701 Financial Administration Policy

701.1 Administrative Authority and Responsibility

The Senior Vice Chancellor for Finance and Business Affairs functions as the chief financial officer of the University. Subject to the approval of the Chancellor, the Senior Vice Chancellor for Finance and Business Affairs is in charge of the financial administration of the University and shall have custody and control of all its funds and securities. He/she is in charge of all the assets of the University, including physical property.

The Senior Vice Chancellor for Finance and Business Affairs is responsible for the development and implementation of all accounting records and procedures, the preparation and interpretation of all financial reports, and the internal control function. He/she is responsible for the preparation of the University budget and oversight control of the budget. He/she maintains financial records of all contract/grants and leases, compiles financial analyses, and coordinates the preparation of business and financial statistical reports.

701.2 Fiscal Accountability

Fiscal accountability for the efficient use of budgeted funds is assigned to senior administrators and department heads. For each approved annual operating budget, the Board of Trustees allocates to each department a portion of the University's current resources to be utilized to fulfill departmental responsibilities and to achieve long-range goals. The department chair is charged with the management of all budgeted funds in accordance with the guidelines set forth in this manual. Misuse or abuse of University resources is addressed in the Internal Audit section.

701.3 Fiscal Authority Required for various transactions

PURCHASE REQUISITIONS must be approved by the department chair, the Senior Vice Chancellor for Finance and Business Affairs, and/or Director of Purchasing before a purchase order may be issued. The Purchasing section will expand upon this authority level.

APPLICATION FOR OUT-OF-STATE-TRAVEL must be approved by at least one approver as designated in Section 701.4.II

TRAVEL REIMBURSEMENT REQUESTS must be approved by at least one approver as designated in Section 701.II before payment may be processed.

ALL INSTITUTIONAL CONTRACTS FOR SPONSORED PROGRAMS (GRANTS AND CONTRACTS) AND LEASE, MAINTENANCE, AND CONSULTING AGREEMENTS must be reviewed and approved by the Senior Vice Chancellor for Finance and Business Affairs or designee.

More stringent approval levels may be implemented during certain budget situations.

Approved: Cabinet, February, 2018
OPR: SVC, Finance and Business Affairs

701.4 Troy University Contractual, Financial, and Personnel Authority Level

Implied in the authority levels set forth in this document is the understanding that appropriate personnel at the subunit levels have reviewed and provided appropriate input on these approvals.

  1. Lease Agreements, Independent Contractors, Consultants, Maintenance Agreements, Licensing Agreements, and Other Types of Performance Contracts 1 (This does not include employee contracts or construction contracts.)
         
    A. $2,500 and under for a period of one year or less provided funds are in the department/college budget. Information copy provided to next level supervision. Associate Deans, District Directors, Campus Directors
         
    B. $2,501 to $5,000 for a period of one year or less, provided funds are in the department/college budget. Deans, University-wide Directors, Associate Vice Chancellors
         
    C.

    $5,001 to $20,000 for a period of one year or less, provided funds are in the department/college budget.

    Vice Chancellors
         
    D. $20,001 to $30,000 for a period of one year or less. Senior Vice Chancellors,Athletic Director
         
    E. Contracts for $30,001 and over and all contracts for more than one year regardless of financial obligation. Chancellor
         
    F. All contracts are required to meet the specifications of the Alabama bid law, University guidelines and policy, and other applicable state statutes and laws. All contracts must be acceptable under the guidelines and requirements of the State of Alabama Department of Examiners of Public Accounts.
       
    G. Paper copies of all new contracts and leases must be approved by the Purchasing Department on the Troy Campus prior to performance.
       
    H. In cases where travel will be reimbursed to Independent Contractors or Consultants, maximum travel limits must be defined in contract.
    I. In cases that may require a series of contracts that in total exceed the above authority levels, the total of the contracts will dictate the authority level at which the event or project must be approved.
       
  2. Authority Levels for Approving Travel (in-state and out-of-state travel)
         
    A. $500 or less Associate Deans, District Directors, Campus Directors
     
    B. $501 - $1,500 Deans, University-wide Directors, 2 Associate Vice Chancellors, Vice Chancellors, Senior Associate Athletic Director
     
    C. $1,501 to $2500 3 Senior Vice Chancellors, Athletic Director
     
    D. Over $2,500 Chancellor
     
    E. All travel must meet the requirements set by the State of Alabama and internal requirements established by the Senior Vice Chancellor for Finance and Business Affairs.
     
