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DUKE UNIVERSITY OFFICE OF SPONSORED PROGRAMS POST AWARD

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					         DUKE UNIVERSITY
 OFFICE OF SPONSORED PROGRAMS




POST AWARD ADMINISTRATION MANUAL




               1
                                                         TABLE OF CONTENTS

INTRODUCTION......................................................................................................................................................................5

SECTION A: THE OFFICE OF SPONSORED PROGRAMS ............................................................................................7
    1.    WHY DOES THE OFFICE OF SPONSORED PROGRAMS EXIST? .........................................................................7
       a.  Pre-Award and Post-Award Administration .............................................................................................................7
       b.  Mission of the Office of Sponsored Programs (OSP) ...............................................................................................7
       APPENDIX 1: PRE AND POST-AWARD INVOLVEMENT ..............................................................................................8
    2.    WHO IS THE OFFICE OF SPONSORED PROGRAMS? ............................................................................................9
       a.  Billing Sections: ........................................................................................................................................................9
       b.  Customer Service Section: ........................................................................................................................................9
       c.  Subcontract Administration: .....................................................................................................................................9
       d.  Effort Support Section: .............................................................................................................................................9
       e.  Central Support Section: ..........................................................................................................................................9
       APPENDIX 2: ORGANIZATIONAL CHART ...................................................................................................................10
       APPENDIX 3: WORKLOAD ASSIGNMENTS .................................................................................................................11
       APPENDIX 4: OSP DIRECTORY ....................................................................................................................................13
    3.    WHAT DOES THE OFFICE OF SPONSORED PROGRAMS DO? ..........................................................................14
       a.  Billing and Cash Collections ..................................................................................................................................14
       b.  Record Keeping and Audit Resolutions ..................................................................................................................14
       c.  Monitoring for Compliance ....................................................................................................................................14
SECTION B: GETTING STARTED......................................................................................................................................16
    1.    NEGOTIATIONS........................................................................................................................................................16
    2.    PRE-AWARD COSTS ................................................................................................................................................16
    3.    REQUESTING A COST OBJECT ..............................................................................................................................17
    4.    REVIEWING THE AWARD DOCUMENT ...............................................................................................................20
       APPENDIX 5: TERMS OF AWARD ................................................................................................................................22
    5.    BASIS OF FUNDING .................................................................................................................................................23
       a.   Cost-Reimbursement ...............................................................................................................................................23
       b.   Fixed-Price .............................................................................................................................................................23
       c.   Advance Payment....................................................................................................................................................23
    6.    INVESTMENT OF FUNDS ........................................................................................................................................23
    7.    DEPOSITS ..................................................................................................................................................................24
    8.    PROGRAM INCOME .................................................................................................................................................24
    9.    ALLOWABILITY OF COSTS ....................................................................................................................................25
    10. PRIOR APPROVAL....................................................................................................................................................26
SECTION C: TRANSACTION FORMS ..............................................................................................................................28
    1.      PAYROLL FORMS ..........................................................................................................................................................28
         a.   General Information ...............................................................................................................................................28
         b.   Hire Form ...............................................................................................................................................................29
         c.   Request for Cost Distribution Change ....................................................................................................................29
         d.   Cost Transfer Only Payroll Form ...........................................................................................................................29
         e.   Biweekly Overtime ..................................................................................................................................................30
         APPENDIX 6: RETURN OF COST TRANSFER ONLY PAYROLL FORM .....................................................................31
    2.      EFFORT REPORTING ...............................................................................................................................................32
    3.      NON-COMPENSATORY AWARD(S) FORM (NCAF) ............................................................................................32
    4.      PURCHASE REQUISITION ......................................................................................................................................33
    5.      ACCOUNTS PAYABLE CHECK REQUEST (APCR) ..............................................................................................34
    6.      TRAVEL EXPENSE FORM .......................................................................................................................................35
         a.   General ...................................................................................................................................................................35
         b.   Prior Approval ........................................................................................................................................................35
         c.   U.S. Flag Air Carriers ............................................................................................................................................36
                                                                                            2
    7.       MISCELLANEOUS REIMBURSEMENT FORM ..................................................................................................... 36
    8.       EXPERIMENTAL SUBJECTS PAYMENT FORM .................................................................................................. 36
    9.       INTERDEPARTMENTAL REQUEST (IR) ............................................................................................................... 36
    10.      CORPORATE CARD ................................................................................................................................................. 36
    11.      JOURNAL VOUCHER (JV) ....................................................................................................................................... 37
       a.      General ................................................................................................................................................................... 37
       b.      Initial Charge (SA Document Type) ....................................................................................................................... 37
       c.      Cost Transfer (ZF Document Type) ........................................................................................................................ 37
SECTION D: EQUIPMENT.................................................................................................................................................. 39
    1.     GENERAL .................................................................................................................................................................. 39
    2.     EQUIPMENT PRIOR APPROVAL............................................................................................................................ 40
    3.     FABRICATION (WORK-IN-PROGRESS) OR ASSET UNDER CONSTRUCTION ................................................ 40
    4.     SCREENING AND SHARED USE ............................................................................................................................ 41
    5.     EQUIPMENT OWNERSHIP ...................................................................................................................................... 41
    6.     SPONSOR-OWNED EQUIPMENT ........................................................................................................................... 41
    7.     MANAGEMENT OF EQUIPMENT .......................................................................................................................... 42
         APPENDIX 7: LOSS, DAMAGE, OR DESTRUCTION (LDD) REPORT ........................................................................ 43
SECTION E: DURING THE LIFE OF THE PROJECT ................................................................................................... 44
    1.      FINANCIAL REPORTS ............................................................................................................................................. 44
         a.   R/3 EXPENSE REPORT WITH AWARD AMOUNT............................................................................................... 44
         b.   R/3 REPORT FOR PROJECTS WITH NO AWARD AMOUNT ............................................................................. 46
         APPENDIX 8: GROUPING OF G/L ACCOUNTS ON R/3 FINANCIAL REPORT......................................................... 48
         c.   FUND STATEMENTS (CUFS – Legacy System) ................................................................................................... 49
    2.      FACILITIES & ADMINISTRATIVE COSTS/INDIRECT COSTS ........................................................................... 49
         a.   General ................................................................................................................................................................... 49
         b.   Calculation of F&A Costs....................................................................................................................................... 49
         c.   Modified Total Direct Costs ................................................................................................................................... 50
         d.   Cost-Sharing F&A Costs ........................................................................................................................................ 51
         e.   Internal Distribution of F&A Cost Recovery .......................................................................................................... 51
         APPENDIX 9 Distribution Table for F&A Cost Recoveries - EXAMPLE ....................................................................... 52
    3.      COST-SHARING ........................................................................................................................................................ 53
         a.   General ................................................................................................................................................................... 53
         b.   Definitions: ............................................................................................................................................................. 53
         c.   General Guidelines: ............................................................................................................................................... 54
         d.   Cost-Sharing of Salaries......................................................................................................................................... 55
         e.   Cost-Sharing Equipment ........................................................................................................................................ 56
         f.   Cost-Sharing Other Direct Costs............................................................................................................................ 56
         g.   Cost-Sharing of F&A Costs .................................................................................................................................... 56
         APPENDIX 10: COST-SHARING OF SALARIES ........................................................................................................... 58
    4.      REBUDGETING OF FUNDS ..................................................................................................................................... 62
         a.   General ................................................................................................................................................................... 62
         b.   Internal Approval ................................................................................................................................................... 62
         c.   Sponsor Approval ................................................................................................................................................... 63
         d.   Calculations for Rebudgeting of Funds .................................................................................................................. 63
    5.      OVERDRAFTS ........................................................................................................................................................... 64
    6.      SUBCONTRACTS ..................................................................................................................................................... 64
         a.   General ................................................................................................................................................................... 64
         b.   Subcontracts Awarded To Duke ............................................................................................................................. 65
         c.   Subcontracts Awarded By Duke ............................................................................................................................. 65
    7.      UNALLOWABLE COSTS ......................................................................................................................................... 66
         a.   General ................................................................................................................................................................... 66
         b.   Cost Accounting Standards (CAS) Exception Forms.............................................................................................. 66
         c.   Reviewable G/L Accounts ....................................................................................................................................... 67
         d.   Entertainment ......................................................................................................................................................... 67
         e.   Administrative and Clerical Salaries...................................................................................................................... 67

                                                                                             3
      f.   Local Service Telephone Charges ..........................................................................................................................68
      APPENDIX 11: REVIEWABLE G/L ACCOUNTS ...........................................................................................................69
   8.    INTERIM REPORTING REQUIREMENTS ..............................................................................................................70
      a.   General ...................................................................................................................................................................70
      b.   Interim Financial Report ........................................................................................................................................70
      c.   Interim Property Report..........................................................................................................................................71
      d.   Interim Patent Report .............................................................................................................................................71
      e.   Interim Technical Report ........................................................................................................................................72
      f.   Small and Small Disadvantaged Business Subcontracting Program .....................................................................72
   9.    NO-COST EXTENSIONS...........................................................................................................................................72
SECTION F: CLOSE OF PROJECT ...................................................................................................................................74
   1.    GENERAL...................................................................................................................................................................74
   2.    REPORTS PROVIDED TO DEPARTMENTAL ADMINISTRATOR FOR CLOSING PROJECTS ........................76
      a.   Projects Ending Within 3 Months (ZF110) .............................................................................................................76
      APPENDIX 12: PROJECTS ENDING WITHIN 3 MONTHS ZF110 ...............................................................................77
      b.   Sponsored Projects One Line Summary (ZF109) ...................................................................................................78
      APPENDIX 13: SPONSORED PROJECTS ONE LINE SUMMARY REPORT ZF109 ....................................................79
      APPENDIX 14: SPONSORED PROJECTS ONE LINE SUMMARY REPORT ZF109 ....................................................80
   C.    ANALYSIS OF TRANSACTIONS REPORT AFTER END DATE (ZF114) ..............................................................................81
      APPENDIX 15: ANALYSIS OF TRANSACTIONS AFTER END DATE ZF114 ...............................................................84
      APPENDIX 16: ANALYSIS OF TRANSACTIONS AFTER THE END DATE (ZF114) - EXAMPLE ...............................86
   D.    POST-AWARD CLOSE-OUT CHECKLIST (30X – 38X, 203) .............................................................................................88
      APPENDIX 17 - Post-Award Close-Out Checklist (30x-38x) ..........................................................................................89
   3.    FINAL REPORTS .......................................................................................................................................................90
      a.   General ...................................................................................................................................................................90
      b.   Final Financial Report ...........................................................................................................................................90
      c.   Final Property Report .............................................................................................................................................91
      d.   Final Patent Report ................................................................................................................................................92
      e.   Final Technical Report ...........................................................................................................................................92
      f.   Subcontracts ...........................................................................................................................................................93
   4.    CLOSING A COST OBJECT ......................................................................................................................................93
   5.    RECORD RETENTION ..............................................................................................................................................93
   6.    AUDITS ......................................................................................................................................................................94
      a.   General ...................................................................................................................................................................94
      b.   OMB Circular A-133 Audit.....................................................................................................................................94
      c.   Property Audit ........................................................................................................................................................94
      d.   Procurement Audit ..................................................................................................................................................95
      e.   Individual Audits .....................................................................................................................................................95
   ACRONYMS ........................................................................................................................................................................96
   SPONSORED PROJECTS REVIEW CHECKLIST .............................................................................................................98




                                                                                          4
                                     INTRODUCTION
The POST-AWARD ADMINISTRATION MANUAL (Manual) is designed to acquaint the Departmental
Administrator with the Office of Sponsored Programs (OSP). It also attempts to introduce the
Departmental Administrator to the policies and procedures required in the administration of sponsored
projects. The Manual is divided into six Sections:
        A.     The Office of Sponsored Programs
        B.     Getting Started
        C.     Transaction Forms
        D.     Equipment
        E.     During the Life of the Project
        F.     Close of Project
For easy access, Appendices referenced in the text are placed following the text they pertain to. This
Manual provides forms that are created and distributed only by OSP. Forms created and/or distributed
by other departments have been purposely omitted to avoid possible future distribution of obsolete
versions of the forms. Forms are available at http://www.finsvc.duke.edu/gap/forms.php. Examples
are provided throughout the Manual to illustrate a procedure or method. Current rates or dates were
purposely not used to avoid possible misuse and/or distraction from the intended purpose of the
example. Indirect cost rates and fringe benefit rates are available on-line under Reports, Rates, and
Documents.
        In March of 1999, R/3 became Duke’s official ledger of record. Among many other features,
the R/3 system offers real-time access from the desktop of financial transactions and resulting reports.
On January 2002, Financial Services (OSP is part of Financial Services) began using R/3 for all
financial transactions.
        On July 1, 2003, CUFS (College and University Financial System) became the legacy system
for financial records prior to March, 1999. Sponsored projects 3XXXXXX cost objects are in Company
0010.




                                                     5
                                                INTRODUCTION



                                                         R/3 SYSTEM
           PROJECT SYSTEM (PS) FINANCIAL                                      FUNDS MANAGEMENT (FM)
                       ACCOUNTING (FI)


                    WBSE (Transactions) *                                                 Fund *
                  Project Definition (Reports)
                                None                                                   Funds Center
                            Org Unit **
                        Cost Element ***                                           Commitment Item ***
                     (6 digits ,e.g., 645000)                                     (6 digits ,e.g., 645000)
                           Commitment                                                  Commitment
                      (Equipment 17XXXX)
       * The generic name is “cost object”. Cost object will be used in this Manual.
       ** Also known as BFR code. Org Unit will be used in this Manual.
       *** A generic name is “G/L Account”. G/L Account will be used in this Manual.

For more information regarding R/3 refer to http://www.r3.duke.edu.
       This Manual is provided by OSP for the use of the designated Departmental Administrators.
Reproduction of this Manual is encouraged. The web version of the Manual does not include the
Index. It does, however, provide “hot links” to other manuals, and circulars, referred to in this Manual.
Throughout this Manual references are made to the GAP - General Accounting Procedures. For
questions regarding the GAPs, please contact Accounting Systems & Procedures at 684-2752
       The Office of Sponsored Programs is always available to answer your questions. Our office
hours are Monday through Friday, 8:00 - 12:00 and 1:00 - 5:00. Office personnel are also available to
accept deliveries from 12:00 to 1:00 pm. The office is located at Erwin Square Plaza, 2200 W. Main
Street, 3rd Floor, Suite 300. The Office of Sponsored Programs central telephone number is 684-
5442, and the fax number is 684-8377. Our campus mailing address is Box 104004, Durham, N.C.
27708. Our USPS mailing address is 2200 W. Main Street, Suite 300, Durham, NC 27705. OSP is
glad to schedule individual appointments with Departmental Administrators to discuss or review any
matter involving the post-award administration of sponsored projects. Your comments and
suggestions are always welcome.




                                                            6
                         SECTION A:
            THE OFFICE OF SPONSORED PROGRAMS
1.     WHY DOES THE OFFICE OF SPONSORED PROGRAMS EXIST?
       a.     Pre-Award and Post-Award Administration
       The administration of sponsored projects at Duke consists of both pre-award and post-award
administration. Pre-Award administration is performed by two pre-award offices: the Office of
Research Support (684-3030) for Departments with Org Units of 04xx xxx xxx through 60xx xxx xxx;
and the Office of Research Administration (684-5175) for Departments with Org Units of 68xx xxx xxx.
       The pre-award offices provide assistance from the proposal stage through Duke’s acceptance
of the award and are also involved if an action has the potential of amending or modifying the award
document. Appendix 1 - PRE AND POST-AWARD INVOLVEMENT provides a list of possible actions
and describes both the pre-award and post-award involvement for each action.




       b.     Mission of the Office of Sponsored Programs (OSP)
       OSP exists to perform the post-award administration of sponsored projects by preparing
financial and other non-scientific reports to Sponsors on sponsored projects, monitoring for compliance
with Sponsor and Duke requirements, assuring reimbursement of project expenditures, providing
training and support to departmental administrators, coordinating award documentation and approval
processes with two pre-award offices and other Duke service departments, and answering questions
and providing information to Sponsors and Duke personnel in a prompt, accurate and cordial fashion.
       OSP performs these duties and responsibilities in order that it may safeguard project funds,
maximize Duke's cash flow position, maintain good relations with Sponsors and Duke personnel, and
be viewed by Principal investigators and Departmental Administrators as facilitating the progress of the
sponsored project.
                 APPENDIX 1: PRE AND POST-AWARD INVOLVEMENT
        ITEM                   PRE-AWARD OFFICE                          OFFICE OF SPONSORED
                                                                              PROGRAMS
    NEGOTIATIONS        Negotiates Awards & Modifications

                        Approves Department’s written            Assigns Cost Object in R/3; notifies
  PRE-AWARD COSTS       requests and negotiates amount           Department & Pre-Award Office
                        included in Award document
                        Reviews, negotiates, and accepts         Reviews Award document for items
  AWARD DOCUMENT        Award documents                          affecting all financial aspects, including
                                                                 allowability, billings, and reporting
                        Provides necessary documentation         Reviews documentation for completeness,
                        and requests that Cost Object be         assigns Cost Object and Org Unit; notifies
 REQUESTING A COST      established, assigns department          Department & Pre-Award Office
      OBJECT            responsible for the project
                                                                 If required in Award document , makes
INVESTMENT OF FUNDS                                              arrangements with the
                                                                 Endowment/Investment Office to
                                                                 automatically invest funds
                                                                 Determines Cost Object, G/L Account, and
      DEPOSITS                                                   reviews for appropriateness
                        Reviews at proposal stage                Determines amount to report to Sponsor as
  PROGRAM INCOME                                                 indicated in the General Ledger
                                                                 Processes Cost Transfer Only Payroll
COST TRANSFER ONLY                                               Forms; assists Departments with filling out
  PAYROLL FORM                                                   cost-sharing payroll forms

                                                                 Monitors on-line system Effort Certification
EFFORT CERTIFICATION                                             Reporting Technology (ECRT)
                                                                 Reviews and approves Purchase
PURCHASE REQUISITION                                             Requisitions for capital equipment
                                                                 purchases (excluding 36X & 39X Cost
                                                                 Objects)
CONSULTANT REQUEST      Reviews and approves consultant
                        requests
                        Reviews and approves Rebudgeting         Reviews and approves Rebudgeting Forms
                        Forms; countersigns requests             and enters revised award information in
REBUDGETING OF FUNDS    requiring Sponsor’s approval; notifies   ITD Plan
                        OSP of approval
                        Reviews and approves requests;           Revises financial records, as needed
                        countersigns requests requiring
   PRIOR APPROVAL       Sponsor’s approval; notifies OSP of
                        approval
                        Reviews and approves requests;           Revises financial records, as needed
 NO-COST EXTENSION      countersigns requests requiring
                        Sponsor’s approval; notifies OSP of
                        approval




                                              8
2.     WHO IS THE OFFICE OF SPONSORED PROGRAMS?
       The Office of Sponsored Programs (OSP) has a staff of 33 people (Appendix 2 -
ORGANIZATIONAL CHART). Appendix 3 - WORKLOAD ASSIGNMENTS provides a quick reference
when deciding who at OSP can best assist you with your questions or concerns. Appendix 4 – OSP
DIRECTORY, provides direct dial telephone numbers and email addresses for all the staff of OSP.
Below is a general summary of each section's responsibility.


       a.      Billing Sections: Primarily responsible for preparing and submitting required billings
and/or financial reports. All billing sections are familiar with all aspects of post-award administration
and they encounter the same types of questions. However, each billing section is assigned certain
Sponsors. Even though each Billing section is capable of answering your questions, we prefer that you
direct your project-related questions to the section that has been assigned your Sponsor. Appendix 3 -
WORKLOAD ASSIGNMENTS lists each Billing Section, their assigned Sponsors, function, and the
name of the person to contact.


       b.      Customer Service Section: This Section is responsible for setting up new cost
objects and modifying existing Cost Objects (changes in project period, Org Unit, Principal Investigator,
etc.); depositing revenue received for sponsored projects (checks and wires); processing NIH’s
quarterly Federal Cash Transaction Report; NIH Letter of Credit draws; administering Duke
Endowment awards (36x codes), and non-Government non-reporting codes (39x). This section is also
responsible for “cleaning up” old codes and requesting that they be closed in R/3.


       c.      Subcontract Administration: The section is responsible for reviewing and processing
invoices submitted by Subcontractors for reimbursement, assisting Departments in administering
Subcontracts awarded by Duke to other entities, and monitoring for compliance with the Prime
Sponsor’s requirements as they relate to Subcontracts.


       d.      Effort Support Section: This section is responsible for monitoring the on-line effort
reporting system Effort Certification Reporting Technology (ECRT). In addition, for monthly
employees, they process a department’s Cost Transfer Only payroll forms for payroll changes that
cannot be processed by iForms.


       e.      Central Support Section: Primarily responsible for providing clerical support including,
distributing all the mail received by OSP, directing telephone calls received through the Office’s main
number, directing incoming traffic, mailing reports/billings, and maintaining an efficient filing system for
the Office. This section also maintains the close-out notification process.
                                                     9
APPENDIX 2: ORGANIZATIONAL CHART    OFFICE OF SPONSORED PROGRAMS
                                                                                                   TOM DAVIS
                                                                                                   DIRECTOR




                     Associate                                            Associate                                       Associate
                      Director                                             Director                                        Director

                      Michelle                                            Sandy Hart                                    Heather Webb
                      Rigsbee



   Billing A         Billing E       Central Support          Billing G                Billing B        Billing C           Billing D      Customer Service
                                                                                                                                             Administrative
                                       Administrative                                                 Administrative      Administrative        Manager
 Administrative    Administrative                           Administrative        Administrative
                                          Manager                                                       Manager             Manager           Yvonna Mills
   Manager           Manager                                  Manager               Manager
                                         Francene                                                   Leigh Anne Arnold     Debra Royster    Set up, LOC, close
  Kim Vance        Pat Thompson                             Sharon Amos          Rose Wilkerson
                                        Richardson                                                  31X 32X 34X 38X           30X               36x, 39X
 33X 35X 38X            30X                                    CHAVI                33X 38X
                                    Triage, Emails, Mail,
                                            Files



   Analyst                                                     Analyst                                  Analyst             Analyst            Analyst
                     Analyst              Typist                                       Analyst

  Cynthia                                                   Tara Whitted                               Angela            Brenda Kirk        Wanda Bell
                  Rachael Baker       Cora Butler                                Donna Emory
 Alexander                                                  Subcontracts                               Williams




                                                                                                                                               Analyst
                    Specialist          Secretary                                 Specialist          Specialist          Specialist
 Specialist
                                                                                                                                               Ginger
                  Connie Tubiolo    Felecia Alston                               Sylvia Cotton      Sherrie Clayton      Elaina Cheek
Donna Cates                                                                                                                                   Huguelet




                                                                                                                                               Analyst

                                                                                                                                             Erika King




                                                                  10
                        APPENDIX 3: WORKLOAD ASSIGNMENTS

   WBS           BILLING    Administrative              Analyst        Specialist        Associate
 ELEMENT         SECTION      Manager                                                     Director
  30X XXXX
     BFR
  0xxxxxxxxx        D         Debra Royster            Brenda Kirk     Elaina Cheek      Heather Webb
      to
 686020158x
  30X XXXX
     BFR                      Pat Thompson            Rachael Baker   Connie Tubiolo    Michelle Rigsbee
 686020159x         E
   To End

