Net Zero Costs in PPM. What They Are & Why They Matter?

Cost Transfers 101 and Net Zero Costs. Summary

  • A cost transfer is the process of moving a transaction (the financial record) from one funding source (e.g., a specific grant (PPM) or departmental account (COA) to another after the initial transaction has been recorded.
  • When you initiate a cost transfer, you are creating an offset transaction in the original location (zeroing out the expense) and generating a corresponding, consistent transaction in the destination location, effectively relocating the expense’s financial record.
  • Before transferring a cost check to see if there’s an equivalent opposite polarity cost (either negative or positive) that has the same Expenditure Type and Item Date. If such a cost exists, it might be a Net Zero transaction and thus not transferrable. See the ‘Identification of Net Zero Costs’ below on how to confirm for sure if it is or is not?

Maintaining Financial Compliance

Administrative staff engaged in project financial management occasionally need to adjust and transfer project costs. However, a specific transaction type—the Net Zero Cost—is systematically restricted from further transfers or manipulation.

This restriction is not a system error; it is a critical automated safeguard. The principle of the Net Zero Cost ensures that the Project Portfolio Management (PPM) subledger maintains absolute synchronization and balance with the General Ledger (GL). Identifying the Net Zero Item flag is essential for administrative efficiency, as attempting to adjust these items will result in immediate system rejection, confirming that the transaction’s accounting role has already been fulfilled as a cancellation record

The Three Part Transaction Model

A Net Zero Cost transaction is a specialized, negative accounting entry generated automatically by the system to execute the formal reversal of a prior expenditure item. Its function is cancellation; it does not represent an actual, allocable expense.

Cost corrections in PPM always utilize a three-part transaction model :

  • Original Cost: The initial expense containing the incorrect allocation.

  • Reversal Cost (The Net Zero Item): The negative entry that mathematically and functionally cancels the Original Cost.
  • New Cost: The corrected charge applied to the appropriate project elements.

The Net Zero Item attribute is the field that explicitly identifies the Reversal Cost as True. This confirms that the transaction is the necessary offset, designed to create a zero balance for the pair.

Net Zero Costs cannot be transferred because they are defined as reversed expenditure items and are explicitly disallowed from further adjustment.

Protecting the Audit Trail

The Net Zero transaction’s sole purpose is cancellation. If a transfer were permitted on the Net Zero transaction, the original charge would become effectively uncanceled at its source. The transfer is rejected to maintain the integrity of the audit sequence, as the Net Zero entry is the immutable record linking the cancellation back to the original source charge. Disruption of this linkage results in the system issuing a mandatory rejection message stating that adjustments are not allowed on a reversed expenditure item.

Identification of Net Zero Costs

Right now, there’s only one place in iO where you can confirm the status of a transaction relative to it being part of a net zero pair.

Go to Grants Management/Awards

Click on the Page icon on the right of the page

Search for the award that contains the project that contains the cost. Click on the drop down next to the project that contains the cost. Select Manage Project Costs

If this is the first time that you’ve ever looked at this Project Costs view, you may need to ensure that the net zero column is selected.

When examining the row with the cost that you are considering transferring, you can see the net zero column that indicates if it is or isn’t a net zero transaction.

When you see an x, it is not a net zero transaction and is transferrable. If you see a tick mark, it is a net zero transaction and it is not transferrable.

Enhancement to Project Cost and Revenue Accounting at Rice (for Service Centers and Auxiliaries)

RCA are rolling out important, mandatory updates to how service centers and auxiliary units charge costs to sponsored projects and faculty funds, and how the corresponding revenue is recorded. These changes are the result of work by the Service Center Task Force and are designed to prevent transaction errors, eliminate duplicate entries, and significantly simplify your monthly and period-end reconciliation processes.

Please read this communication carefully, as these new protocols are effective immediately.

1. The Core Change: Two Distinct Accounting Paths

The biggest change involves separating transactions into two distinct methods based on where the cost is being charged (the destination).

Scenario A: Cost to a COA (General Ledger) String

  • Destination: General Ledger (Chart of Accounts – COA)
  • Method: FBDI (File-Based Data Import)
  • Rule: The FBDI template must only be used for COA-COA transactions. This includes both cost transfers and the traditional cost/revenue accounting where the cost and the corresponding revenue are recorded as two separate lines within the COA.

Scenario B: Cost to a Project/Task (Sponsored Project or Faculty Fund)

  • Destination: Project Portfolio Management (PPM – Project/Task)
  • Method: New ADFdi (Application Desktop Integrator) Tool
  • Rule: This is the new, all-in-one method. Using the dedicated ADFdi tool will now automatically:
    1. Generate the cost to the specified Project/Task.
    2. Simultaneously and automatically record the corresponding revenue to your service center or auxiliary unit.
  • Crucial Note: FBDI templates can no longer be used to create GL costs or revenue relative to any PPM/Project transactions created (using 1087 account code). Any FBDI submission that attempts to record revenue or a cost transfer to a Project/Task (1087 account code) will be rejected by General Accounting.

