Once a sponsored project has been made to the University, a number of changes can affect the ongoing budgeting, accounting, administration, control and compliance throughout the life of a sponsored project referred to as sponsored project account maintenance.
Sponsored projects are frequently awarded for multiple years. When an award is issued under expanded authorities (automatic carryover), it will maintain the same sponsored project account number as new funding years become available. When the award does not fall under expanded authorities, a new sponsored project account number is assigned annually. It is the responsibility of the Department Administrator to initiate the University paperwork for sponsored project noncompeting continuations. For the follow-on award periods, the following documentation is still required to be sent to the Office of Research for a noncompeting continuation to be activated as all changes to sponsored project awards must be in writing and cannot be verbal:
It is critical that this information be submitted to the Office of Research as close to the begin date of the follow-on award year as possible to assure additional funding is made available to prevent overdraft (or over-budget) conditions and unnecessary cost transfers. The information will be forwarded to Sponsored Projects Accounting by the Office of Research in the same manner as previously discussed in the Account Activation section of this website. The responsible Sponsored Projects Accountant will increase the budget and extend the sponsored project end date if required within the established 72 hour time frame.
NIH cooperative agreements, commonly known as U awards, present particular administrative challenges to financial stewardship of sponsored projects at the University. With respect to NIH U awards, the University will follow the following procedures with respect to the proper financial administration of these awards:
- NIH U awards, whether they are received by the University as a prime or pass-through award, are excluded from NIH SNAP and expanded authorities, and therefore require advance approval of any carry over in accordance with the NIH GPS
- Regardless of any direction we receive from our pass-through agencies, our University must follow the terms and conditions of the award being passed down. (On fixed price awards, if pass-through sponsors tell us that we do not need approval for carry over annually, that is fine. We understand and accept their position)
- 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, we establish new accounts annually in PRISM for BOTH cost reimbursable and fixed price awards. This is the standard procedure followed by the University for awards that do not fall under expanded authorities
- The University’s sponsors do not determine how the University establishes and accounts for sponsored projects in our general ledger
- Creating a new account each year is an internal control and a way for University to monitor appropriate spending and cost identification when combined with consistently monitoring its Level Reports
- Large unexpended balances call into the question the integrity of the accounting for costs related to the sponsored project. Any balance to be carried over or transferred should be reasonable when compared to the current year’s expenses and revenues. We don’t build banks on Entity 05 accounts as that is noncompliant and presents financial reporting problems for our University
Sponsored projects can be delayed for a variety of reasons throughout the lifecycle of a project. Hiring key staff, negotiating awards, identifying human subjects, obtaining scarce materials, samples and compounds, lead times on procuring equipment, etc. all can delay the timely progress of a sponsored project. These delays can make it impossible to complete the sponsored project within the original, proposed period of performance.
It is the responsibility of the Department Administrator to initiate the request to the sponsor for an extension of a sponsored project end date. When it is evident that the project will not be completed on time, the sponsor must be informed timely, in writing, and a request for an extension of the period of performance with no increase in budgeted costs (no cost extension) must be made no later than 30 to 60 days before the end date of the project. The sponsor will need to approve the extension in writing in order for a sponsored project period of performance to be extended. Upon receipt of the approved extension in sponsored project end date by the sponsor, the proper paperwork extending the period of performance of the project must be forwarded to the Office of Research. The information will then be forwarded to Sponsored Projects Accounting by the Office of Research in the same manner as previously discussed in the Account Activation section of this website. Sponsored Projects Accounting has an obligation to remit financial reports to sponsoring agencies in a timely manner in accordance with the terms of the award after a sponsored project performance period expires. Accordingly, Sponsored Projects Accounting cannot accept a verbal notification of a pending extension of time as a rationale to not financially report on a subject project in a timely manner in accordance with the terms of the award.
