Spending Award Funds
All expenditures must be made in accordance with the policies and procedures of the University of New Mexico, as published in the University Business Policies and Procedures Manual. In addition, applicable federal and sponsor rules and regulations must be followed.
Allowable, Allocable, and Reasonable Costs
As a condition of receiving federal funding, we agree to follow federal policies, including Office of Management and Budget Circular A-21 that provides principles for determining costs applicable to work performed on contracts and grants. In addition to the specific guidelines of a sponsoring agency, costs charged to sponsored projects are evaluated on three criteria: allowability, allocability, and reasonableness.
Allowability: 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.
Allocability: Once allowability criteria have been met, the cost must be evaluated against the criterion of allocability. The cost is allocable if:
- The cost has been incurred solely to advance the work under the sponsored agreement;
- It benefits both the agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods;
- It is necessary to the overall operation of the institution and is deemed to be assignable in part to sponsored projects.
Reasonableness: The cost must be able to withstand public scrutiny, i.e. objective individuals not affiliated with the institution would agree that a cost is appropriate on a sponsored research award.
Office of Management and Budget (OMB)
- OMB Circular A-21-Cost Principles for Educational Institutions
- OMB Circular A-110-Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations
What are the rules for spending funds?
- Account Codes list
- Recovery of Facilities and Administration Costs UBPP #2425
- Deferred Grant Process Flowchart
- Examples of Revisions That Normally Require Prior Approval:
- Change in scope or objectives of the project
- Change in key personnel
- Absence for more than three months (PI)
- A 25% reduction in effort devoted to the project by the PI
- Need for additional funding
- Budget revisions which affect F&A
- Transfer of funds allotted for training/patient care
Budget Revision Form
Eligibility chart - Big Red Policy #2430
- Cost Share is that portion of the costs of a project or program that is not borne by the sponsoring agency. Typically associated with grants and cooperative agreements, rather than contracts.
- Matching: synonymous with “cost sharing”
- In-Kind: as opposed to “cash”
- Cash: Costs that would not otherwise be incurred by the University.
- Voluntary: Not required by the sponsor; becomes part of the contract and therefore obligatory.
- Mandatory: Required by statute or program requirements as a condition of the award.
- Third Party: Contributions from an organization other than the prime recipient that is participating in the costs of the project. Most common instance would occur when subcontractors supply part of the cost share contributions.
- In Banner, cost share funds are set up separately from the main fund. The cost share fund number is identical to the main award number, except the last digit is a “C”. Click here to see how to view your cost share fund in Banner form FRIGITD.
- When the proposal is awarded, the funds identified on the cost share form will be transferred to the new cost share index. This is done via the Transfer Request Form. The Transfer Request form is initiated by the Vice President for Research office from the Cost Share Commitment Form that was submitted with the proposal. The form is sent to CGA, and CGA creates the Journal Voucher to transfer the funds into the cost share index.
- Income from a project financed by an active contract or grant (e.g., conference fees, sale of materials, brochures, tapes).
- Must be reflected in budget with proposal.
- UNM program income account must be established for any revenues in connection with a sponsored project.
- Never use an outside (non-UNM) bank account to deposit or expend program income funds.
- In Banner, Program Income funds are set up separately from the main fund. The program income fund is identical to the main award number, except the last digit is a “P”. Click here to see how to view your program income fund in Banner form FRIGITD.
- Review monthly University expenditure reports for accuracy: Hyperion Reports-FRH0001 & 2 Grant Ledger Detail and Summary and FSH0001 Salary Labor Benefits and Encumbrance Report
- Review requests for reimbursement (billings)
- Timely correction processing of salary and non-salary expenses
- Review Subaward invoices
- Job Aid-FIRA 001 Determining Fund and Grant Balance
- Click here to see how to determine your over expenditure index on a fund in Banner screen FOAPAL Attribute Associate Form FTMFATA
Budgets
Why is the F & A rate charged to the award?
OMB circular A-21 establishes principles to provide that the Federal Government bear its fair share of total costs, both direct and indirect (F&A).
Direct costs are those costs identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or can be easily and accurately assigned to such activities. An example of a direct cost would be salaries and their related fringe benefits.
Indirect (F&A) costs are those incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular project or activity. An example of an indirect cost would be the administration of payroll and benefits.
In Banner, the Deferred Grant Process (FRRGRNT) calculates and records F&A, revenue, and unbilled receivables.
When do I need a budget revision?
After a grant or contract has been awarded, the approved budget allocations are not always consistent with actual project needs. You can request the reallocation of funds from one spending category, or account code, to another account code category that better reflects your project requirements. This process is called Re-budgeting or Budget Revision.
Cost Sharing
Program Income
Monitoring Expenditures
Cost Transfers
Cost transfers are after-the-fact allocations of direct charges (including labor redistributions) to, from, or between federally sponsored projects Federal, state, and private agency policies and audit guidelines have become quite stringent as they relate to cost transfers between grant and contract programs. A key Federal regulation pertaining to the expenditure of sponsored project funds contains the following statement: “Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience” (Office of Management and Budget Circular A-21/section c.4b.)
Over expenditure index
The Banner HR/Payroll system does not allow for ‘end dates’ on labor distributions. Employees with distributions on grant funds that have ended will be posted to the over expenditure index identified by the department. This new process helps to ensure continuity of funding for employees provides for timely and accurate grant billing and eliminates the need for institutionally monitored suspense accounts. These e-mails will be proactive reminders to assist departmental administrators in identifying employees who have pending labor distributions on contracts or grants that are ending.
Additionally, the requirement for a 60-day memo on cost transfers has been increased to 90 days, as explained in policy #2450