Activation

The post-award sponsored project account activation general ledger process commences in Sponsored Projects Accounting.

A notice of award (NOA) - also referred to as notice, notice of grant award (NOGA or NGA), sponsor notice, or award letter - is a notification from a sponsor indicating that a proposal has been funded. Notice of awards are generally received by pre-award in the Office of Sponsored Programs, although on occasion an investigator (PI) may be notified directly in which case the notice should be submitted through PERIS for review and processing. This notification may require the signature of an authorized University official.

Each notice of award is assigned an “award” or “AWD” number in PERIS by the Office of Sponsored Programs that serves as an internal tracking number linking the original award proposal to the notice of award. The University’s Office of Sponsored Programs forwards the following documents related to each executed agreement to Sponsored Project Accounting from PERIS for each individual “AWD” number:

  • A copy of the complete approved notice of award
  • Sponsored project award information input through PERIS
  • Annual detailed award budget agreed to the NOA

Once the NOA and related terms and conditions are accepted by the authorized University official and transmitted to Sponsored Projects Accounting, a project or account is activated in PRISM/RPA. The PI and other departmental representatives are advised of the activation.

Special treatment: Awards with an approved Participant Support budget require establishment of a sub-account in PRISM/RPA for segregation of related costs and correct application of indirect costs. Refer to sponsor regulations and guidelines in addition to University policy and SPA guidelines in the administration and distribution of applicable costs.

Advance Accounts (formerly Early Accounts) are sponsored project accounts that are internally requested by the performing department of the University prior to receiving a fully executed Notice of Award (NOA) from the sponsoring agency. Requests for Advance Accounts are reviewed and approved by the respective Dean’s office based on the likelihood of receiving the NOA. The performing department assumes full financial risk associated with any unreimbursed costs incurred in the event the account is not awarded or awarded at less than the anticipated amount. Department’s assume this risk on behalf of the University and are expected to obtain adequate assurances of funding in the form of a letter of intent, commitment letter, prime award NOA (for pass-through), or verbal acknowledgements.

Activation of an Advance Account provides for the timely allocation of salary and non-salary related expenditures within the following parameters:

  • To capture pre-award spending when permitted by the funding agency (generally 90 days) to facilitate award performance.
  • To allow for internal and external delays in the award negotiation and approval processes beyond the anticipated start date of a project, including competitive renewals or non-competitive continuation awards that require new project account numbers. Certain agencies routinely execute agreements on a lag.
  • Other unanticipated delays in receipt of a NOA, including transfers of awards from other institutions.
  • To avoid late salary and non-salary cost transfers due to any of the above appropriate uses when funding assurance is high.

  • Automatic carryover of funds on other active awards.
  • Funding Proposal is not yet in “Sponsor Review” status in PERIS (Huron Grants) or when a fully executed award (NOA) has already been received by the University.
  • The award is contract and not a grant or cooperative agreement.
  • Funding assurance is low.

To request an advance account number, the Department needs to initiate a request through PERIS. Advance accounts can be obtained on grants, but not on contracts. While advance accounts can be obtained on grants, they cannot be obtained on contracts. Schools and departments can accept financial risk for their work under the advance account but they cannot be subject to the financial and other risks that can arise in other areas that are monitored and negotiated centrally at the University. These risk areas can include but are not limited to areas such as contract law, indemnification, warranties, publishing, ownership of data, export control, licensing and intellectual property, pre-award costs, effort reporting, organizational conflict of interest, IT security, cost transfers, etc. that can arise due to the lack of a signed contract that do not exist under a grant when it is covered by the NIH, NSF and other federal and non-federal grant regulations and guidelines.

The Uniform Guidance incorporates the Cost Accounting Standards (CAS) 48 CFR 9905.501, 9905.502, 9905.505, 9905.506 which establishes in principle the consistent treatment of costs as direct or indirect (F&A) costs.

The Cost Accounting Standards Board (CASB), an independent legislatively-established board within the executive branch of the federal government, provides guidelines on cost accounting practices, referred to as CAS. In 1994, CAS imposed four standards on universities receiving significant awards from federal agencies. In 1996, A-21 was revised to include the four CAS standards and made these standards applicable to all types of federal awards. CASB imposed these standards to:

  • Prevent the charging of unallowable costs to federal awards (CAS 505)
  • Standardize university costing practices (CAS 501 & 502)
  • Standardize requirements for recipients of federal funds


Project Monitoring

Invoicing

Cost reimbursable awards provide for payment of allowable, incurred costs as prescribed in the NOA subject to a not-to-exceed limitation. This award type is used when acquiring items or services when uncertainties involved in the award performance do not permit costs to be estimated with sufficient accuracy (like research and other sponsored activities of the University) to warrant any type of fixed-price contract. A cost-based, detailed line-item budget typically accompanies such awards.

