Grants Management

Information and management procedures of grants for effort & travel on sponsored programs, grant vs. donation, salary corrections, program income, pre-award Cost, and cost overruns. 

Cost Overruns

A cost overrun occurs when directs costs charged to a grant, cooperative agreement or contract are in excess of the awarded amount. Deficit spending on these funds is inappropriate and should rarely occur. When such an occurrence exists, the deficit must be moved from the grant, cooperative agreement or contract to a departmental account.

The departmental account to which the charges are being transferred should have the same function as the grant, cooperative agreement or contract. Specifically if the deficit fund has a function of research, the departmental fund should have a function of research. The same would follow if the function was instruction or other sponsored.

If the deficit is incurred in anticipation of additional funding, a memo should be prepared by the department accepting the responsibility for the cost overrun should the funding not be forthcoming. See pre-award costs for criteria.

Cost Transfer

• Cost Transfer Policy
• Cost Transfer Explanation and Justification Form - Required for all cost transfers exceeding 90 calendar days.
• Cost Transfer Explanation and Justification Form Example
• P-Card Justification Form - Required for all P-Card reallocations.
• Journal Voucher Form - To correct voucher payments and to reallocate Purchasing Card expenditures.
• Retroactive Distribution Request Form and Partial Salary Correction Form - To correct payroll.
• Grants and Contracts Journal Entry Form - To correct non voucher payments other than payroll including Print Center, Facilities, Library, Postage, etc. (10 lines or less)
• Grants and Contracts Journal Entry Form Example

All expenditures moved on or off a grant or contract fund require the completion of the Grant and Contract Journal Entry form. If the charge is greater than 90 days, the Cost Transfer and Justification form must be completed and accompany the Grant and Contract Journal Entry form.

Frequently Asked Questions

Effort and Travel on Sponsored Programs

With the implementation of Cost Accounting Standards, the University needs to track all expenses associated with Grants and Contracts. This includes not only the charges on the Grant or Contract but all contributed effort or other Cost Share charges. UND must be able to account for all commitments made in a proposal even if we are not required to report them to the sponsor. Therefore be aware that if you are including time and effort for UND faculty or staff in a proposal, they will be required to certify to their effort through our Personnel Activity Confirmation System.

Cost Accounting Standards also apply to reimbursement of travel on grants and contracts. Travel on a grant or contract is allowable if the individual is receiving salary from or documenting effort on that funding source.

• The "Fly America Act" and what it means to your international travel plans.
• Fly America Act - Exception Request Form

Grant vs. Donation

This checklist is intended to assist staff with the appropriate classification of external support. Some judgment will be required to classify an award if items are checked in both areas. Each award must be considered in the whole rather than any single element. This checklist is not intended for direct federal grants and cooperative agreements.

• Budget restrictions or formal financial accounting during the life of the project
• Objectives to be achieved by the use of funds
• Subcontracts (where we are receiving funds as the Subcontractor)
• Prior approvals from sponsor required
• Key personnel are listed
• Period of performance
• Invention/data rights (intellectual property)
• Binding legal relationship (obligates recipient to perform and sponsor to pay)
• Deliverables are part of the agreement
• Reporting requirements (financial or technical)
• The sponsor retains authority to withhold funds pending satisfactory completion of project objectives
• Cost sharing

Gift or Donation

• No contractual requirements. However, objectives may be stated and use of the funds may be restricted to a particular purpose (professorship, scholarship, travel or research in a defined area - e.g. diabetes).
• Award is irrevocable.
• No period of performance is specified.
• Formal financial accounting is not required and there is no requirement to return unexpended funds. However, a report to the donor on the utilization or impact of the gift may be requested.
• The cash is received prior to incurring any expenditures.

Pre-Award Cost

Sometimes it is necessary to have a fund and project established prior to the execution of the final award document. These guidelines outline the requirements for establishing an account that will be used for pre-award costs. It is inappropriate to charge pre-award costs to a non-sponsored account and transfer them later. The following criteria apply:

• The request should contain a description of the sponsor assurance.
• The anticipated award amount.
• The projected start date of the award.
• The department must accept the financial risk in the event an award is not forthcoming, the start date is changed by the sponsor or an acceptable agreement can not be negotiated.