Fixed price clinical trial sponsored projects can be an exception to the above. Often times the NOA will clearly state the end date of the agreement. Sometimes the agreement is silent on the end date of the sponsored project mainly due to the time it may take to recruit the necessary subjects, perform the necessary tests, obtain the necessary samples, etc. to meets the goals of the trial. Accordingly, Sponsored Projects Accounting will work with the Department and the sponsor to extend the end date of the project as long as the performing PI/Department continues to perform under the terms of the award, and the sponsor continues to reimburse the University for its invoices.
Under expanded authorities, the Office of Research can authorize no cost extensions on NIH and NSF (up to one year) awards. The Office of Research does not have authority to authorize no cost extensions on any other sponsors project awards.
It is the performing Department’s responsibility to ensure that a no-cost extension is being requested for purposes that support the project. The fact that funds remain at the expiration of the grant is not, in itself, sufficient justification for an extension without additional funds.
Finally, a pattern of no-cost extensions may be indicative of an award being spent down, with no real, meaningful protocol or work left to be performed. Expenditures of this nature no longer represent sponsored project revenue/expense to the University and not only result in the misstatement of the University’s financial statements and F&A Cost Rate development, but are also noncompliant with sponsor requirements. The Office of Research, the Department Administrator, and Sponsored Projects Accounting will monitor these instances and question the process after more than two no-cost extensions are requested on the same project.
It is sometimes necessary to incur costs on a sponsored project that were not originally budgeted, requested and approved by the sponsoring agency. Re-budgeting requests are the responsibility of the Department Administrator. In general, the sponsoring agency needs to be contacted in writing for prior approval to re-budget funds to cover a new budgeted line item of cost. The revised costs should not be incurred and recorded on a sponsored project until written approval and an approved, revised budget is obtained from the sponsor.
Budget modifications to the original NOA budget can be required in the following instances:
Certain sponsoring agencies allow for a limited percentage of the original, budgeted line items to be re-budgeted between cost categories without prior approval. This is typically specified in the terms and conditions of the award or in the sponsoring agency regulations, guidelines or instructions. The department should prepare a budget modification request (BMR) form and submit it directly to Sponsored Projects Accounting when prior approval from the sponsoring agency is not required. If re-budgeted line item costs exceed the specified limit, then the re-budgeting needs to be requested from the sponsoring agency in writing. Costs should not be incurred and recorded unless written approval is obtained in advance. Requests for re-budgeting need to occur as soon as the budget variances are identified and before the end of the project, or the Department bears the risk that the costs will be disallowed by the sponsoring agency. Once written approval is received from the sponsoring agency, the documentation should be forwarded along with a corresponding budget modification request form (BMR) to the Office of Research. The Office of Research will forward both documents to Sponsored Projects Accounting for processing.
The NIH and NSF are the only agencies that allow the University to internally monitor and approve requests for re-budgeting up to a specified percentage of the original budget. A budget modification form (BMR) is forwarded to the Office of Research for review and approval. When approved, the Office of Research will forward the BMR to Sponsored Projects Accounting to revise the budget. Sponsored Projects Accounting will not accept verbal requests to re-budget between budgeted line items without a BMR form.
The following is a summary of how BMRs should be routed at the University:
The Office of Research should only directly receive BMRs that:
(Consult with the Office of Research regarding any additional documentation that may be required)
Sponsored Projects Accounting should directly receive all other BMRs that:
As previously discussed in the Account Activation section of this website, sponsored projects that require the expertise of one or more University Departments/Principal Investigators (PI) require separate sponsored project subaccounts. After a sponsored project is activated, the project can require additional subaccounts in addition to those established in the initial project setup for the same types of reasons. These new subaccounts still require a separate BMR to modify a previously established project budget, required sponsored project and budget information input through PERIS for each of the new subaccounts and must still reconcile to the budgetary total of the sponsor’s NOA.
It is the responsibility of Sponsored Projects Accounting to submit the majority of the financial reports on sponsored projects in a timely manner. 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 financial report with the assistance of the PI.