  31X XXXX          C        Leigh Anne Arnold    Angela Williams     Sherrie Clayton    Heather Webb

 32X XXXX           C       Leigh Anne Arnold     Angela Williams     Sherrie Clayton    Heather Webb

  33X XXXX
     BFR            A           Kim Vance                Cynthia      Donna Cates       Michelle Rigsbee
  0xxxxxxxxx                                            Alexander
      To
 6056500000

  33X XXXX
    BFR             B         Rose Wilkerson          Donna Emory      Sylvia Cotton      Sandy Hart
 6064000000
   To END

  34X XXXX          C        Leigh Anne Arnold    Angela Williams     Sherrie Clayton    Heather Webb
                                                     Cynthia
  35X XXXX          A           Kim Vance           Alexander          Donna Cates      Michelle Rigsbee

  36X XXXX          F          Yvonna Mills                                              Heather Webb
  38X XXXX
     BFR
0000 to 60169
     and            A           Kim Vance                Cynthia                        Michelle Rigsbee
 6048 to 6049                                           Alexander      Donna Cates
   and 6056
     and
6860504 to End
  38X XXXX
     BFR
 6024 to 6040       C        Leigh Anne Arnold    Angela Williams     Sherrie Clayton    Heather Webb
   and 6050
     and
 6064 to 6840
  38X XXXX
     BFR
    6860 to         B         Rose Wilkerson          Donna Emory      Sylvia Cotton      Sandy Hart
   6860503

  39X XXXX          F          Yvonna Mills                                              Heather Webb


  HOSPITAL          B         Rose Wilkerson          Donna Emory      Sylvia Cotton      Sandy Hart


   CHAVI            G          Sharon Amos                                              Michelle Rigsbee
 HVI -selected
   projects


                                                 11
                     SUBJECT                                          CONTACT

Audits                                       Mary Johnson

Billings & Reports                           See above for Administrative Manager for the appropriate WBS
                                             Element
CAS Forms                                    See above for Administrative Manager for the appropriate WBS
                                             Element
Close-out Documentation - Notification or    Francene Richardson
Status
Cost Transfer Only Payroll Forms             Linda Holman/Chrissy Enoch/Viki Newkirk

Duke Endowment Awards                        Yvonna Mills

Effort Certifications                        Linda Holman/Chrissy Enoch/Viki Newkirk

F & A Costs                                  See above for Administrative Manager for the appropriate WBS
                                             Element
Invoice and Financial Report Submission to   See above for Administrative Manager for the appropriate WBS
Sponsor                                      Element
Master Data & Plan                           See above for Administrative Manager for the appropriate WBS
                                             Element
Effort Support                               Linda Holman/Chrissy Enoch/Viki Newkirk
Overdrafts                                   See above for Administrative Manager for the appropriate WBS
                                             Element
Payments to Duke (Check)                     Erika King

Payments to Duke (Wire)                      Ginger Huguelet


Quarterly Review Notices                     Linda Holman/Chrissy Enoch/Viki Newkirk

Purchase Requisitions                        See above for Analyst for the appropriate WBS Element

Rebudgeting Forms                            See above for Administrative Manager for the appropriate WBS
                                             Element
Request Status for New WBS Element           Wanda Bell

Reviewable GL Accounts                       See above for Administrative Manager for the appropriate WBS
                                             Element

Subcontract Payments                         Tara Whitted




                                                       12
                         APPENDIX 4: OSP DIRECTORY
 Department Number 684-5442                           Fax Number 684-8377
Alexander Cynthia     668-5867       cynthia.m.alexander@duke.edu
Alston     Felecia    668-5859       felecia.alston@duke.edu
Amos       Sharon     668-5243       sharon.amos@duke.edu
Arnold     Leigh Anne 668-5864       leighanne.arnold@duke.edu
Baker      Rachael    668-5870       rachael.culler@duke.edu
Bell       Elizabeth 668-0152        ej.bell@duke.edu
Bell       Wanda      684-2215       wanda.bell@duke.edu
Butler     Cora       668-5858       cora.butler@duke.edu
Cates      Donna      613-6801       donna.d.cates@duke.edu
Cheek      Elaina     668-5852       elaina.cheek@duke.edu
Clayton    Sherrie    660-0105       sherrie.w.clayton@duke.edu
Cotton     Sylvia     684-3155       sylvia.cotton@duke.edu
Davis      Tom        668-5850       thomas.davis@duke.edu
Emory      Donna      668-5866       donna.emory@duke.edu
Enoch      Chrissy    660-0102       chrissy.enoch@duke.edu
Hart       Sandy      684-4926       sandy.hart@duke.edu
Holman     Linda      668-5862       linda.holman@duke.edu
Huguelet Ginger       668-5865       ginger.huguelet@duke.edu
Johnson    Mary       668-5851       mary.johnson@duke.edu
King       Erika      681-4670       erika.king@duke.edu
Kirk       Brenda     668-5853       brenda.kirk@duke.edu
Mills      Yvonna     681-0379       yvonna.mills@duke.edu
Newkirk    Viki       668-5854       viki.newkirk@duke.edu
Richardson Francene 668-5869         francene.richardson@duke.edu
Rigsbee    Michelle   668-5856       michelle.rigsbee@duke.edu
Royster    Debra      668-5861       debra.royster@duke.edu
Thompson Pat          684-5883       patti.thompson@duke.edu
Tubiolo   Connie      681-7049       connie.tubiolo@duke.edu
Vance      Kim        668-5868       kimberly.vance@duke.edu
Webb       Heather    668-5857       heather.webb@duke.edu
Whitted    Tara       681-7221       tara.whitted@duke.edu
Wilkerson Rose        668-5855       rose.wilkerson@duke.edu
Williams   Angela     668-5863       angela.williams@duke.



                                    13
3.     WHAT DOES THE OFFICE OF SPONSORED PROGRAMS DO?
       The Office of Sponsored Programs (OSP) primarily performs the following three main functions:


       a.      Billing and Cash Collections
       OSP maintains detailed financial records for all projects with Cost Objects that begin with the
number 3 and 203 in Company 0010. Detailed financial records include invoices issued, cash
received, and balances due by Cost Object. There were approximately 19,200 sponsored projects
Cost Objects at June 30, 2009. OSP also prepares and submits, in a timely manner and in accordance
with Sponsor specific requirements, project invoices, financial reports, and property reports.
Approximately 1,000 invoices and/or financial reports are prepared and submitted each month by the
OSP Billing Sections. In addition, OSP is responsible for distributing the cash receipts and submitting
reports for projects funded through a Sponsor-established payment system. Approximately 30 cash
draws are processed each month.


       b.      Record Keeping and Audit Resolutions
       OSP is responsible for maintaining files adequate for financial audit resolutions and for serving
as liaison and negotiator when financial audits are conducted. OSP deals with Internal, External,
Independent, and Regulatory Auditors on a routine basis. OSP averages two institutional audits and
eight individual project audits each year. Institutional audits may include a series of projects (e.g.,
research projects) and/or a Duke system (e.g., Property System). During an institutional audit Duke's
internal controls and procedures are reviewed. This type of audit usually has a three to four month
turn-around time. That is, it takes about three to four months for Duke to officially know the outcome of
the audit, and what, if anything, it is required to do to respond to any audit recommendations or
findings. An individual project audit takes approximately one to two months to complete.


       c.      Monitoring for Compliance
       The third main function is that of monitoring for compliance in order to assure that sponsored
projects are administered in accordance with both Duke and Sponsor guidelines and procedures. In
order to accomplish this task, the OSP staff keeps up-to-date on any changes involving either external
or internal policies and procedures.
       During Fiscal Year 2009, approximately 8,300 effort certifications were monitored by the Effort
Support Section staff. In addition, all capital equipment purchases that involve sponsored projects
(except 36X and 39X Cost Objects) are reviewed for compliance and approved by OSP staff.
       Since "non-compliance" may mean a future audit disallowance, OSP takes monitoring for
compliance very seriously. On the other hand, we also understand a Principal Investigator's frustration

                                                    14
with "red tape". Therefore, OSP constantly strives to monitor for compliance in a way that is of the
greatest benefit to the project while staying within the legal framework imposed upon Duke and its
Departments. So, if you have an extenuating circumstance, give the OSP staff a call and they will be
glad to assist you in any way they can.




                                                   15
                                    SECTION B:
                                 GETTING STARTED
1.       NEGOTIATIONS
         Prior to making an award, a Sponsor may wish to negotiate the terms and/or amount of the
award. All sponsored projects negotiations are conducted by the pre-award offices: Office of
Research Support for Org Units 04xx xxx xxx through 60xx xxx xxx/; and the Office of Research
Administration for Org Units 68xx xxx xxx. Please refer any questions pertaining to negotiations to
your pre-award office.


2.       PRE-AWARD COSTS
         Some Sponsors, such as the National Science Foundation and the National Institutes of Health,
allow for "90 days pre-award spending". If a Principal Investigator (P.I.) has received verbal notification
from the Sponsor that his/her project has been funded, the P.I. may be able to request a Cost Object
prior to receiving the award document. This can be done by the Departmental Administrator or P.I.
writing a memorandum to the pre-award office stating the justification for pre-award spending. The
memorandum should be cosigned by the P.I.'s Departmental Chairperson, or his/her designee, and
should state that in the event that the funding does not materialize, departmental discretionary funding
will cover costs incurred on the project. This request may be approved by the pre-award office
provided that: (1) the Sponsor allows for Duke approval of such costs, (2) the approval is requested
and granted prior to the incurrence of actual costs, (3) the advance funding is necessary for the
effective and economical conduct of the project, and (4) the costs are otherwise allowable on the
project. When approved by the pre-award office, the request for a Cost Object “in advance” is
forwarded to the Office of Sponsored Programs (OSP) to establish a new Cost Object. The Financial
Report indicates the anticipated start date of the award and not the date when the pre-award spending
began.
         If the Sponsor does not allow Duke to approve Pre-Award Costs, it may still be possible to
obtain the Sponsor’s approval during the negotiation phase. Contact the pre-award office if the need
for Pre-Award Costs exists. When a Sponsor approves Pre-Award Costs, the award document
stipulates the amount of pre-award costs the project is authorized to incur.




                                                    16
3.     REQUESTING A COST OBJECT
       To ensure consistent and uniform application of the criteria followed in the establishment of new
Cost Objects, authority to establish new Cost Objects is limited to specific offices or positions for each
of the individual fund groups. A Cost Object is a unique number assigned to identify the accounting
activities of a project. For a sponsored project, the cost object is called Project Definition (reports) or
WBS Element (Journal Vouchers). The authority to establish new sponsored projects Cost Objects, to
modify, or close existing sponsored projects Cost Objects is restricted to the Office of Sponsored
Programs (OSP). However, OSP does not establish new Cost Objects until a formal written request is
received from the Office of Research Support, the Office of Research Administration, or the School of
Medicine’s Finance and Resource Planning Office.
       After an award is formally accepted by Duke, the pre-award office attaches the award
document to the proposal and forwards it to OSP with a formal request for a Cost Object. Award
documents received by the Principal Investigator or Departmental Administrator must be sent through
the pre-award office for a formal request for a Cost Object. Requests for 39X (non-governmental, non-
reporting) Cost Objects for the School of Medicine/School of Nursing that are funded by gifts must be
submitted through the School of Medicine’s Finance and Resource Planning Office for review and
approval.
       In the event that the P.I. has been assured by the Sponsor that the project will be funded and
the Sponsor expects the work of the project to begin or continue BEFORE the award document has
been received by Duke, a department may request a cost object “in advance”. The request for setting
up a cost object in advance differs from “pre-award” costs in that these costs are not incurred prior to
the start date of the award. These costs are incurred during the funded project period but prior to Duke
receiving the award document. Since no award document has been received, the costs must be
allowable on the project and the department must agree to cover any incurred expenses from their
departmental discretionary funding in the event that the award does not arrive at Duke.
       OSP reviews the documentation for completeness. Your assistance in ensuring a complete
project file is extremely important. Any revised budgets submitted to the Sponsor or any
attachments referenced in the award documents sent directly to the P.I. or Departmental Administrator
by the Sponsor should be forwarded to the pre-award office. Missing documentation can cause an
incorrect Cost Object to be set up or incorrect financial reports to be submitted.
       Based on the documentation received, OSP determines the first 3 digits of the Cost Object
using the following guidelines from the Accounting Code Overview section of the General Accounting
Procedures (GAP):




                                                    17
                        PROJECT DEFINITION/WBSE SUMMARY
                        3                    0                    3            1234
                      TYPE                SOURCE            PURPOSE
                    Sponsored         0 - DHHS            1 - Instruction/   UNIQUE TO
                     Projects                                  Dept. Res.
                       are            1 - DOD             2 - Training       PROJECT
                     Current          2 - DOE             3 - Research
                    Restricted        3 - NSF             4 - Library
                      Funds           4 - Other U.S.      5 - Student
                                      Gov’t: NASA, ED          Services
                   Always a “3”       5 - State & Other   7 - General
                                      Gov’t                   Operation
                                      6 - Duke Endow.     8 - Student Aid
                                      8 - Non- Gov’t      9 - Special
                  (R/3 Company                                 Programs
                   Code 0010)         9 - Non- Gov’t,
                                          Non-
                                      Reporting


1st digit---indicates TYPE of funds. Sponsored projects are designated as Current Restricted Funds.
       Therefore, the first digit will ALWAYS be "3" or “2”.
2nd digit---indicates the SOURCE of funds. If the award is a Subcontract, the SOURCE is the
       Sponsor subcontracting with Duke and not the Prime Sponsor.
       30X - Department of Health & Human Services which includes Public Health Service awards
              from NIH, NIMH, etc.
       20X - - Department of Health & Human Services which includes Public Health Service awards
              from NIH, NIMH, etc.
       31X - Department of Defense
       32X - Department of Energy
       33X - National Science Foundation
       34X - Other U.S. Government Sponsors, such as NASA, Departments of Agriculture,
              Education, etc.
       35X - State and Other Governmental Sponsors
       36X - Duke Endowment
       38X - Non-Governmental Sponsors Requiring Billings/Reports
       39X - Non-Governmental Sponsors Not Requiring Billings/Reports
3rd digit---indicates the PRIMARY PURPOSE of the funding.
       3X1 - Instruction/Departmental Research/Professorships
       3X2 - Training Programs
       3X3 - Sponsored Research
       2X3 - Sponsored Research

                                                    18
       3X4 - Library
       3X5 - Student Services
       3X7 - General Operations
       3X8 - Student Aid
       3X9 - Special Programs
       Duke is required to account for each project/award separately. Therefore, a new Cost Object is
issued for every new award. An exception to this procedure is when a Sponsor, such as NIH, makes
an award covering a specified “Project Period” (e.g., 5 years) but incrementally funds the project by a
“Budget Period” (e.g., 12 months). If this Sponsor allows for the automatic carry-forward of funds from
one Budget Period to another Budget Period (e.g., NIH grants that do not require NIH approval to carry
forward funds), the project retains the same Cost Object throughout the funded “Project Period”. A
new Cost Object is issued when the Sponsor awards a new Project Period (e.g., NIH, competitive
renewal year). If the Sponsor requires approval to carry forward funds from one Budget Period to the
following Budget Period, a new Cost Object is assigned every Budget Period. This practice assists
both the Departmental Administrator and OSP in determining the total funds spent for each Budget
Period. It also provides the Departmental Administrator with the exact amount available for requesting
from the Sponsor authorization for carry-forward to the new budget period if the Sponsor so allows.
       More than one Cost Object can be issued for one project. When this is the case, the first Cost
Object in the series is called the “parent” and any additional Cost Objects associated with the project
are called the “sub-codes”. This can occur when the project:
       a.      contains several small sub-projects directed by different faculty members
       b.      consists of sub-projects each with different F&A rates, e.g., on-campus and off-campus
               rates
       c.      provides for several subcontract awards
       d.      provides funding for a restricted purpose
Parent and sub-codes are also issued if OSP determines that separating the funds into sub-codes will
greatly enhance the efficiency of the reporting accountability.
       Other information, such as the effective dates of the project, department’s Org Unit number
associated with the project, primary purpose of funding, and special mailing instructions for invoices, is
determined at this time. OSP’s Customer Services Section enters the appropriate data to R/3 and
activates the new WBS Element in the R/3 financial system. R/3 notifies the Department and the pre-
award office by email of the newly assigned Cost Object. Once the Cost Object is issued, an award
folder is prepared and given to the appropriate Billing Administrative Manager.




                                                    19
4.     REVIEWING THE AWARD DOCUMENT
       The Billing Administrative Manager reviews very closely all award documents, guidelines,
and/or terms and conditions. For each funded project the following must be determined:
       a. Amount awarded or obligated by Sponsor (if the obligated amount is less than the awarded
            amount, the obligated amount is allocated to the Plan)
       b. Budget categories approved by the Sponsor (including cost-sharing)
       c. F&A rate(s), Theoretical and Allowable.
       d. Departmental Cost Object credited with F&A Costs recovered and/or charged with
            unallowable expenses or overdrafts
       e. Sponsor Restrictions - e.g., no foreign travel, no equipment
       f.   Sponsor Limitations - e.g., rebudgeted amounts cannot exceed 5% of budgeted categories,
            consultant fees cannot exceed a specified amount
       g. Prior Approval Requirements - e.g., all equipment purchases, all foreign travel
       h. Title to Equipment - Duke or Sponsor
       i.   Reports Required - e.g., financial, property, etc.
       j.   Submittal Requirements - due dates, format, distribution
It is at this point that it becomes crucial for OSP to have the most current budget information. If
a revised budget bypassed the proper channels (pre-award office), OSP could possibly be referring to
an incorrect budget. Consequently, the amounts listed in the ITD (Inception To Date) Plan would be
incorrect. If the total amount awarded does not equal the proposed budget, OSP will request a budget
equal to the award amount. All budgets must be submitted to and approved by the pre-award office.
Until the correct budget is received, OSP will allocate the direct costs to GL Account 099600 “Plan
pending budget from department” and 694600 “Indirect costs – full costs”.
       When an approved Cost Accounting Standards (CAS) Exception Form is attached to the award
document, OSP will use the approved Budget Category (G/L Account) listed in the CAS form to
allocate the Plan in R/3.
       Some Sponsors (e.g., Department of Defense) issue awards that stipulate an “Award
Amount” (e.g., $100,000) and an “Amount Obligated” (e.g., $30,000). This means that the Sponsor
intends to fund the award amount (e.g., $100,000), but, at this time, is making available only the
amount shown as obligated (e.g., $30,000). Therefore, if a Sponsor obligates an amount less than
the award amount, only the obligated amount may be spent. As additional funds are obligated,
OSP updates the ITD Plan. If OSP does not have a budget that equals the obligated amount, the
budget categories in the ITD Plan will indicate the “Award Amount”. However, since the Sponsor
obligated a lesser amount, the amount not yet obligated is restricted by using G/L Account 99800 in the

                                                     20
ITD Plan column of the financial report. Thus, the total awarded amount is reduced to equal the
obligated amount without changing the individual budget categories. Please be aware that in this
situation, even though each budget category indicates a balance, if total expenses exceed the total
obligated amount a bottom-line overdraft will occur.


             CATEGORY              AWARD         OBLIGATED AMOUNT
                                  AMOUNT               (NO BUDGET)               ITD PLAN
         Restricted                                                                   (108,000)
         Salaries                    100,000                                            100,000
         Fringe                       23,000                                             23,000
         Supplies                     37,000                                             37,000
         Other                        40,000                                             40,000
         F&A Costs                   108,000                                            108,000
         TOTAL                      $308,000                   $200,000                $200,000


       Since one of the major responsibilities of the Departmental Administrator is to assist the
Principal Investigator in administering his/her sponsored project, it would be of great advantage to the
Departmental Administrator to review the award document in the same detail as OSP. Appendix 5 -
TERMS OF AWARD is provided to assist you in summarizing restrictive details of a sponsored project.




                                                   21
                                  APPENDIX 5: TERMS OF AWARD

PROJECT DEFINITON/WBSE:           _-__ __ __ __     PERIOD OF PROJECT______________________

PI:__________________________                       CONTACT AT OSP_________________________

____ GOVERNMENT PRIME, NAME OF PRIME SPONSOR:________________________________

EQUIPMENT

____   Sponsor's approval required for all purchases costing $________ or more unless/including
       those specified in the approved budget                                   (circle one)

____   Title vests with Duke/Sponsor                       ____ Notify OSP of changes to Equipment
       for items costing $______ or more                               (Sponsor-owned only)

____   Title for items costing $______ or more, vests with Duke only if items are listed in budget and/or
       approved by Sponsor

____   Other:_______________________________________________________________________

TRAVEL

____   Sponsor's approval is required for foreign/domestic travel

____   Other:_______________________________________________________________________

REBUDGETING

____   Budget changes in excess of $______ or ___% require prior Sponsor's approval

____   Expenses exceeding budget categories require prior Sponsor's approval

____   Other:_______________________________________________________________________

PAYMENTS/FINANCIAL REPORTS

____   Financial Reports must reflect approved budget categories

____   Sponsor may retain ____% of each/final invoice until Final Report has been accepted

____   Excess funds remaining at end of project must be returned to Sponsor

____   Cost-sharing is required      Amount: ___________            Source _______________________

UNALLOWABLE EXPENSES SPECIFIED IN AWARD DOCUMENT (not all inclusive)

____   Rental of Equipment                                 ____     Patient Care Costs

____   Consultants                                         ____     Other______________________




                                                  22
5.     BASIS OF FUNDING
       a.      Cost-Reimbursement
       An award made on a Cost-Reimbursement basis refers to an award where the Sponsor
makes a commitment to award/obligate a specified amount but the actual money is not received by
Duke until after the Office of Sponsored Programs (OSP) bills for the expenses incurred on the project.
On a Cost-Reimbursement award the Principal Investigator may spend the amount awarded/obligated
and should not be concerned with the timing of when the actual money is received. For 30X through
38X and 203 Cost Objects, the amount awarded/obligated will be indicated in the ITD Plan column of
the financial report. With the exception of 39X Cost Objects that do not require financial reports by
OSP, OSP has both the responsibility of requesting payment (reimbursement) and monitoring the
timely receipt of those payments. It should be noted, however, that Sponsors have been known to
withhold payment because of non-submittal of technical reports. If this occurs, the Departmental
Administrator will be notified by OSP and/or the pre-award office of his/her responsibility to ensure
proper payment by monitoring the proper submittal of the delinquent technical report.


       b.      Fixed-Price
       A few sponsors award Fixed-Price Contracts. This type of award stipulates a fixed amount
usually paid when the deliverables are received and accepted by the Sponsor regardless of the actual
expenses incurred. In the event that a minimal unexpended balance is left at the end of a Fixed-Price
Contract and payment in full has been deposited, OSP, during close-out procedures, transfers the
unspent balance to the department’s designated discretionary Cost Object unless otherwise notified in
writing by the Departmental Administrator.


       c.      Advance Payment
       Some Sponsors, usually private, enclose a check with their award document or make Advance
Payments based on a payment schedule specified in the award document. If the Sponsor requires a
financial report, normally the Sponsor will require the return of any unspent funds left at the end of the
project.


