|Responsible University Administrator:||Vice President for Research|
|Responsible Officer:||Assistant Vice President for Research|
|Current Revision Date:||12/12/17|
|Next Review Date:||12/11/21|
|End of Policy Date:||N/A|
Externally funded projects at The University of Southern Mississippi must adhere to financial policies and procedures of the university, the State of Mississippi, the federal government, and individual sponsors. In particular, USM adheres to 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The Office of Research Administration (ORA), under the direction of the Vice President for Research (VPR), is formally charged with the responsibility of providing services to faculty and staff for administering external funding. The Principal Investigator (PI) or Project Director (PD) of a sponsored project is responsible for managing the budget and expending it in accordance with sponsor and university guidelines as indicated in the approved budget.
The University of Southern Mississippi receives substantial external funding in support of its mission. Managing funded projects requires adherence to sponsor and university policies and procedures in order to remain in compliance with applicable law and regulation. This policy provides guidance for PIs/PDs and others involved in the management of sponsored project funding.
All members of The University of Southern Mississippi community engaged in or supporting externally funded programs or projects.
|Institutional Base Salary||Official job salary record through Human Resources. This does not include overload pay or additional pay.|
|Pass-through or Flow-through Funds||The portion of funding that USM awards to a subrecipient, or receives from the prime recipient.|
|Sponsor or Agency||The primary organization providing funding to USM.|
1. Policies and procedures of sponsoring agencies might include requirements in addition to those listed below. All federal funds are governed by 2 CFR 200 “Uniform Guidance” along with any agency-specific requirements.
2.1. The Office of Research Administration is the designated office that manages external financial audits by sponsoring agencies.
2.2. PIs who are contacted for a financial audit must contact ORA for assistance.
3. BUDGET REVISIONS
3.1. During the course of a funded project, the PI/PD may find it necessary to deviate from the sponsor-approved budget. Some sponsors require strict adherence to the approved budget while others afford more flexibility.
3.2. When a budget revision is required, ORA will determine if agency approval is needed. If it is, the PI/PD will work with ORA to develop the revised budget, and ORA will submit the formal budget revision request to the sponsor.
3.3. Once sponsor approval is received, ORA will update the budget in the university financial system.
3.4. If sponsor approval is not required, the PI/PD will work with ORA to provide a revised budget if the university financial system needs to be updated.
4. COMPENSATION and SALARY VERIFICATION
4.1. Compensation, including associated fringe benefits, charged to a sponsored project must be reasonable for the services rendered, conform to university compensation policies, and be treated consistently with other sources of funds (such as general funds).
4.2. Compensation charges are allowable for activities contributing to and directly related to the sponsored project and is paid at the Institutional Base Salary rate.
4.3. Charging compensation to the project based on budget estimates alone is not allowable, but budget estimates may be used for interim accounting purposes. PIs/PDs are responsible for reviewing the charges timely and making necessary adjustments so that the final amount charged to the award is accurate, allowable, and properly allocated.
4.4. Extra service pay (overload compensation and other forms of additional pay) is generally not allowable as a sponsored project expense, except in the case of intra-institutional consulting. When consultation is across departmental lines and the work is in addition to regular responsibilities, extra compensation may be allowable if approved by the sponsor.
4.5. PIs/PDs will be required to verify at least annually that compensation is accurate, allowable and properly allocated to their sponsored project(s).
4.6. Incentive compensation based on a university-approved plan may be paid to an individual; however payment may not be charged to a sponsored project.
5. COST ACCOUNTING STANDARDS
5.1. The Cost Accounting Standards (CAS) located at 48 CFR 9905.501, 9905.502, 9905.505, and 9905.506 are applicable to educational institutions:
5.1.1. 501 – Consistency in Estimating, Accumulating and Reporting Costs by Educational Institutions: Fundamental Requirement – An educational institution's practices used in estimating costs in pricing a proposal shall be consistent with the educational institution's cost accounting practices used in accumulating and reporting costs.
5.1.2. 502 – Consistency in Allocating Costs Incurred for the Same Purposes by Educational Institutions: Fundamental Requirement – All costs incurred for the same purpose, in like circumstances, are either direct costs only or F&A costs only with respect to final cost objectives.
5.1.3. 505 – Accounting for Unallowable Costs: Fundamental Requirement – Costs expressly unallowable or mutually agreed to be unallowable shall be identified and excluded from any billing, claim, application, or proposal applicable to a sponsored project.
5.1.4. 506 – Consistency in Using the Same Accounting Period for Purposes of Estimating, Accumulating and Reporting Costs: Fundamental Requirement – Educational institutions shall use their fiscal year as their cost accounting period.
5.2. In order to be in compliance with CAS:
5.2.1. Project budgets must be developed using specific items and categories of costs, which are consistent with the university's accounting system for recording and reporting of costs. Projects require both a sponsor budget and an internal USM budget when cost categories differ between sponsor cost categories and USM cost categories.