Sponsoring agencies require interim and/or 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 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 financial reports 15, 30 or 45 days after the sponsored project end date.
Once the department completes and submits the necessary Closing Memorandum to Sponsored Projects Accounting, Sponsored Projects Accounting will prepare the required financial report and forward it to the sponsoring agency to meet the requirements of the NOA. The closing memorandum accounting tool was devised to facilitate the proper reconciling, balancing and, financial closing of the project account and the filing of a financial report to our sponsors. The Closing Memorandum is a courtesy to the Department Administrator and PI in that it affords the departments the opportunity to accrue and record all appropriate and allowable unrecorded or trailing costs for a project so Sponsored Projects Accounting can report the total costs of a project and minimize the need for future revisions of the financial reports which are discouraged by the sponsoring agencies. If a Closing Memorandum is not completed and submitted by the Department, Sponsored Projects Accounting will report the costs on the final Level Report on the financial report. Sponsored Projects Accounting will forward a copy of the financial report to departments upon request. See the Account Closing section of the Sponsored Projects Accounting website.
Timeliness of filing of federal financial reports is tested annually as part of our Single Audit by our public accounting firm. Findings of this nature are included in this audit report and are viewed nationally by sponsors and other institutions. Repeat findings embarrass our University. Accordingly, the Department Administrator’s timely attention to and monitoring of sponsored project closings and preparation of well-crafted Closing Memorandums is of paramount importance to the proper accounting, administration and reporting of sponsored project awards at our University.
Although sponsored projects are made in the name of the University, Principal Investigators (PIs) are the scientific and technical directors of the projects and constitute the highest level of key personnel identified to the project by the University. Therefore, sponsoring agencies must be notified immediately in writing by the University of a change in PI on existing awards under a previous PI. Notifying a sponsor of a change in PI is the responsibility of the Department Administrator/Dean/Director/Department Chair’s Office. A change in PI can occur due to:
The sponsoring agency will evaluate the University’s request for a change of PI and notify the University in writing if the change in PI is approved. If not approved, the sponsoring agency will notify the University via written sponsored project amendment that the sponsored project is to be either terminated or transferred to another organization.
The following procedures apply to sponsored project awards that are impacted by a change of PI:
Sponsored projects that are being retained by the University:
Sponsored projects that are being transferred by the University:
Failure to notify a sponsoring agency of a change of PI in a timely manner can result in the disallowance of costs that will be borne by the performing Department, and or the potential loss of future funding and goodwill between the University and the affected sponsor.
Changes in department can occur due to:
For Entity 05 sponsored project accounts, a change of department in PRISM/RPA is required to be entered into PERIS similar to any other change in a sponsored project account and forwarded to the Office of Research. Upon notification in writing of the change from the Office of Research, Sponsored Projects Accounting will process the requested change.
More specifically, with respect to projects invoiced by Sponsored Projects Accounting under Methods of Payment 20, 21, 30, 31, 41, and 51, options include:
With respect to projects that are not invoiced by Sponsored Projects Accounting under Methods of Payment 22 and all accounts on Letters-of-Credit, options include:
Changes in sponsor mailing address can occur when a sponsor relocates its physical location or changes its accounts payable process including changing approving personnel or invoicing systems that requires us to change our invoice mail-to address. Updating our accounting records for changes in mail-to addresses is the responsibility of the sponsors, Sponsored Projects Accounting and the Department Administrators.
It is important that the mail-to addresses be kept current so that University cash flows are optimized and that sponsor relations are maintained. Sponsored Projects Accounting accepts sponsor mail-to address changes in any written form. The Office of Research also needs to be notified of a change of sponsor mailing address.
An NIH Official Statement Relinquishing Interests and Rights in a Public Health Service Research Grant (Relinquishing Statement, form PHS 3734) is required as part of the Change of Institution process at the NIH that allows a PI to change institutions and to transfer an active grant to the new institution. The process is initiated by the Office of Research (by the Authorized Institutional Official) in eRA Commons and identifies the new institution that will assume the award.