The ADFdi method ensures that the cost and its corresponding revenue are successfully linked and posted together, which is the key to accurate and easy reconciliation.

2. Introducing the Pre-Submission Validation Tool

To ensure a smooth transition to the new ADFdi process (Scenario B), we’ve incorporated a powerful pre-submission validation tool directly into the template. Before you attempt to post a transaction, the tool will perform critical checks, including:

  • Period of Performance: Verifies the transaction date is within the eligible project period.
  • Task Number Viability: Confirms the Task number is valid for the selected Project or Faculty Fund.
  • Project Status: Checks that the Project is Active and not Closed.

This validation will save your teams significant time by catching common errors before a failed posting attempt, allowing you to quickly communicate accurate information to your customers.

3. Training and Next Steps

We understand these are significant procedural changes.

An introductory training session will take place via zoom on October 15th at 11am.

[EDIT – see video recording of this session]

This change is going to primarily impact Service Centers (SEA, Chem Stockroom etc.) and Auxiliaries (Housing & Dining, Post Office etc.) but attendance is not limited. All are welcome.

Following this zoom training, there will also be an in person training session in Moody 205 (11.30-13.00) where we will do a walk through of the new ADFdi template, submission process, and validation tool. Details on this training will be added to this post, and communicated via the research-l listserve as soon as they are known.

If you have an urgent need to use the new ADFdi template to generate a cost/revenue transaction in the next two weeks, please reach out to James Hayward (jth6) in the Controller’s Office for assistance. Otherwise, please save your questions for the scheduled training session.

Thank you for your cooperation as we implement these necessary controls for more accurate and efficient accounting at Rice.

Upcoming Changes to Internally Funded Projects (Cost Share)

Overview of Changes

Effective July 1, 2025 (FY26), we’re changing how we account for certain research awards to improve tracking. Instead of using the single 012000 (Internal Projects) fund source, new projects will use specific, dedicated fund sources that better reflect their purpose.

Here are the new fund sources:

  • 012100 for Cost Share projects
  • 012110 for Deficit Projects
  • 012120 for Salary Cap Projects
  • 012130 for Interest Earned Projects

This means that a new Cost Share project, for example, will now be set up with its own fund source: 012100.

Impact on Current Projects

The new fund sources apply only to projects with a start date of July 1, 2025, or later. Projects created before this date cannot be converted.

To ensure consistency, Research and Cost Accounting will take the following steps for all 59 active awards with an existing cost share component:

  1. A new project with the 012100 fund source will be created for each affected award.
  2. The project number for this new project will be communicated to the Project Manager (PM) and the Principal Investigator (PI).
  3. Any costs posted to the old project on or after July 1, 2025, will be transferred to the new project.
  4. The old project will be closed.

It’s important to remember that for reporting purposes, you will need to consider the budgets and costs of both the old and new projects together. Both projects will be accessible within the same award for easy data retrieval.

Project Transition & Budget Management

The old “Internal” cost share project will remain open until its award closes or until September 30, 2025, whichever comes first.

  • All cost transfers related to the old project must be completed and posted in iO before the project closes.
  • Once the old project is closed, its budget balance will be calculated. If the balance is negative, the project will be closed, and the PI and department will need to communicate a management plan to Research and Cost Accounting before it can be reopened.
  • If the balance is positive, the remaining budget will be transferred to the new “Cost Share” project.

For active labor distributions on old projects, Payroll will automatically update them to apply to the new “Cost Share” project starting July 1, 2025.

Project Managers for impacted awards have been contacted directly by e-mail with the above message. If you have any questions, please feel free to respond to that e-mail or to contact Research and Cost Accounting (rchacctg@rice.edu).

OAC Dashboards (Finance Dashboard and Sponsored Projects and Faculty Funds Dashboard)

EDIT (8/19/25. 3.14PM) While the dashboards have returned and can be used, we are aware that there are issues across SPFF with dashboard prompts not running analyses in the way they should. The cause of this issue has been diagnosed and the team is on it. It will very likely not be before tomorrow (8/20/25) that we are able to say how long this will take to fix. I will update this post with information as it becomes available.

EDIT (8/20/25. 8.59 AM) Dashboards are now operational.

Proposed FY26 Rates

Please be advised that Rice’s submitted Fringe rates are 25.8% for faculty and staff and 2.6% for students.

These rates are PROPOSED and may be used for FY26 grant applications (with a start date of 7/1/25 or later) but this are subject to change upon negotiation and execution of the official rates.

When more information becomes available, it will be added here.

Frequently-used RCA ticket categories

Using the correct category can improve processing times for tickets because it allows us to quickly assign the ticket to the correct RCA staff member.  Please note that the “Controller’s Office Use Only” and “RCA Use Only – Cash” categories should not be used by the departments.

Whenever possible, please include an iO award or project number in the Summary field.

Below are some of the most frequently-used categories.