Sponsored Projects Accounting

New Mexico State University

CHAPTER 3: SPONSORED PROJECTS ACCOUNTING

3.20	RESTRICTED FUNDS - EXPENDITURE GUIDELINES Restricted funds are identified by the sponsor or agency restrictions placed upon the use of funds as such, the source of all restricted funds must be external. Internally designated unrestricted funds, including surpluses from fixed price grants/contracts, cannot be sequestered in a restricted fund for any specific purpose. In no case should any expense be recorded in a restricted Index (FOPAL) unless the following conditions are met: The expense is fully covered by guaranteed income. This means that the expenses are fully billable to and collectible from an external party. In the case of gift funds, Accounts Receivable are established on rare occasions on a case-by-case basis, and require the approval of the Controller's Office. In no case should an uncollectible receivable remain in the restricted fund at fiscal year-end. NMSU's collections policy (see subsection 3.30.05) discusses in detail the disposition of uncollectible restricted fund Accounts Receivables. The expense conforms to the guidelines established by the sponsor. In no case may any expense be ultimately recorded in a restricted Index (FOPAL), either directly or through automated entry, which violates a sponsor-specified restriction. Signature Approval on Restricted Sponsored Projects University policy requires that the Department Head or Dean/Director responsible for any given Index (FOPAL) approve all Purchase Requisitions, Direct Pay Requests and Reimbursement Vouchers charging that Index (FOPAL) number. On approval of the Department Head or Dean/Director, signature authority may be delegated to an elected employee. These policies relate to official University documents. For restricted Sponsored Projects, the University Purchase Requisition, Direct Pay Request or Reimbursement Voucher documents should reflect the approval of the Principal Investigator or his/her designee. In the case of multiple Principal Investigators, any of the Co-Investigators may elect to approve the expense. If the Principal Investigator's approval is obtained on an internal requisition document, it does not have to appear on the official Purchase Requisition, as long as it can be documented that the internal requisition has the Investigator's approval; that is, the Investigator or his/her designee must approve either an internal requisition document or the official Purchase Requisition for restricted Indexes (FOPALs). [ back to top]

3.25	GIFTS-IN-KIND A Gift-in-Kind is defined as a gift of goods other than cash or cash equivalents. For the purposes of this policy, services provided are not considered Gifts-in-Kind. Approval of Gifts-in-Kind All gifts-in-kind should be accepted by the University, by either the President's Office or its designee. This will enable the gift to be properly insured and safeguarded through the University Property Office. In many cases, a gift-in-kind may involve additional costs that will need to be approved within the departmental budget. The approved designees for accepting gifts-in-kind are the Vice President for University Advancement and/or the Vice President for Business and Finance. Procedures for Accepting Gifts-in-Kind Gifts Under or Equal to $5,000 In many situations, a donor will present a department, college, or division with small inventory items such as a book or a piece of artwork. For all such gifts, the following procedure is to be used, as applicable: Upon receipt of the gift, a memo is to be written by the department, college, or division receiving the gift to the Vice President for University Advancement with the following information: Description of Gift Donor Name Donor Address Fair Market Value (assigned by Donor) The Vice President for University Advancement will forward the approved memo to the Advancement Services Office, who will then be responsible for issuing a receipt to the donor. The Advancement Services Office will forward a copy of the approved memo to the Property Office if the gift involves equipment or an addition to existing equipment. Gifts Over $5,000 Gifts over $5,000 require special reporting to the Internal Revenue Service. This rule applies if a donor contributes gifts over $5,000 cumulatively in one calendar year, not solely to the value of each gift. The procedures described in Gifts Under or Equal to $5000 should be followed with the following additions: IRS form 8283: this form should be received with the gift and completed by the donor for the gift or gifts contributed by one party. This form includes an independent appraisal to be completed by a licensed appraiser engaged by the donor. A cover letter containing information on the gifts and their appraisal is to be sent to the Vice President for University Advancement for signature and acceptance must accompany the IRS form 8283. The Vice President for University Advancement will then submit copies of the form and letter to the Advancement Services Office for receipting. Donated Assets and Sponsored Agreements Per OMB Circular A-21, Section J.13.a, the value of donated assets are not considered allowed on sponsored agreements as either direct or indirect charges. Depreciation or use allowances may be permitted, under certain circumstances, and in calculation of the F&A rate. This does not preclude the use of donated assets to meet the matching requirements of sponsored agreements in accordance with OMB A-110. [ back to top]

