Creighton University
Accounting Policies
POLICY TITLE: | Cost Share | POLICY NUMBER: | CAPL 05 |
|---|---|---|---|
DATE ISSUED: | July 1998 | DATE REVISED: | June 2009 |
PURPOSE
As a condition of receiving Federal funding, Creighton University must comply with Office of Management and Budget (OMB) Circular A-21 "Cost Principles for Education Institutions" and OMB Circular A-110 "Uniform Administrative Requirement for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations". OMB Circular A-110 Subpart C, Paragraph .23, addresses the requirements for Cost Share.
POLICY
Some sponsored projects require that Creighton University participate to some extent in the total cost of the project. Cost sharing or matching (the terms may be used interchangeably) represents the use of institutional funds to supplement project costs not borne by the sponsoring agency.
Creighton will make a cost sharing commitment when required by the sponsor or by the competitive nature of the award. Creighton will cost share only to the extent necessary to meet the specific requirements of the sponsored project. Salary commitment for cost sharing is limited to a minimum of 5% of total effort per individual. Any effort less than 5% should not be quantified but could be included in the narrative of the proposal. The cost sharing commitment must be included on the Proposal Approval and Routing Form (Green Sheet) and in the proposed budget. The responsible University Officials must approve the cost sharing commitment on the Green Sheet. The forms are available from the Office of Grants Administration (OGA).
SCOPE
This policy should be known and understood by the following groups of individuals.
- Vice Presidents
- Deans
- Department Chairs
- Directors
- Department Administrators
- Principal Investigators
- Other Accounting/Finance Personnel
- Grants Administration Personnel
- Controller's Office Personnel
- Internal Audit Personnel
DEFINITIONS
Cost Sharing is the portion of total project costs not borne by the sponsor agency and is itemized in the project's approved budget. Other terms used include matching, third-party, and in-kind contributions.
Mandatory Cost Sharing is cost sharing that is mandated by the sponsoring agency. This can be in the form of a specified dollar amount or a certain percentage of total costs.
Required or Committed Cost Sharing is cost sharing that has been included in the proposal and accepted by the sponsor regardless of whether it was mandatory or voluntary. The amount included in the proposal becomes part of the legal requirements of the contract or grant.
Voluntary Committed Cost Sharing includes costs associated with a project, identified in the proposal, yet not requested from the sponsor. Once cost sharing has been identified as voluntary committed cost share the University must track it and disclose it to the sponsoring agency if the agency requires reporting of cost sharing.
Voluntary Uncommitted Cost Sharing includes faculty (including senior researchers) effort that is over and above that which is committed and budgeted for in a sponsored project. Voluntary uncommitted cost sharing should be treated differently from committed effort and should not be included in the organized research base for computing the Facilities and Administrative (F & A) rate or reflected in any allocation of F & A costs.
PROCEDURES
Cost Sharing Obligation
There are several points in the proposal and award process at which the University may incur a cost sharing obligation.
1. Proposal Submission - Cost sharing may be in the proposal to the sponsor for one of two reasons: (1) the sponsor mandates cost sharing as a condition of applying for an award; (2) the University voluntarily makes a commitment of cost sharing for competitive purposes. In both of these situations cost sharing is quantified in the proposal budget and becomes the basis for the sponsor's award.
2. Negotiation and Receipt of Award - Cost sharing not quantified in the original proposal budget may subsequently be contributed by the University because sponsor funds are not sufficient to perform the agreed upon scope of work. Examples of this type of cost sharing obligation include: (1) the sponsor does not fund the project at the level requested in the proposal and the full amount is needed to accomplish the scope of work so University resources are committed to the project and; (2) an overrun occurs on a sponsored project fund. Any overrun covered by University sources must be identified as cost sharing.
The points in the proposal and award process at which the University does not incur a cost share obligation include:
1. The sponsor and Principal Investigator (PI) agree to reduce the scope of work which reduces the budgetary requirements. A reduction in budget with a commensurate reduction of the scope of work does not result in cost sharing.
2. The sponsor awards less than the proposed budget but does not agree to reduce the scope of work. The University decides it can still complete the original scope of work within the awarded amount. This is not a cost sharing obligation.
Determining a Cost Sharing Obligation
Upon receipt of an award document OGA will compare the awarded budget to the proposed budget. OGA will forward a copy of the award statement along with the Creighton University Grants Budget Form to the PI. If the award is less than the proposed amount the PI and Department Administrator will determine whether or not the University will voluntarily incur a cost sharing obligation. If so, all three columns of the Grants Budget Form will need to be filled out and the appropriate approvals obtained. If not, only the first two columns of the form need to be completed. Any cost sharing included in the original proposal and/or subsequently through negotiation must be documented with the amount and source of funds by fund and organization codes with appropriate approvals.
Sources of Cost Share
A. University funds provided for the benefit of the specific project (i.e. department, dean or vice president funds, donation funds).
B. Unfunded or Waived Indirect costs. Waived indirect costs are indirect costs that are otherwise available to be recovered but the University has agreed to accept less than the full amount available. The difference between the indirect costs accepted and the amount that would have been provided at the full rate may be used as cost sharing if approved by the sponsor.
