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Glossary

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Account Set Up: Establishment of a new account to record the budget and track costs associated with a sponsored project. The New Account Notification Form requires the signature of the project director, department chair, dean, CGO and the Controller’s Office.

Allocable Cost: A cost that can be assigned to a project that meets a specific project objective based on relative benefits received. A cost may be allocable to a specific project but paid for by the University, depending on what the sponsor (funding agency) determines is allowable for a particular type of project.

Allowable Cost: Determined by the Office of Management and Budget (OMB), the sponsor's requirements and/or University policy. Under OMB Circular A-21, an expense that can be included in the facilities and administrative cost rate proposal or included as a direct cost to federal sponsored agreements are:

  • Reasonable
  • Allocable to the project (if a direct charge)
  • Given consistent treatment by use of generally accepted accounting principles
  • In conformance with any limitations or exclusions set forth by the sponsored agreement or OMB Circular A-21.

Award: Funds provided from an external sponsor for support of a project.

Budget: Project director's financial plan or estimate that lists the categories of expenditures and dollar amounts required to carry out a project's objectives.

Budget Category: A portion of the budget designated for certain kinds of expenditures, i.e., salaries, travel, supplies, equipment.

Budget Period: An interval of time by which the project period is divided for budgetary purposes.

Carryover (carry forward): The remaining available budget balance of a project that may be used to increase the budget of the next budget period. Carryovers are not always automatic and are not always allowed by all funding agencies. They usually require permission from the sponsor.

Consultants: Most federal sponsors limit the amount of payment to consultants to an equivalent rate of payment to an amount equivalent to payment for a GS-14 salary for federal employees. Consulting firms are frequently vendors, but may be subrecipients in certain cases, depending upon the nature of the work they are to perform.

Contracts: A contract is a legally binding agreement between one or more sponsors and the University. Contracts are usually more restrictive than grants. The terms of the agreement outline specific goals and requirements for goods and/or services to be provided to the sponsor by the University. It is routine for these goods or services to be provided on a specific schedule. The relationship between the sponsor and the University is one of procurement. This type of arrangement is not considered for public use but for the direct benefit or use of the sponsor.

Cooperative Agreements
A cooperative agreement is used when substantial sponsor involvement is anticipated in the management and/or performance of the sponsored activity. In all other respects, a cooperative agreement is a type of grant.

Cost Accounting Standards - (CAS)
CAS requires consistency in estimating, accumulating and reporting costs. Ball State University must comply with the following four CAS standards :

  • CAS 501: Consistency in estimating, accumulating and reporting costs. The purposes of this standard are to (1) assure consistency in estimating, accumulating, and reporting costs as well as (2) provide a basis for comparison of such costs. The same practices should be used when estimating costs for the proposed budget, accumulating costs in the accounting system and reporting costs to the sponsor.
  • CAS 502: Consistency in allocating costs incurred for the same purpose. The University is required to charge similar costs in the same manner, either as direct costs or indirect costs.
  • CAS 505: Accounting for unallowable costs. This standard does not include additional guidance on unallowable costs. Educational institutions will, therefore, continue to follow A-21 for guidance on what is unallowable.
  • CAS 506: Cost accounting period. An educational institution must use either its fiscal year or a fixed annual period approved by the government as its cost accounting period. The University uses its fiscal year which is July 1 through June 30.

Cost Reimbursement: A cost reimbursable agreement (contract or grant) provides for payment to the University based on the University's actual cost incurred in performing and completing the agreement. This means that budgeted funds must be SPENT within the approved budget and project period in order for the University to collect the actual cash funds.

Contributed Effort: Effort expended on a sponsored project that the sponsor does not compensate for; a form of cost sharing or matching.

Cost Sharing (Matching): The sharing of the costs of a sponsored agreement by the University. Cost sharing is typically done on grants, not contracts. Cost sharing can either be provided by academic release time, cash, facilities and administrative (indirect) cost, or a combination of all.

Cost Transfer: A direct charge expense transferred from one account to another after the charge has been posted in a financial accounting record or system. Cost transfers from one grant account to another grant account are usually not allowed.

Deficit (Cost Overrun): Direct costs incurred and charged to a sponsored project in excess of the awarded amount.

Direct Cost: Cost that can be clearly identified and directly allocated to a specific sponsored agreement.

