Fixed-Price Residual Procedure

Effective Date: 2026/07/01
Latest Revision: 2026/07/01
Category: Research
Subcategory: Sponsored Programs Accounting
Approved By: Office of the Vice President for Research

Purpose

This procedure sets forth the steps to be taken and tools to be used in closing out fixed-price sponsored awards and managing any resulting surplus funds (residuals) in compliance with Cost Accounting Standards and federal cost principles.

Principal Investigators (PIs) and project administrators must develop accurate proposal budgets reflecting the actual costs necessary to complete the scope of work. When a fixed-price project concludes with a surplus, funds will be handled in accordance with sponsor terms or transferred to a university account.

Actions that may be taken include the following:

  • Charging all direct and indirect project costs to the fixed-price contract or grant index.
  • Assessing and recovering full Facilities and Administrative (F&A) costs on remaining funds using the full F&A rate at the time the award was originally received.
  • Allocating Net Residual Balances under 25% directly to a Principal Investigator (PI) unrestricted index.
  • Reviewing Net Residual Balances at or above 25% by the Fixed Price Residual Review Committee.
  • Allocating approved Net Residual Balances of 25% and over for the immediate unit leader determined use via an unrestricted index.
  • Redirecting unapproved Net Residual Balances of 25% and over to a central Office of Research unrestricted index.

Definitions

Definitions in this Procedure are outlined below:

  • Fixed-Price Residual: The unspent cash balance—calculated as total revenue collected minus total expenditures—remaining on a fixed-price award after all technical obligations are met and the project period has ended.
  • Facilities and Administrative (F&A) Costs: Indirect costs incurred by the university not readily identifiable with a particular project but are necessary to the general operation of the institution.
  • Net Residual Balance: The final amount of unspent cash remaining on a fixed-price sponsored project award after all project obligations are completed, all revenues are collected, and all full F&A costs have been calculated and deducted.
  • Principal Investigator (PI): Any Researcher who has primary responsibility within the University for the design, conduct, and reporting of research.
  • Researcher: Any person affiliated with USU whose role statement, job description, employment assignment, area of study, or function within the University, either in whole or in part, includes conducting research/creative endeavors or other activities overseen by the Office of Research. This includes faculty, professional research staff, research assistants, laboratory and clinical personnel, and others as may be designated by the Vice President for Research. Indicators that an individual qualifies as a Researcher include, but are not limited to, serving as an investigator or key personnel on proposals submitted to Sponsors (which can include instructional or other sponsored activities), submitting protocol applications to research oversight committees (e.g., Institutional Review Board, Institutional Biosafety Committee, Institutional Animal Care and Use Committee), and applying for or mentoring internally funded research/creative endeavors.
  • Fixed Price Residual Review Committee: A designated committee comprised of representatives from the Office of Research, the Sponsored Programs Office (SPO), and Sponsored Programs Accounting (SPA) tasked with evaluating net residual balances at or above 25%.
  • Unit Leader: For this procedure unit leader means a Department Head or Research Center or Institute Director 

Procedures 

Initiating Closeout

  1. Sponsored Programs Accounting (SPA) initiates the award closeout process within 30 days of the official project end date, provided all funds have been collected from the sponsor.
  2. The Principal Investigator (PI) completes and signs the Certification of Fixed-Price Project Completion Form, confirming all technical deliverables have been submitted to and accepted by the sponsor.
  3. The PI routes the completed form to the unit leader and Dean for review and signature.

Reviewing Financial Compliance

  1. SPA reviews all final expenditures to verify that project costs were allowable, allocable, and treated consistently.
  2. SPA verifies the calculation of the Net Residual Balance for accuracy.
  3. If a Fixed-Price Residual balance remains on the award, SPA calculates and applies indirect costs at the full federally negotiated F&A rate in effect at the time the project was initiated.

Allocating Residual Balances Under 25%

  1. SPA evaluates the remaining Net Residual Balance against the total revenue collected.
  2. If the Net Residual Balance is under 25% of the original funded amount, SPA automatically processes a transfer of 100% of the Net Residual Balance to an unrestricted index assigned to the PI.

Allocating Residual Balances of 25% and Over

  1. If the Net Residual Balance meets or exceeds 25% of the original funded amount, the PI must attach a brief written narrative to the Certification of Fixed-Price Project Completion Form explaining the variance between the initial project budget estimate and actual expenditures.
  2. The unit leader reviews the justification during the form routing process.
  3. Upon unit leader approval, the Certification of Fixed-Price Project Completion Form and justification are routed to the Fixed Price Residual Review Committee.
  4. The Fixed Price Residual Review Committee reviews the justification to ensure compliance with Sponsored Programs budgeting principles.
  5. Upon final approval by the Fixed Price Residual Review Committee, SPA transfers the Net Residual Balance of 25% and over to a departmental unrestricted index that can be utilized by the unit leader. 
    1. The unit leader retains absolute discretionary authority over the allocation and use of these funds successfully transferred to the Department Head's index to support departmental infrastructure or broader research initiatives.
  6. If the Fixed Price Residual Review Committee determines the variance justification is insufficient, the closeout package will be referred to the Vice President for Research (VPR) to initiate a collaborative review of the entire Net Residual Balance.
    1. The VPR, in consultation with the unit leader, may authorize a conditional approval to transfer the Net Residual Balance to the unit index. 
    2. The unit leader will have 30 calendar days from the date of referral to agree to the conditions in writing with the VPR.
    3. If an agreement is not reached within 30 days, or if the VPR identifies chronic over-budgeting or institutional compliance risks, the VPR retains final discretionary authority to direct SPA to transfer the Net Residual Balance to a central Office of Research account to support university-wide research initiatives.

History

2008/02/01: Procedure approved for implementation at time of publication of Policy 2.2.2.6

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