COST SHARING
PURPOSE
This statement explains cost sharing, the different types
of cost sharing and the proper documentation for each type. It also contains
the procedures which will be followed to verify that cost sharing commitments
are being fulfilled and to periodically obtain cost sharing data from campus
for financial reporting purposes. Also included in this statement are examples
of costs that are not allowable as cost sharing.
GENERAL GUIDELINES/APPLICABLE
POLICIES
Definitions
Cost sharing is the portion of total project
costs not borne by the sponsor. Other terms also used to
express more specific methods of cost sharing include matching, third-party
and in-kind contributions.
Cost sharing that is required by some sponsors (such as
EPA) is called mandatory cost sharing. Cost sharing included in
proposals that is not required by the sponsor is referred to as voluntary
cost sharing. However, it is the University's policy not to volunteer
cost sharing. Once cost sharing has been included in a proposal and
that proposal has been accepted by the sponsor, the University has an obligation
to provide the cost sharing proposed, regardless of whether it was mandatory
or voluntary. The terms required or committed cost sharing
are used to describe this obligation.
Post-Award Situations Which Require Cost Sharing
Cost sharing may become a requirement through reductions
in award amounts (as compared to what was requested in a proposal) unless
comparable reductions are made in the scope or objective of the work. The
reasons for reductions in award amounts should be clearly documented during
negotiations with sponsors to avoid unplanned or unnecessary cost sharing.
Examples of reasons for a reduction in award amount include original cost
estimate was too high, the scope or objective of the proposal was reduced,
or the sponsor wants the University to bear more of the project cost.
Principal investigators and other University employees
who spend a significant amount of time on sponsored projects that is not
reimbursed by the sponsor must document this as cost sharing. This is true
even if their time was not included in the proposal or award agreement
as cost sharing. Federal regulations require that significant cost sharing,
regardless of whether it was required by the sponsored agreement, be documented
to ensure accurate financial reporting.
Cost sharing may also be required to maintain the committed
level of effort on sponsored projects when re-budgeting results in significant
decreases in salaries of the principal investigator or other personnel
funded from the project that could impact the outcome of the work.
Applicable Regulations
University cost sharing must meet the following criteria
in order to be allowable:
1. Cost sharing must be verifiable from University records.
2. Expenditures documented as cost sharing must be necessary and reasonable for the proper and efficient accomplishments of project objectives.
3. Expenditures documented as cost sharing must be the types of charges that are allowable according to federal cost principles (See "Unallowable Cost Sharing" below and "Allowable Costs").
4. Cost sharing cannot be used or reported more than one time. If cost sharing benefits more that one project, it should be prorated in an equitable manner among the projects (e.g., based on % of each project's cost total to the combined projects' costs).
5. Expenditures supported by a federal project may not be used as cost sharing for another federal project unless specifically approved by the awarding agency.
6. Mandatory cost sharing must be disclosed in approved budgets when required by the agency.
7. If the requested funding is reduced then there should be a corresponding reduction of the cost sharing on a pro-ratio basis. This should occur during negotiations and prior to official acceptance of the award.
8. The following are unallowable as cost sharing:
Documentation Requirements for Cost Sharing
For documentation and reporting purposes, the University
has classified cost sharing into the following categories:
Effort
The effort of University employees for whom the University will fund salaries and related fringe benefits for the time that they work on a sponsored project. During the proposal process the University Employee Labor Cost Sharing (DOR-ELCS) form is completed to tentatively identify those individuals who will contribute a portion of their time to the project objective. Once an award is funded the University Employee Labor Cost Sharing (DOR-ELCS) form is completed to identify the approved individual contributing to the project.
Monthly After-the-Fact Certifications of Labor (AFCL)
forms are required to document the percent of effort contributed to the
project. The total effort reported on the AFCL forms must be 100% inclusive
of teaching, sponsored program cost charged directly to an award and applicable
cost sharing. (See statement for more information on the Monthly After
the Fact Certification of Labor Reports.
It is the responsibility of the Principal Investigator/Project Director (PI/PD) to assure that the committed level of effort for cost sharing is being met.
