Glossary of Terms
The following definitions are divided into three categories:
- Types of funding
- Source of funding
- Commonly used terms in management of externally funded projects (i.e., contracts and grants)
Contracts: A contract is a legally binding agreement between one or more sponsors and the University. The terms of the agreement outline specific goals and requirements for goods and/or services to be provided to the sponsor by the University. It is routine for these goods or services to be provided on a specific schedule. The relationship between the sponsor and the University is one of procurement. This type of arrangement is not considered for public use but for the direct benefit or use of the sponsor. Also see Fixed Price Contract in glossary section of this document.
Grants: A grant agreement is a legal instrument used when the principle purpose is the transfer of money, property, services, or anything of value to the recipient in order to accomplish a public purpose of support or stimulation. A grant will normally contain the following elements:
- The statement of work allows the project director significant freedom to change the emphasis within the general area of work as the project progresses
- Deliverables are minimal, usually consisting of reports only
- Separate accounting procedures are required
Cooperative Agreements: A cooperative agreement is used when substantial sponsor involvement is anticipated in the management and/or performance of the sponsored activity. In all other respects, a cooperative agreement is a grant-type instrument.
Subcontracts: A subcontract is a contract that assigns some of the obligations of a contract to another party. The terms of the obligations are outlined in the same manner as described under contracts.
The four major sources of funding from which the University receives sponsored agreements are as follows:
Federal: Sponsored agreements funded directly by the United States federal government.
Federal Pass-Through: Sponsored agreements where the University is not the prime contractor from the United States federal government, but is acting in the capacity of a subcontractor (federal requirements/restrictions are passed through the prime recipient from the federal government to the University).
Private: Sponsored agreements funded by private corporations.
State: Sponsored agreements funded directly by the State of Mississippi .
Account Establishment: Establishment of a chartfield string (PeopleSoft term for key data elements of the University's chart of accounts) to record the budget and track costs associated with a sponsored project. The chartfield string includes a fund, department identification, program and project_grant. The project_grant chartfield beginning with GR is the unique identifier for a sponsored project.
Allocable Cost: A cost that can be assigned to a project that meets a specific project objective based on relative benefits received. A cost may be allocable to a specific project but paid for by the University, depending on what the sponsor (funding agency) determines is allowable for a particular type of project.
Allowable Cost: Determined by the Office of Management and Budget (OMB), the sponsor's requirements and/or University policy. For purposes of Office of Management and Budget (OMB) Circular A-21, an expense that can be included in the facilities and administrative cost rate proposal or included as a direct cost to federal sponsored agreements are:
- Allocable to the project if a direct charge
- Given consistent treatment by use of generally accepted accounting principles
- Conform to any limitations or exclusions set forth by the sponsored agreement or OMB Circular A-21.
Award : Funds provided from an external sponsor for support of a project.
Budget: Project director's financial plan or estimate that lists the categories of expenditures and dollar amounts required to carry out a project's objectives.
Budget Category: A portion of the budget designated for certain kinds of expenditures, i.e., salaries, travel, commodities, equipment.
Budget Period: An interval of time by which the project period is divided for budgetary purposes.
Carryover (carry forward): The remaining available budget balance of a project that may be used to increase the budget of the next budget period. Carryovers are not always automatic and are not always allowed by all funding agencies.
Consultant: An individual whose expertise is required by the Principal Investigator to perform an aspect of the sponsored project's objectives.
Cost Accounting Standards - (CAS)
CAS requires consistency in estimating, accumulating and reporting costs. The University of Southern Mississippi must comply with the following four CAS standards :
- CAS 501: Consistency in estimating, accumulating and reporting costs. The purposes of this standard are to (1) assure consistency in estimating, accumulating, and reporting costs as well as (2) provide a basis for comparison of such costs. The same practices should be used when estimating costs for the proposed budget, accumulating costs in the accounting system and reporting costs to the sponsor .
- CAS 502: Consistency in allocating costs incurred for the same purpose. The University is required to charge similar costs in the same manner, either as direct costs or indirect costs.
- CAS 505: Accounting for unallowable costs. This standard does not include additional guidance on unallowable costs. Educational institutions will, therefore, continue to follow A-21 for guidance on what is unallowable.
- CAS 506: Cost accounting period. An educational institution must use either its fiscal year or a fixed annual period approved by the government as its cost accounting period. The University uses its fiscal year which is July 1 through June 30.
Cost Reimbursement: A cost reimbursable agreement (contract or grant) provides for payment to the University based on the University's actual cost incurred in performing and completing the agreement. This means that budgeted funds must be SPENT within the approved budget or project period in order for the University to collect the actual cash funds.
Contributed Effort: Effort expended on a sponsored project that the sponsor does not compensate for; a form of cost sharing or matching .
Cost Sharing (Matching): The sharing of the costs of a sponsored agreement by the University. Cost sharing is typically done on grants, not contracts. Cost sharing can either be provided by academic release time, cash, facilities and administrative (indirect) cost differential, or a combination of all.
