• Section 1 - Summary
• Section 2 - Scope
• Section 3 - Policy/Regulation
• Section 4 - Procedures
• Part A - Summary of Roles and Responsibilities
• Part C - Treatment and Distribution of Indirect Costs
• Management of Research Cost Centres Procedure
• Section 5 - HESF/ASQA/ESOS Alignment
• Section 6 - Definitions

Section 1 - Summary

(1) This Procedure:

1. provides a consistent and transparent process for the treatment and distribution of Indirect costs (also known as University Overheads) arising from awarded research projects, contracts and commercial research activities, aligned with Victoria University’s (VU) Research Costing and Pricing Policy.
2. addresses VU’s contractual, compliance and audit obligations around external research funding, and ensuring alignment with the VU Research Funding Strategy, the Financial Code of Conduct Policy and accounting principles, and provide a framework for prudent and efficient financial and project management of internal and external funds and cost centres within the University.
3. provides a framework for regular and timely review of cost centres and outlines the process for the identification of inactive accounts, the closure of research cost centres and the dispersal of indirect costs and residual fund balances, as well as the treatment of fund deficits.

Section 2 - Scope

(2) This Procedure applies to:

1. All academic staff, adjuncts /honoraries /affiliates undertaking research on behalf of Victoria University;
2. All externally funded research projects, contracts and commercial research activities;
3. All external research cost centres; and,
4. All internal research cost centres.

Section 3 - Policy/Regulation

(3) Research Costing and Pricing Policy

Section 4 - Procedures

Part A - Summary of Roles and Responsibilities

Part B - Principles

(4) This procedure outlines the process: 

1. For the distribution of indirect costs recovered from externally funded research projects, contracts and commercial activities undertaken by VU staff; 
2. For the management, review and closure of research cost centres, both internal and external; 
3. For providing access to any residual funds from externally funded research projects (after all Direct and Indirect costs are deducted) and after any required acquittal has been completed and accepted by the Funder; 
4. To ensure residual funds are redistributed to the appropriate organisational unit, or back to the external funding body as required; 
5. For the approval and the dispersal of any residual research funds in a timely and transparent manner to advance research at Victoria University; 
6. Where residual funds exist at the completion of a research project, the funds may be accessed or redistributed in accordance with requirements set out in this procedure; 
7. Where there is a deficit identified the requirements to balance/offset from another fund /cost centre is set out in this procedure. 

Part C - Treatment and Distribution of Indirect Costs

(5) In accordance with the Costing and Pricing Policy all research and commercial and consultancy projects should adopt the principles of Full Costing:

1. Indirect costs (or University overheads) where included will be recovered from the awarded funds at the commencement of the project set up, and at the start of each year (if multi annual funding is awarded).
2. The Indirect costs recovered from grants will be transferred to the Strategic Research Investment Fund (SRIF) managed by the Deputy Vice-Chancellor, Research & Impact for use /re-investment in research activities as prescribed in the Research Funding Strategy.
3. The Indirect Costs from Commercial /Consultancy activities will be split in the following proportions:
   1. 50% will be allocated to SRIF
   2. 25% to the relevant Institute /Centre’ nominated account, and
   3. 25% to the Lead CI in a separate fund 61 account - these funds must be spent once transferred within a 12-month period and according to an approved plan.  

Management of Research Cost Centres Procedure

Identification of residual research funds – externally funded research projects (fund 60):

(6) The VU Finance team will determine whether there are any residual /unspent funds at the conclusion of an externally funded research project, after the grant/contract end date, or within a period of up to 12 months after the final report/milestone completion. The identification of residual funds procedure is as follows:

1. Finance will confirm with the Chief Investigator in writing that the research project has been completed and all contractual reporting milestones have been met;
2. Finance to check with CI that all direct and any Indirect costs (also known as university overheads/ infrastructure charges) have been expended or recovered and are compliant with external funding guidelines. The costing model and calculations will be accessed to verify the project budget;
3. Finance will calculate the final balance of the fund and send the draft acquittal report to the Chief Investigator to review and confirm, Finance to complete the external acquittal, if required;
4. Finance to confirm with the CI where there is no requirement in the contractual agreement to return any of the unexpended funds to the funding body.

