• Expenditure authority is derived from
S.O. 100.4(n) whereas authority to enter into the contract or grant
is derived
from S.O. 100.4(dd).
(See Chapter 13 for information about contract and grant authority.)
The Presidential authority to spend contract
and grant funds under Standing Order 100.4(n) has been delegated to
Chancellors and
Vice Presidents.
(See 6-220.)
6-220 CHANCELLORS AND UNIVERSITY VICE PRESIDENTS
The President has
delegated the contracts and grants expenditure part of his authority under
S.O. 100.4(n) to Chancellors
and Vice Presidents
by letter dated April 14, 1980. [http://www.ucop.edu/ucophome/coordrev/da/da0666.html] The delegation
permits "expenditures or commitments of funds against
any approved research, training, or development contract or grant when
a fully executed contract is in hand or a written notice
of grant award has been received." Refer
to 6-300, "Expenditure
Advance Based on Firm Commitment," for discussion
of the restrictions on the delegation of expenditure authority to
Chancellors in cases where a fully executed contract or
notice of grant award has not been received.
Chancellors may redelegate this authority to individual campus departments
through authorization of the department's
budget by action
of the Accounting Officer. (See 6-230.) After the budget has been authorized by the
Accounting Officer, the
department may delegate
signature authorization to specific individuals within the department to incur
expenses. (See 6-240.)
6-230 CAMPUS DEPARTMENTS
The expenditure authorization process
involves two separate but related actions:
a. Chancellor's approval of department's
budget, (See 6-231) and
b. authorization of the agreement budget
and appropriation of funds by the Accounting
Officer with the concurrence of the Principal Investigator. (See 6-232.)
6-231 Budget Authority
The
Accounting Manual, Section D-224-17, "Delegation of Authority--Signature
Authorization," states:
[http://www.ucop.edu/ucophome/policies/acctman/d-224-17.pdf]
The basic step or foundation of
the expenditure
process
of a campus department, or program as the
case may be, is the approval of
the department's budget by
the
Chancellor. The Chancellor's approval
of the departments
budget in essence constitutes a delegation
(to
the department) of the Chancellor's authority to expend…….
For extramural funds, such as gifts,
contracts,
and grants, budgets are established on acceptance,
and, ordinarily, are documented in a letter
from
the campus accounting officer to the departmental
administrators. All approved budgets
are
then entered in the campus general ledger.
6-232 Accounting Officers Authorization of
Extramural Funds
Acceptance
of the award agreement by the Contracts and Grants Officer under authority
of Standing Order 100.4(dd) [http://www.universityofcalifornia.edu/regents/bylaws/so1004.html]
and approval of rebudgeting actions do not, in fact,
constitute
authorization
to expend the awarded funds. With the concurrence of the Principal Investigator,
the Accounting Officer has the
ultimate
responsibility for appropriating, recording and journalizing, extramural fund
transactions as part of the University
operating
budget. The agreement budget is authorized
when the Accounting Officer enters the budget into the campus'
general
ledger and the funds become University funds.
The
Accounting Officer must establish the agreement budget in the University accounting
system to enable the
Chancellor's
delegated authority in a campus department to expend contract and grant.
Because the expenditure authority
under
Standing Order 100.4(n) is restricted to contracts and grants that "have
been solicited or negotiated in accordance with
established
Regental policy," actions of both the Contracts and Grants
Officer and the Accounting Officer must precede
contract
and grant expenditures by the campus department. [http://www.universityofcalifornia.edu/regents/bylaws/so1004.html]
6-240 SIGNATURE AUTHORIZATION
Once
the budget is established and the department has been authorized to expend
the awarded funds for the budgeted
purposes,
individuals in a department who have delegated expenditure authority can proceed
to incur expenses. Accounting
Manual,
Section D-224-17, "Delegation of Authority--Signature Authorization,"
II.C. states:
Before budgeted funds can be expended, a record of the signatures of those
authorized to originate and
approve specified departmental business transactions must be provided to
administrative and service departments.
Such delegations include authorization to sign purchase requisitions, service
department orders, requests for issuance
of a check, payroll time reporting forms, etc.
This requirement applies to the Department head and each staff member
to whom authority has been delegated…
The Signature Authorization or Cancellation Form U 242-1,
or its equivalent, is the official record used to delegate expenditure
authority and to record signature specimens.
The U 242-1 states, "A signature authorization is a delegation
of authority and
remains in effect until cancelled." In an electronic
environment, some type of document is required to record the assignment
of electronic signatures or authorization codes and the
approval hierarchy levels and codes associated with a particular
function or database.
6-300
EXPENDITURE ADVANCE BASED ON FIRM COMMITMENT
6-310 DELEGATION OF AUTHORITY
The
President has delegated to Chancellors authority to approve expenditures for
projects for which documentation
of
the award has not been received:
….when (a) the contract
or grant is within the solicitation authority previously delegated to you
and you have
satisfied yourself
that a firm commitment exists to reimburse the University for the amount of
its own funds
advanced, and (b)
there is an essential need to advance or commit funds (which normally means
to pay salaries or
meet other expenses
of a continuing project).