GCA reviews and approves the request and sets up the fund and project.

Program Income

Definition

Gross income/revenue generated from activities associated with or generated by a federally supported activity or earned as a result of the Federal award during the life of the award. Program income is subject to all federal requirement as outlined in the Uniform Guidance 2 CFR 200.307 Program income.

Program income includes but is not limited to:

• Income from fees earned for services performed such as laboratory tests;
• Money generated from the use or rental of real or personal property purchased with project funds;
• Proceeds from the sale of commodities or items fabricated with project funds;
• Proceeds from the sale of software, tapes, or publications;
• Income from the sale of research materials such as animal models;
• Fees from participants attending conferences or symposia; and
• Principal and interest on loans made with Federal award funds.

Program income does not include:

• Interest earned on advances of federal funds;
• Rebates, receipt of principal on loans, credits, discounts, etc. or interest earned on them;
• Taxes, special assessments, levies, and fines raised by government recipients; or
• License fees and royalties on research funded by a federal award.

Treatment of Program Income

• The treatment of program income on federal grants is stipulated by the administrative requirements of the awarding agency. Similarly, non-federal sponsors may have terms and conditions that govern the treatment of program income.
• Treatment of program income earned under contracts is handled on a case by case basis under the terms and conditions of a particular contract.
• Program income earned during a project period shall be retained by the University and is usually treated using one of three methods, depending on policy, sponsor type, and/or terms and conditions of award:
  
  • Additive Method - Program income funds are added to the amount of the award. The additional funds are used to cover allowable expenses and are used by the department to further eligible project or program objectives and used for the purposed and under the conditions of the award.
  • Deductive Method - Program income funds are deducted from the amount of funding provided by the sponsor to complete the terms of the award. Program income mut be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-federal agency did not anticipate at the time of the federal award must be used to reduce the federal award and non-federal entity contribution rather than to increase the funds committed to the project.
  • Matching or Cost Share Method - With prior approval from the sponsor, program income funds are used to meet a cost shared commitment. Only expenses incurred to further project/program objectives qualify as cost share. Costs incurred to generate program income may not qualify. The amount of the federal award remains the same.
  • Additive/Deductive Combination - A portion of program income is added to the award as specified by the awarding agency; additional program income funds are deducted from the award amount. NSF and NIH so far are the only federal sponsors to employ this treatment. 
    
• Generally, for federal awards, the additive method is applied, unless otherwise stated in the terms and conditions of the award or sponsor regulations.
• Generally, for non-research projects and programs, the deductive method is applied to program income unless otherwise stated in the terms and conditions of the award.

Examples of how the National Institute of Health (NIH) and National Science Foundation (NSF) specifically treat program income are outlined below:

• National Institute of Health (NIH) - the additive alternative applies to all grantees unless there is a concern with the recipient activity, and NIH uses special terms and conditions, or the program requires a different program alternative.
• National Science Foundation (NSF) - unless otherwise specified in the grant, program income received or accruing to the grantee during the period of the grant is to be retained by the grantee, added to the funds committed to the project by NSF, and thus used to further project objectives. For additional information regarding NSF's treatment of program income, review the NSF Proposal & Award Policies & Procedures Guide (PAPPG).

Program income is administered through a separate project established under the award (ex. UNDP0XXXXXX) which is activated by your Grant's Officer.

Typically, there are expenses associated with the generation of program income which should then be charged to the program income project. Expenditures that are posted against program income must be allowable and in compliance with terms and conditions of the designated sponsored award. Revenue generated by the activity is also posted by Grants & Contracts Accounting to the program income project. The department must contact Grants & Contracts Accounting to set up the project, and to request the income be added to the program income project as revenue. Because the program income is generated utilizing federal sponsor resources, the revenue generated is the property of the federal sponsor and not the department or University.

Award Closeout

Treatment of Remaining Program Income

In the event program income remains at the end of the award, the additional income is considered part of the award funding. In accordance with sponsor policy; program income earned during the period of the award either remains with, or is returned to, the sponsor.

Program Income After the Project End Date

Unless otherwise specified in the terms and conditions of the award, UND is not required to report program income earned and accrued after the period of support has expired from the sponsor.

