Special considerations for projects with cost sharing, including how to set up the correct accounts and how to track.
University Policy 1.1, Cost Sharing for Sponsored Agreements outlines critical guidance on cost share. Given that cost share generally comprises institutional funds, it’s important to understand the risks and requirements related to managing this activity.
Federal requirements are outlined in Title II of the Code of Federal Regulation, Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. See Uniform Guidance (UG) 2 CFR §200.306 Cost sharing or matching.
Tracking Cost Share
To avoid complications well into the project, establish the required accounts/sub-accounts upon execution of the award and monitor them throughout the life of the agreement.
Cost Share Sub-Account
A sub-account is required to track cost share commitments using institutional funds. Costs incurred and contributed to the match need to be posted to the cost share sub-account. Do not post them to the funding account (i.e., the account that is funding the cost sharing).
Account Attribute - Cost Share for Project Number
An account attribute is required to track cost share contributed by one sponsored agreement to another sponsored agreement. This is also used for cost share that is met by capital construction (i.e., a plant account). A separate project-related account consistent with the period of performance associated with the project necessitating the cost share may be required. For plant accounts, a separate sub-account may be used to manage the committed cost share related to the specific portion of a larger plant project.
Do not use a cost share sub-account to track commitments between two separate sponsored agreements or capital construction. Refer to Cost Share Sub-Accounts (PDF, 865 KB).
Be cautious of lengthy negotiations and its impact on proposed commitments. Commitments can change over time and may need to be re-evaluated to ensure they can still be met, prior to executing the agreement.
Uncommitted Cost Share
Voluntary uncommitted cost share is not required to be tracked and should not be recorded in a cost share sub-account. Effort that the unit wishes to track for other reporting purposes technically is not a component of the project that requires tracking and documentation. Therefore, these expenses are institutional and should be recorded appropriately based on institutional funds rather than in the cost base of the project.
Coordinating Cost Share Across Collaborating Units/Departments
Expenses Contributed by an Organization
The organization (org) contributing activity (i.e., expenses) may need a project-related account and cost share sub-account. Expenses incurred within an org generally must be tracked within that org. In addition, effort contributed by a specific org requires a costing allocation for staffing within that org. In other words, staffing must be allocated directly to that org’s account/cost share sub-account.
Reporting access is derived from the fiscal officer, account manager, and the project’s lead principal investigator. It’s important that a project’s accounting structure, including cost share sub-accounts be structured in a way that allows the individuals responsible for a specific portion of the project to have access to financial data required to provide such an oversight.
Funding ($$) Contributed by an Organization
In some cases, an org may be contributing funds only. This can be addressed by an institutional transfer to the administrative org, and, in this case, the administrative org processes the transactions that are incurred within that org to address the commitment.
It’s important to monitor the cost share commitment throughout the life of the project. Failure to meet the cost share requirement may result in a loss of funding.
Project Overrun (True Deficit)
If the project has incurred more expenses than awarded, the result is a project overrun. A project overrun must remain in the same cost base as the project. For example, a research project must have the deficit recorded in a research account. A public service project must have the deficit recorded in a public service account.
The most appropriate mechanism for a project overrun is to record the deficit in a cost share sub-account as part of the closeout activity. By doing that, all costs automatically remain within the project’s cost base. However, a departmental overrun account that is in the correct base may also be used.
National Institute of Health (NIH) Salary Cap
Effort in excess of NIH’s salary cap is unallowable toward a cost share commitment but does need to be tracked in a cost share sub-account.