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Research and Cost Accounting - Guidelines and Procedures

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Fixed Price Funds - Closing Funds with Balances in Fee for Service/Fixed Price Agreements

Background

Most of the funding Rice receives for sponsored projects is based on cost reimbursable awards. Under these agreements, the sponsor is billed for actual costs up to the award amount and thus, at the end of the project, there is no excess cash. However, awards made under fee for service, milestone, and fixed price agreements occasionally result in positive cash balances available after the work is completed and all costs are recorded. These guidelines detail the steps to be taken to enable these project funds to be closed, while maintaining the fiduciary responsibility inherent in the proposal and award process, i.e., appropriately matching proposed costs and actual costs.

  

Fixed price awards follow normal closeout procedures at completion of the project. Research and Cost Accounting (RCA) will confirm the final expenditure amounts with the PI / department administrator (DA). The cash balance that remains on fixed price awards will be handled in accordance with these guidelines. Uncommitted cash balances, less the pro-rata share associated with F&A costs are transferred to designated fund(s) in the department as specified by the PI, chair and/or dean. Note: If full F&A has not been charged to the award, F&A at the full rate will be recovered before the cash transfer calculations are performed. 

Foundation awards are not considered fixed price projects. Most foundations have their own guidelines for how to handle remaining funds (e.g., refund balances over $100 or keep amounts less than $100 and use for the purposes of the award). 

Upon receipt of fixed price award agreements, the Office of Sponsored Research (OSR) will review the statement of work for relatedness to the university mission of education, research and public outreach. If needed, OSR will obtain additional information from the principal investigator (PI) on the relatedness of the project to the university mission. A fixed price award with a remaining uncommitted cash balance may be subject to Internal Revenue Service regulations for Unrelated Business Income Taxes (UBIT). Such awards will be reviewed by Current Funds Accounting and, if found to be subject to UBIT, the taxes will be charged to the departmental fund(s) identified for the transfer. 

As described below, the steps to be taken will depend on the amount of unspent and uncommitted cash remaining on the award. Normally, cash remaining should be less than 10% of the total amount awarded. This is particularly important if federal or federal flow-through funds are involved. Cash in excess of this amount requires special review. 

A. Balance is less than $5,000

RCA will notify the PI and DA of the balance in the fund and request that the PI: 

  1. Certify that the project has been completed 
  2. Confirm that the expenses in Banner represent the final costs of the project 
  3. Request that the direct costs balance be transferred to specified designated (D) fund(s). 

  

Upon receipt of this final cost certification and request to transfer, RCA will proceed with closeout by: 

  • Determining the F&A cost portion in the balance 
  • Charging the pro-rata share of F&A on the remaining balance to the R fund(s) 
  • Transferring the direct cost portion to the designated (D) fund(s) 
  • Advising the PI, DA, Chair and Dean of the F&A and transferred amounts 

  

Note: for balances of $25 or less, RCA will automatically process a miscellaneous charge to the sponsored project fund for the appropriate direct cost amount. 

B. Balance is greater than or equal to $5,000 and less than 10% of award

Follow the same steps as A, with the addition of review and approval by the chair for the cash balance transfer 

C. Balance is greater than or equal to $5,000 and at least 10% but less than 25% of award

Follow the same steps as B, with the addition of (1) an explanation by the PI of the variance between the proposal budget and actual costs to complete the project and (2) the review and approval of the responsible dean for the cash balance transfer. 

D. Balance is greater than or equal to $5,000 and greater than or equal to 25% of award

Follow the same steps as C. Additionally, upon receipt of the final cost certification and request for transfer, RCA will coordinate as needed with the Office of Sponsored Research (OSR) to contact the sponsor to request instructions on how to handle the excess funding, e.g., refund the balance to the sponsor, extend the project, or retain for University use. RCA will notify the PI, DA, chair and responsible dean of the disposition instructions. If the project is not extended, RCA will proceed with closeout per the sponsor instructions and these guidelines. 

Roles and Responsibilities

Summary of actions needed to close fixed price awards, depending on cash balance of award amount (X notes requirement) 

Action  Responsible Individual/Department  A. Balance  B. Balance is ≥ $5,000 and < 10% of award  C. Balance is > $5,000 and ≥ 10% but < 25% of award  D. Balance is ≥ $5,000 and ≥ 25% of award 
1. Notify the PI and DA of balance (90 dats after project end date)  RCA  X  X  X  X 
2. Certify project is completed  PI  X  X  X  X 
3. Confirm final expenses  PI  X  X  X  X 
4. Request balance transfer  PI  X  X  X  X 
5. Approve balance transfer request ot specified D fund(s)  PI, Chair, Dean  X
(PI only)
 
X
(PI and Chair)
 
X
(PI, Chair and Dean)
 
X
(PI, Chair and Dean)
 
6. Request disposition instructions from sponsor  RCA
(coordinated with OSR as needed)
 
n/a  n/a  n/a  X 
7. Advise of sponsor response  RCA
(coordinated with OSR as needed)
 
n/a  n/a  n/a  X 
8. Notify Current Funds Accounting to review for tax implications  RCA  X  X  X  X 
9. Advises RCA if unrelated business income taxes are due and record taxes are due, if needed  Current Funds Accounting  X  X  X  X 
10. Financially close out the award; charge appropriate F&A*; transfer direct cost balance; refund balance to sponsor if needed; notify PI, DA, Chair and Dean of closeout actions  RCA  X  X  X  X 

*Appropriate F&A includes full F&A recovery on posted expenditures and imputed F&A on the remaining balance. 

