This office is responsible for all restricted funds sourced by grants, contracts, Federal/county appropriations, and any related cost-sharing Indexes (FOPALs). This includes the establishment of all restricted funds on Finance System (FIN), monitoring the implementation of fiscal restrictions and requirements imposed by the sponsor on grants and contracts, and the financial close out of all restricted funds. Sponsored Projects Accounting (SPA) is also responsible for the distribution and maintenance of the University’s Effort Reporting System reports, and assistance in compliance with Federal and Non-Federal sponsor terms and regulations. All invoicing and deposit of sponsor payments on grants and contracts are handled through the SPA office. Requests for assistance in the interpretation of fiscal requirements, or questions regarding the status of invoicing, or related financial reporting generated by the SPA office may be addressed at 646-1675, email@example.com or by calling the fiscal monitor assigned to the Index (FOPAL).
NOTE: Throughout the manual, all signatures referred to must be original signatures; facsimile signatures, (unless approved through remote document submission mechanism) initials and signing another employee’s name are not acceptable for internal control purposes. Throughout the manual, the term “Grant/Contract” includes any type of funding accounted for in current restricted funds, excluding gifts.
Restricted funds are identified by external restrictions placed upon the use of funds. As such, the source of all restricted funds must be external; internally designated funds, including surpluses from fixed price grants/contracts, cannot be sequestered in the restricted fund for any specific purpose.
NOTE: Sources of funds that do not fit into one of the above categories should be discussed with the Controller’s Office to determine the proper classification.
Appropriations are broad-based Governmental allocations that generally address a large area of funding, rather than a specific task or project. Appropriations are most commonly broken into smaller, internally-designated budgets for managerial purposes, and may be either unrestricted or restricted in nature, depending on whether they are made available to the entire University, or to specific areas within the University. With certain exceptions, restricted Federal and county appropriations will be treated like grants and contracts.
For accounting purposes, gifts are defined as “Funds received for which no specific goods or services will directly benefit the sponsor.” Many levels of restrictions may be placed on gifts.
A gift is considered “unrestricted” only if it may be used for any purpose within the University.
A gift restricted only to an area within the University, but not as to use, will be classified as “restricted,” because one level of restriction has been placed on it. Examples of multi-level restricted gifts would be any form of Non-Governmental student financial aid or a private “grant” to generally benefit a program’s research, where the sponsor will receive only the same benefits of that research which the general public will also receive, such as publicized results. Governmental sponsors cannot donate “gifts.”
The gift funds described above are clearly tax-deductible contributions with no benefit to the donor. The Advancement Services Office, under the Vice President for University Advancement, also accepts funds where goods or services are offered in exchange for all or part of the income received. These funds must be the result of fund-raising activities. These funds are deposited into current University gift Indexes (FOPALs) as sales/service income. The department is responsible for providing adequate documentation stating the fair market value of the goods or services received by the donor to allow the University to properly receipt the donor for any portion of the fund-raising income that is to be considered a gift. Examples of events that generate this type of income are fund-raising golf tournaments, car washes, luncheons, etc.
NOTE: The use of University facilities must be reimbursed from fund-raising income. Attendance of employees at fund-raising events is not generally considered an appropriate University expense, unless those employees are directly involved in conducting the event.
For accounting purposes, Grants and Contracts are defined as awards for which specific services and/or deliverables are to be provided directly to the sponsor for payment. The consideration must be equal to the University’s approximation of cost, plus a documented, negotiated administrative fee, if applicable, agreed to by the sponsor.
The purpose of a grant is to transfer money, property, services or anything of value from the sponsor to the recipient in order to accomplish a public purpose. The recipient of a grant is expected to pursue the work under the grant independently and report the results to the sponsor at the end of the project.
The principal purpose of a contract is the acquisition of property or services for the direct benefit of the sponsor. A contract is not a grant but a grant is a contract.
Administrative fees can be made a part of a grant/contract with appropriate approval of the Senior Vice President for Administration and Finance.
All grant/contract funds will reflect a budget supported by written sponsor-approved documentation or an approved internal line-item budget. Budgets will not be modified without this documentation.
The SPA Office will be responsible for the establishment of all grant/contract restricted Indexes (FOPALs) and for the coding of all Index (FOPAL) attributes. Federal pass-through Indexes (FOPALs) will be coded as Federal funds. SPA will review all new Index (FOPAL) requests prior to entry in the Finance System (FIN). A complete copy of the fully executed grant/contract and a budget document should accompany new Index (FOPAL) requests.
The SPA Office will be responsible for the establishment and maintenance of all F&A cost Journal Vouchers and computations.
The SPA Office will be responsible for entries related to the closing of a grant/contract Index (FOPAL), including the transfer of surplus balances to designated unrestricted Indexes (FOPALs) through the established surplus income codes and the terming of the Index (FOPAL). Surpluses will be transferred only after the final payment on the grant/contract is deposited, although the Index (FOPAL) should be termed against further activity at the end of the grant/contract period, even if the final payment is not yet received. All grant/contract Indexes (FOPALs) should be closed within six months after the established end date unless the sponsoring agency specifically requires other procedures.
Grant/contract Indexes (FOPALs) may be automatically frozen against further expenditure any time after the established end date to prevent the posting of charges without complete review. If the research center or department anticipates an extension and/or additional funding but believes that all paperwork will not be completed by the end date, they may follow the procedures as described in subsection 3.15.15. If an extension and/or additional funding is not anticipated then, for non-payroll transactions, the following procedures will be used:
- If a Journal Voucher is proposed involving transfers from grant/contract Indexes (FOPALs) to non-grant/contract Indexes (FOPALs), other than to a cost-share Index (FOPAL), the fiscal monitor is authorized to allow the Journal Voucher to be processed. Cost overruns should be transferred to cost overrun Indexes (FOPALs), not to general unrestricted Indexes (FOPALs).