6.     INVESTMENT OF FUNDS
       When advance payments are received, the award document may contractually obligate Duke to
invest the funds. If this is the case, OSP notifies the Departmental Administrator and the
Endowment/Investment Office of this requirement. The Endowment/Investment Office automatically
invests the funds according to Duke’s investment policies. OSP is responsible for informing the
Endowment/Investment Office of the Cost Objects involved. On a monthly basis the

                                                    23
Endowment/Investment Office credits the investment income to the Cost Object. If there are sub-
codes associated with the award, they are netted with the parent Cost Object for investment purposes.
The investment income is credited to the parent Cost Object. If the General Ledger does not indicate
investment income, please contact OSP immediately.
       Please note that only the awards with a contractual obligation to invest the advance
funds are handled automatically by the OSP and the Endowment/Investment Office. The
Departmental Administrator is responsible for investing any other funds that the department may have.
Any questions about Duke's investment policy should be directed to the Endowment/Investment Office
staff (668-0880).
       Funds advanced by the Federal Government do not earn investment income within the Cost
Object. However, Duke is required to pay the Federal Government interest earned on the advanced
funding. Both the computation and the processing of the payment for the interest earned on advanced
Federal funds is the responsibility of OSP and does not affect the Departmental Administrator or the
sponsored project.


7.     DEPOSITS
       OSP is responsible for the reporting/accounting of revenue received for reportable sponsored
projects Cost Objects. The actual deposit is done by either the Office of the Bursar (Governmental
Cost Objects) or through Alumni & Development Records (Non-Governmental Cost Objects). If you
receive a check that needs to be deposited to a sponsored project, it is critical that you indicate the
purpose of the check, e.g., grateful patient gift, reimbursement for expenses incurred on G/L Account
6XXXXX, payment for sales or services, advance payment of grant. OSP determines the Cost Object
the check is deposited to, and reviews the G/L Account for accuracy.
       When a Cost Object is established for a particular project funded by a specifically named
Sponsor, funds received from other than the named Sponsor cannot be deposited to that Cost Object.
Occasionally a 39X Cost Object is established for a particular project or laboratory that will be funded
from various sources. Only in this case can checks received from various Sponsors be deposited to
the same Cost Object. For more information, refer to GAP 200.025 Procedures for Handling Cash and
Check for Deposit and GAP 200.026 Deposits to the University.


8.     PROGRAM INCOME
       Program Income is gross income earned by a sponsored project from activities, part or all of
which are borne as a direct cost by the sponsored project. Examples of Program Income include:
       1.      Fees earned from services performed under the project, such as those resulting from
               laboratory drug testing.

                                                    24
       2.      Rental or usage fees, such as those earned from fees charged for the use of equipment
               purchased with sponsored project funds.
       3.      Funds generated by the sale of commodities, such as tissue cultures, cell lines, or
               research animals.
       4.      Fees paid by participants for a workshop or conference funded by a sponsored project.


       Most Federal Sponsors require that program income be used for the purpose of the project and
be reported. In some cases (e.g., PHS grants), any anticipated Program Income must be disclosed in
the Application (proposal). For more detailed information, refer to the GAP 200.290 Program Income -
Federal Grants and Contracts.
       Some Sponsors consider income as Program Income only during the life of the project. For
these Sponsors, once the project terminates, income derived is no longer considered Program Income.
Therefore, it need not be reported and it may be credited to a discretionary account. Other Sponsors,
however, consider revenues received after the termination of an award to be Program Income.
Consequently, it is critical to carefully review the terms of the award.
       In order to identify Program Income properly, a sub code must be established for “Program
Income”. All revenue and expenses associated with the activity that will produce the program income
must be charged to the program income sub code. For revenue deposits, the following G/L Accounts
must be used: 349400 - Sundry Revenue used when revenue is received from non-Duke sources;
752500 - Program Income used when revenue is received from Duke Cost Objects. Departments must
ensure that these G/L Accounts are properly used to record Program Income.


9.     ALLOWABILITY OF COSTS
       The costs of a sponsored project are comprised of the allowable direct and F&A Costs incident
to the project's performance. Costs charged to a sponsored project are normally allowable if (a) they
are reasonable, (b) they are allocable to the sponsored project, (c) they are given consistent treatment,
and (d) they conform to any limitations or exclusions set forth by the Sponsor. Direct costs are those
costs that can be identified specifically with a particular sponsored project. Refer to GAP 200.320
Direct Costing on Sponsored Projects. F&A Costs (Facilities & Administrative Costs) are those costs
that are incurred for common or joint objectives and, therefore, cannot be identified readily or
specifically with a particular sponsored project (OMB Circular A-21). Refer to GAP 200.330 Facilities
and Administrative (Indirect) Costs on Sponsored Projects. When determining costs applicable to
sponsored projects, also refer to GAP 200.340 Cost Accounting Standards (CAS) on Sponsored
Projects. Unallowable costs are those costs that may not be charged to a sponsored project due to
Sponsor and/or Duke regulations or restrictions.

                                                     25
       Since most, if not all, transactions originate at the departmental level, it is the Departmental
Administrator's responsibility to ensure that unallowable costs are not charged to sponsored projects.
It is OSP's responsibility to assist the Departmental Administrator in reviewing for unallowable costs.
OSP determines allowability by reviewing the G/L Account used in the transaction. In the event an
unallowable charge is made to a sponsored project and another appropriate source of funding is not
identified by the department, OSP is authorized to transfer the unallowable charge from the sponsored
project to the departmental current allocated fund (45X Cost Object).
       Duke has many systems in place which assist the Departmental Administrator in ensuring that
unallowable expenses are not charged to a sponsored project. However, “the integrity and reliability of
the data collected by any accounting system particularly one in which many different people generate
input to the system, is dependent upon the consistent application of established approved guidelines
and procedures. This principle is especially true for the complex accounting system that exists today at
Duke. Enough cannot be said about the importance of each of us being conscious of our responsibility
to help ensure that we maintain the integrity and reliability of our accounting data....Using the correct
revenue or expense classification within the correct fund code for each and every transaction is of the
utmost importance in maintaining the integrity and reliability of the accounting system at Duke.” 1 If,
after referring to the General Accounting Procedures, you have questions regarding the correct G/L
Account to use, contact Accounting Systems and Procedures (684-2752).




10.    PRIOR APPROVAL
       In some instances the Sponsor's prior approval is required to authorize an expense on a
project. Requests for project modifications should be sent through the pre-award office. After
reviewing the award document and Sponsor guidelines, the pre-award office determines whether the
authorization can be obtained internally or whether written Sponsor approval is required. If Sponsor
approval is needed, in most instances, only the Contracting Officer/Grants Officer (or his/her designee)
has the authority to give Sponsor approval. Take care not to confuse the Program Officer/Technical
Officer with the Contracting Officer/Grants Officer. Normally, a Program/Technical officer deals with
the programmatic or technical issues of a project, and, only the Grants/Contracting Officer has the
authority to modify an award document (including the scope of work). However, if the project has
mandated close contact with the Program/Technical Officer, it would be prudent to discuss the
proposed change with the Program/Technical Officer before processing the formal request to the
Contracting/Grants Officer. Many Contract/Grants Officers consult with the Program/Technical Officer
before approving proposed changes to a project.



                                                    26
       If Sponsor approval is required, the pre-award office transmits the request to the Sponsor.
Once the approval is received, the pre-award office forwards a copy to OSP and the Department. OSP
makes the necessary changes on the ITD Plan and/or Master Data.




1
 Memorandum dated May 31, 1991, to Officers, Deans, Chairpersons and Recipients of Monthly Detailed
Financial Statements, from John F. Adcock, Vice President and Corporate Controller
                                                    27
                                  SECTION C:
                              TRANSACTION FORMS
        Before a transaction can be processed, a Cost Object (Project definition/WBSE) must have
been issued for the sponsored project. A Cost Object is a 7-digit unique number assigned to identify
the accounting activities of an entity (sponsored project). If the project has not been issued a Cost
Object, please refer to Section B GETTING STARTED, Part 3 Requesting a Cost Object. Each Cost
Object must be assigned to a responsible Department. Each Cost Object is associated with a ten digit
Org Unit. All financial transactions must also indicate a G/L Account. A G/L Account is a 6-digit
number assigned to designate an asset, liability, fund balance, revenue, expenditure, expense
recharge or credit, appropriation, or cost accounting distribution.
        Both the non-payroll forms and the payroll forms not available via iForms may be obtained via
the web address: http://www.finsvc.duke.edu/gap/forms.php#top. Financial Services offers a series of
Duke Accounting classes which offer detailed instructions on the use of G/L Accounts and transaction
forms. For information about the classes, please contact Accounting Systems and Procedures at 684-
2752.


1.      Payroll Forms
        a.     General Information
        A Departmental Administrator is able to execute in R/3 the report entitled Projects Ending
Within 3 Months Report (ZF110). The report lists all reportable Cost Objects associated with your
department that are scheduled to end within the next 3 accounting periods. (Please refer to Section F
CLOSE OF PROJECT, Appendix 13 for a sample of this report). This Report should be used as a
reminder to process in a timely manner the necessary payroll forms and, thus avoid the necessity of
retroactive changes. Be aware of Corporate Payroll deadlines and submit paperwork promptly. Details
on procedures, additional policies, and forms regarding the employment of personnel are found on line
http://www.hr.duke.edu.




                                                    28
.
       b.      Hire Form
       When hiring a new employee, a Hire Form must be initiated by the department. Until a Cost
Distribution Form is processed indicating changes, the employee will continue to be paid as indicated
on the Hire Form. When the employee is a graduate student, please refer to GAP No. 200.310
Compensation of Graduate Students on Sponsored Research Projects.


       c.      Request for Cost Distribution Change
       A Cost Distribution Change Form is used to change the cost distribution of an individual’s
funding source on either the biweekly or the monthly payroll. This form is used when the change
includes future and/or retroactive changes.
In order to avoid retroactive changes, the Departmental Administrator should review the sponsored
project and the departmental budgets and establish the employees' pay distribution so that the effort is
correctly identified and recorded on a timely basis. When processing a retroactive change that
exceeds 90 days, an Untimely Cost Transfer Justification is required. Failure to properly complete
the Untimely Cost Transfer Justification may cause the salary expense to be considered unallowable.
For more information refer to GAP 200.150 Cost Transfers on Federal Sponsored Projects.


       d.      Cost Transfer Only Payroll Form
       A Cost Transfer Only Payroll form is used only when an iForm cannot be processed. OSP is
responsible for processing Cost Transfer Only Payroll forms for account code changes for all
Faculty/Staff (all Cost Objects), and Biweekly personnel who are paid on sponsored projects Cost
Objects.
       The Cost Transfer Only Payroll form is submitted to the Office of Sponsored Programs for
processing. If the requested salary change is not indicated in the General Ledger within the next
accounting period, contact OSP immediately. If other retroactive salary changes to the original
distribution were recently submitted prior to this change, please so state in the remarks section of the
Cost Transfer Only form (e.g., A payroll form was submitted last week changing this same period. This
Cost Transfer Only form corrects the payroll form submitted last week.) Your comments can help
avoid duplicate or incorrect entries from being processed. Appendix 6 provides a list of reasons why a
Cost Transfer Only form is returned unapproved by OSP.
Please note that the Cost Transfer Only forms for 1XX and 4XX Cost Objects that do NOT involve a
sponsored project Cost Object or the Faculty/Staff Payroll can go directly to the Corporate Payroll



                                                   29
Office. Deadlines for submitting the Cost Transfer Only Forms are available via the internet through
the OSP Home Page.


       e.      Biweekly Overtime
       Most Federal contracts will not allow for the payment of overtime. When such overtime cannot
be charged to a sponsored project because of Sponsor restrictions, the biweekly employee should fill
out his/her time card as usual, including the overtime hours. This ensures that the person's effort is
properly recorded. With a "Biweekly Direct Code Charge Report", the amount of unallowable overtime
on the restricted project is charged to an account which contains funding for overtime. The "Biweekly
Direct Code Report" is a blue card that can be obtained from the Corporate Payroll Office. For more
information refer to the GAP 101.523 Time Reports - BiWeekly Direct Code Charge Report.




                                                   30
             APPENDIX 6: RETURN OF COST TRANSFER ONLY PAYROLL FORM
The Cost Transfer Only payroll form must comply with GAP 200.150 Cost Transfers on Federal Sponsored
Projects (internet address: http://www.finsvc.duke.edu/gap/m200-150.php). It can be returned for the following
reasons:

_____ Original Signature indicating Departmental Approval is missing.

_____ Cost transfer is not timely. Please complete the Untimely Cost Transfer Justification section.

_____ Does not provide the Dates of Transfer for the Cost Transfer.

_____ Account Code is incomplete or illegible.

_____ Credit/Debit percentages do not equal 100 per cent.

_____ Salary stated on Cost Transfer Only form has been previously transferred.

        See JV ________________, R3 Document No. ___________________________

_____ No funds were paid on the account code for the time frame indicated on the Cost Transfer Only form.

_____ Amount of funds requested to be transferred is more than the amount actually paid for the time frame
      indicated on the Cost Transfer Only form.

_____ GL Account requested to be transferred is different from the GL Account actually paid from.


_____ Other ________________________________________________________________________

Please make the necessary adjustment to the payroll form, date and initial the changes and return it to the Office
of Sponsored Programs, Box 104004. Please contact 684-5442 or ecrt-support@duke.edu if you have any
questions.




                                                        31
2.      EFFORT REPORTING
                Educational institutions which receive federal funding are required by OMB Circular A-21
“Cost Principles for Educational Institutions” to maintain an effort reporting system, the purpose of
which is to assure that the distribution of pay is in accordance with actual effort expended (by funding
source and activity). The Effort Certification Reporting Technology (ECRT) is used to meet this
requirement by accumulating payroll data that accounts for 100% of effort for exempt Faculty/Staff.
        Quarterly Effort Review Notices are distributed by ECRT every October, January, and April to
applicable Faculty/Staff employees for the period covering cumulative calendar quarters. The
Faculty/Staff Employee is asked to review the information for accuracy. The designated Effort
Coordinator for the department also receives a notification listing the names of the Faculty/Staff
Employees that were notified by ECRT. Corrections to effort are made by preparing and submitting the
appropriate payroll form. Quarterly Effort Review Notices are not required to be certified.
        After the fiscal year end is closed, ECRT notifies applicable Faculty/Staff employees that their
annual Effort Card that covers the prior fiscal year is available for review and certification. The
designated Effort Coordinator for the department also receives a notification listing the names of the
Faculty/Staff Employees that were notified by ECRT. If the percentage distributions of effort are
correct, the Effort Card must be certified by the specified deadline. If the percentage distributions of
effort are not correct, corrections must be indicated on the Effort Card and certified. In addition, a
payroll form must be processed indicating the manual correction made to the Effort Card. Changing
the Effort Card will not correct the General Ledger. Only a payroll form can correct the General
Ledger. The Effort Card must also be reviewed and processed by the designated Effort Coordinator.
Failure to meet the deadline may result in unallowable charges to sponsored projects. For more
detailed information regarding the Effort Support System and Effort Certification Reporting, refer to the
GAP 200.170 Effort Reporting. Effort reporting questions should be sent to ecrt-suport@duke.edu.
        Neither Quarterly Effort Review Notices nor Effort Cards are provided for Biweekly employees
since these employees certify that the payroll distribution on their time card represents a reasonable
estimate of their effort.


3.      NON-COMPENSATORY AWARD(S) FORM (NCAF)
        All NCAFs are initiated at the department level. The NCAF is used for the monthly payment of
stipends, awards, fellowships or other similar payments where an employer-employee relationship
does not exist. Therefore, this form is not used when hiring an employee. Payments made on the
NCAF are designated as non-salary payments in the approved budget. A Hire Form or a Request for
Cost Distribution Change Form should be used when the funds are provided in the approved budget

                                                    32
                                          SECTION 3
                                      TRANSACTION FORMS
under the Salary and Wage category. Typically, payments using the NCAF are made only on training
or fellowship awards (3X2 or 3X8 Cost Objects). The only exception is when a research project has a
uniquely identified training component. If this is the case, OSP can issue a separate training sub-code
to the parent research Cost Object.
       NCAF processed for Graduate Students should be sent through the Graduate School for
approval. Post Doctoral payments do not need to be sent through the Graduate School. Corporate
Payroll is responsible for processing changes affecting current and future periods. A “Transfer Only”
(only retroactive changes) NCAF should be sent directly to OSP.


4.     PURCHASE REQUISITION
       A Purchase Requisition is used to initiate the purchase of goods and services from outside
vendors. All items purchased with sponsored project funds should comply with Duke purchasing
requirements. Information on “How to Purchase” can be accessed through the Procurement Services
web site. GAP 200.100 Capital Equipment Purchases on Sponsored Projects also contains helpful
information regarding this subject.
       It is the policy of Duke to maintain formal competitive bidding whenever possible. Bids are
necessary in instances where the value of the procurement warrants such action and where the goods
or services can be obtained from more than one source. All bids received are evaluated by the
Procurement Services Department on the basis of quality, service, and price. When it is not practical
to obtain a competitive price or when it appears certain that substitutes are not acceptable (Sole
Source, or Single Source purchases), a full explanation from the requisitioning department covering
the reason for such restrictions is required. Refer to GAP 200.101 Sole Source Justification for
Purchases. Questions regarding Sole Source purchases should be directed to Procurement Services.
       Only capital equipment purchases (except for 36X's and 39X's) require the Office of
Sponsored Programs' (OSP) approval. Please refer to Section D EQUIPMENT for additional
information and requirements. OSP reviews the Purchase Requisition for 1) appropriateness of the
accounting code used, 2) availability of funds, and 3) compliance with the terms of the award. If the
purchase is questionable or clearly unallowable, the Departmental Administrator is advised that the
purchase cannot be approved or that rebudgeting action should be initiated. Depending on the
Sponsor, this may involve requesting the Sponsor’s written prior approval or, for most NIH and NSF
grants, processing an internal rebudgeting form (see Section E, DURING THE LIFE OF THE
PROJECT, Part 4 Rebudgeting of Funds). If the Sponsor's prior approval is required, the Principal
Investigator or Departmental Administrator is responsible for processing the request through proper
channels (please refer to Section B GETTING STARTED, Part 10 Prior Approval). A copy of the

                                                   33
                                        SECTION 3
                                    TRANSACTION FORMS
written approval or internal rebudgeting form should be attached to the Purchase Requisition when it is
forwarded to OSP.
        If the purchase is allowable, OSP approves the Purchase Requisition and forwards it to
Procurement Services. Purchase orders result in commitments. R/3 keeps track of commitments by
calculating a new “commitment” balance every time there is a change in the purchase order, a vendor
invoice is paid, etc. There are no commitment transactions, just a commitment balance. Refer to GAP
200.036 Commitments for more information.
        For more information on the payments of professional services, consult the following General
Accounting Procedures:
•    GAP 200.130 - Engaging and Paying Guest Speakers, Conference Participants and Experimental
                    Subjects
•    GAP 200.131 – Architects, Engineers, Contractors, Attorneys and Auditors
•    GAP 200.132 - Engaging and Paying for Consulting Services Received from Corporations or
     Partnerships
•    GAP 200.133 - Engaging and Paying Instructors or Lecturers (non-Faculty)
•    GAP 200.134 - All Other Payments to Individuals for Services


5.      ACCOUNTS PAYABLE CHECK REQUEST (APCR)
     The Accounts Payable Check Request form is used to pay non-Duke employees/students and
entities for goods and services that do not require a Purchase Order. Accounts Payable Check
Request forms are not required to be approved by OSP. For more information refer to the following
GAPs:
•    GAP 200.135 – Acquisition of Goods and Services Overview
•    GAP 200.136 – Accounts Payable Check Request
        The APCR form cannot be used to pay Duke employees for services rendered. Payment for
services rendered to Duke Employees must be made through the payroll system. Requests for
reimbursement of funds for the purpose of lobbying activities or entertainment are normally not allowed
on sponsored projects and definitely not allowed on Federally sponsored projects. For more
information on the payments of professional services, consult the following General Accounting
Procedures:
•    GAP 200.130 - Engaging and Paying Guest Speakers, Conference Participants and Experimental
                    Subjects
•    GAP 200.131 – Architects, Engineers, Contractors, Attorneys and Auditors



                                                  34
                                         SECTION 3
                                     TRANSACTION FORMS
•    GAP 200.132 - Engaging and Paying for Consulting Services Received from Corporations or
     Partnerships
•    GAP 200.133 - Engaging and Paying Instructors or Lecturers (Non-Faculty)
•    GAP 200.134 - All Other Payments to Individuals for Services


6.      TRAVEL EXPENSE FORM
        a.     General
        The Travel Expense Form is used to reimburse Duke Employees and Students for travel
expenses while on project business. With the exception of the Principal Investigator or Co-P.I., travel
expenses can only be charged to a federal project when the traveler is exerting effort on the project
during the time of travel. Written Sponsor approval is required to pay travel expenses on a federal
sponsored project for a traveler that is not exerting effort on the project at the time of travel. A
Principal Investigator (including Co-PI) may charge travel expenses to the project at any time as long
as the travel is approved by the project.
        If the travel Itinerary needs to be changed due to circumstances beyond the traveler’s control,
any additional fare and/or exchange/cancellation fees charged to purchase the airline ticket to meet the
original purpose of the trip, may be charged to a federal project. However, if the trip is cancelled,
regardless of the reason, the travel expenses may not be charged to the federal project.
        Uncleared travel advances may not be charged to a sponsored project. Alcoholic beverages
are not allowable on Federal projects and most non-Federal projects.
        Some Federal Sponsors require that federal rates be used for domestic travel. Current federal
domestic travel rates are published in the Federal Register. Federal foreign travel rates may be
obtained through the internet. For More information regarding travel, refer to GAP 200.022 Travel
Expenses-Employees and Students and GAP 200.023 Travel Advances. For payments to Foreign
Nationals, please contact the International Office at 681-8472. Travel Expense Forms are not
required to be approved by OSP.


        b.     Prior Approval
        If foreign travel is not listed in the approved budget, some Sponsors require prior written
approval. In some cases, a Sponsor will require prior written approval for foreign travel even if it is
listed in the proposal/application. All requests to obtain prior Sponsor approval for travel on a
sponsored project should be submitted through the pre-award office well in advance of the desired
travel. The request should provide information regarding the purpose of the travel, number of persons
traveling, destination, number of days, and estimated cost.

                                                     35
                                        SECTION 3
                                    TRANSACTION FORMS

       c.     U.S. Flag Air Carriers
       Federal guidelines state that any air transportation to, from, between, or within a country other
than the United States of persons or property, the expense of which will be assisted by federal funding,
must be performed by a U.S. flag air carrier if service provided by such a carrier is available. The
federal government has very specific and detailed requirements that must be met before federal funds
can be paid to a foreign flag air carrier (less cost or convenience may NOT meet the requirements).
For specific requirements, refer to the Sponsor's guidelines or contact OSP.


7.     MISCELLANEOUS REIMBURSEMENT FORM
       The Miscellaneous Reimbursement Form is used to reimburse Duke Employees and student for
business related expenses while on project business. This form should not be used for travel
reimbursement (use the Travel Expense Form), payments to experimental subjects (use the
Experimental Subject Payment form), or payments for purchase of capital equipment (use Purchase
Requisition). The Miscellaneous Reimbursement Form in not required to be approved by OSP. For
more information, refer to GAP 200.021 Miscellaneous Reimbursement Form.


8.     EXPERIMENTAL SUBJECTS PAYMENT FORM
       The Experimental Subjects Payment Form is used to pay experimental subjects on sponsored
projects. The form is not required to be approved by OSP. For more information, refer to GAP
200.420 Processing Payments to Research Participants and GAP 200.032 Sponsored
Programs/Research Short-Term Cash Funds.


