Cost sharing is the portion of project costs not provided by the sponsor. Cost sharing occurs whenever any portion of project costs is provided at USC’s expense rather than at the expense of the sponsor.

Most sponsors expect cost share to be charged in ratio throughout the life of the project. Record cost share in ratio with project spending. It is important to NOT wait until the end of the project to record cost share.

Sponsors can and will withhold reimbursement if you are not meeting cost share requirements!

The method of meeting cost share requirements is determined at the proposal stage and must be approved by the sponsor. Here are three ways to meet Cost Share requirements:

1. Cash Match: Cash outlay by USC using departmental funds or sponsored award funds specifically for cost share or externally provided cash for cost share.
   • Example: A sponsor awards $400,000 for research but stipulates in the agreement that USC must spend $50,000 toward the award.
2. Waived Indirect Cost (IDC): When IDC is “waived” the University agrees not to charge its federally negotiated IDC rate to the sponsor. The portion waived is considered “unrecovered IDC” and can be used as cost share if this is allowed by the sponsor.
   • Example: USC may agree to charge less than our federally negotiated rate to meet our cost share requirements
   • The Post Award Accountant (PAA) is responsible for posting waived IDC monthly.
3. Third Party Match: Third-party in-kind matching includes, but is not limited to, the valuation of non-cash contributions provided by a third party. An in-kind match may be in the form of services, supplies, real property, and equipment.
   • Example: A consultant is volunteering a portion of their time worked on a project, and the value of the time can be used to meet cost share.
   • The department is responsible for providing the PAA documentation (memo from the organization outlining the services they provided) to support the in-kind match being received. The PAA will post the value to the General Ledger. In-kind documentation should be received quarterly, giving GFM the opportunity to report properly.

Cost Share can be:

Mandatory: Cost share that is required by the sponsoring agency. It may be in the form of a specific dollar amount or a certain percentage of total costs.

• Non-compliance Leads to Funding Loss
• Considered Binding Commitment on the Part of University.

Voluntary Committed: Cost sharing that has been proposed by the institution to voluntarily commit a specific portion of the costs of the project when it is not required.

• Included in the proposal as a condition of receiving funding.
• Is a binding commitment to the University.

Voluntary Uncommitted: Cost sharing that is not required by the terms of the sponsored program and is not included or budgeted for as part of the sponsored program.

• May be needed to cover actual effort/cost that is over and above what was committed in the proposal.

Requesting Cost Share combo codes for HCM

• Combo Codes must be created in HCM for cost share to be properly recorded for payroll expenses.
  • Cost Share Request Form [pdf]
  • Cost Share Request Form Instructions [pdf]
• Cost Share Combo Codes begin with a “C”
• Once the combo codes are created, an account change form would need to be submitted for payroll expense to post as cost share on the project.

For non-payroll expenses, Account codes for Cost Share are automatically set up during the award set up process in PeopleSoft.    

Principal Investigators and Grant Support Staff can use the Grant Dashboard in the Finance Intranet to view what expenses have been posted as cost sharing to a sponsored award.  

Expense monitoring is an important component of successful financial management for sponsored projects at the University.  Each sponsored project has specific objectives defined in the notice of award.  The expenses required to complete the objectives of the project are outlined in the approved budget.  Sponsors require, and expect, that there will be a clear link, a one-to-one connection, between the expense items purchased, the project objective and the approved budget.

The principal investigator (PI) and department grant support staff are responsible for the monthly monitoring of the financial activity of their sponsored awards.  All awards, including cost share and program income, should be monitored, and reconciled monthly.

The University uses the Finance Intranet as a reporting solution for PeopleSoft Finance data.   The Grant Dashboard is a report within the Finance Intranet that provides current and available balances by category using budget to actual comparisons and monthly expense transaction listing for sponsored awards. 