5.2.2. Specific items of cost must be consistently budgeted and charged in similar circumstances.
5.2.3. Similar cost incurred in like circumstances must be consistently treated as either direct or facilities and administrative (F&A) across all functions or activities of the institution, unless special or unlike circumstances exists.
5.3. CAS covers the following types of sponsored projects:
5.3.1. All federal awards.
5.3.2. All awards that contain any federal flow‐through money.
5.3.3. Terms and conditions of the proposal or award documents that reference 2 CFR 200 “Uniform Guidance” or Cost Accounting Standards.
5.3.4. Any sponsored project with funds used as cost sharing on a CAS covered project.
5.4. CAS will not apply to fixed price awards unless the funds are used as cost sharing against another CAS covered sponsored project. ORA is responsible for determining whether or not a sponsored award meets the requirements of a “fixed price” award.
5.5. To be considered a “fixed price” award, a project must meet each of the criteria below:
5.5.1. Funds are obtained in full prior to the completion of the sponsored project or are obtained through installments as stated in the award;
5.5.2. There are no financial reporting requirements;
5.5.3. There are no audit requirements;
5.5.4. There is no reference to costs being reimbursable
6. COST SHARING (also called MATCHING)
6.1. The university may be required to contribute to the costs of a sponsored project as stated in agency guidelines. In some cases, these expenses may be in the form of "in-kind" costs such as contributed effort of personnel (salary and fringe benefits) who are supported by non-sponsored funds. At other times, there may be a requirement for "cash," particularly for equipment related projects.
6.2. When cost sharing funds are required, the PI/PD is required to discuss these needs with the respective chair, director, dean, or Vice President for Research. Voluntary committed cost sharing is allowable only with approval of the Vice President for Research or designee.
6.3. Cost sharing may also come from non-university, third-party arrangements. These arrangements must be documented at the time of proposal submission. However, sponsored project funding cannot be used as cost share for another sponsored project without approval.
6.4. The university is required to document all committed (mandatory and voluntary) cost sharing/matching funds just as it tracks agency dollars. These become auditable expenditures.
6.5. Cost sharing is generally not expected for federal funding. Agencies cannot use cost sharing as a factor during the merit review of research proposals, unless the requirement for cost sharing is in accordance with awarding agency regulations and specified in a notice of funding opportunity.
6.6. Costs that can be treated as direct costs on sponsored projects may be used to meet a cost-sharing commitment. When the direct expenses are used as cost share, the associated F&A is cost shared as well. In the unusual circumstance of a waived or reduced F&A rate, the difference between the applicable negotiated F&A rate and the amount of F&A awarded by the sponsor may also be used as cost share if the sponsor allows it.
6.7. Costs that are normally treated as F&A are not allowable as cost share.
7. COST TRANSFERS
7.1. Cost transfers to move expenses to or between sponsored projects for corrections of clerical or bookkeeping errors must be submitted within 90 days of when the error appears on the Monthly Detail Report (MDR).
7.2. The transfers must be supported by documentation that fully explains how the error occurred and an explanation of the correctness of the new charge.
7.3. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient.
7.4. Transfers of costs from one sponsored project to another sponsored project to cover cost overruns or to a sponsored project that is ending are not allowable. Transfers are submitted to ORA for approval on an Interdepartmental Invoice, available on the Controller's website.
7.5. There is no time limit for transferring costs from a sponsored project to another source of funds that is not a sponsored project.
7.6. PIs/PDs are responsible for reviewing the financial status including expenditures of their project(s) monthly and initiating corrections as necessary.
8. DIRECT COSTS
8.1. Direct costs are those costs that can be identified specifically with a particular award, or that can be directly assigned to an award relatively easily with a high degree of accuracy.
8.2. Direct costs must be allowable, allocable, reasonable, and consistently applied across all sources of funds.
8.3. The expense must be reasonable and necessary for the performance of the project. This means that a prudent individual pursuing the proposed work would spend funds in this manner.
8.4. The expense must be allocable to the project, meaning that the expense benefits that particular project.
8.4.1. If the item is of benefit to more than a single award, then a sponsored project may be charged only for that portion of the expense that represents the benefit directly received by that sponsored project.
8.4.2. If the item or service benefits both a sponsored project and other work, only the proportion of the cost that benefits the sponsored project may be charged to that project.
8.4.3. The PI is responsible for determining and documenting proper allocation to more than one project.
8.5. For an expense to be directly charged to a federal sponsored project, it must be consistently treated in like circumstances as a direct charge for all other federally funded projects.
8.5.1. A cost item may not be charged as a direct cost on some sponsored projects and as an indirect cost on other sponsored projects.
8.6. A sponsored project may not be directly charged for any item or service that is specifically designated as unallowable in 2 CFR 200 “Uniform Guidance,” the agency guidelines, or in the agency award.
