Post Award Accounting at Caltech

Post Award Accounting at Caltech

New Grant Manager Training

October 28, 2004

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Overview

Organization and responsibilities

Account structure/types

Monitoring accounts

Useful expenditure types

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Post Award Accounting Responsibilities

PROJECT ACCOUNTING

Budget Realignments

Billing

Cost Transfers

Cost sharing

Financial reporting

Closeouts (financial)

Fabrication accounts

JPL/Caltech accounting interface

NIH Salary cap

Monitoring awards

(in conjunction with campus)

Responding to internal and external audits

COST STUDIES

Payroll Distribution (aka effort reporting)

F&A rate development and negotiation

Service centers

Space surveys

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Organization Chart

Tracey FraserDirector

Project Accounting & Cost Studiesext. 2540

Robert KuppensAssociate DirectorProject Accounting

ext. 2558

PMA & GPS BIOLOGYENGINEERING,HUMANITIES &

CACR

Evy GravesAssistantext. 6737

Deston HalversonAssociate Director

Project Accounting &Cost Studies

ext. 3877

JPL COST STUDIES

Moses Nurtjahjaext. 6756

Erlinda Bandoyext. 2382

Renee Brightext. 8104

Grant Hovakimyanext. 8159

Karel Zumbrunnenext. 8545

Karl Oracionext. 2695

Sandie Glazeext. 2697

Virgil Swanierext. 6865

Pablo D'Angeloext. 6679

Carolyn Griffithsext. 3122

Regina Jacksonext. 2581

Lydia Bostonext. 8115

Estella Venegasext. 2580

Lisa Frenchieext. 3595

Ted LieuManagerext. 2579

Andres Chanext. 2575

Kevin Nguyenext. 8015

Martin Madrigal-Diazext. 2589

Stan Bairesext. 8013

CHEMISTRY

Mabel Chikext. 6755

Kathy Kellyext. 6763

Stephanie Solarioext. 2135

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Organization

Who is the Accounting Specialist on a particular award? http://www.atc.caltech.edu/support/queries.html

POETA-Alias Queries Award Information

Type in award number Award Detail summary screen will appear Scroll down to Award Personnel

Note: This screen is also useful because it includes all linked awards

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Account Structure/Type

Structure

Cost Sharing

JPL Research accounts

JPL Service accounts

Fabrication accounts

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Account Structure - What is POETA?

Project - Projects are funded by Awards(Two kinds of Projects, Capital and Non-Capital)

Organization in POETA, will default to Caltech

Expenditure TypeTask - A Project is made up of one or more

tasks. All expenditure occurs at the task or subtask (i.e., breakdown of a task into a smaller unit of work) level

Award - Awards fund Projects

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Account Structure – What Is Work Breakdown Structure?

Award 2 Award 3Award 1

Task 1

Project 4Project 3

Task 1Task 1

Project 1 Project 2

Task 1 Task 2

SubTask2.1

SubTask2.2

Sub-subTask2.2.1

Sub-subTask2.2.2

Organization of an activity into a hierarchy of one project and one or more tasks

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Cost Sharing

Committed cost sharing on a sponsored project is a binding obligation that must be satisfied in accordance with the sponsor’s requirements

Offer cost sharing only when required by the sponsor

http://atc.caltech.edu/Finance/pa_policies.htm

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Types of Cost Sharing

Committed Must be tracked, documented, and in some

cases, reported

Uncommitted Does not have to be tracked or recorded

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Cost SharingFederal Requirements

Do not use federal funds

Use only once

Costs must be verifiable, necessary, allowable and reasonable for the award on which they are being claimed

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Cost SharingProcedure

Establishing a linked account or specific task within a PTA to track cost sharing is not mandatory under the terms of Caltech’s policy Depends on the Division

In all cases a manual worksheet, the Committed Cost Sharing Worksheet, will be prepared and distributed by OSR (based on information included in the proposal and the award document)

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Cost SharingProcedure

PA will contact the grant manager on an annual basis to obtain an update of the status of cost sharing and to review any supporting documentation Will require account detail of where the cost

sharing was charged and require specific costs to be identified within that account

PA will submit any financial reports due to agency or prime contractor

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JPL Interdivisional Authorizations

What is an Interdivisional Authorization? Authorization for Caltech to incur expenses

for providing a service to JPL and a means for billing JPL for those services (i.e., transferring funding from JPL to Caltech)

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JPL Interdivisional Authorizations