Cost reimbursable invoices can either be monthly, quarterly, or installment. Some agreements provide for automatic payment(s) by the sponsor and do not require a physical invoice. Projects that require monthly or quarterly invoices are designated as such in the RPA system and generate based upon costs recorded by departments in PRISM for the particular month or months. NOAs can sometimes contain an installment schedule where sponsors will require an invoice from the University for set amounts at set intervals such as equal quarterly installment payments over the life of the award equal to the total amount of funding. Any interval can be set by the sponsoring agencies and are set up by Sponsored Projects Accounting as installment invoices that are either automatically paid by the sponsor or require invoicing by the University.

A sponsored agreement or contract that is not subject to any adjustment on the basis of cost experience in performing the agreement. This agreement type places maximum risk and full responsibility for all costs on the University of Pittsburgh and provides maximum incentive for the University to control costs and perform effectively. Fixed price awards provide for payment of a firm or established price as prescribed in the NOA. This award type is used where fair and reasonable prices can be established at the outset of the award.

Fixed price invoices can be generated by Sponsored Projects Accounting, the departments, or the sponsor may send reimbursement directly to the University without an invoice. Sponsored Projects Accounting invoices on fixed price sponsored projects when departments provide the necessary information required to invoice based upon the capitated amount or fee schedule provided in the agreement, or informs us that other invoice milestones of the award were met by the department. The department invoices on fixed price sponsored projects when the department possesses the bulk of the knowledge with respect to performance metrics, milestones, tests performed, etc. required by the fixed price type project and it is not practical or expedient for Sponsored Projects Accounting to invoice on the project. Finally, when the sponsor automatically reimburses the University based upon the receipt of test results, reporting, receipt of samples, etc. the project would be established as a fixed price automatic payment and no invoicing is necessary.

A sponsored agreement or contract in which the sponsor agrees to pay an upfront, predetermined price, for agreed upon services or individual tasks/activities performed. The most common uses of fixed rate activities are those associated with a clinical trial where the sponsor and Pitt agree to a capitated payment arrangement or on set fees for tests or specific milestones as services are provided.

Similar to fixed price invoices, fixed rate can be generated by Sponsored Projects Accounting, the departments, or the sponsor may send reimbursement directly to the University without an invoice. Sponsored Projects Accounting invoices when departments provide the necessary information required to invoice based upon the capitated amount or fee schedule provided in the agreement, or informs us that other invoice milestones of the award were met by the department. The department invoices when the department possesses the bulk of the knowledge with respect to performance metrics, milestones, tests performed, etc. required and it is not practical or expedient for Sponsored Projects Accounting to invoice. Finally, when the sponsor automatically reimburses the University based upon the receipt of test results, reporting, receipt of samples, etc. the project would be established as an automatic payment and no invoicing is necessary. Fixed rate, capitation, or fee-for-service schedule of payments typically accompanies such awards. Examples include certain clinical trial awards received by the University.


Financial Reporting

In compliance with University Policy 05-06-07 for Level Report Review and Reconciliation, the PI or designee is responsible for reviewing Level Reports on Entity 05 sponsored projects on a monthly or quarterly (at a minimum) basis. As stated in the Policy, sponsored project Level Reports are to be reviewed to determine:

  • Overall reasonableness of the accounting and budgeting on the account and to ensure that no unauthorized or inappropriate costs are recorded to the account
  • Costs are allowable, allocable, reasonableness and consistent with treatment of similar costs for sponsored project account transactions
  • The total sponsored project budget (or not-to-exceed limitation) and individual budget line items are either not exceeded, are exceeded and material variances are explainable, or approval is obtained in advance from the sponsoring agency for re-budgeting
  • All costs belong in the account to which they are identified and are timely recorded
  • Any unusual fluctuations or balances are identified, explained and if necessary, corrected
  • Activity from the Level Reports is reconciled to source documents such as cash reports, disbursements, travel and business expense reports, labor distribution reports, P-Card statements, etc. and discrepancies resolved
  • The appropriate distribution of labor and timely execution of salary cost transfers within the effort certification period
  • Appropriate sub-code usage
  • Appropriate MTDC inclusion/exclusion for account transactions including subcontract payments
  • Appropriate application of fringe benefit rates and indirect or F&A rates
  • Sponsored project account budgets agree to the award and related modifications in total and by line item
  • Actual costs compared to the detail line item budgets are monitored for sponsors that require prior approval before line item budgets are exceeded by a certain percentage per the NOA which varies by sponsoring agency
  • Any non-salary adjustments are processed in a timely manner and correction of errors or omissions via non-salary cost transfers must be completed monthly, but no later than 90 days of the end of the month in which the error or omission occurred
  • Sponsored project end dates are closely monitored and strictly adhered to
  • Estimated, accrued or trailing costs are posted to sponsored project accounts timely to avoid late revision of previously submitted final invoices and final financial reports to sponsoring agencies (see below)

The above helps to ensure the accurate, complete and timely accounting and financial reporting of both University sponsored projects and financial statements.

