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- Administrative and Clerical Costs
- Award Closeout
- Award Setup
- Cost Sharing
- Cost Transfers
- Effort Reporting
- Expenditures
- Program Income
- Record Retention
- Service Centers
- Subrecipient Process
- Tuition Remission
Departmental Administrative and Clerical Expenses Under OMB A-21
The cost principles of OMB A-21 state that expenses for administrative and clerical activities in academic departments and institutes should normally be treated as indirect costs and not as a direct charge to federally sponsored programs. Salaries of administrative and clerical staff, office supplies, postage, local telephone costs, and memberships are considered administrative expenses.
The Office of Management and Budget (OMB) has provided guidance on when the direct charging of these costs is allowable. Direct charging of these costs may be appropriate where the nature of a particular project requires an extensive amount of administrative or clerical support, i.e., a level that is significantly greater than the routine level provided by academic departments. The costs must also meet the general criteria for direct charging, i.e., the costs can be identified specifically with a particular sponsored project and the special circumstances requiring the direct charge have been approved by the awarding agency. See Exhibit C from OMB A-21 for OMB interpretation and examples of such circumstances and conditions.
Guidelines
The following guidelines, which have been developed to meet the OMB A-21 requirements and interpretation, became effective for charges to federally sponsored agreements beginning July 1, 1996.
Administrative and clerical salaries
-- Academic departments and institutes
The following criteria must be met to charge administrative or clerical salaries directly to federally sponsored projects:
- the approved proposal budget must list the administrative or clerical personnel by position and the budget justification/explanation should describe the special circumstances requiring the direct charging of these services, and
- the administrative or clerical personnel must be specifically identified with the project. This specific identification is reported by identifying the direct effort on the Time Allocation Report or other appropriate method used for effort reporting. Pooled allocation methods (any method which does not reflect the time spent by a given individual on a specific project) may not be used to direct charge for administrative or clerical services.
Administrative Supplies and Expenses
-- Academic departments and institutes
The following supplies and expenses are normally indirect costs: postage, local telephone costs, general office supplies, and memberships. These supplies and expenses should not be charged directly to federally sponsored programs, unless circumstances under the award justify such direct charges specifically for the technical purposes of the award and all of the following criteria are met:
- the supply or expense must be listed in the approved proposal budget (i.e., postage, local phone costs, etc.) and the budget justification/explanation should describe the special circumstances requiring the direct charging of these costs, and
- the supply or expense must be specifically identified with the project or activity. Note: purchase requisition or other supporting documentation is required to support the specific identification of the charge. Pooled allocation methods (any method which does not charge directly based on the actual use) may not be used.
The above criteria must be met to directly charge administrative and clerical expenses to federally sponsored awards. The attached flowchart summarizes these guidelines. Note: with specific agency approval, rebudgeting to charge administrative or clerical salaries is permitted; internal rebudgeting for this purpose is not permitted.
Implementation
The above criteria must be met to directly charge administrative and clerical expenses to federally sponsored awards. The attached flowchart summarizes these guidelines. Note: with specific agency approval, rebudgeting to charge administrative or clerical salaries is permitted; internal rebudgeting for this purpose is not permitted.
Effective July 1, 1996 (Updated December 2008)
From OMB A-21
Exhibit C -- Examples of "major project" where direct charging of administrative or clerical staff salaries may be appropriate.
- Large, complex programs such as General Clinical Research Centers, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
- Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical records studies).
- Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
- Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
- Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research fields sites that are remote from campus.
- Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. For instance, the examples would be appropriate when the costs of such activities are incurred in unlike circumstances, i.e., the actual activities charged direct are not the same as the actual activities normally included in the institution's facilities and administrative (F&A) cost pools or, if the same, the indirect activity costs are immaterial in amount. It would be inappropriate to charge the cost of such activities directly to specific sponsored agreements if, in similar circumstances, the costs of performing the same type of activity for other sponsored agreements were included as allocable costs in the institution's F&A cost pools. Application of negotiated predetermined F&A cost rates may also be inappropriate if such activity costs charged directly were not provided for in the allocation base that was used to determine the predetermined F&A cost rates.
Award Closeout
Closing out a sponsored project, program, or contract is an important component of post-award administration. Most federal agencies have set time limits for closing out grant awards and require that financial and programmatic reports be submitted within 90 days of the end of the sponsored project period, while nonfederal sponsors generally require reports within 45-60 days of the end of the project. Contracts generally have more requirements than grants and final payment from the sponsor may be withheld if an award is not closed out in a timely manner.
Every effort should be made to complete a project within an award period. When this is not possible, the principal investigator may request an extension without additional funds, or a contract amendment if appropriate, and submit the request via an Instititional Approval Form to the Office of Sponsored Research (OSR) as far in advance as possible before the end of the award. Some no cost extensions for federal awards may be approved by OSR, which will notify the sponsor. Other awards may require approval directly from the sponsoring agency which will be requested by OSR.
OSR sends Principal Investigators (PIs) and/or Department Administrators (DAs) a notification 60 days and then 30 days prior to the end of an award or contract. PIs and DAs should review the status of their funds/projects to ensure that posted charges are correct, initiate any adjustments that are needed, especially to avoid payroll charges getting posted after the end date, and take steps to ensure that allowable expenses are posted on a timely basis. The Office of Research and Cost Accounting will confirm final expenditures with the PI and the DA and prepare the final financial report. The Office of Property Accounting is expected to prepare any equipment/property reports required under the award. OSR will prepare a report of inventions in consultation with the PI and the Office of Technology Transfer. The PI is also expected to send OSR verification that the final technical report has been submitted to the funding agency. Unless an award contains specific reporting requirements, Rice expects all expenditures to be finalized and posted and all reports to be submitted within 90 days of the award end date.
Award Setup
Initial Awards
To set up an initial award in the Banner financial system, the Office of Research Accounting requires (1) the award documents, including all exhibits and attachments, and (2) the proposal documents, which include Rice's Review and Approval Form (R&A), the proposal budget, the budget narrative, the abstract/proposal summary/statement, and the cost sharing budget (if applicable).
The Office of Sponsored Research sends the award documents via e-mail to the Principal Investigator (PI), the Department Administrator and Research Accounting. OSR provides Research Accounting with the proposal documents separately.
