Policies, Procedures and Guidance

GIM 02 – Acceptance of Sponsored Program Awards and Fiscal Compliance on Sponsored Program Accounts (Budget Numbers)

Contents

Effective: August 14, 2017

Purpose

This GIM sets out the policy for acceptance of sponsored program funding and the fiscal management of sponsored awards at the University of Washington, consistent with the Federal Uniform Guidance.

Background

Sponsored programs are awarded to the University and not to individuals. Acceptance of external funding by the University signifies the University’s willingness to assume responsibility for the administration of the funds in accordance with the terms specified by the sponsor, the applicable costing policy requirements, and other applicable federal, state and local law and regulations. This responsibility is shared within the institution by the Principal Investigator, the Chair and/or Director, the Dean, Office of Sponsored Programs, and the Grant and Contract Accounting Office. All parties involved carry out processes to see that the terms of the award are observed, and that expenditures during a given period are not in excess of funds awarded.

Persons/Offices Affected

Principal Investigators, Research Personnel, Research Administration Personnel, Academic Unit Chair, Dean’s Office, eGC1 Reviewers, Office of Sponsored Programs, Grant and Contract Accounting, Management Accounting and Analysis, Assistant Vice Provost for Research, Office of Planning and Budgeting.

University Policy

All sponsored program awards are accepted on behalf of the University by the Office of Sponsored Programs (OSP) and placed in sponsored program budget numbers by the Grant and Contract Accounting (GCA) office for administration by the PI. Per UW Executive Order 34, OSP is the only office with delegated authority to accept sponsored program awards on behalf of the University. All other apparent or assumed authority to accept sponsored program funding is null and void.

Once accepted and made available in a sponsored program budget number, the Dean/Director, Chair and Principal Investigator (PI) assumes the responsibility to oversee that appropriate internal controls are implemented to manage the award at the project level. See the Procedures and Guidance section for guidance on internal controls and signature delegation.

The University maintains internal controls over sponsored programs that provide reasonable assurance, at the entity level, that the sponsored program is managed in compliance with applicable statutes, regulations, sponsor policies, and the award term and conditions. Internal controls include centralized systems to support the administration of sponsored program funding at the entity level, such as centralized receipt and acceptance of sponsored program funding, appropriate budget number set-up, subrecipient monitoring, review and documentation of significant changes that require sponsor approval or notification, as well as invoicing, draw-down processes, cash receipt, fiscal reporting, and closeout. These systems are overseen by OSP and GCA.

The University reviews sponsored program activity and may recommend improvements, either through OSP, GCA or Internal Audit. All instances of noncompliance are promptly acted upon and may involve reporting the instance to the sponsor, require corrective action, termination of an award, inability for a PI to submit future proposals or return of funds.

GCA may require that the PI transfer expenditures or deficit from sponsored program budget numbers in order to ensure that sponsor specific fiscal requirements are met and that the expenditures are consistent with the terms and conditions of the sponsored agreement, federal, state or local law and regulations as well as University fiscal policies.

The University has not budgeted separate funds for covering sponsored program deficits or disallowances. Deficits and disallowances are administered in accordance with the University Deficit Resolution Policy.

Procedures and Guidance

Methods of Acceptance of an Award

The acceptance of an award is made upon the signature of the OSP representative with delegated signature authority for the institutional official, upon drawdown of federal funds from a Federal payment management system, or upon receipt and deposit of a check into a sponsored program budget number.

Budget Number establishment

Grant and Contract Accounting (GCA) is responsible for assigning budget numbers and setting up accounts in the Financial Accounting System (FAS) for new sponsored programs. OSP prepares a Funding Action (FA) for each new sponsored program award and documents the award associated with the FA. The FA, together with the award, are the primary source documents used by GCA when setting up budgets and entering information into FAS.

