Introduction
Managing an award is a collaborative effort between the investigators, departmental staff and the Office of Sponsored Programs (OSP) – Post-Award. Investigators are responsible for completing the scope of the project within the project budget, for preparing and submitting any required technical reporting due to the sponsor, for completing Project Verification Statements (PVS) and for ensuring costs charged to the award are in line with university and sponsor rules and regulations. Investigators are also responsible for working with subaward investigators and communicating with their department financial staff any changes or concerns. (See Managing Subawards) Departmental financial staffs are responsible for processing financial transactions and working with the investigator to ensure that expenditures are in line with university and sponsor rules and regulations. OSP – Post-Award project specialists are responsible for setting up the project and budget in SAP, monitoring the project, providing guidance on sponsor rules and regulations, preparing sub-award agreements, requesting reimbursement from the sponsor, and filing required financial reports with the sponsor.
Setting up an award in SAP
An award will be set up in SAP when all of the required information has been received. In SAP, the award will be captured within a WBS. This WBS number is 13 digits long, begins with a ‘2’. Information needed to set up this WBS number includes:
- Award Document – Signed by all parties
- Detailed budget that matches sponsor award amount and institutional cost share
- Signed, completed routing form – including signatures for cost share (if applicable)
- Verification of applicable compliance (human subjects, vertebrate animals, ionizing radiation, hazardous materials and recombinant DNA approvals)
- Current Conflict of Interest Disclosure
- Subaward Information (contact information, budget, detailed statement of work), if applicable.
- Copy of proposal
Awards are typically set up three times per week unless payroll processing precludes updating of SAP during a regularly scheduled time. WBS numbers are not set up for the Responsible Person (PI) if they have delinquent PVS’s outstanding.
Charges to the Award
All charges to the award must comply with university and sponsor rules. Charges posted to an award must be for goods or services directly benefiting the award and rendered during the award period.
Charges to federal or federal pass-thru awards must meet the criteria of 2CFR§200. Generally speaking, costs must be reasonable, allocable, allowable, and treated consistently. 2CFR§200 defines reasonable as the actions a prudent person would have taken under similar circumstances to purchase the item for this cost. For a charge to be reasonable, it must be necessary for the performance of this award. If the charge is due to special circumstances, they should be documented in the file. Other factors, such as arm’s-length bargaining, federal and state laws and regulations should also be considered. Allocable means that the award directly benefits in the proportion of the expense that was charged to it. The cost must be incurred solely to advance the work under the sponsored agreement or it must benefit the agreement and other work of the university in proportions that can be approximated through the use of a reasonable method. Or it is necessary to the overall operation of the university and it is deemed to be assignable in part to a sponsored project. Allowable means that this expenditure is permitted as a direct cost under the terms and conditions of this specific award or contract. Treated consistently means that like expenses are treated the same in similar circumstances. (i.e. office supplies would generally be considered indirect costs and not directly charged to an award unless there are documented, extenuating circumstances.)
Charges must be allocated to an award in direct proportion to the benefit received by expense. This allocation must be documented and a reasonable method used. Charges for items not in the approved budget may require prior written sponsor approval. A copy of this approval should be kept in the department’s financial files or sent to OSP Post-Award. If written sponsor approval is not required, the charge should be documented with the justification for its need.
Pre-award Spending
In some instances, charges may be incurred up to 90 days prior to the start of the award. If sufficient notification has been received from a sponsor to determine that an award will be made, the award may be set up in SAP with the completion of the IPAS form. The signed, completed form should be sent to the OSP Post-award project specialist. If an award is subsequently not made, any expenses charged to the award must be removed and covered by the department. Check with your project specialist if you have a need to spend prior to the beginning of the award. All charges prior to 90 days of the start of the award require written sponsor approval.
Transfers
Transfers of expenses must be thoroughly documented by the preparer. If the transfer is made more than 90 days after the original cost was posted, a detailed explanation for the delay in making the transfer must also be included.
Per 2CFR§200.405, costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements in order to meet deficiencies resulting from overruns or other fund considerations, restrictions imposed by law, restrictions imposed by terms of the sponsored agreement, and reasons of convenience.
Charges that are not allowable per 2CFR§200 must not be charged to federal grants and contracts. Items that are normally considered indirect charges can only be charged to federal grants and contracts under special circumstances which must be justified and, depending on the sponsor, may require sponsor approval. These items would normally include administrative and clerical salaries, office supplies, toner cartridges, diskettes, local telephone charges, cellular phones, copy charges, memberships, journals and subscriptions. 2CFR§200 does provide some exceptions where these expenses may be charged to a grant or contract. Check with your OSP Post-Award project specialist if you have questions about the allowability of these types of expenses for your award or contract.
Salaries and Wages
Subpart E of the Uniform Guidance pertains to Salaries and Wages. It states, in part (emphasis added): Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member’s regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his salary. Charges for work performed on sponsored agreements during all or any portion of such period are allowable at the institutional base salary rate (IBS). IBS is defined as the annual compensation paid by the university for an individual’s appointment, whether that individual’s time is spent in research, instruction, administration or other activities. IBS excludes any income that an individual earns outside duties performed for the university. In no event will charges to sponsored agreements, exceed the proportionate share of the IBS for that period. This principle applies to all members of the faculty at an institution.
Salaries and wages are documented via Project Verification Statements (PVS) forms. See Project Verification Statements (PVS) for information and instructions on completing these forms.
