Activities During the Grant Lifetime
Activities During the Grant Lifetime
Sponsored Project Expense Budget Period Allocation Considerations
Period of Performance/Budget Period: The total estimated time interval between the start of an initial award and the planned end date, which may include one or more funded portions, or budget periods. Though some projects may span multiple years, the sponsor terms and conditions determine whether the period of performance and budget period is the same or are broken down into smaller segments. At the University of Kentucky, the Period of Performance is defined by the Project From/To Date, while the budget period is defined by the Budget From/To Date.
Sponsored Project expenses should be incurred within the budget period of each award. That means services should be performed in full, travel should occur, equipment and supplies should be utilized, and faculty and staff should complete the scope of work within the budget period.
Below are examples of situations that may arise throughout the life of the project that may require allocation of expenses or sponsor approval due to budget period limitations. Consult with your College Grants Officer regarding options should the following or similar situations arise:
- Service contracts required for the scope of work that crosses the budget period of the award.
- Delivery of purchased items are delayed and received later than expected and could impact the ability to fully utilize within the budget period.
- Equipment needed to complete the scope of work is no longer functioning towards the end of the budget period and budget is available for purchase of replacement equipment or maintenance.
- Travel period crosses the budget period of the award.
- Travel costs need to be posted prior to the budget period of the account.
Please note, expenses should be incurred based on requirements of the award. Expenses incurred on other sources of funding should not be utilized, then supplies replenished at the end of the award when budget is available. If supplies are needed towards the end of the award, volumes purchased should be adjusted accordingly or allocated to ensure items purchased will be utilized to perform the scope of work within the budget period.
Further information required to determine allowability of expenses on a sponsored project can be found in Uniform Guidance under §200.403 Factors affecting allowability of costs and residual supply inventory information under §200.314 Supplies.
Federal Costing Guidelines for Sponsored Projects
Office of Management and Budget Circular A-21 established the principles for determining costs applicable to grants, contracts and other agreements with educational institutions. The principles are designed to provide that the federal government bear its fair share of the total cost, determined in accordance with generally accepted accounting principles, except where restricted or prohibited by law. The basic considerations for determining the allowability of costs are:
- Costs must be reasonable. This is defined as the action a prudent person would have taken under the circumstances.
- Costs must be allocable to sponsored agreements under the principles and methods described in A-21. Any costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements to clear an overdraft or for any other reasons of convenience.
- Costs must be given consistent treatment through the application of generally accepted accounting principles appropriate to the circumstances.
- Costs must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.
UK's "Costing Guidelines for Sponsored Projects" establishes the processes that UK uses to meet the requirements of OMB Circular A-21. The Costing Guidelines provide additional detail on allowable and unallowable costs and exceptions that exist based on UK's implementation of the A-21 requirements. The Costing Guidelines also provide detail on acceptable accounting practices.
Explicitly Unallowable Costs on Federal Agreements
Federal regulations identify specific categories of costs that cannot be charged, directly or indirectly, to federally sponsored agreements.
The following list covers costs specifically designated as unallowable in OMB Circular A-21. This is a quick reference. The specific wording in A-21 should be referred to for greater detail.
- Advertising & Public Relations Costs
- Purchase of promotional items. Production and distribution of magazines, newsletters, radio and TV programs, direct mail, exhibits, unless directly related to the performance of a sponsored project.
- Expenses for employee and subject recruitment are allowable
- Alcoholic Beverages
- Alumni/ea Activities
- Costs incurred for, or in support of, alumni/ae activities and similar services are unallowable.
- Bad Debts
- Any losses, whether actual or estimated, arising form uncollectible accounts and other claims, related collections costs, and related legal costs, are unallowable.
- Commencement and Convocation Costs
- All costs related to commencement and convocation are unallowable.
- Contingency Provisions
- Contributions to a contingency 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, are unallowable.
- Directly Associated Unallowable Costs
- Costs that are directly associated with the unallowable costs are also unallowable. A directly associated cost is defined in federal regulations as any cost which is generated solely as a result of the incidence of another cost, and which would not have been incurred had the other cost not been incurred.
