Cost Accounting Policies & Procedures


▼   Service Center Policy

Print Friendly and PDF



This policy establishes the University of South Alabama (University) policies and procedures for the financial management of service centers.

Definition of Service Center

The University’s service center policy defines service centers as an activity that performs specific technical or administrative services primarily for internal operations and charges users for its services through a charge-out rate(s).  Service Center is a broad term used to define an operating unit that provides goods or services for a fee based on a rate schedule. 

Other Definitions

  • Applicable Credits: Transactions that offset or reduce costs, such as purchase discounts, rebates, allowances, refunds, etc. For purposes of charging service center costs to federally sponsored programs (either directly or through the institution’s Facilities and Administrative (F&A) cost rates), applicable credits also include any direct federal financing of service center assets or operations (e.g., the direct funding of service center equipment by a federal program.).
  • Auxiliary Enterprise: An activity that provides goods or services primarily to students, faculty, staff, and others for their own personal use rather than as a service to internal university operations. Examples of auxiliary enterprises include residence halls, food service, and bookstores.
  • Billing Rate: The amount charged to a user for a unit of service. Billing rates are usually computed by dividing the total annual costs of a service by the total number of billing units expected to be provided to users of the service for the year.
  • Billing Unit: The unit of service provided by a service center. Examples of billing units include hours of service, animal care days, tests performed, machine time used, etc.
  • Direct Operating Costs: All costs that can be specifically identified with a service center. These costs include the salaries and fringe benefits; materials and supplies; purchased services; travel expenses; equipment rental or depreciation; etc.  These costs do not include institutional facilities and administrative costs.
  • Equipment: An item of tangible personal property having a useful life of one year or more and an acquisition cost equal to or greater than $5,000. Purchases that do not meet these guidelines are considered consumable supplies.
  • Institutional Facilities & Administrative (F&A) Costs: All costs that cannot be readily and specifically identified with a specific project, program or activity but which provide an overall benefit to the University and sponsored agreements. Institutional F&A costs consist of general administration and general expenses such as executive management, accounting, payroll and personnel administration; operations and maintenance expenses, such as utilities, building maintenance and custodial services; building depreciation and interest associated with the financing of buildings; administrative and supporting services provided by academic departments; libraries; and special administrative services provided to sponsored programs. F&A costs were previously called “indirect costs.”
  • Surplus/Deficit: The amount that the revenue generated by a service is over/under the costs of providing the service during a fiscal year.
  • Unallowable Costs: Costs that cannot be charged directly or indirectly to federally-sponsored programs. These costs are specified in Office of Management and Budget Circular A-21 (A-21) and 2 CFR 200. Common examples of unallowable costs include alcoholic beverages, bad debts, charitable contributions, entertainment, fines and penalties, and goods and services for personal use.

General Policies

Billing rates should be designed to recover not more than the cost of the services over a long-term period.  Accordingly, it is not necessary that the rates charged for services be equal to the cost of providing those services during any one fiscal year as long as the rates are reviewed periodically for consistency with the long-term plan and adjusted if necessary.  Only costs incurred in providing the services should be included in the billing rates. These costs should exclude unallowable costs as prescribed in A-21 and 2 CFR 200 and also be net of applicable credits.

Service Centers have three categories.  The categories are generally based on annual direct operating costs of the service center.  The categories are:

  1. Specialized Service Facilities are generally operations with direct operating costs that exceed $1,000,000 per year.  Billing rates should include their direct operating costs and their allocable fair share of F&A costs.
  2. Minor Service Centers are generally operations with direct operating costs that exceed $100,000 but are less than $1,000,000 per year.  Billing rates should include their direct operating costs only.  The Institutional F&A costs associated with Minor Service Centers will be recovered through the F&A rate process.
  3. Recharge Accounts are generally operations with direct operating costs less than $100,000 per year.  Billing rates include direct operating costs only. The Institutional F&A costs associated with Recharge Centers will be recovered through the F&A rate process.  

In addition the following guidelines also apply:

  • The billing unit(s) must logically represent the type of service provided.
  • The billing rate computation must be documented.
  • All University users must be charged for the services they receive and be charged the same rates.
  • Outside parties (other than University) can be charged a rate that exceeds costs.
  • Separate account(s) should be established in the University’s accounting system to record the actual direct operating costs of the service center, internal service center support costs, revenues, billings, collections, and surpluses or deficits. Records documenting the units of service provided must also be maintained.
  • Billing rates are to be computed by Center management annually and adjusted when necessary.  Rate adjustments must be reviewed and approved by the Office of Grants and Contracts.  At a minimum, rates must be reviewed and approved by the Office of Grants and Contracts biennially.  Rates are to be based on a reasonable estimate of the cost of providing the services for the year and the projected number of billing units for the year. Reviews can be performed more frequently for new service centers or when the costs/revenues are uncertain.
  • Actual costs and revenues should be compared at the end of each University fiscal year. Deficits or surpluses should be carried forward as an adjustment to the billing rates of the following year or the next succeeding year. Where feasible, the adjustments may be made by increasing or decreasing the charges made to users.

Service Centers That Provide Multiple Services

Where a service center provides different types of services to users, separate billing rates should be established for each service that represents a significant activity of the service center. The costs, revenues, surpluses and deficits should also be separately identified for each service. The surplus or deficit related to each service should be carried forward as an adjustment to the billing rate for that service in future years.

Cost Allocation

Where separate billing rates are used for different services provided by a service center, the costs related to each service must be separately identified through a cost allocation process.  When cost allocations are necessary, they should be made on an equitable basis that reflects the relative benefits each activity receives from the cost. For example, if an individual provides multiple services, an equitable distribution of his/her salary among the services can usually be accomplished by using the proportional amount of time the individual spends on each service. Other cost allocation techniques may be used for service center overhead and institutional F&A costs such as the proportional amount of direct costs associated with each service, space utilized, etc.

Equipment Purchases

Expenditures for equipment purchases cannot be included in the costs used to establish service center billing rates. The rates, however, may include depreciation of the equipment. Including equipment depreciation in the billing rates will generate funds that will enable service centers to purchase equipment. The funds represented by the depreciation should be set-aside in an equipment replacement reserve account established by the Office of Grants and Contracts Accounting. When a service center needs to purchase a new item of equipment, the equipment should be purchased from this equipment replacement reserve account. If the amount in the equipment replacement reserve account is not sufficient to cover the cost of the new equipment, other (non-service center) funds must be used.

Variable Billing Rates

All users within the University should normally be charged the same rates for a service center’s services. If some users are not charged for the services or are charged at reduced rates, the full amount of the revenue related to their use of the services must be imputed in computing the service center’s biennial surplus or deficit. This is necessary to avoid having some users (particularly federal) pay higher rates to make up for the reduced rates charged to other users. This requirement does not apply to alternative pricing structures related to the timeliness or quality of services. Pricing structures based on time-of-day, volume discounts, turn-around time, etc. are acceptable, provided that they have a sound management basis. Such pricing cannot recover more than the costs of providing the services, and must not discriminate against any class of users, e.g. federal vs. nonfederal programs, student vs. faculty, etc.

Services Provided to Outside Parties

If a service center provides services to individuals or organizations outside of the University, the billing rates charged to these users may be higher than those charged to internal users but not lower. Any amounts charged to outside parties in excess of the regular internal University billing rates should be excluded from the computation of a service center’s surpluses and deficits for purposes of making carry-forward adjustments to future billing rates. These amounts may be used as a source of funds for equipment purchases or replacement.  Revenue from outside parties may have Unrelated Business Income Tax (UBIT) implications.

Transfers of Funds Out of Service Centers

It is not normally appropriate to transfer funds out of a service account into the University’s general fund or other accounts. Transfers can only be made for the amount of accumulated depreciation or for the amounts charged to outside users in excess of the normal internal billing rates.

Inventory Accounts For Products Held For Sale

If a service center sells products and has a significant amount of stock on hand, inventory records must be maintained.  A physical inventory should be taken at least annually at the end of the fiscal year and be reconciled to the inventory records. Inventory valuations may be based on any generally recognized inventory valuation method (e.g., first-in-first-out, last-in-last-out, average cost, etc.) The mark-up on inventory, if any, can only include operating costs. A profit margin cannot be included.

Subsidized Service Centers

In some instances, the University, may elect to subsidize the operations of a service center, either by intentionally charging billing rates lower than costs or by not making adjustments to future rates for a service center’s deficits. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason.

Records Retention

Financial, rate setting, statistical and other records related to the operations of a service center, including records supporting billing rate computations, must be retained by the individual service center in compliance with the University’s retention policy.

Establishment of New Service Centers

The chair of the department and the dean of the college, or equivalents where the center will be located, must approve the establishment of new service centers. New service centers must also register with the University’s Service Center Committee by completing the Request to Establish a New Service Center form.   The form collects the following information:

  • A description of the services to be provided and the users of the services.
  • The reasons why the services can best be provided by an internal service center, rather than by an external service provider.
  • A projection of the costs and utilization of the services.
  • A billing rate calculation and, where possible, a comparison of the internal rates with the rates charged by external service providers.

Review of Service Centers

The University has established a Service Center Committee to oversee implementation of this policy and to consider future changes to the policy. The Committee will be responsible for review and approval of:

  • Exceptions and changes to the policy,
  • Review and approval of new service centers,
  • Maintenance of complete listing of University service centers.

The Office of Internal Audit will periodically review the financial operations of service centers. These reviews will focus on the development of billing rates, the handling of surpluses and deficits, and the adequacy of the service center’s record keeping procedures.

Contacts for the Service Center Committee

Communications for the Service Center Committee should be directed to the Office of Grants and Contracts Accounting.


Revised:  October 1, 2015

Issued:  March 25, 2002


▼   Effort Reporting Policy

Print Friendly and PDF



The Uniform Guidance Subpart E §200.430 contains the federal regulatory requirements for internal controls over certifying time expended on sponsored projects. The University’s practice is to utilize an after-the-fact effort reporting system to certify that salaries charged, or cost shared to sponsored awards, are reasonable and consistent with the work performed. The individual’s effort is first assigned to specific awards in the payroll system based on anticipated activities.  Actual effort expended on each project is certified by a responsible person with suitable means of verification that the work was performed, generally the principal investigator, at the end of specified reporting periods. The effort certification should be a reasonable estimate of how time was expended.  


The University’s current practice also complies with OMB Circular A-21, Cost Principals for Educational Institutions Section J8a.  OMB Circular A-21, Section J8a states that compensation for personal services is “allowable to the extent that total compensation to individual employees conforms to the established policies of the institution, consistently applied, and provided that the charges for work performed directly on sponsored agreements and for other work allocable as facilities and administrative (F&A) costs are determined and supported” by an effort reporting system.  The A-21 Circular identified two categories of employees: professorial and professional, and other employees.  The University distinction for these two employee classifications is exempt and non-exempt employees. 


Effective January 1, 2016, exempt employees (professorial and professional) and non-exempt employees certify effort on Personnel Activity Records (PAR Forms). 




The Office of Grants and Contracts Accounting (OGCA) prepares, distributes and maintains the original completed PAR forms.  OGCA also prepares a control sheet which notes the time period being surveyed and lists the names of the employees for whom PAR forms have been prepared.  The PAR form sheets are sent to the attention of the designated Effort Coordinator (or designated person) in a college/department, at the end of each term.  OGCA accounts for cost sharing noted on PAR forms when preparing financial reports for sponsored agencies.  The Effort Coordinator will also receive a report showing all principal investigators (PI) who have a grant but no time for the grant on the PAR forms.


Effort Coordinators must maintain the confidentiality of the PAR forms by limited distribution to the employee being surveyed and the PI.  The Effort Coordinator is responsible for distribution of the PAR forms, collecting and reviewing the completed PAR forms for departmentally determined approvals, and returning the entire set to OGCA.  PAR forms must be returned within 30 days.  The PAR form return by/due date will be communicated in a separate email to the Department/College designated Effort Coordinator. 


The PI is responsible for the financial management of a sponsored project, which includes payroll charges and effort reports.  The PI is also responsible for the review of the grant accounting records and any error corrections within 90 days of the transaction.  In order to realistically certify effort on the part of another employee, these other persons must be limited to those with supervisory responsibility and direct knowledge of 100% of the employee’s actual effort.


The College/Department must maintain an effective system of preparing and processing accurate PA forms in order to ensure timely, reasonable salary distributions to sponsored projects.  In addition, the College/Department must establish and communicate to the appropriate personnel, approval procedures for PA forms and PAR forms.


Cost Share


Mandatory and voluntary cost sharing must be recorded on PAR forms.  Cost sharing occurs when the actual effort expended in a cost category in greater than the effort charged in salary and wage dollars.  This can occur even when no salary or wage dollars are charged to the sponsored agreement.  Cost sharing is also referred to as University matching commitments, these may be specified as in kind or cash on the proposal.


Matching dollars must be from State or self-supporting funds; or, from private or state funded sponsored agreements.  If matching is shown on the proposal, OGCA will set up a fund for recording the match.  Matching is indicated by recording an effort percentage in the match fund associated with the project.  The amount of effort available for research and the other sponsored activities is limited by other University activities (i.e. Instruction) during an academic term.