There are 2 types of IAs 1. Research IA

2. Service IA

Set-up process depends on the type of IA

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JPL Research IA’s

Generally involve a member of the Caltech faculty Set-Up

Must prepare a budget and statement of work that is reviewed by Caltech’s Office of Sponsored Research

Should conform to all the usual requirements for proposal submission, e.g., Divisional Approval Form

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JPL Research IA’s

JPL Contract Management Office (CMO) will only issue an IA to authorize payment for the work after the proposal has been submitted and reviewed

For more information refer to OSR website http://atc.caltech.edu/OSR

Billings and Close-Outs Processed by Project Accounting

Divisional teams

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JPL Service IA’s

Generally do not involve, or are not supervised by, a member of the Caltech faculty e.g., services provided directly to JPL by MPS, technicians, shops, service centers, etc.Set-Up

Complete template detailing budget and statement of work Submit to Lisa Frenchie in Project Accounting (M/C 211-

15) Template and instructions are available on the Project

Accounting website under forms http://atc.caltech.edu/Finance/pa_forms.htm

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JPL Service IA’s

Reviewed by Project Accounting to verify Salary rates (JPL will not accept a different

salary rate than Caltech rate) Correct overhead rate

Work performed at campus (59.3%) Work performed at JPL (26%)

Staff benefit rate

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JPL Service IA’s

JPL CMO will only issue an IA to authorize payment for the work after this paperwork has been submitted and reviewed

Billings and Close-Outs Processed by Project Accounting

JPL team

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JPL IA’s

Be aware of restrictions on charging to JPL IA’s (both service and research) Equipment

Must be preauthorized and specifically identified in the IA

Equipment threshold is lower than Caltech’s ($1,000 compared to $5,000)

Foreign travel Must obtain prior approval

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JPL IA’s

Deobligations Not uncommon JPL CMO will only de-obligate after obtaining

written concurrence from Caltech PI A revised IA will be issued deobligating the

funds

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Fabrication Accounts

Fabrication policy http://www.atc.caltech.edu/finance/

Fabrication set up formhttp://www.atc.caltech.edu/finance/

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Fabrication Accounts

Definition“An equipment fabrication is the transformation of materials, supplies, hardware costs and direct labor (including associated fringe benefits) into an item of equipment that: Does not currently exist Meets unique research specifications Has a total estimated cost in excess of $5,000 Has an estimated useful life of at least 2 years When completed, will not be affixed permanently to a

building or structure”

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Fabrication AccountsFiscal Implications

Costs charged to a fabrication account are not burdened (i.e., overhead rate is not applied), regardless of expenditure type

Fabricated equipment that is eventually capitalized in Oracle Fixed Assets will include all costs charged to the fabrication PTA (including labor, travel, etc.)

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Fabrication AccountsChargeable Costs

Costs charged to a fabrication PTA must be integral to the construction of that fabrication (may include labor costs)

Must be in compliance with OMB Circular A-21

Must not be prohibited in the awarding document

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Establishing A Fabrication PTA

Fabrication PTA’s should be established as far in advance as possible to prevent initial costs being charged to a non-fabrication account

Division representative completes an equipment fabrication request form

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Information required on the fabrication set up form includes: Description Ownership (Caltech/Gov’t/Other)* Ultimate destination* Estimated placed in service date (the best judgment of the

PI of the point in time at which an equipment fabrication will become operational)

Estimated cost Must be signed by the PI or the division representative

*It is extremely important that the issue of ownership and final destination be known and appropriatelyidentified at the time of account set up as this directly impacts the type of fabrication account that willbe established. If the incorrect type of account is established at set up then all costs charged to thataccount will ultimately have to be transferred to the corrected account type.

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Completed forms should be sent to Property Services (Ernest Ngalula at M/C 116-6, ext. 4181)

Property Services reviews the form to verify that the proposed fabrication is capable of meeting Caltech’s definition of fabricated equipment then passes the form to Project Accounting

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Project Accounting verifies that the fabrication is allowable under the terms of the grant, contract or co-operative agreement being charged and if prior approval is required

Who actually sets up the account? If set up at the same time as the main award – OSR If main award already set up – Project Accounting

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If a significant budget realignment is subsequently requested (more than 20% of the original fabrication budget) PA will work with Property Services and OSR to ensure that the project continues to meet the definition of a fabrication and that it continues to be allowable under the terms of the awarding document

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Fabrications

Equipment expenditure types should not be used on fabrication accounts Technically, a component purchased for a fabrication is

not a stand alone asset therefore it doesn’t meet the definition of equipment

In practical terms using equipment expenditure types on fabrications impacts Caltech’s reporting to agencies