Notice of Action
The Banner grants and contracts module has multiple data entry screens with over 80 coding fields to be entered. (See Research Accounting Grant and Fund Checklist.) When the fund has been set up, Research Accounting sends a “Notice of Action” to the PI, Department Administrator, Chairman, Dean, and OSR that the coding for the newly awarded grant or contract has been entered into Banner and is available for data entry. The Notice also includes any special terms and restrictions of the award and indicates if cost sharing is required to be reported. A journal for the budget has been entered, but is not available on the Web until the first transaction has posted. Please review the “Notice of Action” and notify the person named in the contact box if you have any questions about the Notice of Action or any of the fields in Web Apps.
Advance Spending Fund
There are occasions when commitments or expenses need to be incurred before a fund has been established. For example, an award document has not been received but there is relative certainty that it is forthcoming. In such cases the Principal Investigator/Department Administrator can, with the approval of their Dean, request an Advance Spending Fund. Using an Advance Spending Fund will allow for proper coding of expenses and reduce the number of cost transfers and salary redistributions.
What is needed to establish an Advance Spending Fund?
- PI/Department will:
- Download the Request for Advance Spending Form (Word).
- Complete the form, being sure to include the guarantee fund. The guarantee fund will be used to cover
expenses if the project is not awarded or if some expenses are determined to be unallowable after the
award is finalized.- Forward the completed form to OSR.
- Office of Sponsored Research will:
- Advise on the current status of the proposal.
- Forward the form and proposal information for setup.
- Research Accounting will:
- Set up the fund using the same process as that for a new award.
- Use Advanced Spending as the agency ID and as the award number in the fund title.
- Update the Banner codes and information as required after the award is received.
Advanced Spending or Pre-Award?An Advance Spending Fund is appropriate when there is no award yet in place. Pre-Award approval is needed when an award is in place and the PI requests the the project start date be back-dated for up to 90 days. Pre-Award approval is requested via the Institutional Approval Form (Word).
“R” Fund Numbering
When a new award is received, one of the first steps is to assign an appropriate fund number. This six-digit number is used to identify the award in the accounting system as well as allow for summarized financial reporting. The first digit in the fund number represents the fund type (e.g., “D” for Designated and “R” for Sponsored Project). All funds assigned to Research Accounting begin with an “R”. The second digit indicates the agency type and is determined based upon the following criteria:
2nd Digit Source Description 0 Foundations Private foundations (excluding Welch) 1 Federal Federal agencies, excluding NSF, NASA, NIH, and DHHS, which are identified separately. Includes NEA, Air Force, Navy, Army, EPA, DOE, etc. 2 Federal NIH and DHHS 3 Federal NSF 4 Foundation Welch Foundation 5 Federal NASA 6 Private Individual corporations 7 Federal Federal pass-through 8 State and Local State and local government, including state universities 9 Private Private other, including private universities The first five digits of the six-digit fund number identify the project. The parent funds ends in zero (0), and subfunds are sequential and assigned as needed.
Subfunds
Subfunds are separate fund numbers assigned to track specific expenses within a project. Subfunds are linked to the parent fund; they are numbered sequentially (1-Z as the last digit of the fund number); and they have the same Banner coding screens as the parent fund. The establishment of subfunds may be required by the terms and conditions of a specific award. Examples include but are not limited to:
- Participant Support costs on an NSF award
- Awards for Research Experiences for Undergraduates
- Different F&A rates for expenses within an award
A request from the PI/Department Administrator is not needed if a subfund is required by the award or if a subcontract is involved.
A request for a subfund from the PI/Departmental Administrator is needed if equipment fabrication is involved, if the PI wishes to track costs by a co-PI, or for other internal budgeting and tracking purposes.
Subfund for Subcontract to Another Institution
A subcontract is a subgrant from a Rice prime grant or a subcontract from a Rice contract to another institution, typically a university, with a defined scope of work. Research Accounting receives e-mail notification of a subcontract award from OSR, similar to the notice received for a new award. Documents required for setting up the subfund include:
- Subcontract award
- Specifies the subcontractor
- Specifies the agency awarding fund
- Specifies the period of performance
- Specifies the compensation (maximum amount to be paid by Rice)
- Specifies allowable cost and payment information
- Includes assurances
- Includes signatures by both parties
- Scope of Work
- Budget/Budget Justification from the other institution.
The budget in Banner for the subfund includes not only the direct costs authorized to be paid to the subcontractor, but also the Rice F&A costs on the first $25,000 of each subcontract.
Amendments to Awards
To amend an award, Research Accounting must receive an e-mail notice of an amendment from the Office of Sponsored Research. Research Accounting staff will then:
- Update Banner screens as needed
- Prepare a Budget Revision Notice of Amendment
- Enter a budget journal entry in Banner
- E-mail budget revision notices to department
Cost Sharing
Cost sharing is that portion of project costs not borne by the sponsoring agency. They are sometimes referred to as matching funds. Cost sharing must be tracked and reported if it is committed in a quantifiable manner in a proposal budget or narrative. Some sponsors require cost sharing to be included in proposals for them to be considered. This “required” (or “mandated”) cost sharing is described in an agency's program announcement and noted in the award document or the approved budget. “Voluntary committed” cost sharing is not required by the sponsor but has been included in the proposal in a quantifiable manner. Some sponsors (e.g., National Science Foundation) do not allow voluntary committed cost sharing to be included in proposals. Voluntary committed cost sharing commitments that exceed those required or mandated by the sponsoring agency are discouraged. Voluntary committed cost sharing must be approved by the appropriate Dean.
Proposal procedures provide that cost sharing that is quantified in a proposal be identified by type of expense and approved by the provider(s) of the funding. The Vice Provost for Research must approve the waiver of any F&A cost recovery that would be allowed by the sponsor guidelines.
To qualify as cost sharing, expenditures must meet the following criteria:
- Be necessary and reasonable for the accomplishment of the project
- Be derived from non federal sources
- Be treated as cost sharing for only one project
- Be allowable costs
- Be verifiable through the University's accounting system
Each Principal Investigator is responsible for ensuring that all required or voluntary committed cost sharing requirements are met and properly reported. Department Administrators and Research and Cost Accounting staff are expected to assist investigators with this responsibility. In Banner, cost shared expenses are coded by using “IDR2” as the Program code and the R fund number as the Location code. The Office of Research and Cost Accounting certifies cost sharing reports to sponsors.