- If a Journal Voucher involves transfers between grant/contract Indexes (FOPALs) or from an unrestricted Index (FOPAL) to grant/contract Indexes (FOPALs), the department must first obtain the signature of SPA personnel. Sufficient support should be attached to the Journal Voucher to allow the office to make an informed decision.
The following subsections refer to areas where special treatment of restricted funds may be required due to the restrictions under which the University accepts those funds. For further information regarding the restrictions identified in the following subsections refer to the award/contract documentation, awarding/contracting agency regulations, fiscal monitor assigned to the index (FOPAL) or *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al. for grants and Federal Acquisition Regulations (FAR) for contracts. Beyond these subsections, all policies and procedures discussed in other sections of this manual also apply to unrestricted and restricted funds.
Banner generates system entries which recognize an Accounts Receivable equal to the amount of any restricted Indexes (FOPALs) fund balance deficit, and a deferred revenue equal to the amount of any restricted Indexes (FOPALs) fund balance surplus.
Cost sharing may be mandated by legislation or regulation in many programs. It may represent a programmatic decision of the sponsor or the award recipients may volunteer it. Cost sharing frequently becomes a contractual obligation after being introduced in proposal verbiage voluntarily by recipients of contracts and grants. The Cost Share Close Out Form should be completed when a new fund or a change to an existing fund is being made.
Types of Cost-Sharing
Cost sharing can involve:
- The direct outflow of cash, known as Direct Cost-Sharing
- The reduction of charges to the Sponsored Program through reduced Facilities and Administration (F&A) rate, known as Cost-Sharing of Indirect Cost
- The recognition of an in-kind benefit to the contract, known as In-Kind Cost-Sharing
- Definitions of Cost Sharing can be found in the glossary of the Business Procedures Manual.
Cost sharing may be mandatory, which means it is required by the agency. In voluntary cost sharing, the University volunteers to provide the cost sharing. It is important to remember that all cost sharing must be an allocable cost by directly benefiting the project, and, accordingly is only to be committed one time.
Mandatory and voluntary cost sharing will be separately reported in the accounting system.
SPA will determine whether cost-shared F&A will be considered mandatory or voluntary based on the following Cost Sharing Policy effective 10/28/04:
- If the sponsor is requiring a match and we choose to waive the indirect cost as the match – then the cost share is considered voluntary.
- If the indirect cost is capped because the agency has an agency-wide policy to cap the indirect cost rate-then the cost share is considered mandatory.
- If the direct cost is capped at the agreement level only by the agency-then the cost share is considered voluntary.
- If there is a direct cost share requirement at the agreement level – then the cost share is considered mandatory.
- If the University chooses to provide a direct cost share and is not required by the agreement – then the cost share is considered voluntary.
- If the agreement is a fixed price contract and the agency requirement was a capped indirect cost rate (often the sponsor will pay 0% F&A) – then at the end of the agreement if there are funds remaining, the funds will be used to meet the full F&A calculation on the direct expenses. The difference between the amount of the recorded cost share and the total allowable cost share is considered voluntary cost share as allowed by available funds.
- When the rate is capped by the agency – there is recording of lost indirect cost.
When F&A cost is being cost-shared, entries will be made by SPA to record F&A Costs in the grant/contract Index (FOPAL) at the billable F&A cost rate under accounts 798100, with a separate entry which credits the grant/contract Index (FOPAL) under account 7982XX for the portion of the indirect rate which the sponsor will not pay.
Separate cost-sharing Indexes (FOPALs) are created and budgeted when the sharing of direct costs is required. It is important that the department use the same Index (FOPAL) for cost-sharing throughout the life of the award. Cost Sharing is not allowed on Indexes (FOPALs) that are a part of an indirect cost pool. For further information, call AFR.
Generally until an expense is formally approved in writing, through budget or narrative documentation by the sponsor, it cannot be recorded in the grant/contract or gift Index (FOPAL).
NOTE: Verbal approval will not be considered adequate. In special circumstances, the department may arrange for the sponsor to provide verbal approval directly to the SPA office, to be followed by a written confirmation of this approval. A facsimile copy is acceptable confirmation support. The responsibility for obtaining the written approval will rest with the department. If SPA does not receive written approval within 90 days of receipt of the verbal approval, the expenditure will be transferred to an unrestricted over-run Index (FOPAL) until such time as the written approval is received. In general, contact will be limited between the SPA and sponsors to routine items involving billings and financial reporting, but the SPA office will have the authority to contact the sponsor’s financial personnel regarding any appropriate issue. Effort will be made to keep departmental personnel informed of all non-routine contacts.
Index (FOPAL) Creation in Anticipation of Award/Continuation
University policy does allow for the creation of Indexes (FOPALs) on waiver, if certain conditions are met.
If the University has received adequate verification to assure that an award is to be received, then the Index (FOPAL) will be established. This verification information can include:
- Having a prior program that is being renewed
- Having a new program with a well-known sponsor.
- Verifying that terms and conditions are a type that are usually accepted by NMSU.
- Reviewing the cost share or matching requirements to assure they are acceptable and/or
- Verifying that substantial upfront costs are not required.
