Financial Oversight of Sponsored Projects

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Principal Investigator Training

• Financial Oversight of Sponsored Projects
• Columbia University
• Office of the Treasurer and Controller
• Restricted Funds
• V0200H

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Principal Investigator TrainingPurpose of
Training
PURPOSE OF TRAINING

• To give PIs the tools with which to exercise
  oversight by
• Making PIs aware of Federal and University
  policies
• Providing PIs with guidance in exercising
  oversight

Good fiscal management results from a joint
effort between the PI and administrators
Office of the Treasurer Controller
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Principal Investigator TrainingTraining Outline
TRAINING OUTLINE

• Why must the PI exercise oversight for the
  financial management of sponsored projects?
• Columbia policy on PI responsibilities for
  fiscal oversight
• Training limitations
• Federal and University policies - what every PI
  should know
  
• Key points in PI oversight- what every PI
  should do

Office of the Treasurer Controller
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Principal Investigator TrainingWhy the PI???
WHY THE PI ???

• Financial oversight by the PI is necessary
  because
• agency regulations on appropriateness, etc.
• relationship between application award
• relationship between scope resources
• must determine allocations to multiple projects
• must insure adequacy of resources

Office of the Treasurer Controller
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Principal Investigator TrainingHIH Compliance
Issues
N I H COMPLIANCE ISSUES

• Misuse of Funds
• Unallowable Costs
• Allocation of Costs (especially salary charges)
  
• Accelerated Expenditures
• Un-obligated Balances
• Cost Transfers

Office of the Treasurer Controller
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Principal Investigator TrainingNIH Diagnostic
Questions
N I H DIAGNOSTIC QUESTIONS

• Who is recipient of sponsored support?
• Who is accountable?
• Who decides on allocation of costs or cost
  transfers?
• What is the allegiance of departmental
  administrators?
• Is the cost sharing information reported in
  applications linked with actual effort on
  government project?
• Does the organization promote compliance with
  Federal requirements or tolerate individual
  practice and interpretation?
  

Office of the Treasurer Controller
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Principal Investigator TrainingColumbia Policy
on PI Responsibilities
COLUMBIA POLICY ON PI RESPONSIBILITIES

• Principal Investigators are required to exercise
  oversight of the financial transactions and
  financial status of each grant and contract
  sufficient to ensure that charges are
• reasonable and necessary
• allowable under the terms conditions of the
  award
• properly allocated to among the multiple
  awards and funding sources
• limited to the funds awarded for the project

Policy Statement 92-5
Office of the Treasurer Controller
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Principal Investigator TrainingTraining
Limitations
TRAINING LIMITATIONS
The materials presented here are intended to aid
the PIin managing sponsored projects. They have
general applicability to most Federal research
grants, and many other Federal and non-Federal
awards. It is not possible to present training
materials that cover every situation, or every
granting agencys particular set of regulations.
If you are not sure about the applicability of a
particular provision to your project, check with
your departmental administrator, the Grants and
Contracts Office, or the Restricted Funds
Division of the Controllers Office.
Office of the Treasurer Controller
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Principal Investigator TrainingWhat Every PI
Should Know
WHAT EVERY PI SHOULD KNOW

• General rules
• Unallowable costs
• Re-budgeting
• Cost transfers
• Cost sharing
• Salary/effort reporting

• Travel and business
  expenses
• Equipment purchases
• Indirect costs
• Monthly review
• Agency reporting

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW
General rules

• Costs must be related to the project charged
• Costs must be reasonable - prudent person test
• Costs related to multiple projects allocated
• on proportional benefit, where possible
• on any reasonable basis, where necessary
• Costs may not be assigned based on fund
  availability, award expiration date or
  other inappropriate criteria

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW General Rules
(continued)

• Charges may not exceed project award
• Limit charges within budget period to 115
• Pre-award costs, where permitted, limited to 90
  days
• Spending limits apply to total award, not
  necessarily individual FAS accounts
• Unexpended funds may often be carried forward

When in doubt, check with your administrator,
the Grants Contracts Office, or Controllers
Office (Restricted Funds)
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Unallowable Costs

• Federal regulations prohibit certain costs,
  most common
• entertainment
• alcoholic beverages
• air/rail fare in excess of lowest available
• general office supplies
• most clerical administrative salaries

Unallowable costs is a Federal term denoting
costs not reimbursable under Federal grants
contracts
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Unallowable Costs
(continued)

• University Policy Statements
• 92-1 Unallowable Costs
• 92-3 Clerical Administrative Salaries
• 92-4 Other Administrative Costs
• May be charged to other sources when
  appropriate
• Must use special subcodes (85xx)

Unallowable costs is a Federal term denoting
costs not reimbursable under Federal grants
contracts
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Rebudgeting

• Modest re-budgeting generally allowed without
  agency approval
• Re-budgeting of more than 25 may be
  problematic (e.g.., change in scope)
• Significant re-budgeting of key personnel time
  indicates scope change

Rebudgeting occurs when spending differs from
budget
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Rebudgeting (continued)

• Re-budgeting which affects ICR must go through
  Grants Contracts Office
• Obtain agency approval where required