Additional information about requirements and reporting is available in the Office of Sponsored Research and the Office of Research and Cost Accounting.
See also - Office of Management and Budget (OMB):
Cost Transfers
These procedures are issued in accordance with Policy 302, Cost Transfers.
Definition.
A cost transfer moves charges from one University fund to another.
Background
The Principal Investigator (PI) is responsible for the management of sponsored programs that are awarded to him/her. These include federal, state, and private grants and other sponsored agreements.
In addition to technical compliance, the responsibility for budgetary compliance rests with the PI. This includes not only staying within the total program budget and project period, but also staying within specific budget limitations that may be required by the award terms and conditions. Each PI is responsible for ensuring that charges made to a particular research fund are allowed by the funding source and are directly related to the project or activity supported by that fund. The PI should carefully consider whether an expense is an allowable, allocable and reasonable cost on a given fund before the expense is incurred. In addition, the PI is responsible for reviewing monthly expenditure reports and time allocation reports on a timely basis.
Cost transfers are sometimes necessary and unavoidable; however, they should not be used as a method for routine funds management. They may be used to correct an error or to allocate expenses between closely related projects if both projects benefit directly from the expense. Cost transfers should not be requested simply to avoid over expenditure in one research fund by transferring expenses to another research fund, nor should they be used as a method to spend money because a project is nearing its end.
Cost transfers on sponsored project (Rxxxxx) funds are subject to Research Policy 302, Cost Transfers. When initiated, cost transfers must be timely, well-documented and properly approved. Unallowable or inappropriate charges that appear on a sponsored project fund must be moved to an appropriate fund promptly.
Procedures.
To request a cost transfer for non-salary charges involving an R fund, an Expense and Revenue Correction form must be completed and forwarded to the Controller’s Office. See Controller’s website for a copy of the form and instructions.
- Timely. In accordance with the Cost Transfers policy, cost transfers submitted later than 90 days from the end of the month in which the charge first appears on the fund or submitted later than 30 days after the end date of an award are not considered timely. Cost transfers not submitted in a timely manner must also include:
- Approval of the department chair of each department (see Properly Approved, below).
- Additional documentation if expenses are to be charged to another Rxxxxx fund (see Well-Documented, below).
- An explanation of the delay in processing the cost transfer.
- Include information on what steps are being taken to prevent future similar delays.
- Well-documented. In addition to providing information on the original posting in Banner, including entry by Banner transaction amount and Banner document # (see form instructions), a cost transfer request on sponsored project funds must include:
- A full explanation of how the error occurred. For example:
- Why the expense was originally charged to the fund from which it is now being transferred.
- What is known now that wasn’t known at the time of the original charge.
Note: See the Research and Cost Accounting forms section of the Controller’s website for sample explanations for cost transfers.- For transfers other than simple corrections of account codes or movements within subfunds of the same project and that involve moving an expenditure to an Rxxxxx fund, also include:
- How the expenditure directly benefits the fund receiving the charge.
- A generic statement such as “to correct error” is insufficient and will not be accepted.
The direct cost portion of over expenditures in sponsored project funds may be written off to a non-R fund by using account code 72835, Write Off R Fund Over Expenditures, for both the debit and credit amounts. Such a write off does not require a detailed listing of transactions being moved. Please contact Research and Cost Accounting (rchacctg@rice.edu) in the Controller's Office for additional information.- Properly Approved.
- The PI or designee must approve cost transfer requests before they are submitted. The PI or PI designee signature certifies the correctness of the proposed cost transfer.
- Cost transfers that are not timely also require the approval of the chair of each department affected by the cost transfer.
- If the PI is also the chair, approval from the Dean is required.
To request a cost transfer for salary-related charges involving an R fund, the appropriate payroll form must be submitted. There are several methods for redistributing salary charges, depending on the type of employee or student. The most common methods are the payroll re-distribution form for faculty and staff paid semi-monthly and the graduate student payroll authorization form. Please contact the Payroll Office for assistance with the appropriate method to use for needed changes. Additionally, labor charges are subject to Effort Reporting requirements. The Research and Cost Accounting website provides additional information on the Effort Reporting process.
Research and Cost Accounting will contact the department if additional information is needed to approve the cost transfer request. If the cost transfer cannot be approved, Research and Cost Accounting will notify the department via email of the reason for the action or return the original document to the department with the reason for the action.
Questions? Contact Research and Cost Accounting via email at rchacctg@rice.edu.
Effort Reporting
These procedures are issued in accordance with Research Policy 304, Effort Reporting.
Definition
Effort reporting is a means of verifying that salaries charged to a sponsored project or program represent the effort that has been performed as specified in the award and/or the effort expended in support of a project but not paid by that project (mandatory or voluntary committed cost sharing) has been performed as specified.Background
The Principal Investigator (PI) is responsible for the management of sponsored programs that are awarded to him/her. These include federal, state, and private grants and other sponsored agreements. The federal government requires the University to document effort charged and committed as cost sharing in accordance with provisions in Section J10 of OMB Circular A-21, Cost Principles for Educational Institutions.In order to ensure that salaries and wages charged to any grants or contracts are appropriate in relation to effort applied, it is necessary for the PI to review and confirm these charges periodically. Rice has chosen to do this review and certification twice every year for faculty and other employees and annually for graduate students.
The PI should ordinarily sign his or her own Effort Report, in addition to those reports of employees and students paid from or cost shared to his/her projects. The PI or Graduate Student’s Advisor should normally sign the Graduate Student Salary Confirmation. When this is not practical and only when appropriate, the individual who performs the work or someone who regularly oversees the work may sign, such as the laboratory or project manager. Every signer must use a suitable means of verification to confirm that the work was performed. If someone other than those listed above signs the Effort Report or Salary Confirmation, written documentation of the method of verification used by the signer should accompany the Effort Report or Salary Confirmation. The department is responsible for determining the most appropriate person to sign the certification. A process to identify the most appropriate person per individual is a future goal of the University.
