research and Economic Development originally.
- The grant administrator in the Office of Sponsored Programs will review the budget revision and if the agency's prior approval is not required or no additional information is needed, the budget request will approved and forwarded to Contracts & Grants to be entered into Banner.
- If the accountant determines that the budget revision cannot be processed as submitted due to insufficient funds or another concern, the accountant will contact the requestor to try to resolve the issue.
- If the issue is resolved, the revision will be entered into Banner. If the issue is not resolved, the Allotment Request will be returned to the requestor.
- Revisions requiring the agency's prior approval will be forwarded by the Office of Sponsored Programs to obtain the sponsoring agency's approval.
- The Office of Sponsored Programs will notify the principal investigator/project director that the revision is being submitted to the sponsoring agency for approval.
This section is being revised and will be available soon.
- Grant: Provide assistance with a few restrictions
- Cooperative Agreement: Provide assistance with substantial involvement between parties
- Contract: Procure tangible goods and services
- Grant: Application kit or guidelines
- Cooperative Agreement: Request for Proposal
- Contract: Request for bid or quote
- Grant: Short, may refer to general conditions
- Cooperative Agreement: Describes involvement, party relationships
- Contract: Long, detailed specs, clauses, regulations, and expected results
- Grant: Usually not required
- Cooperative Agreement: Usually required
- Contract: Requires signature of authorized official
Involvement by sponsor
- Grant: Generally none
- Cooperative Agreement: Substantial involvement
- Contract: May be extensive
- Grant: Flexible
- Cooperative Agreement: Usually allowed
- Contract: Occasionally allowed with restrictions
- Grant: Grantee
- Cooperative Agreement: Varies based upon agreement
- Contract: Contractor
- Grant: Flexible
- Cooperative Agreement: May be specified with flexible dates
- Contract: Specified in contract
- Grant: Generally liberal
- Cooperative Agreement: May be involved
- Contract: Provision in contract
- Grant: Unrestricted
- Cooperative Agreement: May ask to be informed
- Contract: May require prior review and approval
- Grant: Annual summary
- Cooperative Agreement: More frequent (quarterly) reports
- Contract: Detailed reports, may be monthly
The Office of Contracts & Grants, under the direction of the Vice Chancellor for Research and Economic Development, is responsible for the financial and regulatory administration of all contracts and grants awarded to N.C. A&T. This responsibility includes but is not limited to:
- Establish and communicate policies and procedures consistent with federal regulations.
- Exercise budgetary control of Contracts & Grants fund.
- Provide assistance and guidance to university faculty and staff for the financial management of contracts and grants.
- Maintain an auditable effort-reporting system.
- Prepare and submit financial reports and invoices.
- Make timely deposits of contract and grant receipts from sponsors and follow up with sponsors on delinquent payments.
- Submit final financial reports to funding agencies.
- Submit property reports to the Office of Sponsored Programs.
- Review transactions for allowability and reasonableness of costs.
- Perform annual sub-recipient monitoring in accordance with OMB Circular A-133.
- Coordinate formal audits or financial reviews of contracts and grants by sponsoring agencies.
Guidance for the administration of Contracts & Grants is provided from several sources. The primary authorities are:
- Federal Office of Management and Budget Circular OMB A-21,
- Federal Office of management and Budget Circular OMB A-110,
- Individual regulations from various awarding agencies,
- Periodic policy guidance from the State of North Carolina,
- Budget manual, Office of State Budget and Management, and
- North Carolina A&T State University Policies and Procedures
The distinction between contracts and grants depends only on whether the sponsor or grantor designates the governing document as a "grant" or as a "contract."
- Grants: Funds received from outside sources for the purpose of supporting the public service, research or instruction functions in a specific area of mutual interest to the institution and the grantor. The governing documents furnished by the grantor at the time of such grant awards usually designate the funds as "grants" and specify the degree of accounting and reporting obligations on such funds.
- Contract: Funds received by the institution for specific services rendered to agencies, corporations, or others under negotiated contracts. These contracts are formal written documents that specify the rights and obligations of the parties involved.
- Cooperative Agreements: The appropriate relationship between the federal government and a recipient when both of these conditions are satisfied: A.) The principle purpose of the relationship is to transfer money, property, services, or anything of value to the state or local government or other recipient to accomplish a public purpose. Such purpose may be categorized by support or stimulation authorized by federal statue, rather than acquisition, by purchase, lease, or barter, of property or services for the direct benefit or use of the federal government; and B.) substantial involvement is anticipated between the executive agency, acting for the federal government, and the state or local government or other recipient during performance of the contemplated activity.
This statement explains cost sharing, the different types of cost sharing and the proper documentation for each type. It also contains the procedures that are followed to verify that cost sharing commitments are being fulfilled and to periodically obtain cost sharing data from campus for financial reporting purposes. Also included in this statement are examples of costs that are not allowable as cost sharing.
- Cost sharing is the portion of total project costs not borne by the sponsor. Other terms also used to express more specific methods of cost sharing include matching, third-party and in-kind contributions.
- Mandatory cost sharing is the term used when cost sharing is required by a sponsor.
- Voluntary cost sharing is the term used when cost sharing is included in proposals but is not required by the sponsor. It is the University's policy not to volunteer cost sharing.
Once cost sharing has been included in a proposal and that proposal has been accepted by the sponsor, the University has an obligation to provide the cost sharing proposed, regardless of whether it was mandatory or voluntary. The terms required or committed cost sharing are used to describe this obligation.
Post-award situations that require cost sharing
Cost sharing may become a requirement through reductions in award amounts (as compared to what was requested in a proposal) unless comparable reductions are made in the scope or objective of the work. The reasons for reductions in award amounts should be clearly documented during negotiations with sponsors to avoid unplanned or unnecessary cost sharing. Examples of reasons for a reduction in an award amount include an original cost estimate being too high, the scope or objective of the proposal being reduced, or the sponsor wanting the University to bear more of the project cost.
Principal investigators and other University employees who spend significant time on sponsored projects that is not reimbursed by the sponsor must document this as cost sharing. This is true even if their time was not included in the proposal or award agreement as cost sharing. Federal regulations require that significant cost sharing, regardless of whether it was required by the sponsored agreement, be documented to ensure accurate financial reporting.
Cost sharing also may be required to maintain the committed level of effort on sponsored projects when re-budgeting results in significant decreases in salaries of the principal investigator or other personnel funded from the project that could impact the outcome of the work.
University cost sharing must meet these criteria to be allowable:
Cost sharing must be verifiable from University records.
Expenditures documented as cost sharing must be necessary and reasonable for the proper and efficient accomplishment of project objectives.
