Documenting Cost Sharing
Cost share or matching funds are terms used to describe the portion of a project supported by the university or a third party other than the sponsor. If cost share is a required part of a project, then the university must document that cost share was provided. Items included as cost share must be in conformance with the same rules and regulations as direct charges to the award fall under and must support the work of the project. Requirements for cost share vary widely among sponsors but generally require that the university provide effort, equipment or other items of value to the project.
Cost share falls into three categories:
Mandatory : an amount or percentage required by the sponsor in order to receive the award
Voluntary Committed : an amount or percentage committed in the proposal and/or budget not required by the sponsor in order to receive the award
Voluntary Uncommitted : typically effort not required by the sponsor as a condition for the award and not committed by the faculty in the proposal and/or budget, but performed as part of the project work
Other costs can also be Voluntary Uncommitted.
Cost share must be documented and substantiated. If mandatory or voluntary committed cost share requirements are not met, a proportionate amount of the project’s direct costs may be disallowed. Cost share generally requires additional documentation. Therefore, unless required, cost share should not be included in a proposal.
2CFR§200 requires that cost share be:
- verifiable to records
- not included as a contribution for any other federally assisted program
- necessary and reasonable to accomplish the program objectives
- allowable and allocable under the cost principles
- not paid under another federal award
- provided in the budget when required by federal agency
- in conformance to other 2CFR§200 provisions
The majority of cost share provided by UNL is in the form of effort and is documented using the Personnel Activity Report (PAR). Other forms of cost share must be documented in the same manner as costs charged directly to an award. All cost share is subject to audit. Paid receipts and travel vouchers should be kept in accordance with UNL’s retention policies.
These tools may be used to accumulate costs:
1.Companion cost center: A companion cost center to record financial expenses associated with the cost share for an award can be established in SAP.
For awards where ONLY salary/benefits will be used to meet the cost share obligation, effort will be documented on a Personnel Activity Report (PAR) and companion cost share accounts will not be used.
If costs other than effort (i.e. equipment, travel, supplies) will be used to meet the cost share obligation, a companion cost share account will be established to accumulate cost share costs for a particular award. If a combination of effort and other costs will be used to meet the cost share obligation, a companion cost share account will be established to accumulate all of these costs. A cost share companion is used for very specific reporting within SAP and should not be used for any other costs than those intended as cost share for the award. The rules governing a companion cost share account are:
- A companion cost share account will be set up only when there will costs other than salary used to meet the cost share obligation.
- If a companion cost share account is needed as defined in 1 above and a portion of the obligation will be met with effort, salary will also be charged to this cost share companion account. Regardless of the cost share documentation method used, this information will appear on the PAR and should be used in calculating effort.
- The companion cost share account will be locked when the cost share obligation is met and will not be used for other purposes. OSP will notify Accounting when the companion account needs to be locked. Budget may need to be transferred off of the account.
- The companion cost share flag in SAP will be left on for accounting and grant purposes when the account is locked.
When work-flow notices notifying you of project termination are sent, departments should take action to remove any salary being charged to the companion as well as the project by the end date of the project.
2. Subsidiary ledgers: A subsidiary ledger of items of cost used to support an award’s cost share requirement can be maintained by the department (and provided to Post-Award). The original invoice submitted to UNL Accounting should have the information “USED AS COST SHARE FOR AWARD XX-XXXX-XXXX-XXX” written on it. Subsidiary ledgers should be used when there are few financial transactions needed to support an award’s cost share requirement or the cost share will be met entirely (or mostly) with effort.
Cost Share provided by a Third Party
If cost share is being provided by a third party, special care should be exercised to ensure that the third party meets its requirement and can document that it was met. UNL must make up any unmet amount. A Third Party Cost Sharing Contributions form may be used to substantiate that the cost share was provided.
Donated Items/Volunteer Services
Donated items can be used as cost share but must be assigned a reasonable value and shall not exceed the fair market value of the item at the time of donation. Services must be valued at the value paid for a similarly skilled paid position including an amount of fringe benefits that are reasonable, allowable and allocable, but exclusive of overhead costs.
2CFR§200 provides additional guidance on valuing donated items. If you have any questions about valuing donated items, please contact your Post-Award Project Specialist.