Presentation on theme: "1 Financial Management of Sponsored Programs (Grants & Contracts)* Presented by the departments of: Sponsored Programs in Research and Graduate Studies."— Presentation transcript:
1 Financial Management of Sponsored Programs (Grants & Contracts)* Presented by the departments of: Sponsored Programs in Research and Graduate Studies Grants Accounting in the Comptroller’s Office *sponsored by the department of Business Administrator Services as part of the Departmental Fiscal Management workshop series
2 Presenters Grants Accounting Debra Leonard Diana Dubinsky Lisa Heilman Elaine Petrosky Sponsored Programs Lori Burchard
3 Sponsored Program Administration Sponsored Programs (SP) implements procedures to help meet obligations associated with the management of grants and contracts Grants Accounting (GA) in the Comptroller’s Office oversees management of the accounting and financial aspects of sponsored programs at KSU. They are responsible for all financial reporting.
4 Grant Administration Pre-Award Pre-Award is the period before a grant is awarded and a University account is established Pre-Award procedures are administered by Sponsored Programs. They provide assistance with: Funding opportunities Application process/ budget preparation Cost principles Agency regulations & guidelines Compliance issues
5 Grant Administration Post-Award Post-Award is the period after an award is received and accepted by the University. This includes the financial and operational management of the grant A “sponsored program” is any grant, cooperative agreement, or contract between the federal or state government or another sponsoring agency, and the University Each sponsored program is assigned a unique restricted account in the Financial Records System (FRS)
6 Grant Administration Post-Award Federal regulations & guidelines – Office of Management and Budget (OMB) OMB Circular A-21 - Cost Principles OMB Circular A Administrative requirements OMB Circular A Internal control and audit standards for states, local governments and non- profit organizations Links to all three circulars are available at:
7 Grant Administration Post-Award KSU Policy # “Operational Procedures and Regulations Regarding Sponsored Programs Administration” When sponsor regulations or guidelines are absent, KSU policies and procedures apply If regulations overlap, use the most restrictive requirements
8 Grant Administration Post -Award The Project Director/Principal Investigator (PI) has the primary responsibility to: Manage with care and diligence Adhere to all terms and conditions of the award Document all expenditures in accordance with sponsor regulations Review federal and sponsor guidelines, grant agreements, KSU and departmental policies Comply with reporting requirements
9 Establishing a Grant Account Sponsored Programs receives notification of the award, and forwards a “Request For A New Account” (See Exhibit A) to Grants Accounting Grants Accounting sets up a restricted account When cost sharing has been identified in the proposal budget a cost share account will also be established The PI will receive an approved copy of the request with an assigned account number and name of the responsible grant accountant
10 Establishing a Grant Account An account number beginning with 44(xxxx) indicates a sponsored program (restricted) account The account number beginning with 1(xxxxx) on the form indicates a cost share account if required (University match/contribution) Most federal multi-year grants have automatic carry forward of unexpended funds. The account number will remain the same throughout the project period A new account number may be assigned for each budget period within a multi-year grant when required for accounting purposes
11 The Grant Budget Sponsored Programs, in consultation with the PI, prepares a “Spending Plan” (See Exhibit B) by FRS subcode based on the approved budget This budget is entered into the accounting system and reflected on the monthly account statement
12 Cost Sharing & Matching Funds Many government agencies are prevented by law from paying the entire cost of any sponsored program Agencies require assurance that the University has met its cost sharing obligation The University documents this cost share by setting up a separate account, linked to the grant account.
