University Administrative Policies

 

UNM_Policy_Office-L communicates important policy announcements (such as policy approvals, revisions, or campus review-and-comment periods).




UNM Policy Office

MSC05 3357
1 University of New Mexico
Albuquerque, NM 87131

Physical Location:
Scholes Hall
114 A and B

Phone: (505) 277-2069

Administrative Policies and Procedures Manual - Policy 2485: Over-Expenditures, Losses, and Gains on Contracts and Grants

Date Originally Issued: 01-24-1994
Revised: 08-01-1997, 07-01-2004, 07-01-2015

Authorized by RPM 5.9 ("Sponsored Research")
Process Owners:  University Controller and HSC Senior Executive Officer for Finance and Administration

1. General

Gains on fixed-price contracts or grants are treated as University revenue. Losses on fixed-price contracts or grants and over-expenditures on other contracts or grants are treated as University expenses. Such gains, losses, and over-expenditures are transferred to the responsible college or unit's unrestricted accounts.

1.1. Facility and Administrative Costs

Facilities and administrative (F & A) costs on completed fixed-price contracts are adjusted to the actual amount or the budgeted amount, whichever is greater. When the actual amount exceeds the budgeted amount, the college does not receive any portion of the excess F & A costs. This happens when there are losses on fixed price contracts and over-expenditures on other contracts and grants. F & A costs are calculated using the applicable F & A cost rate in effect for that contract or grant at the time it ended.

2. Account Codes

Account codes are used to identify and segregate losses, gains, and over-expenditures.

2.1. Account Code 0810

Account code 0810 is used to transfer gains to unrestricted accounts. This account code is used for both sides of such entries. The description "Gain on Sponsored Project Gen" is assigned.

2.2. Account Code 8600

Account code 8600 is used to transfer losses and over-expenditures to unrestricted accounts. This account code is used for both sides of such entries. The description "Loss on Sponsored Project Gen" is assigned.

3. Gains and Losses on Fixed-Price Contracts or Grants

A fixed-price contract is considered completed when the funding agency has accepted the results of the contracted work and has paid in full. Occasionally, at the point of completion, there are funds remaining in the account (i.e., the budget was not fully spent). Such gains are treated as University revenue. In other occasional cases, expenses incurred on a fixed-price contract exceed the budget. Such losses are treated as University expenses. Policies and procedures for accounting for losses and gains on fixed-price contracts and grants are outlined below.

3.1. Accounting for Gains on Fixed-Price Contracts or Grants

Indirect costs for the contract or grant are adjusted to the budgeted or actual amount, whichever is greater. Adjustments to indirect costs are credited to the F & A Cost Recovery account. The resulting gain is credited to the college or unit's unrestricted research or public service account, whichever is applicable. The account credited is at the college level, unless the college has authorized the entry to be credited directly to departments. Main Campus or Health Sciences Center (HSC) Contract and Grant Accounting Departments make the appropriate accounting entries.

3.2. Accounting for Losses on Fixed-Price Contracts or Grants

F & A costs for the contract or grant are adjusted to the budgeted or actual amount, whichever is greater. The loss on both direct and F & A costs are charged to the college or unit's unrestricted research or public service account. Actual F & A costs are calculated and charged to the contract or grant account.

  • The actual amount of F & A costs is charged to account code 89Z0.
  • F & A recovery is credited.

The total loss on the contract or grant is expensed, charging the college or unit's unrestricted research or public service account. The account charged is at the college level, unless the college has authorized the losses to be charged directly to departments. Main Campus or HSC Contract and Grant Accounting Departments make the appropriate accounting entries.

4. Over-Expenditures on Contracts or Grants

Over-expenditures on non-fixed-price contracts and grants are recorded as University expenses when the account has expired and the final financial report is prepared by the appropriate (Main Campus or HSC) Contract and Grant Accounting Departments. Actual F & A costs are calculated and charged to the contract or grant account.

  • F & A costs are calculated on actual direct costs and charged to account code 89Z0.
  • F & A recovery is credited.

The total amount that an account has been overspent, including both direct and F & A costs, is charged to the college or unit's unrestricted research or public service account. The account charged is at the college level, unless the college has authorized the over-expenditures to be charged directly to departments. The appropriate Contract and Grant Accounting Departments make the appropriate accounting entries.

5. Notification and Documentation

The gain, loss, or over-expenditure is processed and documented through a journal entry by the appropriate (Main Campus or HSC) Contract and Grant Accounting Department by transferring the gain, loss, or over-expenditures to an unrestricted account.  Notifications are sent to colleges or units that such transfers have been made.