Financial Compliance


Cost Sharing

University Policy No. 4016 / Cost Sharing

Cost Sharing Definition
Cost sharing is the portion of project expenses related to a sponsored agreement that is contributed by the University but not directly charged to the sponsored project fund.
Types of Cost Sharing
  1. Mandatory cost sharing
    Required by the sponsor as a condition of receiving an award.
  2. Voluntary committed cost sharing
    Offered by the Principal Investigator (PI) by including it in the sponsored proposal document.
Cost sharing Represents Real Costs to Mason
  • Cost sharing represents a redirection of University resources from instruction or other activities to support a sponsored project. The PI, department chair, college dean or director, and other administrators should carefully weigh the cost-effectiveness and the expected benefits of cost sharing prior to making the commitment in a proposal.
  • Effort committed may not exceed that allowed by the faculty or staff member’s appointment.
  • Funds expended by Mason in cost sharing result in a lower F&A (indirect cost) rate.
Cost Sharing Activity Code
A six digit activity code will be assigned to labor budgets and direct expenditures to record committed University contributions to a sponsored project or program.
Required Process
  1. Creating an award and noting there is a cost share
  2. Establishing an activity code. The activity code will either start with 00XXXX (for Federal Awards), 99XXXX (for Non-Federal Awards), or SCXXXX (for Salary Cap).
  3. Using the activity code to setup a budget in banner along with the org. number allocated for cost share in the proposal.
  4. Sending an email to the departmental liaison letting them know the activity code and budget information.
  5. It will then be up to the department to submit paperwork charging this cost share account.
  6. OSP reviews these accounts regularly and sends notices when the accounts are not showing the proper amount of expenses.

It is important to know that if your budget states that there is cost share on the project, then it has to be met.
The sponsor is looking for this matching contribution that you have told them will be there.

Useful Resources

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Fly America Act

Introducing The Fly American Act
The Fly America Act refers to the provisions enacted by section 5 of the International Air Transportation Fair Competitive Practices Act of 1974 (Pub. L. 93-624, Jan. 3, 1975), 49 U.S.C. App. 1517, as amended by section 21 of the International Air Transportation Competition Act of 1979 (Pub. L. 96-192, Feb. 15, 1980). 94 Stat. 43, and mandates the use of U.S.-certificated air carriers for federally funded international travel.

The Fly America Act generally requires that all foreign air travel funded by Federal dollars be performed on U.S.-certificated air carriers unless a reasonable exception is applied.

Open Skies Agreements

Travelers using Department of Defense (DOD) funds are not permitted to take advantage of Open Sky Agreements. Travelers using DOD funds must use an American carrier.

Use of United States Flag Air Carriers
Definitions
  • The Fly America Act
    The Fly America Act refers to the provisions enacted by section 5 of the International Air Transportation Fair Competitive Practices Act of 1974 (pub. L. 93-624, Jan. 3, 1975), 49 U.S.C. App. 1517, as amended by section 21 of the International Air Transportation Competition Act of 1979 (Pub. L. 96-192, Feb. 15, 1980). 94 Stat. 43.
  • U.S. Flag Air Carrier
    The term means an air carrier holding a certificate under section 401 of the Federal Aviation Act of 1958 (49 U.S.C. App. 1371). Foreign air carriers operating under permits are excluded.
  • United States
    For purposes of the Fly America Act, “United States” means the 50 states, the District of Columbia, and the territories and possessions of the United States (49 U.S.C. App. 1301(38)).
  • Gateway Airport in the United States
    It means the last airport in the United States from which the traveler’s flight departs, or the first airport in the United States at which the traveler’s flight arrives.
  • Gateway Airport Abroad
    It means the airport abroad from which the traveler last embarks enroute to the United States or at which the traveler first debarks incident to travel from the United States.
General Requirements of The Fly America Act

The Fly America Act, 49 U.S.C. App. 1517, as implemented in the Comptroller General’s guidelines, Decision B-138942, March 31, 1981, requires Federal employees and their dependents, consultants, contractors, grantees, and others performing United States Government financed foreign air travel to travel by U.S. flag air carriers unless:

  1. Travel by foreign air carrier is a matter of necessity as defined in paragraph (b)(3) of this section, or
  2. When U.S. flag air carrier service is available within the guidelines in paragraphs (b)(4)(5) of this section.
Necessity for Use of Foreign Air Carrier Service

Use of foreign air carrier service may be deemed necessary if a U.S. flag air carrier otherwise available cannot provide the air transportation needed, or use of U.S. flag air carrier service will not accomplish the agency’s mission.

