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Section 6: Accounting for Grants and Contracts

Grants and Contracts Accounting Practices

Effective Date:

11/20/09

Approved By:

Associate Vice President for Financial Affairs

Last Revised On:

06/11/18

For Assistance Contact:

Grants and Contracts Financial Services
Assistant Vice President, Financial Affairs and Controller

PURPOSE/SCOPE

This guideline outlines the accounting practices applied bythe University of Texas at San Antonio (UTSA) office of Financial Affairs torestricted funds received as grants and contracts (sponsored projects). For information onthe accounting practices of Grants and Contracts Financial Services in the officeof the Vice President for Research, see the UTSAResearch website.

AUTHORITY

In additionto Generally Accepted Accounting Principles (GAAP), Code of Federal Regulations Title2 Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards, governs accounting practices forgrants and contracts.

NOTE: 2 CFR 200 iseffective 12/26/14. UTSA has accepted the three year grace period for the UniformGuidance procurement requirements. Under this three year grace period UTSA will adhere to the old standard (OMB CircularA-110) for three full fiscal years after the effective date of the Uniform Guidance. For UTSA this grace period will end on August 31, 2018. For more information on the Uniform Guidance seeSponsored Project Procedure – CostAccounting Changes to Grants and Contracts.

UNIVERSITY GUIDELINES

Table of Contents

A. Overview

Theresponsibility for financial management of sponsored projects is shared by Financial Affairs and Grants and Contracts Financial Services (GCFS). This guideline addresses the activities for which Financial Affairs is responsible. Processes for which GCFS is responsible include, but not exclusively project activiation and closeout, billing and accounts management, and reporting. For more information on GCFS activities see the UTSA Research website.

B. Project Activation

GFCS is responsible or project activation, which includes asignment of Chartfields for the project in the UTShare/PeopleSoft system.

Sponsored projects are assigned a Fund, Function,Project ID and Department ID depending on the characteristics of each project,and all sponsored projects have an Activity ID of “1” (Activity ID is notsignificant for sponsored projects). Related Cost Centers may also be assigned for projects that involve cost sharing. For moreinformation on Project ID and other Chartfields, see FMOG - Chart ofAccounts.

Externally funded sponsored projects are classified ascurrent restricted funds in accordance with GAAP.

C. Project Expenditures and Transfers

The monitoring of expenditures is the responsibility of theOffice of Sponsored Project Administration (OSPA) and the applicable Research ServiceCenter (RSC). Edits also exist withinUTShare/PeopleSoft to aid in ensuring that expenditures are allowable andincurred within the specified performance period, and that sufficient funds areavailable. For more information see Sponsored Project Procedure - ExpenditureMonitoring.

FinancialAffairs processes cost transfers between Cost Centers, and GCFS processes costtransfers between projects that do not involve Cost Centers (transfers betweenprojects only). For detailed informationon cost transfers see Sponsored Project Procedure – CostTransfers.

D. Project Closeout

The closeout of sponsored projects is primarily theresponsibility of GCFS in coordination with OSPA/RSC.

E. Receivables, Billing, and Drawdowns

Grants and contracts receivable represent the amount owed to UTSA for expenses associated withsponsored projects.

GCFS is responsible for the billing,collection and reconciliation of grants and contracts receivable. GCFS prepares Line of Credit drawdownrequests for drawdowns from sponsoring agency systems. Financial Affairs performs the drawdownsbased on the requests from GCFS, and GCFS performs the related cash deposit reconciliations.

Despite efforts to ensure that funds are not drawn in advance, UTSA may receive federalfunds for a particular project prior to the expenditures being incurred. Anexample of this is U.S. Department of Defense contracts for which a payment schedule is provided and adhered to by the sponsor,regardless of the timing of expenditures.

The potential for the accrual of an interestliability on federal grants and contracts is identified by GCFS, and the information is forwarded to FinancialAffairs which posts accrued interest on a monthly basis.

If required, Financial Affairs remits interestover the amount of $250 per year to the appropriate federal agency at the closeof the federal fiscal year.

F. Reporting

GCFS prepares and submits all financial reports to sponsors includingaward closeout reports, as well as all reports containing primarily researchdata, such as the Statistical Research and Non-Research Expenditures Report andthe NSF Survey.