Reporting Program Income to Sponsors

Grants & Contracts Accounting reports program income earned and expended to the federal sponsor on the Federal Financial Report (SF-425), the Federal Cash Transaction Report and/or any report format required. Income resulting from royalties or licensing fees are generally exempt from reporting as program income.

Upon completion of the award, the program income account project will be closed out along with the parent award. There are no federal requirements governing the disposition of income earned after the end of the period of performance for a federal award unless the federal awarding agency regulations or the terms and conditions of the federal award provide otherwise.

• If the program income project has a deficit balance (expenses are greater than revenue), the deficit balance will be covered by any surplus remaining on the parent award. If the parent award is fully spent, the deficit balance must be transferred to a fund specified by the department.
• If the activity on the award can be continued in a self-sustaining manner (ex. revenue can cover expenses) at the end of the award the department should contact Tamara Barber to set up a re-charge center.

Documentation

Program income expenses and revenue are subject to audit. Documentation must be maintained and readily available in the event of an audit or other review, this includes but is not limited to:

• Sponsor approval (if required)
• Description of the income-generating activities
• Method used to calculate the rates
• Sponsors stipulation of the rates
• Billing records identifying the budget numbers, customers and amounts charged or invoiced
• Revenue generated
• Any changes in rates

Roles and Responsibilities

Principal Investigators

• Identifies sources of actual and potential program income at the proposal stage; complete required program income sections in the sponsored proposal, as necessary; develop plan for using program income;
• Discuss anticipated program income with the department administrator or business support center;
• Establish rates to use for the sale of goods or services;
• Verifies program income on reports; and
• Addresses account balance issues at final project termination.

Department Administrator/Business Support Center

• Assists Principal Investigator in calculating prices according to this policy; billing properly for products or services which produce program income;
• Reconciles revenue invoiced or submitted against financial reports;
• Monitors program income in account and any limits that are set by the sponsor;
• Deposits income received in accordance with the University's revenue policy; and verifies program income receipt on financial report.

Grants & Contracting Accounting

• Establishes a program income account in the Peoplesoft Grants Module;
• Ensures the proper treatment of program income and that it is properly recorded and accounted for;
• Determines whether program income is reportable or non-reportable;
• Reports program income to sponsor in financial reports; and 
• Advises Principal Investigators, department administrators and business support centers on the proper accounting and tracking of program income.

Award Valuation

Example of Additive

Example of Deductive

Example of Matching

Example of Combination

Purchasing Card (P-Card) Reallocation for Grants & Contracts Activity

P-Card purchases for sponsored projects may be charged directly to the grant fund. When charging directly to the sponsored project in PaymentNet, the following additional chartfields must be completed:

Project No.: UND00xxxxx

PC Bus Unit: UND01

Activity: 1-Activity

P-card purchases reallocated to sponsored funding require the P-Card Justification Form. The completed form must be attached to the Journal Voucher Form.

P-card Statements will continue to flow through Perceptive Content and will need to be reconciled in PaymentNet. In the event an unallowable expense is charged to a sponsored project, the expense will need to be moved to a departmental fund.

Salary

Salary Corrections

The function of the GCA is to properly administer sponsor funding. After the fact salary adjustments are always carefully monitored due to sponsor requirements. If an adjustment is necessary, the correction should be done in a timely manner (within 90 days). No corrections should be requested after effort has been certified on a Personnel Activity Confirmation form.

In order to be consistent with Appointment Revision Forms and have an accurate audit trail for both internal and external auditors, a UND Retroactive Distribution Request and a Partial Salary Correction Form have been developed to assist in submitting the necessary information and can be found on the Payroll website. The form should be used for all Salary Corrections and will require the signature of the Principal Investigator.

Summer Salary

Summer Salary with Grant, Cooperative Agreement or Contract Funding

The following is being provided for faculty with nine-month appointments and being paid on a grant, cooperative agreement or contract during the summer.

