utk-spa-understanding f&a costs
TRANSCRIPT
Understanding F&A Costs
2
Definition of F&A• “F&A costs are those that are incurred for
common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity”
3
Definition• Facilities & Administrative costs is an
easy mechanism for charging a sponsored project an added cost for facilities used and administrative costs– Some costs are too difficult or too time
consuming to account for on an individual project basis
– This is a shortcut accounting method for general instead of project-specific costs
– Actual project direct costs multiplied by a predetermined percentage rate
4
Regulatory guidance• Uniform Guidance
– Direct costs and F&A cost– Identification & assignment of F&A cost
• To determine UT’s F&A rate, the nature of our costs are evaluated and classified in prescribed cost pools for facilities costs and administrative costs
– Determination & application of F&A cost rates
5
Direct versus F&A costs• Direct costs
– Salaries, staff benefits, supplies, long-distance phone calls, travel, equipment, subcontracts
– Exception to “basic support” costs
• Due to nature of project technical work
• F&A costs– Facilities costs
• Bldgs, equip, electricity, library
– Admin costs• “Basic support”
costs
6
Expenses included in F&A• Facilities
– Buildings– Sidewalks– Electricity / fuel– Equipment– Library– Security– Custodial
• Administrative– Department clerical &
admin staff salaries– Research & business
offices– Basic office supplies &
expenses– Portion of other admin
costs – Dept Head, Dean, system charge, etc.
7
F&A facts• Federally-approved rate applied to a specified
cost base• Matrix of rates in effect• Reimbursement for expenses already paid by
UT to support research– These are real costs!
• Predetermined F&A rates to be used prospectively
• Fixed rate for the life of the sponsored project– This is really important!
8
Matrix of F&A rates• Campus• Function
– Instruction– Research– Other sponsored Activities
• Location– On-campus– Off-campus
• Award year– Same rate for life of project
• This is a requirement of Uniform Guidance
KNOX INSTRUCT ON-CAMPUS
48.0
48.0
49.0
49.0
49.0
49.0
49.0
49.0
53.0
53.0
53.0
53.0
MTDC
KNOX INSTRUCT OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
KNOX RESEARCH ON-CAMPUS
46.0
47.0
47.0
48.0
48.0
49.0
49.0
49.0
49.0
51.0
51.0
51.0
KNOX RESEARCH OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
KNOX OTHER SPONSORED ACTIVITY ON-CAMPUS
32.0
32.0
36.0
36.0
36.0
36.0
36.0
36.0
38.0
38.0
38.0
38.0
KNOX OTHER SPONSORED ACTIVITY OFF-CAMPUS
24.0
24.0
21.0
21.0
21.0
21.0
21.0
21.0
26.0
26.0
26.0
26.0
KNOX IPA AGREEMENTS 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 7.1 7.1 7.1 7.1 TULL INSTRUCT ON-CAMPUS
34.8
31.7
31.7
31.7
31.7
55.0
55.0
55.0
55.0
55.0
MTDC
TULL INSTRUCT OFF-CAMPUS 26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0 TULL RESEARCH ON-CAMPUS
50.3
50.0
50.0
50.0
50.0
55.0
55.0
55.0
55.0
55.0 TULL RESEARCH OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0 IPA AGREEMENTS
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
CHATTANOOGA ON-CAMPUS
45.5
45.5
45.5
48.0
48.0
48.0
50.0
50.0
51.0
51.0
51.0
51.0
SAL & WAGES
CHATTANOOGA OFF-CAMPUS
13.1
13.1
13.1
14.5
14.5
14.5
16.0
16.0
16.0
16.0
16.0
16.0
MARTIN ON-CAMPUS
44.0
44.0
44.0
44.0
44.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
SAL & WAGES
MARTIN OFF-CAMPUS
16.0
16.0
16.0
16.0
16.0
18.5
18.5
18.5
18.5
18.5
18.5
18.5
MEMPHIS INSTRUCT ON-CAMPUS
37.0
44.3
44.3
44.3
43.7
43.7
43.7
43.7 MTDC
MEMPHIS INSTRUCT OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
MEMPHIS RESEARCH ON-CAMPUS
46.0
46.0
47.0
48.0
49.5
49.5
50.0
50.0
MEMPHIS RESEARCH OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
MEMPHIS OTHER SPONSORED ACTIVITY ON-CAMPUS
39.0
36.1
36.1
36.1
28.0
28.0
28.0
28.0
MEMPHIS OTHER SPONSORED ACTIVITY OFF-CAMPUS
23.9
26.0
26.0
26.0
21.2
21.2
21.2
21.2
MEMORIAL RES CTR INSTRUCT ON-CAMPUS
38.0
38.0
38.0
24.5
24.5
24.5
24.5
24.5 MTDC
9
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 BASE
Current F&A Rates by Campus
MEMORIAL RES CTR INSTRUCT OFF-CAMPUS
23.0
23.0
23.0
24.5
24.5
24.5
24.5
24.5
MEMORIAL RES CTR RESEARCH ON-CAMPUS
38.0
38.0
38.0
38.0
38.5
38.5
38.5
38.5
MEMORIAL RES CTR RESEARCH OFF-CAMPUS
23.0
23.0
23.0
23.0
22.3
22.3
22.3
22.3
MEMORIAL RES CTR OTHER SPONSORED ACTIVITY ON-CAMPUS
