Session 5:
Financial Management I
Post-award – Policies
Grants and Contracts Accounting
February 13, 2014
I.
Introduction
II.
Roles & Responsibilities
III.
Time & Effort Certification
IV.
Cost Transfer Policy
V.
Cost Sharing
VI.
Audits
VI.
Quick Notes
VII.
OMB Circular A-110
VIII. OMB Circular A-21
Introduction
No matter what your training or background is, as long as you work in a
public management capacity you will have at least three (3) jobs to fulfill:
• Personnel
• Procurement
• Budget
In other words
• People
• Things
• Money
As the research partnership between the federal government and
universities evolved, federal agencies developed principles for
reimbursing both the direct costs of research and some of the costs of
facilities and administration. The reimbursement of these costs has long
been the subject of congressional interest.
RAND “Paying for University Research
Facilities and Administration” 2001.
Who We Are
Code of Business Ethics
“ The American University Code of Business Ethics is intended to guide faculty and staff in
identifying and resolving issues of ethical conduct that arise in the course of their various
transactions and relationships with each other and the wider community.
It is the underlying principle of the University that all of its transactions are conducted with the
highest degree of integrity and honesty.” –
Scott Bass, Provost
Don Myers, CFO, Vice President and Treasurer
The Code of Business Ethics can be found at:
http://www.american.edu/policies/index.cfm
Post Award Management
EVALUATION
• Reconcile
• Report
• Close Out
Fiscal
Cycle
IMPLEMENTATION
• Authorize Transactions
• Analyze Your Data
• Document Your Actions
PLANNING
• System Access
• Budget
• Fiscal Time
Controller’s – Grants and Contracts Accounting
Organizational Chart
Mr. Frank Wilson
Director of Accounting
Ext. 2844
fwilson@american.edu
General Accounting
Grants & Contracts Accounting (GCA)
Mr. Jesús A. Adame
Asst. Director, Grants & Contracts Accounting
Ext. 8873
adame@american.edu
Mrs. Koki Hurley
Manager, Grants & Contracts Accounting
Ext. 2896
khurley@american.edu
Mrs. Leslie Enriquez
Senior Accountant
Ext. 2843
enriquez@american.edu
Mrs. Shailee Upadhyay
Senior Accountant
Ext. 3807
upadhyay@american.edu
Mr. Samuel Sipkin
Grants Accountant
Ext. 2851
sipkin@american.edu
Training Goals
• To enhance skills sets of Faculty and Staff
involved with sponsored grants
• To promote operational efficiencies
• To better understand shared responsibilities
Sponsored Contracts
Roles and Responsibilities
Principal
Investigator
(PI)
Overall
management of
project, including
budgetary
management
Initiation of
Payment Requests
Notification of OSP
in case of any
potential
contractual issues
Completion of time
and effort
certifications
Preparation of
technical or
progress reports
Dean’s Office
Expense
Approval
Processing of
personnel
paperwork
Office of Sponsored
Programs
(OSP)
Grants and Contracts
Accounting
(GCA)
Negotiations with
sponsors and coordination
of award signatures
Establishment of new
project accounts
based on project
briefs from OSP
Issuance of project briefs
to establish grant
accounts and codify
important changes
Preparation of consultant
agreements and other
subcontracts documents
Interpretation of grant
agreement terms and
conditions
Liaison with sponsor on
potential modifications to
grants and contracts
Preparation and
submission of all
financial reports on
grants and contracts
Review of cost
transfer entries
Coordination of
financial audits and
site visits, as well as
liaison with PIs on the
annual A-133 audit
Coordination of
grant closeouts
Financial Research Administration
Roles and Responsibilities
RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
AVPF
PRE-AWARD ACCOUNTS
Request pre-award account, if necessary
Approve commitment of department funds if project not funded
Approve pre-award account
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Vice Provost to notify GCA of pre-award account approval
GCA will establish pre-award "risk" account
If award is not received within a reasonable time frame (1 -2 months), all
associated expenses will be transferred to the department's operating
account
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RAC
Handout
RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
NEGOTIATION
Review and approve proposed award
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Negotiate award terms and conditions
Ascertain that all contracts adhere to AU procurement policies
Develop subcontracts
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Negotiate subcontracts
Notify all applicable offices of changes in project scope and budget
ACCEPTANCE AND SET-UP
Receive grant award
Notify PI and school that award has been received, forward copy if
necessary
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Evaluate whether award is a gift or grant
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Accept the agreement on behalf of the institution
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Prepare budget with object codes for unit review
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Prepare project brief and distribute to PI, department, school, GCA,
others as necessary
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Establish grant account in general ledger
Attend Project Startup meetings to review specific project requirements
Provide training in administrative procedures to project staff
