Working with Your Grant Accountant
When a sponsor issues an award to UWM, it is rarely accompanied by a check. In most cases, when the award is set up in the UWM accounting system and the principal investigator (PI) receives an account number, no funds have been received from the sponsor.
In effect, the University is providing a line of credit for the entire award amount until the grant accountant invoices the sponsor for reimbursement of expenses and payments are received from the sponsor. Therefore, the PI and OSP must ensure that actual reimbursements are consistent with the total expenditures and budget allocations as allowed by the terms and conditions of the sponsor's award. Making this happen requires communication and commitment from both parties.
- Award Terms and Conditions Affect the Allowability of Costs
- Fiscal Policies Affect the Allowability of Costs
- Accountant's Role in Recovering Expenses
- PI's Role in Recovering Expenses and Project Management
- Financial Reports
- Technical Reports
- No-Cost (Time) Extension Request
- Closing Out the Account
Award Terms and Conditions Affect the Allowability of Costs
The grant agreement or contract usually contains the terms and conditions for receiving reimbursement. During the award acceptance process, you will have received a copy of the agreement. Please contact your grant accountant with any questions regarding financial management of the award.
For some federal projects, your grant accountant will initiate electronic drawdowns for funds as specified by the agency. In other cases, he or she will establish a schedule for invoices, submitted in a form acceptable to the sponsor.
It is important to understand what you need to do to help your accountant recover project costs from the sponsor. For example, the sponsor may accept invoices only after you have completed a certain task and/or provided a stated deliverable (usually by a specified date). In this case, notify your grant accountant that a condition for payment has been met.
In another case, the sponsor may request quarterly invoices accompanied by a detailed accounting of expenditures for reimbursement. Here it may be essential that you obtain permission from the sponsor to deviate from the approved budget. Without sponsor approval, the sponsor may not be obligated to reimburse unauthorized expenses. Your grant accountant will keep you informed if there is a problem with the collection of payments.
Fiscal Policies Affect the Allowability of Costs
In addition to specific terms and conditions for fiscal management contained in an award document, most sponsors require that costs adhere to the guidelines provided by the Federal Office of Management and Budget (OMB). Following are circulars related to fiscal management of grants and contracts for the University:
- Circular A-21 establishes cost principles applicable to grants, contracts, and other agreements with educational institutions.
- Circular A-110 outlines uniform administrative requirements for grants and cooperative agreements (not contracts). Each federal agency must formally issue its implementation of A-110 (see Agency Implementation).
- Circular A-133 establishes audit requirements for institutions of higher education and other nonprofits.
Briefly, in order to be reimbursed for costs by sponsors, the costs must be:
- Necessary: Costs must be necessary to accomplish the scope of work, i.e., the cost applied must be essential to achieve a certain result or results.
- Reasonable: The goods or services acquired or applied to the project reflect action that a "prudent person" would take, i.e., the decision is made acting in good judgment and the cost incurred is fair.
- Allocable: The cost is incurred solely to advance work on the project, i.e., the determination of the cost can be approximated through reasonable methods, and the cost is necessary and, therefore, deemed assignable to the project. Costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements for any reason.
If a cost cannot meet all of the above criteria, it is unallowable and will not be reimbursed by the sponsor. Even though an unallowable cost may initially be reimbursed, it may be disallowed in a future audit. If this happens, UWM will have to refund the unallowable amount to the sponsor. Furthermore, in many cases, UWM would have to pay a fine in addition to the original unallowable cost amount.
University policies and procedures also govern the allowability and appropriateness of expenditures. If you are unfamiliar with these policies and procedures, contact your Unit Business Representative for guidance in maneuvering through the various processes related to various types of expenditures.
- Accounting and Budget Control (G7)
- Budget Transfers (F5)
- Purchasing Guidelines (ASM 3.1)
- General Travel Policy (ASM Policy 5.2.1)
Accountant's Role in Recovering Expenses
- To provide the PI with account information upon request.