38.0
38.0
38.0
38.1
38.1
38.1
38.1
38.1
MEMORIAL RES CTR OTHER SPONSORED ACTIVITY OFF-CAMPUS
23.0
23.0
23.0
26.0
26.0
26.0
26.0
26.0
AG EXPERIMENT STATION-ON-CAMPUS
35.0
35.0
40.0
40.0
40.0
40.0
40.0
40.0
44.0
44.0
44.0
44.0
MTDC
AG EXPERIMENT STATION-OFF-CAMPUS
22.0
22.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
AG EXPERIMENT STATION-IPA AGREEMENTS
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
6.0
6.0
6.0
6.0
AG EXTENSION SERVICE-ON CAMPUS
15.0
15.0
16.0
16.0
16.0
16.0
16.0
16.0
18.0
18.0
18.0
18.0
MTDC
AG EXTENSION SERVICE-OFF CAMPUS
12.6
12.6
13.0
13.0
13.0
13.0
13.0
13.0
14.0
14.0
14.0
14.0
AG EXTENSION SERVICE-IPA AGREEMENTS
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.4
2.4
2.4
2.4
IPS ON-CAMPUS
28.8
28.0
28.0
28.0
28.0
35.0
35.0
35.0
35.0
35.0 MTDC
IPS OFF-CAMPUS
21.0
22.0
22.0
22.0
21.0
26.0
26.0
26.0
26.0
26.0
VET MED INSTR ON-CAMPUS
*
*
49.0
49.0
49.0
49.0
49.0
49.0
*
*
*
*
MTDC * For FY06 - FY08 and FY15 - FY18Instruction should use Knoxville rates
VET MED INSTR OFF-CAMPUS
*
*
26.0
26.0
26.0
26.0
26.0
26.0
*
*
*
*
VET MED RES ON-CAMPUS
45.0
45.0
46.0
46.0
46.0
46.0
46.0
46.0
47.0
47.0
47.0
47.0
VET MED RES OFF-CAMPUS
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
26.0
VET MED IPA AGREEMENTS
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
5.3
5.3
5.3
5.3
10
11
Frequency of computation• Computer program is executed
monthly during the month-end closing process– This normally occurs on the 3rd or 4th
business day of the following month
12
Basis of computation• Expenditures that posted to the
WBS Element for the month• Attributes present on CJ20N for the
WBS Element– Control tab - Costing sheet and
Overhead key– Cust enhancement tab - F&A box of 5
attributes
13
CJ20N Control tab• Costing sheet
– Budget entity• 01 is Knoxville
– Source of funds• F is Federal
– Base• M is MTDC
• Overhead key– Budget entity
• 01 is Knoxville– Function
• R is Research– Location
• N is on-campus– Rate agreement year
• 02 is 2002
These attributes are critical because they actually control the
F&A postings
14
CJ20N Customerenhancement tab
• These attributes are for informational purposes only – they don’t actually control the F&A and F&A cost sharing postings– Audited base– Audited rate %– Allowed base– Allowed rate %– Location
15
Audited versus allowed• The audited rate and base are
predetermined based on UT’s F&A rate agreement with the Federal government
• The allowed rate and base are those specified in the individual award document or sponsor rules
• For most sponsored projects, the sponsor allows us to charge our audited rate– If not, it’s called F&A cost sharing
16
Cost bases• Modified Total Direct Costs (MTDC)
base• Salaries & Wages (S&W) base• Total Direct Costs (TDC)• Other
17
MTDC base• MTDC is Modified Total Direct Costs• Definition:
– Total direct costs minus certain modifying cost elements
– Modifiers mandated by Federal government• MTDC is the most common audited base
and is specified by the Federal government in F&A rate agreements with large research institutions– All of UT except for Chattanooga and Martin
which use Salaries & Wages base
18
Modifiers Memorize these cost elements:
– 461000 Equipment– All of 444000 Grants & Subsidies
(includes 444100 Student Fees)– 482100 Subcontracts > $25,000– 441300 Real Estate Rental– Patient Care costs **– Participant Support costs **
**Several different cost elements
19
Subcontracts modifier(These rules apply to each subcontractor
for the life of the project)
• Cost element 481100– Subcontracts up
to $25,000• Does incur F&A
costs
• Cost element 482100– Subcontracts
greater than $25,000
• Does NOT incur F&A costs
20
MTDC computation exampleCost
Element Description Expenditures410000 Salaries $50,000420000 Benefits 15,000431000 Travel 3,000439000 Supplies 2,000444100 Student Fees 4,000461200 Equipment 10,000481100 Subcnt < $25,000 28,000
Total direct costs $112,000
Less modifiers:444100 Student fees ($4,000)461200 Equipment (10,000)
Total modifiers ($14,000)
MTDC base $98,000
Multiply by F&A rate * 45%
F&A costs $44,100
Total costs $156,100
21
S&W base• S&W is Salaries and Wages• Definition:
– Just salary cost elements make up the base• S&W is the audited base specified by
the Federal government in F&A rate agreements with small educational institutions– UT’s Chattanooga and Martin campuses