Utilizing the Grant Dashboard to monitor sponsored projects helps to:

• ensure that expenses are consistent with the project schedule and incurred between the start and end dates of the project
• discover errors in the budget, encumbrances, or expenses
• prevent overspending
• determine if a rebudget is needed
• verify that corrections and cost transfers have been made in a timely manner
• ensure salaries are allocated correctly based on effort

Monitoring expenses helps the PI to measure the rate at which a budget is being spent.  The rate of spending on a project, also known as a “burn rate”, is often monitored by external sponsors to compare project expectations with expenses incurred.  Inconsistent burn rates during a project or budget period may lead to increased scrutiny, questions from sponsors, or in some cases, a reduction in funding allocation.

Documentation and Justification for Expenses

Documentation is required to justify any expense charged to a sponsored project. All costs charged to sponsored project should be backed up by the appropriate documentation, such as: invoices, receipts, travel reimbursements, evidence of receipt of goods and services, purchase requisitions and purchase orders, and any other related supporting documents.

The backup for expenditures should be adequate to support and justify:

• the expense provides a direct benefit to the award
• the expense complies with any award restrictions and approval requirements outlined in the terms and conditions of the award

There are some sponsors that require receipt level back-up for reimbursement. The Principal Investigator (PI) and grant support staff are responsible for ensuring back-up support for expenses is sufficient for a sponsor.

Use the Monthly Payroll Account Funding Review Checklist [pdf] to ensure expenses are being posted to the award appropriately and timely.

It can be difficult to demonstrate how expenditures near the end of a project period benefited the award. All purchases incurred within the last 90 days of a project period should be reviewed to:

• ensure the item/service was received during the project period
• determine how the item/service provided benefit during the project period, given that it was purchased close to the applicable end date. Providing benefit means having a reasonable amount of use during the project period.

Equipment expenditures near the end of the project period should be reviewed to determine:

• If the equipment was included in the original budget proposal. Include this information with the purchase documentation. If the equipment was identified but not purchased until the end of the award, document how the equipment benefited from the award given the limited amount of time left on the award.
• If the equipment was not included in the original budget proposal, determine and document how it benefited the award, given the limited time remaining.
• If Sponsor approval, as required, was obtained for the purchase of the equipment, document that the approval was received in the purchase documentation.
• If the equipment will not be used exclusively for a project, document how the cost was allocated to other funding sources.
• If applicable, document why the purchase was necessary when the proposal indicated that the project had access to necessary equipment and/or facilities.
• If the equipment was purchased to replace existing equipment, provide details of the equipment being replaced.
• Expenditures were incurred, received, and provide a necessary benefit between the start and end dates of the Sponsor Project.

Scenario:

An Award has a total period of funding from October 1, 2021 – September 30, 2022.  

Allowable:

• Lab supplies were purchased (incurred) and received in November 2021 and used (provided benefit) before the end date of September 30, 2022. The transaction was posted in January 2022.
• Travel for a conference that was in the sponsor approved budget for September 2022 was submitted in October 2022.

Unallowable:

• Lab supplies were ordered (incurred) and received in July 2022 but they were not used (did not provide benefit) during the Total Period.
• An airline ticket was purchased in September 2022 for travel to a conference in October 2022. The benefit (conference) was not received during the Total Period. 
• A laptop was ordered in July 2022 and received in October 2022, after the end date of the Total Period. It could not provide benefit to the Award under which it was purchased. 

A cost transfer is a reallocation or redistribution of a previously charged expense that is being transferred to or from a sponsored project.

Cost transfers should not be used as a means for managing project funds; they must meet the rules for allowability, allocability, reasonableness, and consistency. Cost transfers, when necessary, must be timely.

At no time should a sponsored project be used as a holding account for expenses that will subsequently be transferred elsewhere. Transfers of costs to any sponsored project are allowable only if there is a direct benefit to the project being charged. An overdraft or any direct cost item incurred during the management of a sponsored project may not be transferred to another sponsored project for the sake of resolving a deficit or an allowability issues. Cost transfers may not be used as a means of managing awards or to spend down federal dollars at the end of an award cycle.

