Quick reference guide: Fixed price award and residual balance management

Management of Fixed Price Awards will vary by type and require different closeout justifications based on the award. Understanding the type of award and reporting requirements is critical to proper balance management. Applicable projects should follow guidance provided in GAP 200.185 Fixed-Price Residual Balance Transfer.

Overview of fixed-price awards

The following points are true of fixed-price awards:

  • Specify the timeline and deliverables expected during the agreement process 
  • Budget a fair price for the anticipated work during the proposal stage of the project 
  • Exclude opportunities for adjustment of awarded funds based on actual costs incurred 
  • Require review and reallocation of residual balances once closeout is completed

Classification of award by type

Awards are classified as “reportable” or “non-reportable” based on the sponsor, flow through funding, residual balance and financial reporting requirements specified in the fully executed agreement. Reporting needs will be identified by the second digit of the WBSE. If questions arise, review master data in SAP or the funding agreement. Reporting needs will be identified using the second digit of the WBSE.

 Reportable AwardsNon-reportable Awards
Cost Object IdentifierSecond digit of WBSE may be any number “0 - 8” 
For example: 2633789 or 2833789 
Second digit of WBSE will be “9” 
For example: 2933789 or 2919873 
Reporting RequirementsRequires financial reporting of how funds were expended based on the agreement No financial reporting to sponsor is required detailing how funds were expended 
Invoicing ResponsibilitiesCentral Office is responsible for invoicing with progress updates from department Department is generally responsible for invoicing and monitoring progress 
Closeout ProcedureSee sections below for management of residual balances at closeout for reportable awards Contact SoM Finance (for Medicine and Nursing Management Center/School of Medicine/School of Nursing) or Campus Award Management Team (for Provost Area/Campus Schools) 

Invoicing and payment structure for reportable awards 

Once reporting needs are defined, additional classification will be based on invoicing and payment arrangements stated in the award/agreement. The payment structure is identified by the “Funding Basis” in SAP master data using the transaction CJ20N - Project Builder. 

Fixed Price Agreement “FP” Deliverable Task “DT” Capitation “CAP” 
Identified in master data as Funding Basis “FP” Identified in master data as Funding Basis “DT” Identified in master data as Funding Basis “CAP” 
Invoices sent based on payment schedule stated in the agreement Invoices are issued based on deliverable, milestone, or task, as defined in the agreement Invoices and payments are dependent on patient(s) enrolled or procedure(s) performed 

The Funding Basis is found on the “Project Definition Customer Fields” screen, using the transaction CJ20N. See the University Reporting – Sponsored Projects Guide for guidance on using CJ20N. 

Non-reportable awards are not generally assigned a Funding Basis in CJ20N. Refer to the agreement for invoice and payment guidelines. The department may be responsible for invoice creation & submission. 

Closeout of a reportable fixed-price award 

The unobligated or unspent balance remaining on a fixed-price award at the conclusion of the project period is a residual balance. Residual balances may be retained after closeout of the award if terms of the agreement were met and any other requirements (reporting, deliverables, etc.) are fulfilled. Retention of the residual balance will vary by project type.  See GAP 200.185 Fixed-Price Residual Balance Transfer for additional details. 

Important note: Grant Manager should consult with their PI related to justification of the residual balance prior to submission of any closeout documents. 

Closeout procedure for reportable fixed-price awards
  1. Confirm all deliverables have been met based on the agreement 
  2. Verify all costs have been allocated to the project WBSE(s) and are posted to the ledger 
  3. Review all WBSEs, individually and at the overall project level for impact to residual balance 
  4. Complete & submit all required closeout forms (specific form requirements noted below) 
    • Certain balances will require justification and approvals, details are provided below 

PI attestation

When submitting the PI Attestation for a parent WBSE, calculate the estimated residual balance and input into the final project balance field.  
For awards > $20,000 with residual balances > 25% of original award amount or $50,000, include: 

  1. Explanation for the difference between the budgeted/proposed costs and actual expenses 
  2. Brief explanation of planned expenditures for the remaining funds 

Closeout tasklist

On the tasklist, enter the estimated WBSE balance into the residual balance field and the WBSE or Cost Center to which the balance will be transferred. 
For awards > $20,000 with residual balances > 25% of original award amount or $50,000: 

  1. Include the explanations provided on the PI Attestation describing the difference in budget and actual expenses, as well as planned expenditures for the remaining funds. 
  2. Add the Department/Center/Institute management level approver for review and approval of the residual balance 
    • NOTE: D/C/I Management level approver may already be included in established workflow approvals explanation of planned expenditures for the remaining funds 

In some cases, similar justifications may be required at closeout for awards <$20,000 based on Management Center review. 
Management Center approval for residual balances > 40% or $100,000 is required and will be obtained during ORA or CAMT review of the closeout submission.  

 

Institutional procedure for closing of reportable fixed-price awards

Upon receipt of the closeout documentation, Post Award Financial Management Office (PAFM) will: 

  • Review the award terms and conditions, the closeout documentation, and the allocated expenses  
  • Prepare final financial reports/invoices as required by the sponsor 
  • Transfer the residual balance to the WBSE or Cost Center identified on the Tasklist 

F&A, and G&A if applicable, will be assessed for awards >$20,000; the direct cost portion of the residual balance will then be transferred to the WBSE/Cost Center identified on the Closeout Tasklist.