Provide training in Financial Procedures and use of system reports for
project tracking and performance
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AVPF
RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
AVPF
BUDGET AND CASH MANAGEMENT
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Establish account access
Initiate non-salary purchases
Prepare single-source justification for purchases, as necessary
Set up payroll on grants
Verify that expenditures meet Accounts Payable procedures at the time
they are requested
Verify that expenditures are appropriate and adhere to federal, state,
and local regulations
Perform periodic review of grant transactions for appropriateness and
adherence to federal, state, and local regulations (see tab for Periodic
Review)
Establish policy and procedures that ensure the accuracy and
timeliness of all financial transactions posting to the general ledger
Initiate request for re-budgeting and prepare documentation
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Assist with and submit requests for re-budgeting
Receive subcontractor invoice
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Approve work done by subcontractor; sign invoice
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Process payment of subcontract invoice
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Ensure that A-133 reports are received from subcontractors if required
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Ensure that A-133 reports are received and reviewed from
subcontractors at inception and annually
In cases of for-profit sub recipients, obtain a copy of an audit or review
performed by an independent certified public accountant
Review For-Profit audit documents for any weaknesses
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RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
COST SHARING (pending revision to policy)
Establish and publish policy. Review annually with the Deans.
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Codify cost-sharing requirements in the project brief
Gather cost sharing data
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Cost sharing must be recorded through the use of a Journal Entry.
Report cost sharing to sponsors (SF-425)
COST TRANSFERS (pending revision to policy)
For all Awards, the Department Admin must submit a written request to
Grants Accounting. The request will be reviewed on a case by case
basis
Prepare documentation/justification for cost transfers (journal entries)
Review, approve and document cost transfer requests
Review, approve and document cost transfer requests exceeding 90
days
Process cost transfer requests
Provide institutional oversight on cost transfers
AVPF
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Approve cost sharing prior to submission of grant
VPGS&R
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RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
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BUDGET AND CASH MANAGEMENT
Monitor "under-spending" of grant accounts; notify departments
Maintain local oversight for the project
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Prepare and submit invoices to sponsors
Prepare and process letter of credit draws (SF-425)
Receive payments from sponsors and deposit them in institution
accounts
Grants Accounting will report all aged accounts Billed, Received and
Outstanding to Department Admin/PI
Resolve payment problems with late or non-payment by funding
agencies
FINANCIAL AND MANAGEMENT REPORTING
Provide timely and accurate financial information/reports to PI/Dean
Utilize monthly reports for financial monitoring and identify and resolve
errors on the account in a timely manner. Utilize Business Intelligence
tools (Microstrategy)
Prepare, certify and submit interim financial reports. PI and
departmental administrators will be copied on the submission of the
report.
Define, Identify, Monitor, and report program income
Deposit program income. Department Admin will forward all checks to
GCA for handling
Provide institutional oversight to record and report program income
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AVPF
RESPONSIBILITIES
SUBRECIPIENT DETERMINATION AND REPORTING
PI's proposal to the awarding agency identifies the need for a sub
recipient (subcontractor, co investigator).
OSP will review the proposed role of an anticipated project partner and
determine if it is a sub recipient or a vendor.
Annually, GCA will contact and request a copy of the sub recipient's A133
In the case of for-profit sub recipients, GCA will request a copy of their
audited statements
PROGRAM MANAGEMENT
Conduct the sponsored project
Complete and submit interim technical reports (OSP will route and
submit technical reports requiring institutional signature)
Complete the progress report for non-competitive renewals
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
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Provide local oversight over appointment of individuals to the project
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Initiate programmatic changes to the project
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Provide oversight for all research activity
Review programmatic changes to the project
Conduct official communications with sponsor for program, contractual
and budget modifications; no cost extensions, time extensions
Conduct official communications with sponsor for financial matters.
