Foreign Currency Procedure

A. Proposal Development 

• During the proposal development process, the OCG Proposal Analyst will work with the PI and department to develop and review the budget. As a line item in the budget, a foreign currency reserve will be included.
• Historical information indicates that the average foreign currency variation for sponsored projects has been 15%. The OCG Proposal Analyst will include a line item for a foreign currency reserve of at least 15% of total project costs, dependent on sponsor allowability. (For some projects, a higher reserve amount may be needed).
• Bank transaction costs of $50 a month will also be budgeted dependent on sponsor allowability. If payment is known to be less than monthly, then the cost will be reduced accordingly.
• Prior to submission, the department chair, or a similar authorized official, will be required to submit a signed and completed Foreign Exchange Risk Acceptance Form. 

B. Award Negotiation/ Acceptance 

• During the award negotiation, the OCG Award Officer will attempt to negotiate favorable language for the University related to foreign currency exchange. Such language may include payment in U.S. dollars (removing the award from the foreign currency procedure), advance payment of all funds, or an accelerated payment schedule to reduce the risk, and sponsor assumption of the risk where an increase in the foreign currency costs relative to the U.S. dollar would result in an increase in the award value.
• If the sponsor is unwilling to accept this risk, the OCG Award Officer will rely on the completed Foreign Exchange Risk Acceptance Form. On the form, the department will need to provide a SpeedType that will be charged at the end of the project if the foreign currency reserve is insufficient or if the cash receipts do not match the expenditures.
• If the award budget does not include the foreign currency reserve, an internal revised budget including the reserve will be required. The revised budget, including the reserve, will be used in instances where foreign currency exchange rates would otherwise represent a potential financial loss for the University. The Officer will work with the PI and department to make the adjustment. 

C. Award Management/Completion

• InfoEd will reflect the awarded budget in USD including a line for foreign currency contingency budget in account code 960510. Direct and indirect budgets will be reduced accordingly to cover the foreign currency contingency amount, not to exceed the total funded amount. (Note: percentage of contingency may be adjusted depending on specific foreign currency.) 

• The foreign currency reserve will be recorded in PeopleSoft using the account code 960510. A credit line in the budget for the amount in account code 960510, and the two accounts will net to zero. Please note 960510 is a budget code that is not reflected on the sponsored award document.  The value in InfoEd will be the authorized award budget value in USD at the time of award or modification, and it will be the starting value in PeopleSoft. See table 1 below:  

  
• RFS will communicate with the department regarding cash receipts and the impact on foreign currency fluctuation. Adjustments to the overall budget will be made based on the amount of the payment received. RFS will work with the department to determine the adjusted budget amount for each payment received. RFS will enter the adjustment, and the budget update will be reflected in the m-fin financial reports.
  • The budget will be adjusted when the actuals received are greater or less than the budgeted amount. For example, if the budgeted amount is 10,000 euros at $7,500, but the invoiced amount for 10,000 euros results in actuals of $5,000, the reserve will be decreased by $2,500.
• Once the award period of performance has ended, the RFS team will conduct a final review of expenditures, budget modifications, and cash received following our final review and closeout procedures. Final expenditure and budget adjustments will be made at the time of closeout. Unused contingency funds would be used to support the project. In the event of favorable currency fluctuations, unless the agreement terms stipulated those funds should be returned, additional funds would also be used to support the project.  
• Any funds on a fixed price award that may remain due to favorable currency fluctuations after the project has been completed and the agreement has been closed out will be retained by the Department as residual funds (direct portion only), unless the agreement terms stipulate otherwise.
• Any funds on a cost reimbursable award that may remain due to favorable currency fluctuations after the project has been supported and the agreement has been closed out will be addressed as identified within the award document. Any residual funds that may be retained by the department will be transferred to an unrestricted speedtype (direct portion only). 

This process will be followed consistently for Cost Reimbursable and Fixed Price awards.