Sponsored Programs Accounting Definitions
Account Code—The four or five digit letter/number combination that categorizes the sponsor budget and expenditures related to an award into specific categories (such payroll, travel and supplies).
Cost Share/Matching—The portion of total project costs that are paid from sources other than the sponsor. Cost share can be required by the sponsor in the proposal solicitation or be a voluntary contribution shown to the sponsor in the proposal budget. Once cost share is shown to the sponsor in a budget, Michigan Tech is obligated to identify and track the cost share expenditures.
Effort Reporting and Payroll Certification Process—The verification of the ratio of payroll charged to sponsored agreements in relation to the employee’s effort on that project. The verification certifies that the distribution of payroll activity represents a reasonable estimate of the work performed by the employee during a specific time period.
Encumbrance—An amount committed to an outside vendor through the use of a purchase requisition/purchase order for supplies, equipment or services. The obligation to the vendor has been made; therefore, this encumbrance reduces the amount available to spend.
Institutional Research and Development Return—The amount of funds returned on a quarterly basis to the PI. The institutional research and development return is based on the actual amount of overhead/indirect costs, and facilities and administrative costs, collected in that quarter.
Index—The six-digit letter/number combination assigned to a funded project that identifies the project in the accounting system. This is the number used when charging expenditures and setting up payroll.
Modified Total Direct Cost (MTDC)—The direct costs charged to an index/project excluding equipment, tuition and subcontracts over $25,000.
- Summary: This statement shows the funded budget by categories (account code), and total expenditures charged for each account code. Included are columns for the month, fiscal year and project-to-date. There is also has a column for encumbrances.
- Detail: This statement lists each expenditure charged to an account code, showing the date of the expenditure, the amount and the source document (purchase order number, invoice number or journal entry number).
- Payroll: This statement lists each individual paid from the project, by account code. The statement includes both current month and cumulative year-to-date columns for hours and earnings.
Overhead/Indirect Costs and Facilities & Administrative Costs—These are federally negotiated rates for the recovery of costs incurred for common or joint objectives and cannot be readily and specifically identified to a particular sponsored project. The rate is comprised of two main components: administrative costs (both central and departmental) and facilities (operations and maintenance). This rate is applied to Modified Total Direct Costs as the expenditures are charged to the index/project.
PI/Financial Manager—The individual listed in the award document as the person responsible for all aspects of a specific project.
Reallocation—The term used to describe the procedure of moving an expense (including payroll) from one index to another or from one account code to another to correct clerical or bookkeeping errors.
Transfer—The procedure for moving actual dollars from one index to another. Transfers out of sponsored indexes are not allowed. Transfers will always have an account code beginning with a T.