The adequacy of the information is the responsibility of the departmental unit. In order to assure the best possible information, the unit will provide Sponsored Projects Accounting, through the Office of Grants and Contracts, all information available on the award. The accounting budget rule, budget amounts, and start date will be established in accordance with this information. In the event the information is wrong, the Index (FOPAL) will have to be re-established. Sponsored Projects Accounting will establish the new Index (FOPAL) and the unit will be responsible for transferring all costs to the new Index (FOPAL). The Dean or Director is responsible for all charges not billable to the agency.
If approved, but award documents are not received within 90 days of the Index (FOPAL) creation date, an extension of the waiver date for an additional 90 days may be submitted in writing (e-mail is acceptable) to SPA.
Expense for Continuation of Projects and/or Anticipation of Modifications
Expenses will be allowed against the existing Indexes (FOPALs) for up to 90 days after the initial end date on the award if the Principal Investigator/College states they are waiting on the continuation of the award or has requested a modification to end date. A formal waiver is no longer needed. After 90 days, if the continuation or modification
has not been approved by the sponsor, the SPA office is authorized to move those expenses not included in the existing award to the college overrun Index (FOPAL).
The Fiscal Monitor is responsible for tracking expenses outside of the end date to make sure they are not invoiced to the sponsor. Also, the monitor will be responsible for alerting the college at the 90-day point in order to move expenses to the overrun Index (FOPAL).
At the discretion of the Controller, if approved award documents are not received within 90 days of the end date on the award waiting for continuation or modification, a second extension may be granted based on circumstances presented by the college.
Grants/Contracts with specific line item or task budgets approved by the sponsor should adhere to those budgets, unless authority is given to the University to re-budget without sponsor approval or permission to revise the budget is received from the sponsor. All sponsor guidelines should, therefore, be followed when deviating from previously approved budgets. An internal budget document, Budgeting Restrictions Template (BRT), should be provided through Office of the Vice President for Research-Office of Grants and Contracts, to SPA for revised budgets that have been approved by the sponsor or when internally revised budgets affect new CAS expenditures. A CAS Justification form will also be required if a CAS justification is expanded.
In all cases, the sponsor’s documented restrictions will take precedence in determining expense allowability. Common expenses requiring special treatment are addressed below.
The Federal Government requires that the University carefully monitor all payments made to consultants hired on sponsored projects, regardless of the source of funds. To comply with this requirement, the University has devised the procedures discussed below.
Once the decision to hire a consultant is made by the Principal Investigator, prior approval must be obtained from the Dean or Director’s office. In the approval of this request, the Principal Investigator and Dean or Director certifies that:
- There is evidence that the services to be provided are essential and cannot be provided by persons receiving salary support under the grant or otherwise compensated for their services.
- A selection process has been employed to secure the best-qualified person available.
- The charge is appropriate considering the qualifications of the consultant, the prevailing consultant rates, and the nature of the services rendered. Sponsor-imposed regulations concerning maximum daily rates must be adhered to in the computation of this charge. Federal regulations require that each consultant complete an invoice and a report. The NMSU Accounts Payable Office will not authorize contractor payments without submission of an invoice. It is the responsibility of the Principal Investigator to ensure that the contractor’s report and internal approvals are obtained and filed for future audit purposes.
All foreign travel on grants/contracts must be pre-approved by the sponsoring agency. For additional information refer to Chapter 5C-Travel. Be sure reimbursement is claimed only for those places and for those dates for which agency prior approval was received. Travel to any other locations on any other dates is not reimbursable from grant and contract funds. Even though actual expenses may be claimed for foreign travel, the charge must be reasonable and supportable.
Travel Charged to two or More Budgets – When at least one of the Indexes (FOPALs) charged is a grant/contract Index (FOPAL), additional documentation for this kind of travel is required as follows:
- The primary purpose of the trip must be indicated as well as the project or budget that was the primary beneficiary of the trip. This information is necessary to justify the division of transportation and per diem expenses.
- All foreign travel requests must be supported by an attached copy of specific sponsor approval for the trip when required by the sponsor.
- The purpose of the trip and the distribution of charges must be clearly detailed on the Reimbursement Voucher.
NMSU defines capital equipment as any item costing in excess of $5,000per unit with a useful life of one year or more. The definition of capital equipment for grant/contract Indexes (FOPALs) varies from agency to agency and will sometimes conflict with NMSU’s definition. When there is a difference, NMSU will record as capital using our definition per *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al.
Capital equipment purchased with restricted funds requires agency approval, unless specifically stated otherwise in the agency’s guidelines/regulations. Normally approval is obtained at the time of the award through the inclusion of capital equipment in the proposal budget. If capital equipment is not originally proposed and later is deemed necessary to complete the scope of the projects, then agency approval is required.
NOTE: National Science Foundation (NSF) & National Institutes of Health (NIH) do not require agency approval for any equipment costing less than $25,000; however CAS justification will still be required by the Office of Vice President for Research – Office of Grants and Contracts.
Please refer to Accounting Financial Reporting and Business Services/Property section 1C.10 regarding Federal screening regulations and use of excess Government property.
Expenses Incurred Near Project End Date
In general, all materials, supplies, services and equipment should be received prior to the expiration date of a project, and would include items encumbered before the expiration date. On continuing multiple year awards purchase requisitions must be entered in Banner by the 15th of the last month of the budget period. This will ensure that the encumbrances are recorded prior to the expiration date and can be included as expenditures on the annual financial report to the sponsor. Expenditures within the last days of the grant/contract period may be subject to additional review in anticipation of sponsor audit of the period. Exceptions will be made depending on the funding agency, the type of expense, and possible continuation of the award.