Costs that have been obligated on sponsored projects, but have yet to be recorded and paid at the end of a project or project year are referred to estimated, accrued or trailing costs. Sponsoring agencies allow the University to include such trailing costs on our final invoices and financial reports to ensure costs are reimbursed by and reported to the sponsoring agencies in the accounting and budgetary period in which the funds were awarded.

After the sponsored project closes, and the final invoice and final financial report are prepared and submitted to the sponsor, the Department Administrator must monitor their Level Reports to ensure that all proposed trailing costs included in the final invoice and final financial report are recorded on the project and paid within the 90 day time frame to close and report on the sponsored project. If this does not occur, Sponsored Projects Accounting will follow-up with the Department Administrator. Revising previously submitted final invoices and final financial reports can result in the potential loss of current and future funding and goodwill between the University and the affected sponsor so the proper inclusion/exclusion of trailing charges is very important.

If additional costs are identified after the final invoice and financial report are submitted to the sponsor, and the Department would like to revise the final project costs, it is the Department Administrator’s responsibility to contact the sponsor and obtain advance approval for the revision. If approval is granted by the sponsor, Sponsored Projects Accounting will accept a revised Closing Memorandum from the Department and resubmit the final invoice and final financial report to the sponsor. A pattern of late revisions is discouraged.

The University provides the specific monthly online budgetary or Level Reports to Department Administrators (and ultimately PIs) to monitor sponsored project (Entity 05) accounts. These online reports can be accessed through the Cognos Login on the MyPitt Portal on the University’s Website. To obtain access to the Cognos online Level Reports, instructions can be found by clicking the Learn More button under the Cognos Login; then click Request Access on the left side of the screen.

The following reports are available:

This monthly report provides a recap of sponsored project attributes and cost summary information by department, by sponsored project number, by subcode and includes sponsored project budget, current month actual, fiscal year to date actual and project to date actual costs and budget available by subcode line item. This report is used for:

  • Monitoring sponsored project actual costs against total budget
  • Monitoring sponsored project line item actual costs against line item budgets
  • Identifying and explaining material variances
  • Verifying MTDC inclusions/exclusions
  • Recalculating fringe benefit costs
  • Recalculating indirect cost or F&A costs
  • Monitoring accounts receivable
  • Preparing cost-based invoices at the department level
  • Preparing sponsored project cost summaries and financial reports
  • Preparing sponsored project Closing Memorandums
  • Supporting documentation for invoices
  • Audit support

In addition, when a sponsored project approaches its end date and or is in an overdraft, a corresponding message appears on the first page of this report notifying the Department Administrator of a required action on the sponsored project.

This monthly report provides sponsored project cost detail and current month budget adjustment information (transaction detail) by department, by sponsored project number, by subcode, by transaction and includes sponsored project current month actual cost, subcode, reference field, PRISM transaction description, PRISM identifier and PRISM batch name. This report is used for:

  • Verifying all cost transactions belong in the account to which they are recorded
  • Reconciling to accounting source documents
  • Reviewing appropriate subcode usage
  • Identifying and correcting accounting errors
  • Supporting documentation for journal entries
  • Supporting documentation for non-salary cost transfers
  • Verifying timely recording of trailing charges
  • Supporting documentation for invoices
  • Audit support and audit sampling of transactions

This monthly report provides sponsored project payroll activity by department, by sponsored project number, by subcode and includes employee name, employee number, PRISM earnings element, current month actual, fiscal year to date actual and project to date actual payroll costs; as well as any payroll adjustments made during the month and indicates the months that were adjusted.

  • Verifying labor distributions (effort reporting on SPAR documents)
  • Verifying all payroll transactions belong in the account to which they are recorded
  • Reconciling to accounting source documents
  • Reviewing appropriate subcode usage
  • Identifying and correcting accounting errors
  • Supporting documentation for salary reallocations (salary cost transfers)
  • Verifying timely recording of trailing charges
  • Supporting documentation for invoices
  • Audit support and audit sampling of transactions

This monthly report provides overdrawn (over budget or overdraft) sponsored projects by department, by project number, by PI, by agency, by payment method, by end date, by overdrawn amount. Overdrawn amount is calculated by subtracting total sponsored project costs from total sponsored project budget and always results in a negative balance.

See below for a detailed discussion of overdrafted accounts. In summary, overdraft conditions on sponsored project accounts cannot continue indefinitely. Since the University cannot invoice the sponsoring agency for costs in excess of the total sponsored project budget or not-to-exceed limitation, the overdraft or overspending on the award represents a cost to the University, including time value of money, until the overdraft is resolved.

The Department Administrator (and ultimately the PI) should work with contracting officers, the Office of Sponsored Programs, Sponsored Projects Accounting and other University Departments to justify and ultimately resolve overdrafts as soon as practical to ensure responsible and timely sponsored project financial stewardship. Unresolved overdrafts that will not be funded by the sponsoring agency will be borne by the performing departments and charged to the departmental account.