Illustrations

The following examples illustrate the processes described above. 

Illustration #1: $100,000 fixed price award with an F&A rate of 52.5%. 

  Balance  Recovered F&A on Posted Expenditures  Imputed F&A on Remaining Balance  Remaining Direct Costs  Approval 
A.1  $18.75  None
(full F&A already charged)
 
$6.45  $12.30 (miscellaneous expense charged to R fund)  PI 
A.2  $800.00  None
(full F&A already charged)
 
$275.41  $524.59 (transferred to D fund(s))  PI 
B.  $6,500.00  None
(full F&A already charged)
 
$2,237.70  $4,262.30 (transferred to D fund(s))  PI, Chair 
C.  $11,810.00  None
(full F&A already charged)
 
$4,065.74  $7,744.26 (transferred to D fund(s))  PI, Chair, Dean 
D.  $26,000.00  None
(full F&A already charged)
 
As determined by sponsor
($8,894.74 if retained by Rice)
 
As determined by sponsor
($17,105.26 transferred to D fund(s), if retained by Rice)
 
PI, Chair, Dean, Sponsor 

 

Illustration #2: $100,000 fixed price award with an F&A rate of 20.0%. 

  Balance  Recovered F&A on Posted Expenditures  Imputed F&A on Remaining Balance  Remaining Direct Costs  Approvals 
A.1  $18.75  $18.75  $0.00  $0.00  PI 
A.2  $800.00  $800.00  $0.00  $0.00  PI 
B.  $6,500.00  $6,500.00  $0.00  $0.00  PI, Chair 
C.  $11,810.00  $11,810.00  $0.00  $0.00  PI, Chair, Dean 
D.  $26,000.00  As determined by sponsor
($20,041.67 if retained by Rice)
 
As determined by sponsor
($2,038.38 if retained by Rice)
 
As determined by sponsor
($3,907.10 transferred to D fund, if retained by Rice)
 
PI, Chair, Dean, Sponsor 

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 NIH FY 2012 Salary Cap 

NIH has had a salary cap in effect for over two decades.  While previous cap amounts had increased or remained the same as the prior year, the FY 2012 appropriations act signed on December 23, 2011 decreased the salary cap amount.   NIH awards issued on or after December 23, 2011 are subject to the reduced rate, while awards active on December 22, 2011 will be subject to the reduced limit when NIH issues incremental funding with FY 2012 appropriations. 

 

Funding Issued  

Pay Level 

Annual Salary Cap (full-time, 12-mo. appt.) 

Semi-Monthly Salary (full-time, 12-mo. appt.) 

9-Month Salary (full-time) 

On/before

December 22,2011

Executive Level I

$199,700.00

$8,320.83

$149,775.00

On/after

December 23, 2011

Executive Level II

$179,700.00

$7,487.50

$134,775.00

 

The NIH initial issue date for FY2012 funding is critical in determining the effective date for the new salary cap. The new/reduced limits apply not only to awards received by Rice directly from NIH as a prime recipient, but also to NIH subawards we receive from the prime recipient.

 

NIH Notice NOT-OD-12-035  provides guidance on how the new limits will be implemented.  NIH may reduce FY2012 and future funding amounts on awards with categorical budgets to reflect the revised salary limitations.  NIH funding of modular budget awards will not be reduced, although the salary limitation will still apply.  Unless otherwise restricted, recipients will be allowed to rebudget funds freed a result of the lower salary cap.

 

Definitions

 

(a)  NIH Salary cap is the direct salary limitation allowed under NIH appropriations.  It is expressed as a 12-month salary for a full-time equivalent (FTE) appointment.

 

(b)  Institutional base salary is the approved rate of pay for the appointment period and full-time equivalent (FTE).  For example, a full-time faculty member appointed for 9 months at a rate of $90,000 has an institutional base salary of $10,000 per month.  Note: The institutional base salary per month is not affected by a choice to be paid the nine month salary over 12 months. 

 

(c)  The FY appropriation year is identified in the Fiscal Information portion of Section I – Award Data of the NIH Notice of Award (NoA). 

 

(d)  The NIH issue date is identified in the first line of the NoA.  For purposes of the salary cap, the new/reduced limit is effective with the initial issue date of FY2012 funding.  Note (1): the issue date is not determined by the budget period start date indicated in the NoA. Note (2): the effective date of the FY2012 salary cap remains the initial issue date, even if NIH later amends the FY 2012 funding award notice.

 

In addition to the NIH NoA, the fiscal year appropriation information is also available from the NIH RePORTER website (http://projectreporter.nih.gov/reporter.cfm).  This website is helpful in identifying the FY2012 issue date for NIH flow-through funding.  The prime award number is in the subaward documents received from OSR and also in Fund Text in WebApps.  