Non-Salary Matching Total Direct Cost
This includes supplies, travel, equipment, tuition and other total direct costs (except salaries and fringe benefits) which the University will fund. Documentation such as purchase orders, vendor invoices, journal vouchers, payment authorizations, travel authorizations and travel reimbursements should be maintained by the PI/PD.
Indirect Costs
Other Contracts and Grants
In some cases, cost sharing requirements may be met through expenditures on other contract and grant accounts. When this type of cost sharing is used, the accounts must be identified by the PI/PD. If less than total expenditures of the other contract or grant will be used to meet cost sharing requirements, object codes must also be provided. Based on account numbers and object codes provided by the PI/PD actual charges documented in FRS will be used to support this category of cost sharing.
For other contracts and grants to qualify as allowable cost sharing, the technical relationship between the projects must be established. The technical relationship to the project requiring cost sharing can be established by information cited in the other contract/grant proposal linking the work of the projects or by a certification from the Dean stating they have reviewed the other contract/grant and determined it to be technically related to the project requiring cost sharing. This memo should be provided to the Office of Contracts and Grants. Unless clearly disclosed in the proposal and accepted by the sponsor, a federal contract or grant cannot be used as cost sharing for another federal project.
Subcontractor
Subcontractors who have agreed, as part of their contract with the University, to participate in our cost sharing requirements make up this category of cost sharing. A standard clause should be included in subcontract agreements citing the subcontractors cost sharing and reporting responsibilities. Because subcontractors' cost sharing will never appear in the Universities accounting system, it is important to obtain this information from them periodically. Their documentation of actual cost sharing to date should be reported by expenditure category (salaries, fringes, equipment, their indirect costs, etc.). Copies of cost sharing documentation obtained from subcontractors must be provided to the Office of Contracts and Grants.
Third Party/Other
Cost sharing by a third party is not identifiable in the University's financial system. This type of cost sharing must be reviewed to ensure that it is allowable according to the University's agreement with the sponsor and that prior approval for this type of cost sharing has been obtained from the sponsor when necessary. In some cases, federal regulations will govern the valuation of third party contributions. Copies of these regulations are available upon request. Documentation provided by third parties should identify cost sharing by category (salaries, fringes, equipment, etc.) and the value of each. Copies of cost sharing documentation obtained from third party and other sources must be provided to the Office of Contracts and Grants.
Multiple Accounts Under Prime
This category of cost sharing can be viewed as a second tier of cost sharing which can develop when multiple accounts, referred to as sub-accounts, are established under one award. Sub-accounts are typically set up to facilitate the work of multiple principal investigators or colleagues of the principal investigator. In other words, when the approved budget is split for reasons internal to the University, some of the responsibility for cost sharing may accompany the sub-accounts. When this type of arrangement for meeting the University's cost sharing requirements occurs, the PI/PD must identify the sub-account numbers which have been delegated cost sharing requirements for each sub-account should be quantified by the categories described above (#1 through #6) and are subject to the same documentation and follow-up requirements as the prime account.
Unallowable Cost Sharing
1. Federal to Federal
Federal appropriations and contracts and grants funded directly or
indirectly through non-federal sponsors by the federal government are not
allowable as cost sharing for another federal project unless the source
of cost sharing was explicitly disclosed in the proposal and accepted as
cost sharing by the federal agency. Federal contracts and grants may be
used as cost sharing on any non-federal contractor grant unless prohibited
by either sponsor.
2. Expenditures Included In OH Rate
Costs that are recovered through the University's federally approved
indirect cost rates, such as building and equipment use, utilities consumption,
departmental administrative support and departmental office supplies are
not allowable as cost sharing. Questions regarding expenditures that are
recovered through indirect cost rates should be directed to the Office
of Contracts and Grants.
3. Double Counting
Cost sharing can only be committed and reported as cost sharing once.
If cost sharing expenditures relate to two or more projects, the expenditures
should be pro-rated in an equitable manner among the projects so that,
in total, it is only used and reported once.
4. Expenditures Incurred Prior To Award
Expenditure transactions which have already taken place in a period
prior to a project's begin date are not normally eligible as cost sharing.