This monthly report provides a recap of sponsored project attributes and a listing of all sponsored project subaccount numbers that comprise a billing account number. The report is by department (for the holder of the master or billing number account) and is billing number order. The report provides various sponsored project attributes and provides all sponsored project subaccount numbers that comprise a billing account number by PI, by department and includes subaccount project budgets, PJTD expenses and budget funds available and totals at the billing or master account level. This report is used for:

  • Monitoring total project budget and expenses at the billing or master account level
  • Monitoring project budget and expenses at the subaccount level
  • Determining subaccounts in overdraft that require corresponding action
  • Ensuring all subaccount financial closings are obtained in support of the closing of the master or billing account level
  • Determining subaccounts that are in balance (budget is equal to expense with no budget fund available)

This monthly report provides sponsored project cost summary information by department, by project number, and includes three sections: project to date budget, direct and indirect expenses, and budget available, current month actual direct and indirect expenses and total expenses; and fiscal year to date direct and indirect expenses. The report provides various sponsored project attributes and is used for:

  • Providing summary direct and indirect cost by project
  • Determining budget available funds by project

Close-out

Once a sponsored project is complete and the project end date has passed, the sponsored project must be administratively and financially closed in the University systems of record. This process is referred to as the sponsored project account closing process, and this process can vary by sponsoring agency. Federal and non-federal sponsor regulations require the University to financially close sponsored projects in a timely manner, within a predetermined period of time after the project end date provided the award is not being extended. The timeliness and accuracy of sponsored project closing in accordance with sponsoring agency requirements is integral to the University’s system of internal controls for sponsored projects and represents sound sponsored projects administrative and financial management.

Generally, the University must administratively and financially close sponsored projects within a 90 calendar day time frame after the sponsored project end date with the exception of the NIH and the NSF. Specifically, some of our major University sponsors codify their sponsored project closing requirements as follows:

Uniform Guidance
  • 200.343 Closeout
  • 200.344 Post-closeout adjustments and continuing responsibilities
NIH Grants Policy Statement – Section 8. Administrative Requirements
  • Section 8.6 Closeout
NSF Proposal & Award Policies & Procedures Guide (PAPPG)
  • Chapter II. D. 5. Grant Closeout
  • Chapter III. E. Award Financial Reporting Requirements -Final Disbursement Reporting

Other sponsoring agencies have their own guidelines establishing closing requirements and can include clauses in their NOAs that delineate their closing requirements on a project-by-project basis.

Three months prior to the sponsored project end date, a Sponsored Project Termination Notice is automatically distributed to the Departments with the RPAR001 Accounting Summary of Activities report for the sponsored project notifying the Department Administrator and the PI that the sponsored project is about to end. The notice also states that the Certification of Award Closing Memorandum needs to be submitted to Sponsored Projects Accounting after the sponsored project end date.

Principal Investigators, Department Administrators, Sponsored Projects Accounting and the Office of Sponsored Programs all share in the responsibilities for closing sponsored projects. Specific responsibilities are as follows:

Principal Investigators
  • Approval of all project expense-related invoices
  • Identification of any sponsored project unpaid expenses (trailing charges)
  • Verification of final labor distribution
  • Preparation and submission of final project technical reports
  • Preparation and submission of final sponsored project Intellectual Property reporting to the sponsor
  • Request carry over of unexpended funds
Department Administrators
  • Processing and recording of all project-related expense invoices
  • Review of sponsored project Level Reports
  • Identification of any sponsored project unpaid expenses (trailing charges)
  • Verification of final labor distribution
  • Verification of final cost allowability, allocability and reasonableness
  • Verification of proper application of F&A and fringe benefit rates
  • Preparation and submission of sponsored project Closing Memorandum
  • Providing general ledger account for write-off journal entry of any overdrafted or overspent account balance
  • Request carry over of unexpended funds
  • Monitoring Level Reports to ensure all charges are recorded and budget, revenue and expense are all equal upon project closing
Sponsored Projects Accounting
  • Review of sponsored project Closing Memorandum
  • “Mark-up” of final Level Report for final invoice preparation
  • Recalculation of F&A application
  • Preparation and submission of final invoice to sponsor
  • Reduce the project budget to match project expenditures
  • Collection on all outstanding sponsored project accounts receivable
  • Preparation and submission of final sponsored project financial reporting to the sponsor
  • Preparation and submission of final sponsored project property reporting to the sponsor, if any
  • Preparation and submission of final sponsored project Contractor’s Release to the sponsor in coordination with the Associate Secretary’s Office of the Board of Trustees, if any
  • Preparation and submission of final sponsored project Contractor’s Assignment of Refunds, Rebates and Credits to the sponsor in coordination with the Associate Secretary’s Office of the Board of Trustees, if any
  • Preparation of write-off journal entry of any deficits or overspent accounts
  • Record minor adjustments to bring sponsored project account into balance
  • Monitoring Level Reports to ensure all charges are recorded and budget, revenue and expense are all equal upon project closing
Office of Sponsored Programs
  • Facilitate completion of final Intellectual Property Report (i.e. Final Invention Statements)

