Financial Management of Sponsored Projects

The Office for Sponsored Programs' mission is to support research excellence at the University of Connecticut's Storrs and regional campuses. We accomplish our mission by encouraging and facilitating the use of external sponsorship of project needs and by serving as stewards of funds provided to the University by sponsors. OSP maintains an atmosphere that is supportive and protective of the research and scholarly/creative activities of UConn faculty, staff, graduate students, and postdoctoral fellows. We view ourselves as research advocates and professionals dedicated to the best service possible, which means that we work with our campus constituent groups to increase accessibility and reduce encumbrances and streamline our business processes while ensuring adherence to sponsors' requirements.

All awards received by the University include terms and conditions that are agreed to when an award is accepted by UConn. The terms and conditions typically include the timely submission of one or more of the following reports: technical/scientific/progress report, financial statement of expenditures, report of inventions, patent report, royalty report, inventory list of equipment purchased under the award, contractor's release form, and/or final invoice or voucher. In addition, the terms and conditions include the approved budget dollars and line items as well as the rebudgeting terms and billing terms. The University is also obligated to follow all federal rules and regulations such as Office of Management and Budget (OMB) Circular A-21 prescribing allowability of costs to awards and the Cost Accounting Standards.

Technical Reports

Principal Investigators are responsible for preparing and submitting both interim and final technical reports, which typically include a description of the work performed, results of the work and any related publications resulting from the work. The OSP should be copied on the cover letter accompanying the interim and final technical report.

Financial Reports

Preparation of Financial Reports is the responsibility of the OSP. These reports are due within 90 days of the award expiration on federal awards; the deadline may be even shorter for state and private awards. Inability or failure to submit reports within the stipulated time frame can result in the suspension of funding and/or a delay in the release of future funding. All expenditures related to the project must be processed, open encumbrances closed, cost sharing verified, and the account(s) reviewed for errors or necessary changes in order to prepare the final financial report. The following policies are to be followed to ensure that the University of Connecticut is operating in compliance with sponsor terms and Federal policies such as OMB Circular A-21 and Cost Accounting Standards and to ensure that the Office for Sponsored Programs is able to prepare an accurate and timely final financial report for submission to the sponsoring agency as well as close the account in the University's accounting system, Financial Records System (FRS).

The OSP will prepare and send to the Principal Investigator (PI) a draft report of final financial expenditures. There may be several issues to which the PI is asked to respond. These include review of overexpenditures, expenditures after the end date, documentation of cost sharing, and identification of any charges not yet recorded in the University's financial system (FRS). It is essential that these drafts are reviewed and returned within the time frame stated on the draft from OSP. In order to comply with sponsor reporting requirements, OSP will prepare finals based on the draft if the PI does not respond within the allotted time. Any unallowable expenditure, as well as any expenditure that remains unrecorded and therefore unbilled, will then become the responsibility of the PI and his/her Department Head or Dean.

Expenditures

It is the responsibility of the PI to charge expenditures to his/her sponsored program in strict accordance with the budget specified in the agreement. PIs should avoid incurring overdrafts on projects. The PI or designee should review each account's financial status monthly. Detailed and summary financial project reports are distributed to PI's monthly. Financial information can also be reviewed online daily through the University's Financial Record System (FRS). Accounts should be reviewed carefully for incorrect salary distribution, incorrect charges, and other errors.

Accounting statements can also be used as a management tool to determine the award balance available for expenditures, the spending level of each cost category (e.g., salary, travel, equipment), the status of open encumbrances, and any cost sharing commitments that must be fulfilled. Discrepancies should be followed up and resolved immediately. Any questions regarding an account statement should be directed to the project's Grant Manager in OSP. The Grant Manager is there to help PIs manage their projects, and can provide a wealth of valuable assistance in this regard.

Account Overdrafts

All overdrafts are the responsibility of the PI. Overdrafts on an account will result in a negative cash position until they are resolved. Overdrafts result from expenditures made to the account in error, project expenditures were greater than the awarded budget, or expenditures that are charged after the project end date.

If expenditures were made to the account in error, after the end date, or in excess of the approved budget, a cost transfer should be initiated by the PI to move the expenditures to the appropriate account(s). All cost transfers must be fully documented and processed in a timely manner (See the Policy and Procedures on Cost Transfers). All deficits should be cleared within the fiscal year that they occur, especially those charges that are to be transferred to a departmental account. The PI is responsible for reviewing sponsored accounts for overdrafts periodically during each fiscal year. The Office for Sponsored Programs will mail notices of overdrafts to each PI on a monthly basis.

It is the responsibility of the PI and his/her department to clear any remaining deficits within 60 days of account expiration. This will allow the sponsored account to be closed within the time specified in the agreement and be removed from the University's FRS system in a timely fashion. Failure by the Investigator and his/her Department Head or Chair to identify an appropriate account to which to allocate the over draft will cause the OSP to shift the deficit to an unrestricted departmental account or to any of the PI's discretionary accounts, including the indirect return accounts and/or salary savings accounts. To alert PIs to excessively low budget balances the Office for Sponsored Programs will mail notices to PI's when the available budget in an account is 10% or less of the original budget. These notices will be mailed monthly.