Transfers between projects under the same Federal award (based upon the Grant/Contract number) are considered “intra-award reallocations.” These transactions are not “cost transfers” or subject to this policy; however, corrections to sponsored projects should be submitted when the error is found.

Cost transfers must be:

• In conformance with the University and sponsor policies— allowable, allocable, reasonable, and consistent.
• Timely: Cost transfer to sponsored projects must be prepared and submitted within 90-days following the end of the month in which the original charge was posted to the general ledger. Factors that impact or shorten the 90-day window include financial report submission due date, carryforward submission due date, and financial invoice submission due date.

For example:  If an expense is posted on 3/14/2023, you have until 6/30/2023 to correct the charge. 

• Fully Documented and must contain a justification that clearly shows:
• benefit to the receiving project
• allowability and allocability to the new sponsored project
• reason for transfer
• systemic causes are corrected so they will not recur.
• the reason for any delay in the timely processing of the transfer if the transfer date exceeds the definition of timely, above.
• It has been reviewed and signed by the Principal Investigator (PI) on the award.

How to Prevent Cost Transfers?

• review terms and conditions of the award to learn how it should be managed
• establish a financial plan
• maintain accurate projections
• meet with the PI monthly or at least every other month
• reconcile project expenses monthly
• communicate funding changes with HR and payroll in a timely manner
• establish an Advance (Risk) Account to be set up if the Notice of Award is delayed

Resources:

• Cost transfer Policy FINA 3.35 [pdf]
• Visit the Business Manager, Grant Administration, and Principal Investigator training resource pages for additional Cost Transfer information.

Grant Administrators, Principal Investigators, and/or Business Managers are responsible for reviewing report activity monthly to ensure appropriateness toward their research.

The Monthly Payroll Account Funding Review Checklist [pdf] will assist in ensuring expenses are being posted to the award appropriately and timely.

In cases where an award has not yet been issued by the sponsor, it may be appropriate to request the creation of an advance (risk) account to allow work on the project to begin.  Setting up an advance (risk) account will aid in mitigating the need for late-cost transfers.

Circumstances in which an advance account may be justified include:

• instances where an award has been issued, but the negotiation or activation process is taking longer than usual
• restricted carry-forward awards that receive a new account each year
• incoming award transfers for Principal Investigators (PI) joining the University from other institutions

When using Advance (Risk), all expenses must be allowable for the anticipated sponsored project and charged appropriately. If the formally recognized award start date is after the incurred date of any expense, the department must examine whether pre-award costs are allowed. Once a fully executed agreement is received, the account will be finalized, and “Risk” will be removed from the award title.  

Advance (Risk) accounts cannot be invoiced.  When requesting an Advance (Risk) account on awards that exist, please communicate with the Post Award Accountant (PAA) to determine if there are pending expenses that can be invoiced.

Advance/Risk Accounts Responsibilities

Principal Investigator	GFM Post Award Accountant	Grant Support	SAM Office
Step 1: Wishes to begin work on a project upon notification that final award is pending. Completes a Risk Account request.	Step 4: Sets up the Risk Account in Finance PeopleSoft at which time PI can begin charging to the project account.	Step 2: Dean or Chair approves the request for a Risk Account.	Step 3: Sets up the Risk Account in USCeRA.

To request an advance(risk) account, please refer to Risk Account page on the Office of Sponsored Awards Management (SAM) website.

A fixed-price sponsored award is an agreement to deliver a specified service or utilize funds for a specific purpose at a stated cost. If the scope of the work has been completed, any remaining funds may not be required to be returned to the sponsor.  If the funds are not required to be refunded to the sponsor, they are considered residual funds. 

Residual funds occur if the total funding received from the sponsor exceeds the total expenditures at the end of the project and all deliverables have been met.

