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Fiscal Compliance


Fiscal Compliance – being good financial stewards of the sponsors funding – is just as important as the science or technical aspects of an award. 

The principle investigator (PI) is the primary person responsible for the proper management of an externally sponsored project.  The PI must conduct the work as outlined by the approved scope of work and in accordance with the authorized budget. 

Fiscal Compliance Responsibilities (pdf)

Fiscal Compliance includes but it not limited to the following:

  • Allowable/Unallowable Costs (link to section at bottom)
  • Budget Reconciliation
  • Cost Sharing
  • Cost Transfers
  • Effort Reporting
  • Invoicing/Drawdowns
  • Financial Reporting
  • Sub-recipient Monitoring

In order to be allowable on a sponsored project, all charges must, first and foremost, be reasonable, allocable to the specific project, and allowable under sponsor, university, and state regulations.  The university expects and requires budget authorities to exercise the highest standards of ethical and responsibility in the conduct of grants.

Allowable and Unallowable Costs

Determining whether an expense is allowable or unallowable is the first step in assigning a cost to an award. If an expense is not allowable on an award, do not charge it to that award.  It must be charged to an unrestricted funding source.

The principles of OMB Circular A-21 (A-21) govern costs that may be charged either directly or indirectly to the government by educational institutions.  GC generally applies these same cost principles to non-federal funding as well, although in some cases non-federal sponsors define allowable and unallowable costs differently than federal sponsors.

Each awarding agency has the right to establish its own terms and conditions for its awards. Specific award terms and conditions take precedence over the provisions of A-21.  For example, although travel is not defined as unallowable in A-21, your particular award may designate travel, or more likely foreign travel, as unallowable.  In that case, you may not charge foreign travel to that project.

Allowable Costs – An allowable cost is a cost that can be paid by your contract or grant. GC considers a cost to be allowable when it meets the following tests:

  • The cost is reasonable; it reflects what a prudent person might pay.
  • The cost is allocable; the contract or grant that paid the expense benefits from it. For a cost to be allocable, it must meet one of the following criteria:
  1. It is incurred solely to advance the work under the sponsored agreement.
  2. It benefits the sponsored agreement and the work of the institution, in proportions that can be approximated through the use of reasonable methods.
  3. It is necessary to the overall operation of the institution and is deemed to be assignable in part to sponsored projects.
  • The accounting treatment of the cost is consistent across the campus.
  • The cost is allowable as defined by A-21 and/ or by the terms of the particular award.

These requirements pertain to costs associated with developing a proposal, recording in the University accounting system, or reporting on a financial report.

Unallowable Costs – An unallowable cost is a cost that cannot be paid by your contract or grant. Such costs may be expressly prohibited by A-21 or may be considered unallowable as a result of campus policy or by mutual agreement with a governmental agency.   The University has the responsibility to identify such costs and exclude them from any billing, claim, or award proposal.  Occasionally, a sponsoring agency may state that certain costs are not reimbursable even though they are considered allowable by federal regulations. These costs are unallowable and must be excluded from billing.  

When trying to determining allowability, always refer to the award terms and conditions and contact OGSP if you have questions.

 

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