Effort: The amount of time, usually expressed as a percentage of the total that a faculty or other employee spends on a project. Effort is certified and documented through the University's Time Certification System.

Encumbrances/Obligations: The dollar amount of items ordered, services rendered, contracts awarded, or similar purchases that are outstanding or unpaid. Internal reports encumber salaries, administrative (indirect) costs on sponsored projects, and purchase orders.

Equipment: Tangible items non-expendable in nature, instruments, or repairable machines that have a useful life of more than one year and an acquisition cost of $5,000 or greater. Equipment is not a replacement part or component returning a piece of equipment to its original condition. If a component increases the capability of the original equipment and has an acquisition cost that meets or exceeds the established equipment cost thresholds, it is considered a capital item.

Facilities and Administrative (F&A) Cost Rates : The rates used to recover the facilities and administrative costs of a sponsored project. Negotiated, approved rates are to be used for all agreements with the federal government and for most non-federal projects, as allowable.

Facilities and Administrative (F&A) Costs : Also referred to as indirect costs, overhead or administrative costs. These are actual costs incurred to conduct the normal business activities of an organization that cannot be readily identified with or directly charged to a specific project or activity. The normal activities of the University include instruction, departmental research, organized research, public service and other institutional activities. F&A costs are real, auditable costs incurred by the University each time it accepts an award for a sponsored project. If the University does not collect full reimbursement for these costs, other University resources must be used to subsidize them.

Fixed Price Contract: A firm fixed price contract provides for a payment to the University that is not subject to any adjustment on the basis of the University's actual costs incurred in performing and completing the contract, i.e., billings are not based on actual expenditures.

Grantee: A grantee is the recipient of a grant. When the University accepts a grant award, it becomes the grantee.

Grants
A grant agreement is a legal instrument used when the principle purpose is the transfer of money, property, services, or anything of value to the recipient in order to accomplish a public purpose of support or stimulation. A grant will normally contain the following elements:

  • The statement of work allows the PI significant freedom to change the emphasis within the general area of work as the project progresses
  • Deliverables are minimal, usually consisting of reports only
  • Separate accounting procedures are required

The terms and conditions of grants are often agreed upon when the authorized signed proposal was submitted. Federal grants are governed by the administrative terms and condition found in the grants administration manuals or handbooks of the sponsoring agency, e.g. the NSF Grant Policy Manual or the NIH Grants Policy Statement. These types of documents set forth the sponsor's general terms and conditions of award and are derived from OMB Circular A-110. However, it is always necessary to check program announcements and similar documents for embedded terms and conditions.

Indirect Costs: See Facilities and Administrative Costs.

In-Kind Contribution: A non-cash commitment (such as contributed or donated effort, facilities use, or supplies) to share the costs of a sponsored project.

Mandatory Cost Share or Match: Cost Sharing or matching that is required by the sponsor, is stipulated in the notice of award or agreement, which must be documented and reported to the sponsoring agency.

Modified Total Direct Costs (MTDC): The portion of direct costs on which the facilities and administrative (indirect costs) are based, specifically: salaries and wages, fringe benefits, materials and supplies, services, travel, and up to $25,000 on each subgrant or subcontract. Ball State’s current negotiated F&A cost rate is 44.5% of MTDC.

Modified Total Direct Costs (MTDC) Base: The MTDC base is the total Direct Costs for a project less those budget items that are excluded by agreement with the audit oversight agency. The excluded costs are: equipment, construction, alterations and renovations, space rental or lease, tuition and fee remission, scholarships and the amount that exceeds $25,000 of any subgrant or subcontract.

No-Cost Extension: Provides for an additional period of performance to accomplish project goals. May be handled internally in certain circumstances or sought externally from the sponsor. Sponsor requirements for advance approval vary. CGO should be contacted regarding no-cost extensions well in advance of the ending date of the project.

Off-Campus Projects: Projects that are based at facilities not owned, or leased and maintained by the University. However, if the project is conducted in leased or rented space and the lease/rental costs are directly charged to the project, the off-campus facilities and administrative (indirect) cost rate must be used. Ball State’s current negotiated off-campus F&A rate is 24% of MTDC.

Office of Management and Budget Circulars - (OMB): OMB, working cooperatively with Federal agencies and non-Federal parties, established government wide grants management policies and guidelines through circulars and common rules. These policies are adopted by each grant making agency and inserted into their Federal regulations.

