eLearning
Watch the Timing of Expenditures and Benefit to Award eLearning (approx. 30 minutes).
Definitions
In adherence to the four cost principles, all expenditures must be reasonable, allocable, allowable, and consistently treated. Additionally, there are several factors to consider regarding the timing of expenditures.
- Award Period is the start and end dates of the Sponsored Award. This period is also referred to as a “Competing Segment” since the Award is obtained through a competitive process.
- Budget Period is the start and end dates for a designated period of time within a Total Period. This can also be referred to as a “Non-Competing Segment” since there is no competitive process to receive this funding. Not all Awards have Budget Periods. If an Award has Budget Periods, they are designated by the Sponsor in the Award documentation.
- For example: a Sponsor issues an Award with a Total Period from January 1, 2010 - December 31, 2013. The Sponsor provides funding for the first year, so the first Budget Period is January 1, 2010 - December 31, 2010.
- Award Line Dates is the term used in Workday for Budget Period.
- Carry Forward is the balance of unused funds at the end of a Budget Period transferred (“carried forward”) to the next Budget Period. Funds cannot be carried forward to a Competing Segment.
- Automatic Carry Forward is when the balance of unused funds can be carried forward to the next Budget Period without Sponsor approval.
- Project vs. Award: A project (or program) is the overall research topic (e.g., curing breast cancer). An Award is a specific amount of funding utilized in a designated amount of time within that research topic. Most projects are funded by multiple Awards and other funding sources. For more information on Project vs. Award, watch this five-minute eLearning.
- Benefit is the how the expense (item or service) is necessary to the achievement of the Award objectives.
- Date the expense was incurred: the date the expense (item or service) was purchased or ordered.
- Date the expense was posted: the date the expenditure transaction posted in the UW financial system.
- Date received: the date the item or service was received by the department.
Expenditure Timing/Benefit for Different Award Types
Sponsors require that expenditures are incurred, received, and provide a necessary benefit between the start and end dates of the applicable Award or Budget Period. An expense can be posted after the end date of the Award or Budget Period, but must be posted before the Final Action Date (FAD) to ensure that the expense is included in the final invoice/financial report.
Application of this compliance concept depends on the Award type.
I. Award does NOT have designated Budget Periods.
Expenditures must be incurred, received, and provide a necessary benefit between the start and end dates of the Award Period.
Scenario: An Award has an Award Period from January 1, 2012 - December 31, 2013.
Allowable:
Lab supplies were purchased (incurred) and received in November 2013 and used (provided benefit) before the end date of December 31, 2013. The transaction was posted in January 2014.
Unallowable:
Lab supplies were ordered (incurred) and received in December 2013 but they were not used (did not provide benefit) during the Total Period.
An airline ticket was purchased in November 2013 for travel to a conference in February 2014. The benefit (conference) was not received during the Award Period.
A laptop was purchased in December 2013 and received in January 2014, after the end date of the Award Period. It could not provide benefit to the Award under which it was purchased.
II. Award has designated Budget Periods and automatic carry forward.
If the Sponsor allows for automatic carry forward, the UW does not need to report or track expenditures within a Budget Period. Thus, expenditures must only be incurred, received, and provide a necessary benefit between the start and end dates of the Award (not Budget) Period.
Scenario: An Award has a Award Period from January 1, 2010 - December 31, 2013. The current Budget Period is January 1, 2010 - December 31, 2010.
Allowable:
Lab supplies were incurred and received in late December 2010 and used (provided benefit) during the current Budget Period and the subsequent Budget Period (January 1, 2011 - December 31, 2011).
Registration costs were incurred in December 2010 for a conference in March 2011. The benefit (attending the conference) was within the Total Period.
Unallowable:
Lab supplies were purchased in December 2013 and not received until January 2014, after the end date of the Award Period.
Scenario: An Award has an Award Period from January 1, 2010 - December 31, 2013. The current Budget Period is January 1, 2013 - December 31, 2013, which is the last Budget Period of the Award.
Allowable:
Lab supplies were purchased, received, and used in December 2013; the transaction was posted in January 2014.