In some circumstances the sponsor does not reimburse indirect at the full rate due to sponsor policy, government legislation or terms of the agreement. If the difference is to be used as cost share it must be approved by the sponsor.
In addition, when direct cost is shared, the University will cost share the associated indirect costs. This will be calculated by Grants and Contracts Accounting.
C. Another sponsored project account. This is rare and allowable only if approved by both sponsors. Note that federal funds may not be used as cost sharing on other federal funds.
D. Third-party contributions. This is support from a non-University source.
Criteria for Cost Share
To be acceptable to be used as cost sharing an expenditure must satisfy all of the following criteria:
A. be verifiable from official University records;
B. not be used as cost sharing for any other sponsored program;
C. be necessary and reasonable for proper and efficient accomplishment of project objectives;
D. be allowable under the applicable cost principles, OMB Circular A-21;
E. be itemized in the approved budget if this a requirement of the sponsor; and
F. be incurred during the effective dates of the grant or contract.
Acceptable Expenditures
In general, costs normally treated as direct costs on sponsored projects may be used to meet a cost sharing obligation; except as otherwise allowed, costs normally treated as indirect on sponsored projects may not. For a complete list see the listing of expenditure codes in the Controller's Office Policies & Procedures Manual.
A. Examples of expenditures which may be used as cost sharing include:
1. Faculty, staff, or student salaries and applicable fringe benefits.
2. Laboratory supplies
3. Travel
4. Equipment, if required by the sponsoring agency (see section below on equipment)
B. Examples of expenditures which generally may not be used as cost sharing are:
1. Expenditures normally treated as indirect, such as administrative salaries and office supplies.
2. Unallowable costs, such as alcoholic beverages, entertainment and memberships in community organizations.
3. Equipment
Accounting for and Documenting Cost Sharing
All cost sharing must be documented and readily identifiable in the University accounting system. Documentation is the responsibility of the department where the project will be conducted. The method of documentation is determined by the requirement of the sponsored agreement.
Cost Share for Salaries
Cost share for all salaries will be captured through the Personnel Activity Reporting process.
Cost Share as a Percentage
The project budget will be loaded in the Grant Fund at the total cost of the project excluding cost share salary budget. Creighton's cost share portion will be loaded into the budget as a negative amount under account code 75XX - Cost Share Credits. For each transaction, the system will automatically calculate the percentage and charge 74XX - Cost Share Charges in the fund, organization code that the cost share amount will be covered and credit 75XX - Cost Share Credits in the Grant Fund.
Cost Share Identified as Specific Cost Items
A cost share fund will be created in the operating fund number series. Budget will be moved from the fund, organization code that is to cover the cost share into the cost share fund. The items identified as cost share will then be purchased from the cost share fund. If the cost share obligation has not been met by the end of the fiscal year, budget will need to be loaded in the following fiscal year until the cost share obligation has been met. Once the obligation has been met, the cost share fund will be closed and any remaining budget will be moved back to the originating fund, organization code.
All Other Cost Share Reporting
Cost sharing which is not a reporting requirement of the sponsoring agency will be documented on a Cost Sharing Certification Report form (new form). The responsible department will complete the form at the end of each fiscal year (or more often if necessary) recording cost sharing expenditures incurred within that fiscal year period, and submit the form to the Controller's Office.
Equipment Used as Cost Share
Proposing the purchase of equipment as University Cost Share should be carefully weighed as there are cost/benefit issues to be considered.
For example, federal cost principles (OMB A-21) allows universities to calculate depreciation on equipment purchased with non-federal funds. This amount becomes a part of the facilities' component which contributes to the University's indirect cost rate. However, when an item of equipment is purchased in whole or in part with non-federal funds and is cost shared on a federally-funded project, the University is not allowed to include the depreciation normally associated with the item of equipment in the indirect cost rate calculation. Consequently, this type of transaction will have a negative impact on the indirect cost rate. Therefore, one must weigh these factors very carefully before making the decision to commit non-federal funds toward the purchase of equipment to be used as cost sharing on a federally-funded project.
Third Party, In-Kind Contributions as Cost Sharing
The valuation of third-party in-kind contributions is what it would have cost if the University had paid for the item or service itself. Special valuation of third-party in-kind contributions are:
Volunteer Services
Services provided to the University by volunteers are valued at rates consistent with those paid by the University to its employees performing similar work. If the University does not have employees performing similarly work, the applicable rates are those paid by other employers for similar work in the labor market in which the University competes for the same type of services. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
Employees of Other Organizations
When a non Creighton employee furnishes the services of an employee, these services are valued at the employee's regular pay (plus an amount of fringe benefits that are reasonable, allowable and allocable, but exclusive of overhead costs), provided they are in the same line of work for which the employee is normally paid. If these services are in a different line of work, then the rules for volunteer services apply.
Donated Supplies and loaned Equipment or Space
If a third party donated supplies, the contributions should not be valued in excess of the market value of the supplies at the time of the donation. If a third party donates the use of equipment or space in a building but retains title, the contribution is valued at the fair market value of the equipment or space.
Donated Equipment
Valuation of donated equipment should be secured from the Development Office through the donor. Since the donor will usually take a tax deduction for the contributions, he or she must substantiate to the Internal Revenue Service the value used for the contribution. The Development Office asks the donor for a letter or other documentation which states a value for the contribution.