- An example of a cost that is directly associated with an unallowable cost is the cost of airfare to go to another city for the purpose of entertaining business associates, or for fundraising. Since entertainment and fundraising costs are expressly unallowable under OMB Circular A-21, and the airfare would not have been incurred had the unallowable costs not been incurred, the airfare is an unallowable directly associated cost.
- Costs of entertainment, including amusement, 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 of, or failure of the institution to comply with, Federal, State, and local or foreign laws and regulations are unallowable, except when incurred as a result of compliance with specific provisions of the sponsored agreement, or instructions in writing from the authorized official of the sponsoring agency authorizing in advance such payments.
- Fund raising
- Costs of organized fund raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions, are unallowable.
- Goods or Services for Personal Use
- Costs of goods or services for personal use of the institution's employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
- Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, legislation, or similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activity.
- Losses on Other Sponsored Agreements or Contracts
- Also known as Cost Overruns
- Any excess of costs over income under any other sponsored agreement or contract of any nature is unallowable. This includes, but is not limited to, the institution's contributed portion by reason of cost-sharing agreements or any under-recoveries through negotiation of flat amounts for F&A costs.
- Medical Liability Insurance
- Only allowable on research programs to the extent that the research involves human subjects.
- Membership in any civic or community organization or country club or social or dining club or organization are unallowable. As is membership in business, technical, and professional organizations.
- Selling and Marketing
- Costs of selling and marketing any products or services of the institution are unallowable.
- Student Activity Costs
- Costs incurred for intramural activities, student publications, student clubs, and other student activities, are unallowable, unless specifically provided for in the sponsored agreements.
- Pre-Agreement Costs
- Costs incurred prior to the effective date of the sponsored project, whether or not they would have been allowable thereunder if incurred after such date, are unallowable unless specifically set forth and identified in the sponsored agreement, or approved through prior approval procedures.
Meals on Sponsored Projects
Meals can be charged to a sponsored project, provided the sponsor does not explicitly prohibit such costs, if the following conditions are met:
- The meeting includes a majority of outside/external participants, AND
- The meal is served at a formal meeting being conducted in a business atmosphere where the provision of the meal serves to maintain the continuity of the meeting, AND
- The activity at which the meal is being served is significant and integral to the goals of the project
Documentation that supports meals as an allowable charge in an audit may include:
- Meeting invitation that describes meeting purpose
- Meeting agenda
- Attendee roster
- Description of the activity associated with the meal in the proposal narrative and/or budget justification
Business meals may not be charged as project costs when individuals decide to go to breakfast, lunch, or dinner together when no need exists for continuity of a meeting. Such activity is considered to be an entertainment cost.
NIH Grants Policy Statement: Part III: Terms and Conditions for Specific Types of Grants, Grantees, and Activities - Allowability of Costs/Activities
When certain meals are an integral and necessary part of a conference (i.e., a working meal where business is transacted), grant funds may be used for such meals, as qualified under "Travel". Where meals and/or lodgings are furnished without charge or at a nominal cost (e.g., as part of the registration fee), the proposed per diem or subsistence allowance must take this into consideration.
GPS 9505 15. Consumer/Provider Board Participation: When not specifically authorized by program regulations, only the following costs are allowable with the prior approval of the PHS awarding office: a. Reasonable and actual out-of-pocket costs incurred solely as a result of attending a scheduled meeting, including transportation, meals, babysitting fees, and lost wages. b. The reasonable costs of necessary meals furnished by the grantees to consumer or provider board participants during scheduled board meetings only if not reimbursed to participants as per diem or otherwise.
NSF Grant Proposal Guide (GPG), Budget - Proposal Section, Meals and Coffee Breaks. No NSF funds may be spent on meals or coffee breaks for intramural meetings of an organization or any of its components, including, but not limited to, laboratories, departments, and centers.
