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Located Inside: Research Policy Handbook

Summary:

Establishes procedures to meet the requirements of July 15, 1993 revisions to OMB Circular A-21 regarding the definition of University Research

Related Research Policy Handbook Documents:

3.2    Definitions and Categories of Sponsored Projects
3.3    Facilities & Administrative (F&A), i.e., Indirect Cost
          and Fringe Benefit Rates: Definitions and Calculations
3.5    Cost Sharing: Stanford University Policy and Procedure

Authority:

Vice Provost and Dean of Research
Associate Vice President for Research Administration

Contact Person:

Director, Cost & Management Analysis

A.    BACKGROUND

Section B.1.b.2 of the July 15, 1993 revised OMB Circular A-21 (A-21) mandates that, beginning in FY95, for indirect cost rate calculations University Research expenditures be combined with Sponsored Research expenditures under the function of Organized Research. Previously A-21 allowed University Research to be classified as either Organized Research or Departmental Research. Stanford included it as a component of Departmental Research, therefore separate identification of University Research was not necessary.

Circular A-21 defines University Research as:

"all research and development activities that are separately budgeted and accounted for by the institution under an internal application of institutional funds."

Stanford has sought and continues to seek advice from federal representatives regarding the interpretation of this revision to A-21. Stanford's interpretation of the revised OMB Circular A-21 classification of University Research, as applied to the situation at Stanford, requires the University to capture the costs associated with activities that are, in nature, comparable to externally sponsored research but are paid from institutional funds. Cost sharing falls into this category, as well as other activities that contain the characteristics of an externally sponsored research project. This interpretation results in the grouping of like Sponsored and University Research activities into the single category, Organized Research.

There are three categories of research at Stanford: Sponsored Research, University Research, and Departmental Research. Stanford's classification of research activity is based on the characteristics and the sponsorship of the research activity as discussed below. The classification of the research and development activity determines the coding of the associated expenditures and University space utilized in the performance of the research and development activity.

B.    POLICY

NOTE: Information in this section refers to Stanford's legacy accounting system. This system was converted on September 1, 2003. For questions about accounting, contact your Research Accountant in the Office of Sponsored Research, or the appropriate individual in either Engineering Research Administration or the Medical School Research Management Group. Additional information is available on the Oracle Financials Learning Center page.

     1.   Sponsored Research

Research and development activity is properly classified as SPONSORED RESEARCH if the activity is externally sponsored by a federal or non-federal organization or agency.

ACCOUNTING TREATMENT

Expenditures identified as Sponsored Research shall be accounted for under Function 2 (Organized Research). University space used in the conduct of Sponsored Research shall be coded to Organized Research in the University's space inventory system. (Reference Stanford's Space Inventory instructions for specific information.)

     2.   University Research

Research and development activity is properly classified as UNIVERSITY RESEARCH if the activity is supported by either of the following:

1. Committed cost sharing expenditures that directly support externally-sponsored research and development awards. These are expenses borne by Stanford which otherwise would be borne by the sponsor. Please refer to Stanford's Policy and Procedure on Cost Sharing, Research Policy Handbook (RPH) 3.5.

2. Funding that is derived from institutional funds (e.g., gifts, endowment income, interest income, technology licensing income, operating budget, etc.) through a competitive application and award process, and when the research activity has the same general characteristics of an externally sponsored research project. (See Definitions and Categories of Sponsored Projects, RPH 3.2).

   Typically, the application and award process is similar to the process for a Request for Proposal (RFP) and includes identified criteria, a competitive review, funding and notification.

University Research does not include institutionally funded competitive application and award processes which are not research related or whose primary purpose is to provide awards to individual students for research training, such as Fellowships and Undergraduate Research Awards.

EXAMPLES OF UNIVERSITY RESEARCH

1. Awards from the Office of Technology Licensing (OTL) Research Incentive Fund administered by the Office of the Vice Provost and Dean of Research.

   Note: Only a portion of the OTL funds are awarded through a competitive application and award process.

2. Funds provided by the University that are used to cover costs committed and incurred on behalf of an externally sponsored project.

   Affiliates and similar programs should be examined on a case-by-case basis to determine whether they qualify as Instruction, University Research or Departmental Research.

ACCOUNTING TREATMENT

1. Expenditures are always recorded in Function 2 accounts, independent of funding source. University space used in the conduct of University Research should be coded to Organized Research in the University's space inventory system. (Reference Stanford's Space Inventory instructions for specific information.)

2. Accounts are in division fund class 127 (Continuing Projects) with budget and expense tied to project period and carried over the fiscal year end (corresponding to the primary sponsored agreement). Cost sharing accounts are referenced to the specific sponsored projects generating the cost sharing.

3. Funding transfers from designated or gift funds can be on a project period basis, but transfers of General Funds from the Operating Budget can only be on a fiscal year basis. It is preferable that transfers from gift funds also be handled on a fiscal year basis. It is also preferable that costs for a given fiscal year be funded at the beginning of the year. A guarantee account may be used for funds which have not yet been received, if one has been identified on the Cost Sharing PTA Attribute Setup Request, [downloadable file] and approved by an authorized signator.

All University Research shall be separately budgeted and accounted for in the University's accounting system.

     3.   Departmental Research

Any research and development activity that does not meet the criteria in B.1. (Sponsored Research) or B.2. (University Research) above shall be classified as DEPARTMENTAL RESEARCH.

EXAMPLES OF DEPARTMENTAL RESEARCH

1. New faculty start up funds which are provided on a non-competitive basis

2. Funds from a faculty member's designated gift accounts expended for research that are not used to cover costs incurred on behalf of externally or University sponsored research

3. University support of faculty salaries for non-sponsored research

ACCOUNTING TREATMENT

Expenditures for Departmental Research shall be coded to Function 1 (Instruction and Departmental Research) in the accounting system. University space used in the conduct of Departmental Research should be coded to Departmental Research in the University's space inventory system. (Reference Stanford's Space Inventory instructions for specific information.)

Departmental Research is not normally separately budgeted and accounted for under Stanford's system, although care should be taken to assure that Administrative Guide requirements are met.