Instructions for Completing PAR Forms


PAR forms should be completed and signed initially by the employee being surveyed.  In order to complete the form, the actual effort expended in each cost category should be compared to the effort charged.  A-21 J10b(2)(e) states that ‘Short-term fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term, such as an academic period.”  Uniform Guidance Section §200.430(c) states, “It is recognized that teaching, research, service, and administration are often inextricably intermingled in an academic setting.  When recording salaries and wages charged to Federal awards a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected."  Thus, if the percentages reflected on the PAR form are within reason it is acceptable for the employee to certify the PAR form.  If it is determined that the PAR form does not accurately reflect the actual effort expended, the employee is to place the correct percentages in the column on the right side of the form.  A PA correcting the payroll distribution must then be prepared and returned with the PAR form.  If the employee is unavailable, a supervisor or someone with direct knowledge of 100% of the employee’s actual effort may complete the form.  PI approval for faculty members is not required by OGCA.  However, Department Chairs or individual PIs may specify their own additional, internal approval procedures.


The charges appearing on PAR forms are actual charges to grant funds.  Payroll errors should be detected, analyzed and corrected during the monthly review of the grant accounting records.  PAR forms are prepared approximately 30-45 days after the end of each term to allow time for any payroll errors to be corrected.  Once signed, no reallocations which contradict previously certified effort, will be permitted without contemporaneous documentation and a Dean’s approval.


Current Version:     January 1, 2016 - Effective for Spring 2016 Certification Period

Previous Revision:  December 9, 2015

Issued:                    December 10, 2008

▼   Cost Transfer Policy

Print Friendly and PDF


This policy establishes requirements for processing transfers of direct costs to or from sponsored agreement funds, to include both the project and cost share funds. The requirements are based on federal policies and sound management practices. If a specific sponsored project fund agreement has different requirements than those outlined in this policy, typically the sponsored agreement requirements will take precedence. This policy applies to all federal and nonfederal sponsored agreements, except cost transfers to non-federal fixed price agreements.

Definition of Cost Transfer

Cost transfers occur whenever an expenditure is moved from one fund to another. The sponsored agreement fund can be either the one receiving the charge (debit) or the one from which the charge is being removed (credit) or both.

General Policy

Federal regulations, generally accepted accounting principles, and good management practices require that all costs incurred be appropriate to and for the direct benefit of the fund charged, and that accounting records be maintained on a timely and accurate basis. Sponsored agreements are to be monitored on an on-going basis for appropriate and accurate expenditures.


Cost transfers may occasionally be necessary to correct errors in the original charges or for other reasons, such as adjustments of salary charges where the actual distribution of an employee’s effort in an effort certification report differs from the distribution used to charge the funds. These transfers, however, must be properly documented and processed within a reasonable period of time. The following requirements apply to all cost transfers:


  • The cost being transferred is a proper and allowable charge to the receiving fund (i.e., the cost benefits the project and is otherwise allowable under federal cost principles and/or other terms of the agreement).
  • The transfer is supported by documentation that clearly explains why the transfer is being made. The explanation must be sufficient for an independent reviewer (e.g., an auditor) to understand the transfer and conclude that it is appropriate. In some cases, this may be accomplished by a very brief statement (e.g., a transfer to correct a transposition error), while in others, a more elaborate explanation and justification and/or additional documentation may be needed. A statement that merely states "to correct error" or "to transfer to correct project" is not adequate.
  • A cost transfer must be accomplished only through the use of the Cost Transfer Form.  The transfer document must be signed by the Principal Investigator of the receiving project certifying that the cost being transferred is a proper and allowable charge to the receiving fund.
  • Under no circumstances may expenditures be placed on a sponsored fund for reasons of convenience or funding availability with the intention that they will be removed to the proper fund (sponsored project that benefited from the expense) at a later date. Such “parking” of costs violates sponsoring agency guidelines and is strictly prohibited.
  • The transfer document should be submitted as soon as possible after the error is detected or other reason for the transfer becomes known. Although the majority of transfers should occur much sooner, 90 days after the original charge posts to the accounting system is considered to be the maximum reasonable time period under normal circumstances. If there are extenuating circumstances that cause a delay beyond the 90-day period, the reason for the delay must be included in the documentation supporting the transfer. Transfers over 90 days from when the original charged posts to the accounting system must also be signed by the Department Chair, the Dean, the Vice President of the Division, and the Associate Vice President for Finance and Administration/Director of Research Accounting, or a designee appointed by any previously listed approver during times of extended absence.  In some cases, as explained below, the transfer document must be submitted earlier than the normal 90 day maximum. All transfers to correct errors resulting in a credit to sponsored funds must be made regardless of timing.
  • Whenever a cost transfer involves funds in different departments, the transfer must be authorized by both departments.
  • A debit cost transfer will normally not be processed for a cost item for which a financial report has already been filed, unless the cost was accrued on the financial report. To the maximum extent possible, cost transfers related to a financial reporting period will be processed prior to submission of the financial report. Most agreements have a 90-day report receipt cycle. This means that cost transfers will normally need to be submitted within 60 days of the budget period end date in order to be included in the financial report. (For agreements with shorter report cycles transfers will need to be submitted earlier in order to be included on the financial report.)
  • Costs will not normally be transferred more than once. Since the original cost transfer has already been justified, documented, reviewed, and accepted as appropriate, a second transfer of the same cost is highly suspect and should be unnecessary. Debit transfers will normally not be processed against a sponsored agreement, if the cost was previously transferred, unless there are extraordinary circumstances (e.g., data entry error on the original cost transfer submitted).

Inter-Departmental Charges and Transfers

Inter-Departmental Charges and Transfer forms (Publications, bookstore, etc) are normally used to bill costs from service centers (see Service Center policy and Service Center Training Guide) when services have been provided and agreed to by the recipient of the services. The originator has been directly advised by the user of the goods or services of the appropriate fund to be charged.  These charges are primarily used as an internal invoicing system (e.g., Publications, Comparative Medicine and Telecommunications) these forms (invoices) vary by service center.

Journal Vouchers

The Journal Voucher (JV) form may be used for any non-salary cost transfer. JVs are primarily used to correct accounting errors. JVs must be submitted with documentation attached showing the accounting entry to be corrected (i.e., Banner printout, etc.). JVs are processed for individual cost items, and each item, to be corrected must be detailed separately on the JV.  Typically JV’s are prepared in the business office.

Retroactive Salary Transfers

Only the Personnel Action Recommendation (PA) form may be used to process a salary/wage cost transfer.

Payrolls are processed based on the anticipated effort distribution on the Personnel Action Recommendation (PA) form.  Departments should monitor the distribution of compensation and effort on an on-going basis.  When variances between distribution of compensation and effort exceed a reasonable amount a change should be made using the PA form.  Sponsored agreements have limited performance periods and frequently change fund numbers. It is, therefore, important that compensation and effort be closely monitored for all individuals working on sponsored agreements.

Because retroactive salary transfers may affect effort certification reporting, retroactive salary transfers are subject to additional requirements, as follows:

Monthly/Bi-weekly Employees

Retroactive salary transfers that are a result of changes made on effort certification reports must be submitted before or at the time the Personnel Activity Report (PAR) is produced. Retroactive salary transfers may not be processed for pay periods within an effort certification period (September – December, January – May and June - August) for which an PAR has already been submitted and is on file in Office of Grant and Contract Accounting, unless:

  • The retroactive salary transfer adjusts the salary distribution to the amount/fund reported on the PAR or,
  • The retroactive salary transfer credits a sponsored agreement and debits a University of South Alabama (University) fund and the effort remains the same on the sponsored agreement (i.e., an adjustment to show University cost-shared effort on the sponsored agreement).

Retroactive salary transfers for bi-weekly employees requesting to transfer salary incurred during pay periods prior to January 1, 2016 requires that timesheets be amended to correct effort and submitted along with the cost transfer form.

Contacts for Questions

Questions should be directed to the Office of Grants and Contract Accounting,


Revised:  October 1, 2016

Previous Revisions:  May 20, 2016, December 7, 2015, July 25, 2012, January 18, 2006

Issued:  March 25, 2002

▼   Cost Sharing Policy

Print Friendly and PDF


This Policy Statement establishes the University of South Alabama (University) policies and procedures for providing cost sharing commitments to sponsoring agencies, budgeting such commitments in proposals, and documenting cost shared expenditures.

Definition of Cost Sharing

Cost sharing is the portion of project expenses (cash and in-kind contributions) related to a sponsored project that is contributed by parties (typically the University) other than the primary sponsor and is not directly charged to the sponsored project fund(s). Cost sharing represents a University commitment to provide resources to a sponsored project. Cost sharing may be required by the sponsor or offered by the University, and may or may not be included in the sponsored award document. Regardless of how it originates, cost sharing represents a University commitment to provide resources to a sponsored project.  Cost sharing is discussed at length in 2 CFR 200.306. See Uniform Guidance for information on when 2 CFR 200 terms apply.

The two categories of cost sharing are:

  • Mandatory Cost Sharing is a cost contribution, which can be mandated by the sponsor or voluntarily committed by the University, for which the project benefits and is included in the sponsor’s award document.
  • Voluntary Cost Sharing is a cost contribution voluntarily made (typically after the award is made) by the University but not included in the sponsor’s award document. Voluntary cost sharing can also include expenditures incurred during the performance of the project, which were not anticipated in the proposal budget and not funded by the sponsor. Faculty time not over and above a normal workload where the effort benefits a specific project is considered voluntary cost sharing and should be reflected on the effort certification.  Faculty-donated (including senior researchers) additional time, over and above that agreed to, as part of the award, is considered voluntary uncommitted cost sharing (i.e., hours in excess of a normal workload).  Voluntary uncommitted cost sharing should be treated differently from committed effort and is excluded from the effort reporting requirement.

Other Definitions

  • Direct Costs are costs that can be specifically identified with a particular project, program, activity or sponsored fund.
  • Effort is the time spent by a principal investigator, faculty member or other employee(s) on sponsored project(s) and all other activities on an integrated basis regardless of the source of funding. Effort is documented through the University’s effort reporting system. Faculty-donated additional time (including senior researchers) (effort) above a normal workload is considered voluntary uncommitted cost sharing and should not be included in the effort reporting system.
  • Facilities and Administrative Costs (F&A Costs) are costs that cannot be readily and specifically identified with a specific project, program or activity but which provide an overall benefit to the institution and sponsored agreements. F&A costs consist of general administration and general expenses such as executive management, accounting, payroll and personnel administration; operations and maintenance expenses, such as utilities, building maintenance and custodial services; building depreciation and interest associated with the financing of buildings; administrative and supporting services provided by academic departments; libraries; and special administrative services provided to sponsored programs. F&A costs were previously called "indirect costs."
  • Matching Contribution is a form of cost sharing. It is the amount pledged by the institution or a third party to match some portion of funds provided by the primary sponsoring agency. Matching contributions may be in any form, including costs incurred by the University and in-kind contributions made by third parties.
  • Third Party In-Kind Contribution is a non-cash contribution to a sponsored project or program which is provided by a party other than the University or the primary sponsoring agency. Third party in-kind contributions may be in the form of services directly benefiting and specifically identifiable to the project or program, equipment, supplies, or use of space.

General Policy

Cost sharing should generally be limited only to those situations where it is mandated by the sponsor. Voluntary cost sharing should only be provided in cases where it is clearly necessary because of the nature of the program. In all situations, the use of cost sharing should be kept to a reasonable level because of the burden that cost sharing places on University resources.

Costs Eligible for Cost Sharing

To be allowed as cost-shared expenses, costs must be:

  • Allowable, allocable and reasonable under federal cost principles (OMB circulars A-21, A-110 and 2 CFR 200 Subpart E, when applicable) and the terms of the sponsored agreement.
  • Certifiable in the effort distribution and certification process (for cost-shared effort).
  • Capable of being quantified and documented.

There are two general restrictions on costs that may be used for cost sharing:

  • If the costs are used as cost sharing on a federal program, they may not be paid or used as cost sharing on another federal program, unless permitted by statute.
  • Costs classified as F&A costs, such as administrative and clerical salaries, may not be used as direct cost sharing unless permitted by the sponsor (federally funded awards), and unallowable costs.

Examples of allowable forms of cost sharing:

  • The effort of the Principal Investigator and/or employees committed (not paid by the sponsored agreement) to sponsored agreements, including the associated benefit costs.
  • The cost of equipment whose purchase is necessary for, and dedicated to, the successful completion of the project. Existing equipment made available for the performance of the sponsored agreement is not considered for cost sharing since the recovery of its cost is included in the F&A cost rate and the sponsor is already paying for it through the application of the F&A cost rate.
  • Laboratory supplies
  • Travel
  • Third party in-kind contributions. When the contribution is in the form of personal services, the contributor must certify that the amount cost shared is comparable to the individual’s regular rate of compensation. When contributions are for other than personal services, the provider must state the fair market value of the item.
  • Waived or reduced F&A costs (i.e. the difference between the applicable negotiated F&A rate and the amount awarded by the sponsor). F&A costs may be included as cost sharing on federal awards only if they are specifically identified in the accepted proposal, or with the specific approval of the awarding agency.

