The Citadel

The Military College of South Carolina

Indirect Costs Charged to Sponsored Agreements

Created: 07 January 2009

Edited: 06 August 2014

Procedure: 600.040

Written By: Financial Services

Edited By: The Office of Grants Administration and Sponsored Programs

1.0 Introduction

The college has negotiated an indirect cost rate with the Federal Government. It is 40% of salaries, wages and fringe benefits. This indirect cost rate should be included in the budget requested for every sponsored agreement for the college unless the budgetary guidelines specify a different overhead rate.

Section 2-65-70 of South Carolina Act 651, as amended, requires state agencies to recover the maximum allowable indirect costs and return these funds to the State General Fund with the exception of research and student aid grants and contracts. Further, after January 1, 1999, federal grants and contracts whose annual award is two hundred thousand dollars or less are exempted from this recovery requirement. This means that the college is not required to recover the maximum indirect costs on grants under $200,000 and that indirect costs on grants under $200,000 need not be remitted to the state, even if they are not research and student aid. The issue of remittance was discussed with the State Auditor on the date of this procedure.

The Vice President for Finance and Business Affairs has determined that ½ of all indirect cost received and retained by the college will be made available to the Dean of the receiving department and put into the Dean's revolving rollover funds.

2.0 Procedure

1. The Grants Accountant will charge indirect costs to grants prior to any billing. The transactions are:

If grant award is less than $200,000:

  • Debit Grant Fund Indirect cost (Account code 711250)
  • Credit Indirect Cost Revenue (110500-540040)

If annual award is for more than $200,000 and the grant is not research or student aid:

  • Debit Grant Fund Indirect cost - (Account code 711260)
  • Credit Indirect Cost Revenue – (110500-540050)

If the college retains the funds, the Grants Accountant will create a journal entry to transfer 50% of the indirect cost out of the General Fund into the Dean's Rollover Fund (12090X). Inform Budget Office of the total dollar amount being transferred out of the General Fund.

  • Debit General Fund Transfer Out - (110500-820010)
  • Credit Rollover Fund Transfer In – (12090X-810010)

2. If the college does not retain the funds the General Ledger Accountant will move the amount posted to 110500-540050 (Indirect Cost recovery-state) from sub fund 3036 to sub fund 2823 on the state books. When state clears subfund 2823, the General Ledger Accountant will do a cash disbursement to reflect the liability going to 0 and the cash leaving the college.

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