Once a project is complete, any residual funds (an unobligated, unspent balance) will either be transferred to the Principal Investigator’s department or returned to the sponsor.  The ability to retain the funds will be outlined in the Notice of Award/Contract.   

If there is a residual balance remaining, and the funds are no longer subject to the restrictions of the agreement, the Grants and Funds Management Department (GFM) Post Award Accountant (PAA) will initiate the transfer. 

The PAA will start the process by requesting the Principal Investigator (PI) and department grant administrators to confirm the following information:

• statement of work is complete
• all project costs have been charged to the sponsored project
• all interim and final technical reports have been submitted to the sponsor
• the account to transfer the residual balance to

Allocation of residual funds on accounts with less than seventy-five (75%) percent of the funds expended will require a detailed explanation and sponsor approval that the work was fully completed.

• See the Closeouts Policy FINA 3.15 [pdf]

Overdrafts (also known as overbudgets) occur when expenses recorded on the sponsored award exceed the total budgeted costs per the Notice of Award (NOA).  The department is responsible for covering any overdrafts incurred on an award.

When overdrafts occur, the Post Award Accountant (PAA) with Grants and Funds Management (GFM) will request information on how the overdraft will be handled.  PAA’s will provide the Principal Investigator (PI) and the department grant administrator a date for the overage to be cleared.  If it is not cleared within the requested time frame, the PAA will move the balance to a departmental account. 

Monthly monitoring of award expenses will assist in preventing overdrafts. Overdrafted awards cannot be invoiced until the issue is rectified.

Advance (Risk) accounts are encouraged if additional funding is expected. 

Tools and Policy links:

• See the Elimination of Accounts Overdrafts Policy FINA 3.19 [pdf]
• Monthly Payroll Account Funding Review Checklist [pdf]

Visit our Compliance Management page for Time and Effort reporting information and resources.

Visit our Compliance Management page for Subaward information and resources.

All personnel charges on sponsored projects should follow these general guidelines:

• be in the approved budget and within the grant period reflected on the spending plan
• reflect the actual effort on the grant
• include documentation of direct PI approval of the appointment

All University’s Human Resource policies and procedures must be followed when hiring personnel to work on a sponsored project. Principal Investigator (PI) should contact their department’s grant support personnel to assist with the hiring procedures and requirements.

If you find that there is an error with salaries and fringe, you will need to complete a payroll retro funding change form.  Additional information can be found at:

• Payroll Retro Funding Change Form [pdf]
• For training resources, visit the Business Manager training resource page.

Visit the HR Toolbox for information about hiring employees.

Visit the Account Funding Change section on the Business Manager Training (link) Resources page for information about performing account funding changes in PeopleSoft HCM.

Visit the Personnel page on the SAM Office webite for Salary calculations and details.

The sponsored project team is listed in the Finance Intranet Grant Dashboard.  Roles are assigned during the award set up process.  

The roles for sponsored awards in PeopleSoft include:

• Approver_1/Workflow approver: The PI and Project Level 1 Approver(s), if applicable, required to approve before moving to approval level 2.
• BM/Business Manager: No workflow is assigned for this role. The Business Manager will receive the 90, 30 and 15-day close out notifications. to receive Time & Effort reports, the Business Manager must have the Finance_INIT role in PeopleSoft HCM.
• CGA/Post Award Accountant (PAA) in GFM: Some transactions route to the PAA when charging to a sponsored award. (Payment Request, Non-travel Expense Reports with Food line category, Travel Authorization with budget errors, Journal Voucher GT eForm, and Requisitions)
• CPI/Co-Principal Investigator: No workflow is assigned for this role.
• KEY/Key Personnel: No workflow is assigned for this role.
• PI/Principal Investigator: Once the PI approves as a required level 1 approver, the transaction will workflow to the Project Level 1 Approver, if applicable.  If there is no Project Level 1 Approver, the workflow will move the approver level 2.