    F. Any travel outside the State of Alabama is considered out-of-state travel.
     
    G. Chancellor must approve all travel outside the United States.
       
  3. Purchasing Authority (Instructional Materials, Supplies, Equipment, etc.) 4
         
    AMOUNT    
    A. $1,500 or less Department Chairs, Area Coordinators, Campus Directors
         
    B. $1,501 to $3,000 Associate Deans, District Directors, Campus Directors
         
    C. $3,001 to $5,000 Deans, Associate Vice Chancellors, University-Wide Directors, Vice Chancellors, Senior Associate Athletic Director
         
    D. $5,001 to $20,000 5 Vice Chancellors
         
    E. $20,001 to $30,000 5 Senior Vice Chancellors, Athletic Director
         
    F. $30,000 + Chancellor
         
  4. Personnel Authority 6
    A. Classified Positions
    1. The Senior Vice Chancellors, Athletic Director and Campus Vice Chancellors have the authority within the cost centers for which they are responsible to hire classified personnel for positions that previously have been approved and are budgeted.
    2. All proposed new classified positions must receive approvals through the appropriate administrative channels and receive the final approval of the Chancellor.
    3. All classified personnel salary upgrades, promotions, and reorganizations must move through appropriate administrative channels and receive the final approval of the Chancellor.
    4. All cost-of-living raises that affect the majority of employees must be approved by the Board of Trustees.
    B. Professional Personnel
    1. The Senior Vice Chancellors and the Athletic Director have the authority to approve the filling of vacant professional positions that have been previously approved and budgeted for which the salary is $35,000 or less.
    2. All vacant professional positions for which the salary is more than $35,000 must receive approvals through appropriate administrative channels and the final approval of the Chancellor prior to being filled.
    3. All new professional positions, reorganizations involving professional positions, or other actions impacting the salaries of a professional position must be approved through appropriate administrative channels and receive the final approval of the Chancellor.
    4. Any personnel contracts that exceed four years must be approved by the Board of Trustees.
    C. Faculty Appointments, Promotions, and Tenure
    1. All finalists for full-time faculty positions must be interviewed and processed through appropriate academic channels including the Senior Vice Chancellor for Academic Affairs and the Chancellor.
    2. All full-time faculty appointments must be approved through appropriate administrative channels and by the Senior Vice Chancellor for Academic Affairs and the Chancellor.
    3. All recommendations for faculty promotions and tenure must be reviewed by the tenure and promotion process as outlined in the faculty handbook. Upon recommendation by the appropriate committee and the recommendation of the Senior Vice Chancellor for Academic Affairs, the Chancellor will be the final approving authority for all faculty promotion and tenure appointments.
    4. Adjunct faculty must be certified by the appropriate academic officials, prior to being appointed. Adjunct faculty contracts must be approved by the Senior Vice Chancellor for Academic Affairs or designee who will ensure the contracts are paid according to established and published University pay standards. Exceptions to these pay standards must be approved by the Senior Vice Chancellor for Academic Affairs.
    D. Part-Time Personnel
    1. New part-time positions (classified, professional or graduate assistants) must be approved by the Chancellor.
    2. Replacement of budgeted, approved part-time positions or graduate assistants may be approved by Associate Deans, Campus Directors, University-wide Directors, District Directors, or Vice Chancellors.
    3. New Workship positions must be approved by the appropriate Senior Vice Chancellor or Athletic Director. However, the total expended for Workship for each division cannot exceed the budgeted amount. The Senior Vice Chancellor for Finance and Business Affairs prepares a report annually to the Chancellor, and any overages must be justified to the Chancellor.
    4. Replacement for budgeted, approved Workships are to be approved by Deans and University-wide Directors.
  5. Supplemental Pay for Employeees - Periodic (usually one-time) payments to employees for performing a specific task or duty for the university outside the scope of their normal job description.
       
    A. All supplemental pay requests for regular employees must be approved by supervisors, as well as any department head, department chair, and/or dean. In addition, all supplemental pay requests (except adjunct contracts, summer contracts, grant-funded requests, and payroll corrections/adjustments) must be approved by the appropriate level approval authority as follows:
      1. $1 - $100 – Department Head, Department Chair, or Dean  
        2. $101 - $750 – Above, in addition to the Senior Vice Chancellors, Athletic Director and Vice Chancellors (for cost centers under his/her control)
        3. $751 and above – Above, in addition to the Chancellor
       
    B. All adjunct contracts, overload contracts and summer contracts must be approved by the department chair and the dean of the appropriate college.
       
    C. All externally-funded supplemental pay requests for employees must be in accordance with section 702 Grants & Contracts Policy and must be approved by the external funding partner along with University approval by Sponsored Program Accounting; Sponsored Programs; and the appropriate approval authorities as noted in Paragraph A above.
    D. Adjustments to correct errors, back-pay, pay-out of annual leave, and others types of payroll adjustments may be approved and paid/adjusted as necessary by the Payroll Coordinator.
       
  6. Stipends for Employees On-going (with beginning and end date) payments for assuming additional duties and responsibilities for the University.
       
    A. Because of their on-going nature, all stipends for regular employees must be approved by supervisors, as well as any department head, department chair, dean, and vice chancellors (for cost centers under his/her control). In addition, all stipends (except adjunct contracts, summer contracts, grant-funded requests, and Payroll corrections/adjustments) must be approved by the appropriate Senior Vice Chancellor/Athletic Director and Chancellor.
       
    B. All adjunct contracts, overload contracts and summer contracts must be approved by the department chair and the dean of the appropriate college.
       
    C. All externally-funded supplemental pay requests for employees must be in accordance with section 702 Grants & Contracts Policy and must be approved by the external funding partner along with University approval by Sponsored Program Accounting; Sponsored Programs; and the appropriate approval authorities as noted in Paragraph A above.
    D. Adjustments to correct errors, back-pay, pay-out of annual leave, and others types of payroll adjustments may be approved and paid/adjusted as necessary by the Payroll Coordinator.
       