 

Illustrations

 

Example 

Status as of 12/22/11 

FY 2012 Funding, Notice of Award Issue Date 

NIH Salary Cap Amount: Old Rate $149,775* 

NIH Salary Cap Amount: New Rate $134,775* 

Award #1

Not funded

01/09/12 (funding for 02/01/12 - 01/31/13)

N/A

Eff. with award start date

Award #2

Funded thru 02/29/12

01/25/12

Thru 01/24/12

Eff. 01/25/12

Award #3

Funded thru 08/31/12

07/16/12

Thru 07/15/12

Eff. 07/16/12

Award #4

Funded thru 06/30/12

N/A (NCE thru 06/30/13)

Thru 06/30/13

N/A

* Rates are expressed for 9-month, full-time appointment (converted from NIH 12-month, full-time appointment levels).

 

The direct salary maximum amount must be pro-rated based on (a) effort, (b) appointment period and (c) appointment FTE.  Although potential reductions in pay resulting from applying the NIH salary cap to the percent of effort cannot be paid from sponsored projects, they can be paid from departmental funds.

 

Implementation at Rice 

 

Prime NIH awards are identified as R2xxxx funds and NIH flow-through awards are identified as R70xxx, R72xxx, R7Fxxx, and R7Gxxx funds.

 

To assist PIs and DAs with monitoring the salary cap, as FY2012 funding is received RCA will:

  1. Add comments to Budget Action to indicate effective date the project is subject to the lower FY2012 NIH salary cap rate.
  2. Update Fund Text.  Sample entries:
  3. Award Info section − FY2012 issued 02/14/12; YR-03 amend
  4. Salary & Wage section − NIH cap $134,775 eff 02/14/12
  5. Add Keyword “NIH FY12 Salary Cap” to the parent fund.  (Note: Keywords are a searchable field in Fund Code Download in WebApps.)

Before processing payroll forms charging PI salaries to NIH-funded projects, please check NIH RePORTER website (http://projectreporter.nih.gov/reporter.cfm) to see if FY2012 funding has been issued.

 

FY2012 Awards Issued Prior to December 23, 2012, Subject to FY2011 Salary Cap  

 

NIH Notice NOT-OD-12-035 states that awards which received FY2012 prior to December 23, 2011 are not subject to the lower salary cap until they receive FY2013 funding.  NIH identifies three Rice awards that received FY2012 funding and allow salaries at the FY 2011 higher salary cap rate: 

            R21930-778000          Tkaczyk:  5R21EB011598-02

            R22090-416000          Hartergrink: 1R01DE021798-01A1

            R22100-778000          Jacot: 1R13HD071726-01

 

Questions? 

Contact Research and Cost Accounting (email: rchacctg@rice.edu).

 

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Program Income

These procedures are issued in accordance with Policy 303, Program Income. 

I. Background


Sponsors provide funding to cover the costs of conducting research, training, and public-service activities. Program income may be generated as a result of these activities and in some cases must be reported to the sponsor. Federal Office of Management and Budget (OMB) Circular A-110 and applicable federal agency regulations document the identification, recording, reporting, and monitoring requirements for income that is generated during the project period. To be consistent in its accounting practices, the University extends these requirements for managing program income to non-federal sponsors. 


II. Purpose of Policy and Procedures


Research Policy 303, Program Income, and these procedures are issued to comply with sponsor policies on program income and to ensure that such income is managed in an appropriate and consistent manner. 


III. Definition of Program Income

Program Income, per OMB Circular A-110, is "gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award" and includes, but is not limited to: 

  • proceeds from the sale of software, CDs, tapes, or publications produced under the award 
  • income from fees for services performed, such as laboratory tests or analyses 
  • registration fees from conferences or symposia 
  • payments received from external users of property or equipment acquired with sponsored project funds to the extent payments exceed total usage costs 
  • proceeds from the sale of supplies or equipment purchased or fabricated under an award, and 
  • income resulting from license fees and royalties on patents and copyrights that is handled by the Office of Technology Transfer. (Note: Unless otherwise required by an award, program income resulting from license fees and royalties on patents and copyrights is not subject to these procedures.) 

Except as otherwise provided in the awarding agency regulations or the terms and conditions of the award, program income does not include: 

  • receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them 
  • interest earned on advances of federal funds. 

IV. Recording and Reporting Program Income

Program income will be deposited into a specific fund and account code established by Research and Cost Accounting (RCA), as described below. 

The program income fund will be established as a subfund of the primary sponsored project fund. F&A will be charged to expenses in the program income subfund at the same rate as the main sponsored project fund. 

Use of program income is limited to costs allowable on the main project. Therefore, expenses unallowable on the main project fund are also unallowable on the program income subfund. 

Unless otherwise provided in the award documents, program income revenue is used before sponsor funds. 

RCA is responsible for reporting program income activity to the sponsor. 

As with all records related to sponsored projects, records on program income activity must be retained according to sponsor requirements. 

  • For federal awards, OMB Circular A-110 requires that records be kept for at least three (3) years from the date of submission of the final expenditure report. 
  • Some sponsors/awards may have a longer retention period. 

V. How Program Income Can Be Used

Program Income earned during a project period will generally be treated using one of three methods, depending on sponsor policy, award type, and terms and conditions of the award. 

  • Additive:  Program income funds are added to the funds committed by the awarding agency, thus increasing the amount available to accomplish program objectives.
    Example:  A project has (1) $320,000 available ($300,000 award plus program income of $20,000) and (2) total expenditures of $315,000.  Program income of $20,000 will be reported to the sponsor and considered fully spent; the sponsor will pay the balance of $295,000, leaving $5,000 of sponsor funds unused.
      
