Working with Foreign Currency-Based Research Funding

Transcription

1 Wrking with Freign Currency-Based Research Funding Overview Faculty at UfT will ften hld funding frm a spnsr utside f Canada, predminantly the US but als ther cuntries. Thse freign spnsrs require financial reprting in their wn currency. All restricted research funds at UfT perate in Canadian dllars. As a result, spnsr payments are psted t the research fund fllwing the Guide t Financial Management Plicy (GTFM) n currency exchange n freign awards. The Guide requires that research funds be established using the exchange rate in effect either the award start date r the date we received the first award installment, whichever ccurs earlier. Research expenses paid in a freign currency will be psted t the Fund in Canadian Dllars (CAD) using the prevailing exchange rate at the time f psting, except: when the research fund riginated in US Dllars (USD) and the expenditure ccurred in US Dllars, then the cnversin rate t use is the exchange rate used when the budget was created. The exchange rate will be nted n the Funded Research Digest (FReD). Sub-award payments in freign currency will be psted using the prevailing exchange rate at the time f psting, except: when the riginal research award is in US Dllars and the sub-award payment is als in US Dllars: the exchange rate t use fr the payment is the exchange rate used when the research budget was created. The exchange rate will be nted n the Funded Research Digest (FReD). when there is a pre-determined cmmitted freign currency amunt n sub-award agreement, and there is insufficient funds available in the research fund, please cntact the Directr f Research Accunting, Research Oversight and Cmpliance Office (ROCO) Fr yur reference, the General Ledger (GL) number t use fr sub-award payments is Financial reprts prepared t spnsrs fr research funds at the University f Trnt s (UfT) cnslidate the financial reprts frm sub-awardees. The sub-awardee s expenses are classified in the crrespnding expense categry that is required n the spnsr s financial reprt. The rest f this dcument expands n the infrmatin summarized abve using scenaris and questins and answers. Page 1 f 5

2 1) UfT s Plicy n the exchange rate t use when establishing research funds: (A) RULE: If revenue is received prir t the grant start date, then the CAD budget amunt in the research fund will reflect the amunt received in freign currency, multiplied by the exchange rate in effect n the date the funds are received by the University (i.e. depsited r credited t UfT s bank accunt). Nte: Mst, if nt all internatinal grant payments are received via wire transfer SCENARIO 1: Revenue is received prir t the grant start date and the exchange rate is higher than the exchange rate n the grant start date: UfT PI was awarded a Research Grant fr a ttal f USD 10, Grant start date was Jan. 1, 2018 when the exchange rate was $1.20 Spnsr payment fr the full USD 10,000 was received n Dec. 15, 2017, when the exchange rate was $1.25 The revenue recrded in the Fund will be CAD $11, and expense budget will be released in the amunt f $11, (B) RULE: If revenue is received after the grant start date, then the CAD budget amunt in the research fund will reflect the exchange rate in effect n the grant start date. SCENARIO 2: Revenue is received after the grant start date and the exchange rate n the day the funds are received is higher than the rate in effect n the grant start date UfT PI was awarded a Research Grant fr a ttal f USD 10, Grant start date was Jan. 1, 2018 and the exchange rate was $1.20 Spnsr payment fr the full USD 10,000 was received n Jan 15, 2018, when the exchange rate was $1.25 The budget amunt will be set up at CAD $ 11, and the revenue will be psted t the Fund using the exchange rate CAD $1.20 fr a ttal f CAD $11, Page 2 f 5

3 2) Psting expenses (including sub-award payments) paid in a freign currency frm a grant that was awarded in a freign currency 2.1 Research grant is awarded in USD and expenses are t be paid in USD When paying expenses in USD frm a USD currency based research fund, the exchange rate t use when psting the expenses will be the exchange rate used when the budget amunt was established in the research fund, based n the rule indicated in sectin 1(A). The rate is stated n the FReD. Differences that ccur are charged t the freign exchange gain r lss (FXGL) accunt managed by the Central Finance. 2.2 Research grant is awarded in USD and expense is paid in a freign currency ther than USD When paying fr expenses in a freign currency ther than USD frm a research fund that is based in USD, the exchange rate t be used is the prevailing exchange rate at the time f psting. SCENARIO 3: A Research Grant was awarded t a PI at UfT fr USD 10,000 n Dec. 15, The exchange rate used when the research fund budget was set up was $1.25 PI purchased equipment n Feb. 1, 2018 fr USD The cnversin rate as f Feb. 1, 2018 was $1.30. BUT the expense shuld be psted at the riginal exchange rate f $1.25 SCENARIO 4: A Research Grant in USD was awarded t a UfT PI fr USD 10,000 n Dec. 15, The exchange rate used when the research fund budget was set up was $1.25 PI purchased equipment n Feb. 1, 2018 fr EUR $ The expense will be psted t the research fund using the prevailing EUR $ exchange rate n f Feb. 1, ) Psting freign currency expenses t a research fund issued t the University in in Canadian Dllars (e.g. Tri-Agency funds): When purchasing expenses in a freign currency frm a Canadian dllar-based research fund, use the prevailing exchange rate at the time the invice is psted. Fr further infrmatin, please refer t the GTFM purchasing and payments sectin. Page 3 f 5

4 4) Sub-grants (als knwn as Sub-awards) a) Hw d we handle sending funds t ther cuntries frm a CAD-based research fund? Fr Sub-award cheque payments, expense reimbursements, r wire transfers t anther cuntry in freign currency frm a Canadian-dllar issued research award, use the current exchange rate (rate at the time f purchase). When there is a pre-set cmmitted freign currency amunt indicated n the Inter Institutinal Agreement (IIA), and there is insufficient CAD funds t pay this amunt at the current exchange rate, please cnsult with ROCO fr supprt in prcessing this subaward payment. b) Hw d we handle sending funds t ther cuntries frm a freign currency-based research award? Fr Sub-award cheque payments, expense reimbursements, r wire transfers t anther cuntry that are paid in a freign currency frm a freign currency based research fund, use the current exchange rate (rate at the time f purchase). The nly exceptin t this rule is if the grant is funded by the Spnsr in USD and the payment t the sub-awardee will be in USD; in this case, the exchange rate used t set up the budget in CAD can be used t prcess these payments. When there is a pre-set cmmitted freign currency amunt indicated n the Inter Institutinal Agreement (IIA), and there is insufficient CAD funds t pay this amunt at the current exchange rate, please cnsult with ROCO as t hw t prcess this sub - award payment. c) What sub-award line item and GL number will be used when paying invices t the sub-awardee? If a sub-award budget was set up n the research fund, then the invice r sub-award payment will be psted t the sub-award budget line item. The GL number t use is If n sub-award budget was set up n the research fund, then the sub-award invices will be paid ut t the specific budget line item. The GL t use will depend n the line item t which the budget was allcated. Page 4 f 5

5 5) Financial reprting cnsideratins a) Hw des Research Accunting reprt t Freign Spnsrs? Financial reprts are prvided t the Freign Spnsr in the currency they require. The Canadian expense pstings are cnverted t the freign currency, using the freign exchange rate used t set up the budget in the research fund. b) Hw are sub-award expenses reflected n the Spnsr s financial reprt? Fr research funds with sub-award budget line items, sub-award expenses are classified t the crrespnding expense categry required n the Spnsr s financial reprt. Nte: If there is uncertainty abut which freign currency rate t use, please cntact VPRI staff (Research Funding r Partnership Officers/Managers/Directrs and Research Financial Reprting and Audit Directr). Please refer t the GTFM plicy fr purchases in freign currency wrth CAD $200, r mre. Page 5 f 5