FACILITIES AND ADMINISTRATIVE COST INCENTIVE PROGRAM
The facilities and administrative (F&A) cost incentive program was originally established to encourage PIs to obtain full F&A recovery on awards. Fifteen percent of F&A charged on qualifying awards are credited back to the PI's incentive account in the 490 fund series. In order to qualify for incentive, an award must bear the full allowable indirect cost rate applicable. If the sponsor limits recovery to a certain percentage, this is considered full allowable recovery.
In addition, if a multi-year proposal is submitted with full allowable F&A, and the negotiated F&A rate increases during the life of the award, the award will continue to qualify for the incentive program even if the sponsor holds the F&A rate to its original level.
Limitations on 490 Accounts
The 490 account must always maintain a positive cash balance. The 490 account is funded monthly by a transfer of 15% of the F&A posted on each qualifying award for that month.
Incentive is transferred from the F&A holding account, not the research award. The effects of the incentive program never appear in the accounting of the award. A PI will have only one incentive account regardless of the number of awards that are generating incentive. The 490 account will remain active as long as the PI is associated with the university and the account has a positive balance. If a PI leaves the university or retires, the unspent balance in the incentive account will revert to the PI's department/research unit for their use.
ALLOWABLE expenditures CAN be charged to incentive accounts.
- Defined in applicable state laws and administrative code, Board of Regents policies, and University policies
- Department's and college's policies can be more restrictive than the University's policies
APPROPRIATE expenditures SHOULD be charged.
- Necessary and beneficial to the University
- Adequately documented
- Has a business purpose
RESPONSIBILITY FOR ALLOWABILITY AND APPROPRIATENESS:
Expenditures charged to all university accounts must be both allowable and appropriate. The department and the college are ultimately responsible for providing information on the business purpose and determining when an expenditure is allowable and appropriate.
The department and/or college are in the position to determine the best way to use their funds. Judgment on reasonableness of all expenditures, and especially in the case of hospitality, is the responsibility of the college and/or department. Certain types of expenditures from any ISU funds are never allowable from incentive funds.
UNALLOWABLE expenditures from INCENTIVE FUNDS include:
- Alcoholic beverages unless the use is for cooking, research, or course study.
- Flowers or gifts of any kind in connection with the illness or death of employees or family members. Flowers used for public functions, such as retirement parties and convocations, are allowable from incentive funds when they serve a business purpose.
- Employee hospitality functions such as Christmas parties and Administrative Professionals' Day lunches. Annual departmental retreats and retirement parties with a business purpose are allowable from incentive funds.
- Coffee, coffee pots, refrigerators, microwave ovens, etc. for employee use only are unallowable.
The following expenditure categories are inherently subject to more scrutiny:
* Cell Phones
* P-Card Purchases
For further information, please refer to the Allowability and Appropriateness training manual available on the Controller's Department web site at: