Description of Risk
Improper administration of sponsored contracts could cause disallowance of costs, refusal of sponsors to award future contracts, and negative publicity for Institute.
OMB Circular A-21 and the Institute’s Grants and Contracts Policy and Procedures, at http://www.policylibrary.gatech.edu/business-finance/grants-contracts-accounting, require that academic units be responsible for the reasonable and accurate reporting of their sponsored expenditures. [Note: Federal Acquisition Regulation (FAR) 31.2 and Georgia Tech Research Institute’s (GTRI) Policies and Procedures provide similar guidance for GTRI expenditures. Although this section addresses Institute sponsored activities, the same principles apply to GTRI activities.]
This section addresses how the unit should be involved in the oversight of sponsored accounts. Actions discussed here are in addition to general steps taken to verify the reasonableness and integrity of financial records, as discussed in “Accuracy of Financial Records.”
- Understand the level of sponsored activity in the unit
- Designate an individual responsible for coordinating all sponsored activities in the unit
- Provide training to individuals on proper administrative procedures
- Develop and document internal policies and procedures on administration of sponsored activities
The Institute asks all academic unit heads to encourage and support, to the fullest extent possible, efforts by the faculty and staff to attract and perform sponsored research activities. Part of this support is administrative assistance in complying with the many rules, regulations, and standards applicable to sponsored activities. In this environment, all unit heads should periodically, but at least annually, evaluate their sponsored activities in relation to their overall activities. One purpose of this evaluation is to determine if personnel and resources are reasonably allocated to sponsored activities. A support staff of one or two employees may have been adequate, using old administrative techniques or processes, but a doubling of sponsored dollars or projects may require more support help and/or new processes/techniques. Conversely, reduction in sponsored activities means that support staff efforts may need to be reallocated, and that efforts to boost sponsored activity should be initiated.
The unit head must be involved with his/her personnel who perform sponsored research from the point of hiring, before any sponsored activity starts. This advance knowledge is needed so that the unit head can anticipate, and plan for, both the long-range and the near-term needs of the unit. For the near-term, this information is needed to reasonably plan for needed employee training, coordination of physical space, unit budgeting, and for Faculty evaluations.
RESPONSIBILITY AND DELEGATION
In most units with sponsored activity, the unit head selects one person to exercise the care and attention that will be needed to administer the sponsored activities of the unit. This person is given BOTH the responsibility AND the authority to coordinate the unit’s sponsored activities. Delegating the oversight for this activity does not relieve the unit head of the responsibility for the accuracy and reliability of the unit’s financial records. The complexities of Institute sponsored accounting have made experience, formal training, and cross-training prerequisites for this position and for those who may work for this person. In most campus units, this person will:
- Supervise the unit’s business office employee(s) who monitor(s) project accounting
- Coordinate activities between Office of Sponsored Programs, the principal investigator, and Grants and Contracts Accounting; this employee will also work with their counterparts in other campus units for proper interdisciplinary accountability
- Generally protect the Institute’s interests in the proper conduct of his/her unit’s sponsored activities
The first step is for the responsible person to become familiar not only with Institute sponsored policies and procedures cited above, but also on the related areas of budgeting, accounting, procurement, facilities management, & PeopleSoft data entry and reports. This person must then be aware of the unit’s scope of sponsored activities to be administered. With this background, the person can then document how the unit will handle its sponsored activities. Other basic steps should include:
- Require appropriate activity to be processed through the unit’s assigned business office employee. This step is not necessarily to “approve” any single transaction, activity, or report, but is the only way the unit can ensure that PIs are performing their activities in a reasonable and prudent manner.
- Maintain a master project control record, to track the activity from proposal through final deliverable. Important dates and milestones should be monitored, and actions taken as needed to ensure compliance with policies, procedures, laws, and contract terms.
- The unit’s business office should have a copy of the proposal (if applicable) and signed contract or sponsored agreement before initiating a request for a project number. Generally, no expense should be incurred before the project number is assigned or an authorized pre-award number is assigned. In addition, this information is needed so that the business office employee responsible for monitoring the unit’s sponsored activities can reasonably perform this function.
- Finally, the unit should receive, access, and/or run Institute supplied reports and information, made available to assist them in the proper administration of their sponsored activities. Besides Institute project ledgers and PeopleSoft Salary Planning and Distribution (SPD) reports, there are Grants and Contacts Accounting PEB reports, Workload Assignment forms, undesignated reports, undeliverable and late deliverable reports, and many others. Units should incorporate these reports in an overall plan of sponsored activity controls.
COMMUNICATE WITH EVERYONE
While everyone in the unit has to understand their duties and responsibilities in the handling of the unit’s sponsored activities, principal investigators are ultimately responsible for their own sponsored activities. Savvy campus units strive not only to educate and assist their PI’s, but to tailor the level of assistance to the specific needs of each PI.
Everyone in the unit should be notified of the previously documented internal policies and procedures on how the unit will administer its sponsored activities.
- Record Retention: Most original source documents to support the accounting information in the unit’s Institute sponsored project records are still the responsibility of OHR, Budgets, Payroll, Grants and Contracts Accounting, and other Business Office units. But campus units are being called-upon more and more to retain these original records. Units should include in their internal policies appropriate document retention for Institute project records.
- A-21/Plan Confirmation System: Participation in sponsored activities puts the Institute under many additional compliance rules and regulations, over and above those imposed by the state and the Board of Regents. One such entity is the federal Office of Management & Budget, which issued its Circular A-21 to provide Educational entities with the rules they are to use for sponsored activities. The Institute, for its part, incorporated these rules into its Plan- Confirmation System (PCS). A-21/PCS policies and procedures are in place to offer assurance to our sponsors that the expenditures the Institute is asking them to reimburse are reasonable and timely. Since salaries and wages constitute the bulk of Institute charges, that is where most of the processing and procedural controls are. Some of the major areas requiring unit attention under the PCS include the following:
- Undesignated Costs: For any number of reasons, a unit may not always have a sponsored account to which encumbrances and expenditures can be posted. In these cases, units are to charge a special undesignated account, until such time as the regular sponsored account can be established. For personnel costs, this typically means the Institute starts the fiscal year with several million dollars in these costs. Since no sponsor has been designated to invoice, the Institute must fund these costs until the sponsored account is established. Units must monitor and reduce all of their undesignated costs in a reasonable manner during the fiscal year. Institute policy requires no such costs be on the books at the close of the fiscal year.
- Cost Transfers: When expenditures are incorrectly charged, units are expected to identify and correct the error. All cost transfers are to be processed in a timely manner and properly documented. A cost transfer made within 60 days after the posting date of the transaction requiring a transfer will be considered timely. Cost transfers to externally- funded sponsored funds beyond 120 days of the original expense posting will not be allowed under normal circumstances.
- Annual Statement of Reasonableness (ASR) forms: A-21/PCS rules require that all Institute employees (or an acceptable substitute) covered by the PCS should sign an annual statement, certifying that their salary and wages distribution reasonably reflects their work effort. Electronic Workload Assignment forms distributed monthly to covered employees provide the means for employees to review and notify appropriate unit personnel of needed changes during the fiscal year.