Remember: Charges hitting a fabrication PTA are overhead free therefore no fiscal implications to using ‘supplies – allocable’

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Monitoring Awards

Cost transfers

NIH NRSA Fellowships

Budget realignments

NIH salary cap

Foreign travel

Closeouts

Payroll distribution

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Cost Transfers

Policy on cost transfers to federally funded awards http://atc.caltech.edu/Finance/policies_costtransfers.htm

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Cost Transfers

Definition An after-the-fact reallocation of costs, either

labor or non-labor, to a federally funded award

Federal requirements limit the circumstances under which cost transfers are allowed

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Cost Transfers

Procedures for non-labor cost transfers within 90 days Fill out cost transfer and justification form Answer questions 1 through 3 in Section C Signed by PI or cognizant administrator

Send form and supporting documentation to Project Accounting

Project Accounting will notify if transfer is not approved

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Cost Transfers

Procedures for labor cost transfers within 90 days Campus personnel inputs into Labor Distribution Module Must address the following

Indicate name of designated/knowledgeable individual who has reviewed and approved the transfer

Explain why the labor expense was posted to the incorrect PTA Explain why the labor expense should be transferred to the proposed

receiving account. How does the receiving account benefit? Explain why, based on the terms of the receiving award, the charges

are allowable and allocable Will be reviewed and approved by LDU at Caltech Depending on the Division, a signed cost transfer and justification

form may be required

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Cost Transfers

Procedures for transfers after 90 days Fill out cost transfer and justification form Answer questions 1 through 5 in Section C Must be signed by PI, Division Chair and Project

Accounting official Send form and supporting documentation to Project

Accounting Project Accounting will notify submitter if transfer is not

approved If a labor transfer, PA will forward copy of form to LDU for

system approval

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Cost Transfers

What qualifies as an extenuating circumstance? Late issuance of appropriate documentation for reasons

beyond the control of the requestor, such as late issuance of an award by a funding agency

Failure of another department to take action when supporting documentation had been properly submitted

Transfer of expenditures from an unrestricted account to a federal award that was not in place when the expense was incurred

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Cost Transfers

What will not qualify as an extenuating circumstance? Absences of the PI or cognizant administrator Shortage or lack of experience of the staff

administering the awards Federally funded sponsored accounts used as a

holding account for expenditures

If in doubt send PA a draft for review and feedback before obtaining signatures

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NIH NRSA Fellowships

Use the correct expenditure type to prevent overhead being applied “Res/Postdoctoral fellows”

Be aware that if a fellow engages in training for less than 6 months of the award year, one half of that years supply allowance must be returned to the NIH

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Budget Re-alignments

Why does budget sometimes have to be realigned? Linked awards

There must be budget at the PTA level for an invoice to be generated (may need to transfer funding between the main award and the linked award)

May wish to re-align budget between categories (subject to the terms and conditions of the award)

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NIH Salary Cap

NIH imposes a limitation on the rate of pay individuals may receive as compensation from NIH fundsFor calendar year 2004, the cap is $175,700 per yearNIH also mandates that the portion of the individual’s salary that represents the difference between the capped rate and the actual rate may not be received from federal sourcesThe rate can and usually does change on an annual basis

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NIH Salary Cap

For example:PI with a salary of $200,000 per year25% paid by an NSF grant; 25% by an NIH grant; 50% by CIT funds The PI may only be paid $43,920 from NIH

funds (he will be paid $50,000 from NSF funds)

The difference of $6,080, which exceeds the NIH cap, can be paid from non-federal sources

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NIH Salary Cap

At Caltech an excel spreadsheet is available to assist division/center personnel in calculating the appropriate percent of time needed to input into the payroll system in order to maintain consistency with the NIH salary capThis document also serves the purpose of providing an audit trail

http://atc.caltech.edu/Finance/policies.htm

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NIH Salary Cap

Procedure:Prior to initiation of any payroll transaction from NIH funds, the division determines which employees are above the salary cap

Divisions utilize the NIH salary cap template to determine the percentage of salary that can be charged to relevant NIH grants, and what portion should be charged to non-federal funds

Divisions should retain completed NIH salary cap template as part of the record of that payroll transaction

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NIH Salary Cap

Procedure:On annual basis, and at the end of each NIH award’s competitive cycle, Project Accounting will run a report on that award to verify that all salary payments were consistent with the NIH salary cap in effect at the time of the payment, and work with the Division/Center to make necessary adjustments

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Foreign Travel

Prior approval for foreign travel may be required on some awards

In those circumstances, even if the travel benefited the award, the costs will be unallowable on the award unless prior agency approval was obtained