Availability of U.S. Flag Carrier Services

General. U.S. flag air carrier service is available even though:

  • Comparable or a different kind of service can be provided at less cost by a foreign air carrier;
  • Foreign air carrier service is preferred by or is more convenient for the agency or traveler; or,
  • Service by a foreign air carrier can be paid for in excess foreign currency, unless U.S. flag air carriers decline to accept excess foreign currencies for transportation payable only out of these monies.
Scheduling Principals

In determining availability of U.S. flag air carrier service, the following scheduling principals should be followed unless their application results in the last or first leg of travel to and from the United States being performed by foreign air carrier:

  • U.S. flag air carrier service available at point of origin should be used to destination or, in the absence of direct or through service, to the furthest interchange point on a usually traveled route;
  • Where an origin or interchange point is not served by U.S. flag air carrier, foreign air carrier service should be used only to the nearest interchange point on a usually traveled route to connect with U.S. flag carrier service; or,
  • Where a U.S. flag air carrier involuntarily re-routes the traveler via a foreign air carrier, the foreign air carrier may be used notwithstanding the availability of alternative U.S. flag air carrier service.
Guidelines for Determining Unavailability of U.S. Flag Air Carrier Service
Travel to and from the United States:

Passenger service by a U.S. flag air carrier will not be considered available when the travel is between a gateway airport in the United States and a gateway airport abroad and the gateway airport abroad is:
The traveler’s origin or destination airport, and the use of U.S. flag air carrier service would extend the time in a travel status, including delay at origin and accelerated arrival at destination, by at least 24 hours more than travel by foreign air carrier.

Travel Between Two Points Outside the United States:

U.S. flag air carrier service will not be considered to be reasonably available if travel by foreign air carrier would eliminate two or more aircraft changes enroute;

  • Where one of the two points abroad is the gateway airport en route to or from the United States, if the use of the U.S. flag air carrier would extend the time in travel status by at least 6 hours more than travel by a foreign air carrier, including accelerated arrival at the overseas destination or delayed departure from the overseas origin, as well as the gateway airport or other interchange point abroad; or,
  • Where the travel is not part of a trip to or from the United States, if the use of a U.S. flag air carrier would extend the time in travel status by at least 6 hours more than traveled by foreign air carrier including delay at origin, delay en route and accelerated arrival at destination.
Short Distance Travel:

For all short distance travel, regardless of origin and destination, U.S. flag air carrier service will not be considered available when the elapsed travel time on a scheduled flight from origin to destination airport by foreign air carrier is 3 hours or less and service by U.S. flag air carrier would involve twice the travel time.

Travel Finances Solely with Excess Foreign Currencies:

U.S. flag air carriers render themselves unavailable by declining to accept payment in foreign currencies for transportation services required by certain programs or activities of the Government which, under legislative authority, are financed solely with excess foreign currencies which may not be converted to U.S. dollars. In these instances, foreign flag air carriers that will accept the required foreign currency may be used to the extent necessary to accomplish the mission of the particular program or activity.

The statement of justification required must indicate that the transportation service needed can be paid for only in excess foreign currencies and that otherwise available U.S. flag air carriers declined to accept payment in the foreign currencies.

Use of Foreign Flag Air Carriers
Authorization or Approval

Expenditures for commercial foreign air transportation on foreign air carrier(s) will be disallowed unless there is attached to the appropriate voucher a certificate or memorandum adequately explaining why service by U.S. flag air carrier(s) is not available, or why it was necessary to use a foreign air carrier.

Use of foreign flag air carriers may be authorized or approved only when U.S. flag air carrier service is not available as determined under the guidelines or when foreign air carriers are used under the reciprocal terms of an appropriate bilateral or multilateral agreement.

Air Transport Agreements

Nothing in the guidelines shall preclude and no penalty shall attend the use of a foreign air carrier which provides transportation under an air transport agreement between the United States and a foreign government, the terms of which are consistent with the international aviation goals set forth at 49 U.S.C. App. 1502(b) and provide reciprocal rights and benefits.

Justification Statement

A statement executed by the traveler or agency justifying the use of a foreign flag air carrier for any part of foreign travel must be entered on or attached to the travel voucher, transportation request, or any other payment document.

Each request for a change in route or schedule which involves the use of a foreign flag air carrier must be accompanied by a statement justifying such use.

Employee Liability for Disallowed Expenditures

Where the travel is by indirect route or the traveler otherwise fails to use available U.S. flag air carrier service, the amount to be disallowed against the traveler is based on the loss of revenues suffered by U.S. flag air carriers.

