Research Grant — Indirect Cost Recovery (Overhead)
Recovering a negotiated overhead percentage on a research grant.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Grant Receivable (Indirect Cost) | Asset (+) | 15,000.00 | - |
| Indirect Cost Recovery Revenue | Revenue (+) | - | 15,000.00 |
💡 Accountant's Note
Institutions negotiate Facilities & Administrative (F&A) rates with grant agencies. This overhead recovery offsets the real cost of housing and supporting research activities.
Practitioner & Systems Framework
💻 ERP Architecture
Indirect cost recovery (ICR) is calculated automatically by the grants management module as a percentage of qualifying direct costs (the ICR base). The negotiated F&A rate is configured in the system per sponsor category (federal on-campus, federal off-campus, industry, non-profit). ICR revenue is recognised as the direct costs are incurred and the overhead is applied. For federal grants (in the US), the F&A rate must be negotiated with the cognizant federal agency and renewed periodically. The ICR revenue line in the GL is often a significant unrestricted revenue stream for research-intensive institutions.
⚠️ Audit Flags
Auditors verify that the ICR rate applied matches the current negotiated rate agreement (NICRA for US federal grants) or the sponsor-approved rate. Confirm that the ICR base (qualifying direct costs) correctly excludes non-applicable costs (equipment, subcontract amounts above the threshold). Test ICR receivables for timely billing and collection. For US institutions subject to OMB Uniform Guidance, auditors verify that ICR rates are calculated in accordance with the approved methodology.
📄 Required Documentation
Negotiated Indirect Cost Rate Agreement (NICRA) or sponsor-approved rate, ICR calculation workings showing base and rate, grants management system ICR report, ICR receivable by grant and sponsor, annual ICR rate proposal submitted to the cognizant agency, and actual vs. budgeted ICR analysis.
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