3.25.05	State Matched Endowments, Guidelines for Expending Earnings The special appropriated guidelines, enacted for each Endowment Program, should be followed for all donations. For example: Professorships, Lectureships, and Graduate Fellowships: Law of 1984, Chapter 35 reads as follows: "..the income from the investment shall be used to provide salary supplements in the enumerated categories." Therefore, the earnings on the state-matched portion, the foundation portion and/or the University portion will be used for salary supplements only. Chairs: Law of 1984, Chapter 35 reads as follows: "..the income from the investments shall be used by the institutions for the purpose of paying the salary of the faculty member together with the expenses necessary to support his academic activities. Any portion of the income not expended within two years of receipt by the institution shall become part of the endowment and shall not be expended but shall be invested." The earnings on the state-matched portion, the Foundation portion and/or the University portion will, therefore, be used for salary and expenses necessary to support the academic activities of the chairperson. Each Legislative Act will have specific requirements. [ back to top]

3.30	RELATED POLICIES AND PROCEDURES Other policies and procedures within the University should be incorporated into the administration of restricted funds, where applicable. Among the most common documents which may apply and are not reproduced within the Business Policies and Procedures Manual are: Gift Income Spending Policy Sponsored Programs Manual Research Administration Section of General Operating, Personnel and Benefits Manual [ back to top]

3.30.05	Collections Policy for Grants and Contracts SPA is responsible for invoicing all grants and contracts unless other arrangements have been made. The invoices will be prepared on a monthly basis unless otherwise specified in the award agreement. 30 Days Outstanding All receivables will be reviewed when 30 days outstanding. If the receivable represents the first project billing to a private entity, or an invoice to a client with a proven history of slow payments, SPA will call the sponsor at this point to confirm the accuracy of the invoice and request payment. 30 to 60 Days Outstanding Receivables that do not meet the criteria for contact at 30 days will be contacted at 60 days, if necessary. The purpose of the initial contact, whether at 30 or 60 days, is to verify receipt of the invoice, determine if there may be problems with the invoice that prevent payment, and to determine if a revised invoice or "second notice" is necessary. Comments received from sponsors referencing poor quality service as a reason for withholding payment will temporarily suspend further collection efforts. These comments will be relayed to the research center or department by either memorandum or e-mail along with a request that SPA be notified in a like manner when permission is granted to resume collection activity. If either party feels the situation warrants it, a meeting will be scheduled to discuss the account status before any decision regarding further collection is made. This option will be included in all correspondence regarding collections. All Accounts Receivables will continue to age and be subject to procedures at 90, 120, 180 and 270 as stated below, even if SPA's collections efforts have been temporarily suspended. If, at any time during the collections process, a sponsor notifies either SPA or the research center/department that they do not believe the receivable is their obligation, a memo will be sent by the contacted party to the Vice President for Business and Finance for their assistance and opinion in considering the validity of the claim. All other parties involved at this point should receive copies of this memo. Until the issue is resolved by the research center/department, all other collections procedures will cease. 90 Days Outstanding When a receivable has been outstanding for 90 days, SPA will notify the department head, Principal Investigator, and the departmental business contact of the status of the Index (FOPAL) by either memorandum or e-mail. 120 Days Outstanding When a receivable has been outstanding for 120 days, SPA will notify the Vice President for Business and Finance of the status of the Index (FOPAL) in a monthly report. There will also be a special report to the Vice Provost for Research for those Indexes (FOPALs) that have not been settled due to fault of the University. For privately funded Indexes (FOPALs), if there is not a fault on the part of the University, work may be stopped by order of the dean, director, or Vice President for Business and Finance. After 180 Days After 180 days, SPA will submit to Vice President for Business and Finance for possible referral to NMSU General Counsel for legal recourse. NMSU General Counsel will review existing information as provided by the Vice President for Business and Finance and determine if legal action is necessary. The Vice President for Business and Finance shall be kept informed accordingly. At this time, the Vice President for Business and Finance may order the work stopped after consultation with the dean or director. For State or Federally funded awards, ceasing work will be evaluated on a case-by-case basis. This information will be relayed in a special report provided by the Vice President for Business and Finance. After 270 Days If after 270 days, all collection efforts fail, including examination of legal recourse, SPA will notify the Research Center Director, Research Center Business Manager and Principal Investigator of the status of the receivable and to request an unrestricted Index (FOPAL) to which the receivable will be charged. A Journal Voucher will be processed to charge bad debt expense to the appropriate departmental unrestricted Index (FOPAL) (account 769600) and credit the receivable in the restricted Index (FOPAL). The receivable will be re-established utilizing a pair of central administration Indexes (FOPALs) to track the reclassification of Accounts Receivables on grants and contracts. If a privately held company has defaulted on a debt, further contract assignments will not be accepted by NMSU. For Federal or State funded projects that have defaulted on a debt, further contract assignments will be evaluated on a case-by-case basis by the Dean or Director and Vice President for Business and Finance. If after 365 days, a receivable is deemed uncollectible by the Vice President for Business and Finance, regardless of the actions taken by the sponsoring agency, it will be written off and reclassified to central administration as described above. If payment is received after it has been reclassified, the research center/department will be notified and receive credit for payment. [ back to top]