  7. Facilities Improvement Projects Authority
       
    A. The Senior Vice Chancellors may approve facility improvement projects up to $30,000. Prior to approval facilities improvement projects should receive review through the University Director of Physical Plant and the Senior Vice Chancellor for Finance and Business Affairs.
       
    B. All requests for facilities improvements over $30,000 require a preliminary plan to be submitted to the appropriate Senior Vice Chancellor and then to the Senior Vice Chancellor for Finance and Business Affairs who will in turn coordinate the request with the Chancellor. Upon approval of the preliminary plan, a request will be made to the Director of Physical Plant for the development of a final detailed plan including cost. Final approval will come through the Senior Vice Chancellor for Finance and Business Affairs and the Chancellor.
       
    C. All facilities improvement projects must meet the requirements of the Alabama bid law, public works statutes, and other state statutes and regulations pertinent to construction and facilities improvements. Facility improvements and new space allocation must be reported to the appropriate official for proper documentation in the University’s space inventory system.
       
Approved: Cabinet, February, 2018
OPR: SVC, Finance & Business Affairs

702. Grants and Contracts

Grants and contracts are awarded to the University by federal and state agencies, corporations, and foundations. Departments with
project oversight are responsible for the administration of sponsored program activities in compliance with all state and sponsor
imposed guidelines and restrictions. Financial reporting for sponsored programs rests with the principal investigator. Invoicing on
sponsored programs must be submitted to Accounting Services for approval before the invoice is sent to the sponsor.

702.1 Sponsored Program Accounting

General Terms

Extramural Funding: This is a general term for money that comes from outside the University that is used to support a program or project. It may come from federal, state or local governments, business, private foundations, or individuals.

Contract: In this context, a contract is generally an agreement to provide a product or service which is of direct benefit to the awarding agency. Contracts provide for payments to the University which cover allowable project costs or payment of a fixed price for satisfactory completion of the project.

Grant: A grant is an agreement to accomplish something for the public good in exchange for money, property or services. Most federal agencies use a grant document for research awards to universities.

Cooperative Agreement: A cooperative agreement is like a grant except that the federal government will be closely involved in the activity that is being funded, perhaps bringing government personnel to campus to work on the project.

Fixed-Price Contract: Payment for this type of contract is based on satisfactory performance. Payment is set and cannot be adjusted because of how much it costs to meet the terms of the agreement, whether more or less than the contracted amount.

Cost-Reimbursement Contracts and Grants: The sponsor will reimburse the University for any actual, approved project costs, within whatever variances the funding agency allows.

Budget: A budget identifies the types of costs and the estimated amounts needed to complete the project. The budget must be approved by the funding agency and Troy University. This budget will be the basis for authorizing any expenditures on the project and the basis for seeking payment from the funding agency.

Generally, funding agencies recognize that there may be differences between the estimated and the actual expenditures for different elements of a project. The degree to which these variances are allowed may depend on federal regulations or on the specific terms of an agreement.

Direct Costs: These can be specifically identified with a particular project with a high degree of accuracy. If, for example, a person spent 50% of their time on a project, 50% of the salary and benefits would be direct costs. Travel, equipment, supplies or services used specifically for a project are examples of direct costs.

Indirect Costs: These are general costs that cannot be clearly identified with a specific project, but are nonetheless necessary to the project. For example, costs of maintaining a building, administrative expenses, or library expenses are types of indirect costs. Indirect costs, based on rates approved by the federal government, should be included in the approved project budget. These are then charged to specific contract/grant accounts in accordance with the terms of the agreement.

Cost Sharing: This refers to costs that the funding agency doesn't pay. It may be Cash Cost Sharing, In-Kind Cost Sharing, Third-Party Cost Sharing or Indirect Costs. These costs are generally covered by the University. In some cases, a third party may provide cost sharing support.

Total Project Costs: Direct costs plus indirect costs. This includes the granting agency's share, the University's share, and, in some cases, it may include a third party's share.

Program Income: This is income earned by the University that is directly generated by a supported activity or earned as a result of the contract or grant. Examples are registration fees for sponsored workshops or conferences and the sale of items fabricated under an award.

Duration: Every agreement should have specified beginning and ending dates. All expenditures must be incurred or encumbered during this period. If expenditures fall outside this period, they cannot be reimbursed or used as cost sharing. In some cases, pre-award costs may be approved by the sponsor or the Vice President for Research. Some aspects of this rule do not apply to fixed-price contracts.

Research and Development Terms

Research: Systematic study that is undertaken in order to gain a fuller scientific knowledge or understanding of a subject.

Basic Research: Research for the purpose of gaining a fuller knowledge or understanding of a subject without seeking specific ways to put that knowledge to work in new processes or products.

Applied Research: Research that seeks knowledge or understanding so that recognized and specific needs might be met.

Developmental Research: Putting information gained from research to use to create new products or processes.

Note: Research and Development do not include training of scientific personnel, mapping and surveys, routine product testing, quality control, experimental production, and collection of general-purpose statistics that aren't part of a specific research and development project.

Classification of Sponsored Projects by Their Major Functions

Organized Research: All research and development activities of an institution that are separately budgeted and accounted for by project. This includes specific research projects funded by Troy University as well as extramurally-funded projects.