USDA Terms and Conditions: Meals may not be charged as project costs when individuals decide to go to breakfast, lunch, or dinner together when no need exists for continuity of a meeting. Such activity is considered to be an entertainment cost. In contrast, it is NIFA policy that a formal group meeting being conducted in a business atmosphere may charge meals to the project if such activity maintains the continuity of the meeting and to do otherwise will impose arduous conditions on the meeting participants. Please note this requires ADO approval prior to incurring such cost.
The new E-Verify clause will be included on the following federal contracts and subcontracts:
- Contracts with a performance longer than 120 days an a value above the simplified acquisition threshold of $150,000
- Subcontracts for services or for construction with a value over $3,000
- Indefinite-delivery/indefinite-quantity contracts.
The following individuals will need to be screened through E-Verify:
- Current employees who will perform work on the contract must be screened 30 days from the date the individual is placed on the contract
- New employees hired to work on the contract must be screened within 3 days of their hire date.
Exceptions, instructions, and more information is available on UK HR E-Verify Process.
- Expenditure, Recharge and Transfer G/L Accounts (pdf)
Officer of the Treasurer's guidelines on assigning appropriate General Ledger (GL) accounts on financial documents in order to maintain consistency and accuracy for financial reporting; to define the various types of GL accounts; and to provide links to the most current list of available GL accounts.
- BudRule Crosswalk
- AVC Update
Using PRDs, Journal Vouchers, and Procurement Cards
The Payment Request Document (PRD) must be used for categories identified in the Business Procedures Manual (B-3-2-2) when approved sources will not accept UK Procurement Cards, or when the transaction is not authorized on the procurement card. See the guidelines above for full details on using PRDs.
Procurement Cards (ProCards) may be used to pay for small dollar acquisitions, to provide an alternative for cash funds, and for travel advances. They may also provide optimal procurement and payment solutions for other suitable projects that have a define purpose, timeframe and budget. See the Business Procedures Manual (E-7-16) for full details on Procurement Card use.
Journal Vouchers (JVs) A full explanation of Journal Vouchers, including when and how to use them, is available through the Business Procedures Manual, section E-4.
Equipment Purchased with Federal Funds
The recipient shall use the equipment in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds and shall not encumber the property without approval of the Federal awarding agency. When no longer needed for the original project or program, the recipient shall use the equipment in connection with its other federally-sponsored activities, in the following order of priority: (i) Activities sponsored by the Federal awarding agency which funded the original project, then (ii) activities sponsored by other Federal awarding agencies.
During the time that equipment is used on the project or program for which it was acquired, the recipient shall make it available for use on other projects or programs if such other use will not interfere with the work on the project or program for which the equipment was originally acquired. First preference for such other use shall be given to other projects or programs sponsored by the Federal awarding agency that financed the equipment; second preference shall be given to projects or programs sponsored by other Federal awarding agencies
The recipient shall not use equipment acquired with Federal funds to provide services to non-Federal outside organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for as long as the Federal Government retains an interest in the equipment.
Additional information regarding Equipment Guidelines can be found in the UK Business Procedures Manual.
Compensation to Research Subjects and/or Survey Participants
Compensation offered as an incentive to offset any costs due to participation of human subjects is covered by the Office of Treasurer under BMP E-9-1. Important definitions, outlines of PI and Business Staff responsibilities, compensation procedures, and policies on amounts can be found in BMP E-9-1.
The following should be kept for reference:
- Sponsor’s Award: Become familiar with award and sponsor restrictions, due dates of technical reports, and other deliverables.
- Project Account Data Record (PADR): An internal record of project information such as start and end date, sponsor ID, WBS Element (grant account), Budget and Cost Share, summary of terms and conditions, and the last WBS Element revision.
The following should be performed routinely:
- Review the monthly PI Report and verify all expenditures charged to the grant are allocable, reasonable, and allowable.
- Review for over-expenditure, CAS items, and line items with no budget.
- Review, approve, and sign subaward invoices.
- Review personnel changes and communicate with the Program Officer of the funding agency and the Research Administrator.
- Review and verify with department business office that personnel effort is updated and modified as effort levels change. If sponsor approval is required, contact OSPA.
- Certify effort when required and assist the department business office in meeting the university deadlines.