22
S&W computation exampleCost
Element Description Expenditures410000 Salaries $50,000420000 Benefits 15,000431000 Travel 3,000439000 Supplies 2,000444100 Student Fees 4,000461200 Equipment 10,000481100 Subcnt < $25,000 28,000
Total direct costs $112,000
F&A computation410000 Salaries 50,000
S&W base $50,000
Multiply by F&A rate * 50%
F&A costs $25,000
Total costs $137,000
23
TDC base• TDC is Total Direct Costs• Definition:
– All direct costs are included in this base• TDC is never an audited rate specified
by the Federal government in F&A rate agreements with educational institutions– But it is a common allowed base
• State of Tennessee agencies use it
24
TDC computation exampleCost
Element Description Expenditures410000 Salaries $50,000420000 Benefits 15,000431000 Travel 3,000439000 Supplies 2,000444100 Student Fees 4,000461200 Equipment 10,000481100 Subcnt < $25,000 28,000
Total direct costs $112,000
F&A computationTotal direct costs 112,000
Multiply by F&A rate * 15%
F&A costs $16,800
Total costs $128,800
25
Other bases• Other bases may be defined and
used by specific sponsors• Other bases are never an audited
rate specified by the Federal government in F&A rate agreements with educational institutions
26
Participant support costs• Uniform Guidance now indicates that
the portion of the award costs directly supporting participants should not bear F&A:– May include various types of costs such as
housing, motor pool, supplies, etc.– These costs must be collected separately in
a WBS Element so that the correct F&A costs can be computed and posted
27
Participant support costs computation example
MTDC base Participant Support CostsCost WBS Element #1 WBS Element #2 Total
Element Description Expenditures Expenditures Expenditures410000 Salaries $35,000 $15,000 $50,000420000 Benefits 10,500 4,500 15,000431000 Travel 0 3,000 3,000439000 Supplies 500 1,500 2,000444100 Student Fees 0 4,000 4,000461200 Equipment 10,000 0 10,000481100 Subcnt < $25,000 28,000 0 28,000
Total direct costs $84,000 $28,000 $112,000
Less modifiers:461200 Equipment (10,000)
Total modifiers ($10,000)
F&A Base $74,000 $28,000
Multiply by F&A rate (Net) * 45% * 0%
F&A costs $44,100 $0 $44,100
Total costs $128,100 $28,000 $156,100
28
F&A posting• Audited F&A costs are debited to
the sponsored project WBS Element using cost element 501000
29
F&A cost sharing• Definition:
– The difference between our audited rate and what the sponsor will allow
• Must be negotiated & approved in advance by campus / unit research office
• Most sponsors will pay our audited rate• F&A cost sharing should be minimized
– A portion of collected F&A is returned to college / unit that generated it
– This is reimbursement for actual costs that UT has already spent
30
F&A cost sharing attributes
• Attributes are located in IRIS on CJ20N– Cust enhancement tab– Settlement rule and settlement parameters
• Can be complicated to set up correctly
31
Allowable F&A attributes• If there is a difference
between the audited rate and base and the allowed rate and base, then F&A cost sharing is indicated
• These attributes are for informational purposes only – they don’t actually control the F&A and F&A cost sharing postings
32
Settlementrequired attribute
• In IRIS, cost sharing is accomplished by a process known as “settlement”
• The “settlement req” attribute must indicate whether or not there is an active settlement rule on the WBS Element
33
Menu path to settlement• The settlement
parameters and settlement rule are attached to the WBS Element
34
Settlement rule
• The settlement rule shows the percentage of F&A costs to be cost shared
• In this example, 92.89% of the F&A costs must be cost shared to get to the allowed rate of 3.2%– 45% * .9289 = 41.8– 45% - 41.8% = 3.2%
35
Settlement parameters• The settlement
parameters control the type of settlement to be done
• Get here via menu path Goto > Settlement parameters
36
F&A cost sharing posting• F&A cost sharing is credited using
cost element 501990 in an amount sufficient so that the net F&A charge is equal to the amount or % allowed by the sponsor
37
Importance of postinggross amounts
• UT records the gross amounts for F&A costs and for F&A cost sharing in separate cost elements– Fully cost the project– Monitor cost sharing for management