Once the employee’s or student’s effort is certified on the Effort Report or Graduate Student Salary Confirmation, retroactive adjustments will not normally be permitted.
Cost transfers on sponsored project (Rxxxxx) funds are subject to Research Policy 302, Cost Transfers. When initiated, cost transfers must be timely, well-documented and properly approved. Unallowable or unrelated charges that appear on a sponsored project fund must be moved to an appropriate fund promptly. Cost transfers submitted later than 90 days after the end of the month of the original transaction or later than 30 days after an award ends will be reviewed on a case-by-case basis by Research and Cost Accounting (RCA). If the transfer is denied, notification will be made in writing.
Procedures
Effort Reports and Graduate Student Salary Confirmations are printed by RCA and mailed out twice every year and annually, respectively, to departments (or organizations) in order to confirm that salaries and wages paid from or allocated to sponsored project funds (R funds) are reviewed by the PI. Instructions and a due date are included with the reports. Departmental administrators or other employees designated by the chair are responsible for distributing the reports to the appropriate certifier.In the event that an Effort Report or Graduate Student Salary Confirmation lists two or more PIs or the work was performed for a department other than the employee’s or student’s home organization, then RCA will route the certification to the department with fiscal responsibility for the R fund. These will be labeled with instructions for the departmental administrator.
If the certifier deems that the fund number, as described by the title, and the percentage of effort (work performed) charged to the various sponsored project funds is reasonable (within + 5 percentage points) for the reporting period, then the reviewer will sign and date the report to complete the certification. In some cases, a laboratory or project manager, other direct supervisor, or department chair may review and certify the report, but the PI’s review is preferred, if available.
Should the pre-printed percentage differ significantly from the employee’s actual effort, normally defined as + 5 percentage points of total effort, cross out the pre-printed percentage and amount and write the correct percentage and amount to the right under ‘ACTUAL (3)’. Enter any additions in the space provided. This may require a modification to the salary charged.
To modify the salary charged for faculty or other employees, a Payroll Redistribution Form or a corrected Time Allocation Report must be completed and submitted to RCA with the properly certified Effort Report. Additional support documentation or a cost transfer justification may be required.
To modify the salary for graduate students, a Graduate Student Payroll Authorization Form must be completed and submitted to the Office of Graduate and Postdoctoral Studies. Additional support documentation or a cost transfer justification may be required.
Subsequent to proper certification, the approver will return the original document, along with any additional documentation or justification, to the departmental administrator or designee, who will retain a copy for departmental records. The departmental administrator or designee will forward the original document, along with any additional documentation, payroll redistributions, and / or justifications, to RCA by the due date.
Each report is printed with a due date. Reports are considered overdue if they are not properly completed, certified, and delivered to RCA before or on the due date. RCA will notify department chairs, deans and PIs about overdue Effort Reports within 20 business days after the effort reporting deadline. Overdue reports not returned to RCA within 30 business days after the effort reporting deadline will be considered delinquent.
As properly certified Effort Reports are returned to RCA, the analyst date stamps each report when it is received and reviews each report for the appropriate signature(s) and dates. The analyst then files each report first by organization and then alphabetically by name.
If payroll redistributions are required, RCA will monitor the process to ensure redistributions are processed as soon as possible.
Definitions
Certifier / Approver: responsible individual who has first-hand knowledge of the work performed using a suitable means of verification, which can be obtained by documented discussion with the employee or PI.
Principal Investigator (PI): primary individual responsible for the technical and financial management of his/her research grant, cooperative agreement, training award, public service project, contract, or other sponsored project.
Total effort: defined as all professional activity for which the University employs an individual, whether on a full-time or part-time basis, including students who are working as teaching or research assistants. For reporting purposes, effort is calculated in percentages, not hours, with the total of all Rice effort equaling 100%. For faculty, total effort includes, but is not limited to, teaching, office hours, student advising, research activities, committee service, departmental meetings, professional development and community service at Rice or to Rice. Charges to sponsored agreements may include reasonable amounts for activities contributing and intimately related to work under the agreements, such as delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences. Specific short-term assignments, such as teaching a continuing education course, that are not a routine part of an individual’s employment and are compensated separately, are not considered part of “total effort” and are excluded from the effort reporting requirement.
Expenditures
The Principal Investigator (PI) bears primary responsibility for management of the sponsored programs that are awarded to him/her. Management involves budgetary and cost compliance as well as technical compliance. This includes not only staying within the total program budget and time period, but also staying within specific budget guidelines contained in the award. The PI is responsible for ensuring that any committed cost sharing requirements are met and recorded in Rice's financial system. The PI is expected to approve charges to the sponsored programs or to delegate this responsibility to another person who has first-hand knowledge of the need for the expense and the appropriateness of the charges. The PI is responsible for reviewing monthly expenditure reports as well as effort reports on a timely basis. If an error is identified in these reports, it is the responsibility of the PI to initiate the necessary corrections or adjustments as soon as possible.
In assuming the stewardship of federal funds for sponsored programs, Rice has adopted certain cost guidelines and regulations that apply not only to federal awards but also establish the principles for overall university costs. These principles include consistent treatment of like expenditures as direct or indirect costs, and require that procedures be in place to ensure compliance. Further information is contained in Section 11 of the Rice Purchasing and Payment Manual (PDF).
ALLOWABLE COSTS
The federal government, in Section C of OMB Circular A-21, Cost Principles for Educational Institutions, defines allowable costs as follows: “The cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs. The tests of allowability of costs under these principles are:
- They must be reasonable
- They must be allocable to sponsored agreements under the principles and methods provided herein
- They must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances and
- They 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.”
Generally, the documentation and procedures required for research and non research expenditures are the same. Commitment and expenditures must comply with university purchasing policies and procedures. See Section 11 of the Rice Purchasing and Payment Manual for the procurement requirements for expenditures on sponsored project funds. See the Payment Solutions Website for links to purchasing, PCard, travel, and business meeting and entertainment policies and procedures. Costs must be incurred during the period of performance of the project. Every transaction should be adequately documented and its purpose fully explained by the person responsible for it so it can be easily understood by someone who is not familiar with either research in general or the project in particular. Avoid using acronyms.
