Accounting Office

Uniform Guidance

Recipients of Federal funding are required to have solid management practices for administering the award, and have accounting practices that align with cost principles. Cost Principles, as defined in the Uniform Guidance Subpart E, specify that a cost can be charged to a Federal award only if it is allowable, reasonable, and allocable. In addition, items of cost must be consistently treated by the award recipient.

Click here to determine if your expenditure meets the compliance test for use of federal funds. 

Factors in Determining Allowability

UG §200.403 Factors affecting allowability of costs

Allowability of a cost can be determined by answering the following questions:

• Is the cost reasonable and necessary for the program?
• Is the expense in compliance with laws, regulations and grant terms?
• To what extent is the expense allocable to the grant?
• Is the cost adequately documented?
• Is the cost consistent with grantee rules that apply to both Federally funded and non-Federally funded activities?

When Are Costs Reasonable?

UG §200.404 Reasonable costs

"A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost." In order to determine if the cost is reasonable, the following questions must be asked:

• Is the cost ordinary and necessary for the program?
• Do sound business practices support the expenditure?
• Are the costs comparable to market prices for comparable goods or services in the geographic area?
• Have all concerned acted with prudence , considering their responsibilities to the organization, community, and others?

How do I Determine Cost Allocability?

UG §200.405 Allocable costs

Allocable means that good or service can be assigned to an award or cost objective in accordance with the relative benefit achieved. Costs must be charged in proportion to the benefits received, and costs incurred for joint or common objectives are included in the institutional Facilities and Administration (F&A) and cannot be charged to the project.

Policies & Procedures

For policies, procedures, and forms related to Extramural Funds, visit the consolidated Business & Financial Services Forms & Resources and Policies & Procedures webpages, which includes information on: 

• Federal Guidelines
• Major Sponsors
• Manuals & Bulletins
• Facilities & Administrative Rate Agreements
• UCOP & UCR Policies
• EMF Procedures (e.g., Cost Transfers, etc.)

Award Setup

Once an award is approved in Kuali, it is automatically transferred to Oracle Financials. Each Kuali Award issued by the Sponsored Programs Administration (SPA) is associated with a PPM Award; both share similar numbering; for example, Kuali Award 012345‐0001 would be associated with PPM Award K012345. Each PPM Award may have one to many related PPM Projects. The ten‐character PPM Project code utilizes the PPM Award number as its basis; for example, PPM Award K012345 would be associated with project K012345001, K012345002…K012345099. The PPM project is one element of the UCR Chart of Account (COA) GL chart string and the primary element in the PPM POETAF chart string.

Distinct Projects will be created automatically by the Accounting Office (EMF) for the following, and there is no need to submit requests for these items: 

• Main Prime PI (new awards will end in '001'; awards converted from UCRFS may be numbered differently)
• Participant Support (next sequential project)
• Cost Share (ends in '099'. Note: department must provide fund‐activity‐function‐program code of cost sharing source via Kuali Build form)
• Program Income (formerly known as STIP; end in '098')
• Fabrications (ends in 'FXX' and will be defined by General Accounting based on approved fabrication requests)
• Sponsored Capital Programs (starts with 'RV'; note numbering is based on capital project numbering)
• Components subject to different Facilities and Administrative Rates than main award (next sequential project)
• Annual funding with no automatic carryforward to future years (next sequential project)

EMF will assign the department's default Chart of Accounts (COA) to the Award. If the PI and/or Department wishes to utilize a different COA for a particular project, then the Chart of Account - Sponsored Programs (for Cost Sharing and/or Default Override)  form must be completed and routed to EMF.  (A link to that form will be embedded in the Award notification email.) 

Project Budget

Departments receive an email notification with the award details, indicating that a PPM Project it is ready for budgeting. To create and manage a PPM Project budget, department analysts (research administrators/grants analysts) are required to complete the Oracle: Project Portfolio Management for Contracts and Grants training. For more information, visit Finance Training. 

To begin charging expenses to a project, the budget must first be created and baselined. Coordination with EMF is required to reallocate funding between direct and indirect costs, budget years, or projects. For EMF to make adjustments, the project budget must be reduced (not placed in BC75). You can view your award allocation details by referring to the Funding section under 'Awards &Projects.' 