Expenditures documented as cost sharing must be allowable according to federal cost principles (See "Allowable Expenses" and "Unallowable Costs").
Cost sharing cannot be used or reported more than one time. If cost sharing benefits more than one project, it should be prorated in an equitable manner among the projects (e.g., based on the percentage of each project's cost total to the combined projects' costs).
Expenditures supported by a federal project may not be used as cost sharing for another federal project unless specifically approved by the awarding agency.
Mandatory cost sharing must be disclosed in approved budgets when required by the agency.
If the requested funding is reduced then there should be a corresponding reduction of the cost sharing on a pro-rata basis. This should occur during negotiations and before official acceptance of the award.
The following are unallowable as cost sharing:
- Academic support positions charged outside of the instruction budgets (101), such as deans.
- Space, unless specifically leased or constructed for the award.
- Equipment or supplies unless specifically purchased for the award.
- Any cost incurred outside of the award period.
- Equipment usage unless specialized rates are developed and applied uniformly.
- Cost that are unallowable in accordance with federal cost principles identified in OMB Circular A-21 (i.e. advertising , entertainment, stipends and scholarships for research awards, etc).
Documentation requirements for cost sharing
For documentation and reporting purposes, the University has classified cost sharing into the following categories:
- Effort: The effort of University employees for whom the University will fund salaries and related fringe benefits for the time that they work on a sponsored project.
During the proposal process, the University Employee Labor Cost Sharing (DOR-ELCS) form is completed to tentatively identify individuals who will contribute a portion of their time to the project. Once an award is funded, the DOR-ELCS form is completed to identify the approved individuals contributing to the project. Time and Effort Reports are required to document the percent of effort contributed to the project. The total effort reported on the reports must be 100% inclusive of teaching, sponsored program cost charged directly to an award and applicable cost sharing. (See Time and Effort statement for more information). It is the responsibility of the principal investigator/project director to assure that the committed level of effort for cost sharing is being met.
- Non-salary matching total direct cost: This includes supplies, travel, equipment, tuition, and other total direct costs (except salaries and fringe benefits) that the University will fund.
Documentation such as purchase orders, vendor invoices, journal vouchers, payment authorizations, travel authorizations, and travel reimbursements should be maintained by the principal investigator/project director.
In certain circumstances, a charge may be posted to an incorrect fund. When this happens, a correcting journal entry is required to move the cost to the correct fund. This policy explains how the need for a cost transfer arises, the requirements of a cost transfer journal entry, and the method for processing cost transfers through the accounting systems.
This policy is issued to assure the integrity of the University’s charges for salaries, wages, goods and services on sponsored projects transferred to and/or from a sponsored project after an initial charge elsewhere in the University’s accounting system. Additionally, this policy is issued to ensure compliance with sponsor terms and conditions, regulations and University policies.
A cost transfer is a transfer of expenditure from one project to another project after the expense was initially charged to another sponsored project or non-sponsored project, inclusive of reassignments of salary, wages and other direct costs. When the project receiving the charge is a sponsored grant or contract, special rules apply as discussed later in this guide.
In some instances, a cost transfer is unavoidable. The purpose of this cost transfer guide is to provide information to principal investigators, department administrators, project managers, departmental chairs, and deans concerning government cost transfer policies. Cost transfers should not be prepared or approved by departmental personnel if the requirements in this guide are not met.
Reason for concern
Transfers that are frequent, tardy or inadequately explained, particularly on grants with overruns or unexpended balances, raise questions about the propriety of the transfers and the reliability of the university's accounting system and internal controls.
Cost transfers between similar or related projects
The appropriate allocation of costs among similar or related projects should be made when a transaction is initiated in accordance with the University's Direct Cost. The cost transfer guidelines summarized in the first section of this document apply to cost transfers whether projects are related or not related. If a cost transfer is not allowable, the fact the projects are related cannot be used as a reason to make the transfer allowable absent written authorization from the appropriate federal funding agency(s).
Consequences if a cost transfer does not meet government requirements
As required by federal regulations, the University utilizes external auditors to conduct extensive reviews of federal grant and contract expenditures, which includes reviews of cost transfers. In the event that a cost transfer does not meet government requirements, the dollar amount of the transfer will be disallowed, and the area responsible for the grant will have to reimburse the grant for the amount of the disallowed cost transfer. If a significant number of cost transfers do not meet government requirements, the auditors may extrapolate the disallowances and recommend disallowing a percentage of all cost transfers for a particular department, college/school, or the entire University.
- All requests for cost transfer should be submitted directly to the Office of Contracts and Grants.
- Cost transfers must be prepared and submitted within 90 days from the end of the calendar month in which the transaction appears on the award. Cost transfers made after this period require prior approval by the Director of Contracts and Grants and will be permitted only under extenuating circumstances.
- All cost transfers must be accompanied by written documentation, including an adequate explanation of the specific nature of the error and/or any other reason for the cost transfer, the way in which the error occurred, the reason why the transfer was not processed in a timely manner if 90 days or more have passed since the original charge, and how the situation will be prevented going forward. The explanation must be sufficient for an independent reviewer (i.e., a federal auditor) to understand the transfer and conclude that it is appropriate. According to federal regulations, "An explanation which merely states that the transfer was made 'to correct error' or 'to transfer to correct project' is not sufficient." Thus, any cost transfer documentation containing such an explanation will be returned to the department.
- Cost transfers to correct an error must be completed regardless of timeframe if the correction benefits the sponsor.
- Transfers of costs to any sponsored project fund are allowable only where the direct benefit to the project account is charged. An overdraft or any direct cost item incurred in the conduct of one sponsored project may not be transferred to another sponsored project account merely for the sake of resolving a deficit or an allowability issue. Cost transfers should not be used as a means of managing awards.
- All cost transfers must also contain the following certification statement, signed by the principal investigator: "I certify that the cost transferred is an appropriate expenditure for the sponsored grant/contract charged and that the expenditure complies with the terms and restrictions governing that sponsored grant or contract." The certification statement must be countersigned by the Dean before it can be processed in the accounting system.
- N.C. A&T expects that costs directly charged to federally sponsored awards received by the University will comply with the cost principles outlined in Office of Management and Budget Circular A-21.
Additional documentation requirements
Each cost transfer request must contain all documentation necessary for processing a routine journal entry within the accounting system. Such documentation includes a copy of the inception-to-date report (FRRGITD) and transactions detail report (FGRODTA) containing fund number, account code, transaction description (both fields), document code, transaction date, etc. Within the documentation, the expense to be transferred should be clearly identified.
