Once an award has been made to the university, the principal investigator (PI) and unit administrator need to monitor expenses to see that all incurred costs being charged to the sponsored project are allowable, allocable, and reasonable.
In addition to actual costs, here are some of the key elements of monitoring sponsored projects:
Cornell University expects costs to be charged to the appropriate sponsored project account when first incurred. Some circumstances may require transferring expenditures to or from a sponsored account after the initial charge is recorded in the general ledger. Reviewing sponsored project account activity should include determining that charges are reasonable, allowable, and directly support the scope of work for the project. To be allowable, the transfer request must be timely, fully documented, conform to university and sponsor allowability standards, and have appropriate authorization.
Proper management of funds is essential to uphold the fiduciary responsibilities of the university. Frequent late, inadequately documented, and unexplained transfers, especially those that involve sponsored projects with overruns or unexpended balances, raise serious questions about the propriety of the transfers, and may result in expenditure disallowances and/or a subsequent reduction in funding. Knowledge of award and policy requirements and ongoing monitoring will improve the quality of financial reporting, improve compliance with regulatory requirements, and reduce the administrative burden and risks inherent in document corrections.
When there are expenditure errors on sponsored projects that need to be corrected, a cost transfer is necessary. The proper way to correct an error is through a cost transfer within 90 days of the initial charge (see ). Non-salary cost transfers can be done by journal entry using a KFS General Ledger Transfer (GLT) e-doc. Salary cost transfers can be done by submitting a KFS Salary Expense Transfer (ST) e-doc and will be reviewed by Sponsored Financial Services (SFS).
Non-salary cost transfers must be supported with auditable documentation. A detailed explanation as to why the error occurred and a detailed justification as to why the charge is valid for the account now being charged must be clearly stated.
Salary cost corrections are made by submitting an ST e-doc. The form must be completed within an employee’s certification period and submitted through KFS. Any salary cost corrections that appear to be late cost transfers will need additional review by SFS.
See Cost Share.
Principal investigators and unit administrators must see that a sponsored project is not overspent. An overdraft situation must be dealt with immediately after evaluating the cause of the over expenditure.
Overdrafts occur for various reasons. The two most common situations include (1) units who do not monitor expense activity allow costs beyond the awarded amount, and (2) projects spanning more than one year do not receive the future-year funding in a timely manner to cover the allowable expenses for the continuing year.
One or more of the following is appropriate for corrections of overdrafts, keeping thein mind:
Per the Uniform Guidance (), "Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons."
Sometimes it is necessary to consider an expense on a project that initially was not requested from the agency. Some agencies allow small percentages of variance in expenses from the original budget without requesting permission. If cumulative expenses exceed the variance, or if there are other restrictions with regard to rebudgeting, a written request through the OSP Grant and Contract Officer for the award needs to be submitted to the agency. The sponsor will be concerned about the scope of the project and whether goals can be met with the changes requested. Costs associated with the rebudgeting request should not be incurred on a project until written permission is granted. Formal changes to a project budget, through issuance of an amendment or modification, shall be reflected in the budget presented in the university's general ledger at the required level of detail.
Federal awards issued under the terms of the Federal Demonstration Partnership, or more recently under the, do not require agency approval of certain budget changes, as long as they do not constitute a change in scope. These types of budget changes are not recorded in the general ledger, and it is the PI and administering unit's shared responsibility to ensure that project spending is consistent with the scope of work and award authority. As a reminder, certain budgetary changes, for example NSF-funded participant costs, or alterations of space, require prior agency approval. These line items will be reflected in the general ledger on a specific object code, account or sub-account. Further information may be found in the award, agency terms and conditions, the Research Terms and Conditions, or consult SFS.
The Uniform Guidance () states, "Program income means 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...." The sponsored project agreement will dictate how program income is to be treated. Generally, income is applied to the sponsored project and is used to offset expenses thus benefiting the sponsored project. Examples of program income include fees earned from services performed under the award; funds generated by sale of commodities and research materials such as tissue cultures, cell lines, or research animals; admission fees; or registration fees charged to participants for a workshop or conference sponsored by an award. For more information, see .
Periodically, PIs leaving the university transfer their grants and contracts to the new institution. The sponsor may have provided funds to Cornell University to purchase equipment critical to the research. When the PI leaves, the sponsor may direct that the equipment leave with the PI and be transferred to the new institution.
The PI’s unit needs to provide a list of all the equipment to be transferred, including the original purchase order number, actual cost, equipment description, university asset tag number, and the account number to which the equipment was charged. All of this information must be forwarded to Cost and Capital Assets so that the assets can be removed from the equipment asset system. A copy of this information should also be sent to SFS to be filed with the closeout documentation. For more information, see .
When it is evident that a project will not be completed on time, the sponsor must be informed in writing with a request for a time extension with no additional funds granted (no cost extension). This request must be made no later than 30 to 60 days before the end date of the project or as otherwise dictated in the award document. The sponsor will need to respond to the university in writing in order for the project to be extended.
SFS will not extend a project without written notification. If no written notification is received before the report is due, a financial report will be sent to the sponsor under the original end date. Should a no-cost extension be received after the reporting period, the end date will be changed, and the project may continue.
Awards are made by sponsors in full consideration of the skills and talents of the PI managing the project. Periodically, situations arise when a PI is no longer available to continue with the project. For example, a PI may have changed direction in research activity; a leave of absence may be necessary for health or other personal reasons; or a PI may have accepted a position at another institution and is leaving the university. The sponsor must be informed immediately in writing when this event occurs. The sponsor will want to evaluate the circumstances and determine if another university PI can meet the project goals, if another institution will take up the work (leading to an early termination at our institution), or if the project will follow the current PI to his/her new institution.
All notifications to sponsors should be in writing. Solely verbal conversations do not count as proper notification. The university unit needs to gauge spending carefully to avoid unallowable expenses – when the PI is not managing the project, continuing expenses will be questioned by the sponsor.
Not informing a sponsor of a PI change may result in costly consequences to the university.
Early terminations usually occur when PIs move to another institution. Once the sponsor has been informed in writing, either a sponsor-specific termination form will need to be completed, or the sponsor will request an early financial report. Funds paid above the final allowable expenses will be returned to the sponsor. Occasionally, sponsors will request that the university send excess funds to the PI's new institution. This type of request must be in writing from the sponsor on the sponsor's letterhead.