There are times when a sponsor (federal, foundation, industry, etc.), will not pay the full F&A rate established by the institution. When this occurs, the user selects a different F&A rate is applied to the cost base being utilized by the project (Total Direct Cost, Modified Total Direct Cost or other), or unchecks the ‘apply’ option on budget line item expenses. When a different rate (zero for unchecked “apply” or other number entered in the Rates screen) other than the institutional set rate is used, the system generates an amount of “Unrecovered F&A”, also known as underrecovery, or underrecovered funds. Since the full indirect costs are not recovered by the sponsor, the institution must account for the remaining expense usually billed as full IDC.
The Unrecovered F&A tab is where you specify the responsible party responsible for covering the F&A costs not requested or provided by the sponsor.
The system generates an unrecovered amount under the following circumstances:
• When the apply box for the overhead rate on the line item expenses is unchecked, the system will apply the entire Institute rate as Unrecovered F&A.
• When the apply box for the overhead rate is checked, if the Applicable Rate is lower than the Institute Rate, the system will apply the difference as Unrecovered F&A. If the Applicable Rate is over the Institute Rate a negative, Unrecovered F&A is generated.
• The same conditions also apply to Cost Sharing amounts you enter.
When Unrecovered F&A is generated on a budget, you need to identify the funding source(s) for each period in the list on the Institutional Commitments > Unrecovered F&A screen.