Salary cost transfers must contain:
- The name and employee identification number of the individual whose salary distribution is to be corrected,
- The period of time covered by the correction, and
- A copy of the payroll action form or time sheet showing the original salary distribution for the time period covered by the request and the corrected salary distribution.
Cost transfer requests will be returned to the principal investigator if:
- The documentation required for the transfer, as described above, is missing;
- The cost to be transferred was incurred outside the effective dates of the sponsored grant/contract receiving the charge;
- The sole purpose of the transfer is to move deficit from one sponsored grant/contract to another;
- The sole purpose of the transfer is to "use up" unspent funds from a sponsored grant or contract; or
- The certification statement from the principal investigator and/or Dean is missing.
The 90-day cost transfer time limit applies when transferring expenses to a sponsored grant or contract. No time limit exists for removing expenditures from a federally sponsored grant or contract. If inappropriate expenditures are discovered on federal projects, they must be removed without regard to time limits.
In certain circumstances, a transfer may be appropriate even though the 90-day deadline is not met. These transfers will be reviewed under scrutiny and may need justification
Summary of cost transfer guidelines
- All cost transfers to sponsored projects should be made within 90 days of the original charge. Any cost transfer removing expenses from a sponsored grant or contract must be made without regard to this time limit. In certain unusual circumstances, a cost transfer may be appropriate after the 90-day deadline; such transfers will be subject to increased scrutiny and additional approvals.
- The cost to be transferred must be shown to benefit and be allowable under the terms of the sponsored grant/contract receiving the charge.
- Written justification and documentation must accompany the cost transfer request. See Section II for specific requirements
Cost transfers will be returned to the principal investigator if:
- Inadequate documentation is provided with the transfer request;
- The request for cost transfer does not meet the time deadline (see A above);
- The sole purpose of the transfer is to move a deficit from one sponsored grant/contract to another;
- The purpose of the transfer is to "use up" unspent funds from a sponsored grant or contract; or
- The dean's certification is missing.
The criteria for charging costs to federal contracts and grants is based on the following predetermined groups of allowable and unallowable costs as identified in OMB Circular A-21, Section C. Cost Principles. Expenses grouped in the allowable cost category may be charged to contracts and grants based on the policy restrictions of the awarding agency. Expenses grouped in the unallowable cost category may not be charged to contracts and grants unless the awarding agency provides specific approval.
The following guidelines are not all inclusive; in each case, the budget as approved by the sponsor in making an award, any policy restrictions of the sponsor, and applicable state regulations must be consulted.
Advertising and Public Relations
- "Advertising" costs means the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, exhibits, and the like.
- "Public Relations" includes community relations and means those activities dedicated to maintaining the image of the institution or promoting understanding and favorable relations with the community or public at large or any segment of the public.
- The only allowable advertising costs are those solely for a) the recruitment of personnel required for the performance by the institution of obligations arising under the sponsored agreement when considered in conjunction with all other recruitment cost as set forth in section J37 of OMB Circular A-21, b) the procurement of goods and services for the performance of the sponsored agreement, c) the disposal of scrap or surplus materials acquired in the performance of the sponsored agreement except when institutions are reimbursed as a predetermined amount in accordance with Attachment N, OMB Circular No A-110; or d) other specific purposes necessary to meet the requirements of the sponsored agreement.
- The only allowable public relations cost are: a) costs specifically required by the sponsored agreements, b) costs of communicating with the public and news media pertaining to specific activities or accomplishments that result from performance of sponsored agreements, or c) the cost of conducting general liaison with news media and government public relations officers, to the extent that such activities are limited to communication and liaison necessary to keep the public informed on matters of public concern such as notices of contract/grant awards, financial matters, etc.
- Costs incurred for long distance telephone calls, telegrams, radiograms, postage, and the like.
Compensation for Personal Services
- Compensation for personal services must be based on current or accrued salary of an employee rendering services during the period of performance. For academic personnel, charges for work performed on contracts or grants must be based on the individual's regular compensation in an academic year calendar.
- An article of non-expendable personal property having a useful life of more than one year and an acquisition cost equal to or greater than $5,000. General purpose equipment expenditures are unallowable as direct cost except when approved in advance by the sponsoring agency. Special purpose equipment expenditures are allowable as direct costs provided that units with a cost of $5,000 or more are approved in advance by the awarding agency.
- Employer contributions or expenses for retirement, Social Security, employee insurance, and worker's compensation insurance. Benefits must be granted in accordance with established policies for payroll and benefits.
Insurance and Indemnification
- Costs of insurance required or approved pursuant to the contract or grant.
Maintenance and Repair
- Costs incurred for necessary maintenance, repair or upkeep of property (including government property unless otherwise provided for) that neither add to the permanent value of the property nor appreciably prolong its intended life but keep it in operating condition.
Material and Supplies
- Costs incurred for purchased materials, supplies, and fabricated parts directly related to the contract or grant.
Meetings and Conferences
- Costs of meetings and conferences when the primary purpose is the dissemination of technical information. This includes the cost of meals, transportation, rental or facilities, and other items incidental to such meetings or conferences. Expenses must be within the approved contract or grant budget and follow established University procedures.
- Costs of preparing disclosures, reports, and other documents required by the contract or grant to the extent necessary to make such invention disclosures are allowable. In accordance with the clauses of the sponsored agreements relating to patents, costs of preparing documents and any other patent costs, in connection with the filing of a patent applicable where title is conveyed to the government, are allowable.
Printing and Binding
- The costs of printing, production, reproduction, and binding of technical reports and deliverables.
- Costs of professional services rendered by the members of a particular profession who are not employees of the institution are allowable if specified in the proposal budget and approved by the sponsoring agency. Costs of legal, accounting, and consulting services, and related costs incurred in connection with the prosecution of claims against the federal government, are not allowable. In addition, the use of outside consultants for research activities is governed by Administrative Memorandum 104. Principal investigators must familiarize themselves with the restrictions governing outside consultants during the proposal budget preparation process.
Public Information Services
- Costs of news releases pertaining to specific research or scientific accomplishments are allowable when they result from the performance of sponsored agreements.
Rearrangement and Alteration
- Costs incurred for ordinary rearrangement and alteration of facilities. Special arrangement and alteration costs incurred specifically for the project are allowable when special work has been approved in advance by the sponsoring agency.
Rental Cost of Buildings and Equipment
- These costs are allowable subject to approval by the awarding agency during the proposal process.
Scholarships and Student Aid
- The cost of scholarships, fellowships, and other programs of student aid are allowable only when the purpose of the sponsored agreement is to provide selected participation and charges are approved by the sponsoring agency.
Specialized Service Facilities
- The cost of University lab or recharge centers involving the use of highly complex or specialized facilities such as electronic computers, wind tunnels, and reactors are allowable if the Comptroller has approved the rates for specialized services charges and facilities.
- Costs incurred for freight express, postage, and other transportation services relating either to goods purchased, in process, or delivered.
- Travel costs are the expenses for transportation lodging, subsistence, and related items incurred by employees who are in travel status on official contract or grant related business. Domestic travel costs are allowable when permitted by the sponsored agreement.
- All travel must meet the requirements as established in the University Travel Policy for each trip.
- Foreign travel is defined as any travel outside the United States, its territories and possessions, and Canada. Foreign travel costs are allowable only when the travel has received specific prior approval if required. In addition, the Office of Contracts and Grants must approve each foreign trip.
The following costs are considered unallowable charges to a contract or grant unless prior written approval is received from the sponsoring agency.
Advertising and Public Relations
- All advertising and public relations costs other than those specified as allowable in the section above.
- Costs of convocations or other events related to instruction or other institutional activities, including the cost of displays, demonstrations and exhibits, and the costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events;
- Salaries and wages or employees engaged in setting up and displaying exhibits making demonstrations and providing briefings;
- Costs of promotional items and memorabilia, including models, gifts, and souvenirs;
- Costs of advertising and public relations designed solely to promote the institution.
- The cost of alcoholic beverages.
- Costs incurred for or in support of alumni activities and other similar services.
- Any losses, whether actual or estimated, arising from non-collectable accounts and other claims, related collections costs, and related legal costs.
Commencement and Convocation
- Costs incurred for commencements and convocations.
- Contributions to a contingent reserve or any similar provision made for events, the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening.
- The cost of entertainment, including amusements, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities are unallowable).
Fines and Penalties
- Costs resulting from violations or failure of the University to comply with federal, state, and local laws and regulations are not allowable.
- Costs incurred for typewriters, file cabinets, desks, etc., computers are not allowable unless prior approval is received by the sponsoring agency.
- Costs incurred before the effective date of the sponsored agreement, whether or not they would have been allowable thereunder if incurred after such date, are not allowable unless approved by the sponsoring agency.
- Costs incurred for intramural activities, student publications, student clubs, and other student activities are not allowable, unless specifically provided for in the sponsored agreement.
It is the responsibility of each school and/or department to establish policies and internal controls that will assure compliance with the guidelines and the policy restrictions of the sponsoring agency.
This statement provides guidance in accounting for equipment purchased from sponsored awards.
- Equipment is nonexpendable, tangible, personal property having a useful life of more than one year and acquisition costs of $5,000 or greater. This threshold is consistent with the definition of equipment referenced in OMB circulars A-21 and A-110, University Accounting Procedures, and UNC-GA. For contracts and grants awarded prior to July 1, 1996 the threshold for equipment was $500 or more. Note that equipment can further be categorized as general purpose or special purpose equipment.
- Supplies are expendable property having a useful life of one year or less or an acquisition cost of less than $5,000.
- Equipment Fabrication is the term used when multiple items that could be classified as supplies (some having acquisition costs of $5,000 or less) are purchased to create/fabricate an integrated unit of equipment having a total value of $5,000 or more. In these instances, the individual purchase should be budgeted and accounted for as equipment. Fabrication does not include the replacement or upgrading of existing equipment or components. These cost items are to be budgeted and charged as supplies. Note that if an award does include the fabrication of equipment, the college, school, or unit is responsible for requesting a change from the standard equipment code to one for fabrication.
University purchasing procedures
The principal investigator and/or assigned personnel assisting in the acquisition of the equipment must adhere to University purchasing procedures (See Purchasing Procedures).
Screening before purchase
The Office of Management and Budget Office of Management and Budget Circular A-110, Subpart C Section 44 requires equipment screening to avoid purchasing unnecessary items. This screening must be undertaken before issuing a purchase requisition for equipment. The University has established these guidelines for equipment screening:
- The principal investigator is required to screen on a University-wide basis for availability of equipment costing $25,000 or more.
- The equipment screening form (Form EPS1) should be completed and forwarded to the University Property Management Office.
- Upon receipt of the signed EPS1 from Property Management, the requisition can be entered into Banner. The completed EPS1 must be attached to the purchase requisition to confirm compliance for audit purposes.
Additional screening requirements may be necessary for specific agencies. Please see the award documentation for more detail.
Government-furnished property (equipment)
This category includes:
Equipment acquired under federal contracts governed in accordance with FAR 45.5, Government Property, and
Property furnished by the federal government to the University/principal investigator.
Equipment transferred to the University and governed according to FAR 45.5 must be recorded in the Capital Assets Management System. A copy of correspondence related to the transfer of government property to the campus is to be forwarded to the Office of Contracts and Grants.
In most cases, title to federally owned property that is used by the University during the award period vests with the Government. Title and disposition of government property is to be administered in accordance with FAR 52.245-5 Alternate I. Disposition and final title vestment instructions are provided by the Office of Sponsored Programs.
The principal investigator and the appropriate support personnel are responsible for maintaining and updating records of equipment accountable under each award.
Disposal of equipment
Equipment purchased under a contract or grant may provide for title to vest with the University. The conditions or agreement cited in the award document must be reviewed to determine whether the government intends to retain title. For projects in which title to equipment vests with the University, normal University regulations related to trade, transfer or disposition must be followed.
For sponsored awards that provide for the title to remain with the government, prior written approval must be received from the appropriate funding agency before the trade, transfer or disposition of equipment.
Note: OMB Circular A-110 allows the federal government to transfer and otherwise provide disposition instructions on all items of equipment. The equipment will be appropriately identified in the award or otherwise made known to the recipient. Disposition instructions will be issued by the sponsoring agency within 120 days of receipt of a final equipment inventory.
Equipment not in approved proposal/budget
Formal approval is normally required from agencies (occasionally delegated to the Office of Contracts and Grants) before purchasing equipment if not listed in the approved proposal/budget. The principal investigator may want to compile a list of all anticipated equipment for a one-time approval to reduce the paperwork and time involved in approving each piece of equipment separately.
Office of Naval Research (ONR)
Complete DD Form 1419 for equipment purchased from sponsored awards administered under the cognizance of ONR. Contact the Office of Sponsored Programs for instructions for completing the form.
The Office of Sponsored Programs is responsible for requesting Banner fund and grant numbers for all awards and related funds processed through the Division of Research and Economic Development. A request to establish a new Banner fund not processed through OSP must follow the request to establish a fund process.
