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:
- Cost Transfers
- Cost Share
- Budget Modifications
- Equipment Transfers
- Program Income
- No Cost Extensions
- Change in Principal Investigator (PI)
- Early Termination of an Award
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 that they 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 University Policy 3.20, Cost Transfers on Sponsored Projects). Non-salary cost transfers can be done by journal entry using a KFS General Error Correction (GEC) 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.
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 the Cost Transfer policy in mind:
- Salary change by submitting an ST e-doc
- Non-salary cost transfer
- Budget modification with sponsor’s notice of additional funding
Per the Uniform Guidance (2 CFR 200.405(c)), "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."
See Budget Revisions.
The Uniform Guidance (2 CFR 200.1 Program income) 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 University Policy 3.8 Program Income from Sponsored Projects.
See Equipment Transfers.
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 10 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.
See End a Project Early.