99-2  Obsolete

Accounting for Cost Share  (Reissued as 03-4)
January 14, 1999

(Note: This Important Notice is being sent to Account Managers, Chairpersons, Deans and Chancellors. Please forward to others who have a need to know.)

There has been a renewed emphasis placed on cost sharing and its administration by the Federal government. As a result, the university established procedures for accounting for cost share have changed. This document replaces previous Important Notices (including 97-3) pertaining to cost sharing. Additional information regarding cost share can be found in OMB Circular A-110, section 23.

Definition

Cost share is defined as the project or program costs not borne by the sponsoring agency. In order to include an item as cost sharing it must be:

A. verifiable
B.  not included as a cost share to another grant or contract account without agency approval
C. necessary and reasonable for project
D. allowable and allocable under applicable cost principles
E. not funded from another grant or contract without agency approval
F. incurred within the time frame of the project

Additional Guidelines

• Unrecovered indirect cost can be used as cost sharing only with agency written approval.
• Salaries and benefits and equipment purchased for the project are the preferable methods of cost sharing because they are easily verifiable.
• Supplies and other costs should only be used where cost sharing is mandatory and cannot be met through salaries, benefits or equipment.
• Cost sharing should be limited in proposal preparation to only those costs making a direct contribution to the project. Excessive cost sharing causes additional work on everyone's part in verification and has an adverse effect on indirect cost rates. Voluntary cost sharing is discouraged.
• Cost sharing identified in the text of the proposal must be listed in the budget.
• All sources of university cost share should be easily identifiable in the budget. For example, differentiate between costs contributed by the department versus those contributed by the school or another unit.
• A letter of support, with specific reference to the cost sharing, from a third party source, must be included with the proposal. Written confirmation of third party support will be required at the time the final cost sharing report is prepared for the agency.
• The university is required by Federal guidelines to account for all cost share for all awards. This is true regardless of the granting agency involved and whether the cost share is considered mandatory or voluntary.

Procedures

As of January 1, 1999, cost share expenditures will be tracked in sub-accounts of C&G accounts. This change, originally announced in July ’98, is necessary to comply with Federal guidelines. Additionally, it is intended to address several operational deficiencies and to support the initiative to streamline the effort reporting process. The new procedures are as follows:

1. For each award, the account manager will be responsible for supplying C&G a valid account number as source account for cost share expenditures. Multiple source accounts are permitted. In order to avoid delays during award setup, the source account information should be provided in the original proposal budget.
2. C&G will setup a cost share sub-account on the grant account for each source account provided. C&G will also establish a budget for each cost share sub-account in accordance with the awarded budget.
3. The account manager will be responsible for ensuring that allowable cost share expenditures are charged to the cost share sub-account in a timely manner. Salaries should be distributed to the cost share sub-account using the Payroll Accounting Distribution document in the FIS.
4. The source account provided by the department will be debited for all expenditures booked against the cost share sub-account. A transfer of funds will be automatically created each day to charge for the expenses hitting the cost share sub-account.

Any questions regarding these matters should be directed to Contract and Grant Administration.