Overview of Accounting for Sponsored Projects

Designed to empower business managers and accounting staff!

What are sponsored projects?

Funds awarded by Governmental agencies & private companies to UT to perform research, instruction, public service and produce a deliverable.

Our professors are in demand due to their expertise in their field

Some have international reputations

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Importance ofsponsored projects

UT’s mission is instruction, research, and public service

External funding pays for research, instruction and public service work that our faculty members are interested in pursuing

Active researchers make better teachersPays for high-tech equipment & buildingsAttracts quality graduate students who want to work

with highly-regarded facultySpin-off companies improve state & local economy

Increasing our research initiatives will help the University move towards our goal of being a Top 25 Public Research University!

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How much $ is involved?

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FY 2010 $213,460,891

FY 2011 $239,966,194

FY 2012 $236,531,760

FY 2013 $241,437,691

FY 2014 $231,477,817

Who is involved?

Principal Investigator

Co-PI’s & research staff

Graduate students

Subcontractors

Dept Head Department accounting & clerical staff

College admin Research office

Campus / SPA

Controller’s Office

Treasurer’s Office

(A/P dept)

Payroll

Sponsor contracting

officer

Sponsor fiscal rep or A/P dept

Vendors

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Technical work

Administrative & support

staff

External to UT

Support staff goal

Provide superior service to the PI so that he / she can devote maximum time to technical aspects of the project & teaching students

Exceed sponsors’ expectations for fiscal responsibility & administrative performance

Promotes reputation of PI and UT

Sponsors will want to give us more money

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PI responsibilities

The PI is responsible for all aspects of the sponsored project – his/her reputation is on the line Technical

Financial

Administrative

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PI technical responsibilities

Ensure that all technical reports / deliverables are of high quality and are submitted by sponsor deadlines

Ensure that subcontractors are performing technical tasks adequately

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PI Financial responsibilities Ensure that all charges are reasonable, allowable,

allocable, and correctly classified as direct versus F&A

Ensure that all charges post to the correct sponsored project in a timely manner – initiate Advance WBS Element, if necessary

Ensure that the budget is followed

Ensure that any sponsor-required prior approvals are obtained

Budget changes, equipment purchases, travel

Ensure that subcontractor invoices are reasonable based upon the technical work performed and are allocable, allowable and correctly classified as direct versus F&A

Don’t approve payment of invoices until satisfied with technical performance.

Ensure subcontractor invoices include a signed certification statement.9

PI Financial responsibilities, cont.. The PI is responsible for certifying the Schedule of Final

Charges Form.

Ensure all expenditures posted to the project are allowable, allocable, reasonable and necessary to the scope of work by reviewing, verifying and signing departmental sponsored project ledgers.

The PI is also required to ensure all expenditures are incurred prior to the end of the project and posted no later than 60 days after it ends.

The PI is responsible for ensuring the project WBS Element reflects all actual allowable costs that have been incurred on the project, whether under or overspent.

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Administrative responsibilities Ensure that support staff are performing tasks

adequately

Ensure that support staff are given required information in a timely manner

Ensure that all applicable Federal, sponsor and UT rules & regulations are followed

Ensure that award amendments are requested in a timely manner

Business managers/Budget Directors can not certify the Schedule of Final Charges Form. The form can only be certified by the PI, or the Department Head in the PI’s absence!

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Department Head responsibilities

The Department Head is responsible for ensuring that the PI and support staff perform their jobs in an adequate, timely, and compliant manner. Technical

Financial

Administrative

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Department Headtechnical responsibilities

Ensure that scope of work advances UT’s mission and the goals of the academic unit

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Department Headfinancial responsibilities Ensure that all charges are reasonable,

allowable, allocable, and correctly classified as direct versus F&A

Ensure that all charges post to the correct sponsored project in a timely manner Approve PI starting work before signed award

document is received Approve Advance WBS Element, if necessary

Pay for any charges not collected from sponsors Including overruns, disallowances, cost sharing,

uncollected or disputed sponsor invoices

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Department Head administrative responsibilities

Ensure space exists to perform project work Ensure that support staff are performing tasks

adequately and are adequately trained Ensure that processes and culture are present

that promote financial compliance Ensure that all applicable Federal, sponsor,

and UT rules & regulations are followed

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Departmental Accounting Staff financial responsibilitiesSame as for the PI, plus:

Process accounting transactions

Monthly account reconciliation

Provide PI and Department Head with adequate financial information to manage project

Solve problems

Liaison between PI and everyone else

Assist PI in compliance with regulations

Closeout in a timely manner

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Sponsored Projects Accounting responsibilities Set up project in IRIS