In advance of the financial sponsored project closing, at the Department level:

  • PIs are to be approving as many project related invoices as possible in a timely manner
  • Department Administrators are to be recording and paying as many project related invoices as possible; reviewing sponsored project Level Reports in a timely manner (monthly, but no less than quarterly) for allowability, allocability, reasonableness and compliance of all project costs charged with sponsor requirements including effort distribution, budgetary compliance, budget variance analysis and any cost limitations or salary caps. These reviews would encompass subcontract costs as well

Once the sponsored project has ended, at the Department level:

  • The PI and the Department Administrator are to review the project for any outstanding financial obligations that are either un-invoiced by vendors and subcontractors or unpaid by the University and record and pay these obligations or accrue for these expenditures by listing them in a financial Closing Memorandum
  • The Department Administrator prepares the Closing Memorandum which is a sponsored project financial reconciliation of the project budget and expenditures including accrued expenditures, and submits the Closing Memorandum to Sponsored Projects Accounting
  • The PI and the Department Administrator approve the Closing Memorandum and certify that all charges and credits included in the Closing Memorandum are properly recorded/listed and are appropriate to the award
  • The Department Administrator monitors the sponsored project Level Reports to ensure that all accrued expenditures are recorded after-the-fact in the general ledger

Closing Memorandum and worksheet

The Closing Memorandum is a tool for the PI and the Department Administrator affording the opportunity to accrue all appropriate and allowable unrecorded or trailing costs for a sponsored project so the total costs of a project can be reported and invoiced as final and limit the need for future revisions which are discouraged by the sponsoring agencies and higher-tier contractors. The Closing Memorandum accounting tool was devised to facilitate the:

  • Identification and accrual of unrecorded or trailing costs
  • proper financial closing and balancing of the sponsored project accounting
  • filing of the final sponsored project invoice to our sponsors
  • filing of the final financial report to our sponsors

Federal and other sponsoring agencies regulations and requirements often times require the University to operationally and financially close a sponsored project within 90 days after the period of performance of the sponsored project expires. This includes the submission of the final sponsored project financial report. Accordingly, Department Administrators have half the time of the closing period after the sponsored project has expired to complete their closing responsibilities, and submit the required information to Sponsored Projects Accounting so that the final financial report can be completed and submitted timely. For example, if the final financial report is due in 30 days, the department would have 15 days to submit the Closing Memorandum and Sponsored Projects Accounting would have 15 days to fulfill the agency’s financial requirements.

The Closing Memorandum is utilized by Sponsored Projects Accounting primarily to prepare and submit the final invoice to the sponsor, balance the sponsored project in the general ledger, and prepare the final financial report to the sponsor. Execution of these financial responsibilities without subsequent revision represents a proper system of financial internal control over sponsored projects.

Upon receipt of the Closing Memorandum, Sponsored Projects Accounting performs the following procedures:

  • Compares project cost totals listed to the sponsored project Level Report
  • Determines arithmetical accuracy of the Closing Memorandum
  • Reviews and verifies supporting documentation of accrued expenditures
  • Verifies final F&A and fringe benefit cost calculations
  • Develops the basis for the final invoice in accordance with information proposed per the Closing Memorandum
  • Generates the final invoice
  • Monitors whether accrued expenditures are recorded after-the-fact in the general ledger
  • Balances and closes the sponsored project in the general ledger that consists of ensuring that sponsored project budget, revenue and expense are all equal
  • Inactivates the sponsored project account in the general ledger

Costs that have been obligated on sponsored projects, but have yet to be recorded and paid at the end of a project or project year are referred to estimated, accrued or trailing costs. Sponsoring agencies allow the University to include such trailing costs on our final invoices and final financial reports to ensure costs are reimbursed by and reported to the sponsoring agencies in the accounting and budgetary period in which the funds were awarded.

After the sponsored project closes, and the final invoice and final financial report are prepared and submitted to the sponsor, the Department Administrator must monitor their Level Reports to ensure that all proposed trailing costs included in the final invoice and final financial report are recorded on the project and paid within the 90 day time frame to close and report on the sponsored project. If this does not occur, Sponsored Projects Accounting will follow-up with the Department Administrator. Revising previously submitted final invoices and final financial reports can result in the potential loss of current and future funding and goodwill between the University and the affected sponsor so the proper inclusion/exclusion of trailing charges is very important.

If additional costs are identified after the final invoice and financial report are submitted to the sponsor, and the Department would like to revise the final project costs, it is the Department Administrator’s responsibility to contact the sponsor and obtain advance approval for the revision. If approval is granted by the sponsor, Sponsored Projects Accounting will accept a revised Closing Memorandum from the Department and resubmit the final invoice and final financial report to the sponsor. A pattern of late revisions is discouraged.

