Budget Management

Research Financial Services ensures that the University complies with all fiscal provisions of contracts, grants, and other agreements. Generally accepted accounting and reporting practices are followed in the management and administration of sponsored projects and programs. Consideration is also given to cost principles and standards promulgated by Office of Management and Budget (OMB) Bulletins and Circulars, including A-21, A-110, A-133, as well as to specific terms and conditions of each individual award. Specific terms and conditions of the award will accompany the notice of award received by the PI.

There are sponsor, federal, states, local and university rules and regulations which govern expenditures made against sponsored awards. Listed below are some areas of compliance with additional detail. This list is in no way exhaustive. It simply outlines the more common areas of concern. You are encouraged to familiarize yourself with these areas and determine which apply to your award and adhere to them. If any guidance is required, your Research Financial Services Officer is available to advise you.

Federal

Federal guidelines are usually quite broad covering the majority of federal agencies, but each agency could have more restrictive requirements depending on the type of the award. By in large, most federal awards will require compliance with OMB Circulars A-110, A-21, and A-133. The circulars can be found at http://www.whitehouse.gov/omb/grants/

Private

In many instances, private sponsors will utilize these same circulars in addition to any specific requirement they may have. Each individual award may have different requirements - even if it comes from the same sponsor. It could be that a sponsor, such as the American Heart Association, has categorized its awards with different regulations for each funding category. Project specific regulations should be outlined in the award documentation. This documentation should be reviewed for each new award.

State

In addition to the sponsor requirements, the State of Georgia and Georgia State University have their own regulations. Many of the regulations for the University System of Georgia are found in the Board of Regents Policy Manual located at http://www.usg.edu/admin/policy and are available for review. Procedures established by GSU Finance and Administration must be followed for sponsored projects and will ensure compliance with state regulations. These are available at http://www.gsu.edu/~wwwvpf/

Cost Allowability

The majority of awards received by Georgia State University requires compliance with the cost principles addressed in OMB Circular A-21. http://www.whitehouse.gov/omb/grants/index.htm and are defined in Section A (1) Objectives, which states

“This attachment provides principles for determining the costs applicable to research and development, training and other sponsored work performed by colleges and universities under grants, contracts and other agreements with the Federal Government. These agreements are referred to as sponsored agreements.”

Section C (1) – (3) addresses such things as Composition of total costs, factors affecting allowability of costs, and reasonable costs. This area is an excellent source of information if you have concerns about the allowability of certain costs. Also, Section J (1) – (50) will provide the principles to be applied in establishing the allowability of certain costs.

We have also developed the following guidelines to help you determine if a cost is allowable:

Allowable Direct Costs

Charge the following types of costs directly to sponsored agreements when they can be specifically identified as necessary to the work performed under those agreements.

Salaries, Wages and Fringe Benefits

Faculty
Research Associates
Technicians, Lab Assistants, Graduate Students
Tuition remission for Graduate Students
Extra Compensation for GSU Employees (See below for definition and restrictions)

Supplies and Materials

Chemicals
Minor Equipment
Laboratory Supplies
Uniforms
Computer Software
Photographic Supplies
Drugs
Tools
Books
Animals

Other Direct Costs

Travel
Freight and Express
Postage
Patient Care and Subject costs
Subcontracts
Office Supplies
Radioactive Waste Disposal
Facilities Costs - such as rent maintenance, security, utilities
Consulting Services
Equipment (see below about relevant regulation)
Costs that are normally included by the federal government as part of “F&A” or indirect costs may be charged to non-federally sponsored agreements if permitted by the sponsor's policies/practices or are otherwise approved by the sponsor
Animal Care
Long distance telephone costs
Motor Pool (Off Campus Projects only)
Other costs specifically identified and justified in funded proposals (where normal indirect costs are "unlike")

Extra Compensation

Extra Compensation is used when work is done outside normal business hours and above whatever the normal full time EFT is for the individual. Extra-Compensation payments request forms require prior approval by the assigned RFS officer. These requests are approved only in cases where extra-compensation was included and approved in the award budget, or, approved by the awarding agency in writing after the receipt of the award. Please note that Federal funding agencies and some state agencies do not allow extra compensation during the academic year.

With government regulations becoming more stringent, it is imperative that the University community understand and comply with the existing guidelines concerning the payment of extra compensation on sponsored projects. Generally the following guidelines will apply.

Board of Regents Business Policy Manual http://www.usg.edu/pubs/index.html .

Extra Compensation (Section 803.1404)

“…adequate allowance in time assigned for extra compensation duties should be made by a proportionate decrease in teaching loads. Extra compensation may be paid, however, when all four of the following conditions exist: (1) the work is carried in addition to a normal full load; (2) no qualified person is available to carry he work as part of his/her normal load; (3) the work produces sufficient income to be self supporting; and (4) the additional duties must not be so heavy as to interfere with the performance of regular duties.”