Equipment purchased within the last quarter of the grant/contract period must have additional justification included on the Purchase Requisition line-item detail (On-line requisitioning PR system screen) or separate justification forwarded by a memo to SPA to be considered reasonable.
Residual Materials and Supplies exceeding $5,000 on Federal Awards
If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the Federal project or program and the supplies are not needed for any other Federal award, the non-Federal entity must retain the supplies for use on other activities or sell them, but must, in either case, compensate the Federal government for its share, per 2 CFR 200.314.
Therefore, a residual supplies inventory is required upon termination or completion of the project or program if residual supplies in aggregate total more than $5,000. The inventory must be provided in Section 5 of the Report of Final Expenses and must be approved by the Principal Investigator. If the residual supplies inventory is designated for use on a continuing award or other federally supported activities, the Principal Investigator has a fiduciary responsibility to ensure the first-in first-out method is used. Refer to the Report of Final Expenses form for a detailed explanation.
In general F&A costs are identified as those costs, which are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity or any other institutional activity. The Federal Government provides for the allocation of a percentage of these costs to grants and contracts through approved F&A cost rates. The calculation process is complex, but in general involves a comparison of total allocable indirect costs to total direct costs, the ratio of which is expressed as the percentage identified as the F&A cost rate. Different rates are computed for different major functions within the University. F&A cost rates are calculated by AFR and approved annually. The F&A rate in effect at the time of the initial award should be used throughout the life of the sponsored agreement per *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al.
As a part of this allocation of costs, F&A costs are separated into cost pools. Each pool makes up a certain portion of the total F&A cost rate, and may be subject to federally designated caps. The expenditures in Indexes (FOPALs) which make up the cost pools are subject to annual Federal audit and possible disallowance just as expenditures charged directly to grants and contracts Indexes (FOPALs). For further information on F&A, refer to *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al.
Indirect Cost Recovery
As direct costs are charged to grant and contract accounts, an entry is either calculated automatically by the accounting system or computed manually by SPA to record an additional grant/contract expense in code 798100, representing the portion of F&A costs allocable to those direct costs. All expenses charged to this code as F&A costs must be supportable within the grant or contract records in Banner and billable to the external sponsor.
NMSU separately recognizes income as a part of this transaction. A portion of the F&A costs recovered through this charging mechanism are returned to the unit generating the direct costs as unrestricted income, to be used in support of the unit’s research or public service function. The remainder of the F&A cost recovery is retained centrally within the University to help defray the costs associated with the central functions reimbursed in the F&A cost rate.
Unallowable F&A Cost Pool Expense
The Federal Government requires the University to certify that no unallowable costs have been included in any F&A cost expense pool. The guidelines in this section should be used in determining the allowability of any expense. Questions regarding the allowability of specific expenses should be forwarded to Accounting Financial Reporting and Business Services.
There are many expenses in these categories allowable from other NMSU Indexes (FOPALs), but not allowable components of our F&A cost pool. Special accounts have been established for recording these expenses, and should be used throughout the year for this purpose. Contact the appropriate fiscal monitor regarding the use of these Indexes (FOPALs).
Guidelines for Determining Allowability of Expense to F&A Cost Pools
In reviewing costs in each of these areas, please keep in mind that the Federal Government identifies “associated costs” with unallowable costs as equally unallowable; that is, costs which would not have been incurred except for the unallowable activity should be treated as are the expenses directly associated with the activity.
Advertising and Public Relations Costs
Advertising and public relations costs, including any related administrative costs, are unallowable except as noted below. Advertising media includes magazines, newspapers, radio and television, direct mail and exhibits. Public relations includes any activities dedicated to maintaining the image of the institution or promoting favorable relations with the community or any public segment. This also includes the cost of promotional items and memorabilia including models, gifts and souvenirs as well as costs of convocations or other events related to instruction or other institutional activities. The only allowable advertising costs are those which are solely for the recruitment of personnel or for the procurement of goods and services for the performance of sponsored agreements. The only allowable public relations costs are those pertaining to specific activities or accomplishments resulting from the performance of sponsored agreements, or costs of conducting general liaison necessary to keep the public informed on matters of public concern such as notices of grant/contract awards and financial matters.
Costs incurred for, or in support of, alumni and similar activities are unallowable.
Collection costs and legal costs associated with bad debts are unallowable.
Compensation for Personal Services
The cost of University furnished automobiles that relates to personal use by employees is unallowable regardless of whether the cost is reported as taxable income to the employee.
Defense and Prosecution of Criminal and Civil Proceedings, Claims of, Appeals and Patent Infringements Costs incurred by the institution in connection with the defense of suits brought by its employees or ex-employees including the cost of all relief necessary to make such employee whole, where the institution was found liable or settled, are unallowable. Costs associated with claims against the Government are unallowable, as are costs associated with patent infringement litigation.
Donations and Contributions
Donations or contributions made by the institution, regardless of the recipient, are unallowable.
Costs of entertainment, including amusement, diversion and social activities along with any related costs such as tickets to shows or sports events, meals, lodging, rentals, transportation and gratuities are unallowable.
Fines and Penalties
Fines and penalties, including late fees/finance charges, are unallowable.
Goods and Services for Personal Use
Cost 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 employee.
Housing and Personal Living Expenses
Costs of housing and personal living expenses for the institution’s officers are unallowable regardless of whether the cost is reported as taxable income to the employees.
Interest, Fund Raising and Investment Management Costs
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.
