• Expenditure authority is derived from
S.O. 100.4(n) whereas authority to enter into the contract or grant
is derived
from S.O. 100.4(dd).
(See Chapter 13 for information about contract and grant authority.)
The Presidential authority to spend contract
and grant funds under Standing Order 100.4(n) has been delegated to
Chancellors and
Vice Presidents.
(See 6-220.)
6-220 CHANCELLORS AND UNIVERSITY VICE PRESIDENTS
The President has
delegated the contracts and grants expenditure part of his authority under
S.O. 100.4(n) to Chancellors
and Vice Presidents
by letter dated April 14, 1980. [http://www.ucop.edu/ucophome/coordrev/da/da0666.html] The delegation
permits "expenditures or commitments of funds against
any approved research, training, or development contract or grant when
a fully executed contract is in hand or a written notice
of grant award has been received." Refer
to 6-300, "Expenditure
Advance Based on Firm Commitment," for discussion
of the restrictions on the delegation of expenditure authority to
Chancellors in cases where a fully executed contract or
notice of grant award has not been received.
Chancellors may redelegate this authority to individual campus departments
through authorization of the department's
budget by action
of the Accounting Officer. (See 6-230.) After the budget has been authorized by the
Accounting Officer, the
department may delegate
signature authorization to specific individuals within the department to incur
expenses. (See 6-240.)
6-230 CAMPUS DEPARTMENTS
The expenditure authorization process
involves two separate but related actions:
a. Chancellor's approval of department's
budget, (See 6-231) and
b. authorization of the agreement budget
and appropriation of funds by the Accounting
Officer with the concurrence of the Principal Investigator. (See 6-232.)
6-231 Budget Authority
The
Accounting Manual, Section D-224-17, "Delegation of Authority--Signature
Authorization," states:
[http://www.ucop.edu/ucophome/policies/acctman/d-224-17.pdf]
The basic step or foundation of
the expenditure
process
of a campus department, or program as the
case may be, is the approval of
the department's budget by
the
Chancellor. The Chancellor's approval
of the departments
budget in essence constitutes a delegation
(to
the department) of the Chancellor's authority to expend…….
For extramural funds, such as gifts,
contracts,
and grants, budgets are established on acceptance,
and, ordinarily, are documented in a letter
from
the campus accounting officer to the departmental
administrators. All approved budgets
are
then entered in the campus general ledger.
6-232 Accounting Officers Authorization of
Extramural Funds
Acceptance
of the award agreement by the Contracts and Grants Officer under authority
of Standing Order 100.4(dd) [http://www.universityofcalifornia.edu/regents/bylaws/so1004.html]
and approval of rebudgeting actions do not, in fact,
constitute
authorization
to expend the awarded funds. With the concurrence of the Principal Investigator,
the Accounting Officer has the
ultimate
responsibility for appropriating, recording and journalizing, extramural fund
transactions as part of the University
operating
budget. The agreement budget is authorized
when the Accounting Officer enters the budget into the campus'
general
ledger and the funds become University funds.
The
Accounting Officer must establish the agreement budget in the University accounting
system to enable the
Chancellor's
delegated authority in a campus department to expend contract and grant.
Because the expenditure authority
under
Standing Order 100.4(n) is restricted to contracts and grants that "have
been solicited or negotiated in accordance with
established
Regental policy," actions of both the Contracts and Grants
Officer and the Accounting Officer must precede
contract
and grant expenditures by the campus department. [http://www.universityofcalifornia.edu/regents/bylaws/so1004.html]
6-240 SIGNATURE AUTHORIZATION
Once
the budget is established and the department has been authorized to expend
the awarded funds for the budgeted
purposes,
individuals in a department who have delegated expenditure authority can proceed
to incur expenses. Accounting
Manual,
Section D-224-17, "Delegation of Authority--Signature Authorization,"
II.C. states:
Before budgeted funds can be expended, a record of the signatures of those
authorized to originate and
approve specified departmental business transactions must be provided to
administrative and service departments.
Such delegations include authorization to sign purchase requisitions, service
department orders, requests for issuance
of a check, payroll time reporting forms, etc.
This requirement applies to the Department head and each staff member
to whom authority has been delegated…
The Signature Authorization or Cancellation Form U 242-1,
or its equivalent, is the official record used to delegate expenditure
authority and to record signature specimens.
The U 242-1 states, "A signature authorization is a delegation
of authority and
remains in effect until cancelled." In an electronic
environment, some type of document is required to record the assignment
of electronic signatures or authorization codes and the
approval hierarchy levels and codes associated with a particular
function or database.
6-300
EXPENDITURE ADVANCE BASED ON FIRM COMMITMENT
6-310 DELEGATION OF AUTHORITY
The
President has delegated to Chancellors authority to approve expenditures for
projects for which documentation
of
the award has not been received:
….when (a) the contract
or grant is within the solicitation authority previously delegated to you
and you have
satisfied yourself
that a firm commitment exists to reimburse the University for the amount of
its own funds
advanced, and (b)
there is an essential need to advance or commit funds (which normally means
to pay salaries or
meet other expenses
of a continuing project).
For
projects which are beyond the solicitation authority of the Chancellor (e.g.,
actions requiring Office
of
the President approval), the President retains the authority to make the "firm
commitment." (See Chapter 13 for
discussion
of the contract and grant solicitation authority of the Chancellor.)
6-320 FIRM COMMITMENT REQUIREMENT
General
Counsel has provided the following guidance in interpreting what constitutes
a "firm commitment"
which
is incorporated in the April 14, 1980 delegation:
While firm
commitment has no legal definition, it is obviously something less than a
contract. The phrase
is applicable
to situations where University personnel are advised by representatives of
Government agencies that
a contract
or grant will be forthcoming, and the only delay is a ministerial one of document
processing. An agency
representative
making such a representation must be one who can be relied on for such representation.
6-330 RESPONSIBILITY FOR LOSS
The
University has no provision to cover losses resulting when the award is denied
by the sponsor and the
campus
has incurred costs in advance of receiving the denial. Campuses have established policies for determining
where
to
charge such losses.
6-400 RESPONSIBILITY
FOR FINANCIAL MANAGEMENT AND CONTROL OF PROJECT FUNDS
6-410 RESPONSIBILITY ATTENDANT
TO DELEGATED EXPENDITURE AUTHORITY
The Accounting Manual, Chapter D-224-17, "Delegation of Authority--Signature
Authorization," Section
II. B., "Responsibility
Attendant to Delegated Authority," states:
. . . . individuals authorized to expend funds from a Department's
budget must comply
with all the applicable
policies, regulatory requirements, laws, regulations, and special restrictions
on the use of those
funds. For example,
expenditure of State General Fund funds budgeted for the Engineering Department
is contingent
upon compliance with
certain requirements embodied in the control
language of the State Appropriation Act.
Similarly, expenditures
for budgets that include Federal grants must comply with any applicable Federal
requirements
contained in Office
of Management and Budget Circulars A-21, Cost Principles for Educational Institutions,
and
A-110, Uniform Administrative
Requirements for Grants and Other Agreements with Institutions of Higher
Education, Hospitals,
and Other Nonprofit Organizations. Expenditures of a budget funded from endowments
must
conform to the terms
and conditions of the bequest(s) involved. For extramural awards, funds generally
must be expended
according to the terms
of the award, the budget for the project as approved by the sponsor, and any
other applicable
sponsor requirements.
Any unauthorized
deviations from the approved award budget or award terms and conditions may
subject the
campus to risk of
audit disallowance.
6-420 SUMMARY
OF STANDARDS FOR FINANCIAL MANAGEMENT
Consistent
with 6-410, the following list summarizes the basic standards which must be
met to insure that
extramural
funds are properly managed:
a. Funds must be expended consistent with:
(1) The purpose for which the award is made;
(2) The terms of the budget as approved by the sponsor;
(3) Any applicable sponsor requirements;
(4)
Any applicable federal government-wide requirements
(such as OMB Circular
A-21 http://www.whitehouse.gov/omb/circulars/a021/a021.html
and A-110 http://www.whitehouse.gov/omb/circulars/a110/a110.html)
for federal awards;
(5) University policies and procedures;
b. Fiscal
transactions must be completed in conformance with internal control standards
and supporting
documentation
requirements. (See Chapter 7 for references
to Accounting Manual sections which
detail
control
standards and documentation requirements for different types of expenditures.)
c. Fiscal records and reports must be prepared
and submitted in a timely, accurate, and complete manner.