If a Closing Memorandum is not submitted by the Department, Sponsored Projects Accounting will prepare the final invoice and financial report based on the Level Report corresponding with the end-date of the award. No revisions to either will be accepted after-the-fact when a Closing Memorandum is not submitted by the Department. Any additional, unrecovered costs will be borne by the Department.

It is the responsibility of Sponsored Projects Accounting to submit the majority of the final invoices on sponsored projects in a timely manner. Where the financial information required by the sponsor on the final invoices is not cost based, but is operational, scientific milestone or deliverable based, the Department Administrator must complete the final invoice with the assistance of the PI.

Sponsoring agencies require final invoices for the vast majority of sponsored projects. Many sponsors require their own standardized format for invoicing, while other sponsors accept a standard University format. Final invoices are usually always required to be submitted at least 90 days after the end date of the project. When the University is a subcontractor to a prime agency at another institution, final invoices are typically due to the prime agency 60 days after the end of the project period. A small number of sponsoring agencies can require financial invoices 15, 30 or 45 days after the sponsored project end date. Final invoices can vary from a single, installment-based amount to a detailed invoicing of cost incurred by budgeted line item, operational milestone, scientific milestone, etc.

Once the department completes and submits the necessary Closing Memorandum to Sponsored Projects Accounting, Sponsored Projects Accounting will prepare the required final invoice and forward it to the sponsoring agency to meet the requirements of the NOA. Specifically, Sponsored Projects Accounting:

  • Monitors required final invoices deadline requirements
  • Utilizes the Level Report corresponding to the end date of the award as the baseline for the preparation of the final invoice. This ensures that final invoices are compiled based upon actual costs incurred in the project accounting system of the general ledger of the University
  • Reviews Level Report adding trailing charges provided by the Departments as part of the Closing Memorandum submission.
  • Marks the invoice as FINAL which is customary industry practice
  • Submits the final invoices following the sponsor prescribed method
  • Revisions are submitted when trailing costs fail to materialize. Any resultant over payments are refunded.

Timely filing of final invoices insures proper and timely payment of reimbursable costs and minimizes outstanding accounts receivable and related collection efforts.

It is the responsibility of Sponsored Projects Accounting to submit the majority of the financial reports on sponsored projects in a timely manner. Federal, state and local governmental agencies, as well as private companies and foundations generally require the University to submit final financial reports related to the projects they sponsor. Where the financial information required by the sponsor on the financial reports is not cost based, but is operational, scientific milestone or deliverable based, the Department Administrator must complete the final financial report with the assistance of the PI.

Sponsoring agencies require final financial reporting for the vast majority of sponsored projects. Many sponsors require their own standardized format for reporting, while other sponsors accept a standard University format. Financial reports can be required on an interim basis throughout the life of a sponsored project, and final financial reports are usually always required to be submitted at least 90 days after the end date of the project. When the University is a subcontractor to a prime agency at another institution, final financial reports as well as final invoices are typically due to the prime agency 60 days after the end of the project period. A small number of sponsoring agencies can require final financial reports 15, 30 or 45 days after the sponsored project end date. Financial reports can vary from a reporting of summary costs incurred and budgeted funds available to a detailed reporting of cost incurred by budgeted line item, operational milestone, scientific milestone, etc.

Once the department completes and submits the necessary Closing Memorandum to Sponsored Projects Accounting in a timely manner, Sponsored Projects Accounting will prepare the required financial report and forward it to the sponsoring agency to meet the requirements of the NOA. Sponsored Projects Accounting will forward a copy of the financial report to departments upon request. Specifically:

  • Three months prior to the sponsored project end date, a Sponsored Project Termination Notice is automatically distributed to the Department with the RPAR001 Accounting Summary of Activities report for the sponsored project. The notice states the Certification of Award Closing Memorandum needs to be submitted to Sponsored Projects Accounting within 45 days after the sponsored project end date
  • To ensure the timeliness of the submission of final financial reports, Sponsored Projects Accounting monitors required reports via a tracking report based on report due date information entered as part of the account activation process
  • The general ledger screen of the RPA system is the baseline for the preparation of the final financial report. This assures that every report is developed based upon actual costs incurred as recorded on the project accounting system of the general ledger of the University
  • Trailing charges provided by the Departments as part of their Closing Memorandum are added to the recorded costs as a manual adjustment to arrive at total costs incurred on the sponsored project and the final financial report is prepared and the arithmetical accuracy of the report is verified
  • The final financial reports are then submitted either on-line via a sponsor’s web site designed for submitting such information, or via paper copy
  • When trailing costs fail to materialize, the final financial report will be revised, the budget reduced and the residual balance of funds returned to the sponsor

Timely filing of federal financial reports is tested annually by the public accounting firm engaged to perform the Single Audit. Findings of this nature are included in this audit report and reviewed by the University’s Board of Trustees and are subject to inspection nationally by sponsors and other institutions. Failure to submit timely federal and non-federal reports can result in sponsor sanctions.