Costs associated with influencing the introduction or outcome of any Federal, State or local Legislation, election or referendum in any form is unallowable. Legislative liaison activities such as attending sessions or committee hearings or gathering information is unallowable.
Memberships, Subscriptions and Professional Activity Costs
Cost of the institution’s membership in business, technical and professional organizations is allowable; all others are unallowable including membership in any civic or community organizations. Cost of the institution’s subscriptions to business, professional and technical periodicals are allowable; all others are unallowable. Cost of meetings and conferences when the primary purpose is the dissemination of technical information are allowable, including the cost of meals and transportation.
Selling and Marketing
Costs of selling and marketing any products or services of the institution are unallowable.
Student Activity Costs
Costs incurred for student activities are unallowable.
Please keep in mind that these guidelines are to be used in determining allowability of F&A costs only. Direct cost items on grants or contracts may be treated differently. Some costs which would be unallowable in F&A cost may be allowable direct cost items if specifically allowed by the grant or contract.
It is important to remember that even if a particular cost would normally be allowable, it must still be reasonable and conform to the established practices of NMSU. The items listed above are not meant to be all inclusive. There are many other unallowable costs which will be removed from the rate, in total, by AFR such as student aid and equipment. The items listed are those that require screening at the departmental level. Any questions should be directed to AFR.
Surpluses are produced when fixed-price grants/contracts are completed under budget. Fixed price grants/contracts may be budgeted with administrative fees with the approval of the sponsor. Surplus entries for fixed prices grants/contracts are prepared at the end of the grant/contract period. Grant/contract overruns for the college/division will be covered first from this surplus fund balance before the remaining surplus fund balance is transferred to the college or division’s general unrestricted fund Indexes (FOPALs); thus, the only surplus recognized is the cumulative ending surplus grant/contract Index (FOPAL) balance. A grant/contract cannot recognize surplus/fee income unless the maximum negotiated F&A cost rate is charged to the grant/contract.
Grants/contracts may be budgeted with administrative fees with the approval of the sponsor. Any other fee negotiations must have the approval of the Senior Vice President for Administration and Finance. Administrative fees are non-cost supported budget line items. Fees are transferred monthly to the Research Center, unless invoicing is less frequent.
Cost-reimbursable grants/contracts do not produce surpluses as NMSU will only receive reimbursement for actual expenses.
Grant and Contract Cost Overruns
A grant/contract Index (FOPAL) will continue to be charged with direct and F&A Costs until its budget limit is reached. F&A cost income cannot be earned on grant/contract overruns. Overruns of direct costs should be charged directly to unrestricted cost overrun Indexes (FOPALs) under appropriate direct cost account codes at the end of the grant/contract. The fiscal monitor of the grant/contract Index (FOPAL) will be responsible for verifying that cost overrun expenses have been charged to the correct Index (FOPAL).
In the event of a subsequent revision increasing a contract budget, these overruns may be transferred to the contract Index (FOPAL) to the extent that the overrun plus applicable F&A cost does not exceed the revised budget. If a cost overrun occurs unexpectedly, the responsible college or division must transfer funds from other unrestricted Indexes (FOPALs) to the cost-overrun Index (FOPAL). (These expenses cannot be transferred to the college or division’s general unrestricted Indexes (FOPALs) unless they are identified as having been initially charged to the contract in error.)
Surpluses may be accumulated as a part of the estimation process of costing fixed price grants/contracts. Large, un-negotiated surpluses could be considered as a gift portion of a grant/contract separately from standard budgeted surpluses discussed elsewhere. They are donated for the purpose of subsidizing the general nature of work contracted for; these situations are relatively rare and should be addressed on a case-by-case basis.
Contract Courses agreements are administered by University Accounts Receivable.
For those grants/contracts which are split between multiple NMSU organizational units, one unit will be informally designated as the primary unit for grant/contract administration. This unit will be responsible for documenting how under-recoveries, over-recoveries and disallowances are to be split between the primary unit and all secondary units. Unless otherwise documented, all such items will be divided by the same division as exists in the official grant/contract budget.
Payroll expense must be charged to grants/contracts based upon the effort actually undertaken on the grant/contract during the grant/contract period, regardless of the budgeted line item for payroll expense or percentage of effort. Standard University time and Effort Reports must be certified semi-annually if employees are not otherwise reporting their time on an hourly time report system. Effort reports are generated for those employees charging time to Federal grants/contracts. See section 3.35 for a discussion of Effort Reporting.
All personnel involved in a grant/contract’s effort, whether faculty, professional and clerical staff, or student (research assistant) must be paid in accordance with University guidelines. The salary and wage categories and job classifications for employees on grant/contract Indexes (FOPALs) are the same as those established for all other employees of the University. Salary rates and increments are therefore subject to the regulations applied to all other University employees, with the exception of the contracts requiring compliance with the McNamara-O’Hara Service Contract Act of 1965.
Payroll Expenses – Restricted
All NMSU personnel must be paid through the NMSU payroll system, even if they are considered as consultants but performing as employees. All personnel in non-exempt positions must be paid time-and-a-half for hours worked in excess of 40 hours per week. No exempt staff or faculty member may be hired to work on a grant or contract if that effort results in payment in excess of 100% FTE unless prior written approval is received from the sponsoring agency, and the Research Center Director. All faculty or staff members must be paid in accordance with their normal salary rate at the University. The NMSU hiring system should be used to initiate additional compensation to an employee. Please refer to subsection 5B for additional information on the payroll processing.