6-430 SUMMARY
OF FINANCIAL MANAGEMENT DUTIES
The general
financial management duties which must be assumed by the University in administration
of contract and
grant
awards include:
a. Preparation of the proposed budget according
to University and sponsor requirements;
b. Certification of current cost and pricing
data when required;
c. Acceptance of the agreement;
d. Establishment of the approved award budget;
e. Expenditure of funds consistent with
agreement, sponsor, and University policies;
f. Procurement of equipment and supplies
and execution of subcontracts in accordance with sponsor
and University
policies;
g. Recording of expenditures in the appropriate
account in the month the expenditure occurs to
enable accurate,
current, and complete disclosure of financial results;
h. Preparation and submission in a timely manner
of all required interim and final
fiscal reports,
including cost sharing, if any;
i. Preparation and
submission in a timely manner of all required technical reports or
other deliverables
where required for payment;
j. Avoidance of cost over-runs and unallowable
cost-transfers;
k. Identification of the need for revised
budgets and/or need for additional funds;
l. Negotiation of revised and/or increased
budget in order to secure full cost recovery;
m. Negotiation of advance payments provisions,
including the establishment of letters of credit;
n. Timely invoicing and monitoring for prompt
payment when advance payments cannot be negotiated.
o. Prompt completion of project close-out;
and
p. When warranted, submission of requests
for waiver or exceptions to established University costing
and other policies.
6-440 RESPONSIBILITIES OF THE PRINCIPAL INVESTIGATOR
The Principal
Investigator has primary responsibility for financial management and control
of project funds in accordance
with
University and sponsor policies and procedures. The campus Controller is also responsible for
many of the management
and
control responsibilities listed in 6-430 as well as those listed in 6-460.
Some of the responsibilities are shared with
others,
including the Contracts and Grants Officer, Department Chair and College Dean.
However, it is the Principal Investigator
who
is involved in all aspects of award administration.
6-450 RESPONSIBILITIES OF DEPARTMENT CHAIR
(OR EQUIVALENT OFFICERS)
The
Academic Personnel Manual (APM), Section 245, "Duties of Department
Chairperson (or Equivalent Officers)" divides
the
Department Chair duties into two categories: leader of the department and
administrator of the department.
[http://www.ucop.edu/acadadv/acadpers/apm/apm-245.pdf] The administrative duties which are directly
related
to
the financial management and administration of extramural funds, as provided
in APM-245, Appendix A, include the following:
****
5. To prepare the budget and administer the financial
affairs of the department, in accord with University procedures
****
8. To be responsible for the custody and authorized
use of University property charged to the department, and
for assigning
departmental space and facilities to authorized activities in accordance with
University policy and campus
rules
and regulations
****
10. To maintain records and prepare reports in accord with
University procedures.
6-460 RESPONSIBILITIES OF CAMPUS CONTROLLERS
The
campus Controller also has responsibility for many of the financial management
duties listed in 6-430. The missions,
goals, and
objectives
of campus accounting are outlined in Accounting Manual, A-000-4, "University Accounting Program,"
Section III. C. 1. [http://www.ucop.edu/ucophome/policies/acctman/a-000-4.pdf] Specifically, among other things, the campus
Accounting
Office
is responsible for:
****
b) Monitoring all financial and budgetary transactions
to ensure compliance with University and campus policies
and procedures,
with provisions of governing laws and related statutory regulations, with
the terms and conditions
prescribed
by external funding sources, and with generally accepted accounting principles. This includes
administering
all funds to ensure that expenditures are kept within amounts appropriated
and that estimates
of revenue
are adjusted as required.
c) Preparing
and distributing most campus financial reports and statements, including those
for the total campus
as well
as those for Federal, State, and gift funds and for auxiliary and service
enterprises, and preparing claims
against
funding agencies for reimbursement of expenditures incurred.
d) Maintaining
the campus sections of the General Ledger, the official book of accounts,
and other required campus
accounting
records. This includes assigning account numbers, processing
budgetary, financial, and
lien
entries to properly reflect the transactions of campus funds, ensuring that
subsidiary ledger records maintained
outside
of the accounting office are reconciled to control accounts, and closing the
General Ledger at fiscal year end.
6-500
ALLOWABILITY OF COSTS
6-510 GENERAL PRINCIPLES
Funds
derived from contracts and grants are University funds and are to be expended
in accordance with
contract
and grant terms and conditions and University policies. When University policy and funding agency restrictions
on
expenditures differ, the more restrictive of the two policies shall prevail.
Any questions on allowability of an expense
should
be directed to the campus Contracts and Grants Officer or other appropriate
campus fiscal or administrative
officer
prior to incurring the expense.
6-520 CLASSIFICATION OF DIRECT AND INDIRECT
COSTS
Business and Finance Bulletin A-47, "University Direct Costing
Procedures" outlines University policy regarding direct
charging
of all appropriate costs to a sponsored agreement when such costs are not
reimbursed as indirect costs through
application
of approved indirect cost or facilities and administrative (F&A) rates.
[http://www.ucop.edu/ucophome/policies/bfb/a47.html] For federal awards, OMB Circular A-21, Sections D. and E., incorporate the
following
principles for determining direct and indirect costs [http://www.whitehouse.gov/omb/circulars/a021/a021.html]:
Identification
with sponsored work rather than the nature of the goods and services involved
is the determining factor in
distinguishing
direct from F&A costs of sponsored agreements . . . . F&A costs are
those that are incurred for common
or
joint objectives and therefore cannot be identified readily and specifically
with a particular sponsored project . . . .
For
specific information on direct cost elements, see Chapter 7.
For specific information on indirect costs, see Chapter 8.
6-530 FEDERAL COST PRINCIPLES
It
is the University's policy to follow the Federal cost principles for Federal
awards as set forth in OMB Circular
No. A-21, "Cost Principles for Educational Institutions."
(See 6-F01.) Proper costs under federal awards must
be
reasonable,
allocable, consistent, and allowable. OMB Circular A-21 provides the general federal framework for determining
costs
applicable to grants, contracts, and other agreements with educational institutions.
Section C. 2, "Factors Affecting Allowability
of
Costs," states:
The tests of allowability of
costs under these principles are (a) they must be reasonable; (b) they must
be
allocable to sponsored agreements under the principles
and methods provided herein; (c) they must be given
consistent treatment through application of those generally
accepted accounting principles appropriate to the
circumstances; and (d) they must conform to any limitations
or exclusions set forth in these principles or in the
sponsored agreement as to types or amounts of cost items.
6-531 Reasonable Costs
In the expenditure of extramural funds, the University
follows the federal OMB Circular A-21
definition of
reasonable costs
as "the action that a prudent person would have taken under the circumstances
prevailing at the
time the decision
to incur the cost was made" (the "prudent person" test.)
6-532 Allocable Costs
In the expenditure
of extramural funds, the University follows the federal OMB
Circular A-21 definition of allocable costs:
"A cost is allocable
. . . if the goods or services involved are chargeable or assignable to such
cost objective in accordance
with relative benefits
received or other equitable relationship," also referred to as "the
benefits test."
6-533 Consistent Treatment of Costs
In the expenditure of extramural funds, the University
follows the OMB Circular A-21 requirement
that elements
of cost ". .
. . must be given consistent treatment through application of those
generally accepted accounting principles
appropriate to the
circumstances."
6-534 Allowable Costs
In the expenditure
of extramural funds, the University follows the OMB
Circular A-21 test of "allowability"
which
is determined by
the terms and conditions of the sponsored agreement, including the authorized
budget, and applicable
federal regulations. See 6-F01, subparagraph e, for a list of individual
costs.
6-600
FINANCING AGREEMENTS - ADVANCE PAYMENT
6-610 POLICY
As a matter of sound financial management, the
University seeks to minimize the use of its operating funds as working
capital for extramurally
sponsored projects. Because the University receives a large part
of its total budget support from
extramural sponsors,
when monies from certain sponsors are not received simultaneously with cash
expenditures, the
University is forced
into an unacceptable cash deficit management problem. With the objective to minimize the
University's cash
deficit problem, on
The University policy
and procedures for operation of the cash advance program are promulgated in
the
Accounting Manual, C-557-21, "Contracts
and Grants: Cash Advance Program."
[http://www.ucop.edu/ucophome/policies/acctman/c-557-21.pdf
]
6-620 NEGOTIATION RESPONSIBILITY OF CONTRACTS
AND GRANTS OFFICERS
The Contracts and
Grants Officer is responsible for negotiating a cash advance payment method
with the sponsor
whenever feasible.
Advance payments are specifically required for contracts with commercial
sponsors since the
University does not
subsidize work for a for-profit company with State funding.
The responsibilities
of Accounting Officers and other University personnel for other aspects of
the University's
cash management program
are set forth in Accounting Manual, C-557-21, Section VI., "Responsibilities."
6-630
FEDERAL SPONSORS
The University policy regarding securing cash
advances for federal awards operates within the federal guidelines
established by the
United States Department of the Treasury and OMB Circular A-110, ___.22, "Payment"
[http://www.whitehouse.gov/omb/circulars/a110/a110.html#22
] (See 6-F07).
The letter of credit is
the preferred method
of cash advance. If the federal qualifications
for letter of credit are not met, cash advances
should be secured
by direct Treasury check.