9.     INTERDEPARTMENTAL REQUEST (IR)
       The IR form is used to purchase goods and services from various Duke departments, such as
printing services, copy centers, etc. Only capital equipment purchases (except 36x and 39x) require
the Office of Sponsored Programs’ approval. If you are purchasing capital equipment using federal
funds, a screening form must be attached to the IR (please refer to Section D EQUIPMENT, Part 4
Screening and Shared Use).


10.    CORPORATE CARD
       The Corporate card is used to purchase goods and services from any vendor that will accept
the Corporate Credit Card. For more information on its use and restrictions, refer to GAP 200.024
Corporate Card Purchases. The Corporate Card Users Manual is available on-line. Since original
                                                   36
                                          SECTION 3
                                      TRANSACTION FORMS
receipts are required to be maintained at the Department, please be sure to read Section F CLOSE OF
PROJECT, Part 5 Record Retention. In addition, it is imperative that the Department implement
internal procedures that allow for paper documentation to be readily accessible in the event the
transaction is required during an audit. Failure to provide an original receipt will cause the expense to
be unallowable on a sponsored project. In addition, failure to improperly document a transaction in
Paris (the system used for the Corporate Card), such as the dates, purpose, and destination of a
business travel, may cause the expense to be unallowable on a sponsored project.


11.    JOURNAL VOUCHER (JV)
       a.      General
       A Journal Voucher is used to either record an initial charge or to record a cost transfer. Care
should be taken in the distribution of expenditures so that costs are charged initially to the correct
project. If the Text or Notes field cannot contain sufficient information to allow for a proper audit trail of
the transaction, please be sure to read Section F CLOSE OF PROJECT, Part 5 Record Retention
regarding the paper documentation that must be maintained in the Department. It is also imperative
that the Department implement internal procedures that allow for paper documentation to be readily
accessible in the event the transaction is required during an audit. Accounting Operations publishes
specific deadline dates for the submittal of JVs (refer to GAP 200.010 Fiscal Calendar). Refer to the
General Accounting Procedures, G/L Account Definitions to ensure you are using the correct G/L
Account when preparing journal entries.


       b.      Initial Charge (SA Document Type)
       Initial charges made to a sponsored project must provide sufficient detail to determine the
allowability of the charge. The JV should provide information such as type of service, period of service,
how the charge was calculated. Refer to GAP 200.020 Journal Vouchers for information on how to
prepare a Journal Voucher that records an initial charge. If you are using a JV to charge for services
provided to a sponsored project, include information on how the fee/charge was derived and when the
service was provided. If this item is selected during an audit, be prepared to provide a fee schedule for
the charges. Refer to GAP 200.300 Service Component Administration for more information.


       c.      Cost Transfer (ZF Document Type)
       When errors occur in making initial charges, a cost transfer JV is used to correct a
previously incurred cost. A cost transfer JV is subject to federal regulations requiring a greater
amount of supporting justification than is normally required. Federal regulations strictly prohibit the

                                                     37
                                        SECTION 3
                                    TRANSACTION FORMS
transfer of costs from one project to another simply to cover overdrafts or to use balances left at the
end of a project.
       Duke GAP 200.150 - Cost Transfers on Sponsored Projects stipulates what information is
required to be provided when processing a cost transfer JV. It also provides a link to ZF418 Non-
Salary Cost Transfer Tool. In addition, when the correcting entry is not processed within 3 accounting
periods after the initially recorded charge, the GAP requires that an Untimely Cost Transfer
Justification. Review your monthly financial reports and make any necessary corrections immediately
to avoid untimely Cost Transfers.
       Failure to provide the information required by GAP 200.150 will result in the possibility of the
expense being disallowed and the expense moved to the Department’s discretionary account. When
processing a Cost Transfer JV, review for the following:


   •   Allowability of G/L Account on the sponsored project: 1xxxxx receivables; 693200 – Public
       Relations and Social Expenses; 695100 - Interest Expense; and 80XXXX Appropriation &
       Transfers are normally not allowable on reportable sponsored projects. The use of 3xxxxx
       (revenue) G/L accounts on reportable codes (30x-38x and 203) is reserved for OSP and Gift
       Records use only.
   •   Cost transfer was done lump sum: Separate G/L Accounts or document numbers cannot be
       combined.
   •   Insufficient pertinent information was provided: Cost transfer is correcting a G/L account to
       one that requires additional information (e.g., 696000 requires a business objective and
       business agenda).
   •   Cost transfer is debiting a Federal Project for G/L Account 66XXXX (capital equipment):
       Must meet the requirement of GAP 200. 080 Equipment Screening and Shared Use on Federal
       Grants and Contracts and require OSP’s approval.
   Even though, OSP reviews G/L Accounts for allowability at the time a report/billing is processed,
   the responsibility for the proper use of Sponsor’s funds remains at the department level.




                                                   38
                                        SECTION D:
                                        EQUIPMENT
1.     GENERAL
       Duke defines capital equipment as any item costing $5,000 or more with a life expectancy of
two years or more (software is capitalized if the cost is $5,000 or more for one package). Some
Sponsors define capital equipment differently. If a Sponsor defines equipment as having a different
dollar threshold (e.g., $1,000), the Duke definition is used for internal purposes. The Sponsor’s
definition of equipment is used for reporting purposes. Equipment purchases on sponsored projects
Cost Objects (except 36X and 39X) must be approved by the Office of Sponsored Programs (OSP)
and may require a Screening and Shared Use form (refer to Part 4 Screening and Shared Use in this
Section). Equipment purchased during the last 60 days of a sponsored project could be questioned or
declared unallowable by a Sponsor. Therefore, the Principal Investigator or Departmental
Administrator should be prepared to explain and/or justify how an equipment item purchased during the
last 60 days of a project benefits the sponsored project.
       Duke encumbers/commits expenditures that are authorized on a purchase order and that meet
Procurement Services criteria. In R/3 there are no commitment transactions, just a commitment
balance. For more information on commitments, refer to GAP 200.036 Commitments. Any unpaid
commitments at June 30th are automatically carried forward to July 1st. For more information
regarding equipment, refer to the following sections of the General Accounting Procedures:
       200.040        Plant and Equipment Definitions, General Principles and Controls
       200.050        Plant and Equipment Capitalization Policy
       200.070        Plant and Equipment Lease Agreements Purchase and Rental
       200.075        Computer Software Developed or Obtained for Internal Use
       200.080        Equipment Screening and Shared Use on Federal Grants & Contracts
       200.090        Plant and Equipment Depreciation
       200.100        Capital Equipment Purchases on Sponsored Projects
       200.110        Excess Federal Government Property - Use by Sponsored Projects
       200.120        Surplus Federal Government Property (Donated Through State Agencies)
       200.260        Building Identification Numbers




                                                   39
2.     EQUIPMENT PRIOR APPROVAL
       Award documents may include clauses that specify both the authorization required for
purchasing equipment and with whom the title vests. A Federal contract may require the Contracting
Officer's approval for all equipment purchases even though the items are listed in the approved budget;
or require special forms (e.g. Department of Defense DD Form 1419) be submitted and approved
before purchasing equipment. If a Federal contract contains Federal Acquisition Regulations (FAR)
Clause 52.244-2 Subcontracts, all purchases of equipment are required to have prior Contracting
Officer's approval unless the contract specifically states that "all items listed in the proposed budget are
hereby considered approved", or an equivalent of that phrase. The FAR defines "Subcontracts" to
included Purchase Orders for equipment.
       If Sponsor approval is required, the request should provide such information as reason why
equipment is needed, reason why funds are available, and anticipated dollar amounts (refer to Section
B GETTING STARTED, Part 10 Prior Approval). If Sponsor approval is not required and the item of
equipment was not requested in the proposed budget, a "Request for Rebudgeting of Funds" form
needs to be submitted to the pre-award office (refer to Section E DURING THE LIFE OF THE
PROJECT, Part 4 Rebudgeting of Funds for more information).
       Excess Federal Government property may not be obtained for use on a Federally sponsored
project without the prior written approval of the Sponsor. A request to obtain excess Federal
Government property must be submitted by the Principal Investigator to the Pre-award office. The Pre-
award office will forward the request to the Sponsor. The Federal Government may approve a request
to transfer excess Government personal property to a Federal project at Duke University as a means of
providing additional Federal support and conserving equipment funds. For more information, refer to
GAP 200.110, Excess Federal Government Property – Use by Sponsored Projects.


3.     FABRICATION (WORK-IN-PROGRESS) or ASSET UNDER CONSTRUCTION
       Items purchased to be used for fabrication or work-in-progress should indicate G/L Account
668300 on the Purchase Requisition. The Purchase Requisition should also state the name of the
System and STE number the item is being purchased for. STE numbers are obtained from Plant
Accounting. When the fabricated item is completed, the Departmental Administrator must notify Plant
Accounting so that the System can be properly tagged (Duke-owned or Government-owned). Items
being fabricated do not require a Screening and Shared Use form.




                                                    40
4.     SCREENING AND SHARED USE
       The OMB Circular A-110 “Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations” requires that
educational institutions implement a system designed to promote the shared use of previously acquired
equipment or to document that similar equipment is not available for shared use. GAP 200.080 -
Equipment Screening and Shared Use on Federal Grants and Contracts provides a detailed
explanation and the forms that must be used to meet this requirement when purchasing equipment
from Federal funds (30X through 34X, 203, and 35X through 38X Cost Objects with a Federal Prime
Sponsor). Neither items being fabricated nor purchases of software require a Screening and Shared
Use form.


5.     EQUIPMENT OWNERSHIP
       Carefully review the award document and Sponsor’s guidelines to determine who retains title to
equipment purchased with sponsored funds. This review will determine the G/L Account that is
entered on the Purchase Requisition. If you are unsure as to where the title vests, call OSP or leave
the G/L Account blank on the Requisition and OSP will fill it in if the title vests with the Sponsor. If
Duke retains title to the equipment being purchased, you do not have to write in the G/L Account just
make sure not to use the G/L Account 664700 or 664800. G/L Accounts 664700 and 664800 are used
exclusively for Sponsor-owned equipment as described in the following Part.


6.     SPONSOR-OWNED EQUIPMENT
       If Duke does not retain title to the equipment being purchased, the G/L Account used on the
Purchase Requisition is either 664700 - Government-Owned or 664800 - Sponsor-Owned. If you are
replacing a part in a Government-owned item, be aware that Government regulations state "Title to
Government property shall not be affected by its incorporation into or attachment to any property not
owned by the Government nor shall Government property become a fixture or lose its identity as
personal property by being attached to any real property." (FAR 52.245-1 (e) (1)). In addition, if Duke
funds are used to partially pay for an item of equipment that is owned by the Federal Government,
Duke will have no claim to the item when the project terminates.
       Occasionally, the Federal Government will loan equipment to Duke to be used on a specific
Federal project. Unless specifically stated otherwise in the transfer document, the Federal
Government retains title (ownership) of Government-Furnished equipment. Since Government-
Furnished equipment is not purchased by the project, both Plant Accounting and OSP may be
unaware that the Government-owned equipment was received by a project. Therefore, it is of the

                                                     41
utmost importance that the Departmental Administrator immediately notify OSP or Plant
Accounting when Government-Furnished Equipment is received so that it can be properly
accounted for and reported to the Government. In addition, in accordance with FAR 52.245-1 f (1)
(ii) Receipt of Government Property, Plant Accounting and OSP must be informed if any overages,
shortages, or damages are discovered upon receipt of the Government-furnished property and the
condition of the property and apparent causes. This information is critical for the proper reporting of
Government-owned property.
       Sponsor-owned equipment must be carefully monitored and in many cases reported annually.
Therefore, it is critical that both Plant Accounting and OSP be notified of any changes associated with
the Sponsor-owned equipment. “Changes” include, but are not limited to, items being moved from
their original location, lost, stolen, or no longer being used by the project. If an item has been lost,
damaged, or destroyed, Appendix 7 must be completed by the custodian of the equipment and
forwarded to OSP for notification of Sponsor. Sponsor-owned equipment may not be disposed of
without Sponsor’s written approval. When the project terminates, disposition of the Sponsor-owned
equipment must be established. Please refer to Section F CLOSE OF PROJECT, 3. Final Reports, c.
Final Property Report for more information.


7.     MANAGEMENT OF EQUIPMENT
       Duke has many systems in place that assist in all aspects of property management: OSP
reviews Purchase Requisitions for allowability and title; Procurement Services’ purchasing system
conforms with government and Duke regulations and maintains records that verify compliance; and
Plant Accounting maintains inventory records and performs physical inventories for all equipment
regardless of ownership. However, since the Principal Investigator (P.I.) and Departmental
Administrator are the most knowledgeable persons when it comes to the equipment being used or
needed in a sponsored project, the day-to-day responsibility of property management for property
acquired with sponsored funds remains with the P.I./Departmental Administrator. Since most
Sponsors require that a property inventory be submitted either on an annual basis or at the termination
of the project, it is of the utmost importance that Plant Accounting be kept informed on the current
condition and location of equipment. In addition, if the equipment is owned by the Sponsor, any
changes regarding its use or condition should be reported to OSP and Plant Accounting so that proper
notification to the Sponsor may be initiated.




                                                    42
                  APPENDIX 7: LOSS, DAMAGE, OR DESTRUCTION (LDD) REPORT
                                  LOSS, DAMAGE, OR DESTRUCTION (LDD) REPORT
                                          SPONSOR-OWNED PROPERTY

1.          Date of incident: _____________________________

2.          Description of Property

            Asset Number: _____________________                  Government Tag No.: ____________________

            Name of Item: _______________________        Model No./Serial Number: ___________________

3.          Contract/Grant No.: ________________________         Duke Cost Object: _________________

4.          Acquisition Cost: ___________________

5.          Full narrative of the incident location, etc.: ________________________________________________

            __________________________________________________________________________________

            __________________________________________________________________________________

6.          Cause and corrective action taken or to be taken to prevent recurrence:_________________________

            __________________________________________________________________________________

            __________________________________________________________________________________

7.          Estimated Scrap proceeds: _________________________

8.          Repair direct labor and material costs: ______________________

9.          Estimated cost to replace: ___________________________

10.         Copies of supporting documentation are attached (if none, explain): ___________________________

            __________________________________________________________________________________

11.         Equipment clause stipulated in Contract: _________________________________________________

I hereby certify to the best of my knowledge that no insurance costs or other means of covering the LDD of
Sponsor-owned property were charged to the contract/grant and that in the event Duke University is reimbursed or
compensated for LDD of Sponsor-owned property, the Sponsor shall received equitable reimbursement. (12,13,14)




_____________________________________________________                     __________________________
Signature                                                                 Date of Report

Name:       _________________________________________            Title:   __________________________




                                                        43
                         SECTION E:
               DURING THE LIFE OF THE PROJECT
1.     FINANCIAL REPORTS
       Financial Reports should be reviewed every month. Reviewing Financial Reports on a monthly
basis will ensure that unallowable/incorrect expenses are removed on a timely basis (refer to GAP
200.150 - Cost Transfers on Sponsored Projects). For more information refer to GAP 200.012 -
Reconciliation of Financial Transactions. Following are some suggestions:


a)     Review the Financial Report for obvious errors and problems such as:
       1)     incorrect or unallowable G/L Accounts
       2)     purchase orders or work orders completed but still listed as open
       3)     budget category or bottom-line is in an overdraft status
b)     Salary Charges - The salary charges are consistent with the personnel working on the
       sponsored projects. Cost-sharing of salaries is correctly indicated.
c)     Compare supporting documents on hand - invoices, work order bills, telephone bills, material
       issuance reports, journal entries - to the Financial Report for agreement.


       a.     R/3 EXPENSE REPORT WITH AWARD AMOUNT
       1)     General Information
       Classes on how to execute and read Reports are offered by various University groups. The
Office of Sponsored Programs (OSP) strongly suggests, if you have not done so already, that you
attend these classes. This Section is provided for your ready reference and does not include all the
information covered in the classes. Information regarding what and when classes are offered can be
obtained by reviewing the internet site SAP at Duke.
       An expense report is available that provides financial information from the beginning of a
sponsored project for projects with an “Award amount”. The report provides amount awarded (ITD
PLAN), expenses incurred during the current fiscal month (CURR MO ACTUAL), expenses incurred
during the current fiscal year (YTD ACTUAL), expenses incurred from the beginning of the project (ITD
ACTUAL), and the balance (BALANCE) computed as Award minus Expenses (ITD PLAN minus ITD
ACTUAL). A positive number means you have a good balance (not an overdraft). Outstanding
Commitments are also displayed on this report.
       Use the Cost Element Group SPAWEXP, it is organized by G/L Accounts and subtotaled by
broad budget categories. By double clicking a specific expense amount in the Report, the detailed

                                                  44
transaction that makes up that total expense amount is displayed. Double clicking the specific
transaction displays the transaction document. To access the Expense Report, follow the instructions
below:


                                  EXPENSE REPORT WITH AWARD AMOUNT
•   In R/3, to the right of the green check mark, enter in the white box ZFR1, click on the green check
•   Click to the left of each of the following: UNIVERSITY DETAIL REPORTING
•   Double click on Project/Work Breakdown Structure: Inception to Date (with Plan)
•   Enter the following data:
         Project: (enter 7 digit Cost Object, e.g., 3031234)
         Fiscal Year: (enter fiscal year, e.g., 2010)
         Period: (enter fiscal period you want the report to provide expenses through, e.g. September =
         03)
•   Cost Element Group: SPAWEXP
•   Execute the Expense Report


         2)     Headings on R/3 Expense Report with Award Amount
         Project/WBS Element: Indicates the 7 digit Cost Object and the Award Number.
         Person Responsible: This is the name of the Principal Investigator, as indicated in the award
document.
         Project Period: Indicates the start and end date of the project as indicated in the award
document. For projects that ended prior to 06/30/98 the end date may be a generic end date of
06/30/24. The end date of 06/30/24 or 06/30/25 may also be used for projects with no end date.
         Period: Financial information is displayed through the fiscal month indicated.
         Fiscal Year: Financial information is displayed through the fiscal year indicated.
         Cost Elements: Indicates G/L Accounts used from the beginning of the project for either the
award amounts or expenses incurred. The G/L Accounts are grouped and subtotaled in broad budget
categories in accordance with Cost Element Group SPAWEXP. Appendix 8 – Grouping of Cost
Elements on Expense Report provides an example of the G/L Accounts used for each broad budget
category.
         ITD Plan: Inception to Date Plan indicates amounts awarded for each budget category. These
amounts are obtained from the approved budget. If the obligated amount is less than the awarded
amount, the obligated amount is indicated (refer to Section B GETTING STARTED, Part 4 Reviewing
the Award Document). For projects that ended prior to 06/30/98, the ITD Plan field may be blank even


                                                        45
though a budget existed. This is because the Award field in the CUFS legacy system had already
been deleted when the data was uploaded to R/3.
         CURR MO ACTUAL: Indicates expenses that have been incurred during the current fiscal
month.
         YTD ACTUAL: Indicates expenses that have been incurred during the current fiscal year.
         ITD Actual: Indicates expenses that have been incurred from the beginning of the project.
         BALANCE: Indicates the balance available on the Sponsored Project. The balance is
computed as follows: ITD Plan minus ITD ACTUAL. A positive number means you have a good
balance (not an overdraft).


         b.     R/3 REPORT FOR PROJECTS WITH NO AWARD AMOUNT
         1)     General Information
    For projects effective prior to 07/01/98, the Project System Module provides the fund balance as of
06/30/98, revenue received and expenses incurred from 07/01/98, and available balance. For projects
effective as of 07/01/98, the Project System Module provides financial information from the
beginning of the project. The report provides expenses incurred during the current fiscal month
(CM), expenses incurred from the beginning of the project for prior fiscal years (Prior Year), expenses
incurred during the current fiscal year (YTD Actual), and the balance (Ending Bal). The ending balance
for each cost element group is computed by adding the Prior Year and YTD Actual columns. The Cost
Object balance is indicated at the bottom of the Ending Bal column under the heading Project Total.
The Cost Object balance is computed as Revenue minus Expenses. A negative sign means you have
a good balance (not an overdraft).
    Use the Cost Element Group SPREVEXP, it is organized by G/L Accounts and subtotaled by broad
budget categories. By double clicking a specific expense amount in the Report, the detailed
transaction that makes up that total expense amount is displayed. Double clicking the specific
transaction displays the transaction document. Please note that this report does NOT include any
outstanding commitments. To access this Report follow the instructions below:




                           EXPENSE REPORT WITH NO AWARD AMOUNT
•   In R/3, to the right of the green check mark, enter in the white box ZFR1, click on the green check
•   Click to the left of each of the following: UNIVERSITY DETAIL REPORTING
•   Double click on Project/Work Breakdown Structure: Inception to Date (without Plan)
                                                   46
•   Enter the following data:
       Project: (enter 7 digit Cost Object, e.g., 3911234)
       Fiscal Year: (enter fiscal year, e.g., 2010)
       Period: (enter fiscal period you want the report to provide expenses through, e.g. September =
       03)
•   Cost Element Group: SPREVEXP
•   Execute the Expense Report


       2)      Headings on Expense Report With No Award Amount
       Project: Indicates the 7 digit Cost Object and the Award Number.
       Person Responsible: This is the name of the Principal Investigator, as indicated in the award
document.
       Project Period: Indicates the start and end date of the project as indicated in the award
document. For projects that ended prior to 06/30/98 the end date may be a generic end date of
06/30/24. The end date of 06/30/24 or 06/30/25 may also be used for projects with no end date.
       Period: Financial information is displayed through the fiscal month indicated.
       Fiscal Year: Financial information is displayed through the fiscal year indicated.
       CM: Indicates expenses that have been incurred during the current fiscal month.
       Project: Indicates G/L Accounts used from the beginning of the project. The G/L Accounts are
grouped and subtotaled in broad budget categories in accordance with Cost Element Group
SPREVEXP. Appendix 8 – Grouping of Cost Elements on Expense Report provides an example of the
G/L Accounts used for each broad budget category.
       Prior Year: Indicates expenses incurred from the beginning of the project for prior fiscal years.
       YTD ACTUAL: Indicates expenses incurred during the current fiscal year.
       Ending Bal: Indicates the ending balance for each cost element group computed by adding
the Prior Year and YTD Actual columns. The Cost Object balance is indicated at the bottom of the
Ending Bal column under the heading Project Total. The Cost Object balance is computed as
Revenue minus Expenses. A negative sign means you have a good balance (not an overdraft).




