I. General Comments
In an effort to streamline the accounting for residual funds, this guideline outlines when residual funds may be combined, how to setup the residual fund pool (the pool), and what costs are allowable in the pool. Decisions regarding the residual funds generated from a fixed price contract where the division/program no longer exists after contract completion or has residual funds in excess of $100,000 will be handled on a case by case basis by the President's Council.
II. Definitions
Residual Pool
The positive funds remaining from a fixed price contract or restricted donation upon completion of the project. Negative funds remaining from a fixed price contract/restricted donation may be transferred into a pool that has available funds to cover the deficit. The funds available must be positive or zero at all times in the residual pool.
Fixed Price Contract
A firm-fixed price contract provides for a total price that is not subject to any upward or downward adjustment of funds based on the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties (reference FAR 16.202).
Restricted Donation
A restriction placed on a donation by the donor regarding the use of the donation.
III. Procedures
Accounting for Fixed Priced Contracts
When a contract is accepted by UCAR, the Sponsored Agreements Office determines whether that contract is a fixed price contract. As with any new contract, a new account key(s) and contract is setup in the Bi-Tech accounting system to track the funds and expenditures for duration of the work to be performed under the contract (reference OMB Circular A-110, Subpart C, Section .21(b)2). Upon contract completion, UCAR's responsibility to the sponsor has been fulfilled and the A-110 requirement of separate accountability by contract is no longer applicable, therefore, the residual funds may be combined with those of other completed fixed priced contracts.
Accounting for Restricted Donations
The details associated with accounting for restricted donations are provided in the Fundraising Procedure in the overall process section #7.
Requesting a Residual Fund Pool
To establish a residual fund pool, a new account key and contract should be setup to track residual funds. Multiple account keys may be utilized, within the same contract, to meet specific division/program needs. Before any residual funds are transferred into the pool, the Sponsored Agreements Office will review all of the documentation to make a final determination that all contract terms and conditions and donor restrictions have been met. For contracts with residual funds remaining of $10,000 or greater, a brief explanation describing the circumstances generating the residual funds (memo or e-mail), should accompany the request to ensure UCAR's not-for-profit status is not at risk from the activity. After the Sponsored Agreements Office completes the review, the Division Administrator should coordinate with their division Project Accountant to transfer the residual funds into the pool.
IV. Allowable Expenditures in the Residual Funds Pool
Expenditures charged to the pool should be consistent with the mission of UCAR and comply with applicable UCAR policies. Discretionary expenditures are unallowable in the pool (reference UCAR Procedure Food and Miscellaneous Expenses). However, a transfer can be made from the residual pool funds to the program’s Discretionary account to fund discretionary items.
Issued August 2001; Revised September 2007