Provide institutional endorsement to the sponsor for requests for
administrative or programmatic changes initiated by the principal
investigator
GCA
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VPGS&R
AVPF
RESPONSIBILITIES
HUMAN RESOURCE MANAGEMENT
Hire or assign research personnel for project and prepare documents for
appointment of individuals to project
Approve appointments of personnel to project
As necessary, approve appointments to project subject to special terms
and conditions (e.g., Patriot Act)
Assist with matters that involve faculty, such as special appointments
and resignations
Assist with matters that involve terminations of faculty/research
personnel
Terminate research personnel
PI
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DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
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EFFORT REPORTING
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Establish and publish policy. Review annually with the Deans
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Distribute effort reports
Complete effort reports
PI to sign off on effort reports
Track current and pending effort
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Provide information to facilitate compliance with effort reporting policy
Provide local oversight for effort certification
Maintain official records of effort reporting
Ensure compliance with effort reporting
Receive and review effort reports to ensure all federal projects are
represented
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AVPF
RESPONSIBILITIES
AWARD CLOSE-OUT
Notify the PI and OSP of the impending end of the grant award (90 day
notices)
Prepare and submit final technical report (in coordination with GCA
when technical and financial reports must be submitted together)
File copy of Technical Report with OSP for retention
Work with units on delinquent reports when notified by agency
Provide information for closing financial reports
Prepare and approve the final financial report and notify the PI
Provide information on other closing reports, such as on patents and
equipment
Retain the scientific data
Maintain the official institutional record
Resolve issues related to late payment and problems with collection of
awarded funds
Review and provide guidance for completion of patent reports
Communicate to ensure all work has been performed and expenses
incurred; inactivate the account
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
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AVPF
RESPONSIBILITIES
PI
DEAN/
DEPT.
ADMIN. CHAIR1
OSP
GCA
VPGS&R
AVPF
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EXTERNAL AUDIT/SITE VISIT LIAISON
*
Notify OSP and GCA of any requests for audit/review received by the
unit
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Upon receipt from OSP/PI of the audit notice, GCA will contact the
auditor and determine the scope of the audit. GCA will issue to all
parties a procedure memo to be followed during the audit/site visit.
Since this is a joint responsibility of all parties involved in the
management of the university's grants, this memo will specify roles,
responsibilities and due dates. Logistical issues of the auditors, if any,
will be addressed.
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For a university-wide center, the VPGSR serves in this capacity.
Time and Effort Certification
Employees of American University (faculty, staff, students, or temporary
employees) who receive payment from a federally-funded grant are required to
certify their percentage of effort expended-on that grant on a biannual basis.
The University provides documentation for this certification by requiring
periodic effort reports from each individual who receives salary charged to one or
more sponsored projects and/or a cost sharing account during the effort
reporting period. These effort reports document the percentages of the
individual’s total effort that were dedicated to each sponsored project and other
University activities, and require a certification from the person receiving
payment that the reported effort percentages were accurate.
Time and Effort Certification
Faculty members are required to be aware of their proportions of committed
effort to all sponsored projects in which they have roles, their ability to meet
those commitments in light of any other University obligations they may have
and to communicate any significant changes in level of committed effort on
sponsored projects to his/her respective business office.
Significant financial penalties, expenditure disallowances, and reputational harm
will result from failure to provide accurate time and effort certifications or other
failures to comply with the University’s time and effort reporting requirements.
All individuals involved in the effort certification process are expected to abide
strictly by the provisions of this policy or face the suspension of payments from
sponsored research accounts.
Cost Sharing
In many instances, the grantee is required to “match” the federal award or
“cost-share” to help pay for the project.
Recipients can provide their cost-sharing/matching contributions in any of
the following ways:
• Cash Contributions
• In-kind contributions
• Program income
• Combination of nonfederal sources
It is imperative that all cost share documentation be provided in a timely
manner to your assigned GCA accountant in order to be in compliance with
the financial reporting requirements of the grant award or agreement.
Cost Transfer
A cost transfer is the reassignment of an expense to a sponsored project after the expense
was initially charged to another sponsored project or non-sponsored project. Cost
transfers include reassignments of salary, wages, and other direct costs.
While every effort must be made to charge costs to the correct account(s) when they are
incurred, cost transfers are appropriate when their purpose is to correct posting or
bookkeeping errors in the original charges, to appropriately reallocate expenditures
between accounts, or to transfer pre-award costs from an institutional account to a
sponsored project account.
Under no circumstances may costs that benefit one sponsored project be charged
temporarily to another sponsored project. Sponsored project costs that may not be
charged to the appropriate project for any reason may be charged to a non-sponsored
Cost center and transferred to the appropriate sponsored project at the earliest
opportunity. Failure to adhere to this policy will result in improper financial reporting
and inappropriate reimbursement from the sponsor.