UNALLOWABLE COSTS
Some direct costs by their very nature are unallowable on federal projects and most other awards. These costs include:
- Entertainment
- Flowers and gifts
- Office morale expenses
- Alcoholic beverages
- Intramural faculty/staff meeting costs, including meals and refreshments
- Public relations costs, including advertising and lobbying expenses
- Interest expenses and fines, penalties, and late fees
- Cost transfers to cover under spending or overspending on research funds
ALLOWABLE UNDER CERTAIN CONDITIONS
Some direct costs are allowable under certain conditions. Refer to Section 11 of the Rice Purchasing and Payment Manual (PDF) for additional information.
Administrative and Clerical (A&C) Costs. A&C costs include administrative staff, office supplies, postage, monthly telephone lines, and membership dues. Under OMB Circular A-21, A&C costs are included in the F&A cost pool and are allowed as direct costs only under certain circumstances. To be allowable, they must have been clearly stated in the budget and supported in the budget narrative as an exception to OMB Circular A-21 and appear as an allowable cost on the award document. See the Funds Text note section of Web Apps for information on A&C costs on award.
Travel. Sponsors may limit specific travel costs, limit total travel costs to the approved budget, or require prior approvals for domestic and/or foreign travel. The Rice Travel Policy includes a section on charging travel expenses to an R fund. Be sure to include sufficient information to describe the benefit of the travel to the project. A phrase such as “to present paper on research results of study of XYZ at the annual meeting of the American Chemical Society” provides more information than “to attend conference.”
INTERNATIONAL TRAVEL. Rice University Travel Policy 806, Appendix A states, “Use of U. S.-flag carriers is required for all international travel chargeable to a federal award unless special conditions are met, including guidelines for code-sharing tickets. Contact the Research Accounting Office or the Office of Sponsored Research before (emphasis added) making travel arrangements which involve a non-U.S. carrier to ensure such special conditions are satisfied.” If charging airfare to a federal award, a U.S. carrier must be used not only for travel between the U.S. and a foreign city, but also between two foreign cities, unless the flight meets one of the exceptions. If a U.S. carrier does not serve the destination city, then a U.S. carrier must be used to the nearest city that does. Many U.S. carriers have expanded their foreign markets and now fly to more than one or two cities on a continent. For help in determining if a U.S. carrier serves a foreign city, visit Amadeus.net.
NOTE ON CODE SHARING: If a U.S. carrier has a code sharing arrangement with a foreign carrier, the U.S. carrier code and flight number must appear on the ticket in order to charge international airfare to a Federal award. Example: NW code shares with KLM from Houston to Paris. If the ticket shows NW#8662 the airfare is allowable on a Federal award if the ticket shows KL#662 the airfare is unallowable. U.S. carrier codes include: CO, DL, UA, NW. Foreign carrier codes include: LH, AF, BA, KL.
GUIDELINES ON USE OF U.S.-FLAG AIR CARRIERS
- The Comptroller General of the United States, by Decision B138942 of June 17, 1975, as amended March 31, 1981, provided guidelines for implementation of Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974.
- Any air transportation to, from, between, or within a country other than the U.S., of persons or property, the expense of which will be assisted by this award, must be performed on a U.S. flag air carrier if service provided by such carrier is “available.”
- The following rules apply unless the result would be use of a foreign air carrier (“foreign carrier”) for the first or last leg of travel from or to the U.S.:
- A U.S. flag air carrier (“U.S. carrier”) shall be used to destination or, in the absence of through service, to farthest interchange point.
- If a U.S. carrier does not serve an origin or interchange point, a foreign carrier shall be used to the nearest interchange point to connect with a U.S. carrier.
- If a U.S. carrier involuntarily reroutes the traveler via a foreign carrier, the foreign carrier may be used.
- Exceptions. In the following situations, use of a foreign carrier is permissible:
- Travel to and from the U.S. Use of a foreign carrier is permissible if:
- The airport abroad is the origin or destination airport, and use of a U.S. carrier would extend the total travel time 24 hours or more than would travel by foreign carrier or
- The airport abroad is an interchange point, and use of a U.S. carrier would require the traveler to wait six (6) hours or more to make connection or would extend the total travel time six (6) hours or more than would travel by foreign carrier.
- Travel Between Points Outside the U.S. Use of a foreign carrier is permissible if:
- Travel by foreign carrier would eliminate two (2) or more aircraft changes en route or
- Travel by U.S. carrier would extend the total travel time six (6) hours or more than would travel by foreign carrier.
- Short Distance Travel. For all short distance travel, regardless of origin and destination, use of a foreign carrier is permissible if the elapsed travel time on a scheduled flight from origin to destination airport by foreign carrier is three (3) hours or less and service by U.S. carrier would double the travel time.”
Exception to policy is the responsibility of the Principal Investigator and department and should be documented at the time the reservations are booked.
Business Meeting Costs. Costs must meet requirements of the funding agency as well as Rice policy and procedures. They may be charged to a grant or contract ONLY if the awarding agency allows such a cost. Rice policy and procedures require that a detailed outline/agenda and an explanation of the purpose of the meeting and the relationship to the award be submitted along with the business meeting and entertainment form. No intramural meetings may be charged to a federal award.
Equipment. Costs must meet requirements of the funding agency as well as Rice policy and procedures. For equipment items costing $5,000 or more, complete the Research Equipment Procurement Form and submit it along with the purchase order to Payment Solutions. It should describe the equipment and how it will be used on the project. The PO Checklist form is used by Research Accounting to review and approve equipment POs prior to posting the expense to an R fund.
General Purpose Computer and Software Under $5,000. Any purchase requires the signature of the PI or PI designee (Department Administrator). The signature certifies that the items will be used primarily for the conduct of the research and not simply for report preparation. A General Purpose Equipment Certification is required if the payment documentation does not otherwise include needed PI/designee signature. See Forms.