Cost Transfer: A direct charge expense transferred from one grant to another grant (one chartfield string to another) after the charge has been posted in a financial accounting record or system
Deficit (Cost Overrun): Direct costs incurred and charged to a sponsored project in excess of the awarded amount.
Direct Cost: Cost that can be clearly identified and directly allocated to a specific sponsored agreement.
Disbursement: Payment made by the University for goods and services.
DS-2: The short reference for the “Disclosure Statement for Educational Institutions”. Institutions receiving funding in excess of $25 million annually in externally funded awards must submit, and have approved, a disclosure statement which stipulates all of the University's costing practices relative to Cost Accounting Standards.
Effort: The amount of time, usually expressed as a percentage of the total that a faculty or other employee spends on a project. Effort is certified and documented through the University's Time or Effort Certification System .
Encumbrances/Obligations: The dollar amount of items ordered, services rendered, contracts awarded, or similar purchases that are outstanding or unpaid. The University officially encumbers or sets aside funds for sponsored projects salaries, estimated costs (greater than $200) noted on a Permission to Travel Form, budgeted facilities and administrative (indirect) costs on sponsored projects, and most instances in which a Purchase Order is issued.
Equipment: Tangible items non-expendable in nature, such as furniture, instruments, or repairable machines that have a useful life of more than one year and an acquisition cost of $5,000 or greater (which meet or exceed the established thresholds for defining equipment). Equipment is not a replacement part or component returning a piece of equipment to its original condition. If a component increases the capability of the original equipment and has an acquisition cost that meets or exceeds the established equipment cost thresholds, it is considered a capital item.
Expanded Authorities: Policy implemented by some federal granting agencies which delegates certain prior approval authorities to grantee institutions. This delegation allows for internal University approval of administrative and spending actions.
Facilities and Administrative (F&A) Cost Rates: The rates used to recover the facilities and administrative costs of a sponsored project. Negotiated, approved rates are to be used for all agreements with the federal government and for most non-federal projects, as allowable.
Facilities and Administrative (F&A) Costs: Also referred to as indirect costs, overhead or administrative costs. These are actual costs incurred to conduct the normal business activities of an organization that cannot be readily identified with or directly charged to a specific project or activity. The normal activities of the University include instruction, departmental research, organized research, public service and other institutional activities. F&A costs are real, auditable costs incurred by the University each time it accepts an award for a sponsored project. If the University does not collect full reimbursement for these costs, other University resources must be used to subsidize them.
Fixed Price Contract: A firm fixed price contract provides for a payment to the University that is not subject to any adjustment on the basis of the University's actual costs incurred in performing and completing the contract, i.e., billings are not based on actual expenditures
Foreign Travel : Foreign travel includes travel outside of the United States and its territories and possessions (Guam, Puerto Rico, the Virgin Islands and the Canal Zone) and Canada . A trip is considered foreign travel for all legs of the itinerary if the traveler does not return to his or her post prior to departure for a foreign destination.
General Purpose Equipment: Equipment that is not limited to research, scientific or other technical activities. Examples of general purpose equipment include office equipment and furnishing, air conditioning equipment, reproduction and printing equipment, motor vehicles, and automatic data processing equipment.
Governmental Donated Property: Property donated or transferred to the University by a municipality, county, state agency or the federal government.
Government Furnished Equipment: Equipment provided to the University by the federal government or government contractor; title may or may not remain with the government.
Grantee: A grantee is the recipient of a grant. When the University accepts a grant award, it becomes the grantee.
Indirect Costs : See Facilities and Administrative Costs.
In-Kind Contribution: A non-cash commitment (such as contributed or donated effort, facilities use, or supplies) to share the costs of a sponsored project.
Lobbying: A certification assuring the federal agency that no federal appropriated funds or any other non-federal funds have been paid or will be paid for influencing any federal official or employee in connection with the awarding of any contract, grant or agreement.
Mandatory Cost Share or Match: Cost Sharing or matching that is required by the sponsor, is stipulated in the notice of award or agreement, which must be documented and reported to the sponsoring agency.
Modified Total Direct Costs (MTDC): The portion of direct costs on which the facilities and administrative (indirect costs) are based, specifically: salaries and wages, fringe benefits, materials and supplies, services, travel, and up to $25,000 on each subgrant or subcontract.
Modified Total Direct Costs (MTDC) Base: The MTDC base is the total Direct Costs for a project less those budget items that are excluded by agreement with the audit oversight agency. The excluded costs are: equipment, construction, alterations and renovations, hospital or clinic charges for patient care, space rental or lease, tuition and fee remission, scholarships and the amount that exceeds $25,000 of any subgrant or subcontract.
No-Cost Extension: Provides for an additional period of performance to accomplish project goals. May be handled internally in certain circumstances or sought externally from the sponsor. Sponsored Programs Administration should be contacted regarding no-cost extensions.