                                                      47
         APPENDIX 8: GROUPING OF G/L ACCOUNTS ON R/3 FINANCIAL REPORT

Revenue (Only SPREVEXP)                    Patient Care
300000       -    399999                   694200           -   694299
Obligations/Restrictions                   696400           -   696499
99600        -    99900                    Other Costs
Salaries and Wages                         650000           -   659999
600000       -    600299                   670000           -   680299
600500       -    603299                   680499           -   680899
603500       -    609999                   681000           -   681099
Salaries Cost-Shared                       681200           -   681299
600300       -    600499                   681400           -   681599
603300       -    603499                   681700           -   682099
Fringe Benefits                            682200           -   682299
610000       -    619999                   682400           -   682499
Salaries Cost-Sharing Contribution         682600           -   682699
808000       -    808099                   682800           -   682899
Professional Services and Other Payments   683000           -   683099
620000       -    621499                   683200           -   691599
621600       -    629999                   691700           -   694199
Supplies and Materials                     694300           -   694599
640000       -    649999                   694700           -   694899
Equipment                                  695000           -   696399
170000       -    179999 (commitments)     696500           -   696699
660000       -    669999                   696900           -   697099
808100       -    808199                   697200           -   698599
Travel                                     698800           -   698899
698600       -    698799                   699000           -   752799
Alterations and Renovations                753000           -   753099
680300       -    680399                   753300           -   807999
680900       -    680999                   808300           -   999600
681100       -    681100                   S00000           -   S99999
681300       -    681399                   Other Cost-Sharing Contribution
681600       -    681699                   808200           -   808299
682100       -    682199                   Trainee Expenses
682300       -    682399                   621500           -   621599
682500       -    682599                   630000           -   639999
682700       -    682799                   694900           -   694999
682900       -    682999                   698900           -   698999
683100       -    683199                   Cost-Sharing Contribution
Contractual Costs                          696700           -   696899
691600       -    691699                   Indirect costs
697100       -    697199                   694600           -   694699
                                           752800           -   752999
                                           753100           -   753299
                                           Reported Costs
                                           999700           -   999999




                                             48
       c.      FUND STATEMENTS (CUFS – Legacy System)
               As of July 1, 2003, CUFS (College and University Financial System) became the
legacy system for financial records prior to March, 1999. Two types of CUFS Fund Statements
were available for Restricted Fund Codes: Statement of Restricted Funds-Modified and Statement
of Restricted/Allocated Fund. Unless otherwise requested, the Statement of Restricted Funds-
Modified was provided for 30X through 38X Cost Objects. The Statement of Restricted/Allocated Fund
was provided for 39X Cost Objects. If you have a need to review the legacy financial records
(microfiche), contact OSP.


2.     FACILITIES & ADMINISTRATIVE COSTS/INDIRECT COSTS
       a.      General
       Facilities and Administrative (F&A) rates are negotiated with the Department of Health and
Human Services (DHHS). The negotiated rates are required to be used on applications/proposals
unless the Sponsor stipulates otherwise. The latest Rate Agreement is available on the internet under
Reports, Rates, and Documents. For more information regarding F&A costs, refer to GAP 200.330
Facilities and Administrative (Indirect) Costs on Sponsored Projects.


       b.      Calculation of F&A Costs
       The required data to properly calculate F&A costs is obtained from the award documents and/or
approved budget and is entered to the Master Data in R/3 by OSP when the Cost Object is
established. Since the F&A rate and base to which the rate is applied can vary from project to project,
the F&A rate information for each project is stored in the Master Data of R/3 in such a way that the
System can access the data unique to each project. The amount of F&A costs to be charged to the
project is calculated at the end of every fiscal month as part of the process for closing the fiscal month.
The System calculates the F&A costs on current month activity.
       For all 3X2 and 3X3 Cost Objects the F&A costs are computed at the negotiated rate
(Theoretical) and will appear on the General Ledger as an expense to G/L Account 694600. For all
other Cost Objects, the F&A costs (G/L Account 694600) are computed using the rate authorized by
the Sponsor.
       F&A costs charged to a project can exceed the budgeted/awarded amount. This occurs when
direct cost expenses included in the MTDC base exceed their budgeted/awarded amount as follows:


            CATEGORY                        AWARDED AMOUNT              ACTUAL EXPENSE
            Supplies                        $ 1,000                     $1,100


                                                      49
            Equipment                      $10,000                     $9,900
            F&A @ 35% of MTDC              $    350                    $ 385




       c.      Modified Total Direct Costs
       MTDC is an acronym for Modified Total Direct Costs. The MTDC is the base that is used to
compute the F&A costs. According to the F&A Rate Agreement, certain expenses are excluded
from the base used to compute the F&A Costs. Occasionally, a Sponsor may exclude other direct
costs from the base that are not excluded by the Negotiated Rate Agreement. When this occurs OSP
modifies the Master Data so that the additional excluded direct costs are not considered when the F&A
costs are computed by the System.
       To determine what MTDC base is used to calculate the F&A costs on your sponsored project,
take the following steps:




•   In R/3, to the right of the green check mark, enter in the white box ZFR1, click on the green check
•   Click to the left of each of the following: Master Data Display Project/Work Breakdown Structure
•   Enter the following data:
       Project def.: (enter 7 digit Cost Object, e.g., 3911234)
•   Click on Project Definition ICON
•   In Menu Bar click on DetailsCust. fields proj def.
•   Under the section “F&A Calclation Fields”, the Cost Element Grouping indicated under the labels
    “Theoretical Cost Element Group” or “Allowable CE Group” is used to obtain the MTDC used to
    compute the F& A costs




       For 3x2 and 3x3 WBSE, the Theoretical Cost Element field provides the Cost Element Group
(series of G/L Accounts) that are used to determine the Modified Total Direct Costs used to compute
the F&A costs allowed by the Negotiated Rate. The Allowable CE Group field provides the Cost
Element Group (series of G/L Accounts) that are used to determine the Modified Total Direct Costs
used to compute the F&A costs allowed by the Sponsor..
       Once you have found the Cost Element Group (e.g., SPIDC02) used to compute the Modified
Total Direct Costs, an expense report can be executed in R/3 using SPIDC02 in the Cost Element
Group field of the expense report. The result of this report will provide you with the Modified Total


                                                   50
Direct Costs (G/L Accounts and amounts) used to calculate the F&A costs charged to the project. The
Modified Total Direct Costs multiplied by the Theoretical Indirect Cost Percentage listed in the Master
Data, provides the amount charged to G/L Account 694600 of the General Ledger.
       d.      Cost-Sharing F&A Costs
       When F&A costs are to be cost-shared, the cost-shared portion of F&A costs is indicated on the
General Ledger using the following G/L Accounts:


       752800                  Non-Government Research Cost Objects
       752900                  Non-Government Non-Research Cost Objects
       753100                  Government Research Cost Objects
       753200                  Government Non-Research Cost Objects


       Even though the approved budget does not require cost-sharing of F&A costs, F&A costs may,
nevertheless, be cost-shared. This occurs when Duke’s negotiated F&A rate (Theoretical) is higher
than the Sponsor’s awarded F&A rate (Allowable). For more detailed information refer to Part 3 g.
Cost-Sharing F&A Costs in this Section.


       e.      Internal Distribution of F&A Cost Recovery
       F&A costs expensed to a sponsored project are indicated in the General Ledger on G/L
Account 694600. If Cost-sharing of F&A costs are computed, the cost-shared portion is indicated as a
credit in the General Ledger on G/L Accounts 752800, 752900, 753100 and 753200. The actual
charge to the sponsored project is the net of the expense minus the cost-shared credit. The net
amount charged to the project is the F&A Recovery for Duke University. The F&A Recovery is
distributed to various accounts within the University. Appendix 9 is an example of the Distribution
Table for F&A Cost Recoveries. The F&A Recovery is distributed first to the top account at the
indicated rate, then, to the next account at the indicated rate, and so on, until all of the rate is used up.
For example, if a Federal Sponsor only allowed an F&A rate of 50% and the project was associated
with Arts and Sciences (see first column of Appendix 9), the General Fund would receive 41.2 points of
the F&A Recovery, Tech Transfer would receive .5 points of the F&A Recovery, Deferred Maintenance
would receive 7.8 points of the F&A Recovery, and Instructional/Shared Resources would receive only
.5 points of F&A Recovery—for a total of the 50% rate allowed by the Sponsor. The Dept.
Discretionary account would not receive any of the F&A Recovery since it has all been distributed to
the upper accounts.




                                                     51
                          APPENDIX 9 Distribution Table for F&A Cost Recoveries - EXAMPLE




                                              DISTRIBUTION TABLE FOR F&A COST RECOVERIES




                           ARTS & SCIENCES, LAW                                    SCHOOL OF MEDICINE

                          ENGINEERING (NON-GOV'T)           PHYSICS                NURSING                 FUQUA      MARINE LAB       OTS
                          DIVINITY, ADMINISTRATION            FELL         ENGR.


                          GOV'T     NON GOV'T        LSRC                  GOV'T          DCRI   DCRI 1%           GOV'T   NON GOV'T


GENERAL FUND               41.2        27.7          54.0      54.0         43.2   44.7   3.0      0.5      53.5   45.7       42.7     10.0


TECH TRANSFER              0.5          0.5          0.0       0.0           0.5   0.5                      0.5     0.5       0.5


DEFERRED MAINTENANCE       7.8         10.8          0.0       0.0           7.8   8.0                              7.8       10.8


INSTR./SHARED RESOURCES    2.5         15.0          0.0       0.0           2.5   0.8    15.0


DEPT. DISCRETIONARY        2.0          0.0          0.0       0.0           0.0          4.0      0.5                                 16.0


TOTAL RATE                 54.0        54.0          54.0      54.0         54.0   54.0   22.0     1.0      54.0   54.0       54.0     26.0



OSP 08/04




                                                                      52
3.     COST-SHARING
       a.      General
       Cost-sharing amounts and sources are determined at the proposal stage and must be
approved by the Pre-Award Office. Sponsors require that cost-shared expenses indicated on a
proposed budget be treated in the same fashion as the Sponsor’s funds. Therefore, cost-sharing must
be properly accounted for, documented, and reported. If cost-sharing is not properly accounted for,
documented, and reported, Duke could be required to repay Federal funds deemed to be overdrawn as
a result of improper cost-sharing documentation.
Most of the information provided in this Section is from the OMB Circular A-110 “Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other
Non-Profit Organizations”. Unless the non-federal Sponsor specifically states otherwise, OSP also
uses the federal guidelines for non-federal sponsored projects. Cost-sharing can be mandatory or
voluntary. Voluntary cost-sharing can be committed or uncommitted. Cost-sharing is important as it
may have an impact on the negotiated F&A rate. GAP 200.140 Cost-Sharing on Sponsored Projects
provides additional information regarding this subject.


       b.      Definitions:
       Project Costs: Project costs are all allowable costs (as set forth in the applicable Sponsor cost
principles) incurred by a recipient (Duke) and the value of the in-kind contributions made by the
recipient or third parties in accomplishing the objectives of the sponsored project during the project
period. Please refer to Section B GETTING STARTED, Part 9 Allowability of Costs for a more detailed
explanation on allowability of costs.
       Cost-Sharing and Matching: In general, cost-sharing and matching represent that portion of
project costs not borne by the Sponsor. A Sponsor may require that a certain percentage (e.g., 40%)
of the total project costs be paid by Duke. When this occurs, the Sponsor will pay only their
corresponding percentage (e.g., 60%) of the total expenses incurred by the project. In 1999, the
Department of Health and Human Services defined “Matching” as generally used to refer to a statutory
requirement to share in the costs of the project. “Cost-Sharing” was defined as when an institution
shares in the costs of the project voluntarily. For the purpose of the Manual, both Cost-Sharing
and Matching will be used interchangeably.
       Mandatory Cost-Sharing: Cost-sharing specifically required by the Sponsor in order to fund
the project. Mandatory cost-sharing is indicated in the proposed budget.
       Voluntary, Committed Cost-Sharing: Cost-Sharing that is not required by the Sponsor in
order to fund the project. However, this type of cost-sharing could be required due to an imposed
limitation by the Sponsor, such as the NIH salary cap. When cost-sharing is not required by the

                                                    53
Sponsor, listing a Principal Investigator’s effort in the proposed budget with no funds requested from
the Sponsor is also an example of Voluntary, Committed cost sharing.
       Voluntary, Uncommitted Cost-Sharing: Cost-sharing not indicated in the proposed budget or
imposed by Sponsor’s limitations. Allowable expenses incurred above the award amount (usually
removed from the project by using G/L Accounts 696700 or 696800) are an example of Voluntary,
Uncommitted Cost-Sharing.
       Cash Contributions: Cash contributions represent the recipient's (Duke’s) cash outlay,
including the outlay of money contributed to the recipient by non-Sponsor third parties. These are
costs that can be verified by Duke’s General Ledger.
       In-Kind Contributions: In-kind contributions represent the value of noncash contributions
provided by the recipient (Duke) and non-Sponsor third parties. In-kind contributions may be in the
form of charges for real property and non-expendable personal property, and the value of goods and
services directly benefiting and specifically identifiable to the project or program. These costs cannot
be verified by Duke’s General Ledger.


       c.      General Guidelines:
       1)      Cost-sharing charges incurred by the recipient (Duke) as project costs may consist of
               project costs financed with cash or represented by services and real and personal
               property, or use thereof, contributed or donated by non-Sponsor agencies, institutions,
               private organizations, individuals, or Duke.
       2)      All contributions, both cash and in-kind, shall be accepted as cost-sharing when such
               contributions meet all of the following criteria:
               a)      Are verifiable from the recipient's (Duke’s) records;
               b)      Are not included as contributions for any other sponsored project;
               c)      Are types of charges that would be allowable under the applicable cost
                       principles;
               d)      Are not paid by the Sponsor under another sponsored project;
               e)      Are provided for in the approved budget when required by the Sponsor.
       3)      Volunteer services must be documented and, to the extent feasible, supported by the
               same methods used by the recipient (Duke) for its employees (e.g., time record,
               certification of effort).
       4)      Cost-shared expenses should be purchased (paid) from the sponsored project's Cost
               Object using the appropriate 6XXXXX G/L Account. The cost-shared expenses should
               then be credited to the sponsored project's Cost Object and charged to the Cost Object



                                                     54
               that will actually pay for the cost-shared item by using G/L Accounts 808000, 808100, or
               808200.


       d.      Cost-Sharing of Salaries
       The amount and/or percent of cost-shared salary is decided at the proposal stage of a project.
Regardless of whether the Sponsor requires Cost-sharing or not, if the approved budget indicates a
percent effort with no salary, regardless of the size of the percentage, the cost-shared salary must be
documented through the payroll system. In addition, some Sponsors, like NIH, impose a salary cap
that has the result of requiring cost-shared salary for the amount of salary exceeding the NIH salary
cap limitation. For assistance in computing the cost-shared salary exceeding the NIH salary cap
limitation, OSP has developed the NIH Salary Cap Worksheet . Government funded projects cannot
be used to cost-share effort on any other sponsored project. The source of cost-sharing can only
be from a non-governmental source.
       In order to properly account for, and therefore properly report the cost-shared amount and
effort, a payroll form must be processed indicating the cost-shared portion. For the cost-shared effort
and amount, indicate on the payroll form the sponsored project's Cost Object and one of the following
Cost-sharing G/L accounts:
       600300 - Cost-Sharing: Training (excluding Tenure/Tenure Track Faculty)
       600400 - Cost-Sharing: Research (excluding Tenure/Tenure Track Faculty)
       600700 - Cost-Sharing: Training – Graduate Students
       600800 - Cost-Sharing: Research – Graduate Students
       600900 - Cost-Sharing: House Staff or Post Doc Assoc
       603300 - Cost-Sharing: Training (Tenure/Tenure Track Faculty)
       603400 - Cost-Sharing: Research (Tenure/Tenure Track Faculty)


       When dealing with cost-shared salaries one of the Cost-Sharing G/L Accounts must be used
because the Duke system is set up so that whenever these G/L Accounts are used, entries are also
made to remove the charge (but not the accountability) from the sponsored project and charge the
Duke Cost Object (e.g., 45XXXXX) for the cost-shared salary. In addition, it is critical that you indicate
on the payroll form the Duke Cost-Sharing Cost Object (e.g. 45XXXXX) that will actually pay for the
cost-shared salary. Appendix 10 provides a detailed example of cost-sharing salaries from the
proposal stage to the Effort Certification.
       If you have any questions on how to properly submit a cost-sharing Payroll Form, please call
OSP and we will be glad to discuss each individual case with you.



                                                   55
        e.     Cost-Sharing Equipment
        A Purchase Requisition using G/L Account 66XXXX is processed using the sponsored project's
Cost Object. When the equipment charge appears on the sponsored project's financial report (invoice
has been paid), a Journal Voucher using G/L Account 808100 must be processed by the department
crediting the sponsored project and debiting the Cost Object that will actually pay for the equipment
item.


Purchase Requisition:         34X-XXXX-66XXXX-XXXX                         $1,500.00



Journal Voucher:              34X-XXXX-808100-XXXX                        ($1,500.00)Credit
                              4XX-XXXX-808100-XXXX                        $1,500.00 Debit


        f.     Cost-Sharing Other Direct Costs
        The proper transaction form (e.g., Travel Voucher) is processed using the sponsored project's
Cost Object. When the charge (e.g., Travel) appears on the sponsored project's financial report, a
Journal Voucher must be processed by the department crediting the sponsored project and debiting
the Cost Object that will actually pay for the travel expense.


Travel Expense:               34X-XXXX-698600-XXXX                         $1,000.00

Journal Voucher:              34X-XXXX-808200-XXXX                        ($1,000.00)Credit
                              4XX-XXXX-808200-XXXX                        $1,000.00 Debit


        g.     Cost-Sharing of F&A Costs
        For all 3X2, 3X3, and 203 Cost Objects the F&A costs are computed at the negotiated rate
(Theoretical) and will appear on the General Ledger as an expense to G/L Account 694600. For all
other Cost Objects the F&A costs expensed as G/L Account 694600 are computed using the rate
authorized by the Sponsor. The following G/L Accounts will indicate the amount of F&A costs cost-
shared by the project:
        752800                Non-Government Research Cost Objects
        752900                Non-Government Non-Research Cost Objects
        753100                Government Research Cost Objects
        753200                Government Non-Research Cost Objects

                                              EXAMPLE

                                                    56
           COST-SHARING OF F&A COSTS



Sponsored Project Cost Object            3X3-XXXX
Negotiated F&A Rate:                              56%
Percent F&A Rate Cost-Shared:                     10%




MTDC expensed for April, 20XX        =       $10,000.00
     Negotiated F&A Rate                      x     .56
     Amount Charged to 694600        =       $ 5,600.00
     Amount Cost-Shared to 75XXXX    =       ($1,000.00)
     Net Amount Charged to Project   =       $4,600.00




                            57
                        APPENDIX 10: COST-SHARING OF SALARIES
                                             (PAGE 1 of 4)


Dr. J. Doe is a faculty member in the History Department. Dr. Doe has just been awarded a Grant by
the National Endowment for the Humanities that requires Dr. Doe to cost-share 25% of his salary for
the period September 1, 20XX through May 31, 20XX. Dr. Doe's base rate per month is $6,250.00.


                                      PROPOSED BUDGET
                                                   DUKE                        NEH
SALARIES
DR. J. DOE, PRINCIPAL INVESTIGATOR
25% EFFORT, 09/01/XX - 05/31/XX                    $14,063.00
 $6,250 X 9MOS X 25%
FRINGE BENEFITS
$14,063 X 21.4%                                    $ 3,010.00
                                                   ___________
       SUBTOTAL PERSONNEL COSTS                    $17,073.00

SUPPLIES                                                                       $ 5,000.00
EQUIPMENT                                                                      $ 1,000.00
TRAVEL                                                                         $ 2,000.00
                                                   __________                  _________
TOTAL DIRECT COSTS                                 $17,073.00                  $ 8,000.00

F&A COSTS @ 54% OF MTDC                                                        $ 4,320.00
                                                   __________                  _________
              TOTAL COSTS                          $17,073.00                  $12,320.00




                                      FINANCIAL REPORT
DESCRIPTION                                G/L ACCOUNT                                ITD PLAN

Salaries & Wages Cost-Sharing                603400                                 14,063
Fringe Benefits                              610000                                  3,010
Cost-Shared Salaries & Fringe                808000                                (17,073)
Supplies                                     645000                                  5,000
Equipment                                    665000                                  1,000
Travel                                       698600                                  2,000
Indirect Costs                               694600                                  4,320
                                                                             _______________
                                                                 TOTAL AWARD       $12,320




                                                 58
                  APPENDIX 10: COST-SHARING OF SALARIES
                                       (PAGE 2 of 4)



                                   SAMPLE iFORM


Current Cost Distribution Values
           Cost         WBS
Company Center          Element       Cost Object Description   ST   SC   Pct
       10    1500010                  Department of History     60   13   100




New Cost Distribution Values
          Cost         WBS
Company Center         Element        Cost Object Description   ST   SC   Pct
      10                    3430000   NEH Grant                 60   34   0.25
      10     1500010                  Department of History     60   13   0.75




Funding Source for Cost Sharing
          Cost         WBS
          Center       Element        Cost Object Description
            1500010                   Department of History




                                           59
                          APPENDIX 10: COST-SHARING OF SALARIES
                                        (PAGE 3 of 4)
                                       NEH GRANT
                                     EXPENSE REPORT


       COST OBJECT: 343-0000
       P.I.: DR. J. DOE
__________________________________________________________________________________
DATE          DESCRIPTION              G/L ACCOUNT      EXPENDITURES
__________________________________________________________________________________
09/25/XX      F/S DOE,J SEPT.          603400           1,562.50       debit


09/25/XX      F/S Fringe               610000            334.38        debit


09/25/XX      Cost-Shared S & FB       808000           (1,896.88)     credit




                                   HISTORY DEPARTMENT
                                    FINANCIAL REPORT


COST OBJECT: 150-0010
__________________________________________________________________________________
DATE          DESCRIPTION              G/L ACCOUNT      EXPENDITURES


09/25/XX      F/S DOE,J                601300           4,687.50       debit


09/25/XX      F/S Fringe               610000           1,003.13       debit


09/25/XX      Cost-Shared S & FB       808000           1,896.88       debit




                                            60
                           APPENDIX 10: COST-SHARING OF SALARIES
                                               (PAGE 4 of 4)



                                                                                            Show Dollar
Related Reports    Refresh Satements
                                                                                               Value
                                                        Weighted
                                            Weighted      Cost        Total     Certified
                                             Payroll     Share       Weighted    Annual       Certify
CC/WBSE                                       Avg         Avg          Avg        Effort    Checkboxes
Sponsored
  3430000 NEH GRANT
     3430000-603400 Cost Sharing-Research                      25%       25%        25%
  Award Total:                                                 25%       25%        25%
Sponsored Total:                                               25%       25%        25%

Non Sponsored
  1500010 Department of History
     1500010-601300 Instruction                 75%                      75%        75%
  Award Total:                                  75%                      75%        75%
Non Sponsored Total:                            75%                      75%        75%


Grand Total:                                    75%            25%      100%       100%




                                                   61
4.     REBUDGETING OF FUNDS
       a.     General
       After a project gets underway, a Principal Investigator (P.I.) may determine that funds need to
be rebudgeted in order to meet project objectives. Some Sponsors give universities the authority to
approve rebudgeting of funds in-house as long as there is no change in scope to the project. GAP
200.160 Rebudgeting Funds on Grants and Contracts provides additional information regarding this
subject.
       The Public Health Service has defined a “Significant Rebudgeting” action that may be
determined as a change in scope to the project as follows:
       Significant rebudgeting occurs when expenditures in a single direct cost category
       deviate (increase or decrease) from the categorical commitment level
       established for the budget period by more than 25 percent of the total costs
       awarded (excluding carry over amounts).

       b.     Internal Approval
       Prior Sponsor approval is required for all changes in scope to a project. Duke’s internal
procedures for the rebudgeting of funds have been established to indicate to both auditors and
Sponsor that a conscious decision has been made to determine whether a rebudgeting action will
cause a change in scope to the project. If it is determined that the rebudgeting action could be viewed
as a change in scope, the rebudgeting request must be approved by the Sponsor. If a change in
scope will not occur, and the Sponsor so allows, the request for rebudgeting can be approved
internally. If you are not sure as to whether a rebudgeting request can be approved internally, contact
either the pre-award office or OSP.
       The P.I. or Departmental Administrator may rebudget funds internally by submitting to the pre-
award office a “Request for Rebudgeting of Funds” form. A copy of this form is found in GAP 200.160
Rebudgeting Funds on Grants and Contracts. If internal approval can be given for the rebudgeting
request, the pre-award office will sign the request and forward it to OSP. OSP reviews the form and
compares the "Current R/3 Plan Amount" column to the approved award document. The "Current
Category Balance" column is compared to the most recent Inception to date (ITD) expense report. If
the request is appropriate and allowable, OSP signs the request form. The revised category amounts
are entered in R/3 ITD Plan by OSP. The original form is filed by OSP in the project folder. A copy of
the fully approved form is sent to the pre-award office and the Departmental Administrator.




