Post-Award a grant will be set up in UFS where an application is successful and the sponsor has notified the Research Operations Office.
On this page:
- Successful applications
- Access responsibilities in UFS
- The grant structure and coding
- The Award budget
- Activating a grant
- Foreign currency grants
- Amendments to a grant
- Commitments
- Controls
- Grants and VAT
Successful applications
Where applications are successful the sponsor will send an ‘Award Letter’ notifying the Research Operations Office and the applying Principal Investigator (PI). If the department of the PI receive a copy directly from the sponsor they should forward a copy to their Finance Analyst - Research and Grants. This will include information on the following:
- funding
- the dates of the award
- conditions for expenditure
- any other specific terms and conditions
Access responsibilities in UFS
Departmental Key Contacts can request access for departmental members of staff to view research grant data in the UFS Grants module.
The UFS responsibility of ‘Grants Administrator’ gives access to all grants in the department, and the responsibility of ‘Grants Investigator’ restrict access to grants where the user has been named on the grant set up on the award and project eg. the PI or Co-Investigator.
The grant structure and coding
Each research award will be activated within the UFS Grants module and given a unique award number, prefaced by RG or G. This will then be linked to a unique project number.
It is helpful to quote the award RG/G number or project number in all correspondence with the Research Operations Office. Detailed information is held on each research grant such as:
- the duration of the award
- VAT status
- the award budget
- the Principal Investigator
- payroll and expenditure
- non-direct costs and overheads
A grant consists of two main parts – an award and a project
The award represents the funding source, ie. the sponsor and the project represents the activity that the sponsor is funding. The project is linked to the award to allow departments to charge expenditure to the grant.
Although a grant usually consists of one award and one project, it is possible for one award to fund more than one project or to link more than one award to one project.
A project has a minimum of one task but it is possible to have more. This is useful when departments want to break the project into jobs or work packages. Pooled Labour and Research Facilities are set up on a separate task (usually Task 2) since these costs usually need to be ring-fenced according to sponsors’ terms and conditions. For Research Councils shared equipment is usually set up on Task 99.
Most grants awarded will have a budget under Task 1 (direct costs) and Task 100. Task 100 holds the budget for non-direct costs. EC awards will not have a task 100 as they do not have non-direct costs; contribution to the University’s central costs comes from overheads. For reporting purposes different tasks may be used for EC cost categories.
The Award budget
The budget is divided into project(s), task and then into expenditure categories. Where an award letter is received and the expenditure categories are unclear, to ensure that the award is activated correctly and costs are posted accurately, it is important the department discusses with their Finance Analyst - Research and Grants which categories are required (subject to terms and conditions) and the appropriate budget allocation, eg. travel, consumables, equipment.
Direct costs
The most often used direct cost expenditure categories are:
- Staff costs
- Other costs
- Travel and subsistence
Other frequently used expenditure categories are:
- Equipment
- Exceptional items
- Pooled labour
- Research facilities
- Overheads, where relevant
Non-Direct Costs (task 100)
- PI costs
- Estates costs
- Indirect costs
- Infrastructure technicians
- University funded
Older awards will not have non-direct cost budget headings but there may be a budget for overheads, depending on the sponsor.
The budget on UFS will represent the full fEC of the award. If the sponsor has awarded less than 100% of the fEC, the total value of the award (taken from the Award Letter) is grossed up to the full fEC using a Research Operations Office costing tool known as the ‘Budget Calculator’. The ‘University Funded’ budget category is used to show the value not being funded by the sponsor.
The difference between the full cost (per X5 costing) and the price the sponsor will pay is reflected by the University Funded expenditure category as a negative entry. The total budget on the award (including the University Funded category) will equal the total costs of undertaking the project.
An example is given below:
|
|
Costs |
80% funded |
Budget in CUFS |
|
Staff costs |
1,300 |
1,040 |
1,300 |
|
Other costs |
2,600 |
2,080 |
2,600 |
|
Non Direct costs |
1,780 |
1,424 |
1,780 |
|
University Funded |
|
|
(1,136) |
|
|
5,680 |
4,544 |
4,544 |
The Grants module generates the values for non-direct cost charges monthly. Research Accounting posts the non-direct costs to the Grants module. Departments are responsible for charging direct costs to the award. Both the Chest and Department receive a share of the non-direct costs budget; the share is allocated in accordance with the University’s Income Allocation Policy.