Fund Change Transactions
If the Indexes (FOPALs) to which an employee’s pay has been charged must be corrected after-the-fact, the change should be processed in NMSU’s Electronic Labor Redistribution system within 90 days of the pay date.
Fund Change Transactions More Than 90 Days from the Pay Date
The Indexes (FOPALs) Fiscal Monitor will review fund change transaction requests submitted more than 90 days from the pay date to determine if there is an external contractual reason why the fund change must be processed. This is the only type of Index (FOPAL) change transaction request over 90 days that will be processed. All other fund change transaction requests over 90 days will be processed by Journal Voucher using account 769600 to transfer expense to the departmental cost overrun Index (FOPAL). HR may not be updated. No fund change transactions will be processed if the employee’s funding source and level of effort for that time period have been certified through the Effort Report that occurs on a semi-annual basis. Please be aware that if an employee’s salary has not been charged to a restricted sponsored project fund within 90 days of the date of pay, the University will be unable to bill the sponsoring agency for the expense.
Acceptable Changes to Employee’s Funding Source/Level of Effort
Changes of distribution of workload should not normally be made for any prior pay period. In the following exceptional situations, however, retroactive changes may be warranted:
- When necessary to correct clerical and data entry errors
- When subsequent information is received indicating an incorrect original entry
- When charges applicable to a continuing project have been charged to the old Index (FOPAL) because the new Index (FOPAL) was not established when the expense was incurred
- When a sponsor specifically authorizes in writing the charge of pre-award costs to a project
- When required to properly charge non-Federal funds for costs incurred in connection with an award that fails to materialize
- When closely related work is supported by more than one funding source, costs may be transferred from the originally charged Index (FOPAL) to another Index (FOPAL), provided the cost is a proper and allowable charge to the receiving Index (FOPAL). If an over expenditure is being transferred to another project, especially strong supporting evidence is required for approval and the inter-relationship between the Indexes (FOPALs) must be fully explained in the request.
- When the change is for the purpose of utilizing the unexpended funds of another award
- When the change is for the purpose of circumventing award restrictions
- When the change is for the purpose of avoiding a cost overrun by charging another, unrelated agreement
- When a change unrelated to sponsored agreements applies to a closed fiscal year
If additional income is generated through the production or use of grant/contract by products, during the life of the grant/contract, it will be separately recorded in a separate unrestricted fund Index (FOPAL) and administered according to sponsor guidelines.
If the grant/contract specifies that the program income must be deposited against the grant/contract Index (FOPAL), it will be treated as restricted income. Upon termination of the grant/contract, remaining unspent program income will be administered per sponsor guidelines.
Transfers for Expense cannot be made into or out of restricted Indexes (FOPALs), unless the original recording of an expense was recorded in error initially or unless an approved cost overrun transfer as discussed in subsection 3.15.25 is required. If this is the case, a Journal Voucher correcting the recording of these expenses may be made through the expense account. Under no circumstances can a transfer code be used. The following excerpt from *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al should be adhered to at all times regarding restricted Indexes (FOPALs):
“Any cost allocable to a particular Federal award under the principles provided for in this Part may not be charged to other Federal awards to overcome deficiencies, to avoid restrictions imposed by Federal statutes, regulations or terms and conditions of the Federal awards, or for other reasons.”
NOTE: All personnel should be very careful to charge salaries, wages, and other operating expenditures to the correct Index (FOPAL) when the expenditures are incurred.
Transfer of Non-Payroll Expense for Restricted Funds
The most common need for a transfer of non-payroll (other than an error) expense is to clear an Index (FOPAL) of disallowed costs, over-expenditures, and charges outside of project dates.
NOTE: These costs cannot be shifted to other sponsored agreements *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al.
Requests for Transfers Involving Grant/Contract Indexes (FOPALs)
Requests for transfers involving grant/contract Indexes (FOPALs) should be submitted to the appropriate fiscal monitor in SPA. The request should contain the following information:
A copy of the transaction listing where the original transaction occurred, and in the case of restricted and related cost sharing or program incomes costs a copy of the original Purchase Requisition, Direct Pay Request or Reimbursement Voucher.
The reason for the transfer
If the request is for transfer of expenditures to a grant/contract Index (FOPAL), the explanation should be such that an auditor or the sponsor could see that the expenditures were legitimate project costs for the Index (FOPAL) receiving the transfer. In many cases, the request for transfer is required to be forwarded to the sponsor along with other documentation for billing and reporting. It is the responsibility of the individual making the request to verify the expenditure is legitimate.
When closely related work is supported by more than one funding source, costs may be transferred from the originally charged Index (FOPAL) to another Index (FOPAL), provided the cost is a proper and allowable charge to the receiving Index (FOPAL). If an over expenditure is being transferred to another project, supporting evidence is required for approval and there should be language in the request that explains the inter-relationship between the Indexes (FOPALs) and justifies allowability.
Proper approval must be obtained as outlined in this manual in section 2.05 Signature Approval for Routine Business Transactions.
It is the responsibility of the individual requesting an expenditure transfer and/or Research Centers to verify that the transfer has been properly posted.
All prior year corrections must be recorded at the F&A cost rate in effect for the life of the award. Research centers/departments should contact their fiscal monitor regarding all prior year corrections.
Restricted funds are identified by the sponsor or agency restrictions placed upon the use of funds as such; the source of all restricted funds must be external. Internally designated unrestricted funds, including surpluses from fixed price grants/contracts, cannot be sequestered in a restricted fund for any specific purpose.
