Procedure: 600.040                                                                                                                             Date:25 April 2001

Written By: Ralph Earhart
                 Director, Financial Services

1.0     Introduction

        The college has negotiated an indirect cost rate with the federal government. It is 45% 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 thousands dollars or less are exempted also from this recovery requirement.

        The Vice President for Finance and Business Affairs has determined that 1/2 of all indirect costs received and retained by the college will be made available for current year spending in the receiving department. These funds are for departmental operations, not individual faculty member's direction.

2.     General Definition of Responsibility

        The Principal Investigator of each grant is responsible for preparing budgets for grant and subcontract submissions and including all appropriate indirect costs in the budget.

        The Grant Accountant is responsible for charging indirect cost sin accordance with the budget award and reporting periods for each grant.

        The Grant Accountant is responsible for sending a copy of this journal entry to the Budget Office so that they can raise the appropriated budget of the department.

        The General ledger accountant is responsible for moving any indirect costs recorded into gl object code 2450 to the state.

3.     Procedure.
        A.    The grant accountant will charge indirect costs to grants prior to any billing.
               The transactions are:

                (If the grant award is less than $200,000 or if it is a research or student aid award over 200,000)
                DR Grant Account Indirect cost (Object code 6700)
                        CR Grant Cash (a system generated transaction)
                DR General Fund Cash (a system generated transaction)
                        CR Indirect Cost Revenue 110000 0312

                (If the annual award is for more than $200,000 and the grant is not research or student aid, then the credit to the
                general fund goes to 010000 2450)
                Object code 0312 (SL) Indirect Cost recovery (Citadel)
                Object code 2450 (GL) Indirect Cost Recovery (State)

       B.      If the college retains the finds (they get posted to 0312) the grant accountant will furnish a copy of this journal entry to
                the Budget Office and will notify the principal investigator and the department head to expect a budget increase in the
               appropriated account.

       C.     The General ledger accountant will move the amount posted to 010000 2450 (Indirect Cost recovery-State) from sub fund
               3036 to sub fund 2823 on the state' books. When the state clears subfund 2823, the general ledger accountant will do
               cash disbursement to reflect the liability going to 0 and the cash leaving the college.