The Relinquishing Statements are received by Sponsored Projects Accounting via email and attached .pdf in the Sponsored Projects Accounting activations inbox from the Office of Research and are distributed to the responsible staff. As a courtesy to the Office of Research, Sponsored Projects Accounting will review the Estimated Unexpended Balance recorded on the Relinquishing Statement to verify that it comports to the funds available per the sponsored project Level Report, and notify the Office of Research that the balance is acceptable. It is important that the Department Administrator does not underestimate the Estimated Unexpended Balance on the Relinquishing Statement as that will result in the NIH de-obligating more funding than costs incurred on the sponsored project to our University creating an overdraft situation on the sponsored project account.
Other sponsoring agencies can also request that the University provide relinquishing balances on awards that are being transferred. Although official forms don’t exist for other agencies, it is still important that the Department Administrator does not underestimate the estimated unexpended balance on the relinquishing request as that may result in the sponsoring agency de-obligating more funding than costs incurred on the sponsored project to our University creating an overdraft situation on the sponsored project account.
NIH Transfer Letters are the responsibility of the PI transferring to the University, the Department Administrator, the Office of Research and Sponsored Projects Accounting.
When an NIH grant is transferred to the University from another institution, a NOA is issued to the new institution with a grant type of 7. The amount listed on the NOA to the new institution should be equal to the previous institution’s unobligated balance on their award and corresponding DHHS relinquishing statement issued by the previous institution. The previous institution must then submit a final Federal Financial Report (FFR) to the NIH.
If the previous institution’s final FFR reports an unobligated balance that is greater than that reported on the relinquishing statement, the NIH Office of Financial Management (OFM) representative will issue a letter (referred to as an NIH Transfer Letter) to the University indicating an unobligated balance from the previous institution is being added to the University’s Payment Management System account. (If an unobligated balance per a final FFR is less than that reported on the relinquishing statement by the previous institution this can create a problem for the previous institution in that they relinquished more funds to the new institution than were actually available resulting in the new institution’s NOA amount being higher than it should have been.) This NIH Transfer Letter is either sent to the Office of Research, Sponsored Projects Accounting, or to the performing department. If communicated electronically, the transfer letter is often a word document and does not contain an original or electronic signature. The NIH OFM will indicate if this balance is one of the following:
If the letter indicates that any balance is available for use, consideration must be given to any “Special Note” indicated on the letter. The prior award document terms and conditions should be reviewed to verify whether or not the unobligated balance being transferred includes funds that are restricted for a specific purpose or use (i.e. a restricted supplement). Such funds must be budgeted appropriately by the performing department.
Any amount per the NIH Transfer Letter that is indicated as available for use should be added to the University’s corresponding project budget. The transfer letter represents a NOA and no further documentation will be issued by the NIH. The performing department should prepare a BMR to increase the current project’s budget and send it, along with the transfer letter, to Sponsored Projects Accounting.
If an unobligated balance is transferred to the University but restricted from use, the recipient of the letter should forward it to Sponsored Projects Accounting for our records to assist in the reconciliation to the Payment Management System account.
A sponsored project “termination” is a term-of-art in the industry that implies that a sponsored project is either unilaterally or mutually ended before its scheduled completion date. Sponsored project Notices of Award typically can contain a clause that addresses sponsored project termination. Termination of a sponsored project is not to be confused with the completion date, end date or closing of a sponsored project. (Sponsored project completion date, end date or closing simply implies that a sponsored project has reached its agreed-upon expiration date upon which the University must comply with certain sponsored project closing requirements such as final progress, financial, intellectual property, property (equipment), releases and assignments, refunds, rebates and credits reporting; which may or may not be required upon sponsored project termination.)
