96-3 Obsolete

Residual Funds on Fixed Price Awards
May 15, 1996

Recently, the Indiana State Board of Accounts mandated that when a sponsored project is complete, if there are residual funds in the account, they must be moved to an account outside of the contract and grant fund group. These funds will no longer be subject to the restrictions of the contract and grant fund group. On the Indianapolis campus the funds may be moved to a Designated Fund account, and on the Bloomington campus the funds may be moved to a Designated Fund account or a General Fund account. On other campuses, check with the campus Chart Manager to determine what account type is recommended.

Only direct charges should be transferred to the Designated or General Fund account; indirect costs that would have been applied should be transferred to the appropriate Responsibility Center income account. A transfer of funds document should be used. To calculate the direct cost, you divide the total amount of the residual funds by 1.x where x equals the indirect cost percentage. An example follows:

A fixed price award has terminated with a $1,000 residual cash balance. This award had an indirect cost rate of 30.4%.

To calculate direct costs, divide $1,000 by 1.304 to get $766.87. Then subtract that from $1,000 to get $233.13 indirect costs.

On the FROM side of the Transfer of Funds document, enter one line for direct cost ($766.87), with the grant account and object code 5199 - Transfer Out, and one line for indirect cost ($233.13), with the grant account and object code 5199 - Transfer Out.

On the TO side of the document enter one line for direct cost ($766.87), with your Designated or General Fund account receiving the funds and object 1699 - Transfer In, and one line for indirect cost ($233.13) with the RC income account and object code 1699 - Transfer In.

If you have any questions, please contact your C&G Analyst or Consultant, or contact Jennifer Foutty, Manager of Contract and Grant Administration, at 855-4884 or jfoutty@indiana.edu.