                                                  62
       c.      Sponsor Approval
       Rebudgeting requests that require the Sponsor’s prior approval are made in a letter form. The
request should provide such information as reason why the funds are needed, reason why the funds
are available, and the anticipated dollar amounts. Various Sponsors require that the request be
cosigned by the Principal Investigator and a University Official (pre-award office). If you have any
questions regarding the contents of the letter, contact the pre-award office. The request should be
forwarded to the pre-award office for review and transmittal to the Sponsor. Once the Sponsor has
approved the request, the pre-award office forwards a copy of the approval to OSP and the revised
award categories are entered by OSP to the R/3 ITD Plan.


       d.      Calculations for Rebudgeting of Funds
       Most Sponsors do not restrict the rebudgeting of funds to and from indirect costs, therefore
care should be taken to consider the impact on F&A Costs when rebudgeting funds.



              EXAMPLE 1                     Equipment Funds needed: $1,000


You need an additional $1,000 in the equipment category and the funds are available in the Supplies
category. Since F&A Costs are not computed on Equipment but are computed on Supplies, the
calculation is as follows:


       (Amt. needed) / (1 + I/C rate)
               $1,000/1.54                                  =         $649.35 Amount from Supplies
       (Amt. from Supplies) x (I/C rate)
               $649.35 x .54                                =          350.65 Amount from F&A Costs
       Amt. from Supplies + Amt. from Indirect Cost         =         $1,000.00 Amount to Equipment



                   Example 2               Supplies Funds needed: $1,000


You need $1,000 in Supplies and the funds are available in Equipment. Since F&A Costs are
computed on Supplies but not on Equipment, you will need to rebudget enough funds to cover both
your Supply needs and the F&A Costs associated with those Supplies. The computation is as follows:


(Amount of Supplies needed) x (I/C rate)
       $1,000 x .54                          =      $540.00 I/C needed


                                                   63
Amount of Supplies + Associated I/C
       $1,000    + $540                       =       $1,540 Amount Rebudgeted from Equipment




5.     OVERDRAFTS
       Overdrafts on sponsored projects are caused by expenses exceeding either the amount
awarded or the revenue received (39X Cost Objects). Every month, using the Sponsored Projects One
Line Summary Report ZF109 (an example of this report is found in Section F CLOSE OF PROJECT,
Part 2b), the Departmental Administrator should review balances for all sponsored projects Cost
Objects owned by their department. Unfunded overdrafts should immediately be moved from the
sponsored project to an appropriate Duke funding source. Failure to do so may indicate an untimely
review of expenses incurred on a sponsored project.
       The Office of Sponsored Programs (OSP) reviews each cost object for overdrafts during the
close-out process. When multiple cost objects are involved the parent and subcodes are netted
together to determine if a project overdraft exists. The exception is when the terms and conditions of
the award document indicate that certain funds are restricted for a specific use. The subcode with the
restricted funds cannot be netted with the other cost object issued for the project.
       OSP maintains a Write-off List that indicates what cost object to use when writing off overdrafts.
The cost object is provided by the departmental administrator. Overdrafts are first written-off by OSP
to the codes listed in the Write-off List. If a cost object is not provided by a department, the overdraft is
written off to the department’s current allocated fund (45X). Either G/L Account 696700 - Other or
696800 - Research is used when removing lump-sum overdrafts. If extenuating circumstances
regarding an overdraft exist, contact the appropriate OSP staff member to discuss the situation.
       Please be aware that for 39X (except 393) Cost Objects, interest is charged by the
Endowment/Investment Office on overdrafts. If the overdraft was due to an error, a request to have
the interest reversed by the Endowment/Investment Office can be made to OSP.


6.     SUBCONTRACTS
       a.       General
       A Subcontract document is required when an Institution awards to a third party a portion of the
funds it has received for a sponsored project. Proposals for Subcontracts are incorporated in the main
proposal as a mini proposal. Most Sponsors require that prior written approval be obtained when a
subcontract is not stipulated in the initial proposal/application. However, some Sponsors require prior




                                                     64
written approval even if the subcontract is stipulated in the approved budget. Review of the award’s
terms and conditions should indicate when prior written approval is required.
       The subcontract document is negotiated by the pre-award office and usually contains the same
restrictions as the prime award. When the subcontract document has been signed by both parties, the
pre-award office forwards a copy of it to OSP.


b.     Subcontracts Awarded To Duke
       In a subcontract relationship, the Sponsor is the entity making the award to Duke, regardless of
the initial source of funds. For example, when NIH makes an award to Z Company that requires a
Subcontract to Duke, NIH is the “Prime Sponsor” and Z Company is “The Sponsor”. The Cost Object
is issued in the series associated with “The Sponsor” - Z Company (e.g., 38X) and not the Prime
Sponsor - NIH (30X). The Subcontract should be reviewed carefully as some Prime Sponsors require
that terms and conditions contained in the Prime Award be “flowed-down” to the Subcontractor.
Consequently, the Subcontract may include a brief statement indicating that the Subcontractor (Duke)
must comply with all terms and conditions included in the Prime Award.
       Proposals/applications that will result in a Subcontract award to Duke must be submitted
through the pre-award office and treated in the same manner as if they were being submitted directly to
the Prime Sponsor.


       c.      Subcontracts Awarded By Duke
       The pre-award office composes and negotiates Subcontracts awarded by Duke. OSP is
responsible for paying the Subcontractor for expenses incurred on Duke’s sponsored project. OSP
reviews the Subcontractor's invoice for accuracy by comparing it to the approved budget included in
the Subcontract document. If a budget category is exceeded, regardless of amount, the Subcontract
and Prime Sponsor's guidelines are reviewed for any restrictions on rebudgeting. When a budget
category is substantially exceeded, which could signify a change in scope, OSP requests the
Subcontractor to submit a formal request to rebudget funds between categories. In order to safeguard
project funds, OSP defines “substantial” as follows:
       •    Increase or decrease in any budget category (except equipment) that exceeds 25% of Total
            Costs awarded.
       •    Increase or decrease in equipment category exceeding $10,000 or establishing a new
            equipment category.
       In order to comply with OMB Circular A-133 "Audits of Institutions of Higher Education and
Other Non-Profit Institutions", OSP is required to maintain and review a Subcontractor’s audit report if
the Subcontractor has spent $500,000 or more in federal funds in a fiscal year. If the Subcontractor's

                                                   65
audit report indicates a finding that may affect the Subcontract, OSP is required to follow up on the
action taken by the Subcontractor to correct the finding. For more information refer to GAP 200.280
Monitoring Subrecipient Audit Results - Federal Funds. A Subcontractor’s prolonged failure to comply
with the OMB Circular A-133 requirements may jeopardize future subcontracting relationships with
Duke and will prevent payment of invoices until compliance is met.


7.     UNALLOWABLE COSTS
       a.      General
       Unallowable costs are those costs that may not be charged to a sponsored project due to
Sponsor and/or Duke regulations or restrictions. Different Sponsors have different regulations and
restrictions. In some cases, the same Sponsor could also have different regulations or restrictions
depending on their source of funds, type of award (grant, contract, agreement), and purpose of the
funds (research, training, conference travel, etc.). Therefore, only through a close review of the
documentation provided by the Sponsor (or referenced in the award document) can one determine if
the costs are considered allowable or unallowable.
In addition, when a Sponsor awards funds to an institution (Duke), they require the institution to
establish internal controls that will safeguard the Sponsor’s funds. Below are some special internal
controls established by Duke to assist the Departmental Administrator in meeting this requirement:




       b.      Cost Accounting Standards (CAS) Exception Forms
       In order to comply with Office of Management and Budget (OMB) Circular A-21 and applicable
Cost Accounting Standards (CAS), Duke has established GAP 200.320 – Direct Costing on Sponsored
Projects clarifying allowability of costs to federally sponsored projects. This GAP describes how certain
costs may be charged directly or indirectly as Facilities and Administrative (F&A) costs. GAP 200.360
Charging Clerical and/or Administrative Expenses to Federally Funded Projects provides additional
information.
       In addition, effective September 1, 2007 any new award or continuation award funded by the
Federal Government (including Federal prime grants) that includes direct costs that could be
considered unallowable must also have a completed CAS Exception Form I and/or II. The purpose of
these forms is to provide documentation of an approved “exception” to normally unallowable direct
costs on federally funded projects. The CAS Exception Forms must be completed even if the Sponsor
has approved the costs as line items in the approved and funded budget.
       The CAS Exception Forms will routinely be required by the pre-award office at the time of
award. The pre-award office will review, and if acceptable, will approve the CAS form. When the

                                                   66
award documentation is forwarded to OSP by the pre-award office, OSP will review and approve the
CAS form and incorporate the approved budget categories into the Plan in R/3.
       c.      Reviewable G/L Accounts
               OSP has created the cost element group SPREVWGL to assist the Departmental
Administrator in determining if any expenses have been charged to General ledger accounts that could
be considered reviewable or unallowable. Appendix 11 provides an example of some of the reviewable
G/L Accounts included in SPREVWGL.
       During the reconciling of financial transaction process, the Departmental Administrator should
review expenses using SPREVWGL. For any reviewable expenses not previously approved by the
CAS Exception form, steps should be taken by the Departmental Administrator to obtain appropriate
approvals using the Request for Rebudgeting of Funds form. Unallowable expenses must be removed
using the G/L Account of the initial entry and not the cost sharing G/L Accounts (696700 or 696800).
During the process of preparing a financial report or billing, for federally funded projects OSP reviews
transactions using SPCAS cost element group. Reviewable transactions not previously approved are
written off to the department’s discretionary code using the G/L Account of the initial unallowable entry.


       d.      Entertainment
               Federal Sponsors and most non-Federal Sponsors do not allow entertainment expenses
to be charged to a sponsored project. Duke’s policy stipulates that any activity that involves alcoholic
beverages is considered entertainment. In addition, any costs associated with an activity that could be
viewed as a social function are also classified as entertainment. Care should be taken to classify an
expense according to its intended purpose. For example, if supplies (normally G/L Account
64XXXX) were purchased to decorate for a party, the correct G/L Account to use is 693200 – Public
Relations and Social Expenses. To assist the Departmental Administrator in monitoring for
unallowable entertainment expenses, the cost element group SPREVWGL includes G/L Account
693200.


       e.      Administrative and Clerical Salaries
       OMB Circular A-21, “Cost Principles for Educational Institutions”, section F.6.b (2), states in
       part:
               The salaries of administrative and clerical staff should normally be treated as
               F&A costs. Direct charging of these costs may be appropriate where a major
               project or activity explicitly budgets for administrative or clerical services and
               individuals involved can be specifically identified with the project or activity.
               “Major project” is defined as a project that requires an extensive amount of
               administrative or clerical support, which is significantly greater than the
               routine level of such services provided by academic department…

                                                    67
Therefore, administrative and clerical salaries paid from federal funds are unallowable unless an
extensive, clear, detailed, and convincing budget justification is provided. The National Institutes of
Health (NIH) has provided examples of circumstances where direct charging of administrative and
clerical salaries might be appropriate (NIH Guide, Vol. 23, No. 34, September 23, 1994). GAP 200.360
Charging Clerical and/or Administrative Expenses to Federally Funded Projects provides additional
information.
       To assist the Departmental Administrator in monitoring for these unallowable expenses, the
cost element group SPREVWGL includes G/L Accounts 600000, 600100, and 607100. Only
administrative and clerical salaries approved through the CAS Exception Form I will be considered
allowable by OSP. OSP will write off the unallowable expenses (salaries & wages, fringe benefits, and
F&A Costs) to the department’s discretionary code using G/L accounts 696700 or 696800.


       f.      Local Service Telephone Charges
Local service telephone charges (pagers, modem lines, internet access, and fax lines) are normally
treated as F&A costs. Therefore, direct charges for these expenses should not be made to any
Federal Governmental (30X-34X) or Research (3X3, 203) Cost Object (except 393). There may,
however, be some instances (“unlike circumstance”) when these costs may be charged to these Cost
Objects. Exceptions must be approved by the pre-award office and OSP. At time of award, the CAS
Form II must be processed by the department and approved by the pre-award office. During the life of
the project, a Request for Rebudgeting of Funds form must be submitted and approved by the pre-
award office and OSP. Unallowable local service telephone charges are written off by OSP to the
department’s discretionary account.




                                                    68
                     APPENDIX 11: REVIEWABLE G/L ACCOUNTS
                          EXAMPLE
   GL
Account                       DESCRIPTIION
 651300                          GROCERIES
 651400                              MEAT
 651500                      OTHER FOOD ITEMS
 652000            Cost of Goods Sold-Journals-Composition
 653500                            POSTAGE
 690300        ADMINISTRATIVE SERVICES - BLDG FACILITIES
 690400                          AUDIT FEES
 690500                   RESERVE ADJUSTMENTS
 690700               ATTORNEY COLLECTIONS FEES
 690800                          LEGAL FEES
 690900                 BAD DEBTS - FEDERAL GOV'T
 691000                BAD DEBT ACCRUED EXPENSE
 691100                    BAD EXPENSE - CONTRA
 691200                      BOND REDEMPTION
 691500                  COLLECTION AGENCY FEES
 691800                CONTRIBUTIONS AND PRIZES
 691900                   CABLE T.V. BULK CHARGE
 692000                      CABLE T.V. CHARGE
 692400                  DEPRECIATION - BUILDING
 692500                 DEPRECIATION - EQUIPMENT
 693100            DIRECT MAIL MARKETING EXPENSES
 693200           PUBLIC RELATIONS & SOCIAL EXPENSE
 693300                       RADIOLOGY FLOAT
 693800                    GAS FUEL OIL AND HEAT
 694000                      GROUNDSKEEPING
 694300            Reserve for Minor Acquisition Betterments
 694400                        HOUSEKEEPING
6948XX                           INSURANCE
 695000              INTEREST EXPENSE - EXTERNAL
 695100               INTEREST EXPENSE - INTERNAL
 695200                            LAUNDRY
 695400                        LIGHT & POWER
 695600         LOSSES, DAMAGES & OTHER WRITE OFF'S
 695700       MAINTENANCE-NON BILLABLE PAYROLL COSTS
 696000              MEETINGS - BUSINESS RELATED
 696600                  RADIO REPEATER SERVICE
 696900                   PARSONAGE ALLOWANCE
 697000                           ROYALTIES
 697400                     STUDEN DAMAGE-UNIV
 697600                     TAXES AND LICENSES
 698100             TELEPHONE TRUNK LINE CHARGE
 698200                MONTHLY SERVICE CHARGES
 698300          TELEPHONE PAGING SERVICE CHARGES
 698800                     UNIVERSITY SUBSIDES
 699000          TRAVEL & LIVING EXPENSES - DOMESTIC
 699100           TRAVEL & LIVING EXPENSES - FOREIGN
 699200                     VISITING TEAM SHARE
 699400                             WATER
 699600               EXTERNAL MANAGEMENT FEES
 699800             COST ACCOUNTING DIST BUD ADJ
8XXXXX    APPROPRIATIONS AND TRANSFERS (except 8080, 8081, 8082)

                                                 69
8.     INTERIM REPORTING REQUIREMENTS
       a.      General
       One of the main functions of OSP is to prepare and submit, in a timely manner and in
accordance with Sponsor specific requirements, sponsored project financial reports/billings. In order to
accomplish this tremendous task, OSP has a database that includes all Cost Objects that require
financial reports/billings to be submitted by OSP. Each month, the Billing sections produces a
"Workload Report" that indicates which Cost Objects require reports/billings to be submitted for that
month. OSP's goal is to mail all reports/billings on this list before the next month's list is printed.
However, this goal can seldom be met without the Departmental Administrator's cooperation.


       b.      Interim Financial Report
       Sponsor requirements vary as to the timing and format required for the submittal of financial
reports/billings . The timing ranges from monthly submittal to requiring only a final financial report.
The format also encompasses a wide range. A Sponsor may require a financial report that indicates
only a one line total for expenses incurred for a year. On the other hand, a Sponsor may require a very
detailed report/billing that lists every expense down to the last paper clip purchased on the project.
Copies of all invoices, A/P Check Request, travel reimbursement, etc., may also be required to be
attached to the billing or report. In addition to the Sponsor’s reporting requirements, OSP also reviews
the project requirements and restrictions in order to determine if unallowable expenses have been
charged to the project.
       For federally funded projects, financial reports/billings are reviewed by OSP for unallowable or
reviewable expenses using the cost element group SPCAS. F&A and cost-shared are also verified.
Both current and cumulative reported expenses are reconciled to the General Ledger. In addition, the
cash status of the Cost Object is reconciled to the revenue received and/or outstanding invoices.
Sponsors are also sent letters requesting the status of any delinquent payments.
       Some Sponsors have very strict requirements for reporting expenses. When a Sponsor
requires that costs be grouped in a way that cannot be accommodated by Duke’s financial system, a
report is sent by OSP to the Departmental Administrator requesting assistance in grouping the
expenses in accordance with the Sponsor’s requirements. A delay in submitting the proper paperwork
(Payroll forms, JV, prior approvals, etc.) to clear up any unallowable or reviewable expenses can, and
very often does, delay the submittal of the report/billing. A Sponsor may also require an explanation of
excessive unobligated balances. Therefore, your prompt assistance in submitting any paperwork
requested by the Billing sections is crucial in meeting a Sponsor's deadline.




                                                     70
       Occasionally a Sponsor may contact the Principal Investigator or Departmental Administrator
and request financial information. We recommend that you consult with OSP staff before providing the
financial information. The financial reports submitted by OSP are normally based solely on the
expenses indicated on the General Ledger. Confusion can occur if the figures provided by the P.I. or
Departmental Administrator include costs that are not yet reflected on the General Ledger.
       If you are contacted by a Sponsor regarding a late financial report, please call OSP. Our past
experience has shown that in the majority of cases, the financial report/billing was mailed on time.
Confusion on a late financial report is usually caused either because the Sponsor did not receive the
report, even though it was mailed, or the person inquiring is not the person listed on the award
documents as the direct recipient of the report.


       c.      Interim Property Report
       Property reports required by Sponsors are submitted by OSP. As required by OMB Circular A-
110 “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher
Education, Hospitals and Other Non-Profit Organizations”, Plant Accounting performs physical
equipment inventories on a two-year cycle. Through R/3, OSP can access Plant Accounting’s property
records. All procured property reports are reconciled to the General Ledger and Plant Accounting's
records. Equipment purchases are also reviewed for proper authorization and ownership. Sponsor-
owned equipment must be properly classified and tagged. The proper use of G/L Accounts 664700
and 664800 on the Purchase Requisition is a flag to OSP and Plant Accounting that title to the item
being purchased vests with the Sponsor. For more information regarding this subject refer to Section
D EQUIPMENT.
       In addition, some Sponsors require that an annual physical inventory of Sponsor-owned
equipment be conducted and reported, even if it is negative. In some instances, an equipment report
is also required to be submitted within 30 days of the date of the purchase of the equipment. Sponsor-
owned equipment that is no longer being used must also be reported to the Sponsor on a timely basis.
Your assistance is crucial in identifying and notifying OSP of any unused, obsolete, stolen,
missing, or unrepairable equipment. For more information regarding lost, damaged, or destroyed
Sponsor-owned equipment, please refer to SECTION D EQUIPMENT, Part 6 Sponsor-Owned
Equipment. Duke/Department is held accountable for Sponsor-owned equipment until relieved of its
accountability in writing by the Sponsor.


       d.      Interim Patent Report
       Certain Sponsors require that annual invention or patent reports be submitted. The pre-award
office is responsible for submitting these reports.

                                                      71
        Care should be taken by the Departmental Administrator when reviewing the award document
for invention reporting requirements. Some Sponsors require that an invention be disclosed within a
specified period of time or rights to the invention may be lost. For Federal Sponsors, Duke has a legal
obligation to disclose/report all inventions. In event of a new invention or discovery, the pre-award
office and Corporate and Venture Development (CVD - 681-7542) should be contacted immediately.


        e.      Interim Technical Report
        OSP is not responsible for the monitoring or submitting required technical reports. The only
time OSP becomes involved with technical reports is when a Sponsor holds a payment pending receipt
of a delinquent technical report. When this is the case, OSP notifies the Departmental Administrator of
the withheld payment and requests a copy of the letter transmitting the technical report to the Sponsor.
When the copy of the letter is received, OSP resubmits the Invoice/Billing with a copy of the letter that
transmitted the technical report. Past experience has shown that in most cases the technical report
has, in fact, been submitted. However, copies were not sent to all the required people and/or offices.
The Departmental Administrator should closely review the award document for guidance on the
distribution of technical reports.


        f.      Small and Small Disadvantaged Business Subcontracting Program
        The Small and Small Disadvantaged Business Subcontracting Program is administered by the
Small Business Administration. It is designed to increase the level of supplier diversity in accordance
with P.L. 95-507 in all Federal contracts having a total value of $500,000 or greater. Duke must make
a “good faith” effort to insure that a viable Subcontracting Plan utilizing small and small disadvantaged
business, women-owned small businesses, and Historically Underutilized Business Zones businesses
is prepared and submitted to the Government. The Subcontracting Plan is prepared at the proposal
stage by Procurement Services and the Principal Investigator (or his/her representative). When the
proposal is funded, the contract document requires that reports be submitting every six months that
indicate how the goals indicated in the Subcontracting Plan were met. The reports are prepared and
submitted by Procurement Services. To meet the reporting requirements, OSP provides Procurement
Services with financial information regarding Airfare paid through Travel Vouchers.


9.      NO-COST EXTENSIONS
        Due to unanticipated circumstances, a Principal Investigator may need additional time to
complete the project. A request for a no-cost extension must be submitted to the pre-award office and
should provide such information as cause of delay, objectives to be accomplished, and period of
extension. Requesting an extension simply to allow sufficient time to spend the available balance is

                                                   72
not acceptable. For assistance regarding the specific contents of the request or the lead time required
to process the request on time, contact the pre-award office.
       Some Sponsors, such as the National Institutes of Health (NIH-grants under "Expanded
Authority") and the National Science Foundation (NSF) authorize Duke to extend a project as long as
the Sponsor is notified in advance. After the pre-award office approves the request for a no-cost
extension, they notify the Sponsor of the internal approval to extend the project and send a copy of the
internal approval to OSP. The termination date in the R/3 is then changed by OSP. NSF and NIH (in
most cases) do not send revised award notices indicating the extended date. Duke is not authorized to
extend projects that have been previously extended. Additional requests for no-cost extensions of
projects previously extended by Duke require the Sponsor’s written approval.
       For projects that require the Sponsor's written approval for a no-cost extension, OSP cannot
extend the termination date until the written approval from the Sponsor is received.