Closing Checklist

Requests to University sponsors for carry-over of unobligated or unspent funds on sponsored projects is the responsibility of the Department Administrator.  Sponsored projects having more than a one year project period of performance, may have unspent funds at the end of a given award year that can require a request for carryover of unspent funds made to the sponsor.  Request for carry-over of funds is an extremely important responsibility that must be executed in accordance with sponsor requirements that vary between sponsors, and between NOAs from sponsors that include automatic to online to written requests.  Therefore, sponsoring agency regulations, guidelines and requirements, as well as NOAs, need to be reviewed to ensure carryover is properly requested and received by the University.

Some sponsors restrict the University’s authority to carryover an unobligated balance from one grant year to the next and therefore require advance approval of any carry over.Failure to submit timely requests for carryover can result in the loss of funds. Regardless of sponsoring agency, all requests for carryover (other than automatic) must be in writing. Verbal authorizations of carryover will not be accepted.  The Office of Sponsored Programs and Sponsored Projects Accounting must receive all approved carryover requests accompanied by a BMR that increasing the budget on the subsequent year project(s).

Per the NIH Grants Policy Statement carryover of unobligated balances requires prior approval on awards for centers (P50, P60, P30, and other awards), cooperative agreements (U awards), Kirschstein-NRSA institutional research training grants (T awards), non-Fast Track Phase I SBIR and STTR awards (R43 and R41 awards), and clinical trials (regardless of activity code), unless otherwise noted in the NOA. In addition, other awards may be excluded from carryover authority. You must refer to the terms in the NOA.

Regardless of any direction received from pass-through agencies, the University must follow the terms and conditions of the award being passed-through. Since carry over must be approved in advance, related accounts can never extend more than one year in length, unless a no-cost-extension is awarded to the prime award.

Regardless of contract type, it is University procedure to establish new accounts annually in PRISM for cost reimbursable awards with restrictions on carryover for both federal and non-federal sponsors. Examples of non-federal sponsors with carryover restrictions includes American Heart Association, Cystic Fibrosis Foundation, Howard Hughes Medical Institute, Breast Cancer Research Foundation, as well as others.

Final budget modifications to the original NOA budget can be required in the following instances:

  • When carryover from a prior year is not approved for use in the current year
  • To reallocate budget between related accounts (master and sub accounts)
  • To move unliquidated obligations, as reported on the Closing Memorandum, from the prior grant year to the subsequent grant year
  • To reduce the budget to match the final expenses reported to the sponsor

A sponsored project account is considered in-balance when budget, revenue and expense are all equal and accounts receivable are zero 120 days after the award period of performance has expired.  A sponsored project account is considered out-of-balance when these elements are not all equal or there is a balance in accounts receivable 120 days after the award period of performance has expired.  A proper system of internal control over sponsored project accounts requires accounts to be balanced and closed timely in the University’s financial systems.

Out-of-balance conditions and corrective actions include:

  • Project Expenses Less Than Project Budget – Sponsored Projects Accounting completes BMRs to reduce sponsored project budgets to equal sponsored project revenue/expense
  • Project Expenses Greater Than Project Budget
    • Sponsored Projects Accounting processes write-off journal entry and charge departmental account to reduce sponsored project expenses to equal sponsored project budget
    • Department Administrator transfers any new follow-on project year costs to new follow-on project year account
  • Project Expenses Less Than Project Revenues (residual funds)
    • Sponsored Projects Accounting process disbursement authorization to return residual funds (excess revenue) to sponsor
    • Sponsored Projects Accounting process journal entry to transfer minor residual fund balances to departmental gift account if in accordance with University policy
  • Open Accounts Receivable Balance – Sponsored Projects Accounting determines propriety of outstanding invoices.  If appropriate, continue collection efforts on sponsored project accounts receivable and apply cash to eliminate open accounts receivable balance.  Delete invoices created on account that are unnecessary
  • Miscellaneous Adjustment – Sponsored Projects Accounting process miscellaneous adjusting journal entry on immaterial balances to bring sponsored project account into balance

Overdrafted Sponsored Project Accounts

Sponsored project overdrafts (overdrawn or over-budget) conditions occur when costs recorded on the sponsored project exceed the total budgeted costs per the NOA. The University cannot invoice the sponsoring agency for costs in excess of the total sponsored project budget or not-to-exceed limitation, therefore the overdraft or overspending must be removed.
Overdrafts typically occur due to:

  • Lack of timeliness of receipt of future funding in the form of sponsored project NOAs, amendments and modifications from University sponsors on continuing projects
  • Lack of timely or correct labor redistribution (effort reporting)
  • Allocation of costs to the incorrect sponsored project
  • Completion of sponsored project work scopes resulting in the incurrence of more costs than originally estimated in the pre-award process constituting overspending on the project

It is the responsibility of the Department Administrator (and ultimately the PIs) to ensure that sponsored project overdrafts are cleared in a timely manner. After a sponsored project period of performance has ended, overdrafts must be cleared in a reasonable period of time, typically within 90 days and as part of the closing process of the sponsored project. A notice appears on the first page of the Department’s RPAR001 report notifying the Department Administrator that a particular sponsored project is overspent and therefore is in overdraft. The RPAR007S report summarizes sponsored projects that are in overdraft within a specific area/department. This report prints monthly and is distributed to departments through the COGNOS automated report distribution system.