A list of the federal regulations concerning advance
payment is included in the Accounting Manual,
Chapter C-557-21,
VIII. References [http://www.ucop.edu/ucophome/policies/acctman/c-557-21.pdf] Although the
responsibilities
of Federal agencies to monitor cash advances is to be recognized, excessive
requirements should be
resisted and the
negotiated provision not be accepted unless the campus Accounting Officer
agrees that the campus
accounting office
is able to comply with the cash advance payment terms.
6-640 STATE SPONSORS
Accounting Manual chapter C-557-21, Section
III. B., provides the following guidance on
negotiating cash advance
payments
with State sponsors:
The
State of California does not have a cash advance program comparable to the
Federal program. The State, as a
matter of policy, discourages cash advances or progress
payment. Letters of credit are not available, but negotiations should
always include a request for some form of cash advance.
Even though the State agency may refuse to consider advances
over the full term of the agreement, it may be possible
to negotiate advances for the estimated costs of starting a program.
Use of the Interagency Agreement . . . . rather than Standard Agreement . . . . allows
for negotiation of cash advances . . . .
State agencies generally will not consider advance payments,
even though they are allowed in State interagency agreements.
However, for State standard agreements, the State Contract Manual specifies:
7.32 • ADVANCE PAYMENTS
Advance payments by the state are
permitted only when specifically authorized by statute and should be made
only when necessary.
Contracts or agreements containing provisions for advance payments
by the state should preferably
provide for small periodic payments
rather than the total contract price or lump-sum advances (GC §§ 11256 - 11263
and 11019). [http://www.documents.dgs.ca.gov/ols/SCM/SCM%20new%20Rev%208.pdf]
Contract and Grants Officers are encouraged to request
advance payments whenever possible, particularly
under interagency agreements and when the University is
advancing significant start-up funding for the State
under a State agreement.
These
State policies are described in 6-S01 and 6-S02.
6-650 PRIVATE SPONSORS
Accounting Manual, Chapter C-557-21, Section
III. C, "Private Sponsors," states:
Each contract and grant issued by a private sponsor
should be negotiated to include some method of cash advance
payment. Sponsors are generally receptive to negotiating
cash advances; however, because of individual policies and
needs, flexibility is necessary. The preferred advance
would be to receive the full amount at the time of execution of
the contract or acceptance of the award. If negotiation
results in an agreement to pay periodic advances based on
estimated reimbursable costs, the understanding
should be clearly spelled out in the contract. The sample advance
payment clause attached as Appendix I should be
tailored to meet the campus' needs and its ability to comply.
During negotiations, the Contracts and Grants Officer
should coordinate with the campus Extramural Funds Office
if an invoice or financial report is required to secure
periodic cash advance. A clause which may be used as a
model in negotiations for a cash advance provision when
the sponsor requires that the advance request be based
on estimated expenditures appears in the Accounting Manual, Chapter C-557-21, Appendix
I.
Advance payments
are required from for-profit sponsors. (See
6-620.) The campus Contracts and Grants
Officer and the Extramural
Funds Accounting Officer should work out a mechanism so that the Contracts
and Grants
Office is notified
in the event of persistent failure or material breach of contract advance
payment terms by the sponsor.
6-700
FINANCIAL REPORTING REQUIREMENTS
6-710 STANDARDS
The Accounting Manual, Chapter A-000-4, "University Accounting Program",
Section II, provides a brief
statement of the
goals and objectives of the financial accounting and reporting program, as
follows:
[http://www.ucop.edu/ucophome/policies/acctman/a-000-4.pdf]
The
University, as a public institution, has a special stewardship obligation
to process properly and accurately all receipts
and
disbursements of funds; to account for all financial resources received and
used; to ensure that all financial transactions
conform
to legal requirements and administrative policies, and are recorded in accordance
with generally accepted accounting
principles
for colleges and universities; and to provide reports which present to University
administrators and the public a
complete
picture of the University's funds and their use.
The
University accounting program records all financial transactions by account
and fund numbers in order to control
expenditures
against established budgets and to prepare management reports. Among other
duties, the campus Accounting
Officers
prepare "Departmental information to assist managers in administering
their funds by presenting budgets,
expenditures,
liens, and remaining balances" (See Accounting
Manual, Chapter A-000-4, Section IV.C.)
Further
policy regarding submission of financial reports to extramural sponsors who
have provided advance payments is
outlined
in the Accounting Manual, Chapter C-557-21, "Contracts and Grants:
Cash Advance Programs", Section VI. A.,
"Reporting
Requirements," which states:
To avoid possible suspension of funding under an advance
payment program, the requisite reports should be filed
within the time frame specified by the granting agency.
This chapter
also provides additional policy guidance concerning reporting requirements,
such as recording expenses in
the appropriate account in
the month the expense is incurred, thereby allowing for accurate, current,
and complete disclosure
of financial results; substantiating
cost transfers in a well documented and timely manner; and conforming with
internal control
standards and adequate supporting
documentation requirements.
6-720 FORMATS
The
University must prepare various financial reports on contract and grant expenditures
for internal management purposes
and
to meet external reporting requirements. Accounting
Manual Chapter R-265, Reports, outlines some of the various
financial
reports which must be prepared. Chapter R-265 Section B, Indirect Costs, and
Section C, Federal Contracts
and
Grants, lists examples of the various reports required for extramural funds.
Sponsors
have different budgeting and financial reporting requirements.
Contracts and Grants Officers must coordinate
with
the appropriate campus accounting office officials whenever a sponsor requests
financial data or documentation which
is
not routinely provided by the accounting system. The Accounting
Manual, Chapter A-115-2, "Accounting Codes: General
Ledger"
outlines the account code structure and the cost categories which are routinely
provided by the accounting system.
Acceptance
of funding agency restrictions or practices which are unreasonable or otherwise
are deemed arbitrary which
would
result in paperwork burden or hardships for the University should be avoided.
The
Federal government has adopted certain standard financial reporting formats
for use with Federal grants under
OMB
Circular No. A-110, ___.52,
"Financial Reporting." (See 6-F05.) Contracts and Grants Officers should insure
that
budgeting and reporting requirements accepted in Federal agreements are consistent
with these federal
government-wide
reporting requirements. See 17-400 and 17-410 for University policy
on negotiating and responding
to
external reporting requirements and other paperwork requirements.
6-999
RELATED UNIVERSITY REFERENCES
·
Academic Personnel Manual, Section 020, "Special Services to Individuals and
Organizations," June 28, 1958. http://www.ucop.edu/acadadv/acadpers/apm/apm-020.pdf
(Formerly knows as University Regulation No. 4.)
·
Bylaw 21.4, Duties of the Treasurer
http://www.universityofcalifornia.edu/regents/bylaws/bl21.html#bl21.4
·
Standing Order 100.4, Duties of the President,
Sections (n) and (dd)
http://www.universityofcalifornia.edu/regents/bylaws/so1004.html
·
Business and Finance Bulletin A-47, "University Direct Costing Procedures"
http://www.ucop.edu/ucophome/policies/bfb/a47.html
·
Business and Finance Bulletin A-60, "Short-Term Investment Pool (STIP)--Distribution
of Income" http://www.ucop.edu/ucophome/policies/bfb/a60.html
·
·
Business and Finance Bulletin BUS-29, "Management and Control of Inventorial Equipment"
http://www.ucop.edu/ucophome/policies/bfb/uc-bfb-bus%20series.html
·
Business and Finance Bulletin BUS-43, Materiel Management
http://www.ucop.edu/ucophome/policies/bfb/bus43.html
·
Accounting Manual Chapter A-000-4, "University Accounting Program"
http://www.ucop.edu/ucophome/policies/acctman/a-000-4.pdf
·
Accounting Manual Chapter A-000-7, "Official Documentation Required in support
of University Financial Transactions" http://www.ucop.edu/ucophome/policies/acctman/a-000-7.html
·
Accounting Manual Chapter A-115-2, "Accounting Codes"
http://www.ucop.edu/ucophome/policies/acctman/a-115-2.pdf
·
Accounting Manual Chapter C-173, "Cash: Cash Controls"
http://www.ucop.edu/ucophome/policies/acctman/c-173.pdf
·
Accounting Manual Chapter C-557-21, "Contracts and Grants: Cash Advance Programs"
http://www.ucop.edu/ucophome/policies/acctman/c-557-21.pdf
·
Accounting Manual Chapter D-224-17, "Delegation of Authority -- Signature Authorization"
http://www.ucop.edu/ucophome/policies/acctman/d-224-17.pdf
·
Accounting Manual Chapter D-371-36, "Disbursements: Invoice Processing in Response
to Purchase Authorizations" http://www.ucop.edu/ucophome/policies/acctman/d-371-36.pdf
·
Accounting Manual Chapter P-196-13, "Payroll: Attendance, Time Reporting, and
Leave Accrual Records" http://www.ucop.edu/ucophome/policies/acctman/p-196-13.pdf
·
Accounting Manual Chapter R-212-2, "Receivables Management"
http://www.ucop.edu/ucophome/policies/acctman/r-212-2.html
·
Accounting Manual Chapter R-265, "Reports"
http://www.ucop.edu/ucophome/policies/acctman/r-265.pdf
·
Academic Personnel Manual, Section 245, Appendix A, "Duties of Department
Chairpersons (or Equivalent Officers)" http://www.ucop.edu/acadadv/acadpers/apm/apm-245.pdf
EXTERNAL
REQUIREMENT--FEDERAL
6-F01
Office of Management and Budget Circular No. A-21, Cost Principles for Educational Institutions
[http://www.whitehouse.gov/omb/circulars/a021/a021.html]
PURPOSE
A-21
establishes principles for determining allowable direct and indirect costs.