Termination of a sponsored project can occur prior to its end date due to:
The University is typically notified in writing of a sponsoring agency’s intention to terminate an ongoing award at the University, by written amendment or modification. Upon receipt of such notification by the University, the Office of Research, PI, Department Administrator and Sponsored Projects Accounting must all be notified immediately. If the termination is non-negotiable, the performing Department should make every effort to expeditiously wind down the project, reassign staff, cancel outstanding purchasing obligations and bring the award to a close. The Department Administrator should prepare a Closing Memorandum and forward it to Sponsored Projects Accounting (explained in the Account Closing section of the Sponsored Projects Accounting website) that forecasts where the sponsored project will financially close upon final termination that will agree to the final Level Report. A final “termination claim” which normally takes the form of the final invoice, but may require another form specific to the sponsor, will be prepared by the Department and Sponsored Projects Accounting based upon the final costs incurred as of the date of termination. This final reporting/termination/invoice claim will be forwarded to the sponsoring agency for final negotiation, approval, settlement and payment. The final negotiation of the termination is the responsibility of the Office of Research. Any disallowed or otherwise unpaid costs must be borne by the performing Department.
Transfer of a PI to a new organization sometimes requires the University to transfer any equipment purchased by a PI on a sponsored project to the PI’s new organization. Typically we are notified in writing by the sponsor that they are requiring the University to make such an equipment transfer.
The Department Administrator and PI must arrange for the crating and shipping of the equipment to the new location. Often times this service is offered by the manufacturer of the equipment due to the care that must be taken to ensure any highly sensitive scientific equipment is not damaged in transit. The Department Administrator must complete an asset retirement form on the Capital Asset Management website under the Office of the CFO website so that the equipment is retired in the fixed asset system and depreciation is no longer calculated and expensed on our general ledger.
That said, title to all equipment purchased on a sponsored project is transferred to and therefore owned by the University upon completion of the sponsored project unless otherwise regulated or instructed to be returned or shipped elsewhere by the sponsor. Equipment is never owned by the PI. Accordingly, it is the business decision of the responsible Dean’s Office as to whether or not equipment previously purchased on a sponsored project, and still in use by the University is to be retained by the University or can be transferred by a PI to the new PI’s institution. The cost to the new institution can be either fair market value or University book value of the equipment.
A cost transfer is an accounting entry that transfers costs between accounts to correct an accounting or clerical error in the original entry. A proper system of internal financial accounting control with respect to cost transfers dictates that such accounting entries be timely, properly documented, explained and appropriate under the circumstances. Cost transfers can be either salary or non-salary cost transfers.
Please see the University’s Financial Guideline for Cost Transfers, on the Office of the CFO website, CFO Resources, University Policies and Procedures, Financial Guidelines – Sponsored Projects. In addition, please see the University’s Policy on Effort Reporting and Certification 11-01-07, Salary Reallocation.
A pattern of cost transfers is indicative of a lack of internal control and compliance at the University. Every effort should be made to mitigate cost transfers. When cost transfers are required, the timeliness, accuracy and compliance of cost transfers cannot be overemphasized. Late or inappropriate cost transfers are the most common finding in the University’s federal Single Audit Report issued by our public accountants, which is reviewed by our public accountants annually with the Board of Trustees who scrutinize these findings.
A variety of miscellaneous journal entries can be processed by Sponsored Projects Accounting over the life of a sponsored project. These journal entries can include:
Miscellaneous journal entries are recorded by Sponsored Projects Accounting and are the responsibility of both the Department Administrator and Sponsored Projects Accounting. The concurrence of both entities should be obtained before the miscellaneous journal entries are recorded to the sponsored project account.
Determination of whether interest is earned on advances of sponsored project funds and the calculation related thereto is the responsibility of Sponsored Projects Accounting.