Proposal Development

In order to fulfill the university’s responsibility to sponsors, sponsored projects generally include some Principal Investigator effort and other personnel effort that is directly charged to or explicitly cost shared. The effort is quantified in the proposal budget. The amount of effort must be realistic and the total of one’s effort must not exceed 100%. Whenever possible, salary commensurate with effort should be included in the proposal and requested from the sponsor.

When cost-shared effort is offered, the following should be considered:

  • The sponsor’s requirement for cost sharing.
  • The percentage of time already committed on other sponsored projects.
  • The amount of effort devoted to other functions such as teaching and administration.
  • The amount of effort devoted by others such as co-Principal Investigators
  • The size and complexity of the project.

The Transmittal Sheet for Proposal is used to signify that the principal investigator, department, and college concur with the proposed cost sharing and will provide the necessary funding. Prior to proposal submission or award acceptance, the Office of Sponsored Programs may contact the department or the Principal Investigator with any concerns it has regarding the proposed cost sharing commitment. The principal investigator of the sponsored award is responsible to ensure that the cost sharing agreed to has been fulfilled and properly documented.  Non-fulfillment of a cost sharing commitment may result in a loss or return of project funds.


All University incurred, cost-shared expenditures of a sponsored project must be properly recorded and reported in the University accounting or effort reporting system when appropriate.  Third-party cost share must be properly valued according to 2 CFR 200.306, documented and provided to the University for reporting purposes.

For mandatory cost sharing, the cost sharing actually provided and reported must at a minimum be the amount required by the terms of the award.  Completion of a timely effort report fulfills the documentation requirement related to compensation.  Throughout the project, the principal investigator and department are responsible for monitoring the actual contribution to the project and ensuring that the cost-sharing requirement is met and properly recorded.

The principal investigator must provide documentation of cost sharing to the department, college and Office of Grants and Contracts Accounting.  This documentation must be submitted consistent with the reporting requirements of the sponsor but not less frequently than annually.

Contacts for Questions

Questions concerning this policy and its requirements should be address to the Office of Sponsored Projects Administration (SPA) or Office of Grants and Contracts Accounting (OGCA).


Revised:  December 7, 2015

Issued:  December 24, 2001

▼   Reporting Responsibility Policy

Print Friendly and PDF


This policy establishes responsibility for submitting reports required by sponsors of extramurally funded projects at the University of South Alabama (University).

Types of Reports

Reports normally required as a part of the award terms and conditions are; financial reports, management reports, reports of findings or progress, case reports (clinical trials), and/or invention disclosures.  Most formal agreements will specify the type, form and frequency of reports. 

Responsibility for Reporting

Responsibility for reporting is typically the responsibility of the Principal Investigator/Project Director (PI/PD) and/or Office of Grants and Contracts (OGCA) depending of the nature of the report.  The PI/PD is solely responsible for meeting technical and all other programmatic reporting.  OGCA is generally responsible for billings and expenditure reporting.

In some cases sponsored projects have unusual financial reporting requirements (typically due to programmatic complexities) requiring the department or particular program to assume all or part of the reporting responsibility that is generally the responsibility of the Office of Grants and Contracts Accounting.  When departments or specific programs have increased financial reporting responsibility the following must be observed:

  • Reporting must be coordinated with OGCA.
  • The Universities financial accounting system must be the basis for financial reporting.
  • Projections must be fully supported and documented.
  • All financial reports must be fully supported and documented.
  • Documentation and support for financial reports is to be maintained by the originating department.
  • The financial report, including documentation, must be provided to OGCA for review prior to submitting materials to the sponsor.
  • OGCA has signature authority to sign as business officer for the University.
  • OGCA must be copied on all submissions to the sponsor.

Reporting Requirements

Financial reporting should be in compliance with regulatory requirements which includes:  Following Generally Accepted Accounting Practices (GAAP), Financial Accounting Standards Board (FASB) Statements, Governmental Accounting Standards Board (GASB) Statements, and Cost Accounting Standards Board (CASB) Statements.  The basic requirements of these standards include the following:

  • Sources and uses of funds must be aggregated by the type of activity they support, and in accordance with any restrictions imposed on their use.
  • Revenue is reported when earned, and expenditures are reported when goods or services are received.
    • In general, revenue is earned when the University provides goods or services; for example, on a cost-reimbursement research grant, revenue is earned as the costs are incurred for the conduct of the research.
    • Likewise, expenses are incurred as the University uses goods or services; for example, when laboratory supplies are received, the University incurs the expense. Holding an invoice does not prevent the expense from being incurred.
  • Accounting principles must be applied consistently, both within fiscal years and between fiscal years. OGCA is charged with ensuring consistent application of these accounting principles.
  • Transactions must be classified and recorded consistently.

Reporting to Sponsors

Reporting to sponsoring entities according to the specific reporting requirements. In general, most sponsoring entities require adherence to GAAP. Additionally, federal agencies and entities which serve as conduits for federal funds require adherence to either Office of Management and Budget Circulars (OMB), the Code of Federal Regulations (CFR), and/or Federal Acquisition Regulations (FAR). Primary guidance includes:

  • OMB Circular A-21, provides the cost principles for educational institutions. These principles define allowable costs as those which are reasonable, allocable, consistently treated and in conformance with any special limitations. Circular A-21 also defines direct versus indirect costs, and provides guidelines for calculating indirect costs,
  • OMB Circular A-110, provides uniform administrative requirements for grants and other agreements with institutions of higher education, including financial reporting requirements, and
  • 2 CFR 200, supersedes OMB Circular A-21 and A-110. The goal of this reformed guidance is to streamline guidance for federal awards to reduce both administrative burden and the risk of waste, fraud and abuse of federal funding.  The uniform guidance will be effective December 26, 2014 for all subparts contained in the guidance, except for subpart F (audit requirements), which will be effective, the first fiscal year beginning after December 26, 2014. The new uniform guidance will be applicable for new awards and for incremental funding awarded on or after December 26, 2014

Audits of Reports

External auditors and review requests must be coordinated by OGCA.


Revised:  December 8, 2015

Issued:  December 23, 2001

▼   Cost Principles Policy

Print Friendly and PDF



The U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR, Chapter II, Part 200, Uniform Guidance) must be applied uniformly to all Federal awards and must be consistent with policies and procedures that apply to both Federal awards and other activities of the university, including non-federally supported programs (2 CFR 200.403(c)).

In accepting a sponsored project, principal investigators, project directors, departmental administrators and the University of South Alabama agree to follow the cost principles defined by the sponsoring agency. Allowability of costs can vary by sponsor, therefore it is imperative that the sponsor requirements contained in each and every award agreement be understood and followed.

Policy Statement

Sponsored projects may be charged directly for costs that are allowable, reasonable and allocable. Furthermore, all costs charged directly to a sponsored project are subject to audit by the respective funding agency or other audit agencies. This is true for both federally funded and non-federally funded projects.

As stated in the Uniform Guidance (2 CFR 200.412) “There is no universal rule for classifying certain costs as either direct or indirect (F&A) under every accounting system. A cost may be direct with respect to some specific service or function, but indirect with respect to the Federal award or other final cost objective. Therefore, it is essential that each item of cost incurred for the same purpose be treated consistently in like circumstances either as a direct or an indirect (F&A) cost in order to avoid possible double-charging of Federal awards.”

The primary responsibility for the sound fiscal management, as well as the programmatic direction, of a sponsored project belongs to the individual faculty member who is the grant or contract principal investigator. It is the responsibility of the principal investigator or project director to ensure that only allowable, reasonable and allocable direct costs are charged to a sponsored project.

Uniform Guidance Definitions Related to Cost Principle

  1. Allocable Costs (200.405)
    A cost is allocable if the goods or services are charged to an award in proportion to the relative benefits received. The Uniform Guidance states the allocation standard is met if the cost:

    1. Is incurred specifically for the award.
    2. Is charged using direct cost allocation principles.
      • When a cost benefits multiple projects or a combination of projects and programs, and the cost can be distributed in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects or programs based on the proportionate benefit.   
      • If the proportions cannot be easily determined, the cost may be allocable to the projects or programs receiving the benefit on any reasonable documented basis.
      • Allocation across awards cannot be based simply on funding availability.

  2. Allowable Costs (200.403)
    The Uniform Guidance outlines the following general criteria that must be met for costs to be allowable:

    1. Be necessary and reasonable for the performance of the award and be allocable to the award.
    2. Conform to any limitations or exclusions set forth in the Uniform Guidance or the sponsor agreement.
    3. Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the institution.
    4. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to a Federal award as an indirect (F&A) cost.
    5. Be determined in accordance with Generally Accepted Accounting Principles (GAAP).
    6. Not be used to meet cost sharing requirements.
    7. Be adequately documented.

      The University of South Alabama’s position is to follow the most restrictive policy or guidance if a conflict exists.

      For more information on select items of cost see the ‘Uniform Guidance Overview’.

  3. Applicable Credits (200.406)
    Applicable credits refer to those receipts or reduction-of-expenditure type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accrued to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.

  4. Indirect Costs (200.56)
    Costs incurred for a common or joint purpose benefiting more than one cost objective, not readily assignable to the cost objectives specifically benefited without effort disproportionate to the results achieved. Uniform Guidance specifically identifies that office supplies, postage, local telephone costs, and memberships must normally be treated as indirect (F&A) costs. (2 CFR 200 Appendix III.B.6.b.(2)). 

  5. Limitation on allowance of costs (200.408)
    Federal awards may be subject to statutory requirements that limit the allowability of costs. When the maximum amount allowable under a limitation is less than the total amount determined in accordance with the principles in this part, the amount not recoverable under a Federal award may not be charged to [that or any other] Federal award. For example, if an agency caps the amount of institutional base salary that can be used to calculate the costs of effort on a grant, individuals with a salary that exceeds the cap cannot charge the remainder of their salary from effort on that award to this or any other Federal award.

  6. Reasonable Costs (200.404)
    A cost is reasonable if, in nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The Uniform Guidance lists the following items to be taken into consideration in determining the reasonableness of a cost:
    1. Whether the cost generally recognized as ordinary and necessary for the operation of the organization or the proper and efficient performance of the award.
    2. The requirements of sound business practices, arm’s length bargaining; applicable laws and regulations, and terms and conditions.
    3. Market prices for comparable goods or services for the geographic area.
    4. Whether the individual acted with prudence.
    5. Whether the institution significantly deviates from established policy and procedures, which may unjustifiably increase the award’s costs.

  7. Total Cost (200.402)
    The total cost of a Federal award is the sum of the allowable direct and allocable indirect (F&A) costs, less any applicable credits.

  8. Direct Costs (200.413)
    Direct costs are those costs that can be identified specifically with a particular final cost objective - such as a Federal award, or some other internally or externally funded activity - or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs.

    The following costs should normally be directly charged to sponsored accounts. However, the terms of the specific agreement and the sponsoring agency’s regulations must be reviewed prior to determining the appropriateness of costs for an individual project. An individual sponsor may prohibit certain expenses. The following listing is only intended to be a quick reference. It should also be noted that direct costs must also meet the criteria listed above in the Definition section (i.e., be specifically identified with the sponsored agreement and be allowable).

