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Overview of Accounting for Sponsored Projects Date Presenter Name Presenter Phone Number Presenter E-mail.

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Presentation on theme: "Overview of Accounting for Sponsored Projects Date Presenter Name Presenter Phone Number Presenter E-mail."— Presentation transcript:

1 Overview of Accounting for Sponsored Projects Date Presenter Name Presenter Phone Number Presenter

2 2 What are sponsored projects? Governmental agencies & private companies give $ to UT to perform technical projects and produce a deliverable –Our professors are in demand due to their expertise in their field Some have international reputations

3 3 Importance of sponsored projects UT’s mission is instruction, research, public service –External funding pays for research work that our faculty members are interested in pursuing Active researchers make better teachers Pays for high-tech equipment & buildings Attracts quality graduate students who want to work with highly-regarded faculty Spin-off companies improve state & local economy –Boosts UT’s image / reputation / national rankings

4 4 How much $ is involved? FY 2004$315,197,533 FY 2005$336,364,661 FY 2006$339,450,751 FY 2007$337,004,722

5 5 Who is involved? Principal Investigator Co-PI’s & research staff Graduate students Subcontractors Dept HeadDepartment accounting & clerical staff College adminResearch office Campus / unit business office Controller’s Office Treasurer’s Office (A/P dept) Payroll Sponsor contracting officer Sponsor fiscal rep or A/P dept Vendors Technical work Administrative & support staff External to UT

6 6 Support staff goal –Provide superior service to the PI so that he / she can devote maximum time to technical aspects of project & teaching students –Exceed sponsors’ expectations for fiscal responsibility & administrative performance Promotes reputation of PI and UT Sponsors will want to give us more money

7 7 PI responsibilities The PI is responsible for all aspects of the sponsored project – his reputation is on the line –Technical –Financial –Administrative

8 8 PI technical responsibilities Ensure that all technical reports / deliverables are of high quality and are submitted by sponsor deadlines Ensure that subcontractors are performing technical tasks adequately

9 9 PI financial responsibilities Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&A Ensure that all charges post to the correct sponsored project in a timely manner – initiate Advance WBS Element, if necessary Ensure that the budget is followed Ensure that any sponsor-required prior approvals are obtained –Budget changes, equipment purchases, travel Ensure that subcontractor invoices are reasonable based upon the technical work performed and are allocable, allowable and correctly classified as direct versus F&A –Don’t approve payout invoices until satisfied with technical performance

10 10 PI administrative responsibilities Ensure that support staff are performing tasks adequately Ensure that support staff are given required information in a timely manner Ensure that all applicable Federal, sponsor and UT rules & regulations are followed Ensure that award amendments are requested in a timely manner

11 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. –Technical –Financial –Administrative

12 12 Department Head technical responsibilities Ensure that scope of work advances UT’s mission and the goals of the academic unit

13 13 Department Head financial responsibilities Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&A Ensure that all charges post to the correct sponsored project in a timely manner –Approve PI starting work before signed award document is received? –Approve Advance WBS Element, if necessary? Pay for any charges not collected from sponsors –Including overruns, disallowances, cost sharing, uncollected or disputed sponsor invoices

14 14 Department Head administrative responsibilities Ensure space exists to perform project work Ensure that support staff are performing tasks adequately and are adequately trained Ensure that processes and culture are present that promote financial compliance Ensure that all applicable Federal, sponsor, and UT rules & regulations are followed

15 15 Dept accounting staff responsibilities Same as for the PI, plus: –Process accounting transactions –Monthly account reconciliation –Provide PI and Department Head with adequate financial information to manage project –Solve problems –Liaison between PI and everyone else –Assist PI in compliance with regulations –Closeout in a timely manner

16 16 Campus / unit business office responsibilities Set up project in IRIS Work with PI, department accounting staff & research office to get WBS Element opened as quickly as possible Periodic financial reporting Periodic invoicing / cash receipts performed to maximize UT’s cash flow Assist department accounting staff & PI with regulation compliance Closeout in a timely manner

17 17 Campus / unit research office financial responsibilities Review proposals and budgets for accuracy and financial compliance Flow through financial rules to subcontractors Help the PI, department accounting staff & business office get WBS Element opened as quickly as possible Get fully executed award documents from sponsor ASAP so that invoicing can begin which maximizes UT’s cash flow Maximize F&A recovery Negotiate / disallow detrimental financial terms & conditions –Inconsistent costing, such as hourly rates versus % of effort –Unreasonable reporting deadlines –Non-standard invoicing and reporting forms –Backup documentation for expenditures

18 18 Sponsored project life cycle PI has great idea => PI prepares proposal document Proposal approved by UT Proposal submitted to potential sponsor Sponsor accepts proposal => Sponsor & UT negotiate award & UT may award subcontracts UT sets up R account in IRIS PI starts technical work & incurs charges Periodic invoicing / cash receipts => Interim technical & financial reporting Project ends and all project costs are on R within 60 days Final technical & financial reports due within 90 days of end date

19 19 Proposals Proposal document prepared by PI –Includes statement of work –Includes budget & budget justification narrative –Includes known subcontractors –Submitted to the campus / unit research office Routing / approval sheet signed by administrators –Including cost sharing and space Research office reviews total document –Proposal submitted on behalf of the University

20 20 Awards A successful proposal results in an award document between the sponsor and UT –Grant –Cooperative agreement –Contract, purchase order Standard information included in award document Start & end dates, award amount, budget, statement of work Different award types have progressive levels of Sponsor control & restrictions Reporting requirements