APPLICABILITY
A-21
cost principles apply to all federal awards to educational institutions.
SUMMARY OF PROVISIONS
This Circular establishes principles for determining costs
applicable to Federal grants, contracts, and other agreements with
educational institutions.
A-21 lays out a framework for classifying various costs that might
be incurred in the course of
research, training, or other activities performed under
the auspices of an educational institution and supported by the federal government.
a. Major Functions of an Institution
Since different
kinds of costs are associated with different activities, A-21 first defines
the major
functions of
an institution. These activities are
(a) instruction, (b) organized research (separately budgeted and
accounted for),
(c) other sponsored activities (extramurally financed projects other than
instruction and organized research),
and (d) other
institutional activities.
b. Allowable Costs: Direct
and Indirect
Certain costs
may be charged to a sponsored agreement (i.e., to a grant, contract or other
agreement between
an institution
and the federal government) and other costs may not be so charged.
The former are called allowable
costs in A-21.
The general factors affecting the allowability
of costs are discussed in 6-530.
Costs
that can be specifically identified with a particular institutional activity
(at least relatively easily with a high degree of accuracy)
are
called direct costs. Costs that are incurred
for common or joint objectives, and therefore cannot be identified readily
and
specifically with a particular institutional activity, are called indirect costs. According to the Circular: "Identification
with
the sponsored work rather than the nature of the goods and services involved
is the determining factor in distinguishing
direct
and indirect costs of sponsored agreements."
c. Indirect Cost Rate Pools
Indirect cost
rate proposals are based on actual costs.
A-21 defines the categories of indirect costs and the
standard method
of allocating each category to the major functions of the University. Alternate methods are
allowed under
special circumstances. The basic categories
(or "pools") are (1) depreciation and use allowance
(on buildings
and capital improvements to land), (2) operation and maintenance expenses
(for the physical plant),
(3) general
administration and general expenses (not related solely to any major function
of the institution),
(4) departmental
administration expenses (for common or joint departmental activities), (5)
sponsored projects
administration
(not otherwise included in general administration expenses), (6) library expenses,
and
(7) student
administration and services.
d. Types of Indirect Cost Rates
The true indirect
cost rate (determined after the fact) for a particular major function (e.g.,
organized research)
would be the
sum of the costs incurred in support of that function in each indirect cost
pool, divided by the total
direct costs
for that function. A-21 specifies that
these direct costs consist of salaries and wages, fringe benefits,
materials and
supplies, services, travel, and subgrants and subcontracts
up to $25,000 each. In practice the
rates
are usually
negotiated in advance so that they can be applied to particular sponsored
agreements when the actual
direct costs
are incurred. There are several options given for how rates
may be negotiated. The most common
choices are
"predetermined fixed rates" and "fixed rates with carry-forward
provisions." Predetermined rates
fixed
for a definite
period into the future are often used when both parties (the government and
the university) are
reasonably
confident about the probable level of indirect costs during the period. The main advantage of this
type of rate
is that it simplifies the calculation of the rates: there is no after-the-fact adjustment of costs
recovered no matter what the true rate was for the period.
A more accurate (but more complicated to administer)
rate type is
the fixed rate with a carry forward provision.
This means that, while the rate is fixed in advance of a
given period,
any under- or over-recovery of indirect costs can be taken account of and
built into the rate for
the next period.
e. Specific Types of Costs
A-21 also contains
specific guidance on fifty types of costs which includes a brief discussion
of what the
category includes
and what parts of it (if any) are allowable costs.
It should be emphasized that the issue here
is allowability;
the principles apply whether a particular item is treated as a direct or indirect
cost. These sections
are subject
to some interpretation. The
purpose of this list (and of the Circular in general), however, is not
to lay down
a step-by-step process; it is to provide a general framework within which
universities are to use
"logic
and reason" in making individual determinations.
The fifty types of costs addressed are the following:
1.
Advertising and public relations costs
2.
Alcoholic beverages
3.
Alumni activities
4.
Bad debts
5.
Civil defense costs
6.
Commencement and convocation costs
7.
Communication costs
8.
Compensation for personal services
9.
Contingency provisions
10. Deans of faculty and graduate schools
11. Defense and prosecution of criminal and
civil proceedings, claims, appeals and patent infringement
12. Depreciation and use allowances
13. Donated services and property
14. Employee morale, health, & welfare
costs and credits
15. Entertainment costs
16. Equipment and other capital expenditures
17. Executive lobbying costs
18. Fines and penalties
19. Goods or services for personal use
20. Housing and personal living expenses
21. Insurance and indemnification
22. Interest, fund raising, & investment
management costs
23. Labor relations costs
24. Lobbying
25. Losses on other sponsored agreements or
contracts
26. Maintenance and repair costs
27. Material costs
28. Memberships, subscriptions, & professional
activity costs
29. Patent costs
30. Plant security costs
31. Preagreement
costs
32. Professional services costs
33. Profits and losses on disposition of plant
equipment or other capital assets
34. Proposal costs
35. Rearrangement and alteration costs
36. Reconversion
costs
37. Recruiting costs
38. Rental costs of buildings and equipment
39. Royalties and other costs for use of patents
40. Sabbatical leave costs
41. Scholarships and student aid costs
42. Selling and marketing
43. Severance pay
44. Specialized service facilities
45. Student activity costs
46. Taxes
47. Transportation costs
48. Travel costs
49. Termination costs applicable to sponsored
agreements
50. Trustees
f. Compensation for Personal Services
The cost
element called "compensation for personal services", i.e. salaries
and wages, is important because it makes up a large
portion
of both the direct and indirect costs incurred under sponsored agreements. Allowable personnel costs must be categorized
in
terms of the major functions of the institution (research, training, etc.)
and in terms of indirect cost pools (departmental
administration,
student services, and so on). A-21
provides for various methods for documenting the distribution of charges
for
salaries and wages, and also lays down criteria which any particular method
chosen by an institution
must meet. The gist
of
these criteria is summed up in the word "confirmation":
there must be some way to verify that salary and wage charges
made
within the institution's payroll system represent actual costs. At most institutions the confirmation is accomplished
by
means of Personnel Activity Reports (PARs) completed
after the fact on a regular basis by the employees themselves or
other
responsible persons with suitable means of verification that the work was
performed.
PRIMARY UNIVERSITY RESPONSIBILITY
It
is the responsibility of the Vice President - Financial Management to provide
guidance to ensure the University's
compliance
with A-21. The Costing Policy & Analysis Office is
responsible for negotiating indirect costs rates and
providing
guidance on the Personnel Activity Report (PAR) system and on the allowability
of costs to federal awards.
Campus
Accounting and Contract and Grant Officers are responsible for implementation
of local procedures to ensure compliance.
UNIVERSITY POLICY IMPLEMENTATION
Regarding
the general policy framework for direct cost accounting, policy implementation
is incorporated into
Business
and Finance Bulletin A-47, "University Direct Costing Procedures."
Please
see the "Reference" section of the following Manual chapters for further information on the University
policy
and procedures issued on specific topics:
Topic Manual
Chapter
Audit and Disallowance of Costs Chapter 4
Cost Principles and Costing Policies--General Chapter
6
Cost Principles and Costing Policies--Specific Elements
of Costs Chapter 7
Cost Sharing
Chapter 5
Indirect Costs
Chapter 8
EXTERNAL REQUIREMENTS--FEDERAL
6-F02 Office of Management and Budget Circular
No. A-110, ___.22(i)-(j), Standards Governing Use of Banks
PURPOSE
The
purpose of OMB Circular A-110, ___.22(i)-(j)
is to set forth standards governing the use of banks and other
institutions
as depositories of funds advanced under federally funded grants and other
federally funded agreements.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.22(i)-(j) are applicable to all federal agencies
in their administration
of
grants to, and other agreements with, public and private institutions of higher
education, public and private hospitals,
and
other quasi-public and private non-profit organizations. The term "other agreements" does not
include procurement
contracts,
but does include cooperative agreements.
SUMMARY OF PROVISIONS
Subsections
___.22(i)-(j) set forth
standards governing the use of banks and other institutions as depositories
of funds
advanced
under grants and other agreements.
It
covers restrictions on government requirements for separate bank accounts,
deposits in banks with FDIC insurance,
and
emphasis on use of minority banks.