    • Animals – Purchase and animal care use fee or per diem. The agreement must specify that animals will be used on the project. Animal-related costs may not be incurred prior to Institutional Animal Care and Use Committee (IACUC) approval of the animal subjects protocol. Use fees or per diems must be established through a service center/recharge mechanism with consistently applied rates charged to all users.
    • Compensation – Salaries and wages for faculty/scientific/technical/professional individuals working specifically on the sponsored agreement.
    • Conference Costs – (i.e., conducting a conference, not attendance at a conference.) Must be specifically authorized as part of the agreement. (Attendance at a conference is also normally a direct cost, usually treated as a travel cost, if related to the scientific/technical needs of the sponsored agreement.)
    • Consortium Costs/Subcontracting – Usually requires agency authorization.
    • Equipment – Defined as an item with a unit cost of $5,000 or more and a useful life of more than one year. Special purpose scientific/technical equipment is normally a direct cost. General purpose equipment such as computers, printers, FAX machines, furniture, typewriters, filing cabinets, etc. are not normally appropriate as direct costs, except when specifically related to the scientific/technical needs of the agreement. All equipment purchases must be preapproved by Office of Grant and Contract Accounting (OGCA) and may require agency approval. Most agencies have limitations on levels of purchases allowed without specific agency authorization. Rental or lease of equipment is normally an F&A cost but may be a direct cost based on specific needs of the agreement. All vehicle purchases require specific agency authorization. All direct charges for equipment should be specified in the proposal budget. If the awarding agency approves the item in the budget, this usually constitutes agency authorization to charge the cost of the equipment to the agreement.
    • Equipment Fabrication Costs – Appropriate as a direct cost if the equipment is scientific/technical equipment. Fabrication of general purpose equipment is normally an F&A cost.
    • Equipment Maintenance and Repair Costs – Includes maintenance service agreements. Appropriate as a direct cost if the cost is for equipment directly charged to a sponsored agreement.
    • Fringe Benefits – Standard benefits associated with compensation as established by the University’s Human Resources Office. Fringe costs are specifically identified to each employee and are charged individually as direct costs.
    • Housing and Living Expenses – May be incurred only on some conference/training/fellowship agreements where such costs are specifically authorized.
    • Human Subjects Payments/Incentives – The agreement must specify human participants activity and payments. Costs may not be incurred prior to IRB human participants protocol approval.
    • Patient Advertising and Recruitment – The agreement must specify human participants activity. Costs may not be incurred prior to IRB approval of the human participants protocol.
    • Patient Care (Inpatient/Outpatient) – The agreement must specify patient activity and the costs must be authorized by the agency.
    • Pre-agreement Costs – Under Federal Demonstration Project (FDP) and Expanded Authority agreements, costs may be incurred up to 90 days prior to the start date. All other agreements require specific, written agency authorization.
    • Printing and Photocopying – Are not normally appropriate as a direct cost.
    • Professional and Consulting Fees – Specific restrictions may apply to hourly and daily rates and internal (i.e., University employee) consultations. An individual may not be an employee and a consultant on the same sponsored agreement.
    • Registration – Conference registrations, when directly related to the needs of the agreement. Direct charges may only be made for individuals working on the agreement.
    • Rental/Lease Space Costs – Usually only for off-campus projects, if specifically authorized in the award. Incidental space rental for meetings or conferences may be appropriate as a direct cost for an on-campus project. All other space costs are included in F&A.
    • Scholarships, Stipends, Tuition, and Other Student Aid Costs – Appropriate only on training/fellowship/financial-aid agreements where such costs are specifically authorized. May not be charged to research agreements. Additional University and IRS requirements may apply.
    • Scientific/Technical Service Fees – Charges for internal service activities should be established through a service center mechanism with consistently applied rates to all users.
    • Speaker Fees – Payment for services rendered.
    • Supplies – (1) Medical/scientific/technical/laboratory materials such as chemicals, glassware, gases and liquids, scientific software, pharmaceuticals, etc. are direct costs. (2) Educational supplies may only be directly charged to educational/training programs, as outlined and authorized in the agreement. (3) Unless specifically authorized, office supplies are not appropriate as a direct cost.
    • Telephone – Long distance charges are treated as direct costs. Local telephone service and equipment are normally F&A costs.
    • Transportation Costs – Freight, express, cartage, postage and other transportation services relating to goods purchased. Costs would normally be included as part of the purchase price of the goods/equipment and would not normally be charged separately.
    • Travel Costs – Travel must be by coach class and by U.S. Flag Carrier, unless an exception has been authorized.
    • Vehicle Use Costs – Vehicle rental and mileage reimbursement should be directly charged to sponsored agreement travel, in accordance with agency guidelines and the University Travel Policy. No other type of vehicle costs/purchase/maintenance may be charged to a sponsored agreement without specific agency authorization.

  9. Facilities and Administrative (F&A) Costs (200.414)

    The following are normally treated as F&A costs and are not directly charged to sponsored agreements nor used as cost sharing. These costs are charged to University funds and recovered from sponsored projects through the applications of the F&A rate.

    • Accounting/Audit costs
    • Administrative/Managerial/Clerical Salaries/Wages/Benefits – Includes both staff and student employees providing administrative/clerical services.
    • Alterations and Renovations – Only appropriate as a direct cost when required to perform the sponsored agreement and authorized by the sponsoring agency. Many agencies have dollar threshold requirements.
    • Banking Fees or Charges – International bank wire transfer fees are considered normal direct costs and do not required specific approval. All other banking costs are F&A.
    • Computer Services or Use Fees – Routine, standard computer services, hookups and networking costs, including MIS/ITD/Networking/Database Management Personnel costs are normally F&A costs. Specialized computer search or data base services may be appropriate as a direct cost, if the service is directly related to the agreement's needs and the charges are based on established rates charged to all users.
    • Construction Costs/Architectural Fees – Appropriate as a direct cost only on agreements for construction, where such costs have been specifically authorized by the sponsoring agency.
    • Facilities Management – Building Maintenance and Work Orders – Repairs, painting, utility charges.
    • General Purpose Equipment – Computers, FAX machines, typewriters, office furniture, file cabinets, etc.
    • Insurance – Health/Dental/Life insurance for faculty and staff is included as a direct cost as a fringe benefit. Some training/fellowship programs authorize health/dental reimbursement, as a direct cost, for specified trainees. These costs are not included as fringe benefits.
    • Legal Costs
    • Library Costs/Collections/Acquisitions – Appropriate as a direct cost only when they are part of the basic purpose of the agreement (e.g., library resource grants) and have been authorized by the funding agency.
    • Membership Dues – Includes scientific societies and other organizations
    • Office Supplies – Paper, pencils, pens, binders, folders and similar supplies.
    • Postage – Postage/Fed Ex/Courier, etc., includes all costs incurred for correspondence, reports, and manuscripts.
    • Recruitment and Relocation Expense – For faculty/staff. Rarely appropriate as a direct cost. Occasionally approved for individuals hired specifically for the needs of the agreement, in accordance with agency-specific guidelines. Usually must be authorized by the agency. The individual's effort must be dedicated solely to the agreement charged. Direct charging would not be appropriate for individuals with multiple duties.
    • Sabbatical Leave – Rarely appropriate as a direct cost. Occasionally, a portion of an individual's sabbatical salary, directly related to work on the agreement, may be authorized by the agency.
    • Subscriptions/Books/Periodicals – Normally not allowable as a direct cost as these are included in the F&A library services pool. Some special development programs or training agreements may include specific authorizations for such costs.
    • Telephone – Includes equipment use charges or purchases, local telephone service charges, FAX lines, FAX machines and pagers or cellular telephone purchases, fees or services.

  10. Unallowable Costs (200.420 – 200.475)

    The following types of costs may not be charged to a federally sponsored agreement either directly or as F&A costs. This is a quick reference. Please be aware that there are some exceptions to some of the categories listed.

    • Advertising, Public Relations and Promotional Costs – Institutional promotion of the University is unallowable. Some types of advertising, such as recruitment of study patients, may be allowable.
    • Alcoholic beverages
    • Alumni activities
    • Bad debts
    • Charitable contributions, donations or gifts (cash, services or property)
    • Commencement and convocation expenses
    • Contingency provisions
    • Entertainment costs
    • Fines and penalties
    • Food Costs – For seminars or patient incentives, may be appropriate as a direct cost, when related to the specific needs of the agreement. Usually authorized as part of the agreement. Food costs for routine operations or staff meals are not allowable, except in the course of travel or as part of a bona fide meeting related to the specific terms of the agreement.
    • Fund raising and investment management costs
    • First class or other non-coach class travel
    • Honoraria (i.e., a payment without service) – Speaker's fees, or other payments involving a service, are allowable.
    • Housing and personal living expenses of University officers
    • Lobbying
    • Losses (overruns) on sponsored agreements
    • Marketing and selling of goods
    • Personal use of goods or services
    • Pre-agreement costs – Permitted under FDP/Expanded Authority Agreements up to 90 days or with agency approval.
    • Student activity costs

Costs that are directly associated with unallowable costs are also unallowable. Directly associated costs are costs that are generated solely as a result of the incurrence of another cost. For example, if a trip is made to conduct fund raising, the travel expenses for the trip are directly associated with the unallowable fund raising expenses and are also unallowable.

Examples of Exceptional Circumstances

The following outlines possible circumstances under which normal F&A costs may be charged as direct costs to a federally sponsored project. These costs should be explained and justified in the proposal budget when the sponsor requires a detailed budget. These examples are not exhaustive nor are they intended to imply that direct charging would always be appropriate for the situations illustrated.

Administrative/Managerial/Clerical Salaries/Wages/Benefits (200.413(c))

The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs.  Direct charging of these costs may be appropriate only if all of the following conditions are met:

  1. Administrative or clerical services are integral to a project or activity;
  2. Individuals involved can be specifically identified with the project or activity;
  3. Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and
  4. The costs are not also recovered as indirect costs.

These costs may only be authorized for projects where the nature of the work performed requires an extensive amount of administrative or clerical support. The examples provided below are not the only circumstances in which administrative or clerical salaries may be appropriate.  However, these examples provide insight into situations in which such administrative or clerical costs might be appropriate as a direct charge.

  • Large complex programs such as Clinical Research Centers, Primate Centers, program projects, Environmental Research Centers or Engineering Research Centers

and other agreements that entail assembling and managing teams of investigators  from a number of departments or institutions.

  • Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature and reporting, such as epidemiological studies, large scale clinical trials and retrospective clinical records studies.
    • Projects requiring travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
    • Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports or scientific manuscripts).
    • Projects that are geographically inaccessible to normal departmental administrative services, such as seagoing research vessels, radio astronomy projects and other research field sites that are remote from the campus.
    • Individual projects requiring project-specific database management, individualized graphics or manuscript preparation, human or animal protocols, IRB preparations and/or other project-specific regulatory protocols and multiple project-related investigator coordination and communications.

General Purpose Equipment

Computers and printers, and other selected items may be appropriate as a direct cost when the PI/PD certifies that the equipment is necessary for the unique scientific/technical tasks of the specific agreement. (Examples: A computer, which will be used primarily to store and access a large scientific database, may be appropriate as a direct cost. A computer used for processing reports, manuscripts, correspondence and publications would not be appropriate. A photocopier normally services many diverse functions and projects and would not be appropriate as a direct cost).

Membership Dues

Appropriate as a direct cost on an exception basis only where: (1) Membership is a mandatory requirement of the specific agreement; or (2) For training/fellowship programs where the membership is authorized for a trainee as part of the trainee's development/training program; or (3) Where the membership is required/included as part of the registration costs for a conference and participation in the conference is directly related to the specific needs of the agreement.

Office Supplies

Extraordinary costs for office supplies used specifically for the technical/scientific needs of the agreement may be appropriate as a direct cost. (Examples: Paper, envelopes or computer paper, used as part of a survey mailed to participants for an epidemiological study may be appropriate. Paper, envelopes or computer paper used as part of the administration of the project or for routine correspondence and publications would not be appropriate.)


Extraordinary costs for postage, Federal Express or courier directly related to the scientific/technical needs of the agreement may be appropriate. (Examples: Costs of shipping project samples to a laboratory or a collaborator, for analysis, may be appropriate, as would costs for mailing large epidemiological surveys. Shipping costs for returning a piece of equipment may be appropriate, if the item was originally purchased on the agreement. Costs for routine correspondence or mailing proposals, manuscripts or reports would not be appropriate.)


Costs may be appropriate as a direct cost when the PI/PD certifies that the publication is a necessary requirement for the scientific/technical completion of the specific agreement and that it does not benefit other agreements or activities. (This situation would be extremely rare). An exception may also be appropriate for training agreements where the publication purchase is for a trainee and the publication is an integral part of the trainee’s planned program. Publications that provide a general benefit to research and teaching activities would not be a direct cost.


The cost of telephone lines may be appropriate for a project requiring extensive telephone surveying where the function of specified staff is to telephone respondents. Costs would only be permitted for the dedicated lines not for all telephone services supporting the project. Telephone costs would not be appropriate where the purpose is to provide general telephone accessibility to staff or a space/lab.

Pagers or cellular telephone costs may be appropriate for an individual whose primary task is to travel from location to location to gather data or conduct patient surveys and that individual must maintain contact on a continual basis, as part of the specific needs of the agreement. Costs would only be allowable based on the pager/cellular telephone use being dedicated solely to the needs of the project. In the case of an individual who has multiple duties or works on several agreements or where the pager/cellular telephone is not an integral part of the specific tasks associated with the agreement, costs of a pager/cellular telephone would not be appropriate as a direct cost. If the pager/cellular is needed primarily because the person needs to be reachable by staff, such costs may not be directly charged to a sponsored agreement.


Revised:  July 3, 2019, October 1, 2015, July 29, 2022

Issued:  March 25, 2002 

▼   Program Income Policy

Print Friendly and PDF



To define general Federal policies that govern the definition of program income, and the allowable uses and disposition of program income on Federally sponsored projects.  The Federal regulations that govern program income are identified in 2 CFR part 200.  Principal Investigators and Project Directors (PI/PD) are responsible for reviewing their specific awards and consulting the guidelines of the sponsoring agency and 2 CFR part 200, and reporting any potential program income to the Office of Grants and Contract Accounting (OGCA).

Definition of Program Income

Program income means gross income earned by the University of South Alabama (University) that is directly generated by a supported activity or earned as a result of the award.

Program income means gross income earned by the non-Federal entity that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in §200.307 paragraph (f). Program income includes but is not limited to income from fees for services performed, the use or rental or real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the Federal award, program income does not include rebates, credits, discounts, and interest earned on any of them.