Please note that after project budgets are established, a known issue may cause inconsistencies on the Award Overview page, where budget updates may not display accurately, though actuals remain correct. Reliable budget information can be found in the Review section. To fix this, resubmit your project budget to update the Award Overview page.

New Project Requests 

New Projects may be created upon request from Prime PI’s department for Kuali contract and grant sponsored awards under the following circumstances:

• Budget allocation to Co‐Investigator(s) listed on the award documents
• New project under a different Project Organization (i.e., activity) under the Prime PI’s home department on converted projects.
• Major elements of a sponsor award that must be separately tracked and reported

To initiate a new Project request:

1. Complete this form
   • New Project Name should follow the following format: Agency Award# + Project PI + Expiration Date + (plus “Participant Cost” or “Cost Share” or “Diversity as applicable) + Agency Name + Project Title (up until the field length limit is reached and reserving last 5 characters for uniqueness) + Last three of project number (to ensure uniqueness) Page 2 of 2
   • Allocations to BC35 and BC36 are normally included in the primary project (typically project ending with 001) and will automatically sync with Oracle Budget and Oracle GL with the default activity for Undergrad and Grad Student Aid and function 78—no new project and function override is required in these scenarios.
2. The Prime PI’s C&G analyst must prepare a reduction on the project working budget by the amount to be transferred to the new project and baseline it. Confirm the reduction is complete and provide the version number. Note: Converted project costs will not be able to be transferred to a new project; the budget adjustment should be based on the budget balance as of 6/30/2023
3. Specify the Function Code if other than the award function default
   • Allocations to BC35 and BC36 are normally included in the primary project (typically project ending with 001) and will automatically sync with Oracle Budget and Oracle GL with the default activity for Undergrad and Grad Student Aid and function 78—no new project and function override is required in these scenarios
4. Endorsement of the request by the Department Financial & Administrative Officer (FAO), and if required by the Organizational unit, endorsement of the Org CFAO
5. Email to EMF@ucr.edu using subject “Request for New Project‐(Kuali Award #)”
6. The EMF Manager will review requests to coordinate creating new projects as appropriate.

Expense monitoring is a key aspect of effective financial management at the university, especially for sponsored research. Each sponsored project has a specific purpose outlined in the award's terms and conditions, with the necessary expense types detailed in the approved budget. Sponsors expect a clear connection between the purchased items and the project’s goals.

To ensure expenses are allowable, allocable, reasonable, necessary, and consistently applied, regular monitoring through monthly reconciliation is essential for identifying errors and maintaining compliance.

Chart of Accounts "Project" & POETAF 

To charge expenses to your PPM Project, it is essential to understand the following:

• Data in PPM is displayed through a specialized version of the Chart of Accounts (COA) called POETAF, which stands for:
  Project | Organization | Expenditure Type | Task | Award | Funding Source
   
• POETAF expenditure categories and types are aligned with General Ledger (GL) budget categories and expense accounts.
• Most boundary systems (e.g., UCPath, Banner, Web Recharge, Concur Travel and Expense) utilize GL COA chart string, where only the COA Project Number segment is entered by the transactor, and the data is then mapped to the PPM POETAF structure.
• Native Oracle Financials modules, such as Procurement, require the entire POETAF chart string be entered for transactions.
• Click here to learn about the definitions for all Chart of Account (COA) and POETAF segments. 
• Click here to view a visual representation of how Project vs. Non-Project transactions and data flow through UCR's financial systems and reporting tools.

Oracle Financials - Procurement

When submitting a requisition, users must ensure the accuracy of the chart string. For purchases using Contract & Grant or Capital Project funding (PPM Projects), the Project Number should be entered in the first field, followed by the correct POETAF segments.

A common issue occurs when the Project Number is mistakenly entered in the Charge Account section, leaving out the required POETAF segments. This results in manual corrections for each purchase order (PO) to include the appropriate Project Portfolio Management (PPM) segments. To resolve this, any requisitions with a Project Number (excluding 0000000000 DEFAULT) entered in the Charge Account section are rejected. Additionally, the default COA feature cannot be used for Project-related purchases. Please verify accurate chart string entries to avoid procurement delays.

