This procedure is written in response to the 2019 Internal Audit of UALR Budget Controls to meet recommendation 10.  The recommendation states “Identify a solution for budgeting multiple-year grants that correctly assigns budget amounts to the appropriate fiscal year.”

In most cases, restricted revenues are directly correlated to grant and contract expenditures, many of which are unknown when developing a new fiscal year budget.  Because of this, known grant revenue and expenses will be budgeted in their specific funds and “balancing funds” will be used to budget for revenue and expenditures that are unknown but expected based on historical trends.  The following steps will be taken to correctly assign budget amounts to the appropriate fiscal year.

For development of the new fiscal year budget:

  • Because grants and contracts don’t follow a fiscal year, and instead are awarded based on a project period, it is reasonable to expect that funds would carryforward from the old fiscal year to the new fiscal year. The Office of Research and Sponsored Programs (ORSP) will work with program directors/principal investigators to provide their best estimate of annual expense on projects that have carryforward balances from prior years and budget what is anticipated to be used in the upcoming year. These carryforward balances will be included in the new fiscal year budget submitted to the board.
  • ORSP, with the assistance of the Budget Office (as needed), will project revenues and expenditures for restricted funds for the upcoming 12-month fiscal period based on historical trends and analysis.
  • Using the balancing funds for each type of grantor (i.e., Federal, State and Other), the projected revenues and expenses will be budgeted, net of the carryforward amounts from the prior fiscal year.
  • Balancing funds may be budgeted with a positive or a negative balance based on the level of expected activity from the historical analysis and the amount of carryforward from existing projects.

During the fiscal year:

  • As new awards are received, ORSP will continue to budget restricted funds based on the official award notification. This enables the principle investigator on the grant to utilize the funding in support of the research when needed to stay in scope of the project.
  • Monthly, the balancing funds will be adjusted for new awards established during the month to keep the integrity of the fiscal year budget and the net position of the institution intact.

Source documents for all revenue other than that for the balancing funds will be directly from grant and contract awards.  This is one area where source documentation will be retained in ORSP and not the budget office.