Instruction: Except for research training, instruction includes all teaching and training, whether for credit toward a degree or certificate or on a non-credit basis. It includes:

(1) Sponsored Instruction is specific instructional or training activity established by a grant, contract or cooperative agreement.

(2) Departmental Research is research, development and scholarly activities that are not organized research and are not separately accounted for by specific project. Departmental research is considered by A-21 to be a part of the Instruction function.

Other Sponsored Activities: Programs and projects supported by outside sponsors that involve performing work other than instruction and organized research.

Some Important Federal Documents

Federal regulations require universities to be consistent in the handling of costs, regardless of the type of funds involved. Therefore, Troy University applies the guidelines cited in these Office of Management and Budget circulars to all contracts and grants from all funding sources:

OMB Circular A-21 establishes the principles for determining costs applicable to grants, contracts and other agreements with colleges and universities. These principles are to be used as a guide in the pricing of fixed price agreements and apply to direct costs and indirect costs.

OMB Circular A-110 provides a public declaration of the standards to be used by federal agencies and colleges and universities in the administration of grants and other agreements. This does not include contracts that are administered under procurement laws and regulations.

OMB Circular A-133 states audit requirements and provides policy guidance to federal agencies and colleges and universities regarding the institutions' financial records, internal control structure, and compliance with applicable laws and regulations.

702.2 Cost Sharing

Granting agencies may require the University to bear some of the costs of a sponsored project, with a third party sometimes providing support. Support which is not  provided by the primary granting agency is called "cost sharing."

Any cost sharing commitment must be approved by the department head, dean or director, and the appropriate vice president.

Generally, funds from the granting agency and cost sharing funds should be spent at about the same rate throughout the project: for example, when 10% of grant funds have been spent, 10% of cost sharing funds should have also been spent. This provides even support by both parties throughout the project and prevents some problems at the end of the project.

Granting agencies may accept several methods for cost sharing. It is important that both the method and the amount of cost sharing are clearly stated in the written agreement.

702.3 Indirect Costs

If indirect costs are the approved method for University cost sharing, the indirect costs are forfeited, meaning that the University gives up the right to be paid by the sponsoring agency for these indirect costs.

No special account or certification is needed for this method of cost sharing. If a cost sharing report is required, Sponsored Program Accounting will compute the forfeited indirect costs and prepare the report.

702.4 Fixed-Price Contracts

Payment for a fixed-price contract is based on successfully providing the goods or services agreed to in the contract. A fixed-price contract is not adjusted when it actually costs more or costs less to complete the project than the price initially agreed upon. One of the greatest benefits of fixed-price contracts is the reduced amount of administrative burden for the University and the funding agency.

It is very important that all fixed-price contracts be clearly identified as such in the written agreement.

All projects costs, including indirect costs, are to be charged to the contract/grant account. Indirect costs, at Federally-approved rates, should be included in the proposal or contract budget and subsequently charged to the account.

In some cases, money may remain in an account after a fixed-price project has been completed, all bills have been paid, and all payments have been received from the sponsor. If the University's policies regarding project costs and indirect cost recovery have been met, the University may allow the administering department to use the remaining funds.

In order to do this, a request for extension of the contract/grant account should be sent to the Office of Sponsored Programs. This request should state that the project has been completed. If more than 10% of the funds remain after completion, please explain why they were not needed. If the full recovery rate for indirect costs had not been used previously, adjustments will normally be made to recover those costs; that is, additional indirect costs will be charged to the account. Any additional expenditure will be subject to the full indirect cost rate. This policy will be followed consistently for all fixed-price contracts.

UNREIMBURSED CONTRACT/GRANT COSTS: Federal regulations require that actual project costs in excess of the award amount cannot be transferred to an account with an A-21 code different from the contract/grant account. For example, "organized research" costs cannot be transferred to an "instruction" account. This applies to other types of unreimbursed sponsored project costs also. It does not apply to costs that have been charged to the contract/grant account in error.

702.5 Policy to Facilitate Final Billing and Reporting for Contracts and Grants

Effective August 1, 2005

Sponsored Program Accounting is responsible for the preparation and submission of invoices and financial reports to the agencies that provide funding for sponsored projects. These financial documents are prepared based on information in the University's accounting records and on special requirements of the sponsors. After the expiration date of a sponsored project, the University has a specified number of days to submit the final invoice or final financial report. A late submission could result in a loss of money to the University. The deadline for final reporting on Federal grants normally is 90 days from expiration. For contracts (Federal or non-Federal) the specific deadline for final financial reporting is given in the agreement; common deadlines are 30 days, 45 days, 60 days, or 90 days from expiration. The deadlines for cost share accounts are the same as for the sponsored accounts.

If the final financial reporting deadline is 90 days after expiration, all project costs must be processed through the accounting system with 60 days after expiration.

If the final financial reporting deadline is 60 or 45 days after expiration, all project costs must be processed through the accounting system within 30 days after expiration.

If the final financial reporting deadline is 30 days after expiration, all project costs must be processed through the accounting system within 2 weeks after expiration.