If your requisition is rejected, click Action, select Edit, clear the Charge Account field, enter the correct Project Number, and submit the revised requisition.

For purchasing or Oracle procurement inquiries, contact Procurement Services by submitting a ticket to 'Procurement & Accounts Payable'.

Click here for guidance on specific direct/indirect costs to consider during budget preparation and post-award financial administration.

Direct Costs

The Uniform Guidance defines Direct Costs in §200.413 as follows:

Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs.

The most commonly used direct costs budget categories include: salaries and wages, fringe benefits, equipment, travel, materials and supplies, participant support costs, publication costs, consultant services, computer services, subawards. Other categories may exist, like for example student stipends and payments to human subjects. In order to avoid possible double-charging of Federal awards, the university is required to be consistent in its treatment of each item of cost incurred for the same purpose in like circumstances. However, an expense that would normally be charged as indirect or Facilities and Administrative (F&A) cost can sometimes be charged as a direct cost, depending on circumstances.

In order to directly charge a cost normally treated as an F&A/indirect, the project must have a special need for an item or service that is above and beyond the level of service normally provided, and the cost must meet all of the following conditions:

• Be integral to the project
• Can be specifically identified with the work conducted under the project
• Explicitly included in the sponsor approved budget or other written approval
• The cost is not also recovered as indirect cost

Indirect Costs

Indirect costs are sometimes called Facilities and Administrative (F&A) costs, overhead, or research operating costs. The UC Contract and Grant Manual, Chapter 8-100, provides university with General Policy governing indirect costs, defined in the Manual as follows:

Facilities and administrative (F&A) costs are the indirect costs of conducting research, instruction, or other sponsored activities that cannot be easily attributed to a specific sponsored project. When seeking the reimbursement of indirect costs on a sponsored project, the University is recovering for costs already spent to support these activities.

Examples of indirect costs include grant administrative services, lab operations and maintenance, depreciation and debt services taken on for new construction to provide researchers with modern facilities. University negotiates F&A rates with the Department of Health and Human Services and these rates are reflected in the federally approved F&A Rate Agreement. The university seeks to apply negotiated F&A rates to all extramurally funded projects.

Cost Transfers

The Financial Analysis Office has developed these guidelines to assist campus Internal Auditors and departmental staff in strengthening internal controls over cost transfers to Federal grants and contracts. These guidelines aim to provide questions to help determine whether a transfer is allowable. In previous cost transfer audits, the Department of Health and Human Services identified instances where the University failed to comply with Federal regulations when transferring costs to Federal projects. The auditors identified unacceptable transfers made:

1. to eliminate cost overruns
2. to use up unexpended funds
3. charging projects based on unacceptable allocation methods,
4. containing unallowable costs. 

These issues arose because Federal and University guidelines were not consistently followed, and department-level documentation was often insufficient to ensure the transfers were appropriate. Frequent, tardy, and unexplained (or inadequately explained) transfers, particularly where they involve projects with significant cost overruns or unexpended fund balances, raise serious question about the propriety of the transfers themselves as well as the overall reliability of the grantee's accounting system and internal controls.

Click here Internal Control Cost Transfer Guidelines

Effort Reporting

Effort reporting is the method of certifying to the granting agencies that the effort required as a condition of the award has actually been completed. Federal regulations require that any individual committing effort on a federal or federal flow-through contract or grant certify that the salary charged or cost shared by the institution is reasonable in relation to the effort expended on that project. Uniform Guidance 2 CFR 200 (formerly 2 CFR Part 220 and OMB Circular A-21) sets the criteria for acceptable methods of charging salaries and wages to federally sponsored projects, and requires that institutions follow acceptable methods for documenting the distribution of effort for all project personnel. Faculty serving as investigators on sponsored agreements are responsible for certifying the effort they and their staff dedicate to sponsored activities.

What is Effort?

Effort refers to the time spent on a specific activity, including work on sponsored projects with direct or cost-shared (contributed) salary. It encompasses all university responsibilities, such as research, teaching, preparing proposals, service, clinical duties, and administrative duties, performed over a set period.