Activating a grant
The Departmental Administrator and the Principal Investigator will be notified by email once the grant has been activated by the School Team in the Research Operations Office The activation notice will include a link to the sponsor’s terms and conditions as well as a copy of the award letter and starting certificate, if applicable. Departments are responsible for signing the grant starting certificate on confirmation of staff start dates within the specified time limits dictated by the sponsor.
The Award Budget screen will be available to view immediately after the budget has been entered and expenditure can then be charged to the grant.
Foreign currency grants
Grants that are awarded in a foreign currency will be converted to sterling at activation stage, using the University’s foreign exchange policy. The preferred currency for research grants is sterling.
For US Dollar and Euro denominated grants the budget is prepared using a lifetime rate. Any gains or losses are taken by the Chest. Please contact your School Team in the Research Operations Office for advice on proposed awards in other currencies. Any gain or loss in other currencies is the responsibility of the Department.
Amendments to a grant
Your School Team in the Research Operations Office must be notified of all amendments to a grant, e.g. extensions (cost and no cost), supplementary funding and virement of funds between expenditure categories. Each change creates a new version of the budget and previous versions provide an audit trail from the start of the award to the end.
For this reason it is important that Departments keep the Research Operations Office informed should they negotiate any alteration or supplement with the sponsor.
Commitments
UFS is a commitment accounting system. This means that details of any orders placed in the UFS iProcurement Module are transferred to the UFS Grants module and funds are then reserved for the purchase. These are shown as commitments on several reports until matched with invoices.
Staff cost commitments are not recorded in the grants module.
Controls
At the activation stage various controls are set on a grant to ensure that expenditure is charged in accordance with the sponsor’s terms and conditions.
Budgetary control
Budgetary control allows limits to be placed on the total expenditure on the award (‘award level’) and against each expenditure category e.g. staff costs, other costs (‘expenditure level’). Budgetary control is usually set to ‘absolute’ at award level to prevent overspend against the total award budget.
For expenditure category budgetary control can be either absolute or advisory. This depends on sponsor terms and conditions. An absolute level of budgetary control prevents virement across expenditure categories; an advisory level permits an overspend in one expenditure category when there is available budget in another.
Budgetary control can also be set for tasks (task level). Again, depending on sponsor’s terms and conditions, the control can be either absolute or advisory. A setting of absolute would prevent any virement between tasks, whilst advisory permits an overspend in one task provided there is available budget in another.
The main combinations of budgetary control are:
- Absolute at award level, Absolute at task level and Absolute at expenditure category
This restricts the expenditure to the overall award budget and restricts the expenditure to the budget which has been set at both task and expenditure category level (e.g. Task 1, Other Costs). This prevents any virements across tasks or expenditure categories. Once the budget for that task or expenditure category has been spent, further transactions will fail funds checking.
- Absolute at award level, Absolute at task Level with Advisory at expenditure category
This restricts expenditure to the overall award budget, and to the budget set for each task. However, it is possible to overspend an expenditure category if there are funds available on another expenditure category. Budgetary controls will only be set at advisory if this is in accordance with the sponsor’s terms and conditions
- Absolute at award level, Advisory at both task and expenditure levels
This restricts expenditure to the overall award budget, but allows an overspend on tasks and expenditure category if there are funds available on another task or expenditure category. Budgetary controls will only be set at advisory if this is in accordance with the sponsor’s terms and conditions
Transaction controls
Transaction controls are set up to allow spending against a specific expenditure category e.g. staff costs
These controls can be set at either project or task level, as appropriate. If an attempt is made to charge expenditure to a grant against an expenditure type or category that is outside the transaction controls set, an error message will appear on your screen. Your School Team in the Research Operations Office will be able to offer further clarification on this.
Funds checking
All transactions and purchase orders are checked against the budget to ascertain the funds available. If there are sufficient funds the expenditure or commitment will be recorded. If the transaction has failed, there will be details of why it has failed. It is not possible to approve an order or invoice if there are insufficient funds.