OMB Circular A-21 http://www.whitehouse.gov/omb/grants/ (Section J 8d(1))

“…any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency.”

While this makes extra compensation an allowable cost, certain federal criteria are applied in that

1. the “consulting” must be across departmental lines; or

2. the work involved is at a separate or remote location

Services other than these exceptions above are deemed to be an obligation of the university.

NOTE: extra compensation may not be paid from state funds.

A definition of “consultant” is found in Section J 32(a)

“Costs or professional and consulting services, including legal services rendered by the members of a particular profession who are not employees of the institution, are allowable…”

The most appropriate way to approach extra compensation as an allowable cost on a sponsored project is to specify this cost in the proposal (subject to the criteria above) in the personnel area. This cost includes associated fringe benefits of 7% (current FICA allocation rate which is subject to change). They are NOT consulting costs.

Equipment

Only equipment (defined as equipment that costs more than $5,000) which is not currently available for use in the project is allowed to be purchased on a sponsored award. During the requisition process in the Financial system, a button marked “distribute” appears on the screen marked Line 1 Schedule 1 details. If you click on the button, the following declaration will appear:

“This affirms the equipment item(s) being requested for subject grant has (have) been screened for availability and it has been determined that this equipment is not available as excess or under –utilized equipment for use on this Federal sponsored program”

Clicking on OK signifies that the project director has made the appropriate inquiries and is satisfied the equipment purchase is necessary.

Unallowable Direct Costs

The following items are explicitly disallowed in OMB Circular A-21:

Advertising and public relations costs
Alcoholic beverages
Alumni activities
Bad debt expenses
Civil defense costs
Commencement convocation costs
Contingency provisions
Legal costs
Donations and contributions
Entertainment costs
Executive lobbying costs
Fines and penalties
Goods and services for personal use
Housing and personal living expenses
Insurance and indemnification costs
Losses on other sponsored agreements and contracts
Memberships in civic, community, country club, and social or dining clubs
Pre-agreement costs, unless approved by sponsoring agency
Profits/losses on disposition of Plant Equipment Capital Assets
Recruiting costs
Selling and marketing costs
Severance costs
Specialized service facilities
Student activity costs
Taxes
Travel costs – above that normally allowed
Trustees' expenses

Best Practices

Additional assistance in ascertaining correct or incorrect practices with regard to charging costs to sponsored project are listed in the table below for ready reference.

Salaries/Personnel

Incorrect Practice:	Correct Practice:
D Charging of salaries based upon funding instead of actual effort.	C Charging of salaries must be based upon actual effort, and payment must be made in the corresponding pay period.
D Hourly wages paid with no documentation of hours worked and payment for hours not worked.	C Payment of wages must be based upon actual hours worked and payment and hours must be properly documented and approved.
D Grant was "cross charged", i.e., costs charged to project based upon funding, convenience, or to "payback" for departmental accounts for coverage of deficits.	C Use proper accounting and payroll forms such as Personnel Action Forms, forms for retroactive changes, or Amended Personnel Action Form.
D Non-Research activities performed while salary charged to grants, such as, classroom instruction, and preparation of new and competing grant proposals.	C Charge only those costs that are in direct benefit to the research project. Preparation of new and competing proposals are unallowable charges to a sponsored project.
D Inconsistent treatment of grant support services such as clerical support, computer programming, and supplies.	C Departmental services must be charged using a reasonable, consistent method (either direct or indirect) and be charged based upon actual services performed or units used.
D Deficient Personnel Effort Report, i.e., not signed, not submitted, or not signed by individual(s) with direct knowledge of work performed.	C Personnel Effort Reports must be submitted to Grants & Contracts Services by the date noted on the cover sheet. They must be signed by the individual with direct knowledge of work performed by individuals paid on the research project or the Project Director.

Purchase of Goods and Services

Incorrect Practice:	Correct Practice:
D Good and Services purchased that did not directly benefit the research project, or were received outside the project period.	C All goods and services charged as direct costs must have a direct benefit to the research project and received during the project period.
D Office supplies, basic telephone, subscriptions and memberships charged directly without proper justification and approval.	C Normal "indirect" costs may only be charged in "unlike circumstances" which have been properly justified and approved.
D Inadequate documentation of approval.	C The PI or designee, with first hand knowledge of project and work performed, must indicate approval for goods and services, including payroll prior to the transactions.
D Improper or not "reasonable" basis used to allocate shared direct costs. Examples include lab supplies, equipment, rent for off-campus facilities, etc.	C Distribute costs between two or more projects based upon "proportional benefit" or "interrelationship".
D Failure to obtain required sponsor approvals.	C Written prior approval must be obtained to incur any costs which require prior approval as per sponsors rules and regulations and/or grant terms and conditions.
D Habitual transfer of costs from one sponsored project to another sponsored project.	C Cost Transfers to correct an error.

Questions? Contact RFS