- Once the Office of Sponsored Programs has a signed award document, a grant administrator will enter the information into the RAMSeS database.
- The assistant director of Contracts and Grants or departmental designee will complete information in the Banner system and will notify the reporting department that a fund code and grant code need to be assigned.
- The reporting department will assign the fund and grant codes.
- The assigned codes will be forwarded to the assistant director of Contracts and Grants.
- The assistant director will forward the grant and fund codes to the grant administrator in Sponsored Programs.
- The grant administrator will notify the principal investigator/project director of the assigned grant and fund codes.
- A start-up conference will be scheduled to include the principal investigator/project director, grant administrator and Contracts and Grants accountant.
- The conference will cover deadlines for submitting reports, the process for requesting budget revisions and extensions as well as any special terms and conditions.
- For awards or funds not processed through the Division of Research and Economic Development, the individual requesting a new account will complete the Request for Fund form, obtain the appropriate signatures, and submit the forms to the Office of Contracts and Grants. Information from the sponsor or donor must be included with the Request for Fund Form.
The detailed budget for a contract and grant account should reflect the expenditure account code breakdown as submitted and approved by the awarding agency and coincide, where feasible, with the University's Banner account code structure (see appendices).
The Office of Contracts and Grants will input the original budget data into the banner financial system based on the award, original proposal, and any negotiated budget changes.
Automatic budget reallocation used for contracts and grants
The current system provides for contracts and grants to be budgeted at the major account code level, i.e. 72300 with the exception of line items 61100, 61200, 61300 and 6500. Expenditures must be at the detailed level, such as 72300. Since the budget is at the major level, the expenditures are at the detailed level, and the Banner systems does not reallocate budgets as expenditures are made, the major level will have a positive balance and the detailed account codes will have negative balances.
The State of North Carolina has a standard used for the coding and classification of expenditures. This listing is in the Chart of Accounts.
Purchase requests should be coded using the account codes as outlined in the established budget. If there is a question about which object code should be used for a particular purchase, contact the Purchasing Department. If the object code identified is not in the established budget, a budget revision should be submitted to Contracts & Grants.
This section provides guidelines and procedures for allowable charges to contracts and grants.
General guidelines and applicable policies
- Because of their nature, contract and grant expenditures must comply with the authorities detailed in this section.
- The basic accounting principles for reimbursing institutions of higher education for costs associated with sponsored contracts and grants are specified in OMB Circular A-21. These principles establish the two following cost groupings for the reimbursement of cost associated with contracts and grants and agreements:
- Direct costs include the salaries and wages of those working on the project, and expenses for equipment, materials and other related costs of the project. In summary, direct costs are those expenses particular to a sponsored project. The direct costs discussed on the "Direct Costs" page are considered allowable; however, these costs must be necessary and utilized in support of the sponsored project to which the costs are charged. It is always the responsibility of principal investigators to support and justify all direct costs charges to a contract or grant in the event of a state or federal audit.
- Indirect costs are incurred for common or joint objectives and therefore cannot be readily identified with a particular sponsored project. These are defined in more detail on the "Indirect Costs" page. Virtually all nonfederal funding sources rely on the University to apply these basic principles to their agreements.
- The criteria for charging expenses to federal contracts and grants is based on following predetermined groups of allowable and unallowable costs as identified in OMB Circular A-21 Section C, "Cost Principles for Educational Institutions." The tests of allowability of costs under these principles (OMB Circular A-21) are:
- They must be reasonable. A prudent person would have purchased the item and paid the price.
- They must be allowable to sponsored agreements under the principles and methods provided therein.
- They must be consistently treated. Expenses for similar purposes must be treated the same way under like circumstances.
- They must be allowable. The expense must be allowable or not specifically excluded as specified by government regulations. Expenses grouped in the unallowable cost category may not be charged to contracts and grants unless the awarding agency provides specific approval. The aforementioned guidelines are not all inclusive. In each case, the budget as approved by the sponsor in making an award and policy restrictions of the sponsor must be consulted.
To formally notify the principal investigator, grant accountant, and grant administrator in writing that the award end date is within 30 days and identify processes to complete.
The principal investigator is responsible for the following before the end date of an award to ensure a timely and successful grant closeout:
- Providing the status of a no-cost extension if applicable
- Preparing and submitting Human Resources actions terminating personnel or identifying another funding source
- Reviewing completed time and effort reports for accuracy of payroll charges
- Reviewing open encumbrances and verifying that all invoices are going to be paid before the end date
- Taking inventory of unused supplies and contacting the grant accountant concerning the disposition of unused supplies
- Verifying that all travel expenditures have been submitted, received, and reimbursed according to University policies
- Terminating or identifying a new funding source for purchasing cards (P-Cards) related to the award
- Verifying that sub-recipients have completed their scope of work and submitted all invoices to be paid, verifying that all invoices have been paid and that cost sharing has been properly documented
- Reporting cost sharing to the Office of Contracts and Grants
- Reviewing and verifying the accuracy of charges.
- Identifying and submitting in writing to the grant accountant expenditures to be moved and the funding source to charge
- Submitting documentation for the final project report
- Notifying appropriate parties of the project completion, including the Institutional Review Board if human subjects are involved, the Institutional Animal Care and Use Committee if animals are involved, and all personnel working on or assisting with the project
The principal investigator, grant accountant, and grant administrator will receive written notification via email or campus mail that the award will end within 30 days. The Pre-Closeout Checklist will be included.
- The principal investigator is required to complete the Pre-Closeout Checklist
- The completed form must be returned to the Grant Accountant within 10 days of receipt. Failure to return the forms will result in immediate notification to the supervisor, chairperson, and/or dean.
Indirect costs are costs incurred by the University that are not readily assignable to a contract or grant. These costs include building and equipment use charges, utilities, general administration, sponsored programs administration, and departmental administration.
General guidelines and applicable policies
The requirements for including indirect costs on each contract, grant, or agreement and the application thereof is provided by the Office of State Budget and Management. A full or partial waiver of indirect costs can be made only when either of the two following circumstances exists and can be demonstrated in writing:
- Statutory or administrative restrictions prohibit indirect costs claims.
- Extraordinary circumstances exist that may jeopardize the state's best interests.
All indirect costs awarded to the University will be budgeted and charged to each contract, grant and agreement. The Office of Contracts and Grants will not charge indirect costs in an amount that exceeds the budget unless there are excess direct costs funds available and approval of the awarding agency has been obtained. Further, indirect cost funds may not be used for direct costs unless such funds are available and approval has been given by the awarding agency.
State policies and procedures are the first set of regulations that we must adhere to. If the State of North Carolina has a regulation that prohibits an action, then that action is unallowable on a sponsored agreement.
