Compliance With Sponsor Requirements
The principal investigator is responsible, on behalf of the University, for sound technical, fiscal, and administrative management of a project or program in accordance with both University and sponsor requirements. All sponsored program charges should be correctly applied to the appropriate ledger five account. Cost transfers among accounts may be approved for certain reasons but they must be justified in writing and may not be more than 120 days old. Individual Effort Certification Reports must be completed to document time and effort contributed to sponsored programs, indirect cost activity, and major functions.

See also:

Records Retention and Disposition
Records Retention: General Requirements
Preparation of Interdepartmental Transfer Invoices (IDT's)
Preparation of Cost Transfers Involving Sponsored Program Accounts (Ledger 5)
Preparation of Individual Effort Certification Report
Compliance With Sponsor Requirements

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Preliminary Account Request
In order not to interrupt on-going research or delay the start of new projects, the principal investigator may request that a preliminary account be set up for up to three months when a new or continuation award is assured. Should the expected support fall through, the originating department is responsible for expenditures incurred.

See also: Preparation of Preliminary Account Request Form

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Consistent Treatment of Sponsored Program Costs
Federal regulations require that costs be treated consistently in both federally and non-federally funded programs. Costs incurred for the same purpose in like circumstances must be considered either direct costs or Facilitities & Administrativecosts (i.e., F&A or "indirect costs") in all University activities. Direct costs are those identified specifically with a particular project such as salaries of faculty and research associates, equipment and travel. Normal F&A costs are those not identified specifically with a particular activity such as administrative and clerical salaries. F&A costs may be charged directly to non-federal awards, if permitted by sponsor policies or otherwise approved by the sponsor, and to federal awards if circumstances related to the program are clearly different from normal operations of the institution.

See also:

Budgeting the Direct Costs of Sponsored Projects
Consistent Treatment of Sponsored Program Costs

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Budgeting Direct Costs of Sponsored Programs
Direct costs are those costs which can be identified specifically with a particular sponsored program project and which can be practically assigned (charged) to the University account established for the purpose of accumulating program costs. Indirect costs are those not attributable to a particular program and are recovered through the application of a fixed indirect cost rates. The University Object Code attached to each cost category is to be used in preparing a sponsorded program proposal budget. Some categories such as faculty salaries and associated fringe benefits (rates vary by employment title), and equipment routinely are considered direct costs. Other costs such as consultative services require justification for inclusion as a direct cost and some costs can be a direct cost only on specific types of programs, such as trainee stipends on a training program.

See also: Budgeting the Direct Costs of Sponsored Projects

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Indirect Costs
The total cost of a sponsored program consists of direct costs and indirect costs. Direct costs are readily identified with a particular project (such as research faculty salary) and indirect costs are those costs incurred in support of many activities, the portion of which pertaining to the project is difficult to determine (such as secretarial assistance). The allocation of a portion of all such indirect costs to particular projects and activities is accomplished by applying an indirect cost rate to the modified total direct costs (MTDC) of the project. The MTDC equals total direct cost less categories (such as equipment) for which no indirect cost is charged. This rate varies according to type and place of the activity. Of the total indirect cost charged, 30% goes to the state administration and 70% is further distributed by the University (20% for state-approved research and 50% to the dean, department and other entities). Greater specificity and examples of direct and indirect costs (including permissible exceptions) reflecting 1997 federal guidelines are given in Document 8.C of this Research Guide.

See also: Indirect Costs

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Determination of On-Grounds/Off-Grounds Status
Sponsored research will be classified as taking place "off-Grounds" if the research takes place (or predominantly takes place) in a facility not owned by the University and the "off-Grounds indirect cost rate applies. If the work has been approximately evenly divided between "on-Grounds" and "off-Grounds," then the program will use both rates in the same proportion. Requests for approval to use "off-Grounds" indirect cost rates must be made in writing to the University Comptroller.

See also: Determination of On-Grounds/Off-Grounds

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Application of Indirect Cost Rates
The general policy of the State of Virginia and the University is to recover full indirect costs (termed F & A Costs, as of July 1997) by applying approved indirect costs rates (see Research Guide-8.E) to all sponsored programs. Exceptions can be made if the sponsor has limitations on indirect cost recoveries or if the project satisfies certain approved criteria which make application of the usual rate unjustified. Requests for exceptions must be made in writing.

See also: Application of Indirect Cost Rates

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Administrative and Clerical Salaries
The University of Virginia subscribes to the policy and guidelines of the Office of Management and Budget (OMB) that administrative and clerical staff salaries should normally be treated as indirect costs. Exceptions when these costs are clearly attributable to a particular program are allowed if justified in writing and approved. Examples include large, complex programs and aprograms involving extensive data manipulation or making travel or meeting plans for large numbers of persons.

See also: Charging Administrative and Clerical Salaries

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Sponsored Program Deficit Accounts
Sponsored programs accounts (ledger 5) allow expenditures, according to approved budget categories, before collection of cash. The Office of Sponsored Programs (OSP) collects payment on actual expenditures, up to the limit of the budget. Once a deficit occurs, no further expenditures will be paid until corrective action has been taken. Because overcharges cannot be billed to the sponsor, the principal investigator must ensure the account does not exceed budget. Any account deficit must be corrected before OSP will process additional charges and if it is not corrected within 90 days, the deficit will be transferred to the departmental overhead account.

See also: Sponsored Program Deficit Accounts

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