PRIMARY UNIVERSITY RESPONSIBILITY
The
President is responsible for all matters relating to bank accounts and banking
relationships, according to the Standing
Orders
of the Regents of the University of California, Section 100.4, "Duties
of the President of the University." http://www.universityofcalifornia.edu/regents/bylaws/bl21.html#bl21.4
Additionally,
the duties of various University Officers are outlined in:
Accounting Manual, C-173, "Cash: Cash Controls"
Accounting Manual, C-557-21, "Contracts and Grants: Cash Advance Program"
EXTERNAL REQUIREMENTS--FEDERAL
6-F02 (Continued)
UNIVERSITY POLICY IMPLEMENTATION
The
Treasurer has developed procedures to ensure deposits are made in banks with
FDIC insurance and collateral
security
in the event that cash advances exceed FDIC coverage limits.
University
policies regarding bank accounts and letter-of-credit agreements are outlined
in the two Accounting
Manual
sections identified in PRIMARY UNIVERSITY RESPONSIBILITY, above.
Consistent
with these policy statements, Contract and Grant Officers must collaborate
with the Accounting Officer
in
accepting any terms on Letters of Credit.
EXTERNAL REQUIREMENTS--FEDERAL
6-F03
Office of Management and Budget Circular No. A-110, ___.24, Program Income
PURPOSE
The
purpose of OMB Circular A-110, ___.24
is to set forth standards governing the use of income earned by assistance
recipients
from the federally supported activities.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.24 are applicable to all federal agencies in their administration of grants
to,
and other agreements with, public and private institutions of higher education,
public and private hospitals, and other quasi-public
and
private non-profit organizations. The
term "other agreements" does not include procurement contracts,
but does include
cooperative
agreements.
SUMMARY OF PROVISIONS
The
following is the full text of Section ___.24 of Circular A-110:
___.24 Program income.
(a)
Federal awarding agencies shall apply the standards set forth in this section
in requiring recipient organizations to account
for
program income related to projects financed in whole or in part with Federal
funds.
(b)
Except as provided in paragraph (h) below, program income earned during the
project period shall be retained by the recipient
and,
in accordance with Federal awarding agency regulations or the terms and conditions
of the award, shall be used in one or
more
of the ways listed in the following.
(1)
Added to funds committed to the project by the Federal awarding agency and
recipient and used to further
eligible
project or program objectives.
(2)
Used to finance the non-Federal share of the project or program.
(3)
Deducted from the total project or program allowable cost in determining the
net allowable
costs
on which the Federal share of costs is based.
(c)
When an agency authorizes the disposition of program income as described in
paragraphs (b)(1) or (b)(2), program
income
in excess of any limits stipulated shall be used in accordance with paragraph
(b)(3).
(d)
In the event that the Federal awarding agency does not specify in its regulations
or the terms and conditions of the award
how
program income is to be used, paragraph (b) (3) shall apply automatically
to all projects or programs except research.
For
awards that support research, paragraph (b) (1) shall apply automatically
unless the awarding agency indicates in the
terms
and conditions another alternative on the award or the recipient is subject
to special award conditions, as indicated
in
Section ___.14.
(e)
Unless Federal awarding agency regulations or the terms and conditions of
the award provide otherwise, recipients
shall
have no obligation to the Federal Government regarding program income earned
after the end of the project period.
(f)
If authorized by Federal awarding agency regulations or the terms and conditions
of the award, costs incident to the
generation
of program income may be deducted from gross income to determine program income,
provided these
costs
have not been charged to the award.
(g)
Proceeds from the sale of property shall be handled in accordance with the
requirements of the Property Standards
(See
Sections ___.30 through ___.37).
(h)
Unless Federal awarding agency regulations or the terms and condition of the
award provide otherwise, recipients
shall
have no obligation to the Federal Government with respect to program income
earned from license fees and
royalties
for copyrighted material, patents, patent applications, trademarks, and inventions
produced under an award.
However,
Patent and Trademark Amendments (35 U.S.C. 18) apply to inventions made under
an experimental,
developmental,
or research award.
EXTERNAL REQUIREMENTS--FEDERAL
6-F03 (Continued)
PRIMARY UNIVERSITY RESPONSIBILITY
Campus
Contract and Grant Officer and Controller with concurrence of Principal Investigator
for items (a) through
(f);
OP Materiel Management for item (g); and OP Office of Technology Transfer
for item (h).
UNIVERSITY POLICY IMPLEMENTATION
Regarding
royalties received as a result of copyrights or patents (Item (h)) policy
implementation is incorporated in the
University
Copyright Policy and the University
Patent Policy, and described in Contract
and Grant Manual,
Chapter
11, Intellectual Property.
Regarding
income from the sale of property, see Section 15-540 of this Manual.
Regarding
all other program income, use of any program income to be earned during the
project period is determined by
the
terms of the individual award and may be subject to negotiation by the Contract
and Grant Officer and implemented
by
the Accounting Officer, with the concurrence of the Principal Investigator,
within the parameters of
alternatives
(b)(1), (b)(2) and (b)(3).
EXTERNAL REQUIREMENTS--FEDERAL
6-F04 Office of Management & Budget Circular No. A-110, ___.21, Standards for Financial Management Systems
PURPOSE
The
purpose of OMB Circular A-110, ___.21
is to set forth standards for financial management systems of assistance
recipients,
and to prevent federal sponsoring agencies from imposing stricter standards.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.21 are applicable to all Federal agencies in their administration of grants
to,
and other agreements with, public and private institutions of higher education,
public and private hospitals, and other quasi-public
and
private non-profit organizations. The
term "other agreements" does not include procurement contracts,
but does include
cooperative
agreements.
SUMMARY OF PROVISIONS
The
following is the complete text of OMB
Circular A-110, ___.21, Standards for Financial Management Systems:
___.21 Standards for financial management systems.
(a)
Federal awarding agencies shall require recipients to relate financial data
to performance data and develop unit
cost
information whenever practical.
(b)
Recipients' financial management systems shall provide for the following.
(1)
Accurate, current and complete disclosure of the financial results of each
federally-sponsored project or program in
accordance
with the reporting requirements set forth in Section ___.52.
If a Federal awarding agency requires reporting
on
an accrual basis from a recipient that maintains its records on other than
an accrual basis, the recipient shall not be
required
to establish an accrual accounting system. These recipients may develop such accrual data
for its reports
on
the basis of an analysis of the documentation on hand.
EXTERNAL REQUIREMENTS--FEDERAL
6-F04 (Continued)
(2) Records that identify adequately the source
and application of funds for federally-sponsored activities.
These
records shall contain information pertaining to Federal awards, authorizations,
obligations, unobligated balances,
assets,
outlays, income and interest.
(3)
Effective control over and accountability for all funds, property and other
assets. Recipients shall adequately
safeguard
all
such assets and assure they are used solely for authorized purposes.
(4)
Comparison of outlays with budget amounts for each award. Whenever appropriate, financial information
should be
related
to performance and unit cost data.
(5)
Written procedures to
minimize the time elapsing between the transfer of funds to the recipient
from
the U.S. Treasury and the
issuance or redemption of checks, warrants or payments
by other means for program
purposes by the recipient.
To the extent that the provisions of the Cash Management Improvement
Act (CMIA)
(Pub. L. 101-453) govern,
payment methods of State agencies, instrumentalities, and fiscal agents shall
be
consistent with CMIA Treasury-State
Agreements or the CMIA default procedures codified at 31 CFR
part
205, "Withdrawal of Cash from the Treasury for Advances under Federal
Grant and Other Programs."
(6)
Written procedures for determining the reasonableness, allocability
and allowability of costs in accordance with the
provisions of the applicable Federal cost principles and the terms and conditions
of the award.
(7)
Accounting records including cost accounting records that are supported by
source documentation.
(c)
Where the Federal Government guarantees or insures the repayment of money
borrowed by the recipient, the Federal
awarding
agency, at its discretion, may require adequate bonding and insurance if the
bonding and insurance requirements
of
the recipient are not deemed adequate to protect the interest of the Federal
Government.
EXTERNAL REQUIREMENTS--FEDERAL
6-F04 (Continued)
(d)
The Federal awarding agency may require adequate fidelity bond coverage where
the recipient lacks sufficient
coverage
to protect the Federal Government's interest.
(e)
Where bonds are required in the situations described above, the bonds shall
be obtained from companies holding
certificates
of authority as acceptable sureties, as prescribed in 31 CFR part
223, "Surety Companies Doing Business
with
the United States."
PRIMARY UNIVERSITY RESPONSIBILITY
The
Senior Vice President--Business and Finance is responsible for University
implementation of these financial
management
standards. The standards are implemented by the Vice President
- Financial Management and by
campus
Controllers.
UNIVERSITY POLICY IMPLEMENTATION
The
general structure and process of University accounting activities are outlined
in Accounting Manual, Chapter A-000-4,
"University
Accounting Program." Accounting Manual Chapter A-000-7, "Official Documentation Required
in Support
of
University Financial Transactions," and Business and Finance Bulletin G-6, "Substantiation
of Salary and Wage
Charges
to U.S. Government Contracts and Grants" specify records which must be
prepared to support financial transactions.