Taxes, special assessments, levies, fines, and other such revenues raised by a non-Federal entity are not program income unless the revenues are specifically identified in the Federal award or Federal awarding agency regulations as program income.

PI/PD shall apply the standards set forth herein in determining and accounting for program income related to projects financed in whole or in part with Federal funds.

Utilization of Program Income

If the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award, or give prior approval for how program income is to be used, the ‘addition’ method §200.307(e)(2) will apply. In specifying alternatives to the utilization of program income, the Federal awarding agency may distinguish between income earned by the recipient and income earned by subrecipients and between the sources, kinds, or amounts of income. When the Federal awarding agency authorizes the approaches in paragraphs §200.307(e)(2) and (3), i.e. ‘addition’, ‘cost sharing or matching’ respectively, program income in excess of any amounts specified must also be deducted from expenditures.

Program income earned during the project period can be used in the following ways:

  • Deduction. Ordinarily program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than to increase the funds committed to the project.
  • Addition. Program income may be added to the Federal award by the Federal agency and the non-Federal entity. The program income must be used for the purposes and under the conditions of the Federal award.
  • Cost sharing or matching. With prior approval of the Federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the Federal award. The amount of the Federal award remains the same.

Program Income Outside of Project Period

There are no Federal requirements governing the disposition of income earned after the end of the period of performance for the Federal award, unless the Federal awarding agency regulations or the terms and conditions of the Federal award provide otherwise. The Federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process.

Deducting Costs

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.

Royalties and License Fees Exclusion

Unless the Federal statute, regulations, or terms and conditions for the Federal award provide otherwise, the non-Federal entity has no obligation to the Federal awarding agency with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under a Federal award to which 37 CFR part 401,”Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Awards, Contracts and Cooperative Agreements” is applicable.

Sale of Property

Proceeds from the sale of real property, equipment, or supplies are not program income; such proceeds will be handled in accordance with the requirements of Subpart D—Post Federal Award Requirements of 2 CFR part 200, Property Standards §200.311 Real property, §200.313 Equipment, and §200.314 Supplies, or as specifically identified in Federal statutes, regulations, or the terms and conditions of the Federal award.


Revised: July 3, 2019

Revised:  December 9, 2015

Issued:  December 24, 2001

▼   Subrecipient Monitoring Policy

Policy Statement

The University of South Alabama is responsible for monitoring the programmatic and financial activities of its subrecipients to ensure proper stewardship of sponsored funds. The following policy applies to all subawards issued under sponsored programs made to the University, without regard to the primary source of funding. Additionally, this policy addresses institutional responsibilities and assists Principal Investigators (PIs) and administrators to ensure that, in addition to achieving performance goals, subrecipients comply with applicable federal laws and regulations and with the provisions of each subaward agreement.   

Reason for Policy

OMB  Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) (“Uniform Guidance”), specifically §200.331, requires pass-through entities to evaluate each subrecipient's risk of noncompliance in order to determine the appropriate monitoring level, monitor the activities of subrecipient organizations to ensure that the subaward is in compliance with applicable Federal statutes and regulations and terms of the subaward, and verify that subrecipients are audited as required by Subpart F of the Uniform Guidance.  

For non-federal awards, University of South Alabama may also be required by the sponsor to provide evidence of due diligence in reviewing the ability of a subrecipient to properly meet the objectives of the subaward and account for the sponsor’s funds.

Failure to adequately monitor the compliance of subrecipients could result in reputational damage to the University and Schools, and jeopardize current and future funding. It is the responsibility of University of South Alabama, as the pass-through entity, to ensure the good stewardship of sponsored funding. All funds assigned to subrecipient organizations should receive the same diligence as sponsored funds that remain at University of South Alabama.

Who Must Comply

All Principal Investigators (PIs) and administrators at the University of South Alabama within all colleges, units, divisions, and centers, who are involved with the administration and conduct of sponsored awards must comply with this policy.

Roles and Responsibilities

Subrecipient monitoring responsibilities are shared among the following:

PI & College/Department

- Assess potential subrecipient organizations for programmatic, financial, and administrative suitability by requesting subrecipient organization information, i.e. statement of work, budget, etc., at the proposal stage, if necessary,
- At time of award, confirm the statement of work and budget.  Require the subrecipient complete the USA “Subrecipient Form” when appropriate*,
- Monitor programmatic progress and ability of the subrecipient to meet objectives of the subaward,
- Monitor each subaward throughout the period of performance and escalate concerns to the Office of Contracts and Grants Accounting (OGCA) and Sponsored Projects Administration (SPA),
- Colleges/department work with PIs to resolve issues on subawards as they arise.

Sponsored Projects Administration (SPA)

- Review information recorded on “Subrecipient Form”.  Assess risk and assign a risk rating,
- Review any non-standard terms and conditions of the prime award during the subaward agreement negotiation process,
- Incorporate additional terms into subawards based on information from the PI, college/department, and the risk assessment of the subrecipient organization.

Office of Grants and Contracts Accounting (OGCA)

- Consult with SPA on risk assessment when information provided on the “Subrecipient Form” warrants further review,
- Inform colleges, departments, and PIs when issues are identified with a subrecipient organization with whom they have an active subaward,
- Review existing subrecipient organizations on an annual basis, and update subrecipient organization risk rating based on review when appropriate.

* For those institutions participating in the FDP Expanded Clearinghouse Pilot review institution information at:  instead of requiring Subrecipient Commitment Form be completed.


Issued:  Effective for awards made on or after December 24, 2014



▼   Grant Clearing Account Processing Procedures

Print Friendly and PDF


In an effort to expedite and improve the processing of grant funded awards, meet the requirements of the Banner format, provide more access to budget information, and provide a framework of compliance, the Division of Student Financial Services and Grants and Contract Accounting has developed a process for managing term-by-term and aid year grant-funded assistantships and tuition or scholarship awards.

Because of the nature of the reporting and the need for internal controls over grant compliance this process will help departments conform to accounting practices and improve monitoring and documentation. These awards are processed through electronic mediums and will be managed through a clearing account. Each Dean will be responsible for assigning an approval proxy for the electronic mechanisms.

Graduate Assistantships

The tuition portion of graduate assistantships (GA) are processed on a term-by-term basis and are sent to the Office of Scholarship Services (OSS) by various departments (the Graduate School, the Athletic Compliance Office, and the Office of Student Affairs). GA tuition awards must be processed prior to the 100% tuition payment date with a final review on or after the add/drop deadline.

The list/worksheet sent by the various departments should include:

  1. Student name & Jag Number
  2. College and department authorizing the assistantship
  3. Grant FOPAL used to fund the award
    If an assistantship is funded by more than one account, both FOPALs should be included along with the allocation percentage.
  4. Credit hour maximum the award will cover for each student

An approved template will be provided to participating departments.

Once a list is received from a department the OSS will verify the maximum amount awarded based on the student’s major, cost of tuition, and approved maximum credit hours. The award amount will be posted in Banner, via the clearing account processes. A detail code is assigned based on the clearing account for each college/school/department.

After the add/drop deadline has passed (typically the 4th day of classes), the OSS reviews student accounts again to verify or adjust the awards based on changes in enrollment. (This may need to be done several times throughout the week as there may be late additions or withdrawals.)

After the course refund withdrawal date has passed, per the academic calendar, the OSS will prepare an electronic upload of the worksheet provided by the submitting department. This worksheet may be forwarded to the department for a review of adjusted charges (if needed)  and then processed through Banner accounting practices.  All expenses will be moved, through this upload, from the clearing account for each college and school to the appropriate grant account.

Departmental Grant Awards

Grant-funded graduate and undergraduate tuition awards and scholarships are typically processed on a term-by-term basis. Tuition awards and scholarships should be processed prior to the 100% payment date with a final review on or after the add/drop deadline. If an award is presented after the add/drop period an additional level of review will be required or the award will be posted to a future term.

Departments will now provide a worksheet to the OSS, when processing awards from grants. Awards posted through grants will processed through a preassigned clearing account. An approved template will be provided to participating departments.

These lists should be forwarded from the department to the OSS contact. Each Dean will be responsible for assigning an approval proxy for the electronic mechanisms.

The list/worksheet sent by the various departments should include:

  1. Student name & Jag Number
  2. College and department authorizing the grant award
  3. Grant FOPAL used to fund the award
  4. Credit hour maximum the award will cover or the exact award amount

The award amount will be posted in Banner, via the clearing account processes. A detail code is assigned based on the clearing account for each college/school/department. Attached is the list of current clearing accounts.

After the course refund withdrawal date has passed, per the academic calendar, the OSS will prepare an electronic upload of the worksheet provided by the submitting department. This worksheet may be forwarded to the department for a review of adjusted charges (if needed)  and then processed through Banner accounting practices.  All expenses will be moved, through this upload, from the clearing account for each college and school to the appropriate grant account.

▼   Sponsored Projects Fixed Price Standard Operating Procedure


A fixed price agreement is one in which the sponsor pays a firm price for the agreed upon work within an established timeframe, regardless of the ultimate cost to complete the project.   A fixed price agreement must meet the following criteria:

  1. No detailed cost reporting requirements,
  2. No reference to costs being ‘reimbursable’,
  3. Not subject to Federal Circulars, Code of Federal Regulations or other terms referencing allowability of costs including Cost Accounting Standards (CAS).  References to OMB Circular A-133 and 2 CFR 200 Subpart F are acceptable,
  4. No prohibition to charging the University’s full Facilities and Administrative (F&A) rate in the ‘request for proposal’,
  5. No cost sharing requirement in the project ‘request for proposal’.

Fixed price agreements are those in which a value (a fixed price) is determined for work to be accomplished.  In general, payment for a fixed price contract is usually tied to performance or deliverables.  If the performance is not met, the sponsor is not obligated to pay.  If the performance is met, the sponsor is contractually obligated to pay. There is a level of risk involved in ‘Fixed Price Agreements’ because the institution is obligated to complete the work, even if the costs exceed the contracted amount.  However, the institution can retain any cash balance remaining after the work has been completed and all expenses related to the contract have been paid.

Funding requests must be within a reasonable range of actual anticipated expenditures and we do not accept fixed-price contract funding from sponsors simply based on market value (e.g., what might have been paid to other contractors) without regard to estimated costs even if the sponsor is willing to pay it. 

Normally, if a contract proposal is appropriately budgeted and all reasonable and allocable expenditures are posted to the contract account, the unexpended balance should be no more than 25% of the awarded amount unless there is justification. 

An audit sensitive issue arises when final actual expenditures are substantially less than the amount of the contract award.  A substantial positive balance can imply to auditors and external sponsors that we inappropriately inflated our cost proposals thereby deliberately generating a cash surplus. 

Establishing a Fixed Price Agreement

When a fixed price agreement is proposed, 2 CFR 200 Subpart E (formerly OMB Circular A-21), should be used as a guide to determine allowable costs under the project.  This will ensure that cost estimates are comparable to other University sponsored contracts and will provide a basis for determining the reasonableness of the total contract price.  The Principal Investigator (PI) should work through their department and/or college research administrator, Health Systems Grants Administration and Development (HSGAD) for agreements in the Health Sciences Division or Mitchell Cancer Institute, as well as the Sponsored Projects Office (SPA) during the planning stages of the contract development and negotiation to ensure accuracy of contract terms and conditions.  This includes deliverables, budget and timeline.  Facilities and Administrative (F&A) costs based on the University’s cost rates must be included in every fixed price contract proposal.  The contract must be developed in such a way that the following criteria are met:

  1. There will be funding sufficient to cover the project,
  2. A payment schedule should be clearly established to provide sufficient cash flow to keep the project on track to meet completion deadline,
  3. Deliverables and deadlines are reasonable and specific,
  4. Include F&A Costs consistent with University Policy,
  5. Promises/commitments are achievable.

Monitoring the Fixed Price Agreement

It is the responsibility of the Principal Investigator to monitor the timing of tasks, deliverables and final reporting of results.    This includes monitoring the expenditures and receipts associated with the contract to ensure that costs are consistent with budget and sponsor payments are in accordance with the agreement.  If there is a 25% or greater cash surplus remaining on the project at termination, a written explanation must be provided by the Principal Investigator, to the Office of Grants and Contracts Accounting, during the closeout process to document the surplus.  All applicable expenditures are required to be charged to the fixed price project and certified as being complete before transferring residual funds.

Closing a Fixed Price Fund

Fixed Price accounts should be “closed” within 30 days from the project end date.  Expenditures to sponsored fund within this 30 day period are allowable.

Note that the scope of work must be completed by the project end date.  All associated expenditures must be charged to the fixed price FOAPAL before any excess funds will be transferred.  After full payment is received from the sponsor, any excess funds will be distributed in the following manner:  

  1. Full F&A will then be assessed on the remaining balance left on the Fixed Price Contract. 
  2. Any remaining funds can be transferred to and used by the Principal Investigator as long as the transaction meets University and State purchasing guidelines.  [Exception:  if funds are being used as cost sharing on a Cost Accounting Standards (CAS) covered agreement, they must meet CAS guidelines.]
  3. If there is a cost overrun in the fixed price account, the amount must be covered by the department.