In order to comply with sponsors' financial reporting deadlines in an orderly and efficient manner, recipient departments should pay all bills promptly, particularly near the end of the project. The financial manager in each department should be aware of the expiration dates and deadlines for each sponsored project in the department and should make any needed adjustments in a timely manner. If any orders are placed near the end of the project, the department should notify the vendor of the deadlines involved to ensure delivery of the products and receipt of the invoice within the time available. (Normally, all products should be delivered while the sponsored project is still in process; otherwise, the costs could be disallowed since they were not received in time to benefit the project.) If salaries and wages are being charged to the contract/grant account, the departments should ensure that steps are taken to reassign employee salaries and wages to other accounts, as appropriate, when the project is over.

Under this policy, Contracts and Grants Accounting is authorized to submit final invoices and financial reports based on the deadlines noted above for processing projects costs through the accounting system. It is, therefore, critical that the recipient departments pay all project costs within these deadlines to ensure that the University is reimbursed for all allowable project costs. Please note that unreimbursed project costs must be covered by the college/school/department involved.

1 All contracts must have appropriate legal review and scrutiny and must reflect that they have been reviewed by the appropriate financial officer to ensure that they are consistent with financial policy and sate laws regarding expenditure of public funds.
2 Director of Human Resources, Controller, Director of Sponsored Programs, Director of Physical Plant, Director of Student Financial Services, Director of Purchasing, Director of Student Development/Counseling, and Director of Auxiliary Services
3 Multiple travelers to the same event for which the expenses exceed $1,500 requires approval of Senior Vice Chancellors.
4
Notes: a. Purchasers must adhere to Alabama state bid law. Senior Vice Chancellor for Finance and Business Affairs and Director of Purchasing will monitor for cumulative costs that exceed bid law.
b. Where appropriate and applicable, purchasers should use institutional and state bid contracts.
c. Purchasers should be coordinated within a college or division to ensure maximum financial benefit to the University.
5 Purchases in this category that have a significant impact on a particular campus should be coordinated with the Campus Vice Chancellor.
6 When making personnel appointments on the respective campuses, the Executive Vice Chancellor and Senior Vice Chancellors will coordinate and communicate with Campus Vice Chancellors regarding personnel decisions to ensure continuity and campus integrity.

702.6 Policy on Allowable Cost for Grants and Contracts

Purpose

This document provides guidance on appropriate budgeting and expenditures of sponsored funds, whether from federal or non-federal sources and whether directed toward research, training, or other purposes.

All federal awards issued after December 26, 2014 must comply with OMB CFR 200 Uniform Guidance, the basis for this document. Most awards issued before that date must comply with OMB Circular A21 (unless the agency has notified TROY of adoption of the new guidelines). There are a limited number of areas where the Uniform Guidance differs from previous federal regulations, specifically OMB Circular A-21. These include, but are not limited to, administrative and clerical expenses, direct charges of computing devices, visa costs for recruiting purposes, and expenses relating to fluctuations in exchange rates.

Who Should Use This Guidance

All Principal Investigators and administrators at Troy University within all schools, units, divisions, University-wide initiatives, and centers who are responsible for budgeting and expenditures charged to sponsored awards must comply with these guidelines.

Key Cost Principles for Sponsored Awards

This guidance is based on the interpretation of federal regulations, and adherence is required for all sponsored awards.

For any costs to be charged directly to a federal award the expense must be:
   
1 Allowable under both the provisions of federal guidance AND the terms of a specific award
   
2 Allocable: the expense can be associated to a project with a high degree of accuracy
   
3 Reasonable: the cost reflects what a “prudent person” would pay in a similar circumstance
4 Charged consistently as direct expense (versus an indirect cost).  Note that certain types of projects constitute exceptions to the consistency requirement.
An expense is a “direct cost” if that expense can be identified specifically with a particular sponsored project or other activity with a high degree of accuracy.  “Indirect costs” (sometimes referred to as facilities and administrative (F&A) costs or overhead), are costs that benefit many activities (e.g., building operations and maintenance, IT expenses, security, administrative personnel such as grant managers, etc.).  F&A costs are recovered through the federally negotiated rate.  Costs incurred for the same purpose in like circumstances must be treated consistently as either direct expenses or indirect costs.

Treatment of Specific Types of Expenses for Sponsored Awards

This section provides guidance for some of the more common types of costs associated with federal research expenditures. Refer to the Cost Principles in Subpart E, §200.400-200.475 of the Uniform Guidance for the full listing of types of costs. Please contact your Sponsored Program Accountant with any specific questions.

In general, there are three categories of expenses:
   
1 Direct Expenses – These expenses can normally be directly charged to federal awards.  However, the terms and conditions of the sponsored award must be reviewed prior to determining the appropriateness of expenses for each individual project.
   
2 Indirect Costs – Sometimes referred to as facilities and administrative (F&A) costs or overhead, these expenses may not be charged as direct expenses to federal awards unless the costs meet the “unlike purpose and circumstances” criteria.
   
3 Unallowable Expenses – These costs may not be charged to a federal award either as a direct charge or indirectly as recovered through the F&A rate.
Administrative and Clerical Salaries
2 CFR §200.413(c)


Definition: Administrative and clerical personnel provide non-technical support services that benefit departmental, institute, center, or school activities. The services of these individuals could include: clerical support, financial management, procurement of materials and services, budget and planning, and personnel management.