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Foreign Travel - FDP

Prior approval for foreign travel is sometimes waived on FDP awards - depends on the agencyPrior approval waived for:AFOSR AMRMC DOE NASANIH NSF ONR USDA

Prior approval required for: ARO EPA

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Foreign Travel – Non-FDP

Look out for : JPL (prior approval is always required) Non-FDP grants & co-operative agreements Contracts There is a high likelihood that prior approval

will be required on these type of awards

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Award Close-Out

30 day notice prior to end date

NCE required? (best to make request prior to the end date otherwise sponsor approval required)

90 days from end date to close out the award

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Award Close-Out, cont’d

Out of period costs

Equipment purchased close to the end date

Overspends (Don’t wait until the end of the award)

Underspends (underspends on fixed price contracts may be transferred to gift awards)

Clear commitments

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Payroll Distribution (aka Effort Reporting)

http://atc.caltech.edu/Finance/coststudies.htm

Policies & Procedures

Payroll Distribution FAQ’s

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Payroll DistributionOMB Circular A-21

Section J.10.b(2)aThe payroll distribution system will … reasonably reflect the activity for which the employee is compensated by the institution… Section J.10.c.(1)(e)At least annually a statement will be signed by the employee, principal investigator, or responsible official(s) using suitable means of verification that the work was performed, stating that salaries and wages charged to sponsored agreements as direct charges…are reasonable in relation to work performed.

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Payroll DistributionProcedures

Report Distribution Every 6 months

July and January, for 6 months ending March 31 and September 30, respectively

Timing allows for cost transfers to be processed within 90 days

Reports distributed to contact person

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Payroll DistributionDefinition

Payroll confirmation reporting is the formal verification of the reasonableness of payroll charges to sponsored awards

In general each faculty/PI will receive 2 reports to sign Faculty Report (detailing his/her own charges) Award Manager Report (detailing the

individuals charging to his/her awards)

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Payroll DistributionContact Person

Each Faculty and Award Manager Report is associated with a contact personThe contact person is responsible for distributing reports to, and receiving from, faculty and/or award managersContact persons were provided by Division Administrators for the first reporting cycleThe Award Set Up Form currently requests that a Payroll Confirmation Contact Person be designated

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Payroll DistributionCognizant Signatory

Responsibility for confirmation may be delegated to a cognizant signatory

A cognizant signatory is any individual who:

1. Has suitable means of verification that work was performed, and

2. Has the knowledge to confirm that the payroll charges were reasonable in relation to the work performed

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Payroll DistributionProcedures

Review the information on the report and confirm that it represents a reasonable distribution of payroll charges for the work performed If there is a disagreement that the work was performed and/or that the distribution is reasonable, Cost Studies should be notified immediately Cost Studies will work with the award manager/contact person to determine the appropriate course of action. A cost transfer request may need to be processed by the Division/center through Project Accounting. The Cost Transfer policy will apply to such requests

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Useful Expenditures Types

Caltech currently has 309 active expenditure types Fortunately,119 are for use by Finance only, 16 are

for recharge centers, and 4 are for burden expenditures,

But, that still leaves 170 to choose from….

For a complete listing go to:https://fiji.caltech.edu:9013/pls/CNTR/CITWA_EXP.MAIN.PKG.startup

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Expenditure Types

Expenditure Type # of hits in FY2004Supplies - Allocable 363,699 Travel - Domestic Allocable 41,149 Travel - Foreign 9,109 Supplies - Unallocable 8,981 Entertainment* 5,207 Telephone Expense 4,734 Equipment - Caltech 4,386 Mtgs and Conf Exp - Allocable 3,498 Equipment Maintenance 3,344 Subcontracts- Over 25k 1,864

Top 10 Expenditure Types

* Entertainment should never be charged to a sponsored award

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Expenditure Types -Supplies

Expenditure type Expenditure definition Usage Chargeable to a sponsored agreement?

Supplies - Allocable "Supplies that are allocable under applicable cost principles"

Supplies that are necessary for the overall operation of the Institute

Yes, if the costs directly benefit the research

Supplies - Unallocable "Supplies that are not allocable under applicable cost principles"

Examples: Flowers, gifts, donuts, departmental lunches (non-business related)

Never

• Allocable or unallocable? Is this the type of cost that the Federal Government should be paying for either directly (direct charge to an award) or indirectly (recovered through the F&A rate)?

• Caltech includes costs categorized as ‘supplies allocable’ in the pool of overhead costs that we, partially, recover from Federal agencies: we exclude costs categorized as ‘supplies unallocable’ from that pool of overhead costs

• If in doubt use the front page of the newspaper test...