Fixed Price Residual Cost Transfers Procedure

This procedure addresses the current process for requesting a residual fund transfer of a fixed price contract upon termination of the project.

Draft a letter or email to the Director of Grants and Contracts Accounting (OGCA), on your letterhead to include the following:

  1. Request to Close Fund 2XXXXX, entitled “[name of project]” by [sponsor name]
  2. Identify the Principal Investigator;
  3. Provide a statement of final DIRECT expenditures and final INDIRECT expenditures;
  4. Include a statement that all applicable expenditures have been charged to the fund;
  5. Send verification that deliverables were met (e.g. letter of acceptance from sponsor will do) Attach a copy of the Final Report, if required;
  6. If a subcontract(s) was issued, state that the subrecipient(s) has met all requirements and has been paid;
  7. Provide fund number to receive the transfer of residual funds;
  8. Provide reasons why funds were not needed/spent.  If residual balance exceeds 25% of budget please provide additional justification as to why the proposed budget far exceeded the budget need;
  9. The letter must either be signed and/or sent by the PI via email to the Office of Grants and Contracts - AD 362 or
  10. Upon receipt of the request, OGCA will:
    1. Verify that effort reports were certified;
    2. Verify financial information, including that all payments were received;
    3. Transfer unspent, budgeted direct costs.   Unspent, budgeted indirect/F&A cost budget will be administered through the normal F&A distribution process.


Issued:  October 1, 2015

▼   Federal Participant Support Costs Standard Operating Procedure

Print Friendly and PDF


Participant support costs are those costs paid to (or on behalf of) participants in meetings, conferences, symposia, training activities, workshops and similar events. When a sponsor (federal or non-federal agency) funds a project aimed at supporting outreach programs to bring experts together to discuss research or education findings or to expose other researchers or students to new research and education techniques, the funding provided by the sponsor may include this category of expenses.  Those receiving participant support must not be employees of the University of South Alabama.  Federal guidance requires that recipient accounting systems have a mechanism in place (i.e. account code) to differentiate between regular salary and stipend payments[1].

Specifically, participant support costs may include costs of transportation or travel allowance, manuals and supplies (only those directly attributable to individual participants), tuition and stipends, publication and other related costs for participants or trainees.

The number of participants to be supported must be entered in the parentheses on the proposal budget. These costs also must be justified in the budget justification section of the proposal. Some programs, such as Research Experiences for Undergraduates, have special instructions for treatment of participant support.

Federally funded projects, especially those funded by NSF, generally do not allow indirect costs (F&A) on participant support costs. Check sponsor/agreement specific guidelines for specific treatment.

Participant support costs should not be confused with general travel costs which may be incurred by principal investigators and others as those costs relate to individual research and other projects.


Participant support costs have historically been tracked in Banner via account code 770776.  Historically this approach has required frequent reconciliation and correction due to inaccurate account codes being used for participant support costs.  For example, a participant’s travel was paid using account code 730010 instead of 770776, therefore F&A was calculated and posted to the fund in error. 

During FY 2015 the Office of Grants and Contracts Accounting began segregating participant support budgets into a separate fund and mapping it to the same Banner grant number.  This approach allows Banner to exclude F&A on all participant support costs as required by Federal agencies.  It also clearly shows the participant support costs budget and expenditures which is beneficial for compliance (i.e. rebudgeting) purposes.

Selected Considerations

  1. Participant support costs should be considered as only those costs that can directly be attributable to an individual participant rather than costs that support all participants collectively.
  2. Costs for project organizers (such as PI, co-I, etc.), speakers, and program facilitators or coordinators, even where these individuals may also participate as a program participant, are not considered participant support costs.
  1. Funds provided for participant support may not be used by grantees for other categories of expense without the specific prior written approval of the cognizant federal sponsor.
  1. Examples of programs where participant support costs may be appropriate include:
    1. Research Experience for Undergraduates funded by the NSF
    2. Conference and workshops as part of a larger scope project such as a multi-site research project
[1] NSF PAPPGuide, GPG Chapter II, C.2.g.v.

Print Friendly and PDF


A Sponsored Project is any externally funded research, instruction, public service or scholarly activity that has a defined scope of work and set of objectives which provide a basis for accountability and sponsor expectations. Typically a sponsored project is awarded by the sponsor through a Notice of Award document which specifies the terms and conditions of the award. If any one of the following characteristics applies to a project, including commitments made in the proposal or required in the award document, the award is classified as a sponsored project and must be processed through the Sponsored Projects Administration (SPA) Office and the Office of Grants and Contracts Accounting (OGCA).


The sponsored project is established into a restricted fund within the Banner system.  Fund ranges have been established to identify external funding sources.  The fund ranges are as follows:

    • 20XXXX – 245999 = Federal
      • 20XXXX = National Institutes of Health
      • 210XXX = HRSA
      • 231XXX = National Science Foundation
      • 239XXX = US Department of Education; Financial Aid except 2395XX
      • 2395XX = US Department of Education
      • 240XXX = Other Federal
      • 242XXX – 245XXX = Federal Clinical Trials
      • 246XXX = ARRA
      • 247XXX = Program Income
    • 25XXXX = State
    • 27XXXX = Other/Private
      • 275XXX – 278XXX = Clinical Trial non-Federal
    • 2729XX = Internal Research Award
    • 28XXXX = Scholarships, Endowments
    • 29XXXX = Scholarships, Endowments
▼   Sponsored Fund Ranges Standard Operating Procedure

Print Friendly and PDF


A Sponsored Project is any externally funded research, instruction, public service or scholarly activity that has a defined scope of work and set of objectives which provide a basis for accountability and sponsor expectations. Typically a sponsored project is awarded by the sponsor through a Notice of Award document which specifies the terms and conditions of the award. If any one of the following characteristics applies to a project, including commitments made in the proposal or required in the award document, the award is classified as a sponsored project and must be processed through the Sponsored Projects Administration (SPA) Office and the Office of Grants and Contracts Accounting (OGCA).


The sponsored project is established into a restricted fund within the Banner system.  Fund ranges have been established to identify external funding sources.  The fund ranges are as follows:

  • 20XXXX – 245999 = Federal
  • 20XXXX = National Institutes of Health
  • 210XXX = HRSA
  • 231XXX = National Science Foundation
  • 239XXX = US Department of Education; Financial Aid except 2395XX
  • 2395XX = US Department of Education
  • 240XXX = Other Federal
  • 242XXX – 245XXX = Federal Clinical Trials
  • 246XXX = ARRA
  • 247XXX = Program Income
  • 25XXXX = State
  • 27XXXX = Other/Private
  • 275XXX – 278XXX = Clinical Trial non-Federal
  • 2795XX = Internal Research Award
  • 28XXXX = Scholarships, Endowments
  • 29XXXX = Scholarships, Endowments
▼   Cost Sharing Standard Operating Procedure


Cost sharing is the financial support contributed by the University to a sponsored project.  Compliance with federal cost accounting standards requires that cost-shared expenditures be treated in a manner consistent with direct charged expenditures.


  • The required cost share budget is transmitted on the 'Grant Summary Sheet' from SPA.  Receipt of the 'Grant Summary Sheet' prompts OGCA to set up a cost share fund.
  • A separate fund is established for each award requiring cost share.  The fund description is noted as: "Match 2XXXXX".
  • Cost share funds are in specific ranges:
    • 160XXX - University
    • 1715XX - 1716XX - College of Medicine
    • 1805XX - The Mitchell Cancer Institute
  • The cost share fund number is noted on the grant activation notice.
  • Funds are moved monthly to cover cost share expenditures by the COM Business Office Accountant, MCI Grant Specialist, and Academic Affairs Associate Business Manager, as appropriate.
  • Cost share is tracked by the OGCA Grant Accountant assigned to the grant fund and reported to the agency as required.  The OGCA Grant Accountant confirms the cost share commitment is met by the end of the period of performance.
  • During award closeout the OGCA Grant Accountant ensures the cost share is funded and that the fund is ready to be closed.  The OGCA Grant Accountant sends a request to the Assistant Director of Research Accounting to inactivate and terminate the cost share fund.


▼   Program Income Standard Operating Procedure


Program income is earned income that is directly generated by a supported activity or earned as a result of an award during the period of performance.  Revenue resulting from program income must be accounted for and used for allowable costs consistent with the terms and conditions of the award to fulfill scope of work objectives during the period of performance.


  • The need for a program income fund is identified and a fund created at the time the award is set-up or when program income is earned.
  • When required, a program income fund is created in the 247XXX range.
  • The OGCA Grant Accountant responsible for the associated sponsored fund monitors the program income balance.
  • The method of accounting for the program income is determined by the grant agreement and is either:  additive, deductive or matching.
  • As program income is earned it is deposited into deferred revenue.  Allowable expenditures are paid from the program income fund.  All program income must be used for the benefit of the sponsored fund.


▼   Sponsored Project Termination, Expiration and Closeout Procedure


The expiration of an award on its expected expiration date constitutes an implicit assumption that the University of South Alabama (University) has fulfilled its project performance obligations under the award. The sponsor or the University may also terminate an award before its expiration date for various reasons including the transfer of the Principal Investigator/Project Director (PI/PD) to another institution.

A closeout or termination may require the submission of a final invoice and a Contractor's Release. Other aspects of the award that may need to be cleared are:

  • title to property;
  • satisfactory performance of contractual obligations by the PI/PD;
  • submission of all required reports including final technical and financial reports, patent and invention reports, inventory report, small business and small disadvantaged business subcontracting plan reports, and cost-sharing report.

Final Financial Report, Contractor’s Release, Refunds, and Claims

The Office of Grant and Contract Accounting (OGCA) is responsible for submitting any required financial reports (including invoices) at close out of the award. The expiration or termination of an agreement usually requires a final invoice or final financial report from the University. In the final invoice or report the University would request any residual funds due to the University under the award or refund to the sponsor any excess funds not expended. Awards terminated prior to their natural expiration date can also incur additional costs.  The University should make every effort to collect any expenses associated with termination from the sponsor.

When it is determined by OGCA that no funds are owed to the University, a signed Contractor's Release may be sent to the sponsor. This release is an acknowledgment by the University that it has no further claims against the sponsor. A contractor's release is not usually required for a grant award.

Final Technical Report and Other Deliverables

The PI/PD is responsible for submission of any final technical report required under the terms of an award as well as other agreed upon deliverables such as data, graphs or software. Failure on the part of the PI/PD to deliver any required technical reports to the sponsor in a timely matter may affect future funding from that sponsor to the University. In addition, the terms of many contracts provide that final payments will not be made until the required final reports have been submitted. Thus, late or incomplete reports also affect the receipt of the final payment to the University. The PI/PD should therefore establish some method of assuring timely submission of reports and deliverables for which they are responsible.

Final Inventory Report and Title to Property

The sponsor's policies on title to property must be followed when closing out an award. Many sponsors request a property inventory report whether or not the University retains title to such property. When such title is not retained at the time of acquisition, it is incumbent upon the University to request title at project termination.  

Patent and Invention Report

If required by the sponsor, the University must submit a final Report of Patents or Inventions. If a patentable idea, invention or discovery is made during the course of the sponsored project, the disclosure of such must be made through the Office of Commercialization and Industry Collaboration.

The University’s office of Sponsored Projects Administration (SPA) submits final, non-financial, non-technical closeout reports, i.e. invention and/or property reports.

Cost-Sharing Report

If the sponsor requires cost sharing and requests a report of this cost sharing as part of the close-out of the award, such a report is generated by the department/unit which administered the award and is completed in conjunction with OGCA.

Transfer of the Principal Investigator/Project Director (PI/PD)

In the case of a termination of an award because the PI/PD is leaving the University and wants to continue the project at a new institution, written approvals from the sponsor, the University, and the recipient institution are required. OGCA must determine the balance of funds in the project to be transferred. If these funds are in a University account, the University must refund the surplus in accordance with the sponsor's guidance. If the University has not received the balance of funds available to the project, the sponsor de-obligates that balance to the University and re-obligates it to the other institution. If the PI/PD wants to transfer equipment associated with the project, the University in accordance with established policies and procedures for equipment, is responsible for review of the title and consideration of whether approval of the transfer will be given.

Termination of Sub-Awards

Before termination of any sub-award issued from the University to another institution, all financial, technical, property, patent, and other reports required should be received from the sub-awardee along with a statement that it releases the University from all further claims under the sub-award. The University PI/PD should indicate that the sub-award was carried out in accordance with the work statement.

Removing Expenditures from a Sponsored Fund at Closeout

Effective for projects with an end date of June 1, 2016 or after, all expenditures being removed from a sponsored fund during closeout will require a cost transfer request.  This includes:

  1. Costs that are unallowable in nature,
  2. Costs in excess of the award amount,
  3. Costs that are incurred outside of the period of performance.