  • Deductive:  Funds generated through program income are deducted from the financial obligation of the sponsor.  Thus, total funding available for the project is unchanged.
    Example:  A project has (1) $300,000 available (program income of $20,000 plus original award of $300,000, reduced to $280,000 due to the program income) and (2) total expenditures of $290,000.  Program income of $20,000 will be reported to the sponsor and be considered fully spent; the sponsor will pay the balance of $270,000, leaving $10,000 of sponsor funds unused.
      
  • Matching:  Program income is used to finance the University's share of the project costs.
    Example:  A project has (1) $360,000 available (original award of $300,000 plus $60,000 of required cost sharing partially funded by program income of $20,000) and (2) total expenditures of $360,000.  Program income of $20,000 will be reported to the sponsor and be considered fully spent; cost sharing from other sources will be reported at $40,000; the sponsor will pay the balance of $300,000, leaving no unspent balance in sponsor funding.
     

Federally-sponsored awards:  Unless the federal awarding agency specifies in its regulations or the award terms and conditions a different method, OMB Circular A-110 provides that program income for research projects be treated under the additive method and program income on non-research projects be treated under the deductive method. 

Non-federally sponsored awards:  Many non-federal sponsors do not have an established program income policy.  In the absence of a sponsor policy, the program income is not reportable to the sponsor. 

While all program income must be recorded properly in Banner, not all program income must be reported to the sponsor.  The terms and conditions of the award determine the appropriate program income treatment and sponsor reporting requirements.  For example, unless otherwise provided in the award, program income earned after the end of an award period is not subject to either the program income policy or these procedures.  Additionally, as noted above, income resulting from license fees and royalties is subject to the program income policy and procedures only if the terms and conditions of the award require such reporting. 


VI. Anticipated Program Income and the Program Income Subfund

Principal Investigators (PIs) are responsible for identifying and documenting program income on projects funded by both federal and non-federal sponsors and notifying either the Office of Sponsored Research (OSR) or Research and Cost Accounting (RCA), as described below. 

The Notification of Anticipated Program Income form should be submitted as soon as a PI anticipates that program income will be generated.  The form includes information on the type of program income, its relationship to the project and potential sources of program income.  This form is available from the Research and Cost Accounting Formssection of the Controller's Office website. 

If program income is anticipated at the time of proposal submission, the PI notification must be included with the proposal documents sent to OSR. 

  • The Review and Approval (R&A) form question on anticipated revenues to be generated is marked "Yes," and the Notification of Anticipated Program Income form will be attached to the R&A and forwarded to OSR. 
  • The PI will ensure that potential program income information is appropriately included with the proposal documents sent to the sponsor. 
  • If the proposal is awarded, OSR will forward the program income information included in the proposal to RCA with other proposal documents forwarded for new awards. 

If program income is not anticipated at the time of proposal and arises out of opportunities that occur during the award, the PI is to forward the Notification of Anticipated Program Income form to RCA as soon as he/she becomes aware that program income will be generated for a specific award. 

  • The notification can be sent via campus mail to Research and Cost Accounting, MS-70, or via email torchacctg@rice.edu. 

RCA will establish the program income subfund and notify the PI, the appropriate department administrator, chair, and Dean's Office of the fund number. 

RCA will meet with the PI / department administrator to assist with estimating costs and rates and developing a plan for invoicing, payment collection, and deposit activities. 


VII. Invoicing, Depositing, Monitoring, and Reporting program Income

The PI and department administrator (DA) are responsible for preparing any needed invoices related to the program income, collecting payments, and making cash deposits to the program income subfund. 

Program income should be deposited to account code 57231 (Program Income Non-Taxable) or 57241 (Program Income Subject to Sales Taxes).  Note: Questions on amounts subject to Texas sales taxes should be sent via email to disbmt@rice.edu to the attention of the Disbursements Manager. 

In order to establish the budget for the Program Income subfund, the PI and the DA are responsible for forwarding a Rebudgeting Request (with copies of the deposit vouchers, checks, and invoices) to RCA to record the expense budget for the income. 

The PI and DA are responsible for monitoring the budget and activity in the program income fund to ensure that all revenue and related expenses are properly reflected in Banner. 

RCA will report program income activity to the sponsor as required by sponsor regulations and award terms and conditions. 

VIII. During and After Project Closeout

During project closeout, RCA will report final program income amounts to the sponsor, as required by award terms and conditions. 

RCA will appropriately "zero" the program income fund based on project expenditures confirmed by the PI/DA. 

Program income earned after the project period of the primary award should not be deposited to the program income fund. 

  • Contact Current Funds Accounting if a new non-R fund is needed after the project ends. 

IX.  Summary of Roles and Responsibilities


Function / Responsibility 

PI / DA   OSR    RCA  

1. Notification of Anticipated Program Income Form (with estimated amounts, sources, etc.) 

        

a. During proposal 

 
         

 1) Indicate "Yes" on R&A form & attach needed information 

 
X       

2) Ensure information is forwarded to sponsor as needed 

 
X       

3) Ensure information in the proposal is forwarded to RA if proposal is awarded 

 
   X    

b. During award, via email to Research and Cost Accounting 

 
X       

2. Establishment of program income subfund 

      X 

3. Invoicing, collection and deposit of payments to program income subfund 

X       

4. Processing needed budget revision forms 

X     X 

5. Reporting program income to the sponsor 

      X 

6. "Zeroing" program income subfund during closeout of award 

X     X 

  

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Record Retention

The University requires that records for sponsored projects be retained in accordance with requirements of the federal Office of Management and Business (OMB) Circular A-110. 