For federal sponsoring agencies, federal regulations require the University to maintain any advance payments received on sponsored projects in a separate, interest-bearing account. However, this arcane language should not be interpreted literally to mean that cash attributed to each and every project that is financed by the federal government and other pass-through sponsoring agencies via advanced payments or with unexpended advanced balances has to be deposited in a separate bank depository account to accrue interest, and that interest needs to be credited to each individual account. The requirement means that the University must credit and remit interest to the Federal sponsoring agencies in the aggregate for all awards by specific agency. Since our University employs an advanced, centralized, integrated cash management system that encompasses University tuition, philanthropic revenues and sponsored project account revenues, depositing and monitoring advanced funds by specific sponsored project in separate bank accounts is only conceptual. Regardless of whether the University is a prime or sub recipient, the University is required to remit the calculated interest directly to the Federal government and not credit the interest to the sponsored project account. In addition, as payment of the interest is a University responsibility, interest is never remitted to a higher tier sub or prime recipient.
The University of Pittsburgh complies with the subject federal requirement as follows. On a monthly basis, an analysis is done of all federal agencies of the advanced funds (prepaid revenue) received vs. the actual costs incurred on a project-by-project basis. If the aggregate shows that there is net prepaid revenue, we apply interest based on the University’s CTIF rate of interest or Charitable Temporary Investment Fund rate (which is an overnight rate set by Mellon Bank, that is obtained from the University’s Office of Finance) and remits those funds quarterly to the federal government via check. No one sponsored project receives any interest applied to it. Our compliance is audited annually by our independent public accountants – KPMG, a nationally recognized public accounting firm, as part of our annual Single Audit. Most major research universities across the country follow a similar system of crediting and remitting interest on advanced funds to the federal government, which represents a best industry practice.
For nonfederal sponsoring agencies, sponsor guidelines can also require the University to calculate and either remit interest to the agency or apply interest directly to the sponsored project account on accounts where the University receives advance payments. This requirement is typically found in the NOA or the sponsor’s guidelines. Under no circumstances should the University initiate this requirement as the cost of interest increases the overall costs of the University’s sponsored project activity.
Termination notices on NIH Training Grants are the responsibility of the PI and the Department Administrator. When trainees or fellows either complete their research training appointments or terminate early, the Ruth L. Kirschstein National Research Service Award (NRSA) Termination Notice (Form PHS 416-7) must be completed by the trainee and the PI with the support of the Department Administrator for the financial aspects of the form. All Termination Notices for NIH training and fellowship awards are required to be submitted electronically using the eRA Commons xTrain application. A plethora of tutorials and training materials for the eRA Commons xTrain application can be found by searching on the NIH eRA website.
It is important that the amounts recorded as stipends paid to the trainees or fellows reflect not only what was recorded on the sponsored project Level Reports and paid to the individuals, but also reflect the full stipend levels that should have been paid as compensation per the NOA and as published in the NIH NRSA Notices or NOTs.
In the eRA Commons xTrain application the Assistant Controller, Sponsored Projects Accounting serves as the Business Officer (BO) responsible for final submission of the electronic Termination Notice to the NIH. Due to the size and decentralized nature of the University, the number of individual NIH training and fellowship awards and the number of individual University departments having such awards, there is no central, resident expert on XTrain at the University. Each trainee, mentor PI and the PI’s Department Administrator must be knowledgeable in the execution of their responsibilities in the xTrain system. Sponsored Projects Accounting adds little value to this process as the Business Officer as we cannot be familiar with every trainee and fellow appointed on every T and F award at the University that number in the hundreds even though the NIH programmed a single BO into the xTrain software platform process.
Finally, it should be noted that HRSA does not utilize XTRAIN and still requires the submission of the original Termination Notice form by mail or email.
The University’s Research Allocations program is owned by the Office of the Senior Vice Chancellor for Research. The program is governed by University Policy Number 11-01-06 at the following link:
Additional guidance on the program from Office of the Senior Vice Chancellor for Research can be found at:
Sponsored Projects Accounting performs calculations in support of the distributions from the Research Allocations program for use by the Office of the Senior Vice Chancellor for Research and activates new accounts in the general ledger for this program when new account create requests are received from the Office of Research.