Policy Information

Date Established: 1/4/2017
Date Last Updated: 3/2/2017 
Category:
Financial
Responsible Office:
Financial Management
Sponsored Projects Services
Clinical Research Office
Responsible Executive:
Vice President for Finance and Administration
Vice President for Research and Economic Development

Policy Contents

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Residual Balance on Fixed Price Contracts for Sponsored Projects

Summary

This policy provides guidelines for the management, accounting, and proper use of Research Foundation (RF) residual balances for fixed price awards including, but not limited to, industry-sponsored clinical trial awards.

Policy Statement

The University at Buffalo (UB, university) recognizes that certain types of projects supported by external agencies or sponsors are best suited to be funded as a fixed price contract. After sponsor obligations have been met, the study has been closed by the sponsor, and payment in full has been received by the university, a residual balance comprised of direct and indirect cost (also known as facility and administrative (F&A) cost) portions may exist on fixed-price or industry-sponsored clinical trial awards. The indirect cost rate on the award at closure will be charged prior to the direct cost balance transfer. The direct cost balance on fixed-price or industry-sponsored clinical trial awards will be transferred as follows:

  • balances of $100 or less will be transferred to the indirect cost pool
  • balances greater than $100 will be transferred to an appropriate residual balance account in the Principal Investigator's (PI) name; the residual balance amount will be communicated to the PI's dean and department chair when the funds are  transferred

The Clinical Research Office (CRO) is responsible for the transfer of residual balances for industry-sponsored clinical trials; Sponsored Projects Services (SPS) is responsible for the transfer of residual balances for all other fixed price contracts. These respective offices will determine the information needed from PIs to confirm that sponsor obligations have been met, funding has been properly accounted for, the study has been closed, and that payment in full has been received.

Funds in residual balance accounts with no activity for two consecutive fiscal years will be moved to a departmental project assigned to the dean or vice president of the PI’s appointment or home department. However, the dean, vice president, or chief financial officer (CFO) may request that the funds remain in the PI’s residual balance account. Funds transferred to departmental accounts may be spent in support of the departmental academic mission.

When a PI notifies the university that he/she will separate from university service, the funds remaining in the residual balance account established for the PI’s use may be expended by the PI only with specific written approval from the department chair, CFO, dean, or vice president of the PI’s unit. When a PI separates from university service, all remaining funds in the residual balance account will be moved to a departmental account assigned to the dean or vice president of the PI’s appointment or home department. These funds may be spent in support of the departmental academic mission.

Background

Fixed price contracts are based on an agreed upon budget amount (fixed price), and this amount is paid by the sponsor regardless of the actual costs of conducting the sponsored project. Similarly, industry-sponsored clinical trials are based on an agreed upon budget amount (fixed price), which is based on patient enrollment and agreed upon fees, and this amount is paid by the sponsor regardless of the actual costs of conducting the clinical trial. In both cases, this means that when the project costs are below the fixed price contract amount, the university may keep the residual balance. Conversely, when the cost is more than the fixed price contract amount, the sponsor will not provide additional funds to the university to support the additional costs. It is critical that all costs associated with the fixed price contract are charged to the award so that the PI’s (and co-PIs’ if applicable) department or school, as well as the university, are not unreasonably subsidizing the costs of the research, clinical trial, or other activities conducted under the fixed price contract.

Residual or unspent balances on fixed price awards may consist of a direct cost portion and an indirect cost portion. The indirect cost rate on the award at closure will be charged prior to the direct cost balance transfer in order to ensure all indirect costs associated with the award are expended. The remaining balance (i.e., the direct cost portion) will be transferred at the close-out of the award. These funds are considered university resources, and must be spent in accordance with good financial practices and in support of the university’s mission.

Applicability

This policy applies to fixed price contracts administered by SPS and industry-sponsored clinical trials administered by the CRO with balances that are not required to be returned to the sponsor.

This policy does not apply to cost-reimbursement awards.

Definitions

Clinical Trial Award

A research study in which one or more human subjects are prospectively assigned to one or more interventions (which may include placebo or other control) to evaluate the effects of those interventions on health-related biomedical or behavioral outcomes.

Direct Cost

Costs that can be specifically identified with a sponsored project, instructional activity, or other institutional activity, and thus directly assigned relatively easily with a high degree of accuracy. Examples of direct costs include, but are not limited to salaries and wages, fringe benefits, equipment, supplies, travel, and publication expenses.  