The salaries of administrative and clerical personnel are normally treated as an indirect cost unless they meet the definition of “unlike purpose and circumstance” and are integral to the project.   As stipulated in the Uniform Guidance, direct charging of administrative salaries is allowable when all of the following 4 conditions are met:

1. Administrative or clerical services are integral to a project or activity;
2. Individuals involved can be specifically identified with the project or activity;
3. Such expenses are explicitly included in the budget or have the prior written approval of the federal awarding agency; and
4. The costs are not also recovered as indirect costs.

Advertising and Public Relations
2 CFR §200.421


Definition: The costs of advertising media, including magazines, newspapers, radio and television, direct mail, exhibits, electronic or computer transmittals, and related administrative expenses.

Advertising/media expenses are only allowable as a direct charge if used solely for one of the following uses:

1. The recruitment of personnel required for performance of a federal award (subject to the requirements in Recruiting section and 2 CFR §200.463);
2. The procurement of goods and services for the performance of a federal award; or
3. Program outreach and other specific purposes necessary to meet the requirements of the award.

Alcoholic Beverages
2 CFR §200.423


Alcoholic beverages and related expenses are unallowable costs and can only be charged to a federal award if alcohol is specifically necessary for the aim and scope of the project and the agency has provided specific approval in the award notice or if they are approved in writing by the sponsor.

Bad Debts
2 CFR §200.426


Bad debt or uncollected billings, including losses (whether actual or estimated) from uncollectable accounts and other claims, are unallowable and may not be charged to a federal award. Collections and legal expenses related to bad debt are also unallowable.

Compensation (Bonuses, Maternity or Parental Leave, Severance)
2 CFR §200.430


Compensation costs are generally allowable as a direct expense when the paid effort provides a direct benefit to the award and when the amount is within the federally allowable limits (e.g., agency-specific salary caps). Special Considerations:

• Level of compensation may not increase solely due to an increase in available sponsored funding.
• Payments to supplement a fellowship are unallowable on any federal award.
• All TROY employees must be budgeted as salary and cannot be included as consultants or vendors.

Severance
2 CFR §200.431(i)(1)


Definition: Severance pay is compensation in addition to regular salary and wages paid by an institution to employees whose services are being terminated. Expenses of severance pay are allowable only to the extent that such payments are required by law, or by TROY-employee agreement, AND availability of funds in Sponsored award.

Communication Expenses (cell phones, internet)
2 CFR 200 Appendix II


Due to the difficulty in identifying portions of a communications bill to a specific award or other university activity with a high degree of accuracy and certainty, communication expenses are generally included in the indirect cost calculations and treated as indirect costs.  Only when a communication expense meets the “unlike purpose and circumstances” criteria can they be directly charged to a sponsored award.

Communication expenses charged as indirect costs include the following
:


What communication costs can be charged as a direct expense?
Communication expenses that can be linked to a specific sponsored project with a high degree of accuracy and are used primarily for the sponsored project may be charged as a direct expense. Examples of communication expenses that may be charged as a direct cost include the following:


Equipment
2 CFR §200.439, §200.33, §200.452


Equipment, including fabrications, with a total acquisition cost of $5,000 or greater is considered capital equipment and may only be charged as a direct expense when it is necessary for the performance of the sponsored award.


General purpose equipment is generally treated as an indirect cost because it cannot be easily linked to a particular cost objective. Equipment types that are typically considered “general purpose” may only be appropriate as a direct expense when the PI is able to justify that the equipment is necessary for the unique scientific/technical tasks of the specific agreement, not already available, and will be initially utilized almost exclusively for the award objectives.

Equipment Repairs
Routine repair and maintenance of general purpose equipment are normally treated as indirect costs. Service, repairs or warrantee costs for special purpose equipment dedicated to a sponsored project may be charged directly.

Equipment Purchases at the End of Award
Equipment purchases charged directly to an award must be necessary for performance on the project; therefore, equipment purchases near the end of an award period should have additional scrutiny and may be subject to project-specific justification and/or sponsor approval.

Exchange Rates
2 CFR §200.440


Expense increases for fluctuations in exchange rates can be treated as a direct expense when existing funding is available to cover the difference and there is prior approval by the awarding agency.

Fines, Penalties or Settlements
2 CFR §200.441


Expenses resulting from violations (or alleged violations) of, or failure to comply with, federal, state, local or foreign laws and regulations are unallowable. Examples of items that may not be charged to a federal award include:

In very rare situations, if the expense is incurred as the result of complying with a specific provision of the federal award or with prior written approval from the federal awarding agency, the expense may be directly charged to the award.

Materials & Supplies
2 CFR §200.453, §200.94


General purpose materials and supplies purchased and used by departments for all activities should not be directly charged to sponsored awards. Examples include copy paper, office supplies, and cleaning materials.

Items purchased specifically for one or more research projects may be charged as direct expenses. If the use of the items is shared among projects or labs, an allocation methodology should be created, documented and periodically reviewed.

Examples of office supplies that may be charged as a direct expense include:


Books, Journals, Periodicals and Subscriptions
2 CFR §200.454


Books, journals, periodicals, and subscriptions are normally treated as indirect costs. Examples of unallowable charges:
Subscriptions to journals
These expenditures may be charged as direct expenses only in unusual circumstances. Examples include:

Computing devices
2 CFR §200.453, §200.94, §200.20, §200.33


Definition: Machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting, and receiving or storing electronic information. Computing devices that cost less than $5,000, and are essential and allocable to the performance of an award, may be charged directly either as a purchase or a lease.