Consultants, Professional Services, and Salary Reimbursement Agreements. Services must be arranged in compliance with Section 5 of the Rice Purchasing Manual. Salary reimbursement agreements must be arranged through the Office of Sponsored Research and must be signed by authorized officials of both institutions participating in the agreement. A copy of the consultant/professional services/salary reimbursement agreement, along with invoices, is to be attached to the PO or payment requests if payments total more than $2,500 and they are charged to a research fund. The agreement must describe the nature of the services rendered and the basis for the rate of pay and it requires the signature of PI or PI designee (Department Administrator). This signature certifies that:
- Services are essential and cannot be provided by Rice employees,
- A selection process has been used to secure the most qualified individual,
- The fees are appropriate.
Some agreements, for example with NSF, NASA, EPA, may be subject to a daily limit.
Program Income
These procedures are issued in accordance with Policy 303, Program Income.
I. Background
Sponsors provide funding to cover the costs of conducting research, training, and public-service activities. Program income may be generated as a result of these activities and in some cases must be reported to the sponsor. Federal Office of Management and Budget (OMB) Circular A-110 and applicable federal agency regulations document the identification, recording, reporting, and monitoring requirements for income that is generated during the project period. To be consistent in its accounting practices, the University extends these requirements for managing program income to non-federal sponsors.
II. Purpose of Policy and Procedures
Research Policy 303, Program Income, and these procedures are issued to comply with sponsor policies on program income and to ensure that such income is managed in an appropriate and consistent manner.
III. Definition of Program Income
Program Income, per OMB Circular A-110, is "gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award" and includes, but is not limited to:
- proceeds from the sale of software, CDs, tapes, or publications produced under the award
- income from fees for services performed, such as laboratory tests or analyses
- registration fees from conferences or symposia
- payments received from external users of property or equipment acquired with sponsored project funds to the extent payments exceed total usage costs
- proceeds from the sale of supplies or equipment purchased or fabricated under an award, and
- income resulting from license fees and royalties on patents and copyrights that is handled by the Office of Technology Transfer. (Note: Unless otherwise required by an award, program income resulting from license fees and royalties on patents and copyrights is not subject to these procedures.)
Except as otherwise provided in the awarding agency regulations or the terms and conditions of the award, program income does not include:
- receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them
- interest earned on advances of federal funds.
IV. Recording and Reporting Program Income
Program income will be deposited into a specific fund and account code established by Research and Cost Accounting (RCA), as described below.
The program income fund will be established as a subfund of the primary sponsored project fund. F&A will be charged to expenses in the program income subfund at the same rate as the main sponsored project fund.
Use of program income is limited to costs allowable on the main project. Therefore, expenses unallowable on the main project fund are also unallowable on the program income subfund.
Unless otherwise provided in the award documents, program income revenue is used before sponsor funds.
RCA is responsible for reporting program income activity to the sponsor.
As with all records related to sponsored projects, records on program income activity must be retained according to sponsor requirements.
- For federal awards, OMB Circular A-110 requires that records be kept for at least three (3) years from the date of submission of the final expenditure report.
- Some sponsors/awards may have a longer retention period.
V. How Program Income Can Be Used
Program Income earned during a project period will generally be treated using one of three methods, depending on sponsor policy, award type, and terms and conditions of the award.
- Additive: Program income funds are added to the funds committed by the awarding agency, thus increasing the amount available to accomplish program objectives.
Example: A project has (1) $320,000 available ($300,000 award plus program income of $20,000) and (2) total expenditures of $315,000. Program income of $20,000 will be reported to the sponsor and considered fully spent; the sponsor will pay the balance of $295,000, leaving $5,000 of sponsor funds unused.- Deductive: Funds generated through program income are deducted from the financial obligation of the sponsor. Thus, total funding available for the project is unchanged.
Example: A project has (1) $300,000 available (program income of $20,000 plus original award of $300,000, reduced to $280,000 due to the program income) and (2) total expenditures of $290,000. Program income of $20,000 will be reported to the sponsor and be considered fully spent; the sponsor will pay the balance of $270,000, leaving $10,000 of sponsor funds unused.- Matching: Program income is used to finance the University's share of the project costs.
Example: A project has (1) $360,000 available (original award of $300,000 plus $60,000 of required cost sharing partially funded by program income of $20,000) and (2) total expenditures of $360,000. Program income of $20,000 will be reported to the sponsor and be considered fully spent; cost sharing from other sources will be reported at $40,000; the sponsor will pay the balance of $300,000, leaving no unspent balance in sponsor funding.
Federally-sponsored awards: Unless the federal awarding agency specifies in its regulations or the award terms and conditions a different method, OMB Circular A-110 provides that program income for research projects be treated under the additive method and program income on non-research projects be treated under the deductive method.
Non-federally sponsored awards: Many non-federal sponsors do not have an established program income policy. In the absence of a sponsor policy, the program income is not reportable to the sponsor.
While all program income must be recorded properly in Banner, not all program income must be reported to the sponsor. The terms and conditions of the award determine the appropriate program income treatment and sponsor reporting requirements. For example, unless otherwise provided in the award, program income earned after the end of an award period is not subject to either the program income policy or these procedures. Additionally, as noted above, income resulting from license fees and royalties is subject to the program income policy and procedures only if the terms and conditions of the award require such reporting.
VI. Anticipated Program Income and the Program Income Subfund
Principal Investigators (PIs) are responsible for identifying and documenting program income on projects funded by both federal and non-federal sponsors and notifying either the Office of Sponsored Research (OSR) or Research and Cost Accounting (RCA), as described below.
The Notification of Anticipated Program Income form should be submitted as soon as a PI anticipates that program income will be generated. The form includes information on the type of program income, its relationship to the project and potential sources of program income. This form is available from the Research and Cost Accounting Forms section of the Controller's Office website.
If program income is anticipated at the time of proposal submission, the PI notification must be included with the proposal documents sent to OSR.
- The Review and Approval (R&A) form question on anticipated revenues to be generated is marked "Yes," and the Notification of Anticipated Program Income form will be attached to the R&A and forwarded to OSR.
- The PI will ensure that potential program income information is appropriately included with the proposal documents sent to the sponsor.
- If the proposal is awarded, OSR will forward the program income information included in the proposal to RCA with other proposal documents forwarded for new awards.
If program income is not anticipated at the time of proposal and arises out of opportunities that occur during the award, the PI is to forward the Notification of Anticipated Program Income form to RCA as soon as he/she becomes aware that program income will be generated for a specific award.