• Faculty having nine-month contracts may be employed for up to three full months' salary on research grants or other sponsored program activities provided the sponsoring agency's rules do not prohibit such salary payments and the total cumulative salary being paid to the faculty member from all University sources does not exceed the equivalent of three months salary. Section III Part 5.1.2 of the Faculty Handbook
• This includes salary from grants, cooperative agreements, contracts, teaching responsibilities, and summer graduate research professorships'.
• Summer salary of nine-month faculty should be charged to federal grants at a rate no greater than 100% of the base salary for compliance with Federal OMB Circular A-21, Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions.
• Base salary used for computing summer salary will be the base salary of the faculty member's current academic year appointment (that ends May 15th) divided by the number of months in their academic year contract. This amount would be the monthly salary rate and would be used to calculate the summer salary for the period May 16th through August 15th. For example, a nine-month faculty member with a base salary of $90,000 for the current academic year ending May 15th would have a summer salary rate of $10,000 per month ($90,000/9 months = $10,000).
• The annual increase in base salary, for nine-month faculty, is not effective until August 16th of each year.
• Normal research assignments are not considered overload.
• If you are paying yourself a full summer salary (three full months), your time commitments should reflect a full time work schedule.

Tuition Remission

A When a department funds a graduate assistantship from a grant or contract and pays tuition remission for the student, both the assistantship and tuition remission must be paid from the same grant or contract project number. Graduate Assistant salaries are paid semi-monthly through Payroll and tuition remission is processed through Student Financial Aid at the beginning of the academic term. When the funding source changes for the graduate assistantship for one or more pay periods the department MUST PROCESS a journal voucher to correct the funding source of the tuition remission so it agrees with the salary funding source.

Tuition remission for graduate assistantships on grant or contract funding covers the amount of tuition only. Fees, including continuing enrollment, are normally not an allowable cost on a grant or contract.

Uniform Guidance & Federal Requirements from OMB

The Federal Government has issued new Uniform Guidance (UG) for Federal or Federal Flow Through awards. The Office of Management and Budget has combined Educational Institutions, State and Local Governments, Non Profits and Tribal Governments into one document for dealing with Federal Awards. The new document is the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The Final Guidance was published in the Federal Register on 12/26/13 and will become effective for awards made on or after 12/26/14. The Uniform Guidance supersedes A-21, A-87, A110, A-122, A-89, A-102, A-133 and A-50.

The UG is broken down as follows:

• Subpart A – Acronyms and Definitions
• Subpart B – General Provisions
• Subpart C – Pre-award Requirements & Contents of Federal Awards
• Subpart D – Post Federal Award Requirements
• Subpart E – Cost Principles
• Subpart F – Audit Requirements
• Appendices

1. I Funding Opportunities
2. II Contract Provisions
3. III Indirect Costs (F&A)

Following are some of the changes in the UG.

• Compensation – they have removed the examples that were in A-21, Cost Principles for Educational Institutions, and they have put more emphasis on internal controls. The internal controls and new methods to capture salary and wages charged to Federal awards come with some very high expectations. Currently this will not cause any changes at UND as Effort Reporting is still an acceptable methodology.
• Supplies – it states that computing devices qualify as supplies and are allowable if they are under $5,000. You will also need to make sure the computing devices are allocable (justified usage) to your award.
• Procurement Standards – have become more stringent and we may have to rethink how purchases are made on Federal awards. There is a new Micro-purchase threshold, it is currently set at $3,000, the expectation is any amount $3,000 and greater will require quotes or bids. This will have an impact on purchasing of goods and services and usage of the P-card.
• Conflict of Interest – the guidance requires all Federal agencies to establish a conflict of interest policy for Federal awards. This may become messy if agencies have different policies.
• Expanded Authority – which includes pre-award spending, relief from prior approvals, research terms and conditions are not recognized in the new UG. We are hoping this may be addressed in agency specific guidance but are looking for other avenues to get these administrative burdens reduced.
• Administrative Costs – may be treated as direct costs when they meet certain conditions and they must be in the budget and justified, otherwise they need agency approval.
• Cost Sharing – will only be considered during merit review if it was required by regulation and was in the notice of funding opportunity. Therefore providing cost share will not cause a proposal to be rated any higher.
• Indirect Cost – for entities that do not have an approved Indirect Cost Rate you can provide them a 10% de minimis rate of Modified Total Direct cost. Also pass through entities must recognize the Federally approved negotiated indirect cost rate between the Federal government and the subrecipient.

This listing is not all inclusive but will give you an idea of some of the changes and challenges we face. Further information and clarification will be provided as the issues are worked through and additional information becomes available.