Financial Affairs prepares and submits the federal DisclosureStatement (DS-2), which outlines the cost accounting practices that UTSAfollows or proposes to follow. UTSA submitted a DS-2 to the Department ofHealth and Human Services in September 2008.

Financial Affairs also prepares and submits theSchedule of Expenditures of Federal Awards and coordinates other reports that requireinformation from both GCFS and Financial Affairs, such as the Sources & Uses Report.

G. Cost Sharing

Cost sharing is that portion of a sponsored project’s costsnot borne by the sponsoring agency. Either UTSA or a third party may contributecost sharing to a sponsored project. GCFS assigns related Cost Centers forprojects that involve cost sharing.

For more information on cost sharing see SponsoredProject Procedure - CostSharing.

H. Facilities and Administrative (F&A) Costs

Financial Affairs coordinates the preparation and submissionof the UTSA F&A Cost Proposal to the U.S. Department of Health and HumanServices. Rates are expressed as a percentage of modifiedtotal direct costs (MTDC).

The current F&A Agreement covers the period September 1,2015 through August 31, 2017. Current rates are:
  • Organized Research and Instruction — on campus – 47% MTDC
  • Other Sponsored Activities — on campus — 35% MTDC
  • All Programs — off campus — 26% MTDC

GCFS is responsible for F&A rate distributioncalculation and the related journal entries.

I. Fiscal Year-End Accounting

Year-end accounting activities conducted by FinancialAffairs include:
  • Inactivation of closed Project IDs/Cost Centers in UTShare/PeopleSoft
  • Preparation of schedules for the Annual Financial Report
  • Confirmation of state pass-through funds (GCFS is responsible for federal project-related confirmations)

J. Program Income

UTSA is accountable for program income generated fromsponsored project activities.

Examples of program income are:
  • Income from fees for services performed
  • Usage or rental fees charged for use of facilities or equipment
  • Funds generated by the sale of commodities developed by the project ( e.g., tissue cultures, cell lines)
Program income earned during the project period is retainedby UTSA and must be:
  • Added to the funds committed to the project to further eligible project or program objectives;
  • Used to finance the non-federal share of the project or program; or
  • Deducted from the total project or program allowable cost to determine the net allowable costs on which the federal share of costs is based.

If the awarding agency does not specify how program incomeis to be used, the first bullet above applies to all projects orprograms. Federal awards require prior approval from the awardingagency.

UTSA must account for program income using the same rules that apply to federalgrant funds. GCFS must be informedwhenever it is determined that program income will be generated. Incoordination with GCFS, Financial Affairs will determine the appropriate methodof accounting for the income and establish Project IDs/Cost Centers to recordthe income.

GCFS includes program income in financial reports as required by the awardingagencies.

DEFINITIONS

Term Definition
Grants Financial assistance agreementsfrom sources outside the university to carry out an approved project oractivity in support of the research, instruction or public service missionsof the university.
Contracts Written, legal agreementsbetween the university and an awarding agency normally involving the generation of a product, service or other consideration by the university inreturn for the sponsored support from the agency.
Modified Total Direct Costs (MTDC) Total direct costs allocable to a grant or contract excluding equipment, capital expenditures, tuition remission, rental costs, patient care costs, scholarships, fellowships, and participant support costs as well as the portion of each subcontract and subgrant inexcess of $25,000. MTDC represents the costs to which the F&A rate may beapplied to determine allowable indirect charges to a grant or contract.

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS

None at this time.

REVISION HISTORY

Date Description
06/11/18 Update definition of Modified Total Direct Costs.
06/26/17 Update related to grace period extended from two to three years and clarification of GCFS responsibilities.
09/01/15 Update to the Uniform Guidance purchasing rules deadline under Authority section.
09/01/15 Updatesrelated to the transfer of Grants and Contracts Financial Services fromFinancial Affairs to Research.
08/28/15 Updated Authority Section.
01/05/15 Update additional information from DEFINE to PeopleSoft.
06/04/14 Revise references from CFR to applicable Circulars
05/01/14 Updated DEFINE information for transition to PeopleSoft.

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