- To monitor post-audit expenditures according to the guidelines of the grant or contract.
- To contact the department and/or PI regarding questionable expenditures and to coordinate corrections.
- To inform the department, school, or college business office, and PI if the account is overspent.
- To approve salary or cash transfers after verifying that the money is available and that the expense was incurred within the timeframe of the project.
- To request documentation of cost-share/matching provided by the School/College when required.
- To prepare and submit invoices, interim and final financial reports to sponsor.
- To follow up with sponsor if payments are delinquent.
PI's Role in Recovering Expenses and Project Management
- To contact the school or college dean's business office to initiate cost-share/matching expenditures when appropriate, e.g., linking a course buyout with a particular grant so you can document that release time was provided to work on the project.
- To read and understand the reporting requirements of the grant or contract.
- To review and approve invoices from subcontractors.
- To monitor expenditures against the account in WISDM and verify account balances with the grant accountant.
- To adhere to the budget that was approved by the sponsor at the time of the award.
- To discuss any needed changes in the budget as soon as the need becomes apparent.
- To spend the funds in the timeframe outlined in the agreement. Transferring expenses to a project near the conclusion of the project raises questions for the sponsor regarding the appropriateness of the transfer.
- To prepare and transmit technical reports to the sponsor as required.
- To inform both your pre-award proposal reviewer and your grant accountant if there may be a problem developing with your sponsor.
In most instances the grants accountant will prepare all financial reports for your project. These reports are compiled from the data in the Shared Financial System. At times you may need to provide clarification about transactions where uncertainty exists as to the proper budget categorization.
As the PI, it is your responsibility to prepare and transmit both interim and final technical reports to the sponsor in accordance with the reporting schedule. Notify your grant accountant when a report is submitted.
No-Cost (Time) Extension Request
For a variety of reasons, a project may not be able to be completed within the original timeframe. Many sponsors allow for an extension of the performance period (usually 12 months) with appropriate justification. Note that "needing additional time to finish spending project funds" is not an acceptable reason for requesting a time extension.
It is important to request a time extension well in advance of the end date of the award. As soon as it becomes apparent that your project will not be completed by the end date, you should begin the process of requesting a time extension. Contact your grant accountant for help in identifying your sponsor's specific requirements.
Request via E-Mail Message
In order to request a no-cost extension, regardless of any additional sponsor requirements, please provide your grant accountant with an e-mail message that includes:
- PI name and contact information.
- Agency project number.
- Project title.
- UWM fund-account number.
- Current award period and proposed new end date.
- A clear justification for the requested extension.
First send the e-mail message to your chair/director and dean. They must add a statement of agreement that an extension is necessary and then forward the e-mail to your grant accountant.
Request via Signed Letter
In addition to the Request via E-Mail Message required by OSP, some sponsors request a signed letter. If this is the case, the letter should include all of the information that was required for the Request via E-Mail Message to your grant accountant, and:
- A summary of progress to date.
- An estimate of funds remaining.
- A timetable for completion.
The letter should be addressed to the sponsor, signed by the PI, and sent to OSP, where it will be counter-signed by an authorized official and sent on to the sponsor.
Request via NSF FastLane
National Science Foundation (NSF) time-extension requests are initiated by the PI via FastLane. However, OSP will still need concurrence from your chair/director and dean on a forwarded Request via E-Mail Message before electronically approving the request.
Closing Out the Account
After all of the final reports (financial, technical, patent, etc.) have been submitted to the sponsor and the final payment has been received, the account must be closed out (deactivated) in UWM's financial system (SFS). In order to do this, the grant accountant must verify that the budget expenditures and reimbursements are equal.
The most common cause for delay in closeout is that the account is overexpended. Until this situation is corrected by moving expenses to another source of funds, the account cannot be closed out. Your grant accountant will notify you if your account is overspent; you should work with your department administrator and/or school/college business office to transfer expenses as necessary to balance and close out the account.