Accounting Manual, Chapter D-371-36, "Invoice Processing,"
provides rules for verifying and certifying invoices and outlines
departmental
and accounting office responsibilities. Purchasing policies are detailed in Business and Finance Bulletin BUS-43,
"Materiel
Management," and policy for accounting for inventorial equipment is found
in Business and Finance Bulletin BUS-29,
"Management
and Control of Inventorial Equipment."
EXTERNAL REQUIREMENTS--FEDERAL
6-F05 Office of Management and Budget Circular
No. A-110, ___.52, Financial Reporting
PURPOSE
The
purpose of OMB Circular A-110, ___.52
is to prescribe uniform reporting procedures for assistance recipients,
and
to prevent Federal sponsoring agencies from imposing additional reporting
requirements.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.52 are applicable to all federal agencies in their administration of
grants
to, and other agreements with, public and private institutions of higher education,
public and private hospitals, and
other
quasi-public and private non-profit organizations.
The term "other agreements" does not include procurement
contracts,
but does include cooperative agreements.
SUMMARY OF PROVISIONS
The
following is the complete text of OMB
Circular A-110, ___.52, Financial Reporting:
___.52
Financial reporting.
(a)
The following forms or such other forms as may be approved by OMB are authorized
for obtaining financial
information
from recipients.
(1)
SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency shall require recipients to
use the SF- 269 or SF-269A to report the status of funds
for
all nonconstruction projects or programs. A Federal awarding agency may, however, have
the option of not
requiring
the SF-269 or SF-269A when the SF-270, Request for Advance or Reimbursement,
or SF-272, Report
of
Federal Cash Transactions, is determined to provide adequate information to
meet its needs, except that a
final
SF-269 or SF-269A shall be required at the completion of the project when
the SF-270 is used only for advances.
EXTERNAL REQUIREMENTS--FEDERAL
6-F05 (Continued)
(ii)
The Federal awarding agency shall prescribe whether the report shall be on
a cash or accrual basis. If the
Federal
awarding agency requires accrual information and the recipient's accounting
records are not normally
kept
on the accrual basis, the recipient shall not be required to convert its accounting
system, but shall develop such
accrual
information through best estimates based on an analysis of the documentation
on hand.
(iii)
The Federal awarding agency shall determine the frequency of the Financial
Status Report for each project or
program,
considering the size and complexity of the particular project or program.
However, the report shall not be
required
more frequently than quarterly or less frequently than annually.
A final report shall be required at the
completion
of the agreement.
(iv)
The Federal awarding agency shall require recipients to submit the SF- 269
or SF-269A (an original and no
more
than two copies) no later than 30 days after the end of each specified
reporting period for quarterly and
semi-annual
reports, and 90 calendar days for annual and final reports.
Extensions of reporting due dates may
be
approved by the Federal awarding agency upon request of the recipient.
(2)
SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the Federal awarding
agency shall require each recipient to submit the
SF-272
and, when necessary, its continuation sheet, SF-272a.
The Federal awarding agency shall use this report
to
monitor cash advanced to recipients and to obtain disbursement information
for each agreement with the recipients.
(ii)
Federal awarding agencies may require forecasts of Federal cash requirements
in the "Remarks" section
of
the report.
(iii)
When practical and deemed necessary, Federal awarding agencies may require
recipients to report in the
"Remarks"
section the amount of cash advances received in excess of three days.
Recipients shall provide short
narrative
explanations of actions taken to reduce the excess balances.
EXTERNAL REQUIREMENTS--FEDERAL
6-F05 (Continued)
(iv) Recipients shall
be required to submit not more than the original and two copies of the SF-272
15 calendar
days
following the end of each quarter. The Federal awarding agencies may require a
monthly report from
those
recipients receiving advances totaling $1 million or more per year.
(v)
Federal awarding agencies may waive the requirement for submission of the
SF-272 for any one of the
following
reasons: (1) When monthly advances do not exceed $25,000 per recipient, provided
that such advances
are
monitored through other forms contained in this section; (2) If, in the Federal
awarding agency's opinion, the
recipient's
accounting controls are adequate to minimize excessive Federal advances; or,
(3) When the electronic
payment
mechanisms provide adequate data.
(b)
When the Federal awarding agency needs additional information or more frequent
reports, the following shall be observed.
(1)
When additional information is needed to comply with legislative requirements,
Federal awarding agencies shall issue
instructions
to require recipients to submit such information under the "Remarks"
section of the reports.
(2)
When a Federal awarding agency determines that a recipient's accounting system
does not meet the standards in
Section
___.21, additional pertinent information to further monitor awards may be
obtained upon written notice to the
recipient
until such time as the system is brought up to standard. The Federal awarding agency, in obtaining this
information,
shall comply with report clearance requirements of 5 CFR part 1320.
(3)
Federal awarding agencies are encouraged to shade out any line item on any
report if not necessary.
(4)
Federal awarding agencies may accept the identical information from the recipients
in machine readable format
or
computer printouts or electronic outputs in lieu of prescribed formats.
(5)
Federal awarding agencies may provide computer or electronic outputs to recipients
when such expedites or
contributes
to the accuracy of reporting.
EXTERNAL REQUIREMENTS--FEDERAL
6-F05 (Continued)
PRIMARY UNIVERSITY RESPONSIBILITY
The
campus Controllers are responsible for adhering to the financial reporting
requirements outlined in ___.52 utilizing
financial
data generated by the Principal Investigator and/or responsible Program Administrator.
UNIVERSITY POLICY IMPLEMENTATION
Policies
and procedures governing the objectives, organization, and structure of the
University Accounting program and
the
responsibilities of Controllers are outlined in Accounting
Manual, Chapter A-000-4, "University Accounting
Program."
Additional
guidance regarding submission of financial reports is provided in the Accounting Manual, Chapter C-557-21,
"Contracts
and Grants: Cash Advance Program." Policies and procedures regarding billing of
charges to federally-supported
contracts
and grants are given in Accounting Manual, Chapter R-212-2, "Receivables Management."
EXTERNAL REQUIREMENTS--FEDERAL
6-F06 Office of Management and Budget Circular
No. A-110, ___.25, Revision of Budget and Program Plans
PURPOSE
The
purpose of OMB Circular A-110, ___.25
is to set forth criteria and procedures to be followed by federal sponsoring
agencies
in requiring recipients to report deviations from financial plans and to request
approvals for financial plan revisions.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.25 are applicable to all federal agencies in their administration of grants
to,
and other agreements with, public and private institutions of higher education,
public and private hospitals, and other quasi-public
and
private non-profit organizations. The
term "other agreements" does not include procurement contracts,
but does include
cooperative
agreements.
When
the federal awarding agency is a member of the Federal Demonstration Partnership
(FDP), the FDP A-110 General
Terms
and Conditions apply. The FDP General Terms and Conditions vary from
the standard A-110 terms, particularly
in
this section __.25. For a listing of
federal FDP member agencies, see http://www.thefdp.org/Phase4_Members.html#P122_4074.
For
the FDP A-110 Terms and Conditions published
as a side-by-side document with A-110, see
http://www.nsf.gov/pubs/fdp/fdpIV.pdf.
SUMMARY OF PROVISIONS
The
following is the complete text of OMB
Circular A-110, ___.25:
___.25
Revision of budget and program plans.
(a)
The budget plan is the financial expression of the project or program as approved
during the award process. It may include
either
the Federal and non-Federal share, or only the Federal share, depending upon
Federal awarding agency requirements.
It
shall be related to performance for program evaluation purposes whenever appropriate.
EXTERNAL REQUIREMENTS--FEDERAL
6-F06 (Continued)
(b)
Recipients are required to report deviations from budget and program plans,
and request prior approvals for budget and program
plan
revisions, in accordance with this section.
(c)
For nonconstruction awards, recipients shall request
prior approvals from Federal awarding agencies for one or more of the
following
program or budget related reasons.
(1)
Change in the scope or the objective of the project or program (even if there
is no associated budget revision requiring
prior
written approval).
(2)
Change in a key person specified in the application or award document.
(3)
The absence for more than three months, or a 25 percent reduction in time
devoted to the project, by the approved project
director
or principal investigator.
(4)
The need for additional Federal funding.
(5)
The transfer of amounts budgeted for indirect costs to absorb increases in
direct costs, or vice versa, if approval is
required
by the Federal awarding agency.
(6)
The inclusion, unless waived by the Federal awarding agency, of costs that
require prior approval in accordance with
OMB
Circular A-21, "Cost Principles for Institutions of Higher Education,"
OMB Circular A-122, "Cost Principles for
Non-Profit
Organizations," or 45 CFR part 74 Appendix E, "Principles for Determining
Costs Applicable to Research
and
Development under Grants and Contracts with Hospitals," or 48 CFR part
31, "Contract Cost Principles and
Procedures,"
as applicable.
