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Re: Use of Recovered Indirect Cost Bradley, Jenny 04 May 1999 07:58 EST

Chuck,

Thank you for this information.  It is extremely helpful!  Your sentiments echo
many of mine.  I'll let you know the outcome of this "battle."  You've given me
needed ammunition.

Jenny

Herbert B. Chermside wrote:

> Jenny, I know of no institution in the country which treats F&A recoveries
> as funds that "disappear" at the end of the FY.  However, due to the nature
> of these funds, this is a decision that does rest with the institution.
> But, I point out, the decision should be made by the highest executives,
> conscious of what they are doing, rather than being left to the discretion
> of accountants alone.
>
> These funds are reimbursements to the institution for expenses already
> made.  The institution may do with them whatever it wants.  If it chooses
> to have the funds "expire" at the end of the FY, they merely revert to the
> "cental pot" for reallocation.  In short, if there is FY reversion, at the
> time of the reversion, the uses of the funds change.  The funds do not
> disappear, they are merely redirected.
>
> The interpretation that they are unrestricted and therefore MUST revert is
> narrow minded, short sighted, and appears to subvert, unthinkingly, the
> decision to use these funds in the way you describved, as an incentive to
> seek additional external funding.
>
> Accountants, like all of us, seek the easiest solution to anything.  Is is
> easy to say, "Only gifts and sponsored programs are restricted; all else is
> unrestrtcted, and reverts at the end of the FY."  It is an artifact of fund
> accounting (which colleges and universities use, as opposed to cash flow
> accounting) that resources unexpended at the end of the period revert to
> the "pot" for allocation in the next FY without regard to the reasons for
> the surplus.
>
> Hope this gives you some rationalle to persuade the executive offices that
> the current decision by accountants has not been thought through, and thus
> the departments and others are being harmed, even though uninte3neionally.
>
> Consider also the argument that the funds are allocated to the recipient,
> who may have plans to accumulate funds for two or three years to make a big
> acquisition.  The accountants' practice prevents this.  Is that an intended
> outcome of mindlessly applying a "rule" which is merely a guideline?  As
> everyone else does it differently, your accountants appear to be suffering
> from tunnel vision.
>
> However, there is no external standard.  What they are doing is not
> "wrong", it is just another way of doing things which seems to be for their
> convenience rather than accomplishing what seems to be the insitution's goal.
>
> Chuck
>
> At 05:45 PM 5/2/99 -0400, you wrote:
> >I am having a debate with our Business Office on the use of recovered
> indirect
> >cost.  We give percentages to the PI, his or her department and also use a
> >percentage for matching funds for other grants.  Our Business Office insists
> >that we must spend this money on a fiscal year basis.  They are saying
> that it
> >comes in as unrestricted money and therefore cannot be rolled over.  I do not
> >agree with this opinion but, since I am not an accountant, I would like to
> >hear from some others about this matter.  I would appreciate knowing the
> >policy at your institution.  I'll post a summary to the list if you want to
> >reply directly to me.
> >
> >Thank you so much!!
> >
> >
> >Jenny H. Bradley
> >Director of Academic Grants and Foundation Relations
> >Roanoke College
> >221 College Lane
> >Salem, VA   24153
> >
> >(540)375-2409
> >(540)375-2026 (fax)
> >
> >xxxxxx@roanoke.edu
> >
> >Jenny H. Bradley
> >Director of Academic Grants & Foundation Relations
> >Roanoke College
> >221 College Lane
> >Salem, VA  24153
> >(540) 375-2409
> >(540) 375-2026 (fax)
> >xxxxxx@roanoke.edu
> >
> >
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> >
> Herbert B. Chermside, CRA
> Director, Sponsored Programs Administration
> Virginia Commonwealth University
> PO BOX 980568
> Richmond, VA  23298-0568
> Express Delivery Only:
>         Sanger Hall, Rm. 1-073
>         11th & Marshall Streets
>         Richmond, VA  23219
> Voice:  804-828-6772
> Fax     804-828-2521
> OFFICE e-mail   xxxxxx@VCU.EDU
> Personal e-mail xxxxxx@vcu.edu
> http://views.vcu.edu/views/ospa/
>
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--
Jenny H. Bradley
Director of Academic Grants and Foundation Relations
Roanoke College
221 College Lane
Salem, VA  24153

Phone: (540) 375-2409
Fax:   (540) 375-2026

email: xxxxxx@roanoke.edu

======================================================================
 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at http://www.hrinet.org (click on "Listserv Lists")
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