Once a sponsored project award has been made to the University and a general ledger account is activated, a number of aspects of the award must be monitored to ensure the ongoing responsibility for financial stewardship for budgeting, accounting, administration, control and compliance of the sponsored project award is maintained.
Reference the University’s Policy 05-06-07 on Level Report Review and Reconciliation. Department Administrators (and ultimately PIs) are responsible for reviewing and recalculating Level Reports on Entity 05 sponsored projects on a monthly basis, but no less than on a quarterly basis. As stated in the Policy, sponsored project Level Reports are to be reviewed to determine:
The above helps to ensure the accurate, complete and timely accounting and financial reporting of both University sponsored projects and financial statements.
Costs that have been obligated on sponsored projects, but have yet to be recorded and paid at the end of a project or project year are referred to estimated, accrued or trailing costs. Sponsoring agencies allow the University to include such trailing costs on our final invoices and financial reports to ensure costs are reimbursed by and reported to the sponsoring agencies in the accounting and budgetary period in which the funds were awarded.
After the sponsored project closes, and the final invoice and final financial report are prepared and submitted to the sponsor, the Department Administrator must monitor their Level Reports to ensure that all proposed trailing costs included in the final invoice and final financial report are recorded on the project and paid within the 90 day timeframe to close and report on the sponsored project. If this does not occur, Sponsored Projects Accounting will follow-up with the Department Administrator. Revising previously submitted final invoices and final financial reports can result in the potential loss of current and future funding and goodwill between the University and the affected sponsor so the proper inclusion/exclusion of trailing charges is very important.
If additional costs are identified after the final invoice and financial report are submitted to the sponsor, and the Department would like to revise the final project costs, it is the Department Administrator’s responsibility to contact the sponsor and obtain advance approval for the revision. If approval is granted by the sponsor, Sponsored Projects Accounting will accept a revised Closing Memorandum from the Department and resubmit the final invoice and final financial report to the sponsor. A pattern of late revisions is discouraged.
The University provides the specific monthly online budgetary or Level Reports to Department Administrators (and ultimately PIs) to monitor sponsored project (Entity 05) accounts. These online reports can be accessed through the Cognos Login on the MyPitt Portal on the University’s Website. To obtain access to the Cognos online Level Reports, instructions can be found by clicking the Learn More button under the Cognos Login; then click Request Access on the left side of the screen. The following reports are available:
RPAR001 – Summary of Activities – Level II
This monthly report provides a recap of sponsored project attributes and cost summary information by department, by sponsored project number, by subcode and includes sponsored project budget, current month actual, fiscal year to date actual and project to date actual costs and budget available by subcode line item. This report is used for:
In addition, when a sponsored project approaches its end date and or is in an overdraft, a corresponding message appears on the first page of this report notifying the Department Administrator of a required action on the sponsored project.
FGAR311 – Level I Financial Report
This monthly report provides sponsored project cost detail and current month budget adjustment information (transaction detail) by department, by sponsored project number, by subcode, by transaction and includes sponsored project current month actual cost, subcode, reference field, PRISM transaction description, PRISM identifier and PRISM batch name. This report is used for:
HLDR310 - Labor Distribution by Account
This monthly report provides sponsored project payroll activity by department, by sponsored project number, by subcode and includes employee name, employee number, PRISM earnings element, current month actual, fiscal year to date actual and project to date actual payroll costs; as well as any payroll adjustments made during the month and indicates the months that were adjusted.
RPAR007 – Sponsored Projects Overdrawn Account Listing
This monthly report provides overdrawn (over budget or overdraft) sponsored projects by department, by project number, by PI, by agency, by payment method, by end date, by overdrawn amount. Overdrawn amount is calculated by subtracting total sponsored project costs from total sponsored project budget and always results in a negative balance.
See below for a detailed discussion of overdrafted accounts. In summary, overdraft conditions on sponsored project accounts cannot continue indefinitely. Since the University cannot invoice the sponsoring agency for costs in excess of the total sponsored project budget or not-to-exceed limitation, the overdraft or overspending on the award represents a cost to the University, including time value of money, until the overdraft is resolved.
The Department Administrator (and ultimately the PI) should work with contracting officers, the Office of Research, Sponsored Projects Accounting and other University Departments to justify and ultimately resolve overdrafts as soon as practical to ensure responsible and timely sponsored project financial stewardship. Unresolved overdrafts that will not be funded by the sponsoring agency will be borne by the performing departments and charged to the departmental account specified in PERIS.