- The notification can be sent via campus mail to Research and Cost Accounting, MS-70, or via email to rchacctg@rice.edu.
RCA will establish the program income subfund and notify the PI, the approriate department administrator, chair, and Dean's Office of the fund number.
RCA will meet with the PI / department administrator to assist with estimating costs and rates and developing a plan for invoicing, payment collection, and deposit activities.
VII. Invoicing, Depositing, Monitoring, and Reporting program Income
The PI and department administrator (DA) are responsible for preparing any needed invoices related to the program income, collecting payments, and making cash deposits to the program income subfund.
Program income should be deposited to account code 57231 (Program Income Non-Taxable) or 57241 (Program Income Subject to Sales Taxes). Note: Questions on amounts subject to Texas sales taxes should be sent via email to disbmt@rice.edu to the attention of the Disbursements Manager.
In order to establish the budget for the Program Income subfund, the PI and the DA are responsible for forwarding a Rebudgeting Request (with copies of the deposit vouchers, checks, and invoices) to RCA to record the expense budget for the income.
The PI and DA are responsible for monitoring the budget and activity in the program income fund to ensure that all revenue and related expenses are properly reflected in Banner.
RCA will report program income activity to the sponsor as required by sponsor regulations and award terms and conditions.
VIII. During and After Project Closeout
During project closeout, RCA will report final program income amounts to the sponsor, as required by award terms and conditions.
RCA will appropriately "zero" the program income fund based on project expenditures confirmed by the PI/DA.
Program income earned after the project period of the primary award should not be deposited to the program income fund.
- Contact Current Funds Accounting if a new non-R fund is needed after the project ends.
IX. Summary of Roles and Responsibilities
Function / Responsibility
PI / DA OSR RCA 1. Notification of Anticipated Program Income Form (with estimated amounts, sources, etc.)
a. During proposal
1) Indicate "Yes" on R&A form & attach needed information
X 2) Ensure information is forwarded to sponsor as needed
X 3) Ensure information in the proposal is forwarded to RA if proposal is awarded
X b. During award, via email to Research and Cost Accounting
X 2. Establishment of program income subfund
X 3. Invoicing, collection and deposit of payments to program income subfund
X 4. Processing needed budget revision forms
X X 5. Reporting program income to the sponsor
X 6. "Zeroing" program income subfund during closeout of award
X X
Record Retention
The University requires that records for sponsored projects be retained in accordance with requirements of the federal Office of Management and Business (OMB) Circular A-110.
Records include, but may not be limited to, financial records, supporting documents, statistical records, technical reports, and all other records and documents pertinent to an sponsored award. For federal awards, they must be retained for a period of three years from the date of submission of the final expenditure report. For other awards, they must be retained according to the terms of the specific award or for three years following the submission of the final expenditure report to the funding agency, whichever is longer. Record retention is the responsibility of the department with the original records. Records should be reviewed on a periodic basis and destroyed when the retention period has expired.
If any litigation, claim, or audit is started before the expiration of the retention period, the records shall be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken.
Records for real property and equipment acquired with federal funds shall be retained for three years after final disposition.
Documents related to Facilities and Administration (F&A) and other cost allocation plans, including rates for fringe benefits, tuition remission, and services centers, must be retained in accordance with requirements specified in OMB Circular A-110.
Specific questions can be directed to the Office of Sponsored Research or the Office of Research and Cost Accounting.
Detailed information may be found in OMB Circular A-110.
Service Centers
Service center administrators should read and become familiar with the Rice’s Service Center Policy (836‑03).
Scope and Definitions
Service centers, frequently referred to as recharge centers, are University operating units established for the specific purpose of providing products or services to other University cost centers, although services may also be provided on an incidental basis to individual members of the Rice community or to external users. Note: Areas which bill out items such as copying and faxes at a calculated rate are excluded from these procedures if the total amount billed is less than $5,000/year. However, billings may not exceed actual costs, and all users must be billed at the same rate regardless of funding source.
Clearing accounts and auxiliary activities are not subject to these procedures.
Clearing accounts function as a place to charge the costs of items ordered which are later to be distributed to other accounts. Unlike service centers, the cost of various types of goods, or goods and services, are not combined to calculate a rate. For example, a department might order supplies from the A1 fund which are then used for purposes other than general departmental usage. Costs related to these other activities could then be moved to another funding source.
Auxiliary activities are expected to generate the bulk of their income from outside the University (from charges which are not made to other university funds) and to be self‑supporting (e.g. residential colleges). Billings to other University units should be incidental to their main business activities. If billings within the University are significant, it may be appropriate to set up a service center for a portion of the auxiliary's activities.
Requirements for Establishing and Operating a Service Center:
1. A fund (D fund; ‘cost center’) for the accumulation of direct costs must be established. The fund will have a program code of CTR. Costs related to service centers should not be commingled with other expenses. Costs may normally include:
a) Salaries and fringe benefits
b) Materials and expenses
c) Equipment maintenance
d) Equipment use/depreciation charges (see 5. below)
e) Other direct costs
2. The following costs must be excluded in the calculation of billing rates:
a) Equipment purchases ($5,000 or more) ‑ see 5.
b) The following unallowable costs as provided in OMB Circular A‑21, Cost Principles for Educational Institutions:
‑ Advertising costs to promote the service or product offered
‑ Alcoholic beverages
‑ Bad debts
‑ Entertainment
‑ Goods and services for personal use
‑ Dues/memberships for social, civic, and community organizations
‑ Flowers, gifts, and donations
‑ Fines and penalties
‑ Travel costs that do not conform to the Rice travel policy and government guidelines
c) Inventory of supplies and parts
Any of the costs listed above in (a), (b) or (c) which are associated with a service center must be paid from other University funds and coded to the proper account code, so that they will not be included in the indirect cost calculation.
3. The service center manager should submit proposed billing rates for the next fiscal year (beginning July 1) to the Budget Office during the normal budget cycle. The Budget Office will supply this information to the Controller's Office for review. The submission should include the proposed budget, which should be in sufficient detail to determine that no unallowable costs are included.