Resolution of overdrafts throughout the life of the sponsored project can occur through one or more of the following sponsored project accounting and administrative mechanisms:

  • Timely receipt of sponsor NOA, amendment or modification, or internal Budget Modification Request (BMR) that clears the overdraft condition on the continuing project account
  • Labor redistribution (effort reporting adjustment through the SPAR system) to correct an incorrect or untimely labor distribution
  • Non-salary cost transfer (Department initiated) or cost write-off (Sponsored Projects Accounting initiated) to a Departmental or other account

In situations where there are master accounts and one or more subaccounts and there are overall funds available but one or more subaccounts are overdrawn, it is the responsibility of the Department Administrator to clear the overdraft on the subaccount in a timely manner by one or more of these mechanisms. Because the letter-of-credit process calculates the drawdown of funds at the project account level and not the billing account level, funds will not be drawn down on subaccounts that are in overdraft (due to the fact that all overspending on subaccounts may not always be funded by the master account). Letter-of-credit agencies rely on reported drawdown of funds, not reported costs incurred, when granting carryover. Accordingly, if subaccount overdrafts are not cleared timely, this can detrimentally impact the Department carryover request calculation at the master account level on letter-of-credit based projects as the drawdown of funds in the agency letter-of-credit system will be less than costs incurred at the billing account level.

An overdraft due to overspending is not an accounting error and should not be viewed as such. Since we charge what we work on, an overdraft due to overspending must remain on the sponsored project account until the project ends and the account is closed. The overdraft due to overspending will be properly cleared at the end of the project when Sponsored Projects Accounting balances the sponsored project account, which constitutes ensuring that budget, revenue and expense are all equal as part of the closing process. Any overdraft due to overspending will be transferred at the end of the project to the account designated by the department utilizing subcode 8000 which then cannot be transferred to other sponsored project accounts. In addition, the University must include sponsored project write-offs in the sponsored projects cost allocation bases for F&A Cost Rate Proposal preparation purposes and must exclude these write-offs from the sponsored projects cost allocation pools. Sponsored project write-offs are identified through the utilization of the 8000 subcode. Therefore, this is a key internal accounting control of the University with respect to sponsored projects. Do not transfer costs that represent overdrafts due to over spending prior to the end of the sponsored project. (If the department wishes an overdraft due to overspending be cleared prior to the end of the project, they must contact Sponsored Projects Accounting to do so through subcode 8000.) If subcode 8000 is not used to write-off overdrafts due to overspending on sponsored projects, we are noncompliant with our F&A Cost Rate Agreement negotiated with the federal government.

The Department Administrator (and ultimately the PI) should work with contracting officers, the Office of Sponsored Programs, Sponsored Projects Accounting and other University Departments to justify and ultimately resolve overdrafts as soon as practical to ensure responsible and timely sponsored project financial stewardship at the University. Unresolved overdrafts that will not be funded by the sponsoring agency will be borne by the performing department.

Residual Funds

Residual funds on sponsored projects occur when the cash received (revenue) from a sponsor exceeds the costs identified and recorded on the project. Residual funds materializing on a cost reimbursable award are generally the result of overpayments due to advances received or credits processed following the payment of all prior invoices and must be returned to the sponsor. Over payments cannot be unilaterally retained by the University.

Residual funds arising from the performance of fixed price/rate agreements may be retained by the University. Sponsored Projects Accounting reviews the terms and conditions of the applicable awards and determines the disposition of funds with the performing department.

In the event of a transfer of funds due to the departure of a PI from the University, if a sponsor designates that the transferred funds be directed to a new institution, Sponsored Projects Accounting transmits the transferred funds to the new institution provided we are instructed to do so by the awarding agency in writing.

Record Retention

Record retention is the responsibility of the Financial Records Service Department under the Office of the CFO.

The OMB Uniform Guidance require a minimum 3 year retention period from the date of submission of the final financial report. In consideration of the potential for sponsored program audit, tax audit and requirements of state escheat laws, the University adopts a conservative retention period of 7 years regardless of the cost of record keeping. The risk of fines and penalties associated with audit findings is considered to be greater than the cost of retention.

If there are any active litigation, claims, or audit matters related to a sponsored project that extend beyond the expiration of the 7-year retention period, then records must be retained until all litigation, claims, or audit findings involving the records related to the sponsored project have been resolved and final action taken.