For
projects which are beyond the solicitation authority of the Chancellor (e.g.,
actions requiring Office
of
the President approval), the President retains the authority to make the "firm
commitment." (See Chapter 13 for
discussion
of the contract and grant solicitation authority of the Chancellor.)
6-320 FIRM COMMITMENT REQUIREMENT
General
Counsel has provided the following guidance in interpreting what constitutes
a "firm commitment"
which
is incorporated in the April 14, 1980 delegation:
While firm
commitment has no legal definition, it is obviously something less than a
contract. The phrase
is applicable
to situations where University personnel are advised by representatives of
Government agencies that
a contract
or grant will be forthcoming, and the only delay is a ministerial one of document
processing. An agency
representative
making such a representation must be one who can be relied on for such representation.
6-330 RESPONSIBILITY FOR LOSS
The
University has no provision to cover losses resulting when the award is denied
by the sponsor and the
campus
has incurred costs in advance of receiving the denial. Campuses have established policies for determining
where
to
charge such losses.
6-400 RESPONSIBILITY
FOR FINANCIAL MANAGEMENT AND CONTROL OF PROJECT FUNDS
6-410 RESPONSIBILITY ATTENDANT
TO DELEGATED EXPENDITURE AUTHORITY
The Accounting Manual, Chapter D-224-17, "Delegation of Authority--Signature
Authorization," Section
II. B., "Responsibility
Attendant to Delegated Authority," states:
. . . . individuals authorized to expend funds from a Department's
budget must comply
with all the applicable
policies, regulatory requirements, laws, regulations, and special restrictions
on the use of those
funds. For example,
expenditure of State General Fund funds budgeted for the Engineering Department
is contingent
upon compliance with
certain requirements embodied in the control
language of the State Appropriation Act.
Similarly, expenditures
for budgets that include Federal grants must comply with any applicable Federal
requirements
contained in Office
of Management and Budget Circulars A-21, Cost Principles for Educational Institutions,
and
A-110, Uniform Administrative
Requirements for Grants and Other Agreements with Institutions of Higher
Education, Hospitals,
and Other Nonprofit Organizations. Expenditures of a budget funded from endowments
must
conform to the terms
and conditions of the bequest(s) involved. For extramural awards, funds generally
must be expended
according to the terms
of the award, the budget for the project as approved by the sponsor, and any
other applicable
sponsor requirements.
Any unauthorized
deviations from the approved award budget or award terms and conditions may
subject the
campus to risk of
audit disallowance.
6-420 SUMMARY
OF STANDARDS FOR FINANCIAL MANAGEMENT
Consistent
with 6-410, the following list summarizes the basic standards which must be
met to insure that
extramural
funds are properly managed:
a. Funds must be expended consistent with:
(1) The purpose for which the award is made;
(2) The terms of the budget as approved by the sponsor;
(3) Any applicable sponsor requirements;
(4)
Any applicable federal government-wide requirements
(such as OMB Circular
A-21 http://www.whitehouse.gov/omb/circulars/a021/a021.html
and A-110 http://www.whitehouse.gov/omb/circulars/a110/a110.html)
for federal awards;
(5) University policies and procedures;
b. Fiscal
transactions must be completed in conformance with internal control standards
and supporting
documentation
requirements. (See Chapter 7 for references
to Accounting Manual sections which
detail
control
standards and documentation requirements for different types of expenditures.)
c. Fiscal records and reports must be prepared
and submitted in a timely, accurate, and complete manner.
6-430 SUMMARY
OF FINANCIAL MANAGEMENT DUTIES
The general
financial management duties which must be assumed by the University in administration
of contract and
grant
awards include:
a. Preparation of the proposed budget according
to University and sponsor requirements;
b. Certification of current cost and pricing
data when required;
c. Acceptance of the agreement;
d. Establishment of the approved award budget;
e. Expenditure of funds consistent with
agreement, sponsor, and University policies;
f. Procurement of equipment and supplies
and execution of subcontracts in accordance with sponsor
and University
policies;
g. Recording of expenditures in the appropriate
account in the month the expenditure occurs to
enable accurate,
current, and complete disclosure of financial results;
h. Preparation and submission in a timely manner
of all required interim and final
fiscal reports,
including cost sharing, if any;
i. Preparation and
submission in a timely manner of all required technical reports or
other deliverables
where required for payment;
j. Avoidance of cost over-runs and unallowable
cost-transfers;
k. Identification of the need for revised
budgets and/or need for additional funds;
l. Negotiation of revised and/or increased
budget in order to secure full cost recovery;
m. Negotiation of advance payments provisions,
including the establishment of letters of credit;
n. Timely invoicing and monitoring for prompt
payment when advance payments cannot be negotiated.
o. Prompt completion of project close-out;
and
p. When warranted, submission of requests
for waiver or exceptions to established University costing
and other policies.
6-440 RESPONSIBILITIES OF THE PRINCIPAL INVESTIGATOR
The Principal
Investigator has primary responsibility for financial management and control
of project funds in accordance
with
University and sponsor policies and procedures. The campus Controller is also responsible for
many of the management
and
control responsibilities listed in 6-430 as well as those listed in 6-460.
