Indirect Cost Recovery

Overview

Indirect cost recovery is assessed based on direct costs expended on a contract and grant in order to cover the cost of indirect expenses such as light, heat, central administration, etc. that cannot be directly allocated to any particular sponsored project, but nonetheless are real costs incurred by the institution as a result of participating in the sponsored project. Offsetting revenue is recovered by the institution from the sponsoring agency to cover these indirect costs. 

In a Nutshell

• Indirect Cost Rates, Types and Accounts are associated with the grant account or a sub-account associated with the grant account. 
  • Indirect Cost Types identify which types of expenditures will be assessed indirect cost recovery. By default, all expenses that post to an account will be assessed ICR, unless, either the account or the object code is excluded using the Indirect Cost Recovery Exclusion by Type  or Indirect Cost Recovery Exclusion by Account. 
  • Indirect Cost Rates identify the percentage to be assessed, the chart, account and sub-account, object codes and sub-object codes where the icr revenue and expense entries will post.
    • ICR Expense: Wildcards can be used for the Chart, Account and Sub-Account and this means that all expenses will post to the same chart, account and sub-account as the original transaction using the object code/sub-object code associated with the Debit entries. 
    • ICR Revenue: Wildcards can be used for the Chart and Account. ICR Chart and Accounts are associated with the Account or Sub-Account used for the expenditure transaction. Sub-Accounts are not identified specically for ICR Revenue on the Account or Sub-Account and therefore transactions cannot be posted to wild card sub-accounts. In order to post revenue to a sub-account, a specific chart, account and sub-account must be identified. 
  • Indirect Cost Recovery Accounts identify where the ICR revenue should post when wildcards are used in the Credit section of the ICR Rate tabel. ICR Accounts can be added to Accounts or Sub-Accounts. 

ICR Debit / Credit Entries

Debit Entries		Chart	Account	Sub-Account	Object Code	Sub-Object Code
	Wildcard @	Grant account/sub-account where expense incurred			ICR Rate table
	No Wildcard	Chart, account, sub-account specified on the ICR Rate table			ICR Rate table
Credit Entries
	Wildcard #	ICR Account tied to the Grant Account or Sub Account		Not applicable	ICR Rate table
	No Wildcard	Chart, account, sub-account specified on ICR Rate table			ICR Rate table

Creating entries

ICR Types and Rates can be added to Accounts or Sub-Accounts. When expense transactions that are not excluded from ICR post to the Account or Sub-Account, ICR will be generated by the posterJob based on the Rate and Type associated with the Account or Sub-Account. The revenue will post to the ICR Account associated with the Account or Sub-Account and to the object code and sub-object code associated with the Indirect Cost Recovery Rate assigned to the Account or Sub-Account. 

Account ICR Type and Rate

Sub-Account ICR Rate and Type

Account and Sub-Account ICR Account tab

Indirect Cost Recovery Rate

Use the Indirect Cost Recovery Rate document to manage ICR rates. Rates are created for each fiscal year. Any active rates in the current year will be created in the next fiscal year when batch job Fiscal Year Maker is run. 

Enter the Debit and Credit charts, accounts, sub-accounts, object codes and sub-object codes in the New ICR Rate Detail tab. 

Debit Entries: Enter either a specific chart, account or sub-account, or use @ to wildcard the values.  Wildcards in the Chart, Account and Sub-Account field mean that all expenses that post to accounts assigned this ICR rate will be assessed ICR unless specifically excluded by object code or account and will post 

• Object Code and Sub Object Code: The object code and, if specified, the sub-object code where the indirect cost expenses will post. 

Credit Entries: Enter either a specific chart, account or sub-account or use # to wildcard Chart and Account. This identifies the accounting string where ICR revenue will post. When wildcards are used, the ICR chart and account associated with the Account or Sub-Account on the expense transaction will be used. Sub-Accounts are not associated with ICR Accounts and Sub-Accounts, therefore Sub-Account does not accept the wildcard.  In order to post ICR revenue to a sub-account, you will need to specify an account and a sub-account. 

• Sub-Account Number: Leave blank if not using a specific sub-account and upon submit, the system will fill in with 5 dashes. 
• Object Code and Sub-Object Code: The object code and, if entered, the sub-object code where Indirect Cost Recovery income will post. If the sub-object code is left blank, the system will fill in with 3 dashes after submit. 

Indirect Cost Recovery Rate Detail Lookup

Use the Indirect Cost Recovery Rate Detail Lookup to see the accounting string assigned to each rate. This is only a lookup, to make changes to the Rates, use the Indirect Cost Recovery Rate lookup and maintenance documents. 

Indirect Cost Recovery Type

Use the Indirect Cost Recovery Type to create ICR Types that can be assigned to Accounts and Sub-Accounts to specify which expenses should be charged ICR. It's assumed that all expenses will be charged ICR unless the object code is listed in the ICR Exclusion by Type tab. 

Enter or lookup and return all object codes that should NOT be assessed ICR with this ICR Type Code. 

Indirect Cost Recovery Exclusion by Type Lookup

Use the Indirect Cost Recovery Exclusion by Type Lookup to see the object codes excluded for each Type Code. This is only a lookup, to add or inactivate excluded object codes, use the Indirect Cost Recovery Type lookup and maintenance documents. 

Indirect Cost Recovery Exclusion by Account

Use the Indirect Cost Recovery Exclusion by Account to exclude specific accounts that would get picked up by the Indirect Cost Recovery Rate wildcards.