What is the Payroll Certification System?

The Payroll Certification System automates the effort reporting and certification process, offering comprehensive information on all effort spent on federally sponsored projects. Since salary expenses make up the largest direct cost on sponsored projects, this system minimizes compliance and audit risks associated with effort reporting. It helps protect the UC Riverside campus from significant audit disallowances and potential loss of federal funding, which could result from an ineffective effort reporting process.

The system presents effort report details in a clear and user-friendly format, captures electronic certifications to track completion and maintain an audit trail, and offers an easy way to correct and re-certify reports. Effort reports must be certified within 120 days after the end of the service period, with certifiers receiving advance notifications.

For information on system access and roles, see Payroll Certification under Financial Applications.

Note: Payroll Certification System is in development. Guidance will be available soon!

Award (Grant) Closeout

The closeout process is a critical step in ensuring that all administrative, financial, and performance requirements for both the University and the Federal sponsoring agency are fulfilled at the conclusion of an award or grant agreement. This process ensures compliance with the award’s terms and conditions, protects future funding opportunities, and maintains financial integrity. Closeout preparation should begin before the Date of Completion (aka Period of Performance) - the date when all work under the award is completed or the expiration date specified in the award document, including any amendments or supplements. This marks the end of Federal sponsorship/grant. OMB Circular No. A-110 

Sponsor Requirements

The financial closeout process ensures compliance with both sponsor and University policies. Timely submission of financial reports and invoices is essential for reimbursement of allowable project costs. Closeout policies and procedures vary by sponsoring agency, and it is critical to properly interpret and apply all relevant rules and regulations. Order of Precedence for Closeout compliance:

1. Individual Award Terms
2. Government or Federal Regulations
3. University Policies

In most cases, the most restrictive rule will take precedence.

Campus Obligations

The campus has experienced delays in receiving payments and processing new or renewal awards due to the late submission of required reports. The two primary issues contributing to these delays are overdrafts and unexpended balances. To ensure timely fiscal compliance with both sponsor and University guidelines, the University, in collaboration with the PI and relevant departments, must take the following steps:

• Extramural Funds (EMF) Team Responsibilities: The EMF team is responsible for ensuring timely and accurate financial reporting to the sponsoring agency.

• Principal Investigator (PI) Responsibilities: The PI is responsible for adhering to award-specific terms and conditions, including submitting all required reports (financial, programmatic, invention, inventory, and equipment). To facilitate a smooth closeout process and prevent delays, the PI (and C&G Analyst) must:

  1. Clear Overdrafts: Preform a cost transfer or other necessary documentation to shift charges to an appropriate non-Federal fund in the event of an overdraft.
  2. Seek Financial Support: If needed, request assistance from the Department Chair or Dean’s Office to obtain appropriate funds.
  3. Return Unexpended Funds: If a balance remains at the end of the award, prepare a memo to the Accounting Office (EMF) requesting that unexpended funds be returned to the sponsoring agency.
  4. Submission Deadline: Submit all financial, performance, and other required reports to the Federal sponsoring agency within 120 calendar days after the award’s completion, unless an extension is granted. Ensure all expenses are accurately recorded on the ledger within this 120-day period

Please communicate with EMF if an award is about to end or has ended and there are expenditures that have not yet posted to the project. This information is essential for the EMF team as it can affect final invoicing. If the EMF team does not have this information, and final invoicing has been processed, there is no guarantee the additional expenditures will be reimbursed.

Closeout Procedure in Oracle Financials (PPM)

The closeout process for sponsored projects begins when the Extramural Funds (EMF) Team changes the project status to 'Pending Close'. At this stage, departments should ensure:

1. All purchase orders are closed.
2. All costs are posted.
3. All transactions are fully processed.

Once these actions are completed, the EMF team finalizes the process by updating the project status to Closed. By following these guidelines, Principal Investigators and departments can ensure timely and accurate completion of the award or grant closeout process, maintaining fiscal compliance and protecting future funding opportunities. 

Project Status definitions below:

• Pending Close: No new transactions can be initiated, but current transactions may still be processed.
• Closed: No further transactions are allowed on the project.