Penn State - Research Administration
OMB Circular A-21, Cost Principles for Educational Institutions, as clarified by The Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs issued on January 5, 2001, outlines cost sharing requirements for federal assistance awards (grants and cooperative agreements). OMB Circular A-110, Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations: Uniform Administrative Requirements provides specific guidance on cost sharing (see Section 23). To assure compliance, the following guidelines have been developed.
The federal government defines two basic categories of cost sharing, committed and uncommitted:
- Mandatory: Required as a condition to receive an award, and specified by the agency in the proposal guidelines or program announcement. This would be the minimum cost sharing required by the agency. Anything committed beyond the minimum becomes Voluntary Committed cost sharing.
- Voluntary: Committed by the University through the inclusion in the proposal as a specific commitment. This commitment could appear in the proposal either in the administrative/business section (e.g. budget or budget justification) or the narrative.
Committed Cost Sharing - both Mandatory and Voluntary - are accounted for the same and per OMB Circular A-21, must be properly documented for cost accounting purposes. Note: The nature of uncommitted cost sharing (see below) changes to committed as soon as it is included in the proposal budget or award.
- Voluntary: University expenses, such as faculty salaries, that are over and above that which is committed and budgeted for in a sponsored agreement.
Uncommitted cost sharing must not be identified specifically in the proposal budget or award or any modification thereto, and must not be documented or accounted for as part of the award.
Grants and contracts that have any component of committed cost sharing mandatory or voluntary must so indicate on the AURA form (Cost Sharing Y or N field). All changes to committed cost sharing must be updated in IBIS through the UACT screen.
See Policy RA01 Determining The Allowability, Allocability, and Reasonableness Of Costs On Sponsored Projects to determine costs eligible for cost sharing.
To assure compliance with the documentation requirements for committed cost sharing, a cost sharing account must be established either at the administrative or departmental level, using the same budget function (function code) as the agreement (Instruction, Research, Continuing Education). Committed cost sharing for a particular grant or agreement must be accounted for in a separate cost center within this account. The name of the cost center must include the fund number of the agreement for central reporting purposes.
All committed cost sharing for an agreement from general funds should be accounted for through a general fund cost sharing account cost center. Committed cost sharing from miscellaneous funds, such as gifts and endowments or MGR, must be accounted through a miscellaneous fund cost sharing account, using cost centers to identify the match for each grant or contract. Other cost sharing should be accounted for as follows:
Financial Officers should budget cost sharing accounts, as required, and implement controls to assure that general funds are available and expended in accordance with the matching requirements in a particular fiscal year.
Property/Facilities purchased or provided in fulfillment of committed cost sharing must be reported to Property Inventory/Overhead Accounting by the Financial Officer (or delegate).
Equipment: There are additional actions that must be taken to assure that equipment is properly coded in the Universitys Property/Inventory records. All procurement documents should use the M-coding function in the IBIS FANS window for general fund accounts to code the item as being part of a cost-sharing (matching) agreement and should include the appropriate coding to connect it to the correct agreement. The equipment should be accounted for in the Cost Sharing Account. Any changes or corrections to the M-coding status in IBIS after the initial procurement documents are processed must be manually reported to Property Inventory by the Financial Officer (or delegate).
The University does provide matching funds to be used for committed cost sharing purposes. See Guideline RAG02 for more detail. Essentially, these matching funds are used to offset the committed cost-sharing requirement for a particular area. These allocations, approved by the Vice President for Research, should be accounted for as part of the budget in the Cost Sharing Account in the cost center for the particular agreement. In addition, any cost sharing committed at the college or departmental level should also be accounted for as part of the budget in the Cost Sharing Account.
If any costs are or have been questioned as a result of a Government audit, none of these costs shall be transferred between any federally funded accounts, including Cost Sharing accounts, unless and until expressly approved by the Universitys Office of Naval Research Administrative Contracting Officer after a formal Government determination as to the allowability of those questioned costs.
Other Policies in this manual should also be referenced, especially the following:
RA01 - Determining The Allowability, Allocability, and Reasonableness Of Costs On Sponsored Projects
RA02 - Acceptability And Evaluating Of Services, Equipment Or Property Donated To Federally Sponsored Projects
RA03 - Preparing Budgets (Cost Estimates) For Sponsored Projects
Effective Date: October 31, 2001
Date Approved: October 26, 2001
Date Published: October 30, 2001 (Editorial change March 7, 2005)
Most recent changes:
Revision History (and effective dates):