Foreign Travel
Many sponsors have restrictions on or require prior written approval for foreign travel. Foreign travel paid for with federal or federal pass-through funding is subject to the Fly America Act. Check your award rules and regulations to determine if this applies. A copy of written approval for foreign travel should be kept in the department’s financial files or sent to OSP Post-Award.
Rebudgeting
Many sponsors have guidelines when approval is needed for rebudgeting. If your award has such guidelines, you must contact your post-award specialist who will contact the sponsor prior to changing the budget. Once approved (or if sponsor approval is not needed), a new budget should be submitted to your OSP Post-Award project specialist.
You should be aware of the effect of rebudgeting on the F&A amount. F&A is charged in accordance with award expenditures not as budgeted. For example, see chart below, equipment expenditures (non-F&A bearing) were $5,000 over the budgeted amount while other direct expenditures were $3,425 less than budgeted resulting in a reduction to F&A charges of $1,575.
Expenditure | Budgeted | Expenditures |
---|---|---|
Salaries and Benefits | 25,000.00 | 21,575.00 |
Operating Expenses | 5,000.00 | 5,000.00 |
Equipment | 12,000.00 | 17,000.00 |
Total Direct | 42,000.00 | 43,575.00 |
F & A(at 46%) | 13,800.00 | 12,224.50 |
Total | 55,800.00 | 55,799.50 |
In the next example, equipment expenditures were $7,000 under the budgeted amount while other direct charges were $4,794 over the budgeted amount. The result is an increase in F&A of $2,205.
Expenditure | Budgeted | Expenditures |
---|---|---|
Salaries and Benefits | 25,000.00 | 29,794.00 |
Operating Expenses | 5,000.00 | 5,000.00 |
Equipment | 12,000.00 | 5,000.00 |
Total Direct | 42,000.00 | 39,794.00 |
F & A (at 46%) | 13,800.00 | 16,005.24 |
Total | 55,800.00 | 55,799.24 |
Meals/Entertainment Costs
Allowable Costs
Meetings and conferences. “Costs of meetings and conferences, when the primary purpose is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, and other items incidental to such meetings or conferences.”
Unallowable Costs
Alcoholic beverages. “Costs of alcoholic beverages are unallowable.”
Entertainment costs. “Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities) are unallowable.”
Business meals and meeting costs, although not explicitly prohibited under 2CFR§200, have been the subject of a great deal of scrutiny in audits. It is recommended that, where possible, these costs be specifically included in the project budget (which assures that the sponsor approves the expenditure). Also, to substantiate the business purpose of the meeting expenditures, departments are required to provide the following:
- the purpose of the meeting (i.e., content of discussion)
- a list of the attendees (names or group association) present at the meeting
- itemized receipts with requests for payments
- the date and location of the meeting, if it is not self-evident.
Further, the costs must be reasonable and allocable to the project. To determine reasonableness, we often ask our colleagues whether the cost would stand the “front page of the newspaper” test.
Cost Share
If cost share is included in the proposal and/or budget that is awarded, then UNL must document that cost share was provided. Items included as cost share must be in conformance with the same rules and regulations as direct charges to award fall under. Much of the cost share is salaries and wages and will be documented on a PVS. Other items must be identified and documented. If there is a high volume of transactions other than payroll and the dollar amount is large, a companion cost center may be established to accumulate cost share costs for a particular award. For more information on Cost Share, see Documenting Cost Share. Contact your OSP Post-Award project specialist if you need a companion cost center.
Financial Responsibility for Uncollectable Costs on Sponsored Projects
Financial responsibility for sponsored projects resides with the Principal Investigator (PI), the Department, and the College. If a PI is aware of potential non-payment for an award, he or she should contact their department chair and/or staff and OSP immediately. If a sponsored agreement results in unrecoverable costs as a result of any of the following circumstances, it will be the responsibility of the PI, the Department, and the College to cover those costs.
- Expenditures Exceeding Awarded Amount
- Cost Transfers
- Audit Disallowances
- Withholding of Final Payment
- Delinquent Payments from Sponsors caused by Dissatisfaction with the Deliverables or Delinquent Reporting
- Delinquent Payments caused by Sponsor Financial Difficulties, up to and including Bankruptcy
- Non-payment by Sponsor
- Advance Payments
- Funding Regarding Pre-Award Spending
- Subsequent/Supplemental Funding not Awarded
The Office of Sponsored Programs Post Award (OSP) will invoice the sponsor as required by each agreement, and will make reasonable efforts to collect payment. The PI and department are expected to assist with collection efforts when OSP has provided notification that a payment issue exists.
The PI, department contact, and department chair will be notified by OSP that a problem receivable exists within 60 days after the original billing date, at which time a past due notice will be sent to the sponsor (unless contract terms with sponsor indicates their payment cycle is more than 30 days). Past due notices or correspondence will be documented by OSP on a monthly basis thereafter. At the department chair’s discretion, the project may be locked to prevent further posting of expenses. Note that for federal or Nebraska state agency sponsors, this timeline may be adjusted in accordance with their customary billing timelines.
If a receivable on an active sponsored project remains unpaid for more than six months from the original billing date, the PI, department contact, and department chair will again be notified. OSP will lock the project at this time unless there are extenuating circumstances. If a final invoice or payment due remains unpaid nine months after the date when a sponsored project would normally be closed, the unpaid balance will be transferred to a departmental account. If the department does not provide an acceptable account, one will be chosen by OSP.
Close-out Information
For close-out information, please see Closing an Award.