The University of Chicago

Financial Services

  

Accounting Events of Special Note

Certain sponsored award accounting events are worthy of special mention because of their importance in documenting allowable award costs. Accounting events included in this category are:

  1. Budgeting
  2. Cost sharing
  3. Effort reporting
  4. Indirect cost accounting for off-campus expenses
  5. Subaward accounting

The above list, of course, is not all-inclusive. Below is a description of each of these accounting events.

Budgeting

Award funds may be budgeted by individual subaccount (line item budgeting) by budget pools or by a combination of line item and pool budgets. FAS has an Automatic Budget Reallocation (ABR) attribute value for every account. The ABR attribute tells FAS what budget pools exist for an account. The default ABR for a sponsored award account is 3.

ABR code 3 uses the budget pools shown below. Budget is placed into the pools, but a pool can be unbudgeted. If desired, individual subaccounts can also be budgeted. When an expenditure is charged to an unbudgeted subaccount, funds are drawn from the appropriate pool to cover the expense.

Pool Subaccount Number Subaccount Number Range Expense Categories
0999 1000/1999 Personnel costs
2001 2100/4999 Services
5000 5100/5999 Supplies
6000 6100/6999 Equipment
7000 7100/7599 Travel
7600 7700/8599 Other general
9900 9901/9921 Unallowable costs

When an expense is posted to an account with an ABR code of 3, FAS first checks to see if the subaccount the transaction is being posted to has a line item budget. If it does, FAS will make no budget transactions. However, if there is no line item budget, FAS will look to see if there is a line item budget at the 8-digit account level that applies to the transaction, and if there is, then FAS moves budget from the 8-digit account to the 9- or 10-digit account that the expense is being posted to. For example, if a scientific equipment expense was posted to subaccount 6113 in the scientific equipment subaccount range 6100/6199, FAS would first check to see if subaccount 6113 had a line item budget. If it did, no budget transactions would be generated. If there was no line item budget in 6113, FAS would then check to see if there was a line item budget in subaccount 6100 (scientific equipment). If there was, then FAS would move the budget from 6100 to 6113. If 6100 had no budget, FAS would check the ABR Code. If the account had an ABR Code of 3, FAS would draw budget, even if none was present, from the Equipment Pool, subaccount 6000 and place it in subaccount 6113. If the ABR Code was something other than 3, then budget draws would be made from other pools, or in the case of ABR Code 0, no budget draws would be made at all.

See the FAS Manual for more discussion on budget accounting.

Cost Sharing

Definition of terms:

The University is required to account for mandatory and voluntary committed cost sharing in our financial accounting and effort reporting systems.

If an award has mandatory or voluntary committed cost sharing that has to be accounted for, then at least three accounts are needed. There is a “regular” award account (usually the master account but sometimes an associate account) that records expenses funded by the award. There is a “cost sharing” award account (always an associate account) that records the expenses that are cost shared. In addition, there is a “cost sharing counterpart” account, which is normally an unrestricted departmental account that provides the funding for the cost sharing expenses. Normal payroll and non-payroll accounting entries are posted to the “regular” and “cost sharing” accounts. A special accounting entry called the “cost sharing entry” is posted to the “cost sharing” and “counterpart” accounts. The cost sharing entry is generated automatically by the accounting system. The system first totals the gross expenses in the cost sharing account. Then, using that total, the system charges the counterpart account’s subaccount 96×0 and credits the cost sharing account’s subaccount 97×0. After the cost sharing entry, the cost sharing account’s expenses net to zero.

As stated above, mandatory cost sharing is clearly stated in the award notice. However, administrators must now pay additional attention to an award’s proposal to determine whether effort (compensation expense) and/or other expenses were voluntarily committed. Voluntary committed cost sharing may appear in the budget, in the budget justification, on the Current & Pending Support page, or in the Progress report Summary for a Streamlined Non-Competing Award Process (SNAP) application. It may also appear on the NIH Personnel Report for competing continuation applications. The (Principal Investigator) PI may also promise effort in the text of the proposal. The administrator is looking for commitments of effort with no associated salary request or reimbursement.

For more information on cost sharing, see URA’s Web Site.

Indirect Cost Accounting for Off-Campus Expenses

Federal sponsored award expenses incurred at off-campus locations may be charged indirect cost at the off-campus indirect cost rate. An off-campus location exists if the program requires University personnel to conduct program work in buildings not owned by the University—or in a University building where rent is normally charge--for a continuous period of time that is greater than one month and is coincident to a standard pay period.

Because indirect cost charges to an award account are based upon a single indirect cost rate, off-campus and on-campus expenses must be recorded in separate accounts in order for an award's indirect cost charges to be correctly calculated and charged. Below are guidelines for identifying an award's off-campus expenses.

Salaries and fringe benefits

When an award's activity requires an individual to spend time at a non-University owned off-campus location in blocks of time that are greater than one month and coincident to a standard pay period, then the salary and benefit expense for those pay periods should be charged to the off-campus account.

Commodities, goods, supplies and services

Commodities, goods, supplies and services that must be delivered to an off-campus location should be accounted for as off-campus expenses. However, commodities, goods, supplies and services that could be delivered to the on-campus location or that will move between on and off-campus locations during the life of the award should be accounted for as on-campus expenses.

Travel

Travel expenses incurred for travel between:

a. the University and the off-campus location should be accounted for as off-campus expenses;

b. the University and a destination other than the off-campus location should be accounted for as on-campus expenses;

c. an off-campus location and a destination other than the University should be accounted for as off-campus expenses.

Subaward Accounting

A subaward is a formal agreement that is legal and binding upon the institution. The University enters into these agreements when a substantive portion of the work outlined in the prime agreement is conducted at another institution. A subaward normally involves collaboration with another educational or research institution but may be entered into with any organization outside the University.

The principal investigator and award administrator are responsible for determining the allowability of the costs submitted for payment. The invoice should be consistent with the subaward budget and the progress reports received to date. The Subrecipient Payment Authorization Form must accompany payment requests.

A separate unique subaccount in the subaccount range 86XX is assigned to each fully executed subcontract. Indirect costs are recovered only on the first $25,000 of payments and are charged to unique 910x subaccounts.

Additional information on subawards can be found in URA's Web Site.


#