  • OMB A-21: This circular establishes principles for determining allowable costs applicable to grants, contracts and other agreements with educational institutions. All federal agencies that sponsor research and development, training, and other work at educational institutions shall apply the provisions of this circular in determining allowable costs. The principles shall also be used as a guide in the pricing of fixed price or lump sum agreements.
  • OMB A-110 : This circular establishes uniform administration requirements for federal grants and agreements awarded to institutions of higher education, hospitals, and other non-profit organizations.
  • OMB A-133: This circular establishes audit requirements for federally sponsored awards and defines federal responsibilities for implementing and monitoring higher education and other nonprofit institutions that receive federal awards.

Principal Investigator/Project Director (PI/PD): Institutional employee that has direct responsibility for carrying out the requirements of a sponsored project, producing the final technical report, providing the required deliverables and exercising fiscal stewardship of the sponsored funds.

Pre-Award is considered to be activity prior to official funding of a sponsored agreement. These activities are performed by the Sponsored Programs Office and include the following pre-award functions:

  • Identify funding sources
  • Proposal development, coordination, and submission to funding agency
  • Clearance process to obtain all internal approvals before a contract or grant agreement can be executed

Pre-Award Costs: Costs incurred prior to the effective date of an award. Authorization to incur pre-award costs must be obtained from the sponsor.

Post-Award: Activity begins with the official award notification and continues until the award is closed.

Project: The services or activities, mutually agreed upon, that the sponsored funding recipient will provide for a specified period of time.

Project Award: The approval and funding of a project as detailed in the official award document. Specifies the amount of funding, project period, and any special requirements or restrictions.

Project Period: Project period means the total time for which support of a program has been approved, initially or by a renewal award.

Rebudgeting: Process by which funds available for spending are reallocated between budget categories to allow best use of funds to accomplish project goals. Some sponsored projects require obtaining prior approval for rebudgeting. Prior approval requirements will be communicated by CGO.

Sole Source Acquisition: A procurement that does not provide full and open competition, but is affected because only one source is available. There are restrictions on the use of this means of procurement and documentation must show justification for using single source acquisition. Applies to anything $15,000 or more.

Sponsored Agreement/Award: Any contract, grant, or other agreement where the use of funds is restricted by the funding agency and there is some action required by the University (not a gift and not a fee-for-service contract).

Subrecipients: A subrecipient will be performing as a partner for the project, will perform its own portion of the project work as specified in the proposal, will participate in decision making and in determining the direction of the project, and will participate in and contribute to the final products and/or report. The work will be performed at the subrecipient’s own worksite. Subrecipients are often other universities, but other types of organizations may also be subrecipients. Individuals are almost never considered subrecipients. They may be considered employees of the University or they may be vendors. Subrecipient agreements are prepared by CGO and submitted to the subrecipient organization for its approval and signature.

Supplies: Expendable items having a purchase price of less than $5,000 that will be consumed, worn out, or will otherwise deteriorate in less than two years.

Time and Effort Certification System : In order to be in compliance with the OMB Circular A-21, the University must have a mechanism in place in which effort committed on sponsored projects can be certified and documented.

Total Direct Costs (TDC): TDC is the total of all direct costs budgeted for a project.

Total Project Cost: The cost of a sponsored project is comprised of allowable direct costs associated with the project performance and the allocable portion of the allowable indirect costs of the institution. This includes both the sponsor's share and the University's share (matching or cost share).

Unallowable Cost: For purposes of OMB Circular A-21, an expense that cannot be included in the facilities and administrative cost rate proposal and cannot be charged as a direct cost to federal sponsored agreements.

Vendors: Vendors are individuals (or their organizations) who provide services that they normally provide to other customers in the marketplace. While the services may be important to the project, or may even represent a large dollar amount, the providers of the services are not fully participating in the project as partners and decision makers. The services may be provided for any length of time during the project period. Services may be provided for a short period or periodically throughout the project. If the provider of services is an individual, it is important to apply the “20 factors test” provided by the IRS to determine if the person is an independent contractor or if the person is actually acting as an employee of the University.

Contracts and Grants Office
2100 West Riverside Avenue
Muncie, IN 47306

Hours: Monday-Friday 8 a.m.-5 p.m.
Phone: 765-285-5221
Fax: 765-285-5224