RPAR010 – Summary by Billing Number (Level III)
This monthly report provides a recap of sponsored project attributes and a listing of all sponsored project subaccount numbers that comprise a billing account number. The report is by department (for the holder of the master or billing number account) and is billing number order. The report provides various sponsored project attributes and provides all sponsored project subaccount numbers that comprise a billing account number by PI, by department and includes subaccount project budgets, PJTD expenses and budget funds available and totals at the billing or master account level. This report is used for:
RPAR392 – Expired Awards With Out-of-Balance Conditions by Department
This monthly report provides a listing of sponsored projects that are 120 days past their award end date that still have a balance remaining in:
This report is by department, by sponsored project billing, by project number and provides payment method, award number, available budget, receivable balance, net assets and project end date. This report is used for:
RPAR018 - Summary of Expenses – Level III
This monthly report provides sponsored project cost summary information by department, by project number, and includes three sections: project to date budget, direct and indirect expenses, and budget available, current month actual direct and indirect expenses and total expenses; and fiscal year to date direct and indirect expenses. The report provides various sponsored project attributes and is used for:
It is the responsibility of the Department Administrator and the PI to ensure that costs identified and recorded to sponsored project accounts are compliant. Sponsored project costs must be reviewed continually for allowability, allocability and reasonableness in accordance with federal and other sponsoring agency regulations, requirements and guidelines. Consequences of noncompliance with the proper determination, accounting and administration of costs related to sponsored projects can result in the assessment of fines and penalties to the University and the potential loss of current and future funding. Reference the University’s financial guideline on Allowability of Costs at:
Sponsored project overdrafts (overdrawn or over-budget) conditions occur when costs recorded on the sponsored project exceed the total budgeted costs per the NOA. Overdraft conditions on sponsored project accounts cannot continue indefinitely. Since the University cannot invoice the sponsoring agency for costs in excess of the total sponsored project budget or not-to-exceed limitation, the overdraft or overspending on the award represents a cost to the University, including time value of money, until the overdraft is resolved.
Overdrafts typically occur due to:
It is the responsibility of the Department Administrator (and ultimately the PIs) to ensure that sponsored project overdrafts are cleared in a timely manner. After a sponsored project period of performance has ended, overdrafts must be cleared in a reasonable period of time, typically within 90 days and as part of the closing process of the sponsored project. A notice appears on the first page of the Department’s RPAR 001 report notifying the Department Administrator that a particular sponsored project is overspent and therefore is in overdraft. The RPAR 007S report summarizes sponsored projects that are in overdraft within a specific area/department. This report prints monthly and is distributed to departments through the COGNOS automated report distribution system.
Resolution of overdrafts throughout the life of the sponsored project can occur through one or more of the following sponsored project accounting and administrative mechanisms:
In situations where there are master accounts and one or more subaccounts and there are overall funds available but one or more subaccounts are overdrawn, it is the responsibility of the Department Administrator to clear the overdraft on the subaccount in a timely manner by one or more of these mechanisms. Because the letter-of-credit process calculates the drawdown of funds at the project account level and not the billing account level, funds will not be drawn down on subaccounts that are in overdraft (due to the fact that all overspending on subaccounts may not always be funded by the master account). Letter-of-credit agencies rely on reported drawdown of funds, not reported costs incurred, when granting carryover. Accordingly, if subaccount overdrafts are not cleared timely, this can detrimentally impact the Department carryover request calculation at the master account level on letter-of-credit based projects as the drawdown of funds in the agency letter-of-credit system will be less than costs incurred at the billing account level.
An overdraft due to overspending is not an accounting error and should not be viewed as such. Since we charge what we work on, an overdraft due to overspending must remain on the sponsored project account until the project ends and the account is closed. The overdraft due to overspending will be properly cleared at the end of the project when Sponsored Projects Accounting balances the sponsored project account, which constitutes ensuring that budget, revenue and expense are all equal as part of the closing process. Any overdraft due to overspending will be transferred at the end of the project to the account designated by the department utilizing subcode 8000 which then cannot be transferred to other sponsored project accounts. In addition, the University must include sponsored project write-offs in the sponsored projects cost allocation bases for F&A Cost Rate Proposal preparation purposes and must exclude these write-offs from the sponsored projects cost allocation pools. Sponsored project write-offs are identified through the utilization of the 8000 subcode. Therefore, this is a key internal accounting control of the University with respect to sponsored projects. Do not transfer costs that represent overdrafts due to over spending prior to the end of the sponsored project. (If the department wishes an overdraft due to overspending be cleared prior to the end of the project, they must contact Sponsored Projects Accounting to do so through subcode 8000.) If subcode 8000 is not used to write-off overdrafts due to overspending on sponsored projects, we are noncompliant with our F&A Cost Rate Agreement negotiated with the federal government.