13 Cost Sharing & Matching Funds The cost share can be in the form of University contribution, other grants, or in-kind match from third parties All cost shares must be documented in the cost share account in the same way expenses are charged to any other university account
14 Cost Sharing & Matching Funds Most cost sharing is faculty or staff release time spent working on the grant This level of effort must be documented through a “Revision In Salary Distribution Charges” form (See Exhibit C) for the relevant personnel
15 Cost Sharing & Matching Funds At times the University is required or desires to contribute to the cost of equipment, supplies or other costs For University contribution of non-personnel costs, the PI must initiate a budget transfer from the contributing department into the cost share account. Any expenses not covered by transferred funds at the end of the fiscal year are charged to the PI’s department
16 Cost Sharing & Matching Funds Donations of external support, including gifts-in-kind and services are not documented in the cost share account Documentation of the support is recorded on: The “Certification of Facilities and/or Other Items” form (See Exhibit D) for donations of gifts-in-kind The “Certification of Professional Time” form (See Exhibit E) for service donations These forms can be obtained from Grants Accounting
17 Month End FRS Reports
18 Month End Financial Reports Month-end financial and payroll reports are available from FRS by noon of the next business day after month-end Account Statement (See Exhibit F) Report of Transactions (See Exhibit G) Labor Distribution Report (See Exhibit H) Position Control Statement (See Exhibit I)
24 Monthly Account Reconciliation Procedures Compare your internal records (supporting documentation) to financial reports to verify the accuracy of all transactions Budgeted vs. Actual Expenditures Open Commitments Balance Available Notify your grant accountant of any errors in a timely manner
25 Sponsored Program Cost Principles
26 Tests of Allowability of Costs (per OMB Circular A-21) Costs must: Be reasonable Be allocable to a specific sponsored program Be given consistent treatment Conform to laws and regulations, the terms of sponsored agreement and University policy
27 Are the Costs Reasonable? Charge must be necessary for the performance of the sponsored program Restraints or requirements are imposed by such factors such as: Arm’s-length bargaining Federal and state laws Sponsored agreement terms and conditions
28 Are the Costs Reasonable? All concerned parties must act with prudence considering their responsibilities to: University KSU employees & students Government & the public at large Must follow University policies and practices
29 Are the Costs Allocable? A cost is allocable to a sponsored program if it: Is incurred solely to advance the work being conducted under the sponsored program Is necessary to the overall operation of the University and is assignable in part to a sponsored program; or Benefits both the sponsored program and other works of the University in proportions which can be reasonably determined
30 Are the Costs Allocable? Major considerations: Costs allocable to one sponsored program cannot be shifted routinely to another sponsored program Costs allocable to non-federal sponsors may not be shifted to federally sponsored programs Costs may be split between programs if proportional benefits to those programs can be determined, or if the programs are interrelated
31 Direct Costs vs. Indirect Costs Direct Costs - Those costs which can be identified specifically with a particular sponsored project Indirect Costs (F&A Costs) - Those costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity
32 Examples of Indirect Costs Departmental Salaries - Secretarial salaries Postage - exception: direct charging may be appropriate if it can be specifically identified as beyond the normal and customary administrative expense - example: mass mailing for survey Telephone - basic telephone service (lines and equipment) - exception: long distance
33 Unallowable Costs Common Examples: Entertainment expenditures, including meals when not on travel status Individual membership dues & subscriptions Airfare in excess of the lowest available rates Alcoholic beverages Personal use of a vehicle provided by KSU for grant-related use Fines and penalties, including parking and library fines
34 Selected Expenditures
35 Charging Expenses to a Grant Account The PI has ultimate responsibility for ensuring that all expenditures charged to the sponsored program are correct Approval of expenditures should go through normal departmental procedures Allowable expenses must be charged directly to the grant or cost share account, not to a departmental operating account.
36 Expenditures – Equipment Equipment is defined by University policy as any item costing $2,500 or more KSU policy requires a purchase order for any purchase $2,500 or above The Procurement Office can provide guidance on purchase requisitions, vendor selection and purchase orders
37 Types of Equipment Special purpose equipment - equipment used only for specialized research, medical, scientific, or other technical activities General purpose equipment - equipment for which the use is not limited to specialized research, medical, scientific, or other technical activities Examples: Office equipment (computers) & furnishings, copying & printing equipment
38 Expenditures – Equipment Equipment not specified in the proposal budget requires approval through Sponsored Programs and documentation provided to Grants Accounting prior to purchase In general, funding agencies grant title of equipment to KSU at the time of the purchase; some agreements require equipment to be returned Documentation must be maintained regarding the status and location of the equipment
39 Expenditures – Telephone Telephone Expenses Basic telephone service is not an allowable cost to the grant, because it is part of the indirect cost rate Grant-related toll calls can be charged back to the appropriate grant Retain documentation of long distance calls charged to the grant
40 Expenditures – Telephone Under certain circumstances phone service may be charged to the grant if it: Is used solely to benefit the project Has been approved in the grant budget Contact your grant accountant two months before you need to discontinue service
41 Expenditures – Travel All travel must conform to KSU travel regulations Travel Policy # “Expense Statement” (See Exhibit J) submitted for reimbursement must specify in the comment section how the travel directly benefits the grant
42 Expenditures – Travel Document travel expenditures the same as any University-funded trip Per Diems for meal reimbursement
43 Expenditures – International Travel Funding for foreign travel may require that it be specifically budgeted or pre- approved Travelers on federally sponsored trips must travel coach class on U.S. flag carriers, except in extraordinary circumstances Most agencies do not consider travel to Canada to be foreign travel
45 Subcontracts A subcontract agreement, signed by both parties, must be in place before work can be charged to a grant account Once an agreement is signed a purchase order (PO) will be issued that will encumber the subcontract commitment on the month- end financial report
46 Subcontracts The invoice from the subcontractor must reference both the grant account and the PO number The invoice should be detailed enough for the PI to determine that all charges are allowable to the grant The PI reviews and approves the invoice if the subcontractor has met appropriate scientific and reporting requirements