For example, "cost sharing" the PI's effort during the previous
summer for an award with a project begin date of October 1, would not be
eligible as cost sharing. If equipment purchases or lab renovations included
as part of a proposal have already been completed, these may not qualify
as cost sharing. Depending on the agency. the terminology used and the
particular situation, each of these cases would require a review by the
Office of Contracts and Grants to determine if the expenditures would be
allowable by the sponsor. The Division of Research should be notified of
pre-award cost sharing so that they can be considered during negotiations.
5. Lack of Technical Relationship
If no technical relationship can be demonstrated between other contracts
and grants used as cost sharing and the project requiring cost sharing,
the other project expenditures are not eligible as cost sharing.
Non-Compliance With Cost Sharing Requirements
Failure to meet cost sharing obligations or to adequately document cost sharing can result in cost disallowances of contract and grant direct expenditures by the sponsor, thereby creating a liability for the University. It is the responsibility of the principal investigator and school to ensure University compliance with cost sharing regulations and procedures.
Procedures
1. Upon receipt of a new award, the Office of Contracts and Grants will review each project for cost sharing requirements.
2. If the Office of Contracts and Grants determines that cost sharing is required for a particular project, a cost sharing confirmation memo will be prepared and sent to the Principal Investigator/Project Director (PI/PD).
3. Principal Investigator/Project Director will be responsible for confirming all categories and amounts of cost sharing, supplying additional information needed for certain categories, and returning the memo to the Office of Contracts and Grants within 30 days of receipt.
4.Schools and Colleges are also required to report actual cost sharing that has occurred every three months and to submit documentation for certain categories of cost sharing. A standard follow-up memo will be prepared and distributed to the colleges for this purpose by the Office of Contracts and Grants. The memo should be completed, signed and returned to the Office of Contracts and Grants within 30 days of receipt.
a. Follow-up memos will not be sent to the Principal Investigator/Project Director if actual cost sharing to date can be quantified by the Office of Contracts and Grants. If the only types of cost sharing are effort, indirect costs, or other contracts and grants expenditures, and all after the fact certification of labor forms account information has been submitted to Contracts and Grants, it may not be necessary to require the school or college to report actual cost sharing to date.
b. Some agencies require that the University meet their cost sharing commitments by budget period rather than by project period. Based on agency regulations, the frequency of financial reporting and the project period, the Office of Contracts and Grants may determine that cost sharing follow-up on a more frequent basis is necessary to ensure compliance and accuracy of financial reporting.
5. Unresolved differences between Principal Investigator/Project Director confirmation and follow-up memos will be resolved between the Director of Contracts and Grants, Dean and the Principal Investigator/Project Director or Department Head.
6. At the close of a sponsored project, total project-to-date cost sharing which has occurred must be reported by the school or college within 30 days of the award end date, which is on the close-out notice prepared by the Office of Contracts and Grants.
Forms
1. Cost sharing confirmation memos and cost sharing follow-up memos will be prepared by the Office of Contracts and Grants and distributed to PI's/PD's in accordance with procedural requirements.
2. Instructions for campus' response to these memos are provided below.
3. Other related forms include the AFCL Contracts and Grants form which is explained in the Statement "After-the-Fact Certification of Labor Reports in this section.
Instructions for Completion of Forms
COST SHARING CONFIRMATION MEMO
Item/Description
1. The Office of Contracts and Grants will complete if possible the amount and categories of cost sharing based upon their review of information contained in the proposal and award documents. Whenever the amount of cost sharing can not be determined by Contracts and Grants, an asterisk will be placed in this category.
2. The PI/PD should review the information supplied by the Office of Contracts and Grants and confirm both the amounts and types of cost sharing. Amounts should be provided for any asterisked category. Changes in category or amounts should be entered and the total revised if necessary.
a. In addition to amount, provide account numbers and, if applicable, object codes for any cost sharing planned in this category.
b. In addition to amount, list all sub-accounts which will participate in cost sharing requirements.
3. Signature of Principal Investigator/Project Director and Dean or Department Head confirming the types and amounts of required cost sharing.