University Fiscal Policies That Apply to Sponsored Programs

The University maintains fiscal policies that guide the management of sponsored program funding. These policies include, but are not limited to, the following:

• Review and Submission Requirements for Proposals (GIM 1): Sets out proposal review responsibilities, including budgetary review by the PI, Chair, School/College, and OSP.
• Fringe Benefit Rates and Sponsored Projects (GIM 3): Describes the applicable fringe benefit rates to use in a sponsored program proposed budgets and the rates actually applied to awards.
• Stipend Supplementation of Fellows and Trainees: Describes when supplementation is and is not appropriate for fellows and trainees under training grants.
• Subrecipient Monitoring (GIM 8): Explains the responsibilities around ensuring that a subrecipient is an appropriate entity to make a subaward to, how progress is monitored, and how subrecipient costs are approved, which is a type of control used in monitoring.
• Advance Budget Numbers (GIM 9): Sets out the allowability of expending funds in anticipation of an award and the responsibility to monitor such spending.
• Facilities & Administrative (F&A) Cost Rates (GIM 13): Describes the applicable F&A rates to use in sponsored program budgets.
• Transfer of Expenditures Between Budgets (GIM 15): Gives the parameters in which cost transfers may be made.
• Cost Share on Sponsored Programs (GIM 21): Sets out the limitations on use of cost-share on sponsored programs.
• Sponsored Program Costing Policy (GIM 23): Explains the factors used to decide whether a cost is appropriately budgeted and expended under sponsored project budget numbers and gives examples of when prior sponsor approval is needed.
• Closeout of Sponsored Programs (GIM 39): Explains the responsibilities at time of closing a budget number, including receiving final invoices and fiscal reporting.

Other University policies that impact the fiscal compliance responsibilities of sponsored program accounts and funding include the UW Deficit Resolution Policy, and Activity Based Budgeting (ABB) recovery and distribution of F&A from sponsored programs back to Schools and Colleges.

Internal controls

Effective internal controls should include procedures for establishing a control environment designed to promote a commitment to integrity, including, but not limited to, effectively sharing information and communication protocols, procedures to identify and assess risk of waste fraud and abuse, separation of duties for receipt and expenditure of funds, delegation of authority for expenditure activity, and a system for evaluating the effectiveness of established internal controls. A guide for Internal Control best practices is found on the Financial Accounting website.

Signature Delegation

PIs may delegate the approval for a variety of functions related to fiscal compliance on a sponsored program.

The individual and/or position to which the signature authority is delegated should have direct knowledge of the needs of the project, i.e., how a specific purchase benefits or is needed by the project or written instructions from someone who does have such knowledge.

The intent of this policy is to ensure that the PI or someone to whom signature authority has been delegated is involved in some aspect of the transaction (e.g. initiation, e-mail or initialed approval of the request or invoice, etc.). The documented involvement is intended to demonstrate that someone who has direct knowledge of the Award has reviewed the transaction and verified that it is necessary for the award.

The delegation of signature authority must be made in writing or email prior to any individual or position other than the PI or other Senior/Key Personnel (see below)  initiating/approving acquisition of goods and services. The written document or a copy of the email must be maintained at the appropriate organizational level, i.e. college, department, division, etc., where administrative/budget records are maintained for the budget number assigned to the sponsored project. One authorizing memo or email should be used for each budget number unless the same delegation criteria and individual are used among more than one budget number. For example, if a lab is supported by 5 sponsored projects, with essentially the same personnel working on all 5 projects, and the PI wishes to delegate signature authority to the same individual(s) and/or positions for each project, then one written delegation document or one email is sufficient. The delegation document must be revised and updated as individuals and budget numbers change.

• Senior/Key Personnel, as defined in GIM 10, are assumed to have signature authority unless overruled by written delegation of signature authority approved by the PI; and
• Specific costs itemized in the proposal and funded by the sponsor do not require additional approval by the PI or designee during the procurement process.

Limits of Delegation

Faculty may not delegate signature/certification authority for approval of the following:

• Faculty Effort Certification (FEC) including Cost Shared effort;
• Grant and Contract Certification Report (GCCR) including Cost Shared effort; and
• Subaward invoices.

The FEC and GCCR forms represent the University’s method for complying with the federal requirements for certifying that effort is a reasonable reflection of actual effort directed towards sponsored awards.

Subaward invoices represent a subset of programmatic work on an award.

In rare instances, the Dean, Director, or Chair can approve the FEC, GCCR, and/or a subaward invoice assuming they have suitable means of verification.

As an added control, it is strongly recommended that the PIs, particularly if they have delegated authority to others, review the detailed expense transactions for their awards as shown in the My Financial Desktop transaction summary report or other reports that serve the same purpose, for reasonableness and to detect errors and/or irregularities (fraud). This review should be done monthly but not less frequently than quarterly. PIs are further encouraged to sign or initial and date the reports as evidence of their review. Auditors consider PI review as a key control and documentation to demonstrate this review may be requested during an audit.