Cost Transfer
Cost transfers may be made, provided all of the following conditions are met:
• The cost reflects a good or service that directly benefits the project
• The cost is a proper and allowable charge to the project
• The transfer is supported by adequate documentation fully explaining the circumstances under which
the error occurred and justifying the charge to the project to which the transfer is made
• The transfer is approved by the Principal Investigator (PI)
Cost transfers must be made within 90 days of the original charge. Any transfer made after this
period raises serious questions regarding the propriety of the transfer. If a project director desires to request
a transfer after this time, an explanation of why the transfer is late must accompany the full explanation for
the transfer, and its justification, as well as a certification by the principal investigator/project director. Any
transfer of costs on a sponsored program is ultimately the responsibility of the project director, who should
retain appropriate documents to support the requested changes. All cost transfers are subject to the review
and approval of the Grants and Contracts Accounting office.
Auditors and sponsors will audit and request additional justification on suspicious cost transfers
with the following characteristics:
• Costs transferred 90 days after the original charges were recorded
• Transfers supported by inadequate documentation or justification
• Transfers made at the end of a project that relieve cost overruns or spend out a project
AUDITS
A-133 Audit
The most common audit in federal grants is the organization
wide or single audit under OMB Circular A-133.
Entities that expend $500,000 or more each year in federal
financial assistance are required to have an A-133 audit. The A133 audit entails both a financial audit and an audit to determine
if the grantee is meeting applicable programmatic requirements.
SOX at American University
• Under the guidance of the Audit Committee, the University undertook an
extensive Sarbanes-Oxley review of its internal control environment.
• While not required for non-public companies, the University Audit
Committee adopted a SOX program to show the public the University’s
management was dedicated to quality and accuracy around financial
reporting.
• This review is conducted each year by the internal audit team Protiviti,
using best practices developed during similar reviews at their corporate
and other not-for-profit clients.
Sarbanes-Oxley Act of 2002
• In 2002, the Sarbanes-Oxley Act (or “SOX”) was made a United States
federal law which set new or enhanced standards to monitor the internal
control structure of an organization.
• The bill was enacted as a reaction to a number of major corporate and
accounting scandals including those affecting Enron and WorldCom.
How SOX Will Impact You
• AU and Protiviti worked together to prepare a flowchart for each
of the processes within the University.
• On an annual basis, Protiviti tests the controls within each of the
processes to ensure they are designed appropriately and working
effectively.
• As an employee of the University, you may be asked to provide
evidence of a controls operations throughout the fiscal year.
How SOX Will Impact You
• AU and Protiviti worked together to prepare a flowchart for each
of the processes within the University.
• On an annual basis, Protiviti tests the controls within each of the
processes to ensure they are designed appropriately and working
effectively.
• As an employee of the University, you may be asked to provide
evidence of a controls operations throughout the fiscal year.
Quick note:
Gift vs. Grant
The University has a fiduciary to sponsors and donors. The
appropriate classification of external funding sources
facilitates the assignment of responsibility, the proper
recognition of achievements, and the appropriate reporting
results.
Gift - A gift is any item of value given to the University by a donor who
expects nothing in return other than recognition and disposition of
the gift in accordance with his or her wishes. To be considered a gift,
item(s) being given or contributed:
 must be devoid of contractual requirements and with no deliverables (gift may be
for a stated purpose, with the use of the funds designated for that purpose);
 must be irrevocable with no specified period of performance;
 does not require formal fiscal accountability beyond general stewardship and
communication as a courtesy to the donor; e.g., progress reports, reports of
expended funds and balances; and
 qualify for tax purposes as a charitable contribution by the donor.
Gift vs. Grant
Grant - To be considered a grant or contract, the following requirements
must be met:
 submission of a formal proposal by the University is required;
 contractual agreement binding the University to a specified line of scholarly study
or educational training within a specified period of performance;
 documents must contain provisions regarding intellectual property rights, and/or
the disposition of tangible, or intangible results from the project;
 documents require formal accountability (budgets and financial reports) for all
funds received and expended; and
 documents may be cancelled by either party for failure to perform.
Quick Note:
Budget RevisionPrior Approval Requirements
During the performance of project it may be appropriate for funds to be reallocated to
support advancement of a project. While grantees have some discretion to re-budget,
there are some actions that require specific prior written approval from the agency.
Most common instances of need for prior sponsor approval are:
• Changes in project scope or objectives
• Changes in key personnel
• Approval for the absence of the principal investigator/project director
for more than three months or a 25% reduction in time for the same individual
• The need for additional funding
There are other approvals prescribed by the circulars and individual agency guidelines.
