CONTROLLER'S OFFICE

Research & Cost Accounting

Residual Balances of Fixed Price Awards

Most of the funding Rice receives for sponsored projects is based on cost reimbursable awards. Under these agreements, the sponsor is billed for actual costs up to the award amount and thus, at the end of the project, there is no excess cash. However, awards made under fee for service, milestone, and fixed price agreements occasionally result in positive cash balances available after the work is completed and all costs are recorded. These guidelines establish the treatment of residual funds pertaining to externally funded sponsored projects at Rice University to ensure they are expended to advance the research mission of the University.

Definitions

Fixed-price Award - An agreement in which a fair price for the anticipated work is determined at the proposal stage of the project and is not subject to any upward or downward adjustment of awarded funds based on actual costs incurred. The award amount is pre-determined, based on fixed fee as defined in the agreement, and is paid to Rice on a schedule listed in the award agreement. Fixed-price awards include, but are not limited to, fixed fee contracts, deliverable-based agreements, and other awards where there is no requirement that any remaining funds be returned to the sponsor.

Residual Balance - An unobligated, unspent balance remaining on a fixed-price award at the conclusion of the project period after all project costs have been allocated to the award, all financial obligations have been met, and all deliverables have been received by the sponsor.

Research and Cost Accounting will follow a prescribed protocol when all fixed price awards have been completed and residual funds exist:

  1. Research and Cost Accounting (RCA) will confirm the final expenditure amounts with the PI / department administrator (DA). The DA will alert RCA when the sponsor confirms satisfactory completion of all deliverables.
  2. Full Facilities and Administrative costs (F&A) will be applied to the award prior to transferring the residual funds in order to ensure all F&A costs associated with the award are fully funded.
  3. The PI and DA will confirm that the residual funds will be expended to advance the research mission of the university.
  4. The residual funds will be transferred to the appropriate research designated (D) fund by RCA, who will notify PI and DA upon completion.

Foundation awards are not normally considered fixed price projects. Most foundations have their own guidelines for how to handle remaining funds (e.g., refund balances over $100 or keep amounts less than $100 and use for the purposes of the award).

It is also permissible to extend the project date in the financial system so the residual funds can be spent on project related activities. This extension of the project period is not considered an amendment to the project.

Revised 8-7-2020

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