Sample Signature Delegation Forms

• Signature Delegation Sample e-Mail
• Signature Delegation Form Sample A
• Signature Delegation Form Sample B
• Signature Delegation Form Sample C

Restrictions on Spending

Restrictions on funding may be imposed by a sponsor or imposed by OSP per University policy. GCA will budget funds into restricted object code category 37-99 when such funding is not available for expenditure. An example is carryforward of unexpended balances from one renewal year to the next when sponsor prior approval is required.

Rebudgeting

The budget plan is the financial expression of the project or program as approved during the award process. After a project has been awarded, the PI may determine that the approved budget allocations are not consistent with actual project needs. S/he may request the formal reallocation of funds from one spending category, or object code, to another object code category that better reflects the project requirements. This process is called rebudgeting.

Informal rebudgeting occurs when actual expenditures exceed or fall short of the allocated amount budgeted in an object code or when actual expenditures occur in an object code that has no budget allocation. Many sponsors allow rebudgeting without prior approval while others require approval when rebudgeting into or out of a spending category exceed a specified percentage of the award amount.

If prior sponsor approval is not required then formal rebudgeting is not necessary but may be requested to assist in budget management. Some examples of prior approval requirements are set out in GIM 23 (Sponsored Program Costing Policy). If sponsor approval is required, the PI is responsible for preparing a request for submission to a sponsor, for OSP’s concurrence (counter-signature). Upon receipt of sponsor approval, the Office of Sponsored Programs (OSP) notifies Grant and Contract Accounting (GCA) of the approval through processing of a Post-Award Change (PAC) in SAGE/SPAERC.

Rebudgeting requests that do not require sponsor approval are completed by GCA and do not require OSP involvement.

When a sponsor allows rebudgeting between the direct costs and F&A costs it is necessary to provide for the increase or decrease in F&A that may occur when rebudgeting.

Carryover of Unobligated Balances Between Budget Periods and Unexpended Balances at End of Project

Spending throughout the project must be monitored. Overexpenditures, or deficits, at the expiration of a budget period must be closely reviewed prior to carryforward to the non-competing (continuation) budget. Deficits will not be carried forward to a competing renewal period of a project.

GCA will automatically carryforward unobligated balances to the continuation (renewal) budget number. If carryforward permission is not automatic, GCA will place the balance in a restricted category. Sponsor prior approval to expend unobligated balances is required in these cases and such a request must be prepared by the PI and sent to OSP for OSP concurrence and submission to the sponsor.

Federal funding that allows for one budget number for the entire project period (i.e. no annual fiscal reporting) does not require prior sponsor approval for carryforward as the funding per budget year is not segregated. NIH SNAP eligible awards are an example of such an award.

Deficits require transfer by the PI to an appropriate non-sponsored funding source budget number.

If a project has an unexpended balance and it is a fixed price agreement or a clinical trial, it is possible to move the unexpended funds to a corresponding department surplus account per the transfer to surplus procedures. If the University does not have the authority to keep and/or carryforward the balance, GCA will return the funds to the sponsor.

Responsibilities

Principal Investigator

• Develops an over-all plan for the commitment and expenditure of grant and contract funds, working with the authorized person(s) in the department, school , college or unit and consulting other University officers as appropriate.
• Initiates expenditures to be charged against the grant or contract account.
• Supervises expenditure of sponsored program funds and approves sub-recipient invoices (see GIM 8) to assure:
  • That funds are used only for purposes that directly relate to and benefit the activity supported in the award.
  • That expenditures are consistent with all special terms, conditions, or limitations that apply to expenditures under the particular grant or contract.
  • That expenditures do not exceed the total funds authorized for a given period under the grant or contract. In many cases the grant or contract may also specify expenditure limits by budget category or line item.
• Assumes accountability for deficits, including non-payment by sponsor, or disallowances that occur under a sponsored award.

Chair, Director, or Dean

• Establish systematic procedures in the college for supervision of grant and contract accounts.
• Provide reasonable coordinated administrative support for the management of grant or contract accounts.
• Consult with principal investigator concerning the resolution of a deficit or disallowances incurred on a grant or contract account and fix responsibility for settling the problem quickly.
• Ensure that departmental personnel have access to online financial systems for administration and monitoring of financial activity.
• Point of contact for OSP or GCA, when sponsor’s questions related to expenses are associated with performance of the scope of work.