3.30.10	Centralized Billing Policy for Restricted Grants and Contracts New Mexico State University uses a partially decentralized approach to billing for grants and contracts. The responsibility for grant and contract billing rests with SPA. While NMDA billings are prepared at NMDA, they are approved by the Central Office before release. Procedures established by NMDA shall be submitted to the Controller's office on an annual basis, in July of each year. Staff responsible for preparing invoices shall be trained within each department in the use of their departmental procedures. Each billing department's procedures must contain the following elements: Billings will be prepared in accordance with agency contractual requirements, and all applicable Federal, State and University policies and procedures. If there is no time frame established for cost reimbursable contracts, then billings will be done on a monthly basis. Billings for restricted Indexes (FOPALs) will be prepared only for expenditures made in compliance with the award terms and conditions and within the award budgeted amount. All billings will be reconciled to the official accounting records as recorded in the University's Finance System, to assure that all Indexes (FOPALs) have been billed and no activity is billed more than once. Proper segregation of duties must exist between preparation of billings, receipting of funds, and authorization of contracts. The designated unit personnel that are responsible for grant and contract billing will certify all billings. These persons will be named in the departmental procedure. Revenue and Accounts Receivable for each billing will be recorded in the Finance System at the time the invoice is prepared and submitted for payment. Accounts Receivable aging reports, in 30 day increments through 120 days, will be produced at least monthly and proper collections procedures will be followed to assure the safeguarding of all University assets. [ back to top]

3.35	EFFORT REPORTING Effort reporting provides a basis for charging salaries to Indexes (FOPALs) in accordance with the relative activity applied to various programs and projects. The information reported by departments for a pay period reflects the actual activity of each employee as well as it can be measured, not the budgeted activity. However, budgets normally provide a guide to the application of actual activity. Effort reporting also provides documentation that an employee is in the employment of the University during the pay period. Principal Investigators are urged to check Effort reports closely each semester to certify that all persons paid on a sponsored project did, in fact, work on that project for the amount of time indicated Effort Report document. Effort on grants/contracts should be charged to the grant/contract Index (FOPAL). Any cost-shared effort should be charged to a formal cost-sharing Index (FOPAL) or another unrestricted Index (FOPAL), as discussed in subsection 3.15.3. [ back to top]

3.35.05	Effort Reporting The University's Effort Reporting document for non-hourly employees is the NHRECRT Report. For more information on time and leave reporting on grants and contracts refer to subsection 3.15.40. The University's Effort Reporting document for hourly employees is the Payroll Requisition Report which is completed on-line by all non-exempt employees. [ back to top]
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