(7)
The transfer of funds allotted for training allowances (direct payment to
trainees) to other categories of expense.
(8)
Unless described in the application and funded in the approved awards, the
subaward, transfer or contracting out of
any
work under an award. This provision
does not apply to the purchase of supplies, material, equipment or general
support
services.
EXTERNAL REQUIREMENTS--FEDERAL
6-F06 (Continued)
(d)
No other prior approval requirements for specific items may be imposed unless
a deviation has been approved by OMB.
(e)
Except for requirements listed in paragraphs (c) (1) and (c) (4) of this section,
Federal awarding agencies are authorized, at
their
option, to waive cost-related and administrative prior written approvals required
by this Circular and OMB Circulars A-21
and
A-122. Such waivers may include authorizing
recipients to do any one or more of the following.
(1)
Incur pre-award costs 90 calendar days prior to award or more than 90 calendar
days with the prior approval of the
Federal
awarding agency. All pre-award costs are incurred at the recipient's
risk (i.e., the Federal awarding agency is
under
no obligation to reimburse such costs if for any reason the recipient does
not receive an award or if the award is
less
than anticipated and inadequate to cover such costs).
(2)
Initiate a one-time extension of the expiration date of the award of up to
12 months unless one or more of the following
conditions
apply. For one-time extensions, the recipient must
notify the Federal awarding agency in writing with the supporting
reasons
and revised expiration date at least 10 days before the expiration date specified
in the award. This one-time extension
may
not be exercised merely for the purpose of using unobligated
balances.
(i) The terms and conditions of award prohibit the extension.
(ii)
The extension requires additional Federal funds.
(iii)
The extension involves any change in the approved objectives or scope of the
project.
(3)
Carry forward unobligated balances to subsequent
funding periods.
(4)
For awards that support research, unless the Federal awarding agency provides
otherwise in the award or in the agency's
regulations,
the prior approval requirements described in paragraph (e) are automatically
waived (i.e., recipients need not obtain
such
prior approvals) unless one of the conditions included in paragraph (e) (2)
applies.
EXTERNAL REQUIREMENTS--FEDERAL
6-F06 (Continued)
(f)
The Federal awarding agency may, at its option, restrict the transfer of funds
among direct cost categories or programs,
functions
and activities for awards in which the Federal share of the project exceeds
$100,000 and the cumulative amount of
such
transfers exceeds or is expected to exceed 10 percent of the total budget
as last approved by the Federal awarding agency.
No
Federal awarding agency shall permit a transfer that would cause any Federal
appropriation or part thereof to be used for
purposes
other than those consistent with the original intent of the appropriation.
(g) All other changes to nonconstruction
budgets, except for the changes described in paragraph (j), do not require
prior
approval.
(h)
For construction awards, recipients shall request prior written approval promptly
from Federal awarding agencies
for
budget revisions whenever (1), (2) or (3) apply.
(1)
The revision results from changes in the scope or the objective of the project
or program.
(2)
The need arises for additional Federal funds to complete the project.
(3)
A revision is desired which involves specific costs for which prior written
approval requirements may be imposed
consistent
with applicable OMB cost principles listed in Section ___.27.
(i) No other prior approval requirements for specific items
may be imposed unless a deviation has been approved by OMB.
(j)
When a Federal awarding agency makes an award that provides support for both construction and nonconstruction
work,
the Federal awarding agency may require
the recipient to request prior approval from the Federal
awarding
agency before making any fund or budget
transfers between the two types of work supported.
(k) For both construction
and nonconstruction awards, Federal awarding agencies shall require
recipients to
notify the Federal awarding
agency in writing promptly whenever the
amount of Federal authorized funds is
expected
to exceed the needs of the
recipient for the project period by more than $5000
or five percentof the Federal
award, whichever
is greater.
This notification shall not be required if an applicationfor
additional funding is submitted for a continuation award.
(l)
When requesting approval for budget revisions, recipients shall use the budget
forms that were used in the application
unless
the Federal awarding agency indicates a letter of request suffices.
(m)
Within 30 calendar days from the date of receipt of the request for budget
revisions, Federal awarding agencies shall
review
the request and notify the recipient whether the budget revisions have been
approved. If the revision is still under
consideration
at the end of 30 calendar days, the Federal awarding agency shall inform the
recipient in writing of the date
when
the recipient may expect the decision.
PRIMARY UNIVERSITY RESPONSIBILITY
The
Principal Investigator and/or Program Director is
responsible for identifying any need for revision of the financial plan,
with
the assistance of the Accounting Office. Submission
of requests for revisions will be coordinated by the campus
Contract
and Grant Officers and implemented by the campus Accounting Officers.
UNIVERSITY POLICY IMPLEMENTATION
The
University accounting system, as detailed in Accounting Manual, Chapter A-000-4, "University
Accounting Program"
provides
for monitoring of expenditures in the various budget categories of a sponsored
project and control over expenditures
in
those categories which are restricted by the terms of the funding agreement. The need for internal control standards and
adequate
supporting documentation also is outlined in Accounting Manual, Chapter C-557-21, "Contracts and Grants:
Cash
Advance Program."
EXTERNAL REQUIREMENTS--FEDERAL
6-F07
Office of Management and Budget Circular No. A-110, ___.22, Payment
PURPOSE
The
purpose of OMB Circular A-110, ___.22
is to standardize methods of making payments to
assistance
recipients.
APPLICABILITY
The
standards promulgated by Circular A-110,
___.22 are applicable to all federal agencies in their administration
of
grants to, and other agreements with, public and private institutions of higher
education, public and private hospitals,
and
other quasi-public and private non-profit organizations.
The term "other agreements" does not include procurement
contracts,
but does include cooperative agreements. Note
FDP variations in this section. (See references above in 6-F06.)
SUMMARY OF PROVISIONS
The
following is the complete text of ___.22, Payment:
___.22 Payment.
(a)
Payment methods shall minimize the time elapsing between the transfer of funds
from the United States Treasury
and
the issuance or redemption of checks, warrants, or
payment by other means by the recipients.
Payment methods of
State
agencies or instrumentalities shall be consistent with Treasury-State CMIA
agreements or default procedures
codified
at 31 CFR part 205.
(b)
Recipients are to be paid in advance, provided they maintain or demonstrate
the willingness to maintain: (1) written
procedures
that minimize the time elapsing between the transfer of funds and disbursement
by the recipient, and
(2)
financial management systems that meet the standards for fund control and
accountability as established in Section ___.21.
Cash
advances to a recipient organization shall be limited to the minimum amounts
needed and be timed to be in accordance
with
the actual, immediate cash requirements of the recipient organization in carrying
out the purpose of the approved program
or
project. The timing and amount of cash advances shall
be as close as is administratively feasible to the actual
disbursements
by the recipient
organization for direct program or project costs and the proportionate share
of any
allowable
indirect costs.
(c)
Whenever possible, advances shall be consolidated to cover anticipated cash
needs for all awards made
by
the Federal awarding agency to the recipient.
(1)
Advance payment mechanisms include, but are not limited to, Treasury check
and electronic funds transfer.
(2)
Advance payment mechanisms are subject to 31 CFR part
205.
(3)
Recipients shall be authorized to submit requests for advances and reimbursements
at least monthly when
electronic
fund transfers are not used.
(d)
Requests for Treasury check advance payment shall be submitted on SF-270,
"Request for Advance or Reimbursement,"
or
other forms as may be authorized by OMB. This
form is not to be used when Treasury check advance payments are made
to
the recipient automatically through the use of a predetermined payment schedule
or if precluded by special Federal awarding
agency
instructions for electronic funds transfer.
(e)
Reimbursement is the preferred method when the requirements in paragraph (b)
cannot be met. Federal awarding agencies
may
also use this method on any construction agreement, or if the major portion
of the construction project is accomplished
through
private market financing or Federal loans, and the Federal assistance constitutes
a minor portion of the project.
(1)
When the reimbursement method is used, the Federal awarding agency shall make
payment within 30 days after
receipt
of the billing, unless the billing is improper.
(2)
Recipients shall be authorized to submit request for reimbursement at least
monthly when electronic funds transfers
are
not used.
(f) If a recipient cannot meet
the criteria for advance payments and the Federal awarding agency has determined
that reimbursement
is not feasible because the
recipient lacks sufficient working capital, the Federal awarding agency may
provide cash on a
working capital advance basis.
EXTERNAL REQUIREMENTS--FEDERAL
6-F07 (Continued)
Under this procedure, the Federal
awarding agency shall advance cash to the recipient to cover its estimated
disbursement
needs for an initial period
generally geared to the awardee's disbursing cycle. Thereafter, the Federal awarding agency
shall reimburse the recipient
for its actual cash disbursements. The working capital advance method of payment
shall not
be used for recipients unwilling
or unable to provide timely advances to their subrecipient
to meet the subrecipient's
actual cash disbursements.
