Presentation on theme: "Overview of Accounting for Sponsored Projects"— Presentation transcript:
1 Overview of Accounting for Sponsored Projects DatePresenter NamePresenter Phone NumberPresenter
2 What are sponsored projects? Governmental agencies & private companies give $ to UT to perform technical projects and produce a deliverableOur professors are in demand due to their expertise in their fieldSome have international reputations
3 Importance of sponsored projects UT’s mission is instruction, research, public serviceExternal funding pays for research work that our faculty members are interested in pursuingActive researchers make better teachersPays for high-tech equipment & buildingsAttracts quality graduate students who want to work with highly-regarded facultySpin-off companies improve state & local economyBoosts UT’s image / reputation / national rankings
4 How much $ is involved? FY 2004 $315,197,533 FY 2005 $336,364,661
5 Who is involved? Principal Investigator Co-PI’s & research staff Graduate studentsSubcontractorsDept HeadDepartment accounting & clerical staffCollege adminResearch officeCampus / unit business officeController’s OfficeTreasurer’s Office(A/P dept)PayrollSponsor contracting officerSponsor fiscal rep or A/P deptVendorsTechnical workAdministrative & support staffExternal to UT
6 Support staff goalProvide superior service to the PI so that he / she can devote maximum time to technical aspects of project & teaching studentsExceed sponsors’ expectations for fiscal responsibility & administrative performancePromotes reputation of PI and UTSponsors will want to give us more money
7 PI responsibilitiesThe PI is responsible for all aspects of the sponsored project – his reputation is on the lineTechnicalFinancialAdministrative
8 PI technical responsibilities Ensure that all technical reports / deliverables are of high quality and are submitted by sponsor deadlinesEnsure that subcontractors are performing technical tasks adequately
9 PI financial responsibilities Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&AEnsure that all charges post to the correct sponsored project in a timely manner – initiate Advance WBS Element, if necessaryEnsure that the budget is followedEnsure that any sponsor-required prior approvals are obtainedBudget changes, equipment purchases, travelEnsure that subcontractor invoices are reasonable based upon the technical work performed and are allocable, allowable and correctly classified as direct versus F&ADon’t approve payout invoices until satisfied with technical performance
10 PI administrative responsibilities Ensure that support staff are performing tasks adequatelyEnsure that support staff are given required information in a timely mannerEnsure that all applicable Federal, sponsor and UT rules & regulations are followedEnsure that award amendments are requested in a timely manner
11 Department Head responsibilities The Department Head is responsible for ensuring that the PI and support staff perform their jobs in an adequate, timely, and compliant manner.TechnicalFinancialAdministrative
12 Department Head technical responsibilities Ensure that scope of work advances UT’s mission and the goals of the academic unit
13 Department Head financial responsibilities Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&AEnsure that all charges post to the correct sponsored project in a timely mannerApprove PI starting work before signed award document is received?Approve Advance WBS Element, if necessary?Pay for any charges not collected from sponsorsIncluding overruns, disallowances, cost sharing, uncollected or disputed sponsor invoices
14 Department Head administrative responsibilities Ensure space exists to perform project workEnsure that support staff are performing tasks adequately and are adequately trainedEnsure that processes and culture are present that promote financial complianceEnsure that all applicable Federal, sponsor, and UT rules & regulations are followed
15 Dept accounting staff responsibilities Same as for the PI, plus:Process accounting transactionsMonthly account reconciliationProvide PI and Department Head with adequate financial information to manage projectSolve problemsLiaison between PI and everyone elseAssist PI in compliance with regulationsCloseout in a timely manner
16 Campus / unit business office responsibilities Set up project in IRISWork with PI, department accounting staff & research office to get WBS Element opened as quickly as possiblePeriodic financial reportingPeriodic invoicing / cash receipts performed to maximize UT’s cash flowAssist department accounting staff & PI with regulation complianceCloseout in a timely manner
17 Campus / unit research office financial responsibilities Review proposals and budgets for accuracy and financial complianceFlow through financial rules to subcontractorsHelp the PI, department accounting staff & business office get WBS Element opened as quickly as possibleGet fully executed award documents from sponsor ASAP so that invoicing can begin which maximizes UT’s cash flowMaximize F&A recoveryNegotiate / disallow detrimental financial terms & conditionsInconsistent costing, such as hourly rates versus % of effortUnreasonable reporting deadlinesNon-standard invoicing and reporting formsBackup documentation for expenditures
18 Sponsored project life cycle PI has great idea=>PI prepares proposal documentProposal approved by UTProposal submitted to potential sponsorSponsor accepts proposalSponsor & UT negotiate award & UT may award subcontractsUT sets up R account in IRISPI starts technical work & incurs chargesPeriodic invoicing / cash receiptsInterim technical & financial reportingProject ends and all project costs are on R within 60 daysFinal technical & financial reports due within 90 days of end date
19 Proposals Proposal document prepared by PI Includes statement of work Includes budget & budget justification narrativeIncludes known subcontractorsSubmitted to the campus / unit research officeRouting / approval sheet signed by administratorsIncluding cost sharing and spaceResearch office reviews total documentProposal submitted on behalf of the University
20 AwardsA successful proposal results in an award document between the sponsor and UTGrantCooperative agreementContract, purchase orderStandard information included in award documentStart & end dates, award amount, budget, statement of workDifferent award types have progressive levels ofSponsor control & restrictionsReporting requirements
21 Federal grants “For the public good” One or two page grant document May not require UT to signUsually incorporates agency grant policiesGuide usually located on their web site
22 Flow-through awardsAn award where the prime funding sponsor awards money to an awardee and the awardee awards part of the money to a sub-awardeeExample: NASA gives Vanderbilt a grant for $1 million & Vanderbilt sub-grants $100,000 to UTUT’s sponsor is Vanderbilt, a private entity, because that is who our award agreement is with; however, it is Federal flow-through funding because we know that the prime sponsor is NASASame compliance requirements as direct Federal award
23 Restricted WBS Element Restricted WBS Elements are cost collectors in IRISUT must spend the $ in accordance with the sponsor’s specificationsUT must maintain separate accounting of each project’s financial activityEstablished by the campus / unit business office at the request of the department or upon receipt of an award document from the campus / unit research office
24 Advance WBS ElementA restricted WBS Element can be established before the executed award document is receivedPI wants to start working on the projectIf costs will be incurred, then where will they post?Never to another sponsored project WBS Element!!!Department evaluates likelihood of award and authorized PI to start work without an executed award agreementSubmits signed form to the campus / unit business officeRisks? See next slide.