Open Encumbrances

The Principal Investigator or his/her designee should periodically monitor encumbrances and communicate any problems with the appropriate department (such as Purchasing or Accounts Payables). All encumbrances to be liquidated should be cleared within 60 days of the award expiration date to ensure their inclusion on the final financial report. All open commitments have to be liquidated or closed in order to close an account in FRS. The PI should continue to monitor all accounts, whether they are past the end date or not, to ensure that commitments are properly closed out.

Cost Transfer

• Request for Cost Transfer Form
  • Web-based Form

When completing the cost transfer request form, please address all of the following items. For any item that you consider non-applicable to a particular request, indicate N/A next to the item.

• Justification – provide a detailed explanation that justifies the need to transfer an expense that had been previously approved on another account. Include in your justification why the charge was originally charged to the account from which it is being transferred and how the expenditure benefits the new account.
• Required Documentation - At the time you submit your request on-line, provide OSP with copies of the documents used to process the expense and copies of receipts that support the charge. The copies can be either faxed to 486-3726 or scanned and sent as an email attachment to your Grant Managers. Requests can not be processed without the documentation.
• Timeliness – process all cost transfers within 90 days of the original charge and within 90 days of the end date of the project

The following list represents acceptable reasons for cost transfers between accounts:

• Expenditure was inadvertently charged to incorrect account number an/or subcode
  
• Clerical error in account number subcode
  
• Expenditure originally charged to one account, but item(s) later used for purpose/project other than originally intended
  
• Expenditure being transferred to new account number representing new budget period for the same award
  
• Expenditure originally charged to one account, but item(s) later determined to benefit more than one project, therefore portion of cost is allocated appropriately
  
• After review of account financial statements, expenditure determined to be not allowable/allocable to this account

Salary Distribution & Effort Reporting

Salary charges to accounts are initiated by payroll authorizations. The payroll authorization lists the pay periods, the planned effort and the corresponding salary amount for each account to be charged. The authorizations provide the basis for the recording of payroll charges in FRS. Once a payroll authorization is submitted and entered into the system, payroll charges will continue in accordance with the stated distribution until a revised authorization is issued, changing the distribution. Payroll authorizations should be prepared as soon as a change is anticipated in order to allow time for all required signatures and processing. Project personnel should be transferred to another source of funding by the project end date.

Federal regulations require certification of all employees whose salary is paid on sponsored projects or who contribute committed effort to sponsored programs. This certification is accomplished through the Effort Reports. These reports are sent out by the Office for Sponsored Programs quarterly for classified staff and each semester for professional staff and faculty charged to the grant or contract. The forms provide certification that the effort distribution adequately reflects the individual's work activities. Faculty are required to certify their own effort reports and are required to certify the effort reports of their research staff working on their sponsored project(s) unless they have the employee sign their own. However, in cases where the employee or principal investigator is not available, a responsible official may certify the effort provided that s/he can document the basis for verifying that the actual work was performed. Salaries and effort are also verified for each grant at the end of the project.

Cost Sharing

Cost sharing on a sponsored program is a contribution to the cost of the project not funded by the sponsor. Direct cost sharing refers to funds expended by the University on behalf of a sponsored project and includes personnel, equipment, and supplies. Mandatory cost sharing is required to be reported on the financial reports and to be supported through the accounting records.

Identification of the source of cost sharing is to be made at the time the proposal is submitted. Cost sharing/match accounts are to be set up for each grant as required and used to charge the cost sharing expense. These accounts should be established at the time the award is received and set up in the University's FRS system. A periodic review of the financial statements will ensure that cost sharing commitments are being met and that unrestricted funds to cover the cost share commitment have been transferred in a timely manner to the cost sharing/match accounts. Transfers from unrestricted accounts to the cost sharing accounts should be made in the fiscal year in which the costs are to be incurred.

Account Surpluses

Unlike cost-reimbursement arrangements, where expenditures are reimbursed after they are incurred, some granting agencies allocate funds at the beginning of the award period or as a fixed price agreement. When such an award expires, leaving a surplus balance in the account, a determination must be made as to whether the remaining funds may be utilized. The decision belongs to the awarding agency, and is often communicated within the award notice. If the unrestricted balance results from a firm, fixed-price agreement, it is often available for the investigator to spend. In such cases, where the direct cost balance is less than 15 % of the original direct cost budget, the balance will be transferred; net of indirect costs, to an unrestricted discretionary account and be made available to the Principal Investigator. Balances remaining that are greater than 15% of the original budget will be investigated to determine if all applicable costs have been charged to the agreement. If surplus funds are required to be refunded to the agency, the Office for Sponsored Programs will return the appropriate balance along with the final financial report.

Subawards

The Personal Service Agreement (PSA) is used to issue a subaward to a collaborating institution on a grant or contract. It is the responsibility of the PI to prepare the required documents for the PSA. OSP reviews and approves the PSA before it is sent to and signed by the subrecipient. All PSAs over $3,000 must be reviewed and approved by the Attorney General's office. During the life of the subaward, the PI monitors technical progress, compliance with all applicable laws and regulations, and reporting requirements. The PI reviews the sub-recipient’s invoices before payment and submits them to Accounts Payable for payment. At close-out, OSP reviews the final invoice to ensure that all costs are allowable and that cost share has been met.