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Expenditure Types -Equipment


Equipment- Caltech Equipment where title is retained by the Institute and is to be carried as an asset under the Institute's capitalization policy

Use the “Equipment - Caltech” expenditure type if:Caltech will have title to the asset, AND Unit cost is $5,000 or more (including freight and tax), AND Item has a useful life of 2 years or more, AND Item is a stand alone asset

Yes, if the project directly benefits from the equipment and an allocable cost for that award

Equipment - Gov't Equipment where title is retained by the government and tracked by the Institute

•Use the “Equipment - Govt” expenditure type if:–The Government retains title to assets over $5,000, AND the additional equipment criteria are met OR–The Government retains title to items under $5,000, AND the additional equipment criteria are met (typica

Yes, if the project directly benefits from the equipment and an allowable cost for that award and the government will retain title

Equipment - Other Equipment where title is retained by others (excluding the government) and tracked by the Institute

–Use the “Equipment – Other Owned” expenditure type if:The non-federal sponsoring agency retains title to assets over $5,000, AND the additional equipment criteria are met OR –The non-federal sponsoring agency retains title to items under $5,000, AND the

Yes, if the project directly benefits from the equipment and an allowable cost for that award and the sponsor will retain title

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Expenditure Types -Determining Title

Sources of Information:Oracle: https://fiji.caltech.edu:9013/pls/CNTRL/CITWA_POTA_PKG.startup Type in award number Double click on ‘award detail’ Scroll down to equipment

Award summaryOffice of Sponsored Research

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Expenditure Types


Equipment Maintenance Service and material costs incurred to maintain equipment (other than computers) - Subject to IDC

Any equipment maintenance, whether one time or for a maintenance agreement. Note that Overhead is applied

Yes, if direct benefit and allowable under terms of the award

Computer Software Computer costs associated with various packages, programs, routines and symbolic languages that control the functioning of the system (excluding hardware and maintenance costs)

Equipment expenditure types should not be used for software. Software is not considered capital and overhead will be applicable

Yes, if direct benefit and allowable under terms of the award

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Expenditure TypesTravel


Travel - Domestic Allocable "Travel costs incurred for an individual on official Institute business within the United States that are allocable under applicable cost principles"

Must be allowable in accordance with Caltech's travel policy. Normally, only the cost of economy travel should be charged as allocable.

Yes, if allowable

Travel - Domestic Unallowable

"Costs incurred to take a trip or journey within the United States that are not allocable under applicable cost principles"

Example: difference in cost between a first class upgrade and economy fare

No

Travel - Foreign "Travel costs incurred for an individual on official Institute business outside the United States"

Must be allowable in accordance with Caltech's travel policy. Normaly, only the cost of economy travel should be charged as allocable.

Yes, if allowable and prior approval obtained if necessary

Travel - Foreign Unallowable "Travel costs incurred for an individual on official Institute business outside the United States that are not allocable under applicable cost principles"

Example difference in cost between a first class upgrade and economy fare

No

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Expenditure TypesMeetings & Conferences


Mtgs and Conf Exp-Allocable "Costs incurred to attend meetings and conferences that are allocable under the applicable cost principles"

Costs of meetings and conferences, when the primary purpose is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, and other items incidental to such meetings or conferences.

Yes, if the award directly benefits and the cost is allocable under the terms of that award

Mtgs and Conf Exp-Unallowable

"Costs incurred to attend meetings and conferences that are not allocable under the applicable cost principles"

Examples might include attendance at a civic or community organization

No

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Expenditure TypesParticipant Support Costs

Expenditure type Expenditure definition

Mtgs - Participant Support (Materials & Supplies) Direct costs for registration or conference fees associated with meetings, conferences, symposia or training projects that are paid to, or on behalf of, participants or trainees who are not employees of the Institute

Travel - Participant Support Direct costs for stipends, subsistence allowances and travel allowances associated with meetings, conferences, symposia or training projects that are paid to, or on behalf of, participants or trainees who are not employees of the Institute

Stipend Participant Support Stipends paid under NSF grants that provide for participant support costs

Stipend Participant Support UG Use only for stipends paid to undergraduate students on NSF- REU awards

• Why is it important to use the correct expenditure type? Because participant support costs are overhead free

• Administrative costs such as room rental, copying, postage, and clerical services do not qualify as Participant Support costs.

• To rebudget funds from participant support cost category to another category requires Program Officer approval

Post Award Accounting at Caltech

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