Some of the responsibilities are shared with
others,
including the Contracts and Grants Officer, Department Chair and College Dean.
However, it is the Principal Investigator
who
is involved in all aspects of award administration.
6-450 RESPONSIBILITIES OF DEPARTMENT CHAIR
(OR EQUIVALENT OFFICERS)
The
Academic Personnel Manual (APM), Section 245, "Duties of Department
Chairperson (or Equivalent Officers)" divides
the
Department Chair duties into two categories: leader of the department and
administrator of the department.
[http://www.ucop.edu/acadadv/acadpers/apm/apm-245.pdf] The administrative duties which are directly
related
to
the financial management and administration of extramural funds, as provided
in APM-245, Appendix A, include the following:
****
5. To prepare the budget and administer the financial
affairs of the department, in accord with University procedures
****
8. To be responsible for the custody and authorized
use of University property charged to the department, and
for assigning
departmental space and facilities to authorized activities in accordance with
University policy and campus
rules
and regulations
****
10. To maintain records and prepare reports in accord with
University procedures.
6-460 RESPONSIBILITIES OF CAMPUS CONTROLLERS
The
campus Controller also has responsibility for many of the financial management
duties listed in 6-430. The missions,
goals, and
objectives
of campus accounting are outlined in Accounting Manual, A-000-4, "University Accounting Program,"
Section III. C. 1. [http://www.ucop.edu/ucophome/policies/acctman/a-000-4.pdf] Specifically, among other things, the campus
Accounting
Office
is responsible for:
****
b) Monitoring all financial and budgetary transactions
to ensure compliance with University and campus policies
and procedures,
with provisions of governing laws and related statutory regulations, with
the terms and conditions
prescribed
by external funding sources, and with generally accepted accounting principles. This includes
administering
all funds to ensure that expenditures are kept within amounts appropriated
and that estimates
of revenue
are adjusted as required.
c) Preparing
and distributing most campus financial reports and statements, including those
for the total campus
as well
as those for Federal, State, and gift funds and for auxiliary and service
enterprises, and preparing claims
against
funding agencies for reimbursement of expenditures incurred.
d) Maintaining
the campus sections of the General Ledger, the official book of accounts,
and other required campus
accounting
records. This includes assigning account numbers, processing
budgetary, financial, and
lien
entries to properly reflect the transactions of campus funds, ensuring that
subsidiary ledger records maintained
outside
of the accounting office are reconciled to control accounts, and closing the
General Ledger at fiscal year end.
6-500
ALLOWABILITY OF COSTS
6-510 GENERAL PRINCIPLES
Funds
derived from contracts and grants are University funds and are to be expended
in accordance with
contract
and grant terms and conditions and University policies. When University policy and funding agency restrictions
on
expenditures differ, the more restrictive of the two policies shall prevail.
Any questions on allowability of an expense
should
be directed to the campus Contracts and Grants Officer or other appropriate
campus fiscal or administrative
officer
prior to incurring the expense.
6-520 CLASSIFICATION OF DIRECT AND INDIRECT
COSTS
Business and Finance Bulletin A-47, "University Direct Costing
Procedures" outlines University policy regarding direct
charging
of all appropriate costs to a sponsored agreement when such costs are not
reimbursed as indirect costs through
application
of approved indirect cost or facilities and administrative (F&A) rates.
[http://www.ucop.edu/ucophome/policies/bfb/a47.html] For federal awards, OMB Circular A-21, Sections D. and E., incorporate the
following
principles for determining direct and indirect costs [http://www.whitehouse.gov/omb/circulars/a021/a021.html]:
Identification
with sponsored work rather than the nature of the goods and services involved
is the determining factor in
distinguishing
direct from F&A costs of sponsored agreements . . . . F&A costs are
those that are incurred for common
or
joint objectives and therefore cannot be identified readily and specifically
with a particular sponsored project . . . .
For
specific information on direct cost elements, see Chapter 7.
For specific information on indirect costs, see Chapter 8.
6-530 FEDERAL COST PRINCIPLES
It
is the University's policy to follow the Federal cost principles for Federal
awards as set forth in OMB Circular
No. A-21, "Cost Principles for Educational Institutions."
(See 6-F01.) Proper costs under federal awards must
be
reasonable,
allocable, consistent, and allowable. OMB Circular A-21 provides the general federal framework for determining
costs
applicable to grants, contracts, and other agreements with educational institutions.
Section C. 2, "Factors Affecting Allowability
of
Costs," states:
The tests of allowability of
costs under these principles are (a) they must be reasonable; (b) they must
be
allocable to sponsored agreements under the principles
and methods provided herein; (c) they must be given
consistent treatment through application of those generally
accepted accounting principles appropriate to the
circumstances; and (d) they must conform to any limitations
or exclusions set forth in these principles or in the
sponsored agreement as to types or amounts of cost items.
6-531 Reasonable Costs
In the expenditure of extramural funds, the University
follows the federal OMB Circular A-21
definition of
reasonable costs
as "the action that a prudent person would have taken under the circumstances
prevailing at the
time the decision
to incur the cost was made" (the "prudent person" test.)
