The Catholic University of America

Archived 4/17/09

Grants and Contracts Policy

I. Introduction

Externally funded research is an important component of the university's missions of research, instruction and service. To comply with federal, sponsor, and other regulations, and to properly account for research expenditures and revenue, the university provides the following guidelines for grant and contract accounting. Principal investigators are required to exercise oversight of the financial transactions and status of each grant and contract sufficient to ensure that charges are reasonable and necessary, allowable under the terms and conditions of the award, properly allocated to and among multiple awards and funding sources, and limited to funds awarded for the project.

This policy applies to all externally funded research at the university and to all faculty and staff who participate in this research.

II. Definitions

III. Agreements

All agreements for grants and contracts must be made in the name of the university. All contracts must be signed by a university official, generally the Provost or his designee. Any cost sharing arrangements must be approved in advance and must comply with the university's cost sharing policy. If a grant requires matching funds and fund raising is considered as a source of those matching funds, the grantee is required to obtain approval from the Vice President of Institutional Advancement before the grant proposal is submitted.

IV. Definition of a Grant or Contract

The correct determination of exchange transactions vs. contributions is critical for correct reporting of resources received in the university's accounting records. In addition to being reported properly in the audited financial statements, this determination directly affects the computation of the university's Facilities and Administration (F&A) rate for calculation of indirect cost recovery. The final determination of exchange transaction or contribution shall be made by the Office of Grants and Contracts.

Statement of Accounting Standards No. 116 (SFAS 116) "Accounting for Contributions Received and Contributions Made" defines an exchange transaction as "in-substance purchases of goods and services in which each party receives and sacrifices commensurate value."

SFAS 116 defines a contribution as "an unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary non-reciprocal transfer by another entity acting as other than an owner."

In general, funds received from sponsors are considered exchange transactions if they include one or more of the following conditions:

  • Investigator-initiated project specific proposals for research, training or public service activities
  • Sponsor has written policies concerning indirect cost recovery. The absence or prohibition of indirect costs does not automatically preclude an award from being an exchange transaction.
  • Provisions regarding ownership of intellectual properties
  • Requirement for delivery of specific goods or services by the university to a sponsor
  • Requirement for formal accountability to a sponsor in the form of fiscal and/or technical reports

V. Disclosure of Direct Grants

Grants issued directly to faculty and staff will be considered a potential conflict of interest and must be disclosed to the university through the annual Conflict of Interest Disclosure.

VI. Creation of a Project and Organization Account

Documentation required to create a project and organization account includes, but is not limited to: advertisement of funding availability or requests for proposals, proposal submitted, award document, correspondence providing direction or requirements related to the award, and other relevant documents. The principal investigator is required to submit all relevant documentation to the Office of Sponsored Programs who shall work with the Office of Grants and Contracts to create the project accounting structure.

VII. Expense Submission

Fundamental to all grants and contracts is the requirement that a particular grant or contract may only be charged for costs related to that project. The principal investigator best understands the scope of the project, the effort committed to it by faculty and staff, and the relationship of the project to other projects with which resources may be shared. The principal investigator is responsible for certifying to all effort expended on sponsored agreements.

Therefore, while the principal investigator may delegate day-to-day administrative activities, the principal investigator remains responsible for the financial management of the grant or project. All expense submissions must be approved by the principal investigator or his or her designee.

VIII. Revenue Recognition and Billing

Revenue is recognized, by the Office of Grants and Contracts, as expenses are incurred. Bills are generated and mailed directly to the sponsor by the Office of Grants and Contracts based on the contract specifications. The Office of Grants and Contracts is responsible for any draw-down of funds.

IX. Stipends and Fellowships

Guidelines for the awarding of stipends and fellowships are provided by the Office of the Vice President for Finance and Treasurer. All grants and contracts are required to comply with published guidelines. Not all awards allow for tuition remission and/or fellowships - grant restrictions which are more restrictive than university policy will override university policy.

X. Unallowable Expenses

Certain expenses are unallowable for reimbursement by the federal government. These expenses may be permitted under university policy and may be entirely valid and appropriate for the project, but they cannot be claimed as direct or indirect costs of federally sponsored projects. It is very important that all costs that are unallowable be classified as such, as failure to do so can have severe negative consequences for the university.

Office of Management and Budget (OMB) circular A-21 and other regulations define what is allowable and unallowable. Two general conditions define unallowable costs: 1) costs for an unallowable activity or 2) costs for an unallowable object.

Specifically Unallowable Activities:

  1. Organized fund raising
  2. Lobbying
  3. Commencement and Convocation
  4. General public relations and alumni activities
  5. Student intramural activities and clubs
  6. Defense or prosecution of criminal, civil, and administrative proceedings, including claims against the federal government
  7. Housing and personal expenses of university officers

All expenses in support of these activities are unallowable and are generally recorded in separate organizations or accounts to ensure that the transactions are identified for reporting.

Specifically Unallowable Costs

  1. Certain kinds of advertising and recruitment costs
  2. Alcoholic beverages
  3. Entertainment
  4. Fines and penalties
  5. Promotional materials (employee morale items are allowable)
  6. Moving costs if employee resigns within 12 months
  7. Certain types of travel costs (e.g., first class travel)
  8. Cash donations to other parties *
  9. Memberships in civic, community or social organizations
  10. Goods and services for personal use of employees (e.g., automobiles)
  11. Investment management costs

* While the university in general does not make donations, small contributions in certain cases may be permitted (e.g., cash in lieu of flowers as a memorial) by university policy, however, they would not be allowable under Federal regulations.

All questions about the proper recording of expenses should be directed to the Office of Grants and Contracts.

XI. Recharge Operations

Certain technical services, such as wind tunnels, melters, etc., may be used by a number of projects. These service centers may be charged to a number of grants and contracts. The Office of Grants and Contracts must review and approve the cost mechanism used for these charges, in advance of any charges.

For more information about recharge operations and service centers, see Campus User Practice Guide, Recharge Operations and Service Centers.

XII. Reporting

The Office of Grants and Contracts will provide financial report formats and training to principal investigators or their designees for oversight of grant and contract funds. Specialized reports may be created upon principal investigator request. The Office of Grants and Contracts shall be responsible for the timely submission of financial and property reports to sponsors as required by the contract agreement. Technical reports are the sole responsibility of the principal investigator.

XIII. Close Out of Grants and Contracts

Funds may not be obligated after the termination date of the sponsored agreement. The Principal Investigator is responsible for ensuring that all purchases of equipment, supplies, or services are completed prior to the close of business of the final day of the award period.

The Office of Grants and Contracts will work with the Principal Investigator to produce final reports of activity for the sponsor and to close out any remaining funds, under the terms of the agreement, as allowed by federal or sponsor regulations.

XIV. Federal Indirect Cost Proposal and Negotiation

It is the responsibility of the Office of Grants and Contracts to prepare and negotiate the Federal Indirect Cost Proposal.