Rebudgeting occurs when spending differs from
budget
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Cost Transfers

• Exceptional, not routine
• Done on a timely basis
• No parking of expenses
• Original expense incurred during award period
• Incorrect charges must always be removed

Cost transfers are used to correct, reassign or
redistribute costs between
accounts
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Cost Sharing

• Cost sharing commitments on Federal projects
  cant be satisfied from other Federal
  projects
• Salary requests and charges to projects should
  generally reflect effort committed (i.e..,
  generally no cost sharing)
• Over-expenditures on projects transferred to
  non-project accounts represent cost sharing
• Must be readily verifiable in Univ. records

Cost sharing represents costs of carrying out a
project not charged to the project
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Salary and Effort
Reporting

• PI determines level of effort to be committed
  by personnel
• Salaries charged should be consistent with
  effort
• Significant variances in effort require
  redistribution
• No redistribution required for short term
  fluctuations
• Quarterly effort monitoring reports provide
  guidance
• Annual effort certification required
• Clerical administrative salaries not
  generally allowable on Federal projects

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Travel and Business
Expenses

• Limited to lowest commercial fare
• Must use U S carriers
• Travel meals limited to 80 (15/25/40) Hotels
  300
• Charge excess to other sources
• Business meals
• same limits as above
• document business purpose and attendees
• entertainment costs not business expenses

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Equipment Purchases

• Definition 2,000 and useful life 2 years
• Re-budgeting into or out of equipment impacts
  ICR
• Purchases during the last 60 days of terminal
  year may be problematic
• University tags, tracks and capitalizes
  equipment. Report dispositions to Property
  Manager

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Indirect Costs

• Necessary to support research and other projects,
  but cant be
  precisely allocated to individual projects
• Include support costs related to
• facilities (utilities, maintenance, security,
  etc.)
• libraries (university and departmental)
• departmental admin (school/dept)
• general admin (controller, purchasing, etc.)
  
  

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Indirect Costs
(continued)

• also known as Indirect Cost Allowance (ICA),
  Facilities and Administration (FA), or Overhead
• Recovered through application of an indirect cost
  rate
• Rate applied to MTDC (total direct excluding
  equipment, GRA tuition, subcontracts in excess of
  25,000 and patient care costs
• Separate rates for on campus, modified off
  campus, off campus
  

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Indirect Costs
(continued)

• Rate in effect at time of competitive segment
  governs rate charged for entire segment
• University policy provides for full indirect
  costs unless funding agency policy requires a
  lower rate
• When a lower rate is applied, the institution
  loses real dollars
  

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Monthly Reports

• Summary Account Statement (AM 090)
• Detail Report of Transactions (AM 091)
• Summary Payroll Account Distribution (Summary
  PAD)
• Detail Payroll Account Distribution (Detail PAD)

The University provides standard monthly reports
for review
Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Monthly Reports
(continued)

• Reports should be reviewed to insure that
• improper costs are not charged
• costs which should be charged are reflected
• charges are consistent with the PIs
  expectations
• PI knows the overall financial status of project
• significant variances from budget are identified

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Monthly Reports
(continued)

• Use of administrative staff encouraged, but PI
  must oversee review
• Process corrections and reallocations promptly
• Resulting transfers to other sponsored
  projects normally limited to 60 days
• No time limit on transfers from sponsored
  projects

Office of the Treasurer Controller
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Principal Investigator Training What Every PI
Should Know
WHAT EVERY PI SHOULD KNOW Agency Financial
Reporting

• Controllers Office is responsible for
  financial reporting
• Reporting is based on expenditures in FAS
• Interim invoicing for reimbursement generally
  done without contact with department
• Final reporting after departmental
  reconciliation/signoff
• PI should review to ensure concurrence
• variances from FAS require documentation

Office of the Treasurer Controller
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Principal Investigator TrainingKey Points-What
Every PI Should Do
KEY POINTS-WHAT EVERY PI SHOULD DO

• If you manage your own projects, review FAS
  monthly
• If projects are managed by others
• give administrator clear instructions on
  allocations
• review project status with administrator
  periodically
• Make allocation decisions based on
  benefit/equity
• Never allocate based on fund availability or
  expiration

Office of the Treasurer Controller
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Principal Investigator Training Key Points-What
Every PI Should Do
KEY POINTS-WHAT EVERY PI SHOULD DO

• Dont park expenses in project account only to
  be transferred at a later date
• Insure discrepancies are promptly resolved and
  corrected
• Review final reconciliation of project
  closeout to insure concurrence

Office of the Treasurer Controller
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Principal Investigator TrainingIndicators of
Problems
INDICATORS OF PROBLEMS Watch out for these
problem indicators

• Unauthorized or inappropriate charges
• Unallowable costs
• Improper cost allocations
• Overdrafts
• Assignment of costs based on fund availability
  or project expiration
• Cost transfers (frequent, delinquent, etc.)
• Equipment purchases near end of project

Office of the Treasurer Controller
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Principal Investigator TrainingQuestions?
Questions?
Richard Ruttenberg 854-1050 mailtorr40_at_columbia
.edu
Office of the Treasurer Controller
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Principal Investigator TrainingYour Feedback is
Important
your feedback is important!
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