# Foreign Awards Paid in Foreign Currency Guidance ## expand\_more - Effective Date: December 2018 - Responsible Office: Office for Sponsored Programs - [PDF version of Guidance for Foreign Awards Paid in Foreign Currency](/sites/g/files/omnuum12866/files/office-for-sponsored-programs/files/foreign_awards_paid_in_foreign_currency_guidance_december_2018.pdf "foreign_awards_paid_in_foreign_currency_guidance_december_2018.pdf") ## Reason for Guidance At times, the University is unable to negotiate payment from foreign sponsors in U.S. Dollars (USD). In those instances, it is recommended that school/tubs consider obligating such awards at 90% to accommodate potential foreign currency fluctuations that occur over the life of the award. This guidance outlines a process to manage foreign currency fluctuations in order to minimize cash losses. ## Who Must Comply This guidance is applicable to all Principal Investigators (PIs) and administrators at the University within all schools, units, divisions, University-wide initiatives, and centers, who are involved with the initiation, administration, and conduct of sponsored awards. ## Roles and Responsibilities Foreign currency obligation responsibilities are shared amongst the following: ### PI & Department/Local Level Managing Unit - Develop detailed budgets and budget justifications as required for proposal submission to the sponsor in USD. - If it is known that the award will be awarded in a foreign currency, use [OANDA ](https://www.oanda.com/)for historical exchange rates and trends in order to develop an accurate budget that accommodates foreign currency fluctuations. - Manage spending to be in-line with obligated amount; monitor updated action memos that de-obligate the award if cash payments are less than anticipated ### School/Tub - Facilitate regular monitoring of awards in the departments/local level managing units - Work with PIs and departments to resolve issues on awards that result in a loss due to a foreign exchange fluctuation ### Office for Sponsored Programs (OSP) / Harvard Medical School (HMS) or Harvard T.H. Chan School of Public Health (HSPH) Office for Research Administration (ORA) - Negotiate foreign awards in USD; if unable, then work with sponsor to establish favorable award terms to minimize any loss from foreign currency fluctuations - When award comes in, depending on payment schedule, obligate at 90% - OSP Research Finance responsible for notifying ORA or OSP when a payment is less than the anticipated amount on a quarterly basis - OSP and ORA to de-obligate an award to account for cash losses due to foreign currency fluctuations ## Procedures The following procedures outline the process for obligating awards received in foreign currency. ### Proposal Process If it is known at proposal stage that a foreign sponsor will not pay in USD, then the department/local level managing unit should work with ORA and OSP on the best way to develop the proposal budget to accommodate foreign currency fluctuations. ### Award Initiation OSP or ORA will make all attempts to negotiate a sponsored award with the following terms: - Award stipulates payment in USD. - If USD is not feasible, then the highest advance payment amount will be requested in order to better manage the fluctuations. - A frequent, at least once quarterly, payment schedule will be requested. - If the sponsor will not provide an advanced payment and/or negotiate a frequent payment schedule, OSP/ORA will attempt to negotiate a firm, fixed price award. OSP/ORA will obligate the entire year at 90% to account for any currency fluctuations that may arise between the award start date and the first payment date. - Any associated subawards will be initiated at the adjusted amount. ### Award Management - On a quarterly basis, OSP Research Finance will submit requests to OSP/ORA to adjust the obligated award amount in GMAS to reflect the actual USD received to date (any change >USD$250). - As award modifications are received by OSP/ORA, obligations are calculated based on the most recent foreign currency conversion ([OANDA](https://www.oanda.com/)). - Subawards can be awarded, at the discretion of the school and the PI, at 90% ### Award Closeout OSP Research Finance will ensure that income matches expenses. - Any over-expenditure due to the foreign currency fluctuation beyond what was obligated will be the responsibility of the PI/department/local level managing unit. - If income exceeds expenses due to favorable currency fluctuations, then the income will be moved to a non-sponsored fund in compliance with sponsor award terms and school/tub level policies. ## Additional Resources - [Fixed Price Award Residual Balance Transfer Form](/links/fixed-price-residual-balance "Fixed Price Award Residual Balance Transfer Form") ## Related Policies and Documents - [Fixed Price Residual Balances Guidance](/guidance-fixed-price-sponsored-awards "Fixed Price Residual Balances Guidance") - [Sponsored Financial Reporting and Closeout Policy](/sponsored-financial-reporting-and-closeout-policy) - [Sponsored Expenditures Guidelines](/sponsored-expenditures-guidelines) ## Definitions ### Fixed price sponsored award ### This type of agreement requires the University to successfully perform the work and deliver the product for a price agreed to up front. ### Residual Balance (Unexpended funds) The unspent balance of obligated funding portion of sponsored award. ### Sponsored award Funding arrangement in which the University is providing a return benefit to, or agrees to provide a defined deliverable or complete a set of activities for, the sponsor in exchange for the funds, regardless of whether the funding instrument is designated a contract, cooperative agreement, grant, consortium agreement, or otherwise. ## Revision History December 2018 - New guidance released See also:- [ F ](/alpha/f) - [ Policies ](/page-type/policies) - [ Foreign Awards ](/policies-guidance/foreign-awards) - [ Foreign Currency ](/policies-guidance/foreign-currency) - [ Monitoring Expenditures ](/policies-guidance/monitoring-expenditures)