Work with PI, department accounting staff & research office to get WBS Element opened as quickly as possible

Periodic financial reporting

Periodic invoicing / cash receipts performed to maximize UT’s cash flow

Assist department accounting staff & PI with regulation compliance

Closeout in a timely manner17

Office of Sponsored Programs administrative responsibilities

Review proposals and budgets for accuracy and financial compliance

Flow through financial rules to subcontractors Help the PI, department accounting staff & business office get

WBS Element opened as quickly as possible Get fully executed award documents from sponsor ASAP so that

invoicing can begin which maximizes UT’s cash flow Maximize F&A recovery Negotiate / disallow detrimental financial terms & conditions

Inconsistent costing, such as hourly rates versus % of effort

Unreasonable reporting deadlines

Non-standard invoicing and reporting forms

Backup documentation for expenditures

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Sponsored project life cycle

PI has great idea=>

PI prepares proposal

document

Proposal approved by

UT

Proposal submitted to

potential sponsor

Sponsor accepts proposal

=>

Sponsor & UT negotiate

award & UT may award

subcontracts

UT creates R account in

IRIS

PI starts technical

work & incurs charges

Periodic invoicing /

cash receipts=>

Interim technical &

financial reporting

Project ends and all

project costs are on R within 60

days

Final technical &

financial reports due within the contracted

date

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Proposals

Proposal document prepared by PI Includes statement of work Includes budget & budget justification

narrative Includes known subcontractors Includes all supplemental documentsSubmitted to Office of Sponsored Programs

Including cost sharing and space

Research office reviews total document

Proposal submitted on behalf of the University

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Awards

A successful proposal results in an award document between the sponsor and UT Grant

Cooperative agreement

Contract, purchase order

Standard information included in an award document

Start & end dates, award amount, budget, statement of work

Different award types have progressive levels of Sponsor control & restrictions

Reporting requirements21

Federal grants

“For the public good”

One or two page grant document

May not require UT to sign

Usually incorporates agency grant policies Guide usually located on their web site

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Flow-through awards

An award where the prime funding sponsor awards money to an awardee and the awardee awards part of the money to a sub-awardee Example: NASA gives Vanderbilt a grant for $1

million & Vanderbilt sub-grants $100,000 to UT UT’s sponsor is Vanderbilt, a private entity, because

that is who our award agreement is with; however, it is Federal flow-through funding because we know that the prime sponsor is NASA

Same compliance requirements as direct Federal award23

Restricted WBS Element

Restricted WBS Elements are cost collectors in IRIS

UT must spend the $ in accordance with the sponsor’s specifications

UT must maintain separate accounting of each project’s financial activity

Established by SPA at the request of the department or upon receipt of an award document from the OSP office

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Advance WBS Element

A restricted WBS Element can be established before the executed award document is received PI wants to start working on the project

If costs will be incurred, then where will they post?

Never to another sponsored project WBS Element!!!

Department evaluates likelihood of award and authorized PI to start work without an executed award agreement

Submits signed form to SPA along with the “Research and Laboratory Compliance” form completed by the PI.

Note: They may also need to meet a Financial Conflicts of Interest, if applicable. (This may hold up the account creation a bit!)

http://13134m1l2szd36ie6w8tg1djw2.wpengine.netdna-cdn.com/wp-content/uploads/2013/06/WBS.pdf

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Risks related to an Advance WBSE?

Factors affecting risk of setting up an advanced WBS Element Is the award coming from a Government or private sponsor?

Do we have a good and reliable past relationship with sponsor?

Is it a Competitive or non-competitive proposal?

Do we have an intent to award provided verbally or in writing by the sponsor?

Have we already started working?

If you don’t feel comfortable with the answers to these questions, an Advance WBSE probably isn’t the way to go!

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Restricted WBS Element creation

Required information Signed Advance WBS Element request form or

fully-executed award document TERA PAMS proposal Budget in IRIS Financial Conflict of Interest Form Research & Laboratory Compliance Form

submitted Delays can occur

Department must monitor new account creation progress

If award amount differs from proposed amount, then department must submit revised budget to OSP

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Timeline for creation

Restricted WBS Elements need to be established in a timely manner

Ideally, before the project start date

Provide adequate time for department to assign recurring costs

Payroll PIF’s, service centers, etc.

