Budget & Revenue

Budget

Budgets for sponsored project are comprised of Direct Costs and Indirect Costs, applied to the project at the appropriate rate for the sponsor and project. Combined Direct cost and Indirect costs are referred to as Total Cost. Sponsored project budgets are entered into the financial system and the eRPM Award Record when an Award Notice is received. At the time an award is made, a sponsor may include an approved budget in the award, incorporate the proposed budget by reference, or provide a lump sum award amount with no further breakdown of budgeted costs. Budget information contained in the sponsor award notice is used to enter project budget information in the financial system. At a minimum award funds are allocated into direct and indirect costs, if applicable. Note that the awarded budget is considered to be only the amount obligated for spending by the Sponsor and does not reflect revenue or actual dollars received. It is the responsibility of the unit to ensure budget is allocated appropriately to reflect the anticipated needs of the project and that rebudgeting requests are completed in a timely manner. It is not uncommon for a PI to determine funds must be rebudgeted in order to complete the project. Depending on the terms of the award, you may be required to submit a revised budget to the sponsor explaining the need for rebudgeting project costs. Check the sponsor award document to see if the sponsor has specific guidelines for when sponsor authorization for a revised budget is required.

See Budget Reallocation for information on rebudgeting funds.

Revenue

Project revenue is recognized by a variety of payment types and is monitored monthly during project review to ensure payments are received in a timely manner. The different revenue payments types are described below.

Sponsor Project Payment Types (mechanism for project revenue)

Letter of Credit (LC)

LC Payment Type projects receive revenue from a Letter of Credit mechanism. Billing for Letter of Credit Revenue: Letter of Credit Payment Type projects do not require invoicing and receive monthly revenue equal to that month’s expenses by an automatic allocation run during the close of that month's business.

Cost Reimbursable (CR)

CR Payment Type projects receive revenue credit when a sponsor invoice, based on the actual costs expended by the University at the time of invoicing, are sent to the sponsor. Billing for Cost Reimbursable Revenue: CR project invoices are generated automatically and frequency is based on the terms of the award (e.g. monthly, quarterly, semi-annually, or other specified times).

Advance Payment (AD)

AD Payment Type projects receive revenue when payment is deposited, generally at the time of award when the project grant is established. Billing for Advance Payment Revenue: Advance Payment projects do not require invoicing and receive revenue in advance of project expenditures.

Pay Schedule (PS)

PS Payment Type projects receive revenue (1) when a sponsor issued payment is received and deposited or (2) revenue credit when an invoice is issued and sent to the sponsor. Payments and invoicing are based on terms and a schedule that is agreed upon at the time the project grant is established. The payment schedule could be based on dates during the award period or completed project milestones (e.g. enrolling a subject, submitting a progress report). Billing for Pay Schedule Revenue: PS Payment Type projects may require sponsor invoicing, may receive direct payments for milestone or other project activities, or may contain a combination of both direct payment and invoicing for a single project. It is important to know and adhere to the pay schedule requirements for a project to ensure all project revenue is received.

Fixed Price (FP)

Fixed Price Payment Type projects receive revenue by one or more of the mechanisms listed above. However, with a Fixed Price agreement, the sponsor agrees to pay the University a fixed amount for deliverables. The payment amount does not depend on the expenditures (resources and time) charged to the project. Billing for Fixed Price Revenue: Fixed Price Payment Type projects may receive revenue in advance of the project, may require sponsor invoicing, may receive direct payments for milestone or other project activities, or may contain a combination of payment types for a single project. It is important to know and adhere to the pay schedule requirements for a project to ensure all project revenue is received.

Project Grant Revenue Allocation

The following Payment Types allocate revenue at the parent PG and subaccount PG levels:

• Letter of Credit (LC)

• Cost Reimbursable (CR)

The following Payment Types typically allocate revenue at the parent PG level:

• Advance Pay (AD)

• Pay Schedule (PS)

• Fixed Price (FP)

For Payment Types that allocate revenue to the parent PG, project revenue may exceed the parent PG budget. Revenue can be transferred to subaccounts by journal entry during the project period or is transferred to the subaccount(s) at close-out.

The Funding Source section of the Project Grant Budget Status Report in M-Reports contains revenue information:

Revenue at Close-Out

Non Fixed Price Awards with a Revenue Balance
For all projects not identified as fixed price awards, any revenue remaining at the end of the project must be refunded to the sponsor. These funds are identified on the Financial Status Report as ‘Return in Unexpended Revenue to the Sponsor’.

Fixed Price Awards with a Revenue Balance
Fixed Price Agreements retain unspent funding at the completion of the project. The remaining unspent balance, if less than twenty percent of the total budget, may be transferred to a departmental discretionary chartfield. If the balance is greater than twenty percent of the total budget, only the direct cost portion of the balance is retained by the department. These funds are identified on the Financial Status Report as a ‘Fixed Price Balance’.

Revenue Deficit
Departments must cover any revenue deficit, commonly referred to as an overdraft, by providing a department discretionary chartfield combination at the time the Closeout Report is completed by Sponsored Programs.