Residual funds are unobligated, unspent cash balances remaining in a privately funded fixed-price sponsored project cost center at the conclusion of an award.
A Fixed Price Sponsored Agreement is an agreement where UNO agrees to perform an agreed-upon set of specified deliverables in exchange for a set (fixed) amount of compensation. As such, proposed budgets must ensure that actual university costs and the sponsor funds closely align.
Typically, the sponsors agree to the scope of the work to be performed, with an agreed-upon value, but provide no details of how the funds are to be spent. Such agreements may result in a situation where a residual amount (payment for the specified deliverables exceeds expenses) or a deficit amount (expenses exceed the agreed-upon payment amount) exists upon the fulfillment of the agreement.
As long as deliverables have been met and accepted by the private sponsor, funds remaining at the end of the project period belong to the university.
Residuals occur only when the revenue is greater than the expense incurred. Revenue is recognized when payment is received.
It is important that the cost object used to collect payments and record costs accurately reflects the true costs of the deliverables. In addition, costs used directly in support of fulfilling the agreed-upon terms may be subject to the Office of Management and Budget (OMB) 2CFR Part 220, Cost Principles for Educational Institutions.
Surplus and Deficits
It is important that the cost object used to collect payments and record costs accurately reflects the true costs of the deliverables. In addition, costs used directly in support of fulfilling the agreed-upon terms may be subject to the Office of Management and Budget (OMB) 2CFR Part 220, Cost Principles for Educational Institutions.
Surplus Amounts
Costs not associated with the performance of this award should not be charged to the cost object used to track the activity of the award to "use up" the funds as this will distort the historical costs of fulfilling this agreement.
Deficit Amounts
If project costs are underestimated, the academic unit will have to cover excess expenses necessary for the principal investigator to complete the work. This is referred to as a deficit balance wherein project expenses exceed the agreed-upon payment amount. The PI/academic unit will need to provide a cost center number to transfer all deficits. The cost center number should be provided in the Project Completion Form.
Procedure
Regardless of the term used in the award or contract, this procedure covers all agreements where there are residual funds remaining at the end of the agreement, including but not limited to a fixed price, fixed cost, and fee-for-service agreements or awards.
When work is completed on the agreement, concurrence with the sponsor has been received, and all project expenses have been charged to the award, the residual balance will first be used to:
- Cover Facilities & Administrative (F&A) costs up to the maximum budgeted amount.
- If F&A was originally completely waived by ORCA, and there are unobligated/residual funds at the end of the project, F&A will be charged to the project at the rate of 10% of the remaining balance.
After F&A has been charged, if the remaining residual balance is:
Is less than 25% of the total awarded amount, and under $5000:
- It will be transferred to an existing revolving cost center to be determined by the department chair, using available accounts, if possible.
If the remaining residual balance is greater than $5000, or greater than 25% of the awarded amount:
- Justification is required to retain the funds (such as a change in scope of the project), or the balance will be allocated by the associate vice chancellor for Research and Creative Activity and/or the senior vice chancellor for Academic Affairs.
- Residual research funds may be used to support ongoing research projects and research-related activities at UNO, or may be returned to the sponsor.
Residual Balance Funds Form
In order for the transfer to be performed, the Residual Balance Transfer Form must be completed by the Principal Investigator and signed by the department chair or dean. The following items must be confirmed or provided:
- All the work on the project has been completed
- No outstanding items remain open or in question with the sponsor
- All reports have been received and accepted by the sponsor
- All costs for the project are applied to the project’s WBS; including all commitments for the project that have been cleared in SAP.
- All payments for the project have been received from the sponsor
- Justification if the residual balance is greater than $5000, or greater than 25% of the awarded amount
- Cost center number of the account to which these funds will be transferred
When the transfer form is completed, it must be sent to the Grants Accounting for the appropriate review and approval.
Grants Accounting personnel, after deducting 10% of the remaining balance, will transfer any remaining residual balance up to 25% of the awarded amount (not to exceed $5000) to the Cost Center indicated.
If the remaining residual amount is greater than 25% or greater than $5000, Grants Accounting personnel will transfer the residual balance as directed in writing by the associate vice chancellor for Research and Creative Activity and/or the senior vice chancellor for Academic Affairs.
If no Cost Center is specified within 45 days of the request, the residual will be transferred to an account that will be selected by ORCA and Grants Accounting, and the college will be notified of the transfer.
Residual funds cannot be transferred directly to another sponsored agreement or to a State-Aided “41” cost center; however, they may be used to fulfill cost share or match agreements of another sponsored agreement.
Each department or center is permitted to establish one revolving cost center for the purpose of transferring small residual balances.