Financial Close Out for Fixed Price AgreementsPurposeTo describe the disposition of residual balances on fixed price agreements BackgroundFixed price agreements involve significant financial risk for the Institution and Department. A fixed price contract requires that PSU perform the work to the sponsor's specifications regardless of the actual cost of doing the work. Therefore the university must budget carefully to ensure that actual cost and the price paid by the sponsor will match. All costs for a fixed price project must be expensed directly to the project index. Thus with accurate budgeting and charging of costs, there should be neither a deficit nor a substantial surplus of funds at project completion. As with all sponsored projects, expenditures on fixed price contracts require the additional administrative review by the Research Accounting Office (RA) and must be directly related to the purpose and performance of the contract. PolicyUpon project completion, both deficit and surplus balances on a fixed price agreement must be transferred to a non-sponsored departmental account. All costs for a fixed price project must be expensed directly to the project index. ProceduresDetermining Project CompletionProjects will be determined by RA to be completed upon one of two trigger events. First (preferred) the project director (PI) will inform RA that all contract deliverables have been completed and received by the sponsor. Second, one year following the end date of the contract, RA will request a statement from the PI, the relevant Department Chair or Institute Director that all contract deliverables have been completed and received. If the PI indicates that not all deliverables have been accomplished, they will coordinate with the funding sponsor and provide to RA a listing of outstanding deliverables and a timeline for completion of those products. If this information is not provided within one month of the request, RA will proceed to close out the sponsored project index. If Costs Exceed the Sponsor's Funding at Project CompletionIf costs exceed the sponsor's funding at project completion, RA will take one or more of the following steps until all project costs are covered:
Exceptions to this model must be approved by the Office of Research and Sponsored Projects. Note: This paragraph applies to cost overruns on cost reimbursement awards as well. If the Sponsor's Funding Exceeds Costs at Project CompletionIf the sponsor's funding exceeds project costs, RA will utilize the following sequence in closing the project account:
8/04 |
