Troy University Sponsored Program Accounting

General Terms

A. Types of Funding Support

Contracts-- A contract is a legally binding agreement between one or more sponsor and the University. The terms of the agreement outline specific goals and requirements for goods and/or services to be provided to the sponsor by the University. It is routine for these goods or services to be provided on a specific schedule. The relationship between the sponsor and the University is one of procurement. This type of arrangement is not considered for public use but for the direct benefit or use of the sponsor. (Also see "Fixed Price Contract" in section C below.)

Grants-- A grant agreement is a legal instrument used when the principle purpose is the transfer of money, property, services, or anything of value to the recipient in order to accomplish a public purpose of support or stimulation.

Cooperative Agreements-- A cooperative agreement is used when substantial sponsor involvement is anticipated in the management and/or performance of the sponsored activity. In all other respects, a cooperative agreement is a grant-type instrument.

Subcontracts-- A subcontract is a contract that assigns some of the obligations of a contract to another party. The terms of the obligations are outlined in the same manner as described under contracts.

B. Source of Funding

The four major sources of funding from which the University receives sponsored agreements are as follows:

Federal--sponsored agreements funded directly by the United States federal government.

Federal Pass-Through--sponsored agreements where the University is not the prime contractor from the United States federal government, but is acting in the capacity of a subcontractor (federal requirements/restrictions are passed through the prime recipient from the federal government to the University).

Private --sponsored agreements funded by private corporations.

State--sponsored agreements funded directly by the State of Alabama.

C. Commonly Used Terms in Management of Contracts & Grants

Allowable Cost-- For purposes of OMB Circular A-21, an expense that can be included in the facilities and administrative cost rate proposal or included as a direct cost to federal sponsored agreements and is not specifically excluded by government regulations or by the contract/grant/cooperative agreements.

Budget-- Project director's financial plan that lists the categories of expenditures and dollar amounts required to carry out a project's objectives.

Budget Period-- An interval of time by which the project period is divided for budgetary purposes.

Carryover (carry forward)-- The remaining available budget balance of a project that may be used to increase the budget of the next budget period. Carryovers are not always automatic and are not always allowed by all funding agencies.

Cost Accounting Standards - (CAS)
CAS requires consistency in estimating, accumulating and reporting costs. The University of Alabama must comply with the following four CAS standards:

Cost Reimbursable Contract-- A cost reimbursable contract provides for payment to the University based on the University's actual cost experience in performing and completing the contract.

Cost Sharing-- The sharing of the costs of a sponsored agreement by the University. Cost sharing is typically done on grants, not contracts. Cost sharing can either be provided by released time, cash, indirect cost differential, or a combination of all. Cost sharing accomplished through the first two (release time and cash) must be recorded in a University cost sharing account.

Direct Cost-- Cost that can be clearly identified and directly allocated to a specific sponsored agreement.

Disbursement-- Payment made by the University for goods and services.

Encumbrances/Obligations-- The dollar amount of items ordered, services rendered, contracts awarded, or similar purchases that are outstanding or unpaid.

Equipment-- Items, non-expendable in nature, such as furniture, instruments, or repairable machines with a useful life of more than two (2) years.  The University's equipment threshold is $5,000.

Fixed Price Contract-- A firm fixed price contract provides for a payment to the University that is not subject to any adjustment on the basis of the University's cost experience in performing and completing the contract, i.e., billings are not based on actual expenditures. Note: Residual funds remaining at the end of the project will be transferred to the P.I./P.D.'s appropriate research overhead account. If the instrument is also a fee-for-service type agreement, it is likely that it is unrestricted funding which should be recorded as sales and services of educational activities and does not require a C&G account number.

Indirect Cost-- Costs associated with sponsored projects that cannot be clearly identified with or allocated to an individual project.

Principal Investigator / Project Director - (P.I. / P.D.) -- Institutional employee that has direct responsibility for carrying out the requirements of a sponsored project, for producing the final technical report and for providing the required deliverables.

Post-Award activity begins with the official funding and continues until the award is closed. Post-award activities are performed by Sponsored Program Accounting.
The life of a sponsored agreement begins with the University professor. He or she takes a workable idea and transforms the idea into a written proposal. The Office of Sponsored Programs coordinates the proposal and submits the proposal to the potential funding agency. The agency either accepts or rejects the proposal. Accepted proposals are funded and notifications of acceptance by the agency are sent to The Office of Sponsored Programs.  Sponsored Program Accounting communicates to the professor the new account number assigned to the award.  Sponsored Program Accounting remains actively involved until the award is officially closed.

Project-- The services or activities, mutually agreed upon, that the sponsored funding recipient will provide for a specified period of time.

Project Award-- The approval and funding of a project as detailed in the official award document. Specifies the amount of funding, project period, and any special requirements or restrictions.

Sponsored Agreement/Award-- Any contract, grant, or other agreement where the use of funds is restricted by the funding agency and there is some action required by the University (not a gift and not a fee-for-service contract).

Total Project Cost-- The cost of a sponsored project is comprised of allowable direct costs associated with the project performance and the allocable portion of the allowable indirect costs of the institution. This includes both the sponsor's share and the University's share (matching or cost share).

Unallowable Cost-- For purposes of OMB Circular A-21, an expense that can not be included in the facilities and administrative cost rate proposal and can not be charged as a direct cost to federal sponsored agreements.

Unit Cost Contract-- A unit cost contract provides for payments to the University based on the services provided for a particular unit or units produced. These payments are not subject to any adjustments based on the University's actual cost experience. This is a particular type of fixed price contract (see definition above).


Troy University Sponsored Program Accounting