Off-Campus Projects : Projects that are based at facilities not owned, or leased and maintained by the University. However, if the project is conducted in leased or rented space and the lease/rental costs are directly charged to the project, the off-campus facilities and administrative (indirect) cost rate must be used.
Office of Management and Budget Circulars - (OMB): OMB, working cooperatively with Federal agencies and non-Federal parties, established government wide grants management policies and guidelines through circulars and common rules. These policies are adopted by each grant making agency and inserted into their Federal regulations. Their website is available at: http://www.whitehouse.gov/OMB/grants/index.html.
- OMB A-21: This circular establishes principles for determining allowable costs applicable to grants, contracts and other agreements with educational institutions. All federal agencies that sponsor research and development, training, and other work at educational institutions shall apply the provisions of this circular in determining allowable costs. The principles shall also be used as a guide in the pricing of fixed price or lump sum agreements.
- OMB A-110: This circular establishes uniform administration requirements for federal grants and agreements awarded to institutions of higher education, hospitals, and other non-profit organizations.
- OMB A-133: This circular establishes audit requirements for federally sponsored awards and defines federal responsibilities for implementing and monitoring higher education and other non-profit institutions that receive federal awards.
Principal Investigator / Project Director (PI / PD): Institutional employee that has direct responsibility for carrying out the requirements of a sponsored project, producing the final technical report, providing the required deliverables and exercising fiscal stewardship of the sponsored funds.
Pre-Award is considered to be activity prior to official funding of a sponsored agreement. These activities are performed by Sponsored Programs Administration and include the following pre-award functions:
- Proposal development, coordination, and submission to funding agency
- Identify funding sources
After funding, Sponsored Programs Administration requests agency prior approval for:
- Certain budget amendments
- Program changes
- No-cost extensions
- Change in official PI
Pre-Award Costs: Costs incurred prior to the effective date of an award. Authorization to incur pre-award costs must be obtained from Sponsored Programs Administration.
Post-Award activity begins with the official funding and continues until the award is closed.
Program Income: Program income is gross income earned by a grant recipient from the activities, part or all of which are borne as a direct cost by the grant. Examples are fees for services performed under the grant, rental or usage fees charged for use of equipment purchased with grant funds, third party patient reimbursements for hospital or medical services paid from the grant, funds generated by the sale of commodities, patient or copyright royalties.
Project: The services or activities, mutually agreed upon, that the sponsored funding recipient will provide for a specified period of time.
Project Award: The approval and funding of a project as detailed in the official award document. Specifies the amount of funding, project period, and any special requirements or restrictions.
Project Period: Project period means the total time for which support of a program has been approved, initially or by a renewal award. As used by the Public Health Service, project periods consist of one or more annual budget periods with funding for future years beyond the initial budget period provided on a non-competing basis.
Rebudgeting: Process by which funds available for spending are reallocated between budget categories to allow best use of funds to accomplish project goals. Some sponsored projects require obtaining prior approval for rebudgeting. Prior approval requirements will be communicated by the Office of Contracts and Grants Accounting at the time the restricted chartfield string is established.
Site Visit: A funding agency initiated review of a proposed project conducted at the University. The purpose of the site visit can encompass a fiscal or programmatic review or both.
Sole Source Acquisition: A procurement that does not provide full and open competition, but is effected because only one source is available. There are restrictions on the use of this means of procurement and documentation must show justification for using single source acquisition.
Special Purpose Equipment: Equipment which can be used only for research, scientific or other technical activities.
Sponsored Agreement/Award: Any contract, grant, or other agreement where the use of funds is restricted by the funding agency and there is some action required by the University (not a gift and not a fee-for-service contract).
Subcontract: A contract issued under a prime contract, agreement, purchase order, or grant for the procurement of services or program related tasks over $10,000. Issuance of subcontracts are subject o the terms and conditions of the prime award.
Stipend: A payment made to a participant on a sponsored project. The payment does not require services; rather, typically the payment is for participation only or to defray living expenses while engaged on an instructional or research endeavor.
Supplies: Expendable items having a purchase price of less than $5,000 that will be consumed, worn out, or will otherwise deteriorate in less than two years.
Time or Effort Certification System: In order to be in compliance with t he Office of Management and Budget Circular A-21, the University must have a mechanism in place in which effort committed on sponsored projects can be certified and documented.
Total Direct Costs (TDC): TDC is the total of all direct costs budgeted for a project.
Total Project Cost: The cost of a sponsored project is comprised of allowable direct costs associated with the project performance and the allocable portion of the allowable indirect costs of the institution. This includes both the sponsor's share and the University's share (matching or cost share).
Unallowable Cost: For purposes of OMB Circular A-21, an expense that can not be included in the facilities and administrative cost rate proposal and can not be charged as a direct cost to federal sponsored agreements.
Unit Cost Contract: A unit cost contract provides for payments to the University based on the services provided for a particular unit or units produced. These payments are not subject to any adjustments based on the University's actual costs incurred. This is a particular type of fixed price contract (see definition above).