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Payroll Certification & Effort Monitoring

Definition
Payroll Certification is a project-based method of certifying effort on federally sponsored projects to certify that salary charges are reasonable in relation to work performed.
Useful Resources
Required Process & PI Responsibilities
Committing Effort and Payroll Charges
  1. Proposed effort should be an accurate reflection of the amount of time to be spent on the project. Summer salary should be for time to be spent in the summer; otherwise academic year salary should be included. All projects require a portion of PI time to be charged to the project or tracked as committed cost sharing using an activity code.
  2. Effort commitments are requirements of the award and shifts in PI and key personnel effort should be reviewed closely. The absence of the PI for more than three months or reductions of PI effort by 25% or more of budgeted salary requires prior sponsor approval.
  3. Committed cost sharing must be tracked with an activity code to ensure it is included on payroll certification reports. This includes cost share committed in the original proposal or post award adjustments, when effort is being moved from sponsor funding to cost share.
  4. Effort not related to a sponsored project should be charged to non‐sponsored funding sources. For example, time spent writing proposals should not be charged directly to a sponsored fund. PI’s effort should not be charged 100% to sponsored projects.
  5. PIs need to be aware of sponsor/award specific requirements and take necessary actions when
    proposing and/or charging effort.
    For example, NSF limits charges for senior personnel to a maximum of two months in any one year, and NIH imposes a salary cap (Executive Level II salary is $185,100 effective January 10, 2016); salary in excess of the cap must be charged as cost share.
Tracking Effort and Payroll Charges
  1. PIs must monitor project activity on a regular basis and ensure shifts in effort of project staff are accurately updated in the financial system. PIs should communicate regularly with departmental administrators responsible for submitting funding change paperwork to ensure changes are processed in a timely manner.
  2. PIs need to be aware of sponsor/award specific requirements and take necessary actions when
    proposing and/or charging effort.
    For example, NSF limits charges for senior personnel to a maximum of two months in any one year, and NIH imposes a salary cap (Executive Level II salary is $185,100 effective January 10, 2016); salary in excess of the cap must be charged as cost share.
Certifying Effort and Payroll Charges
  1. Payroll certification reports need to be reviewed closely, and if adjustments are required the
    necessary funding changes need to be processed. Approval and certification is required within 30 days of receipt of the payroll certification report.
  2. Effort not related to a sponsored project should be charged to non‐sponsored funding sources. For example, time spent writing proposals should not be charged directly to a sponsored fund. PI’s effort should not be charged 100% to sponsored projects.
  3. PIs need to be aware of sponsor/award specific requirements and take necessary actions when
    proposing and/or charging effort.
    For example, NSF limits charges for senior personnel to a maximum of two months in any one year, and NIH imposes a salary cap (Executive Level II salary is $185,100 effective January 10, 2016); salary in excess of the cap must be charged as cost share.
Procedure
  1. Generating Payroll Expense Reports;
  2. Payroll Expense Reports will be generated 60 days after the last day of the month for the project anniversary date or project end date, whichever is sooner.
  3. Reports are distributed to the payroll certification liaison within each department.
  4. The payroll certification liaison works with principal investigators to obtain approval, then submits the approved reports to OSP.
  5. The reports must be returned to OSP within 45 days of distribution.

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Subcontracts

University Policy No. 4009 / Subrecipient Monitoring Policy

Mason is responsible for financial and programmatic monitoring of sponsored project funds awarded to Mason that are subcontracted to another institution or organization (subrecipient). To provide the monitoring required by federal regulations and to ensure good stewardship of sponsored projects, Mason will use reporting, site visits, regular contact, or other means to provide reasonable assurance that the subrecipient administers awards in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved.

This policy applies to all subawards issued under all sponsored projects awarded to Mason.

Outside Entities
Objectives of The Subrecipient Monitoring Policy
  • Advises and provides to subrecipients copies of federal laws or regulations, terms and conditions of the prime award or agreement, and Mason requirements that apply to the subaward or subcontract.
  • Provides subrecipients with information regarding the prime award including Catalog of Federal Domestic Assistance number (CFDA), title, award name and number, award dates, and funding agency, as required by OMB Uniform Guidance, 2 CFR Part 200.
  • Monitors costs and activities of subrecipients to ensure expenditures charged to Mason are consistent with the budget and scope of work of the subaward or subcontract. Ensures that the performance goals set forth in the scope of work are being met in a timely manner.
  • Conducts an annual risk assessment of all active subcontracts or subawards to determine which subrecipients require closer scrutiny.
  • Ensures that subrecipients expending $500,000 or more in federal awards during the subrecipient’s fiscal year have met the OMB Uniform Guidance audit requirements for that fiscal year.
  • Issues management decisions on audit findings within six months after receipt of the subrecipient’s audit report and ensures that the subrecipient takes appropriate and timely corrective action.
  • Considers whether subrecipient audit findings necessitate adjustment of Mason’s records, such as budget modifications or reallocation of resources, a demand for repayment from the subrecipient, or other remedial measures.
  • Requires each subrecipient to permit the sponsor and/or Mason and its auditors to have access to the subrecipient’s pertinent records and financial statements, as necessary.
Required Process
  1. Invoices are sent to accounts payable by a subcontractor.
  2. AP logs these invoices in and then sends them to OSP for a pre-review of the invoice to ensure sufficient funding is available.
  3. AP routes the invoice to the PI to review and approve.
  4. The PI then sends their approval to AP who then processes the the invoice for payment.

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