In reality, we are not always timely

Causes more work for everyone

Sponsors & auditors not happy

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Sponsored projects in IRIS

Master data in various IRIS modules

Project Systems module has most master data

Funds Mgmt module has some master data & budget

Sales & Distribution module has invoicing master data

Accounts Receivable module has invoicing & collection activity

You should review this information and make sure that it agrees with your award document

If not, call SPA

Errors can radically affect your project!

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IRIS transactions

CJ20N contains many attributes

Dates, obligated and award amount, F&A, cost sharing information, PI, invoicing, function, sponsor, project profile, project type, etc.

Learn what all of these represent

Field names aren’t always descriptive

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Accounting structure

CJ20N work breakdown structure

Project definition

Header only, not a chargeable object

WBS elements

Chargeable objects with many attributes

Different levels & flexibility

Link to funds centers

Can cross organizational lines

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Required structure

Award document requirements

New award document number from sponsor always requires a new Project Definition & WBS Element

Different F&A rates within one award

This always requires separate WBS Element for those charges that are treated differently for F&A computation

Example – NSF - participant support costs.

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Optional structure

Divide project for mgmt purposesBy technical phases of workFor different sub- or co-PI’s within UT

WBS Element linked to their funds centerThey have spending control

They have accounting ledger access

You can see other IRIS accounting reports, not ledger

They get F&A recovery and research “credit”

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Complex structure

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Project DefinitionR011024009

WBS ElementR011024009

(lead PI)

WBS ElementR074215115

(co-PI)

Funds CenterU013410024

Funds CenterU073415055

Charges to projects

Charges must be in compliance with the rules & regulations applicable to UTUniform Guidance

UT Fiscal Policy

Sponsor policy manuals

Award document clauses

Responsibility of PI and departmentConsequences of incorrect charges

Know your proposal and budget agreement specifics. 35

Types of charges

Direct costs

Salaries, staff benefits, supplies, long-distance phone calls, travel, equipment, subcontracts

Exception to “basic support” costs

Due to nature of project technical work

F&A costs

Facilities costs

Bldgs., equip, electricity, library

Admin costs

“Basic support” costs

Clerical & admin salaries, phone line charges, office supplies

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What are F&A costs?

Facilities & Administrative costs

Federally-approved rate applied to a specified cost base

Modified Total Direct Costs (MTDC) base

Salaries & Wages (S&W) base

Matrix of rates in effect

Campus, function, location, award year

Same rate for life of project

Reimbursement for expenses already paid by UT to support research

These are real costs!

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Expenses included in F&A

Facilities Buildings

Sidewalks

Electricity / fuel

Equipment

Library

Security

Custodial

Administrative Department clerical

& admin staff salaries

Research & business offices

Basic office supplies & expenses

Portion of other admin costs – Dept Head, Dean, system charge, etc.

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F&A cost sharing

Must be negotiated & approved in advance by OSP

A portion of collected F&A is returned to college / unit that generated it

Financial activity F&A is charged to WBS Element at full, audited rate

during month-end closing using cost element 501000

F&A cost sharing is credited during month-end closing using cost element 501990 in an amount sufficient so that the net F&A charge is equal to the amount or % allowed by the sponsor

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Transfers of costs

Cost transfers should only be to correct errors

To correct an error is not sufficient justification for documentation.

Subject to sponsor, Federal, State and internal audit disapproval

Excessive or late transfers

Cost transfers that do not document how target project benefited from the charge

Fiscal policy includes time limits and documentation requirements – similar to other universities

All cost transfers over 90 days require a “Cost Transfer Explanation” form.

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Sponsored Projects Accounting “Certification”

The Modules listed as Training Classes related to Sponsored Projects can also be taken as a Certification.

In order to gain a Certification in Sponsored Projects Accounting, you must take the training class and pass a quiz associated with the training module.

Trainings toward the Certification can be obtained through HR training courses, Blackboard, or In-House training (upon departmental request)

If taking the training through HR for the Certification you will need to take the quiz. Quiz’s are located in the Sponsored Projects Accounting project section in Blackboard.

You must be registered as a participant within this project in Blackboard to gain access.

To be setup in Blackboard contact Jay Taylor, Financial Compliance Officer, SPA @vtaylor@utk.edu or 974-0952.

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RAOR Meetings

ROAR meetings are held on the 3rd Wed. of each month between 10-11am.

Please consider attending these meetings. Each meeting has a specific topic and the meetings are open forum discussion. That means you should bring all your questions based on the topic being presented or just come to provide feedback about your experiences with others based on their questions.

Also, the topics are chosen by topics/concerns supplied by attendees. The ROAR Committee would love to hear your topic requests.

These meetings will give valuable information for you to take back to your department!

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Any Questions?

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