(g)
To the extent available, recipients shall disburse funds available from repayments
to and interest earned on a
revolving
fund, program income, rebates, refunds, contract settlements, audit recoveries
and interest earned on
such
funds before requesting additional cash payments.
(h)
Unless otherwise required by statute, Federal awarding agencies shall not
withhold payments for proper charges
made
by recipients at any time during the project period unless (1) or (2) apply.
(1)
A recipient has failed to comply with the project objectives, the terms and
conditions of the award, or
Federal
reporting requirements.
(2)
The recipient or subrecipient is delinquent in a
debt to the United States as defined in OMB Circular A-129,
"Managing
Federal Credit Programs," Under such conditions, the Federal awarding
agency may, upon reasonable
notice,
inform the recipient that payments shall not be made for obligations incurred
after a specified date until the
conditions
are corrected or the indebtedness to the Federal Government is liquidated.
(i) Standards governing the use of banks and other institutions
as depositories of funds advanced under awards are as follows.
(1)
Except for situations described in paragraph (i)(2), Federal awarding agencies shall not require separate
depository
accounts for funds provided to a recipient or establish any eligibility requirements
for depositories for funds
provided
to a recipient. However, recipients
must be able to account for the receipt, obligation and expenditure of funds.
(2)
Advances of Federal funds shall be deposited and maintained in insured accounts
whenever possible.
EXTERNAL REQUIREMENTS--FEDERAL
6-F07 (Continued)
(j)
Consistent with the national goal of expanding the opportunities for women-owned
and minority- owned business enterprises,
recipients
shall be encouraged to use women-owned and minority- owned banks (a bank which
is owned at least 50 percent by
women
or minority group members).
(k)
Recipients shall maintain advances of Federal funds in interest bearing accounts,
unless (1), (2) or (3) apply.
(1)
The recipient receives less than $120,000 in Federal awards per year.
(2)
The best reasonably available interest bearing account would not be expected
to earn interest in excess of $250 per
year
on Federal cash balances.
(3)
The depository would require an average or minimum balance so high that it
would not be feasible within the expected
Federal
and non-Federal cash resources.
(l)
For those entities where CMIA and its implementing regulations do not apply,
interest earned on Federal advances deposited in
interest
bearing accounts shall be remitted annually to Department of Health and Human
Services, Payment Management
System,
Rockville, MD 20852. Interest amounts
up to $250 per year may be retained by the recipient for administrative expense.
State universities and hospitals shall comply with CMIA,
as it pertains to interest. If an entity subject to CMIA uses its own funds
to pay pre-award costs for discretionary awards without
prior written approval from the Federal awarding agency, it waives its
right to recover the interest under CMIA.
(m)
Except as noted elsewhere in this Circular, only the following forms shall
be authorized for the recipients in requesting
advances
and reimbursements. Federal agencies shall not require more than
an original and two copies of these forms.
(1)
SF-270, Request for Advance or Reimbursement.
Each Federal awarding agency shall adopt the
SF-270 as a standard form
for all nonconstruction programs when electronic funds transfer or
predetermined
advance methods are not used.
Federal awarding agencies, however, have the option of using this form
for construction
(2)
programs in lieu of the SF-271, "Outlay Report and Request
for Reimbursement for Construction Programs."
(2)
SF-271, Outlay Report and Request for Reimbursement for Construction Programs.
Each Federal awarding agency
shall
adopt the SF-271 as the standard form to be used for requesting reimbursement
for construction programs.
However,
a Federal awarding agency may substitute the SF-270 when the Federal awarding
agency determines that
it provides adequate information to meet Federal needs.
PRIMARY UNIVERSITY RESPONSIBILITY
The
campus Controllers are responsible for securing payment from sponsors of extramural
projects based upon payment
terms
and conditions accepted by campus Contract and Grant Officers.
UNIVERSITY POLICY IMPLEMENTATION
Detailed
procedures for administering advance payment through letter of credit or Treasury
Check are detailed in the
Accounting
Manual, Chapter C-557-21, "Contracts and Grants Cash Advance Programs."
EXTERNAL REQUIREMENT--FEDERAL
6-F08
Federal Acquisition Regulation (FAR), Parts 31 and 32 and Related Clauses
PURPOSE
The
Federal Acquisition Regulation (FAR) is the primary regulation for use by
all federal agencies in their acquisition of
supplies
and services with appropriated funds.
APPLICABILITY
The
FAR applies to all contracts for the acquisition of supplies and services
awarded by any federal agency. The
FAR
does
not apply to grants and cooperative agreements covered by 31 USC 6301, et. seq., the Federal Grant and
Cooperative Agreement Act [http://www4.law.cornell.edu/uscode/31/6301.html].
SUMMARY OF PROVISIONS
The
general financial sections of the FAR are Part 31, "Contract Cost Principles
and Procedures", [http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/31.htm]
and Part 32, "Contract Financing" [http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/32.htm]. Specific contract clauses relating to allowable
cost
and payment are found in Parts 52.216
[http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/52_215.htm#P372_55341]
and 52.232 [http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/52_232.htm].
a.
FAR Part 31, "Contract Cost Principles and Procedures"
Subpart
31.1, "Applicability" establishes the general principles for determining
applicable cost principles for a given type of
recipient
organization and a given type of contract.
The cost principles are applicable whether the institution is a prime
contractor
or a subcontractor under a prime contract with another type of organization.
Subpart
31.2 specifies the cost principles for contracts with commercial organizations;
Subpart 31.3 specifies the cost principles
for educational institutions; Subparts 31.4 and 31.5 are reserved; Subpart
31.6 specifies the principles for state and local
governments;
and Subpart 31.7 specifies the principles for nonprofit organizations.
EXTERNAL REQUIREMENT--FEDERAL
6-F08 (Continued)
The
Subpart 31.3 provides that the cost principles in OMB Circular No. A-21 are the applicable cost principles for educational
institutions. It incorporates the provisions of A-21 by reference.
The
FAR contract clauses governing general financial issues of allowable costs
are set forth at 52.216. The FAR contract
provisions
governing payment and limitation of funds are set forth at 52.232.
b.
FAR Part 32, "Contract Financing"
FAR
Part 32 prescribes policies and procedures for contract financing and other
payment matters, including coverage on
advance
payments, progress payments based on costs, contract debts, contract funding,
and assignment of claims. The
FAR
contract provisions governing contract financing are set forth in FAR Part
52.232.
PRIMARY UNIVERSITY RESPONSIBILITY
Responsibilities
related to FAR Part 31 are presented in Section 6-F01, Office of Management and Budget Circular No. A-21,
"Cost Principles for Educational Institutions,"
under University Policy Implementation.
Detailed
procedures for administering advance payments through letter of credit or
Treasury Check are provided in
Accounting
Manual, Chapter C-557-21, "Contracts and Grants: Cash Advance Programs."
Guidance
on acceptance of specific FAR clauses is issued by Contract and Grant Memo and via the OP RAO website,
"Guide
to Clauses" at http://ucop.edu/raohome/clauses/guidance.html.
EXTERNAL
REQUIREMENT - STATE
6-S01
State Administrative Manual Section 8099 - Cash; Maximization of Interest
Earnings
http://sam.dgs.ca.gov/TOC/8000/8099.htm
PURPOSE
Section 8099 lists and summarizes
all the other State Administrative Manual
sections related to maximization
of interest earnings.
APPLICABILITY
The State Administrative Manual (SAM) applies to all State government
agencies.
SUMMARY OF PROVISIONS
The SAM sections summarized in Section
8099 set forth (1) the procedures for State agencies to follow in order
for the State to
secure prompt reimbursement and deposit of funds it receives, and (2) the
policies for payments on State
contracts. Advance payments are permitted only when authorized
by law or under interagency agreements. However, they
are not made unless
absolutely necessary.
LEAD AGENCY
State of California Department of General Services.
PRIMARY UNIVERSITY RESPONSIBILITY
Contract and Grant Officers are
responsible for requesting start-up costs when necessary and monthly rather
than
quarterly payments
in arrears when State agencies use interagency agreements.
UNIVERSITY IMPLEMENTATION
Guidance is issued via Contract
and Grant Memo.
EXTERNAL REQUIREMENT
- STATE
6-S02
State Administrative Manual Section 8758 - Charges for Interagency
Services.
http://sam.dgs.ca.gov/TOC/8700/8758.htm
PURPOSE
Section 8758 lists the types of
charges allowed on interagency agreements and sample clauses to
include in such
agreements.
APPLICABILITY
The section applies to all State
agencies.
SUMMARY OF PROVISIONS
Section 8758 states
that charges for interagency services can include direct, indirect, and central
service costs.
Advance payments
are allowed.
LEAD AGENCY
State of California Department of General Services.
PRIMARY
UNIVERSITY RESPONSIBILITY
Contract and Grant Officers are
responsible for requesting interagency agreements from State agencies.
Accounting Officers
are responsible for requesting advance payments under interagency agreements.
UNIVERSITY IMPLEMENTATION
Guidance is issued via Contract
and Grant Memo as needed.