Examples of computers that can be charged as direct expenses include:


Copier Charges

Copier charges for general administrative support of a project should not be charged as a direct expense.

Copy charges may only be an appropriate direct charge in cases when both of the following criteria are met:


Memberships, Dues and Professional Activity Expenses
2 CFR §200.454


Dues and memberships in professional organizations are normally charged as indirect costs because their purpose is more general in nature – i.e., furthering a PI’s knowledge in his/her field – and cannot be identified with a high degree of specificity to an individual research project. Membership may be charged only if it is required for conference attendance where the researcher is presenting his or her research or obtaining, circulating, or distributing information to advance the performance of the project.

Note: the membership fee is allowable as a direct cost to the project if it reduces the overall cost of attending the conference.

Participant Support Costs (excluding training grants)
2 CFR §200.75, §200.456


Definition: Direct expenses for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects.

Participant support costs are allowed if all of the following criteria are met:


Note: NIH will only allow Participant support costs to be charged if they were approved in the original Funding Opportunity Announcement.

Who is a participant?
A participant is defined as a non-TROY employee who is the recipient, not the provider, of a training associated with a workshop, conference, seminar, symposium, or other short-term instructional or information sharing activity. Participants are not required to provide any deliverable to the university and they are not subject to Troy University human resources policies (e.g., they cannot be terminated for failure to perform). Participants may include students, scholars, and scientists from other institutions, representatives of private sector companies, teachers, and state or local government agency personnel.

A person classified as an intern would be paid as an employee and not as a participant, because the intern, while receiving certain training, is also providing services.

What expenses can be included in participant support costs?
Participant support costs include expenditures for items such as the following:


What expenses CANNOT be included as participant support costs?
Participant support costs do not include the following types of payments:


Rebudget

Per 200.308(c)(5), prior approval is required to transfer funds budgeted for participant support costs to other categories of expenses.

Postage and Express Delivery
2 CFR §200.473


Postage or express mailing expenses are generally treated as indirect costs. If the expenses are required for a project and can be linked to that specific project, the cost may be charged as a direct expense. Examples of shipping and postage expenses that may be charged as direct costs:


Professional Service Expenses
2 CFR §200.459, §200.435


Costs of professional and consultant services are allowable as direct expenses when all of the following conditions are met:


All TROY employees must be budgeted as salary and cannot be included as consultants, advisors or vendors. Retainer fees for professional services must be supported by evidence of bona fide services available or rendered. Any professional service costs related to defense and prosecution in criminal and civil proceedings are unallowable.

Travel Expenses
2 CFR §200.474


See the University Travel Policy and Fly America Act.

Travel-related expenses are allowable as direct expenses when they provide a direct benefit to the sponsored award.

Unallowable travel expenses include:


Domestic and foreign travel charged to a sponsored project must follow these guidelines as well as the Troy University Travel Policy and funding agency requirements, whichever imposes the greater restrictions.

Travel expenses that directly support the sponsored project may be charged on an actual expense basis, on a per diem or mileage basis in lieu of actual expenses incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip.

702.7 Policy on Personnel Cost for Grants and Contracts

The salaries and wages of university employees and related staff benefits required to complete a sponsored project (including but not limited to Principal Investigator’s academic and summer salary, postdoctoral research associates, technicians and graduate students) should be budgeted, charged and reported as a direct cost under this category of expenditure. Salaries and wages include holiday, vacation, and sick pay as appropriate. Expenses used in computing fringe benefits are: (a) Social Security; (b) Teacher’s Retirement; and (c) Group Life, Long Term Disability and Medical Insurance.

As a rule, administrative and clerical salaries are treated as indirect costs, except as outlined in the following guidelines.  These are considered Office of Management and Budget (OMB) exceptions.  A non-exhaustive list of administrative and clerical positions includes fiscal officers, accountants, secretaries, directors, vice presidents, president, office personnel, executive assistants, and administrators.

When Administrative and Clerical Salaries and Staff Benefits Can Be Charged as Direct Costs:

Salaries and fringe benefits of administrative and clerical staff may be charged as direct costs in instances where sponsored projects require the services of administrative and clerical staff beyond the normal level provided by departmental administrators paid from a “University” account. The total cost of these services may be budgeted, charged, and reported as a direct cost to a sponsored project when all of the following conditions apply:

1. The specific type and nature of the services are not provided by the departmental administration account; and
2. The services are required by the project’s scope; and
3. The cost can be accurately identified to the project, and
4. The approved project budget narrative clearly describes the need for the service.

It is the responsibility of the Principal Investigator (PI) or Project Director to support and justify in the proposal all direct costs to be charged to a sponsored award. The office of Sponsored Program Accounting will approve direct costs that meet Cost Accounting Standards exceptions guidelines.

Effort Reporting Policy

Policy Statement

As a recipient of federal funding Troy University is required to comply with the Office of Management and Budget Circular Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) as well as other federal requirements for certifying effort expended on sponsored awards. TROY requires all individuals who receive sponsored funding to comply with University policies and sponsoring agency regulations regarding the proposing, charging, and reporting of effort on those awards.