During the closeout process specific expenditures, or a portion of a single expenditure, must be removed via a cost transfer by the responsible department or college.  The responsible unit must prepare the cost transfer form, along with the PA or Expense Transfer, to obtain appropriate signatures and submit to OGCA for review and processing.  Note in the cost transfer justification whether the cost being removed from the sponsored fund is unallowable, in excess of the award amount (cost overrun), or if the cost was incurred outside the period of performance. 

Unallowable costs must always be removed.  This includes costs that are unallowable per relevant regulations and/or terms of the award.  Refer to 2 CFR 200 Subpart E for guidance on Cost Principles.

Costs exceeding the award amount must be removed from the overspent fund and tracked for F&A proposal purposes per 2 CFR §200.451 (….All losses are not allowable indirect (F&A) costs and are required to be included in the appropriate indirect cost rate base for allocation of indirect costs.)  OGCA will capture these costs using the activity code: CLSOUT on college/departmental fund and the grant fund listed on the entry. Our F&A proposals will be adjusted accordingly. 

Costs incurred outside the period of performance must be evaluated for proper treatment.  There are circumstances when the program is continuing to a newly established sponsored fund and transfer of expenditures from the old fund to the new is appropriate.  But, generally costs incurred outside the period of performance are not allowed to be transferred to an unrelated program.

If personnel costs are the only available expenditures on a fund with costs in excess of the award amount and a PA cannot reasonably be done to remove these expenditures, a cost share fund will be set up.  Grants and Contracts will move the excess salary and benefits to the cost share fund with a journal voucher using the over expenditure account code.  The responsible unit must prepare the cost transfer form.

When selecting expenditures to remove from a sponsored fund in an overspent status please take care to evaluate the allowability, reasonableness and allocability of the expenditure to the sponsored fund.  If during your review you determine unallowable costs exist take care to remove those costs in total.  Also remember to allow for the F&A expenditures that will automatically adjust based on direct cost expenditures removed.

Regularly reviewing expenditures will diminish the need for cost transfers at a project’s end.  Begin planning for closeout of a sponsored fund approximately 90 days before the end of the period of performance.  Review the sponsored fund both for unallowable expenditures and for completeness of expenditures.  Remember that you can allocate expenditures, i.e. direct pays based on availability of funding.  Removing excess costs over authorized funding levels to another sponsored fund is not allowable per 2 CFR §200.451.

Current Version:  January 17, 2019

Revised:              June 1, 2016

                           December 3, 2014

                           April 15, 2002

Issued:                December 26, 2001

▼   Principal Investigator Transfer Procedure


If a project is to be transferred to another institution before the expiration of the project period, Sponsored Projects Administration (SPA) and the Office of Grants and Contracts Accounting (OGCA) is to be notified so that it can make appropriate plans. If SPA agrees that the transfer is in the best interest of all parties, it will contact the appropriate officials at the funding agency and at the recipient institution to ensure that there will be no diminution of services and that the change is conducted in a timely, efficient, and orderly manner. After all obligations at the University have been met remaining funds may be relinquished to the sponsor for transfer to the new institution.


Options for Active Awards

Depending upon the type of award, the sponsor's policies and the expectations of the principal investigator's new institution, there are several options for the disposition of active awards when the principal investigator leaves the University.


Option 1: Awards may remain at the University in their entirety when the project is tied closely to the University. For examples:


·         The purpose of the award is to develop a new course designed to fill a niche in the University's offerings.

·         The grant is for equipment.

·         The primary purpose of the grant is to fund students. For example, a training grant may have a group of students in various stages of training.


Option 2: In some circumstances the award may be transferred entirely to the principal investigator's new employer.  This is the most likely outcome when the project is identified exclusively with the principal investigator and does not fund graduate students or other personnel.


Option 3: The project may remain the University, and a portion of the project may be transferred to the principal investigator's new institution through a subcontract.


Option 4: Conversely, the award may be moved with its original principal investigator, and a subcontract may be issued to the University for the work remaining here.


Principal investigators should discuss the status of their awards and their plans for the future with their sponsors. SPA will discuss the transfer with the sponsor's administrative staff to find out how the sponsor would like to proceed.


The Transfer Process

Option 1: The entire project, with a new principal investigator, stays at USA which continues to receive funding directly from the sponsor.  A new USA principal investigator must be identified and approved, in writing, by the sponsor.


Option 2: The entire award, relinquished by USA, is relinquished to the sponsor for transfer to the principal investigator's new institution:


·         Funds available for transfer must be identified.

·         SPA, representing the University, must formally relinquish the project. (NSF and NIH have forms for this process.)

·         The project will be closed at USA in accordance with USA and sponsor policies.

·         The sponsor will re-issue to award to the principal investigator's new institution upon receipt of a proposal.


Option 3: A project stays at USA which continues to receive funding directly from the sponsor. A portion of the work is transferred to the principal investigator's new institution using a subcontract.


·         A new USA principal investigator must be approved by the sponsor.

·         The budget must be revised to include a subcontract and indirect cost issues must be negotiated by SPA.

·         A subcontract proposal must be prepared by the departing principal investigator's new institution and submitted to USA.

·         The sponsor must approve the subcontract and new budget.

·         When approval is secured, SPA will issue the subcontract.


Option 4: The project is transferred to the principal investigator's new institution, which will receive funding directly from the sponsor. The new institution will issue a subcontract to USA.


·         Funds available for transfer must be identified.

·         SPA must formally relinquish the project. (NSF and NIH have forms for this process.)

·         USA must identify an appropriate principal investigator and submit a subcontract proposal to the departing principal investigator's new institution, based on figures provided by the new institution.

·         Any indirect cost issues must be negotiated by SPA.

·         The sponsor will re-issue the award to the new institution, which will then issue a subcontract to USA.


Identifying Funds Available for Transfer

The principal investigator and the department must work closely with SPA and OGCA to calculate the dollar amount which is unspent and available to be transferred. Due to logistical difficulties of transferring funds at subsequent times, the initial calculation is critical


Indirect Cost Issues

When a budget is revised to include a new subcontract, the cost of the subcontract should be included in the indirect cost calculations. However, the institution preparing the new subcontract proposal could also reasonably expect to include indirect costs in its calculations. This creates a burden on the original budget. Any reduction of direct costs to cover the indirect cost burden could affect the outcome of the project and would probably not be allowed by the sponsor. SPA will negotiate a fair distribution of indirect cost recoveries with its counterpart at the principal investigator's new institution. In practice, this usually means that each university will accept a lower rate for the project.


Equipment Transfers

Title to equipment never rests with an individual faculty member. Award documents will state whether title is vested in the sponsor or the university. If title rests with the university, written permission must be secured from the appropriate dean and vice president before the equipment can be released.


If the sponsor or another government entity owns the equipment, written approval from the owner must be secured before the equipment leaves USA. The department will be held financially liable for any equipment transferred without authorization.


New Faculty Transferring Awards to USA


To transfer awards received elsewhere to USA, a new USA faculty member must submit proposals with USA salaries, fringe benefits, and indirect costs through research support.


If the award is to be transferred in its entirety to USA, the principal investigator's previous employer must formally relinquish the award, and a proposal must be submitted to the sponsor.


When only a portion of the work is to be transferred, the proposal must be submitted to the principal investigator's former institution, which will issue a subcontract to USA.


Rate Issues

If a project is being transferred in its entirety to USA and if USA 's indirect cost rate is significantly higher than that of the principal investigator's previous employer, USA may accept a lowered rate for the remainder of the budget year. It is expected that the full rate be used in proposals for all subsequent years of the project.


When only a portion of the work is to be transferred, if adding a subcontract to USA places a burden on the original project budget, SPA may be willing to negotiate F&A rates with the principal investigator's former institution.


▼   Budgeting Procedure

Print Friendly and PDF


Budget Components

A budget is a numerical estimate of anticipated cost to accomplish the stated objectives of a sponsored program. Most sponsors provide guidelines for budget preparation and many provide forms for the submission of budget information. The following guidelines provide general criteria for budget development and highlight specific budgetary restrictions and requirements of selected agencies.  For multiple-year proposals, a budget for each year is usually expected, as well as a cumulative budget.

For further guidance refer to the “Uniform Guidance” section on the OGCA and SPA website.


Include only USA personnel and base amounts on actual salary figures.  Consult your College Business or Research Office prior to including an inflationary factor for future budget periods.
The budget should clearly describe the proposed effort of every person, or position, for which salary is requested. Sponsors may ask that effort be described either in terms of academic, summer, or calendar-year months. Others want effort described in percentages. When instructions are not explicit, such as in some foundation applications, the budget justification should clearly describe the contributed effort of every salaried project staff member.

Requested salaried must be supported by actual salary rate information. However, generally speaking, a strong justification will focus on the how the project will be accomplished with the proposed personnel.

Only USA personnel may appear as salaried persons in a project budget. Those not on the University payroll may be consultants, recipients of honoraria, or affiliated with an institution which will be receiving a subcontract from USA if the project is funded.

If personnel are contributing effort to the project for which they do not expect to be reimbursed, they should be listed as project personnel. Their effort should be described the same as the effort of paid personnel with “-0-“ showing on the budget forms, and their contributions clearly described in the budget justification.

Some agencies place restrictions on the amount of time they will support a faculty member during a given year and on the amount of salary they will pay. For example, generally NSF will only support two calendar months, and NIH caps the faculty member’s total salary to be allocated to the project.

Undergraduate students may work on grants and are usually hired as bi-weekly employees. Undergraduate work loads are necessarily limited to less than 20 hours per week and effort is usually described in hours.

Administrative and Clerical Staff may be supported by sponsored projects under very limited circumstances.  Only work directly related to the project objective can be budgeted as direct costs.  In general, clerical support is considered as reimbursed by indirect cost recovery.  All requests to direct charge administrative and clerical salary to a project must adhere to 2 CFR §200.413(c).

Normally, faculty members should not receive supplementary pay, that is, remuneration for additional work performed during their regular, 9-month appointment term, since they are already being paid for full-time service (100% effort). Payments for additional work during that period will usually be substitutive rather than supplementary.  In unusual circumstances, particularly when a department other than the principal investigator's primary appointment is involved, he or she may request permission from the Provost and Senior Vice President for Academic Affairs, with the approval of the appropriate dean, to receive reimbursement from grant funds above his or her regular salary. 

Grants may not be used to augment the salaries of staff. Policy does allow monthly employees to receive supplementary pay if they perform short- term tasks, conducted outside their work schedules, which are not related to their primary jobs, although this rarely occurs as part of funded projects.

Fringe Benefits         

Fringe benefits are charged based on the actual cost of each fringe (e.g. health insurance, life insurance, etc).  The University establishes estimating fringe rates for various categories of employees.  Actual fringe benefits are calculated as a percentage of the total salary for each individual employee.  The estimated fringe rates are intended to provide adequate funding to cover the actual fringe benefit costs that will be charged to sponsors. 

The current, estimated fringe rates can be found at:


Capital equipment is defined by the University as a permanent asset costing $5,000 or more per unit and having a useful life of one year or more. The cost of shipping and installation is included in the cost of the equipment.

Operational software is purchased in conjunction with hardware and is considered part of the purchase price. Software applications which are purchased separately are considered equipment if they meet the dollar threshold as described above per licensed user.

Leased software is not identified as capital equipment, regardless of cost.

Extended warranties are not capitalized and should go in the "other direct costs" category.

The budget should specify the name and manufacturer of the equipment whenever possible. Sponsors may want to see the manufacturer’s specifications and price list, particularly if the equipment is very expensive.


Lodging, meals, transportation, car rental, mileage, parking, taxis, registration fees (for travel expenditure procedures and allowable costs, refer to the USA Travel and Entertainment Regulations Manual).

Materials & Supplies

General office supplies, such as staples and pens, are not allowable on federal grants unless they are related to specific project activities rather than general departmental activities. This budget category can be supported by general descriptions of the type of supplies included and a best estimate of their cost.


External consultants may be individuals or firms, provide identical services to others as part of their primary business, provide expertise vital to the project, but do not have authority over the direction of the project and are provided with specifications defining their contribution to the project rather than a statement of work requiring discretion.

Consultants should be listed by name in the budget.  Information presented about the consultant should included the daily rate of pay, number of days of employment, any additional amounts to be paid such as travel and per diem, the consultant's primary affiliation and expertise, and justification of the need for consultant services

By statute, some federal agencies limit the daily rate of pay for consultants to that of an Executive Schedule Level IV Federal employee (exclusive of indirect cost, travel, per diem, clerical services, fringe benefits and supplies).  Before a consultant can be hired, a contract for the consultant's services must be reviewed and approved by both Sponsored Projects Administration and the Office of Grants and Contracts Accounting.


If another organization, a subrecipient, will be paid to conduct part of the proposed project, a subcontract is the most appropriate mechanism for the transfer of funds if the subrecipient will contribute to the scholarly or scientific conduct of the project as described in a statement of work.   Conduct of the subrecipient's portion of the project requires judgment, unique expertise, and original thought.  Subrecipient does not provide identical services to others as their primary business. Examples of identical services include the fabrication or repair of equipment, data processing, and routine analytical and testing services.

For every subcontract, USA must have a proposal which has been through an institutional review process and authorized by the appropriate person at the recipient institution.

