Contracts and Grants
Accounting
Program Income Procedures
Effective July 1, 2014
C&G Training Presentation
May 14, 2014
What is Program Income?
• Some sponsored activities generate income as a by-product of
the work performed. Federal regulations refer to this as
"program income.” Examples:
– Income from fees, such as registration fees
for conferences and workshops
Authority
to spend
– Fees charged for laboratory tests and analysis
– License fees and royalties on patents and copyrights
– Fees garnered from the use or rental of property
acquired using award funds
– Proceeds from the sale items fabricated using award
funds, such as software, CDs, tapes, or publications
Funds
from
Program
Income
Funds
committed
by Sponsor
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What is Program Income?
• When income is directly generated by a supported activity or
earned as a result of an award, that income is subject to the
terms and conditions of the sponsor and must be treated
according to the sponsor’s requirements
• Income generated by federally sponsored activities is
considered part of the award and must be spent on that award
– Funds generated on one award cannot be used on a different award
– Some NSF awards specify Program Income funds be spent first, i.e.,
before the sponsor is invoiced for expenses
• Program Income is “net” – the income generated covers the
costs incurred
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Types of Program Income
• Regardless of the type of program income, the funds
generated must be spent on the award
– Additive – program income funds are added to award funds, thus
increasing the amount available to accomplish program objectives
– Deductive – total funds available to the project remain the same and the
funds generated through Program Income are deducted from the financial
commitment of the sponsor
– Matching – program income funds are used to finance the non-sponsor
share of the award (mandatory or committed cost sharing)
– Add/Deduct – a portion of program income is added to the award funds
(up to a limit specified by the sponsor) increasing the amount available to
spend. The remaining program income is deducted from the sponsor’s
financial commitment.
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Additive Program Income
• Increases the total amount
available to spend
Authority
to Spend
$110k
Additive
Program Income
($10k)
Award
amount
$100k
Funds
committed by
sponsor
($100k)
5
Deductive Program Income
• Income earned reduces the
sponsor’s financial
commitment
• Total amount available to
spend remains the same
Award
amount
$100k
Deductive
Program Income
($10k)
Funds
committed by
sponsor
($100k)
($90k)
6
Matching Program Income
• Applies to cost sharing commitment,
not award amount
• Uses income
generated by award
activities as cost
sharing on the award
• Does not change the
University’s cost
sharing commitment
Award
amount
$100k
Cost
Share
amount
$25k
Matching
Program Income
($10k)
Funds committed
by University
($15k)
($25k)
Funds
committed by
sponsor
($100k)
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Add/Deduct Program Income
• Splits income between
additive and deductive per
sponsor’s requirements
• Increases the total amount
available to spend up to a
sponsor-defined limit
• Funds generated in excess
of the limit reduce the
sponsor’s financial
commitment
Authority
to Spend
$105k
Award
amount
$100k
Additive
Program Income
($5k)
Deductive
Program Income
($5k)
Funds
committed by
sponsor
($100)
($95)
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Accounting for Program Income
• As soon as you have identified an activity that will
generate income…
– Check your award documentation to determine the sponsor’s
requirement for tracking and using program income
– Notify CGA, and let them know the ChartFields (Fund, Dept, Program
Code, CF2) you will be using
– CGA will then create a specific CF1 value -- attributed “program income”
with SPO award number as the attribute value – for you to use
• For Matching Program Income, the CF1 value assigned will represent both
Program Income and Cost Sharing for the award (value begins with 2, has
two attributes)
– CGA will update the PC ChartField mapping table so the new CF1 will
function appropriately in BearBuy and BFS
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Recording Program Income
Expenses
• When making purchases and recording expenses related to
generating Program Income, use
– the appropriate expense account
– the C&G Fund
– the specific Program Income CF1
• F&A will be assessed on Program Income expenses at the
award funded rate
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Program Income Expenses
Sample Accounting Entries
Recording of the Salary Expense
BU
Account
Fund
Dept
Prg Cd
CF1
CF2
PC BU
Project
Activity
Analysis
Type
Amount
10000
50210
30451
30001
-
2P1000
CPFLD
GM100
10000012
01
ACT
100
10000
Cash
30451
00800
-
-
-
GM100
10000012
01
-
-100
Recording of the related overhead
BU
Account
Fund
Dept
Prg Cd
CF1
CF2
PC BU
Project
Activity
Analysis
Type
Amount
10000
57990
30451
30001
80
2P1000
CPFLD
GM100
10000012
01
SFA
50
10000
57998
19933
00510
80
2P1000
-
-
10000012
01
OFA
-50
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Recording Program Income
Revenue
• When recording Program Income, use ChartFields:
– Revenue Account 45050 (only for Program Income revenue)
– C&G Fund
– Program Income Attributed CF1
• If you will bill customers for program income, work with BPS and the
BFS BI/AR team to generate those invoices within PeopleSoft.
– BPS will create charge codes associated with a Program Income ChartString
– When the invoice is generated, Program Income revenue will be recorded
– Payments will be routed to and applied by BPS
• If you do not bill customers for Program Income, create a CDS entry
using the Program Income ChartFields listed above
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Program Income Revenue
Sample Accounting Entries
When an invoice is sent to the customer:
BU
Account
Fund
Dept
Prg Cd
CF1
CF2
PC BU
Project
Activity
Analysis
Type
Amount
10000
12303
30451
30001
-
-
-
GM100
10000012
01
-
300
10000
45050
30451
30001
-
2P1000
CPFLD
GM100
10000012
01
PRI
-300
10000
Cash
69995
00800
-
-
-
-
-
-
-
300
10000
12303
30451
30001
-
-
-
GM100
10000012
01
-
-300
CDS entry, when there is no customer invoice :
BU
Account
Fund
Dept
Prg Cd
CF1
CF2
PC BU
Project
Activity
Analysis
Type
Amount
10000
Cash
69995
00800
-
-
-
-
-
-
-
300
10000
45050
30451
30001
2P1000
CPFLD
GM100
10000012
01
PRI
-300
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Net Program Income
• The net of Program Income will be contributed to award
activities either as additive or deductive, per sponsor
requirements
Expenses incurred to earn
the Program Income
Use only Revenue Account 45050
to record Program Income
BU
Account
Fund
Dept
10000
45050
30451
30001
10000
50210
30451
30001
10000
57990
30451
30001
Prg Cd
CF1
CF2
PC BU
Project
Activity
Analysis
Type
Amount
2P1000
CPFLD
GM100
10000012
01
PRI
-300
-
2P1000
CPFLD
GM100
10000012
01
ACT
100
80
2P1000
CPFLD
GM100
10000012
01
SFA
50
Net Program Income
-150
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Contracts & Grants
Implementation Project
http://controller.berkeley.edu/departments/
contracts-grants-accounting
contractsgrants@berkeley.edu
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