                                                   73
                                    SECTION F:
                                 CLOSE OF PROJECT
1.       GENERAL
         It is essential that costs be accurately recorded and finalized at the end of a project so that final
financial reporting requirements can be met. If a project is transferred to another institution or
terminated early for the convenience of the Sponsor, the close-out procedures are the same once the
proper documentation has been processed establishing the earlier end date. All documentation
required to terminate a project early must be processed through the pre-award office. The National
Science Foundation and the National Institutes of Health have specific forms that are required to be
completed when transferring or relinquishing a sponsored project.
         Most Sponsors require final financial reports to be submitted within 90 days after a project
terminates. To allow sufficient time for allowable expenses to be recorded, the Office of Sponsored
Programs (OSP) begins close-out procedures 60 days after the termination date of the project. GAP
200.180 Closeout of Sponsored Project provides additional information regarding this subject.
                All corrections and other transactions necessary to bring the costs to the correct amount
must be recorded on the general ledger during the two accounting periods following the project end
date. This is the responsibility of the departmental administrator. The following close-out
documentation is required to be submitted by the department to the Office of Sponsored Programs no
later than 60 days after the project end date:
     •   ZF114 Report – Analysis of Transactions After The End Date Report: This report is
         completed by the department. The ZF114 is available in R/3 for the department administrator
         to execute themselves. The ZF114 lists all expenses that have been charged to the project after
         the project end date up to the time the report is executed. The department administrator must
         review the expenses and indicate in the columns provided in the report whether each expense
         is allowable or unallowable. All unallowable expenses must be removed by the department. If
         allowable expenses have not yet hit the General Ledger, the department administrator should
         add the expense to the ZF114 report and attach the appropriate supporting documentation.
     •   Obligation Sheet for NIH Training Grants: If the project is a training grant funded by NIH, the
         Obligation Sheet for Training Grants is also completed by the department.
     •   Post Award Close-Out Checklist: This report is completed by the department and signed by
         the Principal Investigator and the responsible financial administrator.
     The Central Support Section of OSP performs a general review of the close-out documents. After
the general review, the close-out documents are either accepted and forwarded to the appropriate
Billing Section for final financial report preparation, or the close-out documents are returned to the

                                                      74
Department. A department can review the status of the close-out documents by entering Transaction
ZG53 in R/3.
     To facilitate the close-out of a project, the Office of Sponsored Programs (OSP) via R/3
automatically sends various email notifications to departments based on Master Data field and Project
End Date. The Budget End Date is used if carry-forward is not automatically allowed. The email
notifications are sent as follows:
1)      Standard Notification – 90 day Sponsor due date:
            a. 1st Notice – 45 days before project end date – Awareness notice that project will end in
                45 days.
            b. 2nd Notice – 30 days after project end date – stipulates deadline date of 60 days after
                project end date for submittal of completed close-out documentation
            c. 3rd Notice – 61 days after project end date – reminder that close-out documentation was
                not received by deadline and extends the deadline by 5 working days
            d. Final Notice – 69 days after project end date – stipulates that close-out documentation
                was not received and OSP will not be able to submit the final financial report. No further
                reminders are sent.
2)      Standard Notification – less than 90 day Sponsor due date:
            a. 1st Notice – 45 days before project end date – Awareness notice that project will end in
                45 days.
            b. 2nd Notice – at project end date – stipulates deadline date of 14 days before Sponsor
                due date for submittal of completed close-out documentation
            c. 3rd Notice – 14 days before Sponsor due date – reminder that close-out documentation
                was not received by deadline and extends the deadline by 5 working days
            e. Final Notice – 7 days before Sponsor due date – stipulates that close-out documentation
                was not received and OSP will not be able to submit the final financial report. No further
                reminders are sent.


Each notification lists all sponsored projects owned by the department and lists the close-out
documentations that are required before OSP can submit the final financial report/billing. The table
below indicates who receives each notification:




                                                      2nd Notice
                                         1st Notice                 3rd      Final
                           Recipient                   Due in 30
                                         Awareness                 Notice   Notice
                                                         Days

                                                      75
                       Grant Administrator   X          X       X        X

                          Departmental
                                             X          X       X        X
                          Administrator
                               P.I.                             X        X
                        Business manager                                 X

                       Management Center
                        (reporting will be
                            available)



       When the close-out documentation is received, OSP will process the final financial report/billing
only after the normal workload for the month has been completed. This will avoid the late reporting of
projects where the closing documentation was received by the deadline. The Management Centers
are provided with a monthly report listing projects by BFR code with delinquent final financial reports.


2.     REPORTS PROVIDED TO DEPARTMENTAL ADMINISTRATOR FOR CLOSING
       PROJECTS
       Several reports are available to the Departmental Administrator to facilitate the close-out
process.


       a.      Projects Ending Within 3 Months (ZF110)
       This report provides a list of Cost Objects associated with a specific Organizational Unit that are
scheduled to expire within the next three accounting periods. The main purpose of this report is to
provide the Departmental Administrator with sufficient time to process the necessary documents
required for a smooth close out of the project. The report lists actions that may be required to
eliminate unallowable charges after the end date. Almost all projects require action on the following
two items:


       1)      Payroll forms must be processed indicating another appropriate source of funding.
       2)      Source of funding for standing orders must be changed.
       3)      Commitment items need to be invoiced or voided.
       4)      Lab Managers and departmental staff need to be notified that the project has ended.


       Appendix 12 explains each column of the report. Instructions on how to execute the ZF110
report are found in the internet.




                                                   76
                            APPENDIX 12: PROJECTS ENDING WITHIN 3 MONTHS ZF110




 1              2                                 3             4                         5            6         7




                                                       8

1 Project                    The seven digit Project number (i.e., fund code)
2 Description                The description of the Project
                             The ten digit Organizational Unit number for the Project (i.e., BFR code – replaces
3 Org Unit
                             Component)
4 Principal Investigator     The name of the Principal Investigator for the Project
  1 Fisc Mth                 Indicates Projects which are terminating in the first fiscal month of the report (from the fiscal
5
  (Fiscal Month End Date)    month selected to run report) and provides the end date within that period.
  2 Fisc Mth                 Indicates Projects which are terminating in the second fiscal month of the report (from the
6
  (Fiscal Month End Date)    fiscal month selected to run report) and provides the end date within that period.
  3 Fisc Mth                 Indicates Projects which are terminating in the third fiscal month of the report (from the fiscal
7
  (Fiscal Month End Date)    month selected to run report) and provides the end date within that period.
8 Footer Message             Summarizes the actions needed to ensure a smooth close-out of the Project.




                                                           77
b.      Sponsored Projects One Line Summary (ZF109)
        This report provides a list of all sponsored projects associated with a department. It can
be used by the Departmental Administrator to make the following analysis (Please refer to
Appendix 13.):
•    3132000: The project ended last month; it has a balance of $5,000 and an outstanding
     commitment of $5,000. A commitment becomes an expense when the vendor is paid.
        •        Is the committed amount correct?
        •        Do I need to cancel a Purchase Order?
        •        Do I need to call the vendor and request an invoice, the item was received 3
                 months ago.
•       3234000: The project terminates in less than 30 days and there remains a balance of
        $30,000.
        •        Is the progress of the project running behind schedule and an extension needs
                 to be requested?
        •        Will the personnel be moving to another project? Do I need to process Payroll
                 forms?
•       3335000: The project terminates in 2 months and the balance is $8,000.
        •        Will there be sufficient funds to cover the project costs until it terminates?
        •        Is there a competitive continuation year forthcoming?
•       3533333: The project terminates this month and has a zero balance.
        •        Have I contacted telecommunications, copy center, etc. to change the charge
                 code to the continuation project so that an overdraft will not occur?
        •        Has the final technical report been submitted?
•    393-8888: The project terminated over 3 years ago and has an overdraft of $1,500.
        •        Did an incorrect entry cause the overdraft?
        •        Has the Sponsor failed to pay all the promised funds?
        •        Is the Cost Object being charged interest on the overdraft amount?
        •        Why has the Cost Object not been closed in R/3?
        •
        Appendix 14 is a Call Out Sheet for the ZF109 Report and includes an explanation of
each column in the report. Instructions on how to execute the ZF109 report are found in the
internet.




                                              78
                                    APPENDIX 13: SPONSORED PROJECTS ONE LINE SUMMARY REPORT ZF109
                                                                                       DUKE UNIVERSITY
                                                                        Sponsored Projects One Line Summary Report
                                                                                              2003 - 04

                                                                                                                                 Award         Revenue      Current
  Project         Org Unit       DESCRIPTION      PI          Begin      End       Award          ITD             ITD              vs             vs         Month       Commitments
                                                              Date       Date      Amount        Revenue        Expenses        Expenses       Expenses     Expenses

 3020000         6860501110   2T30-YX-01010-50    DOE        01/01/03   12/31/04    160,000       -10,000.00     15,000.00      145,000.00       5,000.00       500.00        2,000.00
 3031000         6860501110   5P01-QT-12345-01    SMITH      06/01/02   05/31/03    520,000       -25,000.00     30,000.00      490,000.00       5,000.00     1,000.00            0.00
 3132000         6860501110   DAAH09-96-J-0000    JONES      10/01/00   09/30/02    650,000      -650,000.00    645,000.00         5,000.00     -5,000.00    10,000.00        5,000.00
 3234000         6860501110   DE-FG09-95-ER0000   RIGSBEE    12/01/98   11/30/02    550,000      -450,000.00    520,000.00        30,000.00     70,000.00    50,000.00            0.00
 3335000         6860501110   SOS-96-6000         WOODALL    01/01/00   12/31/02     96,000       -88,000.00     88,000.00         8,000.00          0.00         0.00            0.00
 3486000         6860501110   P019Z700000         JOHNSON    02/01/01   01/31/03     80,000       -55,000.00     60,000.00        20,000.00      5,000.00    15,000.00            0.00
 3533333         6860501110   NCSU SUBCONTRACT    THOMPSON   11/01/01   10/31/02    120,000      -115,000.00    120,000.00             0.00      5,000.00         0.00            0.00
 3897777         6860501110   XYZ INCORPORATED    DAVIDSON   03/01/00   02/28/03    320,000      -320,000.00    200,000.00      120,000.00    -120,000.00    20,000.00        6,500.00
 3919999         6860501110   WHY FOUNDATION      SMYTH      05/01/89   00/00/00                  -20,000.00     20,000.00      (20,000.00)          0.00         0.00            0.00

 3938888         6860501110   ABC COMPANY         BELL       06/01/97   05/31/99                       -             1,500.00    (1,500.00)   1,500.00            0.00            0.00

** Grand Total                                                                     2,496,000   -1,733,000.00   1,699,500.00     796,500.00     -33,500.00    96,500.00       13,500.00




                                                                                    79
                            APPENDIX 14: SPONSORED PROJECTS ONE LINE SUMMARY REPORT ZF109
                                                  (Image has been reduced from actual size)




          1        2    3                        4                5       6         7            8         9           10          11         12          13

1    Project            The seven digit Project number (i.e., fund code). Indicates all projects in R3 as of the date report executed.
2    Org Unit           The ten digit Organizational Unit number for the Project (i.e., BFR code – replaces Component).
3    Description        The description of the Project.
4    PI                 The name of the Principal Investigator for the Project.
5    Begin Date         The beginning date of the Project.
                        The ending date of the Project. If end date indicates year 2024: REL (released) – Project has no end date; CLSD (closed) – generic
6    End Date
                        End Date was used when the data was uploaded from legacy to R3. True end date must be obtained from legacy data.
                        The amount obligated by the Sponsor, as indicated in the award document. If the Award Amount indicates 0.00: REL (released) – a)
                        project does not have an Award Amount, b) project was set up in advance and Award has not yet been received by OSP; c) budget at
7    Award Amount
                        OPS does not equal Award Amount; CLSD (closed) – If code ended prior to 07/01/98 Award Amount in legacy data was not available
                        to upload to R3.
                        Inception to Date Revenue – Revenue received from the beginning of project to Report Selection dates. For projects with no Award
8    ITD Revenue
                        Amount and effective prior to 07/01/98: ITD Revenue is the fund balance as of 06/30/98 plus revenue received from 07/01/98.
                        Inception to Date Expenses – Expenses incurred from the beginning of the project to Report Selection dates. For projects with no
9    ITD Expenses
                        Award Amount and effective prior to 07/01/98: ITD Expenses begins with expenses incurred as of 07/01/98.
10   Award vs Expense   Award Amount less ITD Expenses for the Project.
11   Rev vs Expense     ITD Revenue less ITD Expenses for the Project.
                        Total of the current month’s expenses (direct and indirect) for the Project for the Fiscal Year and Fiscal Month selected in the Report
12   Cur Month Exp
                        Selections field.
                        Total of commitments (i.e., encumbrances) pending for the Project. This data is a “moving target” as it indicates commitments as of
13   Commitments
                        the date the report is executed regardless of the Fiscal Year and Fiscal Month selected in the Report Selections field.



                                                                              80
        c.      Analysis of Transactions Report After End Date (ZF114)
        This Report lists expenses that have been incurred during the accounting period after the
project terminated through the date the report is executed. The report is available both as a hard
paper copy and as a download to an Excel spreadsheet. The Excel spreadsheet should be used. The
Departmental Administrator is to review these listed expenses for allowability. The final financial
report/billing will NOT be submitted to the Sponsor by OSP without a completed ZF114 report.
        A completed ZF114 report is due at OSP within 60 days from the end date of the project. If the
Sponsor requires the final financial report/billing earlier then 90 days, the ZF114 must be executed,
completed, and received by OSP with sufficient time to allow for the timely submittal of the final
expenditure report/billing. If no expenses have been incurred after the end date, a ZF114 report will
not produce. When a ZF114 report does not produce, OSP must be notified in writing whether or not
any additional expenses are to be included as part of the final expenses for the project. If additional
expenses are to be include as part of the final expenses for the project, either the R/3 document
number or a copy of the source document for the added expenses must be provided to OSP.
Estimates are not acceptable. The completed ZF114 Excel report must be emailed to OSP email
address sponsoredprograms@duke.edu. The subject line should indicate “ZF114 report for 3xxxxxx”.
Please do NOT copy OSP personnel.
        Failure to submit the ZF114 report to the correct email address may result in OSP concluding
that the ZF114 requirement was not met. If the completed ZF114 report is not received within the
required 60 days, a reminder notification is sent to the department, with a copy to the P.I. A new
deadline is established allowing an additional 5 working days from the date of the reminder notification
to submit the required completed ZF114 report.
        If the completed ZF114 report is not received by the 2nd deadline, a Final notification is sent to
the department, with a copy to the P.I., and the Business Manager. The Final notification informs the
Departmental Administrator that the final financial report/billing was not submitted because the
completed ZF114 report was not received. It also informs the Departmental Administrator that no
further reminders will be sent and OSP will take no further action will be taken by OSP until the
required completed ZF114 report is received. The notification also informs the Departmental
Administrator that when the completed ZF114 report is received OSP will process the final financial
report/billing only after the normal workload for the month has been completed. This will avoid the late
reporting of projects where the closing documentation was received by the deadline. Upon request,
the Management Centers are provided with a monthly report listing projects by BFR with delinquent
final financial reports.




                                                    81
       Appendix 15 explains each column of the Report. The Report provides columns where the
Departmental Administrator can indicate how the expense should be handled. If the expense is
allowable, the questioned amount should be entered in the “Amount Allowable” column. In addition,
the date when the expense was obligated or incurred should also be indicated in the “Date Incurred”
column. Salaries and wages are incurred at the time the effort is exerted.
       Appendix 16 provides an example of the paper ZF114 report and how the paper Report would
look after being completed. Appendix 16 indicates that the salary and wage amounts were for a period
after the project ended, therefore, both the salary/wage and corresponding fringe benefits should be
indicated in the “Amount Not Allowable – To Be Transferred” column. However, since the General
Ledger indicates the month in which the salary payment “hit the books”, it is highly recommended that
all salary payments after the end date be reviewed to make sure they were not “retroactive payments”
within the period of the project and thus allowable. The project terminated 08/31/0X, and a purchase
order for an item was issued on 08/15/0X (prior to the terminated date of the project), but the invoice
was not received and paid until 09/15/0X (after the termination date). In this case, the expense would
be allowable and the “Date Incurred” would be 08/15/0X (date purchase order was issued). If travel
was taken on 09/10/0X and the Travel Expense form to pay the travel expenses was processed in
September 200X. Since the travel was taken after the termination date, it is unallowable. The “Date
Incurred” would be 09/10/0X and the amount charged would be listed under the “Amount Not Allowable
– To Be Transferred” column
       Expenses indicated on the Report under the “Amount Not Allowable – To Be Transferred”
column will not be automatically removed from the project. Payroll forms, Journal Vouchers, etc.,
must be processed by the Departmental Administrator to remove the unallowable expenses
from the project. Ideally, the paperwork to remove the unallowable expenses should be attached to
the Report when it is returned to OSP or the “Amount Not Allowable – To Be Transferred” column
should indicate the document number that removed the unallowable expense.
       Outstanding expenses which are legitimate costs to the project but are not indicated on
the ZF114 Report are to be added by the Departmental Administrator at the end of the ZF114
Report. All of these added costs must have been either incurred or obligated prior to the termination
date of the project. These expenses cannot be estimates. The amounts added to the Report must be
actual amounts that you know are being charged. OSP is not allowed to invoice or report estimated
expenses.
       Some training grants allow for the obligation of training expenses. When this is the case, an
Obligation for Training Grants sheet (Appendix 16, page 2) must be attached to the ZF114 Report.
The Departmental Administrator must complete the sheet and return it with the ZF114 Report to OSP.



                                                   82
In order to properly report all expenses incurred on the project by the Sponsor’s deadline, it is
imperative that the 60 day deadline be met by the Departmental Administrator. As previously stated,
the final financial report/billing will NOT be submitted to the Sponsor by OSP without a
completed ZF114 report.




                                                    83
                            APPENDIX 15: ANALYSIS OF TRANSACTIONS AFTER END DATE ZF114




                    4                                                                                7




     8                  9       10                                  11           12             13               14


                                                       15

                                                                                                          16



Description of Information and Columns
                                     The ten digit Organizational Unit number for the Project (i.e., BFR code - replaces
 1       Org Unit
                                     component code)
 2       Project                     The seven digit Project number (i.e., fund code)
 3       PI                          The name of the Principal Investigator for the Project
 4       Start - End Dates           The beginning and ending date of the Project
 5       Award Amount                The amount obligated by the Sponsor, as indicated in the award document
                                     The total amount of expenses incurred on project starting with the first fiscal month AFTER
                                     the fiscal month the project ends through the calendar date the report is executed, e.g.
 6       Total Expenses to Date
                                     Project ends 11/15, expenses are for Fiscal Month December through date report is
                                     executed
 7       Balance/(Overdraft)         Project balance or overdraft as of the date the report is executed

                                                               84
8    G/L Account              The General Ledger Account used for the transaction (i.e., object code)
                              The R3 document number assigned to the transaction; Company Code and Fiscal Year of
9    Doc.Number; Comp Year
                              transaction.
                              The text description of the transaction. For a Journal Voucher it is the text provided in the
10 Charge Description
                              Text field of the Journal Voucher.
11 Amount                     Amount of the transaction. A minus to the right of the amount indicates a Credit
                              Date when the expense was incurred. Note: When an expense is incurred as a result of a
12 Date Incurred              Purchase Order, the Date Incurred is the date when the Purchase Order was issued.
                              Salaries and wages are incurred at the time the effort is exerted.
                              The amount of the transaction that is allowable and should be reported to the Sponsor as
13 Amount Allowable
                              part of the Final Expenses.
                              The amount of the transaction that is not allowable and should NOT be reported to the
                              Sponsor as part of the Final Expenses. Transaction forms to remove the unallowable
     Amount Not Allowable –
14                            expenses must be attached to the Report or they will be moved to the departmental
     To be Transferred
                              discretionary account. If the Department has moved the unallowable expense, the column
                              indicates the document number that moved the unallowable transaction.
                              Blank lines are provided to add allowable expenses that are not included in this report but
                              have been incurred prior to the End Date of the project and should be reported to the
15 Blank Lines
                              Sponsor as part of the Final Expenses. Amounts cannot be estimates. Original transaction
                              forms must be attached to Report.
                              Indicates the date that the Report must be completed and returned to the Office of
16 Deadline Date              Sponsored Programs. Failure to reply by the deadline will cause all expenses indicated in
                              the report to be considered unallowable and moved to the department’s discretionary code.




                                                        85
                      APPENDIX 16: ANALYSIS OF TRANSACTIONS AFTER THE END DATE (ZF114) - EXAMPLE

Duke University                  BFR                        600885123                               Award Amount                  150,000.00
                                                                                                  Total Expenses to
Sponsored Programs               Project:                       3130000                                       Date                155,000.00
Analysis of Transactions         P. I. :                    DOE, J                              Balance/(Overdraft)                 (5,000.00)
After the End Date               Start-End Dates:           09/01/00 - 08/31/0X
GL             Document Number       Charge                     Amount            Date                Amount             Amount Not Allowable
Account              Comp Year       Description                                  Incurred           Allowable             To be Transferred
 601600              600015123   F/S P/R ENDING 09-30-0X             1,318.75     ___/___/___                                          1,318.75
 601600              152316789   ADJ. 100-1000-0000 JUL              2,373.75       07/30/0X               2,373.75
 607200              61234597    B/W P/R ENDING 09-15-0X              397.20      ___/___/___                                           397.20
 607200              61234588    B/W P/R ENDING 09-29-0X              397.20      ___/___/___                                           397.20
 610000              61234589    F/S P/R ENDING 09-30-0X              288.81      ___/___/___                                            288.81
 610000              61234589    B/W P/R ENDING 09-15-0X               90.96      ___/___/___                                             90.96
 610000              61234589    B/W P/R ENDING 09-29-0X               90.96      ___/___/___                                             90.96
 610000              123154899   ADJ. 100-1000-0000 JUL               519.85        07/30/0X                   519.85
 645000              501234569   DUML INVOICE #03018                     1.78       08/15/0X                      1.78
 645000              501234570   DUML INVOICE #03018                     2.25       08/15/0X                      2.25
 645900              501234571   COPIES SEPTEMBER                        1.50     ___/___/___                                              1.50
 646000              501234568   DUML INVOICE #03018                     6.00       08/15/0X                      6.00
 646000              501234566   DUML INVOICE #03018                     3.50       08/15/0X                     3.50
 698600              501234565   LARRY                                862.72        09/10/0X                                             862.72
 693600              501234564   22685 FEDEX                           22.50        08/29/0X                     22.50
 693600              501234563   UPS THRU 7 2001                       19.89        07/19/0X                     19.89
 698000              501234562   LONG DIST CHARG THRU 8/2              35.41        08/02/0X                     35.41
 698400              501234545   TRUCK USE THRU 9/17                   25.25        09/17/0X                                              25.25
 694600              501234546   0203 IDC CLAIM                      3,487.47
 645000              502011111   Invoice #05068                                     08/30/0X                     56.00
 698600              60512345    IC 428409, M Woodall                               08/21/0X                   526.00
 693600              60135646    Postage                                            08/31/0X                     12.00
                                                                                  ___/___/___

                                                                86
                                    OBLIGATIONS FOR TRAINING GRANTS                                                            APPENDIX 16

                                                                     (302 WBS Elements)


CODE/WBSE: ________________ Org Unit ___________________                PRINCIPAL INVESTIGATOR ______________________________


NAME                                         DATES                      STIPEND                     FEE                        TRAVEL

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________

_________________________________            ___________________        _______________             _______________            _______________


INFORMATION FURNISHED BY; _________________________________________                        DATE ______________________

For 302 Training Projects, complete this worksheet by indicating any training expenses that will be paid to individuals after the training project’s end date. These expenses
will be reported as Obligations. Return the worksheet to the Office of Sponsored Programs by the deadline date indicated on the Analysis of Transactions After the End
Date Worksheet.