In no case should any expense be recorded in a restricted Index (FOPAL) unless the following conditions are met:
- The expense is fully covered by guaranteed income. This means that the expenses are fully billable to and collectible from an external party. In the case of gift funds, Accounts Receivable are established on rare occasions on a case-by-case basis, and requires the approval of the Controller’s Office. In no case should an uncollectible receivable remain in the restricted fund at fiscal year-end. NMSU’s collections policy (see subsection 3.30.05) discusses in detail the disposition of uncollectible restricted fund Accounts Receivables.
- The expense conforms to the guidelines established by the sponsor. In no case may any expense be ultimately recorded in a restricted Index (FOPAL), either directly or through automated entry, which violates a sponsor-specified restriction.
- Signature Approval on Restricted Sponsored Projects
- University policy requires that approval of all Purchase Requisitions, Direct Pay Requests and Reimbursement Vouchers be obtained as outlined in this manual in section 2.05 Signature Approval for Routine Business Transactions. These policies relate to official University documents.
A Gift-in-Kind is defined as a gift of goods other than cash or cash equivalents. For the purposes of this policy, services provided are not considered Gifts-in-Kind.
Approval of Gifts-in-Kind
All gifts-in-kind should be accepted by the University, by either the President’s Office or its designee. This will enable the gift to be properly insured and safeguarded through the University Property Office. In many cases, a gift-in-kind may involve additional costs that will need to be approved within the departmental budget. The approved designees for accepting gifts-in-kind are the Vice President for University Advancement and/or the Senior Vice President for Administration and Finance.
Procedures for Accepting Gifts-in-Kind
1. Gifts Under or Equal to $5,000
In many situations, a donor will present a department, college, or division with small inventory items such as a book or a piece of artwork. For all such gifts, the following procedure is to be used, as applicable:
Upon receipt of the gift, a memo is to be written by the department, college, or division receiving the gift to the Vice President for University Advancement with the following information:
- Description of Gift
- Donor Name
- Donor Address
- Fair Market Value (assigned by Donor)
The Vice President for University Advancement will forward the approved memo to the Advancement Services Office, who will then be responsible for issuing a receipt to the donor.
The Advancement Services Office will forward a copy of the approved memo to the Property Office if the gift involves equipment or an addition to existing equipment.
2. Gifts Over $5,000
Gifts over $5,000 require special reporting to the Internal Revenue Service. This rule applies if a donor contributes gifts over $5,000 cumulatively in one calendar year, not solely to the value of each gift. The procedures described in Gifts Under or Equal to $5000 should be followed with the following additions:
- IRS form 8283: this form should be received with the gift and completed by the donor for the gift or gifts contributed by one party. This form includes an independent appraisal to be completed by a licensed appraiser engaged by the donor.
- A cover letter containing information on the gifts and their appraisal is to be sent to the Vice President for University Advancement for signature and acceptance must accompany the IRS form 8283.
The Vice President for University Advancement will then submit copies of the form and letter to the Advancement Services Office for receipting.
3. Donated Assets and Sponsored Agreements
Per *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al. , the value of donated assets is not considered allowed on sponsored agreements as either direct or indirect charges. Depreciation or use allowances may be permitted, under certain circumstances, and in calculation of the F&A rate. This does not preclude the use of donated assets to meet the matching requirements of sponsored agreements in accordance with *Uniform Guidance 2CFR Chapter I, Chapter II, Part 200, et. al.
The special appropriated guidelines, enacted for each Endowment Program, should be followed for all donations. For example:
Professorships, Lectureships, and Graduate Fellowships
Law of 1984, Chapter 35 reads as follows: “..the income from the investment shall be used to provide salary supplements in the enumerated categories.” Therefore, the earnings on the state-matched portion, the foundation portion and/or the University portion will be used for salary supplements only.
Law of 1984, Chapter 35 reads as follows: “..The income from the investments shall be used by the institutions for the purpose of paying the salary of the faculty member together with the expenses necessary to support his academic activities. Any portion of the income not expended within two years of receipt by the institution shall become part of the endowment and shall not be expended but shall be invested.”
The earnings on the state-matched portion, the Foundation portion and/or the University portion will, therefore, be used for salary and expenses necessary to support the academic activities of the chairperson. Each Legislative Act will have specific requirements.
Other policies and procedures within the University should be incorporated into the administration of restricted funds, where applicable. Among the most common documents which may apply and are not reproduced within the Business Policies and Procedures Manual are:
- Gift Income Spending Policy
- Sponsored Programs Manual
SPA is responsible for invoicing all grants and contracts unless other arrangements have been made. The invoices will be prepared on a monthly basis unless otherwise specified in the award agreement, and a receivable will be established. Receivables will be managed as follows:
30 Days Outstanding
All receivables will be reviewed when 30 days outstanding. SPA will contact the agency via email requesting confirmation of invoice receipt.
60 Days Outstanding
Contact made at 60 days to inquire about payment status, determine if there may be problems with the invoice that may be preventing payment, and to determine if a revised invoice is necessary. Comments received from sponsors referencing service related issues as a reason for withholding payment will temporarily suspend further collection efforts. These comments will be relayed to the research center or department by e-mail along with a request that SPA be notified by email when permission is granted to resume collection activity. If either party feels the situation so warrants, a meeting will be scheduled to discuss the account status before any decision regarding further collection is made. The meeting option will be available throughout the collection process. All receivables will continue to age and be subject to procedures at 90, 120, 180 and 270 days as stated below, even if SPA’s collections efforts have been temporarily suspended.