Individual agency or program guidelines must be adhered to if there is a particular cost or action that is identified as unallowable. This applies even if the cost is allowable under state regulations and/or OMB Circular A-21 guidelines.
- Principal investigators/project directors should be aware of University policies and procedures, federal regulations, and the terms and conditions applicable to their awards. If questions arise, the principal investigator/project director should consult their accountant.
- The accountant will make a determination, consulting the director of Contracts and Grants and other support personnel as necessary.
Expenditures in excess of funds awarded are unallowable. Also, federal, state and private funding agencies do not allow transferring costs to other accounts to meet deficiencies caused by overruns, to avoid restrictions, or for other reasons of convenience. However, these transfers are allowable if the costs can be charged to an account that has the same technical goals and the costs have contributed to those goals.
The school's designated administrative personnel and the principal investigator are responsible for ensuring that over-expenditures do not occur or to transfer these costs if an account becomes overspent. Any account reflecting over-expenditures must be reconciled and the excess costs transferred within 60 days after the date of occurrence. If this transfer is not made within 60 days, the Office of Contracts & Grants will transfer the costs to the department's operating budget or discretionary fund.
In cases where a continuation award or additional funding is in process, the Office of Contracts & Grants will allow an over-expenditure if proof of additional funding is provided.
Federal regulations require that recipients of federal funds adhere to certain cost accounting standards. Costs charged to federal funds must be allowable, allocable and consistently charged.
Charging overtime to federal funds for employees whose regular duties are related to and paid from state, university or other non contract and grant funds is a violation of cost accounting standards. For some federal agencies, overtime is not an allowable cost under any circumstance.
General guidelines and applicable policies
- The only allowable overtime charges to federal awards are for individuals whose regular salary and duties are related to and paid by that particular federal award (examples below).
- Supervisors are responsible for identifying an allowable funding source before allowing the individual to work overtime.
- Overtime payrolls that violate this policy will not be approved for payment until an allowable funding source is identified.
- Janice is the project assistant for federal grant A. Her duties and salary are related to and paid 100% from federal grant A. She works two hours overtime. Janice’s overtime would be an allowable charge to the federal grant if agency regulations allowed overtime.
- Tammy is an administrative secretary in the Bioengineering Department Her primary duties are related to and paid from state funds. Dr. Stephanie has a grant from NASA. She asks Tammy to work overtime to perform tasks for her grant. Tammy works overtime and the overtime payroll is submitted to charge the cost to the NASA grant. This is an unallowable cost to the federal grant. The employee has worked and must be paid. The cost will have to be paid from a non-federal funding source.
- Sarah is working with Dr. Cathy on two research grants. Her duties and salary are 75% on grant A & 25% on grant B. Sarah works overtime during the week. The duties are related to grants A & B. Allowable overtime cost should be pro-rated 75% to grant A and 25% to grant B.
- Dr. Cathy wants Sarah to continue her regular duties for grants A & B and to work overtime to perform tasks related to federal grant C. The overtime cost would be an unallowable cost for grants A, B & C. The overtime will have to be paid from a non-federal funding source.
Participant support costs include stipends, subsistence, travel costs, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, and training projects. These costs are identified in the budgets at the time of proposal submission.
- Participant support costs should be specifically identified in the proposal and budget narrative.
- Funding agency guidelines should be followed relative to requesting indirect costs on participant support costs.
- Indirect costs are not charged on National Science Foundation participant support costs.
- If any agency restricts the rebudgeting of participant support costs or indirect costs are not allowed, a separate Banner fund and budget must be established.
- If agency prior approval is required to rebudget funds from participant support costs to other categories of costs, the principal investigator/project director should request approval through the Office of Sponsored Programs.
- Expenditures for participant support costs follow normal University procedures based on the type of expenditure.
Paying Salaries from Sponsored Programs and Institutional Trust Funds (DORED -- CG -- 19 -- 083013)
For an individual to be paid on a sponsored program, these conditions must be satisfied:
- The individual or applicable position must be identified in the award.
- The necessary payroll authorization forms must be submitted.
- The period of employment must be within the award period.
- The hiring of the individual must conform to state regulations as identified on the Human Resources website.
- The level of effort for the individual should agree with the level of effort identified in the budget.
- There must be sufficient funds in the budget.
If there is not an established position, the principal investigator/project director must submit a request to establish the position to Contracts & Grants.
The Contracts & Grants accountant will review the request and if approved, forward it to the Department of Human Resources. (See Human Resources: Establishing a Position)
For established positions, there are several classifications.
- EPA employees may receive the following forms of compensation on sponsored programs if approved in the budget:
- Academic Salaries: Funds paid during the academic year (Account Code 61110).
- Summer Pay: Funds paid during the summer months. All federal agencies allow payment of three months of salary except the National Science Foundation, which allows only 2 months (Account Code 61118). The pay rate for summer salaries cannot exceed the academic pay rate.
- An Internal Salary Authorization form is submitted to pay EPA employees.
- The salary authorization form must be approved and signed by the principal investigator/project director, department chair, and dean.
- The approved form will be forwarded to the Office of Contracts & Grants.
- The Contracts & Grants accountant will approve the form and submit it for further processing.
- If there is a problem with the form, the accountant will return the form with a transmittal letter identifying the concern.
- Time and effort reports must be certified.
- Clerical and technical support positions are classified as SPA employees.
- An E-1 form is submitted to pay SPA employees.
- Steps 3 through 6 as outlined for EPA employees above are followed.
- If a graduate student is paid a flat rate, an internal salary authorization form is prepared charging the cost to object code 61112.
- Graduate students paid by the hour are charged to object code 61451, and a Student E-1 form is submitted.
- The appropriate forms must be approved before the student begins work.
- Time and effort certifications are not required for required for graduate students paid by the hour charged to account code 61451.
- Time and effort certifications are required for graduate students who are charged to account code 61112.
- Undergraduate students are paid by either by the hour or a flat rate.
- A Recommendation for Student Employment form is prepared using account code 61450 for students paid by the hour.
- Steps 3-6 as outlined for EPA employees above are followed.
- Students must sign daily time sheets.
- Time sheets and payroll form are submitted monthly to the Office of Contracts & Grants according to an approved schedule.
- Time sheets and payroll forms are required for undergraduate students paid on object code 61450.
- Time and effort reports are not required
- Undergraduate students who are paid a flat rate are charged to account code 61452.
- Time and effort reports are required for students paid a flat rate.
- Temporary employees are technical and clerical employees not in established positions.
- Temporary employees are paid an hourly rate.