This proposal must include the following documents:

  1. A statement of work
  2. A corresponding budget
  3. Written confirmation of the institution's willingness to participate in the project. It is critical that an institutional officer sign the confirmation.  A signature from the participating principal investigator, a department chair, or dean will not suffice to commit the institution.  The institutional confirmation may be either in the form of a letter to Sponsored Projects Administration or a signed agency cover sheet used as part of the subcontract proposal.
  4. If required by the sponsor, the recipient institution may need to provide certifications and representations.

When preparing the budget, include the total costs of each subcontract, including the recipient institution's fringe benefits and indirect costs, as a line item in the budget proposal.

Subcontracts will be issued by Sponsored Projects Administration when the award is received.

Duplicating and publication costs.


Includes participant costs, equipment less than $5,000, rentals, photo copying, communication costs.

Facilities and Administrative (indirect) Costs

Direct costs are those which can be identified specifically with a particular sponsored project and which can be directly assigned to such activities, relatively easily and with a high degree of accuracy. For example, the supplies needed for a research project are easy to identify; however, costs such as heating and air conditioning rooms and labs used by the project staff are not. The latter are indirect (facilities and administration), defined as those that are incurred for common or joint objectives, and which cannot be identified readily and specifically with a particular sponsored project.

Federal regulations provide principles for determining which costs are applicable to agreements with the government and identify which of those costs may be charged as direct and which must be charged as indirect costs. Furthermore, the rules state that the distinction between direct and indirect costs must be maintained consistently throughout the University regardless of the source of funding.

Where appropriate, use the F&A cost rate stipulated by the funding agency, i.e., ED only allows an 8% F&A cost rate on most of their programs. Use the appropriate negotiated rate with HHS where allowed by the funding agency  (See F&A Cost Rates). In computing the F&A cost rate, do not include any of the following charges: equipment, capital expenditures, charges for patient care and tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000. Approval for the use of a lower F&A cost rate than what is allowed by the funding agency must be secured from your Dean and the Office of Sponsored Projects Administration.  Any variations to approved F&A rates must be approved by the Vice President for Research and Economic Development.

Rate Changes - The federal government dictates that the F&A rate in effect at the time an award is made will be frozen throughout the life of the award. Even if the University negotiates a new set of rates with the government, those rates will not be used in continuations or supplements.

Please see the F&A Cost Rate Schedule at:

MTDC Base:

Modified total direct costs (MTDC), consisting of all salaries and wages, fringe benefits, materials, supplies, services, travel and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract).  Modified total direct costs shall exclude equipment, capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000.           

TOTAL PROJECT COSTS  =  Direct Costs + F&A Costs

Budget Justification

The budget justification is a narrative, usually two-three pages, explaining the calculations you used to determine the total cost for each budget category. It MUST match both the budget and the proposal narrative. For example, if the Principal Investigator is committing 25% of his / her time to the project, the 25% time should be indicated accurately in the proposal narrative, in the budget, and in the budget justification. Funding agencies are very knowledgeable of appropriate budget costs for what you propose to do. Underestimating or overestimating your budget could create, in the funding agency, a lack of confidence in your ability to successfully complete the grant. Preferably, the budget should be close to the average award size. If a significantly lower or higher budget is proposed, be sure to explain why, in detail, in the budget justification.

Key Points

Grants and Contracts Accounting must document, for internal and external audit purposes, the percentage of time of all key personnel listed on the grant, all in-kind contributions, and all cash contributions.  All in-kind contributions and cash contributions must be approved on the department and/or college level as well as Sponsored Projects Administration.  Contact the funding agency program officer for relevant budget questions.  Otherwise for standard types of questions, call the Sponsored Projects Administration office.  A budget justification should be included for each year of the proposal unless the guidelines state otherwise. Read the application guidelines very carefully and re-read several times prior to submission of your proposal.

Cost Sharing

On certain proposals the University may be required to cost share certain expenses with the funding agency. These issues should be discussed with the department chair, dean, and Senior Vice President for Academic Affairs, as appropriate, early in proposal development. All requests for the University to provide matching funds must be approved by the department, Dean, and University in advance.
▼   Rebudgeting and Prior Approval
Applies only to Non-College of Medicine


Actions that require prior approval are cited in the award documents for each sponsored project or in general agency guidelines.  Generally, administrative actions affecting the project’s scope, budget, period of performance, subcontractor changes, pre-award spending and key personnel, occurring after the initial award is made require either University or sponsor review and approval.  Other post award items such as travel and equipment acquisition may also require agency review and approval. For a list of typical prior approval items and general items needed for justifying the change, click here.

General Procedure for Prior Approval Requests

All post-award administrative actions requiring prior approval based on University or Sponsor regulations must be forwarded to the Sponsored Projects Administration (SPA) Office.  The request should be completed following the guidelines noted in this procedure and routed through the appropriate College Research Office prior to submitting the request to SPA for review.  

The SPA office will review the request in accordance with the sponsor’s requirements, the agreement terms and the justification provided. Approval or disapproval of the action(s) will be made by the SPA office as appropriate. If contract modification is necessary, the SPA office will ensure modification is fully executed prior to approving the request.

Re-budgeting Funds on a Grant or Contract


The budget plan is the financial expression of the project or program as approved during the award process. After a grant or contract has been awarded, the PI may determine that the approved budget allocations are not consistent with actual project needs. S/he may request the formal reallocation of funds from one spending category, or account code, to another account code category that better reflects the project requirements. This process is called Re-budgeting or Budget Revision.

Informal re-budgeting occurs when actual expenditures exceed or fall short of the allocated amount budgeted in an account code or when actual expenditures occur in an account code that has no budget allocation.  Many sponsors allow re-budgeting without prior approval while others require approval when re-budgeting into or out of a spending category exceeds a specified percentage of the award amount. If prior approval is not required then formal re-budgeting is not necessary, but may be requested to assist in budget management.  Principal investigators need to be aware of the specific requirements for their awards and to request prior approval for budget changes when necessary. 

Note: Re-budgeting to include animal care costs or human subject costs is not permitted without prior IRB and or IACUC approval.

When budget revisions are made in direct cost categories, there may also be an impact on the F&A costs to be charged to the project.  As an example, if funds budgeted for equipment, that were not included in the MTDC base for calculating the F&A cost, are expended for materials and supplies, then F&A costs will be assessed against those expenditures.

Note:Re-budgeting may have an effect on Facilities and Administrative (F&A) Costs

Re-budgeting Procedure

To request re-budgeting of funds on a grant or contract:

Determine if the sponsor of the grant or contract allows re-budgeting and whether prior approval is required.   (Note:  If the sponsor requires prior approval for re-budgeting that exceeds a certain percentage of the budget, care must be taken to ensure this limit is not exceeded when multiple re-budgeting events occur in a single budget period. For example: on NIH non-modular budgeted awards, sponsor concurrence is required when a single direct cost budget category deviates (increase or decrease) from the categorical commitment level established for the budget period by more than 25 percent of the total costs awarded.)

In all cases the justification to request a re-budget should, at a minimum, include the following explanation:

  • Is the re-budget moving budget to an allowable budget line, (e.g. student, aid, equipment, etc.)
  • Will the scope of the project change?
  • Include a technical justification provided for each line item change.
  • Confirm that there is budget in the account code being re-budgeted from.
  • Will F&A be impacted?  Does the re-budget request accurately calculate any changes to F&A? 

If sponsor approval is required:

Federal Sponsors with systems in place to request administrative changes, i.e. FastLane, NIH Commons, NOAA Grants Online:

  • Initiate the budget revision request in the appropriate online system and route for approval.  The SPA Office will review the online request and authorize the request to the sponsor.

Sponsors without online systems to request post award administrative changes:

  • Forward the letter form signed by the PI to request a re-budget to the Sponsored Projects Administration Office (SPA) for review and submission to the sponsor. SPA will request re-budgeting from the sponsoring agency.  Once approval from the sponsor is received it is sent to the Office of Grants and Contracts Accounting (OGCA) for processing in Banner.

If the sponsor does not require prior approval for rebudgeting:

Complete the Rebudgeting Form and appropriate justification request and submit to the responsible OGCA Grants and Contracts Analyst. Provide a justification/explanation for each budget line item impacted by the request. OGCA will review the re-budgeting request to determine if it is allowable, based on sponsor regulations or contractual agreements in the award documents.  If OGCA determines that prior sponsor approval is required, OGCA will forward the request to SPA.  The PI will then need to provide a letter to SPA, signed by the PI for SPA to submit to the Agency.  Re-budgeting requests that do not require sponsor approval will be completed within a week of receipt of your request.

OGCA will notify the college/department about the status of the request.

Impact of re-budgeting on F&A costs

When a sponsor allows re-budgeting between the direct costs and F&A costs, F&A costs must be also be re-budgeted for the increase/ (decrease) in F&A that may occur.  See examples: Rebudget Example 1 and Rebudget Example 2

Occasionally after an award is received the planned site where the project is to take place changes from on-campus to off-campus or vice versa. A change in location may have an impact on the F&A rate to be applied. Such a move will require formal re-budgeting.

When re-budgeting from direct cost categories that are exempt or excluded from F&A costs to categories not exempt from F&A cost, the amount being re-budgeted is reduced proportionately by the associated F&A cost of the non-exempt category.

No cost extension

The principal investigator must plan and direct the project work so that it will be completed within the time and funds authorized.  It is often necessary and appropriate to initiate a request for additional time with or without additional funds.  Requests for such changes should be initiated by the principal investigator, countersigned by SPA, and forwarded to the sponsor by SPA well in advance (at least 60 days) of the project expiration date.

All requests should contain a written justification that explains the following:

Federal Sponsors

Most federal sponsors allow the University to grant a one-time extension of a grant without additional funds up to one year.  We must still notify the federal sponsor of our intent to initiate this first extension.  Any further extensions of time require the prior approval of the sponsor.

Federal Sponsors with systems in place to request administrative changes, i.e. FastLane, NIH Commons, NOAA Grants Online, initiate the no cost extension request in the appropriate online system and route for approval.  The SPA Office will review the online request and authorize the request to the sponsor.

Non-Federal Sponsors

Non-Federal sponsors may require the formal execution of an amendment to the contract to effectuate changes or extensions of the terms and conditions of an award.

Documentation must be in the form of a letter (or official e-mail or other correspondence) from an authorized official of the sponsor approving the extension and/or modifying the active agreement.

Note that ANY charges incurred after the end date of the project and before the Sponsor's final approval is received are the responsibility of the PI and the Department.

Please click to see why a rebudgeting process is needed.

▼   Fabricated Equipment Procedure


A separate fund will be set up for fabricated equipment.  The department will let OGCA know that there will be fabricated equipment.  The department will also be responsible for making sure the completed equipment is properly tagged by the Property Office.


Fabricated equipment is defined as an item of equipment that is built or assembled in its original form from individual parts by a PI and/or other sponsored project personnel, an internal shop, or an external shop. When a completed item of fabricated equipment has an aggregate cost of $5,000 or more, when its service life is longer than one year, and when that item will be recorded as capital equipment in the University’s capital asset management system, the individual component costs associated with the fabrication (regardless of the individual amounts) will not be assessed the Facilities & Administrative (F&A) rate. However, fabricated equipment costs do not include routine maintenance and repair costs associated with a piece of fabricated equipment.  Furthermore, equipment that is fabricated as a deliverable to the sponsor where title to the finished product will be transferred to the sponsor should include F&A charges. An instance where components are simply connected together in a system, such as when individual computers and servers are joined to create a network, does not constitute a fabrication.


Fabricated equipment must be identified prior to acquisition of component parts. Please note the fabricated equipment deliverable in the statement of work.  In the budget justification, specific guidance concerning the fabricated equipment should include:

  1. The specific relationship the activity will have with the performance of the overall project scope,
  2. How the component costs will be accounted,
  3. The anticipated functionality,
  4. The value of the finished fabrication, and
  5. The expected ownership vesting of the equipment.

Costs that should be budgeted and charged to a sponsored account include materials and supplies necessary for the fabrication, as well as any internal or external shop service fees. Although project personnel may participate in the fabrication, their salaries will not be exempt from the F&A rate assessment. Only labor costs that are implicit in the internal or external shop rates will be F&A exempt. Labor, travel, and other costs associated with the services of an outside party in a fabrication should be incorporated in the external shop service fees.

If a fabricated equipment item will have an aggregate cost of less than $5,000, the individual costs for all acquisitions are subject to the relevant F&A rate. If you initially anticipate that the total fabrication will cost more than $5,000 and as such exempt the individual components from F&A but the final product ends up aggregating to less than $5,000 then all component costs will then be subject to F&A.

Once your project is funded and you begin procuring fabricated equipment components, you will charge those individual costs to the equipment account code series, but you will need to make a special notation on invoices prior to sending them to accounts payable. You must consult with your college business office prior to incurring fabricated equipment component costs so as to avoid administrative errors.

Remember: If ownership of the final product is to transfer to the sponsor, the F&A rate applies to the individual fabrication components.