Roles are a one-to-one relationship.  In other words, a business manager cannot be listed on the sponsored project as an approver_1 and a business manager. 

Federal and non-federal sponsors perform audits to inspect the University’s sponsored accounts and processes to ensure compliance with the sponsor’s financial requirements. Audits occur as part of federal requirements, as part of specific award terms, and on an ad hoc basis at the discretion of the sponsor. All sponsored audit requests must be directed to the Post Award Accountant (PAA) in the Grants and Fund Management (GFM) Department.

Audits are conducted on sponsored projects to ensure compliance with:

• Federal laws and regulations
• Sponsor requirements
• Award terms and conditions
• Internal policies

In the audit report, an auditor will issue findings for instances of noncompliance, which requires the award recipient to develop a corrective action plan to address deficiencies. Auditors may also identify questioned costs, which is a cost charged to an award in which the auditor believes violates the award terms and conditions and which the recipient should repay the sponsor. The sponsor, or pass-through entity, is responsible for audit resolution.

The University may be audited or monitored through the following:

• Internal Audit
• Sponsor Audits
• Federal Audits

Internal Audit

Internal Audit is an office within the CU System Office that conducts audits within the University and may review all aspects of the award lifecycle. Internal Audit may examine:

• Compliance with University policies
• University activities and procedures
• Award management

Audits Required by Sponsor

Depending on the terms and conditions of an award, sponsors may require audits during the award period or as part of the award closeout. These requirements are specifically stated in the award notice and may require an external audit firm to perform the audit or provide an audit certification.

Sponsors may conduct desk reviews or site visits to ensure compliance with sponsor requirements and internal policies. During a desk review, sponsors may either request specific information or request the completion of a questionnaire or checklist. For example, a desk review may request supporting documentation regarding a specific cost or may request specific information regarding university policies or procedures. Sponsors may also conduct an audit on an award.

Federal Agency Audits

Federal agencies can engage the University in an audit at any point in time to inspect individual awards or multiple projects, depending on the scope of the audit.

Other Types of Audits

The following is a list of audit testing that can occur:

• Invoice Testing – a review of transactions on a specific invoice to test for compliance with sponsored award terms
• Transaction Testing – a sampling of transaction on a sponsored award to test for compliance with sponsored award terms
• Internal Control Testing – assessment of the policies and procedures related to financial transactions to ensure proper controls are in place and being adhered to
• Site Visits – a review of a specific program or project to ensure all aspects of the project are being managed in accordance with sponsor requirements
• Desk Review – a general review of the institution and its internal controls

The Controller’s Office has developed multiple tools for Principal Investigators (PI) and department grant support staff to help monitor expenses on sponsored projects.

Grant Dashboard Tool

The Grant Dashboard is a report in the Finance Intranet created to assist the Principal Investigator (PI) and department grant support staff in monitoring expenses that are posted to a sponsored project. 

The Grant Dashboard provides the ability to:

• Search by: PI, Contract, and Project (USCSP)
• View expenses grouped in the categories as shown on the Standard USC Invoice submitted to sponsors
• Expand categories to show detailed account codes
• Drilldown into the transactions posted to the sponsored project

Visit the Business Manager, Grant Administration, and Principal Investigator training resource pages for additional Grant Dashboard information.

HCM Payroll Distribution Search

This HCM tool displays payroll information by employee, including their pay group, funding chartfield, gross earnings, and the cost of each employee’s benefits to the project.

The Principal Investigator (PI) and department grant support staff can use this tool to complete a monthly review to detect any errors or problems with payroll and fringes posted to a sponsored award. This tool can help verify that the correct employees are funded by the project, employees are charged appropriately, and account changes and retros have been posted to the sponsored project. To access this reporting tool, go to www.admin.sc.edu.

Visit the Business Manager, Grant Administration, and Principal Investigator training resource pages for additional HCM Payroll Distribution information.