- The Recommendation for Temporary Employment form is prepared using object code 61410.
- The form should indicate temporary as employment status and an hourly rate must be specified.
- Steps 3-6 as outlined in Section A above are followed.
- Time sheets and payrolls should be submitted to Human Resources according to the approved schedule.
- Time and effort reports are not required.
The payroll authorization determines where an employee's salary will be officially charged for a specific period of time. The delay or the failure to submit payroll authorizations contributes to many problems relating to financial reporting and budgets on contract and grant funds. Timely processing of the payroll authorization is necessary to correctly code payroll charges to the proper accounts.
These cutoff dates have been established for payroll authorization processing.
- EPA: By July 24 each year.
- EPA: By December 1 each year
- EPA: By April 20 each year.
- EPA: No later than two weeks after the BD119 is submitted internally to Academic Affairs/Salary Administration.
- SPA: By the deadline established by Human Resources.
Retroactive payroll authorizations
- EPA, SPA and temporary employees: Retroactive payroll authorizations are allowable if they involve a new fund that the employees have been working on that was not established at the time the original authorizations were submitted. This must be done within 30 days after the new budget code is established.
Budget code changes
- EPA, SPA and temporary employees: For funds that are funded annually and new budget codes are assigned each year, payroll authorizations reflecting the new budget code are to be completed within 30 days of receipt of the new fund number.
Federal guidelines require that records related to sponsored programs be retained for three years after submission of the final financial report. If the project is engaged in an audit or litigation, records must be maintained for three years after resolution.
Principal investigators are required to retain copies of these items and supporting documentation until submission and acceptance of the final financial report:
- Purchase requisitions and supporting documentation
- PC Card reconciliations
- Travel reimbursements
- Check requests
- Inventory records
- Salary authorizations
- Other Human Resources information
- Time and effort certifications
- Cost sharing certification
Office of Sponsored Programs
Sponsored Programs will retain these documents in RAMSeS:
- Proposal documentation
- Award documentation
- Closeout documentation
Office of Contracts and Grants
Contracts and Grants will retain copies of these items and supporting documentation until submission and acceptance of the final financial report:
- Project files
- Billings and invoicing
- Required financial reports
This policy provides guidelines to principal investigators and project directors for the expenditure of residual funds resulting from fixed-price contracts.
- A separate trust fund account will be established for funds remaining on fixed-price contracts.
- The account will be utilized by the principal investigator/project director to benefit the program.
- Any funds remaining on a fixed-price contract must be expended within 18 months after the residual account has been established. The account cannot be established until the final fiscal report has been filed with the agency and all funds have been received.
- The expenditure of funds from the established trust fund account is restricted to non-personnel costs within state guidelines. The purchase of office furniture, carpet, draperies, and office adornments is prohibited. However, special consideration for personnel costs may be requested through the appropriate vice chancellor.
- All expenditures from the established trust fund will be monitored by the Office of Contracts & Grants.
- Any funds not expended in the 18-month period will revert to a general scholarship fund.
The principal investigator/project director is responsible for monitoring the project and all related expenditures. All expenditures must be made according to the approved plan and budget. Contracts and Grants accountants are responsible for reviewing assigned accounts and notifying the principal investigator/project director of discrepancies and concerns.
The principal investigator/project director or a designee will review the expenditures posted in Banner Finance monthly to determine the accuracy and status of transactions posted. Discrepancies should be reported to the assigned accountant in Contracts and Grants.
The principal investigator, project director or account manager is responsible for securing appropriate goods and services to satisfy the terms and conditions of the award, gift, or activity and that are within the award period.
- Purchase and travel requests must be approved by the principal investigator/project director or the responsible account manager.
- Requests should follow the normal university purchasing and travel guidelines.
- Purchasing will forward requisitions on contracts, grants, and trust funds to the assigned accountant for approval.
- The accountant will approve or disapprove requisitions based the award, allowability of costs, and university policies and procedures and availability of funds.
- Approved purchase requisitions are signed by the accountant and returned to Purchasing.
- Requests that are not approved are returned to the PI with an explanation.
- Scholarship requests should be submitted directly to the Financial Aid Office.
- It is the responsibility of the principal investigator/project director to submit only request for goods and services that are allowable for the award and are within the award period.
- Requests for goods, services, and travel that are found to be unallowable or outside the award period will be charged against the principal investigator/project director's departmental state fund budget if allowable or to other departmental funds.
- Disallowed costs will be reported to the principal investigator/project director, department head, dean, and vice chancellor.
Work on a sponsored program should be performed via release time efforts. Sponsored program funds are not intended to be used to supplement salaries by allowing employees to earn extra income but rather to replace salary sources to augment the effort contributed to a particular award. Therefore, request for special payments on sponsored programs will be granted only in extreme circumstances. Work must not be allowed before approval by Contracts & Grants or the employee authorizing the employment will be held personally liable for the special payment. (See University Policy on Supplemental Compensation.)
Special payments are:
- Amounts paid to EPA employees for work during the academic year that is outside of their normal scope of duties. This work is normally performed after the work hours and/or on weekends. (Work on a sponsored program during the summer where the employee is paid at their normal pay rate is not special payment; this is summer employment).
- Special awards or honors that EPA and SPA employees receive such as Research Excellence Awards, Outstanding Teacher, etc., that must be paid on the payroll.
- The principal investigator/project director will prepare the appropriate payroll authorization indicating that it is a special payment. Written justification will be included with the authorization.
- The Internal Salary Authorization form should be prepared for EPA personnel. The E-1 form should be completed for SPA personnel.
- The completed forms should be submitted to Contracts & Grants for verification of funds and allowability of costs.
- If funds are available and the costs are allowable, the authorization will be approved.
- Approved Internal Salary Authorizations are forwarded to the Vice Chancellor for Academic Affairs. Approved E-1 forms are forwarded to Human Resources.
- Authorizations not approved by Contracts & Grants are returned to the account manager with a letter of explanation
Subcontracting is the transfer of a significant portion of work on a sponsored agreement to a third party. Subcontracting requires agency approval and is usually identified in the proposal.
Procedures: Approved subcontractors
Approved subcontractors: Those identified in the budget of a funded sponsored program award.
- Principal investigator/project director works with the post awards officer in the Division of Research and Economic Development to develop a subcontract.
- A subcontract is submitted to the awardee for approval.
- A copy of the completely executed subcontract is distributed to the project director requesting that a purchase order be submitted.
- The principal investigator/project director submits a purchase request for the amount of the award charged to object code 1995.
- The awardee will submit invoices in accordance to the terms and conditions of the award.