48 Hiring Personnel University policy and procedures must be followed when hiring personnel on a sponsored program.
49 Hiring Personnel Standard forms used should be available in each department and routed for approval: “Position Request and Authorization” (PRA) (See Exhibit K) “Personnel Action Form” (PAF) (See Exhibit L) “Offer of Graduate Appointment” (See Exhibit M) “Student Appointment Form”
50 Hiring Personnel Personnel working on grants must be paid at the same level as employees doing similar work and raises must be consistent with university funded positions. They also receive the same benefits. Hourly personnel receive the same annual salary increases as other classified employees. Administrative staff are term appointments made on an annual basis. Salary increases are determined annually upon renewal and cannot be greater than university funded position increases.
51 Hiring Personnel Graduate Research Assistants must earn the same stipend as other Research Assistants in their home department. Tuition is a fringe benefit of the appointment and also charged to the grant. It is not possible to charge the stipend to one grant account and the tuition to another grant account. Graduate Assistants are not permitted to work in addition to their appointment without approval.
52 Charging Existing Personnel Current employees may devote a portion of their time and corresponding salary to a sponsored program or cost share when the arrangement is approved by their department ahead of time. Secretarial and clerical staff are not allowable costs as they are included in the indirect cost rate calculation. If a program requires these services they must be clearly justified in the proposal and approved in the grant award.
53 Charging Existing Personnel The “Revision in Salary Distribution Charges” form (See Exhibit C) is used to: charge a percentage of effort to a cost share account charge a percentage of effort to a grant account revise a salary distribution between accounts For assistance contact your grant accountant Salary amounts must be distributed based on actual effort (percentage of time spent working on a project), NOT on how much money is available in the grant budget
54 Charging Existing Personnel A “Revision in Salary Distribution Charges” form (See Exhibit C) must be completed at the beginning of each project year for current university employees to allocate their effort to a grant. Faculty members with effort on sponsored programs should complete a form at the beginning of each academic year (AY) to charge their time as allocated in the project budgets. This can be revised if effort changes.
55 Summer Appointments Summer faculty appointments on grants are not automatic. A PAF must be submitted for summer work indicating it as an additional appointment. Compensation is based on the previous academic year salary (1/39th for each week worked) A PAF must be completed for temporary summer staff including graduate students working on temporary appointments during the summer Forms should be submitted by the end of spring semester for timely processing and payment
56 Employee vs. Non-Employee Status An employee is paid through the KSU payroll system. A non-employee is paid via a “Check Request” (See Exhibit N) through Procurement. The “Independent Contractor Determination” form (See Exhibit O) provides guidelines to decide whether a person is an employee or non- employee.
57 Employee vs. Non-Employee Status An individual is considered an employee if: performs the services rendered subject to the will and control of the University (the employer) the University has the legal right to control both the method and the result of the services provided hours of work are set by the University, and a continuing relationship exists he/she has been paid through payroll by the University during the current calendar year
58 Employee vs. Non-Employee Status An individual is considered a non-employee if: established in private business in the field of the goods or services provided follows an independent trade providing the goods or services to the public has private liability insurance covering the goods or services provided maintains private facilities, tools, equipment, and/or other resources necessary to provide the goods or services the nature of the goods or services is such that they are not and cannot be provided by University employees
59 Non-Employee Payment To pay a non-employee submit: A “Check Request” (See Exhibit N) The “Independent Contractor Determination” form (See Exhibit O) A “Consultant Agreement” form (See Exhibit P) or a detailed invoice Library.cfm Contact Treasury, Tax, & Risk Management Services for assistance with tax-related questions Phone 23751
60 Non-Employee Payment The detailed invoice must include: Name of company or consultant Social Security Number or Taxpayer I.D. Number Nature of services rendered and their relevance to the grant-supported program Dates of service Basis for calculating the fee paid Amount to be paid
61 Non-Resident Aliens Before paying or reimbursing expenses to non- resident students, employees, or visitors: Contact Sandy McKitrick in the Payroll Department for assistance in completing the required forms and complying with federal tax regulations Phone A copy of the person’s visa and passport is needed The individual must apply for a social security number as soon as possible
62 Effort Certifications
63 Effort Certifications An “Effort Certification Report” (See Exhibit Q) is an after-the-fact confirmation that employees paid from grant funds or cost share accounts performed services related to the grant. The report records the effort (work) for which the employee is compensated Effort Certification is required when any effort is expended on a sponsored program This is a requirement of OMB Circular A-21 and is subject to audit