University faculty and staff are expected to charge their time to sponsored awards commensurate with the committed effort expended on all activities they perform. Payroll charges to sponsored awards, and cost sharing recorded for faculty and staff, serve as the initial data points for the University’s effort reporting system.

Reason for Policy

The Uniform Guidance Subpart E §200.430 contains the federal regulatory requirements for internal controls over certifying time expended on sponsored projects. The University’s practice is to utilize an after-the-fact effort reporting system to certify salaries charged, or cost shared to sponsored awards, are reasonable and consistent with the work performed. The individual’s effort is first assigned to specific awards in the payroll system based on anticipated activities. Actual effort expended on each project is certified by a responsible person with suitable means of verification the work was performed, generally the principal investigator, at the end of specified reporting periods. The effort certification should be a reasonable estimate of how time was expended. Section §200.430(c) states, “It is recognized that teaching, research, service, and administration are often inextricably intermingled in an academic setting. When recording salaries and wages charged to Federal awards for IHEs [Institutions of Higher Education] a precise assessment of factors that contribute to costs is therefore not always feasible, nor is it expected.”

The Monthly Effort Reporting Forms are the means for complying with the federal regulations relating to effort certification.

Who Must Comply

All individuals who either receive payment or whose salary/or portion is used as matching on a sponsored award must comply with this policy.

Adherence to this policy is required for all effort related to federally sponsored awards as well as any non-federal awards.

Completion and Certification of Monthly Effort Report


The Time and Effort Report


The Effort report must contain all activities for which compensation is paid by Troy University. The total work effort should equal 100%. The certifier is expected to review the percentages on the effort report and verify whether they reasonably reflect the individual’s effort.

Salary distribution consistent with effort percentages will be done in the Sponsored Program Accounting office based on the information provided on the Effort Report. It is each PI’s responsibility to ensure the salary distributions are done correctly and in a timely manner.

702.8 Policy on Subreceipient Monitoring for Grants and Contracts

Policy Statement

Troy University is responsible for monitoring the programmatic and financial activities of its subrecipients to ensure proper stewardship of sponsor funds. The following policy applies to all subawards issued under sponsored programs, without regard to the primary source of funding. Additionally, this policy addresses institutional responsibilities and assists Principal Investigators (PIs) and administrators to ensure that, in addition to achieving performance goals, subrecipients comply with applicable federal laws and regulations and with the provisions of each subaward agreement.

Reason for Policy

OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) (“Uniform Guidance”), specifically §200.331, requires pass-through entities to evaluate each subrecipient's risk of noncompliance in order to determine the appropriate monitoring level, monitor the activities of subrecipient organizations to ensure that the subaward is in compliance with applicable Federal statutes and regulations and terms of the subaward, and verify that subrecipients are audited as required by Subpart F of the Uniform Guidance.

For non-federal awards, Troy may also be required by the sponsor to provide evidence of due diligence in reviewing the ability of a subrecipient to properly meet the objectives of the subaward and account for the sponsor’s funds.

Failure to adequately monitor the compliance of subrecipients could result in reputational damage to the University and Schools, and jeopardize current and future funding. It is the responsibility of TROY, as the pass-through entity, to ensure the good stewardship of sponsored funding. All funds assigned to subrecipient organizations should receive the same diligence as sponsored funds that remain at Troy University.

Who Must Comply

All Principal Investigators (PIs) and administrators at Troy University within all schools, units, divisions, University-wide initiatives, and centers, who are involved with the administration and conduct of sponsored awards that issue and manage subawards must comply with this policy.

Definitions

Subrecipient

Subrecipient means the legal entity to which a subaward is made and which is accountable to the University for the use of the funds provided in carrying out a portion of the University’s programmatic effort under a sponsored project. The term may include institutions of higher education, for-profit corporations, and foreign or international organizations (such as agencies of the United Nations) at the discretion of the Federal awarding agency.

Annual Subrecipient Monitoring

Annual subrecipient monitoring includes those activities undertaken to review the financial status and management controls of a subrecipient to mitigate the risk of contracting with a subrecipient organization.

Pre-award Subrecipient Review

Pre-award subrecipient review includes those activities undertaken prior to officially subcontracting with a third-party organization. Such activities may include reviewing organizational, financial or other information to identify potential risks.

Post-award Subrecipient Monitoring


Post-award subrecipient monitoring refers to those day-to-day activities undertaken to monitor billings and scientific progress of an active subaward.

Subaward

A subaward is an award of financial support from a prime awardee to a qualified organization for the performance of a substantive portion of the program funded under the prime award. The term also includes awards made by a subrecipient to a lower-tier subrecipient. It does not include procurement of goods and services funded by a prime award (i.e., vendors are not considered subrecipients).

Roles and Responsibilities

PIs have primary responsibility for monitoring subrecipients to ensure the responsible stewardship of funds, including:

Deans

At Proposal Stage:

At Award Stage:

Sponsored Program Accounting

Sponsored Program Accounting is responsible for the oversight of TROY’s subrecipient monitoring program and ensuring the procedures are compliant with federal and other applicable regulations.