The Department Administrator (and ultimately the PI) should work with contracting officers, The Office of Research, Research Accounting and other University Departments to justify and ultimately resolve overdrafts as soon as practical to ensure responsible and timely sponsored project financial stewardship at the University. Unresolved overdrafts that will not be funded by the sponsoring agency will be borne by the performing departments and charged to the account specified in PERIS.
The responsibility for monitoring out-of-balance sponsored project accounts is the joint responsibility of the Department Administrator and Sponsored Projects Accounting. A sponsored project account is considered in-balance when budget, revenue and expense are all equal 120 days after the award period of performance has expired. A sponsored project account is considered out-of-balance when budget, revenue and expense are not all equal 120 days after the award period of performance has expired. A proper system of internal control over sponsored project accounts requires accounts to be balanced and closed timely in the University’s general ledger. Therefore, the University has a responsibility to clear out-of-balance conditions and close sponsored projects in a timely manner.
The RPAR 392 report of Expired Awards With Out-of-Balance Conditions by Department is a monthly report that provides a listing sponsored projects that are past their project end date that still have a balance remaining in:
This report is by department, by sponsored project billing, by project number and provides payment method, award number, available budget, receivable balance, net assets and project end date. This report is to be monitored monthly by the Department Administrator and Sponsored Projects Accounting and out-of-balance account conditions cleared in the general ledger in a timely manner. Actions that need to be taken to clear out-of-balance conditions include:
The Sponsored Projects Accounting system tracks projects for which costs are being recorded and accumulated, but for which invoices have yet to be generated by the electronic invoicing system. Sponsored Projects Accounting reviews such projects on a monthly basis to ensure invoices are scheduled in accordance with the Notice of Award and are calculating appropriately.
There are instances in which Sponsored Projects Accounting cannot generate invoices, and these include the following:
It is the responsibility of the Department Administrator, Sponsored Projects Accounting and the Office of Research to continually monitor unbilled accounts to ensure the proper paperwork is obtained by the University in order to invoice sponsors on sponsored projects in a timely manner. This is accomplished through regular monitoring of sponsored project Level Reports, Out-of-Balance reports and Notices of Award.
As required by the OMB Uniform Guidance, prime recipients must prepare a risk assessment and monitoring plan for all subrecipients to ensure compliance with all federal audit and financial regulations. The University’s Sponsored Project Subrecipient Monitoring Financial Guideline (https://cfo.pitt.edu/policies/guideline/UniformGuidance-SubrecipientMonitoring.pdf) details the process and defines roles and responsibilities for each step in subrecipient monitoring.
An outgoing subcontract or subaward is a grant or contract agreement whereby an external, third-party to the University known as a subrecipient receives outgoing funding provided by the University to carry out a portion of a prime or higher-tier sponsored project received by the University. Subrecipients can include other Universities, companies or other not-for-profit institutions. Negotiation of outgoing subcontracts is the responsibility of the University performing Department, and the Office of Research. Sponsored Projects Accounting has no responsibility with respect to the outgoing subcontract process, other than to invoice for costs recorded to subcontract subcodes on the Level Reports. Outgoing subcontracts represent only subcodes 6450 to 6455 to us.
Identification of the subcontract or subaward occurs at the Department level who notifies the Office of Research of their intent to subcontract with a particular external third-party. Upon receipt of the required information from the Department Administrator and PI, the Office of Research will prepare the terms and conditions of the subcontract, negotiate those terms with the subrecipient and obtain the necessary approvals. Once the subcontract is in place, the Department receives the subcontract invoices, and approves them for payment utilizing subcodes 6450 to 6455. Any scientific or business disputes that arise from the subcontracting process are resolved at the Department/PI/Dean’s level. If the subcontract disputes cannot be resolved at that level, and any legal issues arise, those issues are referred to the Office of General Counsel.
Subcontract Payments Greater than $25,000
It must be noted that only the first $25,000 of individual subcontract payments under federal awards and certain non-federal sponsors such as PCORI are subject to the application of University F&A Rates. Subcontract costs greater than $25,000 are excluded from the application of University F&A Rates. Therefore, care must be taken to ensure that amounts over the first $25,000 of individual subcontract payments are coded to subcode 6453, 6454 or 6455 so that they are excluded from the application of University F&A Rates. The proper accounting for subcontract payments is audited annually as part of our University Single Audit.