64 Effort Certifications – Base Effort vs. Incidental Effort “Base Effort” is 100% of the work for which an employee is paid salary/wages by the University “Incidental Effort” is work in excess of the normal, for which supplemental compensation is paid. Includes: Honoraria Intra-university consulting Continuing education Evening and weekend teaching Regional campus teaching
65 Effort Certifications – Effort Reporting Periods Faculty and Contract employees will certify their effort three times each year, at the end of: Fall Semester Spring Semester Summer Semester Certifications for hourly employees are completed at the end of each month
66 Effort Certifications Process Effort Certification Reports are generated from the payroll records and sent to departments Reports are reviewed, changes made if necessary and signed by employee or responsible individual
67 Effort Certifications Process Reports are returned to the Effort Certification Coordinator (in the Comptroller’s office) within 10 working days If there are significant differences (5% or more during the certification period) a “Revision in Salary Distribution Charges” form (See Exhibit C) must be initiated to revise the salary/wages charged to the sponsored program
68 Cost Transfers
69 Cost Transfers A cost transfer is the moving of an expense from one account to another. Forms to initiate transfer: “Revision in Salary Distribution Charges” (See Exhibit C) “Request for Revision in Charge” (See Exhibit R) “Interdepartmental Charges” (See Exhibit S) “Inter-Department Charge Request Form (See Exhibit T)
70 Cost Transfers & Federal Regulations Four general circumstances under which cost transfers may be appropriate: To correct errors in the original charges Legitimate re-budgeting as a result of a change from the initial work plan To reallocate costs among related grant accounts To reallocate costs incurred by the department on behalf of the grant, such as long distance telephone calls, and copy charges
71 Cost Transfer Documentation Documentation required for non-salary cost transfers: Date of original transaction Original Account Number Reference Number Payee/Description Amount of original transaction Justification for transfer Account to be charged Questionable cost transfers without adequate documentation will be disallowed
72 The Importance of Timeliness Cost transfers must be made within 90 days of the original transaction to avoid an audit disallowance Transfers after 90 days will require approval from Sponsored Programs and are only allowable under unusual circumstances External auditors may assume that certain transfers have been made simply to use up excess funds
73 Disallowed Costs Disallowed costs that are allowable under University policy will be charged back to the department Disallowed costs that are also disallowed by the University will need to be reimbursed to the University by the PI
74 Grantor Payments
75 Grantor Payments Grants Accounting (GA) handles the receipt of checks and wire transfer payments to sponsored programs from federal, state, and local agencies, foundations, and corporations. Expenditures can be made after GA receives the award documentation and establishes an account. This does not necessarily mean that cash has been received.
76 Grantor Payments Grants Accounting handles the receipt of funds including: Letter of Credit Invoices Pre-Payments The receipt of funds is transparent to the PI Grants Accounting is responsible for invoicing sponsors
77 Program Income With most grants the income is received from the funding agency. In some grants there is income generated from the program. This may include Sales of Publications Conference/Workshop Fees Usage or rental fees Patent and copyright royalties Program income can come from both federal and non-federal sources (A-110 Subpart C.24) If income is received directly by the academic department, contact GA for assistance in proper handling of deposit
78 External Reporting
79 Financial Reports Most sponsoring agencies require the grantee to submit reports on the grant expenditures at the end of the grant period. Some agencies require periodic reports. Grants Accounting prepares financial reports based on expenditures recorded in the grant and cost share accounts Grants Accounting approval is required on all financial reports prior to submission
80 Financial Reports The PI is responsible for: Submitting all expenses for payment so they are recorded in the FRS grant account in a timely manner for inclusion in the financial report Verifying that the information in the final financial report is correct and agrees with his/her records
81 Performance/Technical Reports Interim Progress Reports are required annually for most federal grants Responsibility of PI Submit in timely manner to ensure release of continuation funding in multi-year projects Due 2-3 months prior to end of current funding period depending on agency May need to be completed more frequently based on agency requirements
82 Performance/Technical Reports Final Progress Reports are required within 90 days of termination of federal grants Considered essential by agencies Future awards to universities with delinquent reports may be delayed Contents of report prescribed by agency. Sponsored programs can provide direction. If financial information required as part of report it is to be provided by Grants Accounting
83 Reporting Requirements Copies of all financial, progress, and final reports to be sent to Sponsored Programs for official file Other reports that may be required are: Equipment reports Patent and Invention reports Annual audit reports Annual or final certifications These reports will be prepared by Sponsored Programs in consultation with PI
84 Resources Comptroller’s Office Grants Accounting Debra Leonard Diana Dubinsky Lisa Heilman20985 Elaine Petrosky20986
85 Resources Research and Graduate Studies Sponsored Programs Carol Toncar22289 Lori Burchard Internal Audit
86 Resources Procurement Department Payments Purchases Telecommunications27922 Human Resource Services and Solutions Payroll Department Treasury, Tax, & Risk Management Services23751
87 Sponsored Programs Grants and Contracts Thanks for attending!