(7) Subject to completion of Clause 6 (a-d) above, the allocation /dispersal of residual funds and the management of deficits from Fund 60 accounts will be as follows:

1. Where the final balance is in deficit for a Fund 60 project, an alternate cost centre within the same fund type should be identified and checks undertaken to ensure there is no impediment to transfer and balance off the deficit. If there is no such fund under the CI’s name or portfolio of funds, then an alternate appropriate Institute, Centre or College fund must be identified and used to cover the deficit.
2. Where the final balance for external research project funds is confirmed by Finance to be positive, that the project has been fully costed, and the balance is less than $5,000, then the residual funds can be returned to the Chief Investigator, providing that all other external fund/cost centres under that CI’s management have positive balances. If there are deficits identified by Finance in other of the CI’s project accounts, then the residual funds should be used to offset this fund first. After the above checks have been undertaken and upon the production of an expenditure plan, the following procedures will apply:
   1. Upon approval of an expenditure plan by the relevant Institute or Centre Director (using the approved one page template) for the use of the residual funds, Finance will facilitate the transfer of the approved residual funds balance to a newly created (fund 61) cost centre for researchers to use in accordance with the expenditure plan for a period of up to 12 months.
   2. All expenditure must be made in accordance with the proposed expenditure plan, supporting research activities and in accordance with the Institute, Centre or College budget parameters set out by the relevant College, Institute or Portfolio.
   3. All research undertaken using the residual funds must be consistent with the requirements outlined in the NHMRC Responsible Conduct of Research Code.
   4. Finance will close the fund at the conclusion of the prescribed period, as set out in the approved expenditure plan.
   5. At the conclusion of the expenditure plan any surplus funds, or residual amounts, will be recovered and transferred to the Strategic Research Investment Fund (SRIF), for use /re-investment into research activities, as prescribed in the Research Funding Strategy.
   6. Where the Chief Investigator resigns from the University and does not continue to hold an adjunct position or honorary position, any residual funds will be recovered and transferred to the SRIF, managed by the Research and Impact portfolio (see v. above).

(8) Where Finance confirms (through Clause 6a-d) the Final balance is positive, that the project was fully costed and exceeds $5000, and the Lead CI has no other cost centres in deficit, then the following procedure will apply:

1. The balance of the residual project funds will be distributed in the following proportions:
   1. 25% to the Lead CI (upon production of an approved expenditure plan);
   2. 25% to the relevant Institute/Centre to support strategic research activities, and
   3. 50% will be transferred to the SRIF for use /re-investment in research activities as prescribed in the Research Funding Strategy.

Internal cost centre management (fund 61 and 62)

(9) Every internal cost centre related to research will be monitored and a report sent by Finance to the account holder on a monthly basis to assist in the prudent management of expenditure.

(10) In November each year all internal cost centres (fund 61 and 62) will be reviewed by Finance (in consultation with the DVCRI portfolio), and if there has been no activity for the previous 12 months, the account holder will be notified that the fund will be closed at the end of the year, and any surplus funds will be transferred to the SRIF.

Section 5 - HESF/ASQA/ESOS Alignment

(11) HESF: Standards 4.1 Research; 6.2 Corporate Monitoring and Accountability.

Section 6 - Definitions

(12) Direct Costs: Cost that can be easily attributed to a specific research project and would not have been incurred if the project was not undertaken. These include but are not limited to: salaries (including salary oncosts), subcontractor costs, consumables, materials and supplies (including laboratory supplies and animals), project specific equipment, and travel and other fieldwork expenses.

(13) Full Cost: The full cost of completing the (research or consultancy) project. This should include both the Direct and Indirect costs associated with completing the project.

(14) Indirect Costs: Also known as overheads, are costs borne by the University in carrying out its business, to deliver research but are not directly attributable to the research project. These include but are not limited to: office space, information and communications technology, equipment and support; services such as research administration, P&C, IT, legal, security, finance and insurance; and other University costs such as management, shared buildings, grounds and utilities.

(15) Pricing: Pricing is the process of determining the amount of money that is charged for a product or service. It involves setting a value (“Final Price”) based on various factors such as costs, market demand, competition, and perceived value and may not always reflect the actual cost of producing or delivering the product or service.

(16) Research: As defined in the Commonwealth’s Higher Education Research Data Collection specifications as amended from time to time.

(17) University Costing Model: Costing tool that accurately estimates and calculates costs associated with research projects and consultancies to provide a comprehensive breakdown of expenses, both Direct and Indirect, required to conduct a specific research project or consultancy, and facilitates pricing decisions.