Subcontractors Having No Negotiated F&A Rates On Federal Awards
Normally, the majority of our subcontractors represent either other top 100 Institutes of Higher Education in the U.S. or companies having significant business with the U.S. Government where they already have F&A Cost Rates that are negotiated with the U.S. Government. Code of Federal Regulations 45 CFR 15.2.3 Allowable and Unallowable Costs, states that:
Recipients must use an approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no such rate exists, the recipient must use either a rate it has negotiated with the subrecipient, or a de minimis indirect cost rate of 10 percent of modified total direct costs (MTDC) if the subrecipient has never received a negotiated indirect cost rate from the Federal Government.
The above does not state that Sponsored Projects Accounting or Cost Accounting will prepare the rate for the subcontractor. It means that the subcontractor will hire an accounting firm, have that accounting firm prepare a set of audit financial statements, and from those financial statements and related ledgers and supporting records, prepare and certify a short-form F&A Cost Rate Proposal in accordance with the OMB Uniform Guidance that Cost Accounting will then negotiate with the subcontractor. This will only occur if the subcontract is material enough. Otherwise, the subcontractor is entitled to the 10% de minimis rate.
The reason for this is that often times these small start-up firms wish to transfer all of their financial risk of preparing and proposing an F&A Cost Rate to the University, which our University refuses to accept.
Cost Sharing (or matching) is the funding or costs contributed or allocated to a sponsored project or program not borne by the sponsor. Cost sharing can be required by law, regulation, administrative decision of a Federal agency or other sponsor or by award agreement itself. Cost sharing requirements vary by sponsor and between grants from the same sponsor. Please see the University’s Sponsored Project Financial Guideline on Cost Sharing at: https://www.cfo.pitt.edu/policies/guideline/cost_sharing1.pdf
It is the responsibility of the Department Administrator (and ultimately the PI) to account for and ensure that any cost sharing requirements are met on sponsored projects. Per OMB Circular 200.306:
Under Federal research proposals, voluntary committed cost sharing is not expected. It cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity. Criteria for considering voluntary committed cost sharing and any other program policy factors that may be used to determine who may receive a Federal award must be explicitly described in the notice of funding opportunity.
Accordingly, cost sharing that is voluntarily proposed on a sponsored project increases the overall costs of the University’s research mission and should be avoided.
In instances where University sponsors require cost sharing to be reported on sponsored project invoices or financial reports, Sponsored Projects Accounting will contact the Department Administrator to obtain the applicable cost sharing amounts.
Administration of program income related to sponsored projects is addressed in University Policy No. 11-01-05. It is the responsibility of the PI and the Department Administrator to properly identify and record program income to the sponsored project. Program income is defined in the OMB Uniform Guidance 200.80 as gross income earned by the non-federal entity that is directly generated by a supported activity or earned as a result of the federal award during the period of performance. Program income includes but is not limited to income from:
Program income is most often associated with federal sponsors, but can occur on non-federal sponsored projects as well.
Program Income is typically identified and agreed to in the pre-award process by the sponsoring agency (Contracting Officer) and the University. The NOA will dictate how program income is to be treated. Alternative methods typically include additive, deductive, matching and combination alternatives. Most often, program income is applied to the sponsored project and used to offset costs thus benefiting the sponsored project budget (deductive alternative). Program income is accounted for on the sponsored project as a credit recorded in subcode 7550 by the Department Administrator in a separate subaccount to an existing sponsored project master account. Program income should never be recorded as a credit to any other expense subcode. Under no circumstance should program income identified in the NOA be recorded as sponsored project revenue. It is the responsibility of Sponsored Projects Accounting to report program income to the sponsoring agency on the financial report when it is required on federal awards.
Interest earned on advance payment of funds is not program income. Program income also does not include rebates, credits, discounts, and any related interest unless stipulated in the terms and conditions of the NOA.
Monitoring of equipment originally purchased on a federal grant is primarily the responsibility of the Department Administrator and the PI, with support through the fixed asset system provided by the Office of Financial Operations. Such equipment must be identified by the University and tracked in the University’s fixed asset system as federally purchased equipment until such equipment is dispositioned. Disposition consists of all changes to the use of that equipment other than its originally intended use including expiration of the sponsored project it was originally procured under, transfer, sale or obsolescence. The University is held to a high standard when it comes to disposing of federally purchased equipment.
When federally purchased equipment is dispositioned, the PI and Department Administrator must adhere to the following protocol:
Title to all federally purchased equipment is transferred to and therefore owned by the University upon completion of the federally funded sponsored project. Equipment is never owned by the PI.