Other transactions e.g. journals or those which are imported into the Grants module e.g. payroll are funds checked once they are within the Grants module. These are flagged as a Funds Check Failure if there are insufficient funds available.
An exception report which details individual transactions which have failed grants processing including funds check failures is sent to departmental grants contacts daily. This report identifies where the funds check failure has occurred. Please note that an item which has failed funds checking is not recorded in the award status of the grant. Further details of this report are given at http://ufs.admin.cam.ac.uk/researchgrants/docs_rsg/failuresreport.pdf
Contact Research Accounting at ufs_grants@admin.cam.ac.uk if you do not know your departmental grants contact.
Expenditure incurred in excess of budget
In practice there are occasions when expenditure will have been incurred on a specific research project in excess of the available budget. This expenditure may not be recoverable from the sponsor and consequently will be borne by the department.
Research Operations Office will instruct Research Accounting to move the costs at the end of the grant.
Grants and VAT
The VAT treatment of research income will differ depending on the nature of the arrangements and the parties involved. The Research Operations Office will determine the appropriate VAT rate for each grant as the VAT status impacts both the research budget and the wider University's expenditure and VAT recovery.
VAT on research funding
There are different types of VAT treatment for income received for research grants:
• Outside the Scope (OS) – public funded research grants & collaborations qualifying for VAT-free status
• Standard Rated (SR) – research supplied to commercial entities and collaborations that do not qualify for VAT-free status
• RS-services RoW – research services supplied to commercial sponsors outside of the UK and collaborations outside the UK that do not qualify as outside the scope
• RG – goods RoW – research goods exported outside of the UK
For further information, see the VAT flowchart, sponsor cards & collaboration guidance in Appendix A, Establishing the VAT rate of Research Grants.
Standard rated 20%
Standard rated grants do have VAT charged on invoices to the sponsor. As these are taxable supplies any VAT on directly related purchases is recoverable from HM Revenue & Customs (HMRC).
The last letter of the source of funds mapping code will be A, which will automatically trigger the VAT reclaim from HMRC, leaving only the net value as a cost to the grant. UK commercial sponsors are normally classed as standard 20%.
Zero rated
For zero rated (this includes RG and RS) grants, any VAT charged on related purchases is also recoverable from HMRC. This is because zero-rating is a type of taxable supply, and it follows that VAT on directly related purchases is recoverable. No VAT will be charged to the sponsor.
The last letter of the source of funds mapping code will be A, which will automatically trigger the VAT reclaim from HMRC, leaving only the net value as a cost to the grant. Typical examples of sponsors whose grants are normally zero rated are commercial organisations outside the UK.
Outside the scope
Outside the scope grants are not liable to VAT so we are not able to reclaim the VAT from HMRC on any purchases. Any VAT paid will be coded to the grant as an additional cost. The last letter of the source of funds mapping code will be B. Typical examples of grants classed as outside the scope are those from Research Councils, charities and the European Commission.
| NIH grants |
Any taxes on NIH grants are treated as an ineligible cost, consequently any taxes (eg. UK VAT, foreign VAT, sales tax, excise duty) included in purchases/expenses which relate to an NIH grant must be separated when processing in UFS. Code the taxes to somewhere other than the grant (eg. from the department’s share of overheads and apply ‘No UK VAT’ to all the lines. |
| Horizon 2020 |
Horizon 2020 grants are typically treated as outside the scope of VAT, therefore we can’t reclaim the VAT on associated purchases from HMRC. Any VAT on purchases can be included as an additional cost on the grant. However, if the funding from a Horizon 2020 grant is used to subsidise a business activity, for example the research results in something which the University or our partners can exploit commercially, the University is able to recover VAT on purchases from HMRC, subject to the normal rules. |
Self-charging VAT on goods and services from overseas
If you purchase goods or services from outside the UK the university may be subject to additional VAT and import taxes.
- Purchases of services from outside the UK are likely to require a self-charge (known as the reverse charge) to be made by coding the invoice to SERVICE TAX.
- Importing goods from outside the UK is now subject to customs declarations. Import VAT & duty costs may apply unless appropriate reliefs can be used.
Please see the Import Export Hub website for further information.