4. Telephone number where person who confirmed cost sharing can be reached.
5. Date that the form was signed.
COST SHARING FOLLOW-UP MEMO
Item/Description
1. The Office of Contracts and Grants will complete "Planned Cost Sharing" based on the cost sharing confirmation memo response.
2. The PI/PD respondent should review their cost sharing documentation and provide actual project-to-date cost sharing which has been performed through the date indicated and supporting documentation should be attached. The Office of Contracts and Grants will complete "Actual Cost Sharing" for:
a. Effort that is documented as cost sharing on effort reports via AFCL and through after the fact memos submitted to Contracts and Grants.
b. Waived indirect costs on direct expenditures.
c. Other Contracts and Grants for which account numbers have been supplied.
Additional cost sharing in these categories or differences should be included in the PI/PD's response on the follow up memo.
3. In addition to the amount of cost sharing which has occurred in the Subcontractors category, copies of cost sharing information provided by subcontractors must be submitted to the Office of Contracts and Grants.
4. In addition to the amount of cost sharing which has occurred in the Third Party/Other category, copies of cost sharing information provided by these sources must be submitted to the Office of Contracts and Grants.
5. Signature of person certifying actual cost sharing to date.
6. Telephone number where person certifying actual cost sharing can be reached.
7. Date that the form was signed.
M E M O R A N D U M
| TO: | |
| FROM: | Accountant, Office of Contracts and Grants |
| DATE: | |
| SUBJECT: | COST SHARING CONFIRMATION FOR ACCOUNT_________ |
Our records indicate that cost sharing is required for
this project. Please confirm or identify the type
and amount of cost sharing that will be used to fulfill the University's
cost sharing obligations in the
column labeled "College Confirmation".
| Cost Sharing | PI/PD |
| Per Agreement(1) (if determinable by C&G) | (2) Confirmation |
TYPE AND REQUIRED DOCUMENTATION
| $__________ | EFFORT (Salary and Related Fringe Benefits) | $____________ |
Cost sharing set-up form (C&G FORM) should be prepared
and forwarded to the Office of Contracts
and Grants within 60 days of project begin date. Cost sharing by EPA 9-month
faculty during the
summer and bi-weekly employees will require an after-the-fact memo rather
than a set-up form.
| $__________ | NON-SALARY MTDC | $____________ | |
The documentation (PO's, IDT's, TA's, PA's, etc.) for
this type of cost sharing must be maintained
by the college/school and should be identifiable as cost sharing for this
specific project.
| $__________ | EQUIPMENT & TUITION | $____________ |
The documentation for equipment, tuition and other Non-Salary
MTDC expenditures used to meet
cost sharing requirements must be maintained by the college/ school and
should be identifiable as
cost sharing for this specific project.
Page 2
| Cost Sharing | PI/PD |
| Per Agreement(if determinable by C&G) | Confirmation |
TYPE AND REQUIRED DOCUMENTATION
| $__________ | CONTRACTS AND GRANTS | $ 2a__________ |
Other contract and grant accounts which will be used to
meet the cost sharing requirements should
be identified by account number and object code (if total expenditures
will not be required) and
provided to the Office of Contracts and Grants when this memo is returned.
The Technical
relationship to this project must be established. This can be accomplished
by identifying explicit
statements in the other contract/grant proposal linking the work to this
project or should be certified
in a memo from your Dean based on his/her technical review of the project(s)
being offered as cost
sharing.
| $__________ | OVERHEAD ON COST SHARING | $____________ | |
In addition to direct costs which may be claimed as cost
sharing (Effort and Non-Salary MTDC),
indirect costs should also be claimed on indirect costs which qualify as
cost sharing if not prohibited
by the sponsor.
APPLICABLE RATE:_________.00%.
| $__________ | WAIVED OVERHEAD | $____________ |
Waived or reduced overhead used to meet cost sharing requirements
should have been approved in the
proposal process by the Vice Chancellor for Research. Based on the percentage
waived, this cost
sharing component is calculated based on the actual project-to-date salaries
and wages for this account.