Records include, but may not be limited to, financial records, supporting documents, statistical records, technical reports, and all other records and documents pertinent to an sponsored award. For federal awards, they must be retained for a period of three years from the date of submission of the final expenditure report. For other awards, they must be retained according to the terms of the specific award or for three years following the submission of the final expenditure report to the funding agency, whichever is longer. Record retention is the responsibility of the department with the original records. Records should be reviewed on a periodic basis and destroyed when the retention period has expired. 

If any litigation, claim, or audit is started before the expiration of the retention period, the records shall be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken. 

Records for real property and equipment acquired with federal funds shall be retained for three years after final disposition. 

Documents related to Facilities and Administration (F&A) and other cost allocation plans, including rates for fringe benefits, tuition remission, and services centers, must be retained in accordance with requirements specified in OMB Circular A-110. 

Specific questions can be directed to the Office of Sponsored Research or the Office of Research and Cost Accounting. 

Detailed information may be found in OMB Circular A-110.  

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Salary Support through Sponsored Projects

These procedures are issued in accordance with Research Policy 311, Salary Support through Sponsored Projects. 

Actions Related to Faculty Compensation
Summer Salary
  1. Faculty Summer Salary Authorization (FSSA) completed and routed for faculty member, Principal Investigator (PI) (if different), Chair, and Dean’s signatures.
    • Follow Faculty Summer Salary Guidelines posted on the Payroll Forms section of the Controller’s website. 
    • Provost's approval required for any policy exceptions. 
      
  2. FSSA delivered to Payroll by required date. 
  3. Payroll updates FSSA with approved rate of pay. 
  4. Payroll forwards FSSA to Research & Cost Accounting (RCA). 
  5. RCA reviews, approves, and returns FSSA to Payroll.  RCA reviews for available budget or guarantee fund, charges within project period, allowability, correct coding (i.e. Fund, Orgn, Account, Program, Activity and Location or FOAPAL), and other sponsor limitations (i.e., NIH variable annual salary cap, NSF limitation of no more than 2/9ths of regular annual academic salary for all NSF-funded awards). 
  6. Payroll processes the FSSA form. 
  7. Departmental administration reviews completed payroll transactions. Changes in distribution or additional amounts must be reflected on new FSSA. 

Academic Year Time Salary
  1. Fall or Spring Academic Year Time (AYT) form
     
     
    1. Fall or Spring Academic Year Time (AYT) form (found on Payroll Forms Website)
    2. Separate Fall or Spring AYT form completed and routed for faculty member, PI (if different), Chair, and Dean’s signatures. Provost's approval required for direct or contributed effort above 50% of the academic year or any other policy exceptions.  
    3. AYT form mailed to RCA. 
    4. RCA reviews, approves, and returns AYT form to Payroll.  RCA reviews for available budget or guarantee fund, charges within project period, allowability, correct FOAPAL coding, and other sponsor limitations (i.e., NIH variable annual salary cap, NSF limitation of no more than 2/9ths of regular annual academic salary for all NSF-funded awards). 
    5. Payroll process AYT form.   
    6. Departmental administration reviews completed payroll transactions. 
  2. Budget Transfer Memorandum (BTM) 
    1. BTM completed and routed for faculty member, Chair, and Dean’s signatures based on school procedures for allocation of released salary and benefits paid from A1. 
    2. BTM mailed to the Budget Office. 
    3. The Budget Office forwards BTM to RCA. RCA reviews for Fall or Spring AYT form or other payroll form completed and budget transfer request amount equals charges to sponsored project funds. 
    4. RCA forwards to Current Funds for processing. 
    5. Departmental administration reviews completed budget transactions. 

    Notes:
    • For awards expected, but not yet received by the university, please see advance spending fund procedures. 
    • ‘To be determined’ (TBD) or an advance spending fund should be used on effort reports or salary form.  ‘TBD’ will be charged to the department’s A1 fund. 
      

Actions Related to Exempt Staff
New Hires:
  1. Personnel Action Form (PAF) completed by department and routed for required signature. PAF must include defualt fund-orgn-acct. 
  2. Approved PAF sent to Human Resources (HR). 
  3. Individual appears on Time Allocation Report (TAR). 
All Exempt Staff:
  1. Monthly TAR mailed to department by Payroll. 
  2. Department reviews and updates TARs with changes. 
  3. Department forwards TAR to Payroll by the due date. 
  4. Payroll forwards TAR to RCA, if changes affect sponsored projects. 
  5. RCA reviews, approves, and returns TAR to Payroll.  RCA reviews the TAR for direct and cost shared allocations for charges within project period, allowability (limited to administrative / clerical staff allowability), and correct FOAPAL coding. 
  6. Payroll processes TAR. 
  7. Departmental administration reviews completed payroll transactions. 

