Indirect costs and Grants Management

[atif_farooq]

Hi:

At client side we have a project sponsored by one sponsor with a amount and validity 3 years from onwards. The project is multipurpose , like trainings, research..Now under one one project we have around 80 trainings and 20 Research assignments .For each training/research program there are certain direct cost that can be directly identified for every projects however some costs like staff salaries , utilities e.t.c can not be directly assigned to every training program.They need to be allocated at month end to all trainings in progress. As of budgeting the above in GM i have following idea

1..Create sponsored program for every training or research program that start..

2..There will only be on grant master that will incorporate all sponsored programs and sponsored classes(client not agreeing to open multiple grant)

3..Distribute the whole budget over desired sponsored classes for every sponsored program and post.

In above i have a question, there are sponsored classes which are of indirect cost nature like salaries, how do i account for these in GM..In GM i have tried using IDC rules and posted budget with an IDC share of cost to relevant sponsored class as maintained in customizing but i am not clear what is the next process...Executing GMIDCPOST results in nothing...

How will indirect cost be allocated through CO , it means entry need to be posted in FI for IDC cost ..deriving IDC cost sponsored class and then later on allocating... . Please guide.

Regards

[sjajodia · Accepted solution]

Atif,

GMIDCPOST calculates indirect cost by applying the IDC rate associated with each direct cost sponsored class to the actual expenditures posted to the direct sponsored class. The result is posted to the grant using an FI document with debit to the indirect cost sponsored class in the external fund and credit to the indirect cost sponsored class in the internal fund.

The prerequisites include configuration of IDC Rules (Liabilities = Accrual Basis Expenses), the Credit GL Account, GL Account for Cash Transfers between funds, etc.

Thanks

Shyam

[atif_farooq]

Hi Shyamal:

With your suggestion my issue has been resolved and i am able to post financial entry in GMIDCPOST. However entry generated lookd pretty odd to me. What should i do of revenue account here, i mean to say why is revenue account require when debiting an expense. Please see screen shot

There were two entries posted consuming grant budget now expense has been debited , now what is the next the process, what will become of revenue ?

Please guide.

Regards

[sjajodia]

Atif,

The revenue represents indirect cost recovery (credits) in the internal fund. In the external fund you will see indirect cost expense. This allows the internal fund to pay for the actual indirect costs. All expenses (direct and indirect) will be billed to the sponsor generating total grant revenue.

Thanks

Shyam

[atif_farooq]

Hi:

Thanks for your reply but please tell how IDC calculation in GM is relevant with my scenario, which is allocation of Indirect costs, assume i have a SP XYZ, and 3 Sponsored classes A,B,C. A is IDC relevant. I create a Grant with budget posted these sponsored class, program and fund. For sponsored class A i given 100 percent as IDC relevant , now system will post all cost of main Sponsored class to IDC Expense GL. From the cost posted to this GL against some real IO i want to allocate all of its cost to IOs, does this hold true ?

Regards

[Former Member]

Atif,

Please read the link below (pay attention to the section 'Purpose')::

http://help.sap.com/erp2005_ehp_06/helpdata/EN/af/222a3b770ec45de10000000a11402f/content.htm

When translates to your scenario, it means that you post your payroll cost to cost centers / internal funds and based on the agreed upon rate, you run this IDC transaction to apply the overhead from cost center / internal fund to external fund.

Regards,

Ming  

[Former Member]

Atif,

You might want to check with your client whether all types of labor cost are indirect. I believe certain types of labor cost are direct. They are posted to WBS/order through activity allocation. When users enter their time sheet, they specify hours and CO object. CAT7 will transfer activatity cost from cost center to WBS/order. Payroll run will post the actual cost to cost center. In the US, it is a GM legal requirement to substantiate this part of the labor cost.