PERCENTAGE WAIVED: ______.00
| $__________ | SUBCONTRACTORS | $____________ |
Approved subcontractors who have committed as part of
their agreement with the University to
participate in cost sharing requirements must provide documentation of
their actual cost sharing by
expense category (salaries, supplies, equipment, etc.). Their costs sharing
should be supported by
actual expenditures reflected in the subcontractors' financial accounting
records and are subject to
the same criteria for allowability as NC A&T SU cost sharing.
Page 3
| Cost Sharing | PI/PD |
| Per Agreement (if determinable by C&G) | Confirmation |
| $__________ | THIRD PARTY/OTHER | $____________ |
The documentation for third-party cost sharing should
include the cost sharing categories (salaries, supplies,
equipment, etc.) and the value of each. A copy of the guidelines for the
allowability and valuation of
third-party contributions will be furnished to you upon request. Statements
from third parties documenting
their actual cost sharing to date will be required by the Office of Contracts
and Grants every six months.
| $__________ | MULTIPLE ACCOUNTS UNDER PRIME | $___________ | |
Some or all of the required cost sharing for this project
is being met by other colleges with sub-accounts
established under this prime. Please list each account so that we may forward
a confirmation memo to
the college(s) responsible for the following accounts:
___________________________________________________________________
__________________________________________________________________
| $__________ | TOTAL | $___________ |
If the amount cannot be determined from the proposal or
award information the College should provide
amount in response.
This form should be completed and returned to the Office
of Contracts and Grants within 30 days.
Follow-up on all types of cost sharing will occur each six months until
the project ends. Please notify
us of any changes in planned cost sharing immediately. Additional information
about cost sharing, what
is allowable, and what is unallowable information, please call me at extension
5-2153.
| CONFIRMED BY: | (3)________________ | EXT: (4)______ | DATE: (5)_______ |
| PROJECT DIRECTOR |
M E M O R A N D U M
| TO: | |
| FROM: | Office of Contracts and Grants Accountant |
| SUBJECT: | COST SHARING FOLLOW-UP FOR ACCOUNT _____________ |
Please provide project-to-date cost sharing which has occurred by cost sharing categories listed below:
|
Actual (2) |
|||
|
Planned (1) |
Cost Sharing |
Period End of |
|
|
TYPE |
Cost Sharing (a) |
Through__/__/__ |
Source Report |
| EFFORT | $ ___________ | $ 2(a)_________ |
__/__/__ |
| BENEFITS | $ ___________ | $ ____________ |
__/__/__ |
| NON-SALARY MTDC | $ ___________ | $ ____________ | |
| EQUIPMENT & TUITION | $ ___________ | $ ____________ | |
| OVERHEAD: | |||
| (1)Direct Cost Sharing ___.0% | $ ___________ | $ ____________ | |
| (2)Waived/Reduced ___.0% | $ ___________ | $ 2(b)_________ | |
| CONTRACTS AND GRANTS | $ ___________ | $ 2(c)_________ |
__/__/__ |
| SUBCONTRACTORS | $ ___________ | $ 3 (b)________ | |
| THIRD PARTY/OTHER | $ ___________ | $ 4 (b)________ | |
| SUB-ACCOUNTS UNDER PRIME | $ ___________ |
||
| (Separate Confirmation Mailed) | |||
| TOTAL | $ ___________ | $ ___________ |
Page 2
(a) Based on information provided to the Office of Contracts
and Grants on cost Sharing
Confirmation Memo.
(b) Copies of cost sharing documentation obtained from
these non-University sources should be
returned with this memo to the Office of Contracts and Grants.
This form should be completed and returned to the Office
of Contracts and Grants within 30 days.
If "-0-" is entered for "Actual Cost Sharing" for any
of the planned categories, please indicate when
cost sharing will occur. Additional information about cost sharing and
expenditures that are not
allowable as cost sharing are located in the NC A&T State University
Administration Procedures
Manual, Section D. If you have any questions or need additional information,
please call me at
910-334-7683.
CLASSIFICATION: I certify that "Actual Cost
Sharing" documented above represents actual
expenditures which directly relate to and benefit this sponsored project.
| Completed By: | ______(5)_____________ | EXT: ____(6)___ | DATE: __(7)__ |
|
Project Director |