Summary of CDEM and AVC Interaction
How will this effect my sponsored project accounts?*
When an individual works on one or multiple awards, their salary is allocated based on a general percentage that represents a reasonable amount of time in relation to the work performed to each project. CDEM (Cost Distribution Entry Module) is a tool to track and capture the general percentage an individual should charge a cost object and fund over the expected period of work, also known as the cost distribution plan.
CDEM provides the ability to compare the commitment (proposed salary expense) versus actual salary expense throughout the life of the cost object and assess whether a cost object is being charged as intended. A commitment entry must be created for every cost object and fund before it can be used in a cost distribution plan. A commitment in CDEM should be not confused with a commitment (encumbered) expense in SAP. CDEM commitments are not exported into other institutional reporting systems such as BW Reporting. CDEM also provides a way to specify a period to prorate a distribution percentage when the period of work begins or ends in the middle of a payroll period.
CDEM replaced both manual entry into SAP for monthly IT0027 screens and the FES system for faculty cost distributions. FES “tracks and versions” are no longer needed as cost distribution plans feed directly to SAP from CDEM. Bi-weekly payroll cost distribution plans will be added to CDEM during FY22.
AVC check is the available control (AVC) that checks consumption (actual plus encumbrances) against budget to prevent overcharging. CDEM compares the In-progress plan with the Active plan distributions.
AVC check must pass or pass with credit.
- Requires Check – AVC check needs to be performed before workflow can be initiated
*Any sponsored project account that was active as of March 1, 2021 will need to be checked in GMAVCOVRW and with your Ledger to make sure the salary is budgeted and charging appropriately. Repeated budget revision requests to keep up with the payroll posting issue(s) will not be allowed. The account must be monitored according to University BPM policy E-17-6. If an account has ended and reaches the close out phase but has a salary sponsored class with a zero budget and over expenditures that have posted, the costs will be moved to the Dean’s Indirect Overrun cost object.
More info can be found here: https://www.uky.edu/ufs/cdem
Project Changes or Alterations
Project Changes or Alterations
Cost Transfers for Sponsored Projects
A cost transfer is any transfer of an expense involving a sponsored project via a Journal Voucher. Institutions receiving federal funds are potential subject to audit disallowances without sufficient control and documentation of cost transfers.
Allowable Types of Transfers
A Journal Voucher may sometimes be necessary to:
- Correct bookkeeping or clerical errors in original charges within 90 days of the error with appropriate explanation of the error
- Properly allocate costs to the appropriate accounts using a verifiable and reasonable method in accordance with cost accounting principles
- Transfer charges between accounts supporting closely related work for reasons other than covering over expenditures
- Reclassify over expenditures to voluntary cost sharing accounts.
The request for cost transfer must include:
- Specific identification of the original charge
- Justification of the appropriateness of the charge to the receiving account
- A full explanation of why the transfer is necessary
Full guidelines on cost transfers is available in the Business Procedures Manual, E-50-3.
Equipment Purchases in the Last 6 Months of the Grant
All charges to a grant project, particularly in the final months of the project period, must be allowable and allocable as a direct cost to the grant, and be reasonable and necessary for the conduct of grant activities. Equipment may not be purchased simply to use an unobligated balance remaining at the end of the project. If the equipment is for a preponderance of use on the project, then ample time is required to purchase the item, use it and be able to report the results in the final report.
If equipment is purchased during the last 6 months of a project, additional justification will be required from the PI:
- Confirmation whether or not the PI will be requesting an extension.
- If the project is continuing, no heightened scrutiny will be needed for purchases made late in the current budget period.
- Receipt date of the equipment or expected receipt date of equipment.
- Note: if the equipment is ordered, but not received by the end of the budget period, it will not be an allowable expense.
- What equipment the PI was using before the equipment purchase or a programmatic reason as to why the equipment was not necessary until now.
The Research Administrator is responsible for reviewing guidelines and confirming whether or not sponsor approval is required for equipment purchases.
Equipment Grants: Due to the purpose of equipment grants, time of expenditures incurred at the end of the project are not scrutinized like they are on other grants.