21 21 Federal grants “For the public good” One or two page grant document May not require UT to sign Usually incorporates agency grant policies –Guide usually located on their web site

22 22 Flow-through awards An award where the prime funding sponsor awards money to an awardee and the awardee awards part of the money to a sub-awardee –Example: NASA gives Vanderbilt a grant for $1 million & Vanderbilt sub-grants $100,000 to UT –UT’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 NASA Same compliance requirements as direct Federal award

23 23 Restricted WBS Element Restricted WBS Elements are cost collectors in IRIS UT must spend the $ in accordance with the sponsor’s specifications UT must maintain separate accounting of each project’s financial activity Established 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 24 Advance WBS Element A restricted WBS Element can be established before the executed award document is received –PI wants to start working on the project If 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 agreement –Submits signed form to the campus / unit business office –http://admin.tennessee.edu/uwa/to/co/pdf/WBS.PDFhttp://admin.tennessee.edu/uwa/to/co/pdf/WBS.PDF Risks? See next slide.

25 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 26 Restricted WBS Element setup Required information –Signed Advance WBS Element request form or fully-executed award document –COEUS proposal # (for Knoxville) –Budget in IRIS Delays can occur –Department must monitor new account setup progress –If award amount differs from proposed amount, then department must submit revised budget to campus / unit research office or business office ASAP

27 27 Timeline for setup Restricted WBS Elements need to be established in a timely manner –Ideally, before the project start date Provide adequate time for department to assign recurring costs –Payroll PIF’s, service centers, etc. –In reality, we are not always timely Causes more work for everyone Sponsors & auditors not happy

28 28 Sponsored projects in IRIS Master data in various IRIS modules –Project Systems module has most master data –Funds Mgmt module has some master data & budget –Sales & Distribution module has invoicing master data –Accounts Receivable module has invoicing & collection activity You should review this information and make sure that it agrees with your award document –If not, call campus / unit business office –Errors can radically affect your project!

29 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 represent –Field names aren’t always descriptive »Read Business Process Procedure (BPP) on IRIS web site for definitions

30 30 Accounting structure CJ20N work breakdown structure –Project definition Header only, not a chargeable object –WBS elements Chargeable objects with many attributes Different levels & flexibility Link to funds centers –Can cross organizational lines

31 31 Required structure Award document requirements –New award document number from sponsor always requires a new Project Definition & WBS Element –Different F&A rates within one award This always requires separate WBS Element for those charges that are treated differently for F&A computation Example – Department of Education - participant support costs

32 32 Optional structure Divide project for mgmt purposes –By technical phases of work –For different sub- or co-PI’s within UT WBS Element linked to their funds center –They have spending control –They have accounting ledger access –You can see other IRIS accounting reports, not ledger –They get F&A recovery and research “credit” –Department must request new WBS Element Campus / unit business office has no other way of knowing that they are needed

33 33 Complex structure Project Definition R WBS Element R (lead PI) WBS Element R (co-PI) Funds Center U Funds Center U

34 34 Charges to projects Charges must be in compliance with the rules & regulations applicable to UT –OMB Circular A-21 and A-110 –UT Fiscal Policy –Sponsor policy manuals –Award document clauses Responsibility of PI and department –Consequences of incorrect charges

35 35 Types of charges Direct costs –Salaries, staff benefits, supplies, long-distance phone calls, travel, equipment, subcontracts –Exception to “basic support” costs Due to nature of project technical work F&A costs –Facilities costs Bldgs, equip, electricity, library –Admin costs “Basic support” costs –Clerical & admin salaries, phone line charges, office supplies

36 36 What are F&A costs? Facilities & Administrative costs –Federally-approved rate applied to a specified cost base Modified Total Direct Costs (MTDC) base Salaries & Wages (S&W) base –Matrix of rates in effect Campus, function, location, award year Same rate for life of project (A-21 requirement) –Reimbursement for expenses already paid by UT to support research These are real costs!

37 37 Expenses included in F&A Facilities –Buildings –Sidewalks –Electricity / fuel –Equipment –Library –Security –Custodial Administrative –Department clerical & admin staff salaries –Research & business offices –Basic office supplies & expenses –Portion of other admin costs – Dept Head, Dean, system charge, etc.

38 38 F&A cost sharing Must be negotiated & approved in advance by campus / unit research office A portion of collected F&A is returned to college / unit that generated it Financial activity –F&A is charged to WBS Element at full, audited rate during month-end closing using cost element –F&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 39 Transfers of costs Cost transfers should only be to correct errors Subject to sponsor, Federal, State and internal audit disapproval –Excessive or late transfers –Cost transfers that do not document how target project benefited from the charge New fiscal policy includes time limits and documentation requirements – similar to other universities

40 40 Ledger summary Budget should equal zero! Obligated amount and budget for total uses of funds should match! Remember that cumulative actual expenditures and budget variance for uses of funds includes F&A !

41 41 Training classes 1 Overview of Accounting for Sponsored Projects 2 OMB Circulars & Cost Accounting Standards 3 Understanding F&A Costs 4 Direct Costing 5 Cost Transfers & Closeout 6 Cost Sharing 7 Subcontract Monitoring 8 Advanced Topics 9 Invoicing, Reporting & Cash Receipts 10 Sponsored Projects Reports in IRIS Other – IRIS reporting for sponsored projects


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