Talk with your assigned OSP staff member who will provide guidance about whether
the requested budget change for your project will fall within the prior approval
requirements.
Budget Revision
Should significant funds need to be transferred from one object code to
another, the project brief will need to be revised. The principal
investigator must request such action from OSP in writing. If sponsor
approval is required, OSP will obtain the approval before revising the
project brief.
For general guidance on re-budgeting for federal projects refer to OMB
Circular A-110, Section 25 - Revision of Budget and Program Plans as
listed below.
<http://www.whitehouse.gov/omb/circulars/a110/a110.html>
Project Expenditure Control Authority
The principal investigator approves charges to an account. The signatures of other
project personnel will not be honored without prior written approval. By signing
off on a project cost, the principal investigator certifies that the expenditures were
appropriate, project-related, and actually incurred.
To assist Principal Investigators with their account responsibilities, the Controller’s
Office and the Office of the School/College Dean jointly perform expenditure
control functions designed to ensure that:
Expenditures are allowable and allocable
Allotments are available
Proper approvals have been obtained
Expenditures appear consistent with the approved budget
Expenditures are consistent with sponsor and university policies
Expenditures
Principal Investigators are responsible for accessing and reviewing their
accounts on a timely basis to ensure that expenditures are proceeding
according to plan and that all costs are charged to the correct accounts
and object codes. Principal Investigators must request access to their
restricted account through the office of their School/College Dean.
Two reports have been developed for Principal Investigators and their
departments to track expenditures on restricted accounts. These screens
are:
XEX2 – provides totals by object code for one project
XEX3 – provides reports on all projects, one project per page
BI Tool
In addition, Principal Investigators are encouraged to use the Business Intelligence
Reporting tool found at my.american.edu portal under the Technology Link.
Financial Reports/Invoices
Financial reports and invoices are prepared by the GCA office when
required or mandated by the grant award. The grant accountant uses the
guidelines supplied by the sponsor to complete such reports. Once prepared
and signed by the accountant, it is reviewed by the immediate supervisor
before submission to the sponsor.
What is a Grant Closeout?
A Grant closeout includes all of the final steps in completing a grant
agreement.
A Grant closeout occurs when the awarding agency determines that all
applicable administrative actions and work under the grant have been
completed. The recipients must submit all required financial, performance
and other reports, and refund any balances of unobligated cash that the
awarding agency approved.
Within how many days should a cost
transfer take place?
 100
 90
 120
 180
Within how many days should a cost
transfer take place?
 100
 90
 120
 180
Recipients can provide their
cost-sharing/matching contributions
in any of the following ways:
 Cash Contributions
 In-kind contributions
 Program income
 Combination of nonfederal sources
Recipients can provide their
cost-sharing/matching contributions
in any of the following ways:
 Cash Contributions
 In-kind contributions
 Program income
 Combination of nonfederal sources
We will resume in 5 minutes
There are five sets of cost principles
applicable to federal awards:
1. OMB Circular A-21 Cost Principles for Educational Institutions.
2. OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal
Governments.
3. OMB Circular A-110, Cost Principles for Educational Institutions
4. Federal Acquisition Regulations System (FARS), Contracts with Commercial
Organizations, codified at 48 CFR.
5. 45 CFR 74 Principles for Determining Costs Applicable to R&D with
Hospitals.
Circular No. A-110
Uniform Administrative Requirements.
This Circular sets forth standards for obtaining consistency and uniformity among
Federal agencies in the administration of grants to and agreements with
institutions of higher education, hospitals, and other non-profit organizations.
A-110:
• C21: Standards of Financial Management
• C23: Cost Sharing or matching
• C24:Program Income
• C27: Allowable Cost
• C28: Period of availability of funds
• C30-37: Property Standards
• D70-73: After the Award Requirements
Allowable Expenditures on Sponsor Awards
Circular No. A-21
Cost principles for Educational Institutions
Provides principles for determining the costs applicable to research and development,
training, and other sponsored work performed by colleges and universities under grants,
contracts, and other agreements with the Federal Government. These agreements are referred
to as sponsored agreements.
A-21:
• Introduction to Sections B &C
• Introduction to Section J
• Definition of "F&A" costs
• J3: Alcoholic beverages
• J5: Audit cost and related services
• J18: Equipment and other capital expenditures
• J36: Pre-agreement costs
Technical Support for you
A one point contact:
GCA is now on i-Support through OIT
Please direct your questions and comments
through askaccounting@american.edu.
or you can reach us at our
main office phone number ext. 3875