Actions Related to Non-Exempt Staff
New Hires:
  1. Personnel Action Form (PAF) completed by department and routed for required signature. PAF must include defualt fund-orgn-acct. 
  2. Approved PAF sent to Human Resources (HR). 
All Non-Exempt Staff:
  1. Timesheets, including fund-orgn and hours worked, completed by individual. 
  2. Timesheets verified and signed by the supervisor(s) / manager(s). 
  3. Departmental administration reviews completed payroll transactions. 
Notes:
  • Hours reported via timesheets will be charged to default fund-orgn-acct provided from PAF.  If effort differs from default, record hours and fund-orgns appropriately on timesheets. 
  • Long-term changes to the default fund-orgn-acct should be updated via PAF. 

Actions Related to Undergraduate Students  (Hourly Students on RCH, OSP2, INST, or RCHU funds)
New Hires:
  1. Student Personnel Action Form (SPAF) initiated by the student in ESTHER is completed by the department and routed for required signatures. 
  2. Approved SPAF sent to Financial Aid. 
All Hourly Students:
  1. Timesheets, including fund-orgn and hours worked, completed by individual. 
  2. Timesheets verified and signed by the supervisor(s) / manager(s). 
  3. Departmental administration reviews completed payroll transactions. 
Notes:
  • Hours reported via timesheets will be charged to default fund-orgn-acct provided from SPAF.  If effort differs from default, record hours and fund-orgns appropriately on timesheets. 
  • Long-term changes to the default fund-orgn-acct should be updated via SPAF. 

Actions Related to Graduate Students
Subject to change pending completion of online approval process
  1. Via WebApps, Online Graduate Student Payroll Authorization Form (GSPAF) completed by student's home department.  GSPAF routed by the department for required signatures. 
  2. Approved GSPAF routed to the Office of Graduate & Postdoctoral Studies (GPS). 
  3. GPS reviews, approves, and routes GSPAF to Payroll. 
  4. Payroll enters current and future pay periods into Banner. 
  5. Payroll forwards GSPAF to RCA for approval. RCA reviews, approves, and returns GSPAF to Payroll. RCA reviews for: charges within project period, allowability, and correct FOAPAL coding. 
  6. Payroll enters redistributions after RCA approval, if necessary. 
  7. Departmental administration reviews completed payroll transactions. 

Note: GSPAF required for all payroll actions, including new students, labor redistributions, and terminations. 

For redistributions over 90 days old, the GSPAF cannot be produced and routed via the online system.  Please initiate a paper GSPAF, obtain departmental approvals per the Cost Transfer Policy and Procedures, including explanation of benefit to the award(s) by the individual, explanation of delinquency, and steps the department is taking to avoid future occurrences.  GPS approval, then send to Payroll.  Payroll will forward to RCA if necessary.

For cost transfers over 90 days old or otherwise sujbect to the Cost Transfer Policy and  Procedures:
  1. Payroll Redistribution Form completed by department and routed for required signatures. 
  2. Cost Transfer Policy and Procedures     followed by the department, including explanation of benefit to the award(s) by the individual, explanation of delinquency, and steps the department is taking to avoid future late occurrences. 
  3. Department forwards form to Payroll.  Payroll forwards to RCA.  RCA reviews, approves, and returns form to Payroll.  RCA reviews for direct and cost shared allocations: within project period, allowability (limited to administrative / clerical staff allowability), and correct FOAPAL coding. 
  4. Payroll processes the redistribution form. 
  5. Departmental administration reviews completed payroll transactions. 

Questions? 

  • For questions about approved forms sent to Payroll for processing, please contact payroll@rice.edu. 
  • For questions about allowability, sponsor limits and budgetary restrictions, and FOAPAL coding, please contact rchacctg@rice.edu. 
  • For questions about Rice budget transfers, please contact budget@rice.edu. 

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Service Centers

Service center administrators should read and become familiar with the Rice’s Service Center Policy (836‑03).  

Scope and Definitions 

Service centers, frequently referred to as recharge centers, are University operating units established for the specific purpose of providing products or services to other University cost centers, although services may also be provided on an incidental basis to individual members of the Rice community or to external users.  Note: Areas which bill out items such as copying and faxes at a calculated rate are excluded from these procedures if the total amount billed is less than $5,000/year.  However, billings may not exceed actual costs, and all users must be billed at the same rate regardless of funding source. 

Clearing accounts and auxiliary activities are not subject to these procedures. 

Clearing accounts function as a place to charge the costs of items ordered which are later to be distributed to other accounts.  Unlike service centers, the cost of various types of goods, or goods and services, are not combined to calculate a rate.  For example, a department might order supplies from the A1 fund which are then used for purposes other than general departmental usage.  Costs related to these other activities could then be moved to another funding source. 

Auxiliary activities are expected to generate the bulk of their income from outside the University (from charges which are not made to other university funds) and to be self‑supporting (e.g. residential colleges).  Billings to other University units should be incidental to their main business activities.  If billings within the University are significant, it may be appropriate to set up a service center for a portion of the auxiliary's activities. 