Fixed Price Award

A type of sponsored project account where costs are pre-determined based on a fixed fee per unit of service or product. The total is not subject to any upward or downward adjustment of funds based on actual costs. There is no stipulation or expectation that excess funds be returned to the funding agency.  

Indirect Cost (Facilities and Administrative (F&A) Costs)

The costs of administrative and support functions of the university including general administration and expense, operations and maintenance, building and equipment depreciation, and library expenses. Costs incurred for common or joint objectives that cannot be readily assigned to a particular sponsored project, instructional activity, or any other institutional activity.

Residual Balance

An unobligated cash balance of funds remaining in a fixed price sponsored account at termination of the project.  

Residual Balance Account

An account established for the purpose of receiving the transfer of a residual balance at termination of a fixed price sponsored project or industry-sponsored clinical trial award and close out of the account.  

Responsibility

Sponsored Projects Services (SPS)

  • Work with the PI to determine the appropriate amount to transfer to a residual balance account.
  • Determine the appropriate course of action with regard to any cash balance of funding at the time of account close out.
  • Fully charge all indirect (F&A) cost rates on fixed price awards.
  • Notify the PI’s dean’s office of the residual balance amount on the account.
  • Transfer direct cost balances to the PI's residual balance account, as appropriate.

Clinical Research Office – for industry-sponsored clinical trial awards

  • Determine the appropriate course of action with regard to any cash balance of funding for industry-sponsored clinical trials at the time of account close out.
  • Confirm that the sponsor has closed the study.
  • Fully expend all fees and applicable direct costs for the study.
  • Fully charge all indirect (F&A) cost rates on industry-sponsored clinical trial awards.
  • Notify the PI’s dean’s office of the residual balance amount on the account.
  • Transfer direct cost balances to the dean’s office, as appropriate.

Financial Management

  • Establish the project and/or task for new residual balance accounts.
  • Maintain residual balance accounts.
  • Process and monitor expenditures of residual balance accounts.
  • Close out residual balance accounts with zero balances.
  • Transfer funds from residual balance accounts assigned to PIs who have separated from the university to a departmental project.
  • Determine next steps for residual balance accounts that have not had activity for more than two fiscal years.

Deans, Vice Presidents, Chief Financial Officers (CFO)

  • Work with Financial Management to determine next steps for residual balance accounts that have not had activity for more than two fiscal years. 
  • Request that the funds remain in a PI’s residual balance account, when appropriate.
  • Provide written approval for expenditures from residual balance accounts, when appropriate, for PIs separating from university service.

Principal Investigator (PI)

  • Work with the appropriate sponsored projects business office (SPS or CRO) to determine residual balances.
  • Provide written justification that all appropriate project or study costs have been correctly allocated to the award, if requested by SPS or CRO.
  • Certify that all terms of the award have been met.
  • Expend residual balance accounts in a timely manner in accordance with good financial practices and in support of the university’s mission.

Contact Information

Financial Management
418 Crofts Hall
Buffalo, NY  14260
Phone:  716-645-2660
Fax:  716-645-6795
Email:  ubsd.nsgroup@business.buffalo.edu  

Sponsored Projects Services
The UB Commons
520 Lee Entrance, Suite 211
Amherst, NY  14228-2634
Phone:  716-645-2634
Fax:  716-645-2760
Email:  awards@business.buffalo.edu

Clinical Research Office
875 Ellicott Street, Suite 6040
Buffalo, NY 14203
Phone:  716-888-4841
Fax:  716-854-1397
Email:  ubcro@buffalo.edu

Related Information

Procedures

When a project terminates, the PI must certify that the project is complete and that costs have been correctly allocated. Charges to fixed price awards must reflect all actual effort and costs incurred.

The PI will be required to certify that all:

  • income has been received for the project
  • expenses have been properly charged to the account
  • project work is complete and reports and other deliverables have been provided.

University Links

Related Links

History

March 2017 Updated the policy to:
•  require the transfer of residual balances greater than $100 to an appropriate residual balance account in the PI's name rather than transferred to the dean's office where the PI resides
• 
add a responsibility for SPS to work with the PI to determine the appropriate amount to transfer to a residual balance account
  add a responsibility for deans, vice presidents, and CFOs to work with Financial Management to determine next steps for residual balance accounts that have not had activity for more than two fiscal years
•  remove responsibilities for deans, vice presidents, and CFOs to establish school or department processes for managing residual balances

Presidential Approval

Signed by President Satish K. Tripathi

Satish K. Tripathi, President

1/4/2017

Date