purposes– Easily report cost sharing to sponsors– Cost sharing must be quantified for
F&A rate proposals
38
F&A costs and F&A costsharing posting example
CostElement Description Expenditures410000 Salaries $50,000420000 Benefits 15,000431000 Travel 3,000439000 Supplies 2,000444100 Student Fees 4,000461200 Equipment 10,000481100 Subcnt < $25,000 28,000
Total direct costs $112,000
501000 F&A costs $44,100501990 F&A cost sharing (22,050)
Net F&A costs $22,050
Total costs $134,050
Gross F&A costs
Gross F&A cost sharing
Net F&A costs allowable
39
Posting exceptionfor TDC base
• IRIS is unable to charge the audited base and net down to a TDC base
• Solution:– Charge the allowable rate using TDC base
• Implications:– Overstates F&A costs– Overstates F&A cost sharing– Net F&A amount is correct
40
TDC posting exampleCost
Element Description Expenditures410000 Salaries $50,000420000 Benefits 15,000431000 Travel 3,000439000 Supplies 2,000444100 Student Fees 4,000461200 Equipment 10,000481100 Subcnt < $25,000 28,000
Total direct costs $112,000
45% MTDC Audited F&A costs $44,100 correctplug F&A cost sharing (27,300) correct
15% TDC Net F&A costs $16,800 correct
501000 Audited F&A costs $50,400 overstated501990 F&A cost sharing (33,600) overstated
Net F&A costs $16,800 correct
Total costs $128,800
Here’s how we wish we could
post it
Here’s how we actually post it
41
F&A overspending• Sometimes, a PI may over or under
spend a project because only the direct cost budget variance was reviewed– Spending differently than the budget may
cause this if differences are between F&A and non-F&A bearing cost elements
– See the example on the next slide– IRIS reports ZFM_WBS_SUMMARY and
ZFWBS012 calculate amount left to spend taking this situation into account
42
F&A overspending example
Cost Budget ActualElement Description Amount Expenditures410000 Salaries 50,000$ 52,583$ 420000 Benefits 15,000 14,125 431000 Travel 3,000 2,865 439000 Supplies 2,000 5,983 444100 Student fees 4,000 2,844 461200 Equipment 10,000 6,252 481100 Subcnt < $25,000 28,000 26,488
Total direct costs 112,000$ 111,140$
Less modifiers:444100 Student fees (4,000)$ (2,844)$ 461200 Equipment (10,000) (6,252)
Total modifiers (14,000)$ (9,096)$
MTDC base 98,000$ 102,044$
Multiply by F&A rate * 45% * 45%
F&A costs 44,100$ 45,920$
Total costs 156,100$ 157,060$
Underspent direct costs by $860, but OVERSPENToverall by $960 due to spending out-of-category
43
Training classes• 1 Overview of Accounting for Sponsored Projects• 2 OMB Circulars & Cost Accounting Standards• 3 Understanding F&A Costs• 4 Direct Costing• 5 Cost Transfers & Closeout• 6 Cost Sharing• 7 Subcontract Monitoring• 8 Advanced Topics• 9 Invoicing, Reporting & Cash Receipts• 10 Sponsored Projects Reports in IRIS• 11 Business Ethics for Sponsored Projects• 12 Schedule of Final Charges (SFC)
Sponsored Projects Accounting “Certification”
• The Modules listed as Training Classes related to Sponsored Projects can also be taken as a Certification.
• In order to gain a Certification in Sponsored Projects Accounting, you must take the training class and pass a quiz associated with the training module.
• Trainings toward the Certification can be obtained through HR training courses, Blackboard, or In-House training (upon departmental request)
• If taking the training through HR for the Certification you will need to take the quiz. Quiz’s are located in the Sponsored Projects Accounting project section in Blackboard.
• You must be registered as a participant within this project in Blackboard to gain access.
• To be setup in Blackboard contact Jay Taylor, Financial Compliance Officer, SPA @[email protected] or 974-0952.
44
RAOR Meetings• ROAR meetings are held on the 3rd Wed. of each month between 10-
11am.
• Please consider attending these meetings. Each meeting has a specific topic and the meetings are open forum discussion. That means you should bring all your questions based on the topic being presented or just come to provide feedback about your experiences with others based on their questions.
• Also, the topics are chosen by topics/concerns supplied by attendees. The ROAR Committee would love to hear your topic requests.
• These meetings will give valuable information for you to take back to your department!
45