Requirements for Establishing and Operating a Service Center: 

  1. A fund (D fund; ‘cost center’) for the accumulation of direct costs must be established.  The fund will have a program code of CTR.  Costs related to service centers should not be commingled with other expenses.  Costs may normally include:
    1. Salaries and fringe benefits 
    2. Materials and expenses 
    3. Equipment maintenance 
    4. Equipment use/depreciation charges (see 5. below) 
    5. Other direct costs 
      
  2. The following costs must be excluded in the calculation of billing rates:
    1. Equipment purchases ($5,000 or more) ‑ see 5. 
    2. The following unallowable costs as provided in OMB Circular A‑21, Cost Principles for Educational Institutions:
      • Advertising costs to promote the service or product offered 
      • Alcoholic beverages 
      • Bad debts 
      • Entertainment 
      • Goods and services for personal use 
      • Dues/memberships for social, civic, and community organizations 
      • Flowers, gifts, and donations 
      • Fines and penalties 
      • Travel costs that do not conform to the Rice travel policy and government guidelines 

       
       
    3. Inventory of supplies and parts 

      Any of the costs listed above in (a), (b) or (c) which are associated with a service center must be paid from other University funds and coded to the proper account code, so that they will not be included in the indirect cost calculation. 

      
  3. The service center manager should submit proposed billing rates for the next fiscal year (beginning July 1) to the Budget Office during the normal budget cycle.  The Budget Office will supply this information to the Controller's Office for review.  The submission should include the proposed budget, which should be in sufficient detail to determine that no unallowable costs are included.

    Proposed billing rates should be calculated using the proposed budget, anticipated service volume, and any over/under recovery of costs from prior years.  A full explanation of the methodology used to determine the rates must also be provided, including the basis for all estimates. 

    Billing rates must be based on costs and must be applied uniformly to all users.  In general, rates should equal the cost of providing the product or services during any fiscal year, within a margin of ±5% of annual service center billings.  In some cases, a longer break‑even period may be appropriate; this must be determined on a case-by-case basis.  In these instances, rates should be designed to recover the total costs of providing the products or services ±5% over a three-year period; a five-year period may be used in extremely unusual circumstances.  Examples of cases where a break even period longer than one year may be appropriate include service centers whose usage or costs vary widely from one year to the next due to reasons beyond the control of the service center.  Contact Research and Cost Accounting to arrange for a longer break‑even period for a service center. 

    A University department may choose to subsidize a service center for the benefit of internal users (other Rice University funds/organizations) only.  Consult Research and Cost Accounting to determine the proper coding for the subsidy based on the nature of the service center. 

  4. Revenues and related expenses must be charged to the same fund, organization, and program code.  Each service center must prepare timely interdepartmental transfer forms (or another billing method approved by the Controller's Office) and obtain proper authorization from the department being charged.  Internal revenue accounts (account codes 58xxx) must be used by the service center to record the revenue received from internal users. Service centers are responsible for maintaining and retaining supporting documentation related to usage and rates.

    In rare cases, service centers may perform services for external users (users other than Rice University funds/organizations).  These instances should be approved by the Dean's Office and reviewed by the Controller's Office, since these activities may raise unrelated business income and ad valorem tax issues.  External sales accounts (account codes 57xxx) must be used for revenues for services provided to external users. 

    Billing for services paid for by external users should normally include the standard University negotiated on‑campus facilities and administrative rate applicable to sponsored research projects.  Billing for services paid for by Rice funds may not include any indirect costs. 

  5. Equipment Purchases: In calculating billing rates, equipment purchases (as defined by the University's capitalization threshold) must be excluded.

    It is the department's responsibility to establish a separate equipment fund to charge equipment purchased for use exclusively by the service center.  Equipment normally provided as a part of general University operations (desks, chairs, etc.) may not be considered service center equipment.  This fund must be adequate to provide resources for service center equipment purchases.  The department should work with the Controller's Office to assure that the list of equipment agrees with fixed asset records in the Controller's Office. 

    Annual charges for equipment use or depreciation as approved by the government, based on the cost of equipment listed on fixed asset records at December 31, may be calculated and included as a cost in calculating the service center billing rates.  The use charges will show as a charge in the service center fund (cost center) and a credit to the related service center equipment fund.  These credits may be used to fund purchases of additional or replacement equipment, if needed.  Property Accounting will provide the cost basis of the equipment upon request.  The Controller's Office will review the proposed equipment use or depreciation calculation and make the appropriate entries. 

  6. Slightly different rules apply to specialized service centers as defined in OMB Circular A‑21.  Specialized service centers are those which have billings in excess of $500,000/year and provide a good or service which cannot be readily purchased commercially.  Anyone who believes they may have a specialized service center should contact Research and Cost Accounting (x6092) for more information. 
  7. A few examples of areas which may function as service centers include:
    • computer equipment maintenance centers 
    • telecommunications 
    • craft work which is separately billed (carpentry, custodial, etc.) 
    • design and layout assistance for publications 
    • machine shop 
    • electronics shop 
    • storerooms 
    • copy, fax and computer usage, if billed 
    • networking installation and maintenance, if billed 

    Related Forms: Submit to Research and Cost Accounting a completed Service Center Fact Sheet for each fund or activity which may be subject to the Service Center Policy. Research and Cost Accounting will review the information and advise the department if the Rate Calculation Worksheet and Equipment Schedule are required. 

Questions?  Contact Research and Cost Accounting (email rchacctg@rice.edu). 