25 Risks? Factors affecting risk of setting up an advanced WBS Element Government or private sponsor?Good and reliable past relationship with sponsor?Competitive or non-competitive proposal?Intent to award provided verbally or in writing?Have we already started working?
26 Restricted WBS Element setup Required informationSigned Advance WBS Element request form or fully-executed award documentCOEUS proposal # (for Knoxville)Budget in IRISDelays can occurDepartment must monitor new account setup progressIf award amount differs from proposed amount, then department must submit revised budget to campus / unit research office or business office ASAP
27 Timeline for setupRestricted WBS Elements need to be established in a timely mannerIdeally, before the project start dateProvide adequate time for department to assign recurring costsPayroll PIF’s, service centers, etc.In reality, we are not always timelyCauses more work for everyoneSponsors & auditors not happy
28 Sponsored projects in IRIS Master data in various IRIS modulesProject Systems module has most master dataFunds Mgmt module has some master data & budgetSales & Distribution module has invoicing master dataAccounts Receivable module has invoicing & collection activityYou should review this information and make sure that it agrees with your award documentIf not, call campus / unit business officeErrors can radically affect your project!
29 IRIS transactions CJ20N contains many attributes Dates, obligated award amount, F&A, cost sharing, PI, invoicing, function, sponsor, project profile, project type, etc.Learn what all of these representField names aren’t always descriptiveRead Business Process Procedure (BPP) on IRIS web site for definitions
30 Accounting structure CJ20N work breakdown structure Project definition Header only, not a chargeable objectWBS elementsChargeable objects with many attributesDifferent levels & flexibilityLink to funds centersCan cross organizational lines
31 Required structure Award document requirements New award document number from sponsor always requires a new Project Definition & WBS ElementDifferent F&A rates within one awardThis always requires separate WBS Element for those charges that are treated differently for F&A computationExample – Department of Education - participant support costs
32 Optional structure Divide project for mgmt purposes By technical phases of workFor different sub- or co-PI’s within UTWBS Element linked to their funds centerThey have spending controlThey have accounting ledger accessYou can see other IRIS accounting reports, not ledgerThey get F&A recovery and research “credit”Department must request new WBS ElementCampus / unit business office has no other way of knowing that they are needed
33 Complex structure Funds Center U013410024 Funds Center U073415055 Project DefinitionRWBS ElementR(lead PI)WBS ElementR(co-PI)
34 Charges to projectsCharges must be in compliance with the rules & regulations applicable to UTOMB Circular A-21 and A-110UT Fiscal PolicySponsor policy manualsAward document clausesResponsibility of PI and departmentConsequences of incorrect charges
35 Types of charges Direct costs F&A costs Salaries, staff benefits, supplies, long-distance phone calls, travel, equipment, subcontractsException to “basic support” costsDue to nature of project technical workF&A costsFacilities costsBldgs, equip, electricity, libraryAdmin costs“Basic support” costsClerical & admin salaries, phone line charges, office supplies
36 What are F&A costs? Facilities & Administrative costs Federally-approved rate applied to a specified cost baseModified Total Direct Costs (MTDC) baseSalaries & Wages (S&W) baseMatrix of rates in effectCampus, function, location, award yearSame rate for life of project (A-21 requirement)Reimbursement for expenses already paid by UT to support researchThese are real costs!
37 Expenses included in F&A FacilitiesBuildingsSidewalksElectricity / fuelEquipmentLibrarySecurityCustodialAdministrativeDepartment clerical & admin staff salariesResearch & business officesBasic office supplies & expensesPortion of other admin costs – Dept Head, Dean, system charge, etc.
38 F&A cost sharingMust be negotiated & approved in advance by campus / unit research officeA portion of collected F&A is returned to college / unit that generated itFinancial activityF&A is charged to WBS Element at full, audited rate during month-end closing using cost elementF&A cost sharing is credited during month-end closing using cost element in an amount sufficient so that the net F&A charge is equal to the amount or % allowed by the sponsor
39 Transfers of costs Cost transfers should only be to correct errors Subject to sponsor, Federal, State and internal audit disapprovalExcessive or late transfersCost transfers that do not document how target project benefited from the chargeNew fiscal policy includes time limits and documentation requirements – similar to other universities
40 Ledger summary Remember that cumulative actual expenditures and budget variance foruses of funds includes F&A !Obligated amount and budget fortotal uses of funds should match!Budget should equal zero!
41 Training classes 1 Overview of Accounting for Sponsored Projects 2 OMB Circulars & Cost Accounting Standards3 Understanding F&A Costs4 Direct Costing5 Cost Transfers & Closeout6 Cost Sharing7 Subcontract Monitoring8 Advanced Topics9 Invoicing, Reporting & Cash Receipts10 Sponsored Projects Reports in IRISOther – IRIS reporting for sponsored projects