If at any time during the collections process, a sponsor notifies SPA or the research center/department that they do not believe the receivable is valid, research and resolution between SPA, the research center/ department and the agency will occur. All other collection procedures will cease until the issue is resolved.
90 Days Outstanding
When a receivable has been outstanding for 90 days, SPA will notify the Research Dean/Research Center Director, Research Center Business Manager and Principal Investigator (collectively “organizational unit”) of the status of the receivable by e-mail and request assistance from the PI/department in collecting the outstanding amount from the agency. SPA will continue to contact the agency via email requesting a payment status update.
120 Days Outstanding
When a receivable has been outstanding for 120 days, SPA will notify the organizational unit of the status of the receivable by e-mail and request assistance from the PI/ department in collection of the outstanding amount from the agency. SPA will notify the Senior Vice President for Administration and Finance (SVPAF) of the status of the receivable in a monthly report. The Vice President for Research (VPR) will be notified for those receivables that have not been settled due to fault of the University and those at risk of collection. Work may be stopped by order of the dean, VPR or SVPAF on privately funded awards when the outstanding receivable is not due to fault on the part of the University. SPA will continue to contact the agency via email or by phone requesting a payment status update.
After 180 Days
After 180 days, SPA will submit the receivable to the SVPAF for possible referral to NMSU General Counsel for legal recourse. NMSU General Counsel will review existing information as provided by the SVPAF and determine if legal action is appropriate. SPA will continue to contact the agency via email or by phone requesting a payment status update.
At this time, the SVPAF may order the work stopped after consultation with the dean or VPR. For State or Federally funded awards, ceasing work will be evaluated on a case-by-case basis.
After 270 Days
After 270 days, if all collection efforts fail including examination of legal recourse, SPA will notify the organizational unit of the status of the receivable and request an unrestricted Index (FOPAL) to which the receivable will be charged at 365+ days outstanding. SPA will continue to contact the agency via email or by phone requesting a payment status update. If after 365 days a receivable is deemed uncollectible by the SVPAF, regardless of the actions taken by the sponsoring agency, it will be written off as a bad debt. A journal voucher will be processed to charge bad debt expense to the appropriate departmental unrestricted Index (FOPAL) (account 769050) and credit the receivable in the restricted fund. The bad debt is reclassified to an “inactive” accounts receivable on grants and contracts with a corresponding reserve. This allows tracking in the event subsequent payment is received. If payment is received after the receivable has been reclassified to inactive, the research center/department will be notified and receive credit for payment and the reserve will be adjusted to match the inactive receivable. If a privately held company has defaulted on a debt, further contract assignments will not be accepted by NMSU and the debt may be transferred to a collection agency. For Federal or State funded projects that have defaulted on a debt, further contract assignments will be evaluated on a case-by-case basis by the dean or VPR and SVPAF.
New Mexico State University uses a centralized approach to billing for grants and contracts. The responsibility for grant and contract billing rests with SPA. SPA will use the following guidelines when billing:
- Billings will be prepared in accordance with agency contractual requirements, and all applicable Federal, State and University policies and procedures. If there is no time frame established for cost reimbursable contracts, then billings will be done on a monthly basis.
- Billings for restricted Indexes (FOPALs) will be prepared only for expenditures made in compliance with the award terms and conditions and within the award budgeted amount.
- All billings will be reconciled to the official accounting records as recorded in the University’s Finance System, to assure that all Indexes (FOPALs) have been billed and no activity is billed more than once.
- Proper segregation of duties must exist between preparation of billings, receipting of funds, and authorization of contracts.
- The designated personnel that are responsible for grant and contract billing will certify all billings.
- Accounts Receivable for each billing will be recorded in the Finance System at the time the invoice is prepared..
- Revenue is recognized through the Banner Deferred Grant process which is run weekly and coordinated with month-end financial closings. For year-end, the weekly scheduled process is suspended and coordinated with every fiscal year-end close.
Accounts Receivable aging reports, in 30 day increments through 120 days, will be produced at least monthly and proper collections procedures will be followed to assure the safeguarding of all University assets.
Effort reporting provides a basis for charging salaries to Indexes (FOPALs) in accordance with the relative activity applied to various programs and projects. The information reported by departments for a pay period reflects the actual activity of each employee as well as it can be measured, not the budgeted activity. However, budgets normally provide a guide to the application of actual activity. Effort reporting also provides documentation that an employee is in the employment of the University during the pay period. Principal Investigators are urged to check Effort reports closely each semester to acknowledge that all persons paid on a sponsored project did, in fact, work on that project for the amount of time indicated in the Effort Report document. Employees charging time to Federal grants/contracts will be required to certify their effort.
Effort on grants/contracts should be charged to the grant/contract Index (FOPAL). Any cost-shared effort should be charged to a formal cost-sharing Index (FOPAL) or another unrestricted Index (FOPAL), as discussed in subsection 3.15.3.
The University’s Effort Reporting document for non-hourly employees is the RA-SPA-EEC Effort Report available through Cognos Reporting. Effort Reports will be reviewed and certified on-line.
The University’s Effort Reporting document for hourly employees is the Time Sheet which is completed on-line by all non-exempt employees. For more information on time and leave reporting on grants and contracts refer to subsection 3.15.40.
*The Uniform Guidance 2CFR Chapter I, Chapter II, Part 200 et. al. was implemented on 12/26/14. The Uniform Guidance is effective for awards and funding increments on existing awards on or after 12/26/14. Awards made prior to 12/26/14 will continue to adhere to OMB circulars A-21/A-110/A-133.