Grant and Contract Accounting Office (GCA)

• Provides principal investigator with information about any special terms, conditions, or limitations that apply to each sponsored program account.
• Consults on specific questions about the propriety of a given expenditure, on budget monitoring techniques, and on other such matters.
• Monitors certain types of sponsored program-related transactions on a sampling basis to assure consistency with sponsor and University policies.
• Provides required fiscal reports and invoicing to sponsoring agencies.
• Receives and accounts for cash payments.
• Facilitates collection procedures through its aged receivable process.
• Notifies departments of past due invoices.

Office of Sponsored Programs (OSP)

• Reviews proposals consistent with GIM 1
• Accepts sponsored program funding on behalf of the University
• Prepares and approves Funding Actions in order to establish or supplement a sponsored program budget number
• Reviews requests to sponsors prepared by PIs, in which the PI is requesting prior sponsor approval
• Assists with notifying the PI regarding closing out a sponsored program
• Maintains sponsored program policies, including those regarding fiscal compliance, in coordination with GCA
• Communicates with sponsors regarding changes that require amendments to current award criteria, scopes of work, official requests for extensions and rebudgeting, or any other requests that are tantamount to a change to the grant or contract.
• Carries out entity level and project level risk assessment before issuing a subaward and monitors subrecipients throughout the life of the subaward, on a periodic basis.
• Is the contact office for disputes over contractual terms or performance on sponsored agreements, and will escalate as needed.

Internal Audit

• Provides independent assurance to the Board of Regents and University management regarding the adequacy and effectiveness of internal controls. This includes reviewing and evaluating:
  • Internal controls established to ensure compliance with applicable policies, plans, procedures, laws, regulations, and contracts;
  • The means with which assets are safeguarded;
  • The reliability and integrity of financial and operating information;
  • The economy, efficiency, and effectiveness with which resources are employed; and
  • IT systems to determine if they are appropriately managed, controlled, and protected.
• Reports to University management on the areas examined.
• Evaluates management’s plans or actions to correct reported findings.
• Reports at least annually to the Board of Regents Finance and Asset Management Committee and to inform the Board of any significant findings that have not been reasonably addressed by University management.

Definitions

Internal Controls:
A process designed to provide reasonable assurance regarding the achievement of the following objectives for sponsored awards:

1. Transactions are properly recorded and accounted for, in order to:
   1. Permit the preparation of reliable financial statements and Federal reports;
   2. Maintain accountability over assets; and
   3. Demonstrate compliance with Federal statutes, regulations, and the terms and conditions of the award;
2. Transactions are executed in compliance with:
   1. Federal statutes, regulations, and the terms and conditions of the award that could have a direct and material effect on a sponsored program; and
   2. Any other Federal statutes and regulations that are identified in the Audit Compliance Supplement; and
3. Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition.

Sponsored program:
An exchange transaction between the University and the sponsor that is not a purchase or sale of goods or services or “work for hire” arrangement but instead is a mutual exchange involving the University and a sponsor.

Unliquidated obligation:
For financial reports prepared on a cash basis, obligations incurred by the non-Federal entity that have not been paid (liquidated). For reports prepared on an accrual expenditure basis, these are obligations incurred by the non-Federal entity for which an expenditure has not been recorded.

Unobligated balance:
The amount of funds under a Federal award that the non-Federal entity has not obligated. The amount is computed by subtracting the cumulative amount of the non-Federal entity’s unliquidated obligations and expenditures of funds under the Federal award from the cumulative amount of the funds that the Federal awarding agency or pass-through entity authorized the non-Federal entity to obligate.

Related Resources

Subject	Document/Resource
Tools to assist PI with reconciliation	Grant Tracker and MyFinancial Desktop
Internal Control Best Practices	Financial Accounting Internal Control guidance
Office of Research Guidance on Management of Award and Award Changes	Manage Award Award Changes
GCA Budget Number Process Guidance	GCA Process Overview
Sponsored Program Acceptance – Delegation of Authority	Executive Order 34

Change Notes

Details on changes to this GIM are available from the Office of Sponsored Programs, osp@uw.edu