8.7. All four of these criteria must be met before an expense may be directly charged to a sponsored project. Costs that might be incurred for the common or joint objectives of several sponsored projects, but which cannot be specifically attributed to a particular sponsored project with a high degree of accuracy, may not be directly charged to these sponsored projects.
8.8. There may be special circumstances in which costs normally treated as F&A can be treated as a direct cost. ORA will assist the PI with that determination, as well as review sponsor requirements for prior approval requirements. The following practices are not acceptable:
8.8.1. Rotation of charges among sponsored projects by month without establishing that the rotation schedule credibly reflects the relative benefit to each project.
8.8.2. Assigning charges to the sponsored project with the largest remaining balance.
8.8.3. Charging amounts budgeted instead of charging an amount based on actual usage.
8.8.4. Assigning charges to sponsored projects in advance of the time the cost is incurred.
8.8.5. Identifying a cost as something other than what it is.
8.8.6. Charging expenses exclusively to sponsored projects, when the expense has supported non‐sponsored projects.
8.8.7. Assigning charges that are part of the normal administrative support for sponsored projects (e.g., proposal preparation, accounting, and payroll).
8.8.8. Assigning charges to the sponsored project based on project ending date without regard to the appropriateness of the costs.
8.8.9. Prepaying expenses at the end of a project for services that will occur past the project’s ending date.
9. FACILITIES and ADMINISTRATIVE COSTS (also called Overhead or Indirect Costs)
9.1. Facilities and Administrative costs are actual costs incurred by the university that cannot be readily identified or associated with a single sponsored project or activity. These costs are normal business activities of the university such as utilities, safety, libraries, building and equipment use and maintenance, accounting, payroll, and academic and sponsored programs administration.
9.2. The determination of F&A rates is based on a cost proposal submitted by to USM’s federal cognizant agency, the U.S. Department of Health and Human Services. This proposal contains all the F&A categories that relate to direct costs necessary to conduct the primary functions of the institution such as teaching, research and other activities. Rates are then negotiated and a final rate agreement is signed establishing the required rates for all projects submitted to external funding sources. A listing of the current negotiated rates can be found at http://www.usm.edu/research/forms-and-budget.
9.3. Unless stated through a published rule of the sponsoring agency, F&A costs are not usually waived or reduced. Should PIs wish to request a reduction of F&A based on unusual circumstances, they may do so through the Vice President for Research. Any reduction of rates must be documented at the time of proposal approval.
9.4. Recovered F&A costs are distributed to the Vice President for Research, the USM general fund, and the college and department generating the F&A, unless another arrangement is agreed upon in advance of the proposal submission. Units receiving recovered F&A establish their own criteria and procedures for use of these funds.
10. PARTICIPANT SUPPORT COSTS
10.1. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not USM employees) in connection with conferences or training projects.
10.2. Other categories of participant support costs (such as incentives, gifts, souvenirs, t-shirts and memorabilia) are generally not allowable unless well justified and approved by the sponsor.
11. PROJECT CLOSEOUT
11.1. At the end of a project, final technical (or programmatic) and financial reports are frequently required to be delivered to the sponsor.
11.2. PIs are responsible for preparing the technical report, which may be submitted by either the PI or ORA depending on sponsor requirements and systems.
11.3. The PI and PI’s department are responsible for maintaining a copy of all technical reports and project documentation in accordance with USM’s or sponsor’s records retention policy, whichever is longer.
11.4. ORA will contact the PI for review of any final financial report required by the sponsor.
12. SERVICE CENTERS
12.1. Costs identified for the use of university service centers should be budgeted, charged, and reported as direct charges.
12.2. These charges must be based on actual utilization supported by adequate documentation.
12.3. These charges must also be based on a usage rate approved by the Office of the Controller.
13.1. An organization receiving “pass through” funds to carry out part of an award, and with responsibility for programmatic decision making and achieving of programmatic goals, is generally considered a subrecipient and is subject to the terms and conditions of the primary award. Prior to issuing a subaward, ORA determines whether the relationship is that of a subrecipient or a vendor.
13.2. ORA conducts a risk assessment of all subrecipients and will determine whether additional terms and conditions will be imposed on the subrecipient based on results of the risk assessment and any audit findings.
13.3. PIs are responsible for monitoring the activities of the subrecipient to ensure the subaward is used for authorized purposes and that performance goals are achieved.
13.4 PIs are also responsible for reviewing financial and programmatic reports and following up with the subrecipient to ensure action on any deficiencies.
The Associate Vice President for Research is responsible for the review of this policy every four years (or whenever circumstances require immediate review).
Amendments: Month, Day, Year – summary of changes
11/01/11: Formatted for Institutional Policies website.
02/20/13: Formatted for template. Minor editing throughout.12/08/17: Combined RSCH-SPA-005 and RSCH-CGA-001 to create a comprehensive post-award policy. Updated to reflect current federal regulations. Minor editing throughout.