Unallowable:
Lab supplies were purchased in December 2013 but not received until January 2014, after the end date of the Award Period. The supplies could not be used (provide benefit) during the Award Period.
III. Award has designated Budget Periods and the Sponsor does NOT allow automatic carry forward between Budget Periods.
Expenditures must be incurred, received, and provide a majority of benefit during the Budget Period.
Scenario: An Award has an Award Period from January 1, 2010 - December 31, 2013. The current Budget Period is January 1, 2010 - December 31, 2010.
Allowable:
An airline ticket was purchased in March 2010 for a conference in June 2010. The benefit (attending the conference) was within the current Budget Period.
Unallowable:
An airline ticket was purchased in November 2010 for a conference in March 2011. The benefit was after the current Budget Period ends.
A piece of equipment was incurred in December 2010 and received in January 2011. The benefit was after the current Budget Period ends.
Expenses Moved via Accounting Adjustment
If an expenditure is moved to an Award via cost transfer, the date the expense was originally incurred must fall within the start/end dates of the benefiting Award or Budget Period (where the expense was moved), as applicable.
Scenario: The current Budget Period on an Award is January 1, 2010 - December 31, 2010.
Allowable:
An expense was incurred and received in January 2010 and posted to a department budget. The expense was transferred in February 2010 to the Award.
Unallowable:
An expense was incurred in September 2009 and posted to a department budget. The expense was transferred in February 2010 to the Award. The expense was incurred prior to the start date of the Award (and more than 90 days, see below).
Pre-Award Expenditures
Some Sponsors allow expenses to be incurred prior to the start date of the Award or Budget Period. These are called pre-Award expenditures. Prior to incurring pre-Award expenditures:
- Review the Award to determine if the Sponsor allows pre-Award expenditures.
- If the Award is silent on the issue, review the Sponsor regulations to determine if they allow pre-Award expenditures. Some federal Sponsors allow expenditures up to 90 days prior to the Award start date.
- If pre-Award expenditures are allowed, determine if there are any requirements (e.g., prior written Sponsor approval).
- Learn more about advance budgets and take steps to request one.
Scenario: The start date of an Award is January 1, 2010. The Sponsor allows pre-Award expenditures up to 90 days before the Award start date (October 1, 2009) without written approval.
Allowable:
Lab supplies were incurred in late December 2009 and charged to a department budget. The expense was moved to the Award in February 2010.
Unallowable:
Lab supplies were incurred in December 2009 and charged to an advance budget. The Award was delayed and did not start until June 1, 2010. The expense was incurred more than 90 days prior to the start date of the Award.
End of Award Expenditures
It can be difficult to demonstrate how expenditures near the end of an Award or Budget Period benefited the Award in a limited amount of time. All purchases incurred within the last 90 days of a Award or Budget Period should be reviewed to:
- Ensure the item/service was received during the Award or Budget Period; and
- Determine how the item/service provided benefit during the Award or Budget Period, given that it was purchased close to the applicable end date. Providing benefit means having a reasonable amount of use during the Award or Budget Period.
End of Award Equipment Expenditures
In addition to the above, it is recommended that equipment expenditures near the end of the Award or Budget Period should be reviewed to determine:
- If the equipment was included in the original budget proposal. If so, include documentation (copy of the budget and/or budget notes) showing that the equipment was identified as part of the proposal. Include this information with the purchase documentation. If the equipment was identified but not purchased until the end of the Award, document how the equipment benefited the Award given the limited amount of time left on the Award.
- If the equipment was not included in the original budget proposal, determine and document how it benefited the Award, given the limited time remaining.
- If Sponsor approval, as required, was obtained for the purchase of the equipment, include the approval in the purchase documentation.
- If the equipment will not be used exclusively on this Award, document how the cost was allocated to other funding sources.
- If applicable, document why the purchase was necessary when the proposal indicated that the project had access to necessary equipment and/or facilities.
- If the equipment was purchased to replace existing equipment, provide disposition (location, status, and/or current use) of the equipment being replaced.