                                                                                     87
       d.      Post-Award Close-Out Checklist (30x – 38x, 203)
               The accurate and timely submission of final sponsored project billings/reports is a key
compliance focus for the federal government and has been an issue for some our peer institutions. To
support the timely and accurate close-out of sponsored projects and submission of applicable billings
and reports, the department should reconcile their financial statements monthly, ensure the timely and
accurate submission of effort reports, and follow all applicable policies and procedures regarding
allowability or expenditures. In support of the University’s compliance effort the Post-Award Close-Out
Checklist (Appendix 17) must be reviewed, signed, and returned to OSP within 60 days after the end of
the project.
       The Post-Award Close-Out Checklist is considered incomplete if any of the items are not
checked or indicate “n/a”. In addition, the Post-Award Close-Out Checklist is unacceptable unless the
Responsible Financial Administrator AND the Principal Investigator have both signed the Checklist.
The completed Post-Award Close-Out Checklist must be emailed to OSP email address
sponsoredprograms@duke.edu along with the completed ZF114 Report. Please do NOT copy OSP
personnel. Failure to submit the completed Post-Award Close-Out Checklist to the correct email
address may result in OSP concluding that the Post-Award Close-Out Checklist requirement was not
met.
       If the completed Post-Award Close-Out Checklist is not received within the required 60 days, a
reminder notification is sent to the department, with a copy to the P.I. A new deadline is established
allowing an additional 5 working days from the date of the reminder notification to submit the required
completed Post-Award Close-Out Checklist. If the completed Post-Award Close-Out Checklist is not
received by the 2nd deadline, a Final notification is sent to the department, with a copy to the P.I., and
the Business Manager. The Final notification informs the Departmental Administrator that the final
financial report/billing was not submitted because the completed Post-Award Close-Out Checklist was
not received. It also informs the Departmental Administrator that no further reminders will be sent and
OSP will take no further action will be taken by OSP until the required completed Post-Award Close-
Out Checklist is received. The notification also informs the Departmental Administrator that when the
completed Post-Award Close-Out Checklist is received OSP will process the final financial report/billing
only after the normal workload for the month has been completed. This will avoid the late reporting of
projects where the closing documentation was received by the deadline. Upon request, the
Management Centers are provided with a monthly report listing projects by BFR with delinquent final
financial reports.




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                              APPENDIX 17 - Post-Award Close-Out Checklist (30x-38x)

     Cost Object: ______________         Award #:_________________              Project End Date: ___________


     To support the timely and accurate close-out of sponsored projects and submission of applicable bills and reports, the department should
     reconcile their financial statements monthly, ensure the timely and accurate submission of effort reports, and follow all applicable policies and
     procedures regarding allowability of expenditures. In support of the University's compliance effort, the attached checklist must be reviewed,
     signed, and returned within 60 days after the end of a project. (GAP 200.180 Closeout of Sponsored Project).
                                                            To The Best Of My Knowledge:
                                                       Attestation                                                        √       Policy / Procedure
1    Project financial transactions have been reconciled.                                                                              GAP 200.012
2    Cost Transfers have been properly documented.                                                                                     GAP 200.150

3    Reviewable GL Accounts (cost element group = SPREVWGL) have been reviewed and documented.                                         GAP 200.320

4    Cost-sharing is correctly accounted for in accordance with regulations.                                                           GAP 200.140
     Clerical and administrative expenses have not been charged (unless approved in the budget proposal
5                                                                                                                                      GAP 200.360
     process.)
     Final payroll documents have been processed and effort for Key Personnel reconciles with committed effort
6                                                                                                                                      GAP 200.170
     and applicable effort reporting documents.

     Revisions of effort for Key Personnel equal to or greater then 25% of the funded percentage have been
7                                                                                                                                      GAP 200.170
     approved by the sponsor, if applicable.

     The Project Plan (Award) has been reviewed for accuracy and specific budget categories and/or project
8                                                                                                                                      GAP 200.160
     bottom-lines are not in an overdraft status.

9    Expenditures over the Award amount have been managed in accordance with applicable regulations.                                   GAP 200.185

10   Final subrecipient invoice has been approved by the PI, if applicable.                                                            GAP 200.280
11   Property control and record keeping has been followed for purchase of Capital Equipment.                                          GAP 200.100

12   You have informed Plant Accounting of any unused, obsolete, stolen, missing, unrepairable capital equipment                       GAP 200.110
     purchased by the project. For federally owned equipment, you have also informed OSP.
     ZF114 has been completed and includes all obligations and outstanding charges. ZF114 is attached to
13                                                                                                                                Post Award Manual
     checklist.

     My signature certifies that the attestations above are correct to the best of my knowledge and that all charges               GAP NO. 200.320
     to this project are allowable, reasonable, and allocable in accordance with applicable regulations.


     Signature of the Responsible Financial Administrator is required - Printed Name:                                           Date

     My signature certifies to the best of my knowledge that all charges to this project are allowable, reasonable,                GAP NO. 200.320
     and allocable in accordance with applicable regulations.



     Signature of the Principal Investigator is required - Printed Name:                                                        Date


     Optional Signature (Business Office / Manager) Printed Name:                                                               Date
                        Department wishing to review the FINAL billing/FSR prior to submittal to Sponsor ==>                    (check here)
     Departments wishing to review Final billings/reports before submittal to Sponsor are advised that this could
     result in the late submission of the Final billing/report.

      This completed Checklist must be submitted to Sponsored Programs with completed ZF114 (Analysis of Transactions After the
                                        End Date) within 60 Days of the End Date of the Project.
                            fax to 684-8377 or email PDF file to sponsoredprograms@duke.edu (preferred).




                                                                           89
3.     FINAL REPORTS
       a.      General
       Most Sponsors require final reports to be submitted within 90 days of the termination date of the
project. However, some Sponsors require that the final reports be submitted within 30, 45, or 60 days after
the termination date of the project. Meeting this deadline becomes especially crucial when the award
document specifically stipulates that final invoices/billings received after the deadline are not acceptable and
will not be paid. As previously stated, these deadlines can only be met when OSP and the Departmental
Administrator work closely together. When processing a final report, the same steps are followed as with the
interim reports with the following additional procedures


       b.      Final Financial Report
       When processing the final financial report/billing, OSP prepares an internal Excel worksheet that lists
the ITD expenses as of the termination date of the project. In the next step, OSP reviews the ZF114 Report
“Analysis of Transaction Report After the End Date” submitted by the Departmental Administrator and adds (1)
all the transactions listed in the allowable column of the ZF114 report and (2) any additional expenses added
to the end of the ZF114 report to the ITD expenses as of the end date of the project. The sum of these two
columns provides the allowable final expenses to report to the Sponsor. For any expenses added to the
ZF114 report, OSP must have documentation indicating that the original paperwork is being processed to
charge the expense to the project. Estimates are not acceptable.
       After allowable expenses have been finalized and the final financial report/billing has been prepared,
OSP enters the reported financial information to the ITD Plan. The Expense Report ITD Plan indicates the
reported amounts at bottom of the report using G/L Accounts 999700 – Reported Direct Costs, 999800 –
Reported F&A Costs, and 999900 – Reported Total Costs. In addition, if the total reported expenses are less
then the awarded amount, OSP also makes an entry to the ITD Plan which reduces the total awarded amount
to equal the total reported expenses, thus making the available balance for the project zero. This entry is
made using G/L Account 99800 – Restricted Amount.
       If the Sponsor allows for the automatic carry-forward of any available bottom line balance and a new
Cost Object has been issued for the competitive renewal year, OSP will add to Plan in R/3 of the next year’s
award (new Cost Object) the carry forward balance from the prior year. Each budget category is adjusted to
indicate the carried-forward balance (increase/decrease) from the previous year’s budget category.
       OSP also notifies the Departmental Administrator and the pre-award office if a category has exceeded
NIH’s “Significant Rebudgeting” threshold. Significant rebudgeting, according to NIH, occurs when
expenditures in a single cost category deviate (increase/decrease) from the categorical commitment level
established for the budget period by more than 25 percent of the total costs awarded (excluding carry over
amounts). The Departmental Administrator is asked to contact the pre-award office to obtain the NIH Grant’s

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Management Official’s concurrence that a change in scope has not occurred. In addition, NIH may also raise
a question if the total carried-forward amount exceeds 25 percent of the amount awarded. If this is the case, it
is recommended that the Departmental Administrator contact the pre-award office concerning the possibility of
writing a letter of explanation to NIH regarding the substantial carry-forward amount.
       For projects funded in advance, if the Sponsor requires that any unobligated balances be returned,
OSP processes an Accounts Payable Check Request form for the amount to be returned to the Sponsor. The
check is mailed with the Final Financial Report. For Fixed-Price Contracts with a balance at the end of the
project, the final payment must be received before the balance amount is transferred to the department.
Please be aware that for cost-reimbursement awards, the Sponsor can, and often does, hold the last payment
until the Final Technical Report has been received and accepted by the Sponsor.


       c.      Final Property Report
       Some Sponsors require a Final Inventory Listing of Duke-owned equipment acquired with Sponsor’s
funds. Please be aware that even though not normally exercised, some Sponsors retain the right to transfer
title of the equipment to other Sponsor funded projects, possibly at other institutions. Usually, this right must
be exercised by the Sponsor within a specified period of time, usually 120 days from the termination date of
the project. All Sponsors require Final Property Reports of Sponsor-owned equipment. It is OSP’s
responsibility, in conjunction with the Departmental Administrator and Plant Accounting, to submit these
reports to the Sponsor.
       If the equipment is owned by the Sponsor, a request for disposition instructions must be sent by OSP
to the Sponsor. When the Sponsor is the Federal Government, Standard Form 1428, Inventory Schedule B,
indicating the condition of each item of equipment must also be submitted to the Sponsor by OSP. A request
for disposition instructions can take any of the following forms:


1)     If the Sponsor has awarded a continuation project (a new Cost Object has been issued), OSP can
       request that accountability of the Sponsor-owned equipment be transferred to the continuation project
       (new Cost Object).
2)     If a continuation project will not be awarded, but the Principal Investigator (P.I.) holds other Sponsor-
       funded projects and the Sponsor-owned equipment can be used, OSP can request that accountability
       of the Sponsor-owned equipment be transferred to another Sponsor-funded project.
3)     If returning the Sponsor-owned equipment (e.g., cost of dismantling, cost of freight) would cost more
       than the current value of the equipment, OSP can request the Sponsor to either transfer title to Duke or
       abandon the equipment in place with no further obligation to the Sponsor. This type of request will
       require a detailed explanation by the P.I. regarding the circumstances surrounding the Sponsor-owned



                                                        91
       equipment. Some Sponsors may, nevertheless, require that the equipment be returned to the Sponsor
       regardless of the cost involved.
4)     If the Sponsor is the Federal Government and the P.I. wishes to continue to use the Government-
       owned equipment on a non-federally funded project, OSP can request that title of the Government-
       owned equipment be transferred to Duke with no further obligation to the Government. However,
       before some federal agencies will agree to transfer title of Government-owned equipment to an
       educational institution, a long process must take place. The Government-owned equipment is first
       reviewed by the awarding Federal Agency to see if the equipment is needed on any other federal
       project that this Federal Agency is currently funding. If none are found, then the items are listed as
       available to other Federal Agencies through the Government Supply Agency (GSA). If no other
       Federal agency needs the equipment, then title can be transferred to Duke. This process can take as
       long as six months to one year to accomplish.
5)     If the P.I. has no further use for the Sponsor-owned equipment, OSP can request instructions from the
       Sponsor on how to dispose of the Sponsor-owned equipment. The Sponsor could require that the
       equipment be returned to the Sponsor or sold by Duke with the proceeds returned to the Sponsor.


       OSP contacts the Departmental Administrator to determine the disposition of the Sponsor-owned
equipment. Regardless of which option is chosen, the Sponsor must be notified if any of the Sponsor-owned
equipment is no longer usable (obsolete, beyond repair, etc.). Refer to Section D EQUIPMENT, Appendix 7
Loss, Damage or Destruction Report form. Care must be taken not to dispose of any Sponsor-owned
equipment until written authorization is received by the Sponsor.


       d.     Final Patent Report
       The pre award office is responsible for submitting the final patent report. The same procedures are
followed as with the interim patent reports (SECTION E DURING THE LIFE OF THE PROJECT, Part 8c
Interim Reporting Requirements) with the exception that this report is marked "Final". In event of a new
invention or discovery, the pre-award office and the Corporate and Venture Development (CVD - 681-7542)
should be contacted immediately.


       e.     Final Technical Report
       OSP does not monitor, maintain, or require that copies of Final Technical Reports be submitted to
OSP. However, timely submission of the Final Technical Report is of great importance since Sponsors may
hold final payment until the Final Technical Report has been received and accepted. When this is the case,
OSP will contact the Departmental Administrator and inform them of their responsibility to ensure that the
delinquent report is submitted. The Departmental Administrator is asked to provide OSP with a copy of the

                                                       92
cover letter transmitting the Final Technical Report. OSP can then contact the Sponsor and inquire regarding
the status of the held final payment.


        f.     Subcontracts
        When a sponsored project provides for the award of a Subcontract, OSP has the responsibility of
closing out the Subcontract. Before the final payment to a Subcontractor is issued, OSP sends a form letter to
the Departmental Administrator requesting certification that the technical performance has been completed by
the Subcontractor as required by the Subcontract document. In addition, the Subcontractor’s audit reports are
reviewed for compliance with OMB Circular A-133 Audit requirements.


4.      CLOSING A COST OBJECT
        After a project has ended and the final reports/invoices have been submitted by OSP to the Sponsor,
OSP can begin procedures to close the Cost Object in R/3. Closing a Cost Object in R/3 prevents the
processing of any future transactions to the Cost Object. For sponsored projects Cost Objects, only OSP is
authorized to request Accounting Systems and Procedures to close or reopen a closed Cost Object. Before a
Cost Object is closed in R/3, the following must occur:
•    The balances must be out to zero
     (award amount = reported expenses = actual expenses = revenue received)
•    No outstanding commitments exist
Once all of the above occur, OSP submits a request to Accounting Systems and Procedures to close the Cost
Object. If you are not sure if a Cost Object has been closed, you can look in R/3 to see the status of the Cost
Object by entering CJ03 in the white box to the right of the green check. Enter the Cost Object in the Project
def. box (e.g., 3110123) and click the Proj. definition icon. If the System status reads REL the code is open.
If the System Status reads CLSD the Cost Object is closed and cannot accept any more transactions.
        A closed Cost Object will be reopened by Accounting Systems and Procedures only at the request of
OSP. OSP will request a Cost Object to be reopened only when funds are to be returned to the Sponsor and
revised final reports/invoices are submitted.


5.      RECORD RETENTION
        Most sponsors require that records be retained for a minimum of three years from the date the final
expenditure report is submitted or final payment is received. OSP retains its records approximately seven
years from the termination date of the project. If paper documentation is only maintained with the Department
(e.g., paper backup for JVs, Procurement Card receipts, etc.), it is imperative that the Department retains the
back-up documentation for the period required by the Sponsor. This documentation may be requested by



                                                      93
OSP if the expense is picked during an audit. For more information refer to GAP 200.240 Retention Period for
Accounting Records and GAP 200.250 Destruction of Accounting Records.


6.     AUDITS
       a.      General
               One of the main functions performed by OSP is record keeping and audit resolution. OSP
       maintains files on awards adequate for inspection by internal and external (independent and
       regulatory) auditors and serves as liaison and negotiator with auditors. It should be noted that
       documentation of transactions that exist only at the departmental level would also need to be made
       available for audit inspection. OSP is involved in all financial audits of sponsored projects. In
       conjunction with pertinent Departments and Offices, OSP assists in preparing and submitting all
       responses to external audit recommendations or findings on sponsored projects. If you receive a call
       or a letter informing you that an external audit team either wants to pay you a visit, or is at your
       doorstep, please immediately contact OSP. OSP is routinely involved with the following audits:


b.     OMB Circular A-133 Audit
       Effective July 1, 1990, universities and other non-profit institutions must have audits conducted
in compliance with OMB Circular A-133 “Audits of States, Local Governments, and Non-Profit
Organizations”. Auditors are required to determine if: (a) fund statements are presented accurately; (b)
Duke has an internal control structure that provides reasonable assurance that federal awards are
being managed properly and ensures compliance with laws and regulations that could have material
effect on the fund statements; and (c) Duke has complied with those laws and regulations that could
have a direct and material effect on its fund statement amounts and on each major federal assistance
program. OSP is also responsible for submitting Duke's A-133 Audit Report to the Federal
Government. In addition, OSP also provides other non-federal institutions a copy of this audit report
when these non-federal institutions have made awards (Subcontracts) to Duke from a Federal prime
source.


c.     Property Audit
       Duke is directly responsible and accountable for all Government property located at Duke. This
includes not only Government-owned property, but also property purchased with Government funds.
The Office of Naval Research (ONR) performs the Property Control System Analysis (PCSA) audit.
During this audit, Duke's property management system is reviewed for compliance with Government
regulations regarding purchases of equipment and accountability of equipment (e.g., location, proper
tagging, reports, etc.).

                                                        94
        d.      Procurement Audit
        Procurement audits are required when the aggregate business with the Department of Defense,
National Aeronautics and Space Administration, and Department of Energy exceeds $10,000,000 in
grant funds. ONR performs the Contractor's Procurement System Review audit. During this audit
Duke's procurement system is reviewed for such things as proper bidding, sole source justifications,
equipment screening for shared used, etc. For the past few years, Duke has not met the required
threshold for this audit.


        e.      Individual Audits
        Some Sponsors, such as the American Heart Association, send auditors to audit the projects
funded by them. During these audits, the auditor will review a sample of transactions funded by the
Sponsor to ensure that Duke has complied with the Sponsor’s specific requirements and restrictions.
In addition, Duke’s internal controls are reviewed to ensure that they adequately safeguard the
Sponsor’s funds.




                                                  95
                                          ACRONYMS
APCR          Accounts Payable Check Request form – used to pay non-Duke employees/students
              and entities for goods and services that do not require a Purchase Order
CM            Current fiscal month – month is defined as Duke’s fiscal month and NOT calendar
              month
CUFS          College & University Financial System – Duke’s legacy system for financial records
              prior to March 1999
DHHS          Department of Health and Human Services – Federal Agency designated as Duke’s
              Cognizant Audit Agency
F&A Costs     Facilities and Administrative Costs – those costs that are incurred for common or joint
              objectives and, cannot be identified readily or specifically with a particular sponsored
              project. Commonly called Indirect Costs.
FM            Funds Management Module in R/3
FSR           Financial Status Report – Financial report required by the Federal Government
G/L Account   General Ledger Account – six digit code that indicates the type of transaction, e.g,
              salary, supplies, etc.
GAP           General Accounting Procedures – Procedures that dictate Duke’s practices regarding
              financial matters
IR            Interdepartmental Request Form –used to purchase goods and services from a Duke
              University department
ITD Plan      Inception to Date Plan – indicated the amount awarded by a Sponsor by broad budget
              categories
JV            Journal Voucher – transaction that allows for corrections of transactions
LDD           Loss, Damage, or Destruction Report – Report required to be completed when
              Government-owned equipment is lost, damaged, or destroyed.
MTDC          Modified Total Direct Costs – used to compute F&A Costs
NCAP          Non-Compensatory Award Form – used to pay financial aid type of payments using
              G/L Account 63xxxx
NIH           National Institute of Health – Federal Agency – Cost Objects begin with 30X
NSF           National Science Foundation – Federal Agency
OMB           Office of Management and Budget – Federal Agency that has responsibility of
              providing guidance for federally sponsored projects
OSP           Office of Sponsored Programs – post-award office
P.O.          Purchase Order – issued by Procurement based on an approved Purchase
              Requisition – used to purchase goods and services from an outside vendor

                                                96
PI         Principal Investigator – responsible person of sponsored project
PY         Prior year – Refers to Duke’s closed fiscal year(s)
R/3        Duke’s official ledger of record effective March, 1999
SPAWEXP    Cost Element group used for a sponsored project with an award
SPIDC01    Cost Element Group – Includes certain cost elements (G/L accounts) that will be used
           to compute F&A costs
SPREVEXP   Cost Element group used for a sponsored project with no award
WBSE       Work Breakdown Structure Element – One of the names given in R/3 to a Cost Object
YTD        Year to date – year is defined as Duke’s fiscal year – July 1 through June 30
ZF109      Sponsored Projects One line Summary Report
ZF110      Projects Ending Within 3 Months Report
ZF114      Analysis of Transactions After End Date Report




                                             97
                               SPONSORED PROJECTS REVIEW CHECKLIST
CJI3              Execute detail transaction report for last closed accounting period

         ____     Reconcile Financial Transactions (GAP 200.012 Reconciliation of Financial Transactions)

         ____     Review Cost Transfers for appropriate documentation (GAP 200.150 Cost Transfers on Sponsored
                  Projects)

         ____     Review Payroll entries for appropriateness

         ____     Manage overdrafts

         ____     Remove Reviewable G/L Accounts (GAP 200.320 Direct Costing on Sponsored Projects)

CJ03              Project/Work Breakdown Structure

         ____     Review new codes for accuracy in:

                  ___       Begin and end date

                  ___       Person responsible (Principal Investigator’s name)

                  ___       Allowable F & A rate

                  ___       Org Unit (BFR code)

Reporting – Sponsored Projects from beginning of Project (ZFR1Univ Detail ReportingProj/Work Breakdown Structure:
                  Inception to date (with Plan)

         ____     Review PLAN for accuracy (Use cost element group SPAWEXP)

ZF109             Sponsored Projects One line Summary

         ____     Review for unfunded overdrafts and remove unallowable expenses (GAP 200.185 Unfunded Expenditures
                  on Restricted Fund Codes)

ZF110             Projects Ending in 3 Months

         ____     Determine if a request for a no-cost extension is necessary

         ____     Determine new source of funding. If necessary, request a Cost Object in advance

         ____     Process Payroll Forms moving employees from terminating project

         ____     Cancel Standing Orders

         ____     Contact vendor and request invoice for outstanding Commitments or cancel outstanding commitment

Closing of Projects

ZF114             Analysis of Transactions Report After End Date

         ____     Review, complete, and return Worksheet to the Office of Sponsored Programs no later then 60 days from
                  the end date of the project.

         ____     Process Payroll forms moving employees from terminated project, if applicable (GAP 200.150 Cost
                  Transfers on Sponsored Projects)

         ____     Process Cost Transfer JVs moving unallowable expenses from terminated project, if applicable (GAP
                  200.150 Cost Transfers on Sponsored Projects)

Post-Award Close-out Checklist

         ____     Review, complete, sign, and return the Checklist to the Office of Sponsored Programs no later then 60 days
                  from the end date of the project




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