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Subrecipient Process:  Issuing and Monitoring Subawards and Subcontracts

The University has issued Policy No. 307, Issuing and Monitoring Subawards and Subcontracts, which sets forth the processes in place to provide reasonable assurance that subrecipients satisfactorily meet the programmatic and financial activities involved in the subaward or subcontract. 

Related procedures are available on the OSR website. 

Please contact RCA if you have any questions on subcontract invoice processing or specific invoice costs. 

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Tuition Remission

These procedures are issued in accordance with Research Policy 305, Tuition Remission. 

Rice University charges tuition remission on amounts paid to graduate students who provide services to the university as research assistants (RAs) or teaching assistants (TAs) as part of their enrollment at the University. Research Policy 305 applies regardless of the funding source. The charge for tuition remission is based on an average rate applied to all compensation paid to graduate RAs and TAs. The tuition remission rate is set annually and may change at the beginning of each fiscal year. The current tuition remission rate is posted on the Office of Sponsored Research. 

Coding graduate student stipend payments. Proper coding of graduate student stipend payments is based on whether the graduate student is appointed as a trainee/fellow or as a graduate RA or TA, depending on his or her assignments. Separate account codes are used on the Graduate Student Payroll Authorization form for these types of stipend payments: account code 60820 for trainee/fellow; 60850 for RA; and 60860 for TA. (Note: Graduate students who are paid hourly wages are classified as graduate student workers and payments are charged to account code 60880 on the Student Payroll Authorization form available through Esther.) 

Guidelines for coding of graduate student stipend payments are available on the Office of Graduate and Postdoctoral Studies website. 

Tuition remission charges. The payroll system will automatically post a tuition remission charge to the same fund and organization as the payment recorded for an RA or TA. Tuition remission costs that are not eligible expenses on sponsored funding are charged, without penalty, to the department’s A1 budget (unrestricted funds). 

Tuition remission and the annual budget. The University has chosen to provide to the Deans, through the annual operating budget process, an allocation equal to a portion of the tuition remission generated -- from sponsored project, designated, gift and restricted endowment funds -- in the just completed fiscal year. 

Additionally, effective with fiscal year 2009, Rice will include in the yearend budget carry forward calculation an amount equal to 100% of the amount charged as tuition remission on compensation paid to graduate students from departmental unrestricted (A1 and A2 budget) funds. This amount excludes tuition remission charges that defaulted to unrestricted funds because tuition remission was not an eligible expense of the external funding source. 

Questions? The following offices are available for assistance: 

Correct coding of graduate student stipends. Contact the Office of Graduate and Postdoctoral Studies (Cindy.Wilkes@rice.edu, x5812) or Research and Cost Accounting (email rchacctg@rice.edu). 

Posted tuition remission charges.  Contact the Payroll Office (payroll@rice.edu). 

Tuition remission and the annual budget. Contact the Budget Office (budget@rice.edu). 

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University‐Funded Research Awards

Rice‐funded awards that are made to faculty or staff through a competitive process (such as the Faculty Initiative Fund, the Enhancing Rice Through Information Technology program, the Shell Center and similar seed funding programs managed by different units at Rice) will be established in Banner as University (U) funds. Note that if the awards are funded as part of an externally sponsored grant (i.e. foundation, another university, federal agency, industry), the award will be recorded as an R fund.

Each Rice‐funded award will have a unique U fund number and be established in Banner in the home org of the recipient. The Controller’s Office establishes the U funds and the U fund number is included in the award notice to the recipient of the award. If there are questions about U fund, please contact Crystal Davis (x2478 or crystal@rice.edu)

Characteristics of U Funds 

1) Each established U fund has the following characteristics:

a. U funds will not allow spending to exceed available funds/budgets. Recipients of U funds will be notified about insufficient funds/budgets and be requested to provide another source of funding for the amount in excess of available funds.

b. U funds are either funded in advance or funded in arrears.

i. U funds that are funded in advance by the sponsor have funds transferred in at the start.

ii. U funds that are funded in arrears receive a budget entry and then funds are transferred, based on direction of the sponsor, into the U fund to cover allowable expenses. Sponsors should in these cases clearly define the rules and communicate these through an agreement with award recipients. Any charges that were not part of the approved budget are not automatically approved, and if not approved, they are the responsibility of the investigator.

c. U funds provide inception‐to‐date activity within the fund, which avoids the need to scroll between Banner windows for each fiscal year.

d. U funds support runs from program start date through the program end date set by the sponsor. The project end date can only be a changed by approval of the award sponsor in response to a written request explaining the circumstances that require extension. Expenses expected after the end date must be encumbered before the end date so that there is no new activity after the end date.

2) If it is necessary to make funds available to a collaborator who is a Rice employee, the preferred approach is to transfer expenses from the collaborator to the U fund so that all activity is contained in a single U fund. Another option, if the sponsor agrees, is to request another U fund for that purpose. If the collaborator is not employed at Rice, the collaborator should be a subaward and payment should be charged to the U fund for subaward costs.

3) At the closing date of the award, unspent funds will revert back to the sponsoring fund and org unless an exception is requested and granted by the sponsor.

 

Review and Approval (R&A) Forms 

Institutionally funded research requires assurance that compliance issues are identified. Award recipients must complete the Review and Approval form (R&A) and submit the form to the Office of Sponsored Research. The form can be found at: http://osr.rice.edu/Forms.

Click to download a pdf version of this procedure.
 

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