- The invoices will be forwarded to the principal investigator/project director for approval.
- Invoices forwarded to principal investigators/project directors should be reviewed, approved and returned promptly.
- If there is a reason to withhold payment to a subcontractor, the principal investigator should notify the subcontractor and the Office of Contracts and Grants.
- Approved invoices will be returned to the Contracts and Grants accountant for submission to Accounts Payable for payment.
- If there are serious issues that need to be resolved before payment can be made, the matter will be discussed with the Director of Contracts and Grants and the Vice Chancellor for Research or a designee.
- At no time should payment be withheld without sufficient discussion and documentation.
Procedures: Unapproved subcontractors
Unapproved subcontractors: Those not specifically identified in the approved award budgets.
- Principal investigators/project directors must contact the post awards officer in the Division of Research and Economic Development to determine whether the request to work with or engage the services of a third party constitutes subcontracting.
- If it is determined that the request is for subcontracting, the post awards officer will submit a written request to the sponsoring agency for approval of the subcontractor.
- If agency approval is received, the steps identified for approved subcontractors above will be followed.
It is the policy of N.C. A&T to comply with all federal guidelines and regulations for certification of effort commitments on sponsored projects. This policy describes the procedures for:
- Budgeting effort commitments to sponsored projects
- Charging salaries to sponsored project accounts
- Reporting actual effort expended on sponsored projects
- Making changes to effort commitments
- Certifying the accuracy of effort reports.
This policy applies to all faculty, students and staff who have salaries paid from sponsored projects and/or effort committed to sponsored projects.
The portion of a total sponsored project’s costs that are paid by N.C. A&T, rather than by the sponsor. Cost sharing of direct expenditures represents a redirection of departmental or institutional resources to support sponsored research activities. There are three types of cost sharing:
- Mandatory committed cost sharing is required by the sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor.
- Voluntary committed cost sharing represents resources offered by N.C. A&T when it is not a specific sponsor requirement.
- Voluntary uncommitted cost sharing represents university faculty effort that is over and above that which is committed and budgeted for in a sponsored agreement.
In the case of mandatory or voluntary committed cost sharing, when an award is received in which cost sharing was proposed, the cost sharing becomes a binding commitment that N.C. A&T must provide as part of the performance of the sponsored project.
Institutional base salary (IBS)
The total compensation received by an individual from N.C. A&T for research, instruction and other activities. IBS does not include supplemental payments, fringe benefit payments, reimbursed expenses, or consulting fees paid directly to an individual by an external party.
NIH salary cap
By law, a salary charged directly to an NIH grant or cooperative agreement (including a sub-award) cannot exceed a certain specified amount, currently $179,700. Additional guidance on the cap can be found here.
The proportion of an individual’s time devoted to a particular project or activity, based on the total amount of time spent on activities for which the individual receives compensation from N.C. A&T. The sum of all effort in a specific time period may not exceed 100%.
Externally funded activities in which a formal written agreement, i.e., a grant, contract, or cooperative agreement, is entered into by N.C. A&T and by a sponsor. A sponsored project may be thought of as a transaction in which there is a specified statement of work with a related, reciprocal transfer of something of value.
General guidelines and applicable policies
Preparation and Submission of Proposal Budgets
In proposing budgets for sponsored projects, the principal investigator assures N.C. A&T and the potential sponsor that effort commitments are represented as accurately as possible. Proposal budgets should delineate the complete committed cost of the project, identifying the amount requested from the sponsor and other costs that N.C. A&T must provide (e.g., cost sharing).
As part of the institution’s annual budgeting process, each faculty member should work with his/her department chair and Dean (as appropriate) to develop a “budget” for his/her expected effort commitments, including time spent for research, service, education, and administration.
Minimum Effort Commitment
Faculty must commit some effort (at least 1%) to each sponsored project on which he/she serves as a principal investigator or key personnel, including foundation or industry agreements.
Maximum Effort Commitment
Research faculty may not commit more than 90% effort on sponsored projects, so as to allow reasonable effort for other commitments, such as service, research administration, and other administrative/educational duties. Department chairs, division heads, and other faculty members in leadership roles should limit their effort commitments on sponsored projects to a level that allows for the increased administrative responsibilities required by their role as a chair, division head or leader. It is expected that administrative responsibilities would constitute at least 20% of the effort of these individuals.
Voluntary Committed Cost Sharing
Voluntary committed cost sharing (committing effort without requesting salary) is not allowed on federal grants and other funded agreements without authorization from the Vice-Chancellor of Research and Economic Development. If approval is not granted, then all effort commitments on sponsored projects must provide for a paid effort amount equal to the committed effort amount for all faculty listed as a PI, co-PI or key personnel on the project up to the amount allowable by the NIH salary cap, e.g., if 50% effort is committed on the grant application, 50% salary must be requested in the proposal budget.
Certification of Effort Reports
Effort reporting is completed on an after-the-fact basis for fall semester, spring semester and summer. The Office of Contracts & Grants will prepare the reports. The reports will be distributed within 45 days after the end of the reporting period. Certified reports are due back in Contracts & Grants within 30 days after receipt.
The distribution of salary costs and cost sharing should reasonably represent the activities being performed by the faculty and staff.
Two original signatures are required on all Time and Effort Report certifications. The report must be certified by individuals with first-hand knowledge of the actual expended effort. The individual must sign his/her report, and it must be certified by the principal investigator/project director (PI/PD). In the event that the individual is no longer with the university, his/her immediate supervisor may sign and PI/PD must sign. If the individual/immediate supervisor and the PI/PD are the same, the Dean is required to sign.
Effort Reporting Accuracy
Providing inaccurate effort estimates on the effort report form, whether knowingly or through carelessness or mismanagement, may result in mischarges of costs to the federal government and other sponsors. Each individual with responsibility for effort reporting must thoroughly understand the proper method of completing effort report forms and ensure effort percentages reported on the forms reasonably reflect actual effort expended during the reporting period.
Penalties for Non-compliance
The Provost and Dean will be notified via e-mail of all delinquent certifications not returned to Contracts & Grants by the designated deadline. Continued failure to return the required forms will result in Contracts & Grants recommending to the Vice Chancellor for Business and Finance and the Vice Chancellor for Research and Economic Development that expenditure processing on active awards be suspended until effort reporting is current. Contracts & Grants will notify delinquent faculty members and their department chairs of pending actions via e-mail before the anticipated action.
All faculty and staff who are required to complete effort reports for sponsored projects must complete a training program on effort reporting principles.
- OMB Circular A-110 - Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
- OMB Circular A-21 - Cost Principles for Educational Institutions