700.4 Residual Fund Balance
Responsible Officer: Executive Director
Responsible Unit: Sponsored Projects Accounting
Effective date: April 1, 2010
Last revised on: October 17, 2017
Accepting a fixed price agreement involves a degree of risk because the University must complete all work even if the costs exceed the amount of the agreement. In addition to mitigating the risks associated with accepting fixed price agreements, the University must also ensure that relevant costs are assigned to the appropriate project and that the necessary processes are in place to assure consistency in estimating, accumulating, and reporting costs.
Consequently, Principal Investigators must budget carefully to ensure that the amount of the agreement is sufficient to cover project costs, ensure that all allowable and allocable costs are assigned to the appropriate project, and provide adequate documentation to justify large residual balances.
A residual balance on a sponsored project is defined as the unobligated cash that remains at the end of the performance period after all deliverables and financial obligations have been fulfilled and final payment has been received. Residual balances may be used to further University academic, research, and service missions.
At the end of the performance period, residual balances on sponsored projects will be transferred to the administering department when all of the following conditions are met:
- All direct charges and project revenue have been accounted for properly
- All project deliverables have been provided to the sponsor
- All project payments have been received from the sponsor
- The amount of indirect costs generated by the project’s expenditures have been recovered
- The sponsored agreement terms do not require the University to return the residual balance
- Justification is provided for residual balances greater than 25% of the Total Project Budget
Indirect Cost Application Exemption
Indirect costs will not be applied to residual balances except in the following rare instance:
When fixed price projects receive a full or partial F&A waiver, full indirect costs will be collected from the residual balance, up to the amount that would have been applied to the incurred expenses if the waiver had not been approved and full F&A had been allowed from the start of the budget period.
Procedures and Related Policies
Office of Sponsored Research: Policy 700.4, Pro.1 – Requesting Residual Balance Transfer
For questions regarding this policy and its related procedure, please contact ResAdminOSR@unc.edu. For questions regarding Pre-Award management or Post-Award administration, please contact the assigned Sponsored Programs Specialist. For invoicing, reporting and other financial matters, please contact the assigned Sponsored Projects Accountant. OSR Staff assignments may be found in RAMSeS or on the OSR website.
10/17/2017 Policy revised so that indirect recovery is based on incurred expenses (exclusions apply), justification threshold increased to 25%, and policy now applies to all sponsored projects.
The policies in the Office of Sponsored Research Policies & Procedures Manual supersede any OSR policies, procedures and appendices previously included in the University Business Manual, a publication of UNC Chapel Hill’s Division of Finance.