Proposed billing rates should be calculated using the proposed budget, anticipated service volume, and any over/under recovery of costs from prior years. A full explanation of the methodology used to determine the rates must also be provided, including the basis for all estimates.
Billing rates must be based on costs and must be applied uniformly to all users. In general, rates should equal the cost of providing the product or services during any fiscal year, within a margin of ±5% of annual service center billings. In some cases, a longer break‑even period may be appropriate; this must be determined on a case-by-case basis. In these instances, rates should be designed to recover the total costs of providing the products or services ±5% over a three-year period; a five-year period may be used in extremely unusual circumstances. Examples of cases where a break even period longer than one year may be appropriate include service centers whose usage or costs vary widely from one year to the next due to reasons beyond the control of the service center. Contact Research and Cost Accounting to arrange for a longer break‑even period for a service center.
A University department may choose to subsidize a service center for the benefit of internal users (other Rice University funds/organizations) only. Consult Research and Cost Accounting to determine the proper coding for the subsidy based on the nature of the service center.
4. Revenues and related expenses must be charged to the same fund, organization, and program code. Each service center must prepare timely interdepartmental transfer forms (or another billing method approved by the Controller's Office) and obtain proper authorization from the department being charged. Internal revenue accounts (account codes 58xxx) must be used by the service center to record the revenue received from internal users. Service centers are responsible for maintaining and retaining supporting documentation related to usage and rates.
In rare cases, service centers may perform services for external users (users other than Rice University funds/organizations). These instances should be approved by the Dean's Office and reviewed by the Controller's Office, since these activities may raise unrelated business income and ad valorem tax issues. External sales accounts (account codes 57xxx) must be used for revenues for services provided to external users.
Billing for services paid for by external users should normally include the standard University negotiated on‑campus facilities and administrative rate applicable to sponsored research projects. Billing for services paid for by Rice funds may not include any indirect costs.
5. Equipment Purchases: In calculating billing rates, equipment purchases (as defined by the University's capitalization threshold) must be excluded.
It is the department's responsibility to establish a separate equipment fund to charge equipment purchased for use exclusively by the service center. Equipment normally provided as a part of general University operations (desks, chairs, etc.) may not be considered service center equipment. This fund must be adequate to provide resources for service center equipment purchases. The department should work with the Controller's Office to assure that the list of equipment agrees with fixed asset records in the Controller's Office.
Annual charges for equipment use or depreciation as approved by the government, based on the cost of equipment listed on fixed asset records at December 31, may be calculated and included as a cost in calculating the service center billing rates. The use charges will show as a charge in the service center fund (cost center) and a credit to the related service center equipment fund. These credits may be used to fund purchases of additional or replacement equipment, if needed. Property Accounting will provide the cost basis of the equipment upon request. The Controller's Office will review the proposed equipment use or depreciation calculation and make the appropriate entries.
6. Slightly different rules apply to specialized service centers as defined in OMB Circular A‑21. Specialized service centers are those which have billings in excess of $500,000/year and provide a good or service which cannot be readily purchased commercially. Anyone who believes they may have a specialized service center should contact Research and Cost Accounting (x6092) for more information.
7. A few examples of areas which may function as service centers include:
- ‑ computer equipment maintenance centers
- ‑ telecommunications
- ‑ craft work which is separately billed (carpentry, custodial, etc.)
- ‑ design and layout assistance for publications
- ‑ machine shop
- ‑ electronics shop
- ‑ storerooms
- ‑ copy, fax and computer usage, if billed
- ‑ networking installation and maintenance, if billed
Related Forms: Submit to Research and Cost Accounting a completed Service Center Fact Sheet for each fund or activity which may be subject to the Service Center Policy. Research and Cost Accounting will review the information and advise the department if the Rate Calculation Worksheet and Equipment Schedule are required.
Questions? Contact Research and Cost Accounting (email rchacctg@rice.edu).
Tuition Remission
These procedures are issued in accordance with Research Policy 305, Tuition Remission.
Rice University charges tuition remission on amounts paid to graduate students who provide services to the university as research assistants (RAs) or teaching assistants (TAs) as part of their enrollment at the University. Research Policy 305 applies regardless of the funding source. The charge for tuition remission is based on an average rate applied to all compensation paid to graduate RAs and TAs. The tuition remission rate is set annually and may change at the beginning of each fiscal year. The current tuition remission rate is posted on the Office of Sponsored Research.
Coding graduate student stipend payments. Proper coding of graduate student stipend payments is based on whether the graduate student is appointed as a trainee/fellow or as a graduate RA or TA, depending on his or her assignments. Separate account codes are used on the Graduate Student Payroll Authorization form for these types of stipend payments: account code 60820 for trainee/fellow; 60850 for RA; and 60860 for TA. (Note: Graduate students who are paid hourly wages are classified as graduate student workers and payments are charged to account code 60880 on the Student Payroll Authorization form available through Esther.)
Guidelines for coding of graduate student stipend payments are available on the Office of Graduate and Postdoctoral Studies website.
Tuition remission charges. The payroll system will automatically post a tuition remission charge to the same fund and organization as the payment recorded for an RA or TA. Tuition remission costs that are not eligible expenses on sponsored funding are charged, without penalty, to the department’s A1 budget (unrestricted funds).
Tuition remission and the annual budget. The University has chosen to provide to the Deans, through the annual operating budget process, an allocation equal to a portion of the tuition remission generated -- from sponsored project, designated, gift and restricted endowment funds -- in the just completed fiscal year.
Additionally, effective with fiscal year 2009, Rice will include in the yearend budget carry forward calculation an amount equal to 100% of the amount charged as tuition remission on compensation paid to graduate students from departmental unrestricted (A1 and A2 budget) funds. This amount excludes tuition remission charges that defaulted to unrestricted funds because tuition remission was not an eligible expense of the external funding source.
Questions? The following offices are available for assistance:
Correct coding of graduate student stipends. Contact the Office of Graduate and Postdoctoral Studies (Cindy.Wilkes@rice.edu, x5812) or Research and Cost Accounting (email rchacctg@rice.edu).
Posted tuition remission charges. Contact the Payroll Office (payroll@rice.edu).
Tuition remission and the annual budget. Contact the Budget Office (budget@rice.edu).