1. Overview of Accounting for Sponsored Projects
Date
Presenter Name
Presenter Phone Number
Presenter

2. What are sponsored projects?
Governmental agencies & private companies give $ to UT to perform technical projects and produce a deliverable
Our professors are in demand due to their expertise in their field
Some have international reputations

3. Importance of sponsored projects
UT’s mission is instruction, research, public service
External funding pays for research work that our faculty members are interested in pursuing
Active researchers make better teachers
Pays for high-tech equipment & buildings
Attracts quality graduate students who want to work with highly-regarded faculty
Spin-off companies improve state & local economy
Boosts UT’s image / reputation / national rankings

4. How much $ is involved? FY 2004 $315,197,533 FY 2005 $336,364,661

5. Who is involved? Principal Investigator Co-PI’s & research staff
Graduate students
Subcontractors
Dept Head
Department accounting & clerical staff
College admin
Research office
Campus / unit business office
Controller’s Office
Treasurer’s Office
(A/P dept)
Payroll
Sponsor contracting officer
Sponsor fiscal rep or A/P dept
Vendors
Technical work
Administrative & support staff
External to UT

6. Support staff goal
Provide superior service to the PI so that he / she can devote maximum time to technical aspects of project & teaching students
Exceed sponsors’ expectations for fiscal responsibility & administrative performance
Promotes reputation of PI and UT
Sponsors will want to give us more money

7. PI responsibilities
The PI is responsible for all aspects of the sponsored project – his reputation is on the line
Technical
Financial
Administrative

8. PI technical responsibilities
Ensure that all technical reports / deliverables are of high quality and are submitted by sponsor deadlines
Ensure that subcontractors are performing technical tasks adequately

9. PI financial responsibilities
Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&A
Ensure that all charges post to the correct sponsored project in a timely manner – initiate Advance WBS Element, if necessary
Ensure that the budget is followed
Ensure that any sponsor-required prior approvals are obtained
Budget changes, equipment purchases, travel
Ensure that subcontractor invoices are reasonable based upon the technical work performed and are allocable, allowable and correctly classified as direct versus F&A
Don’t approve payout invoices until satisfied with technical performance

10. PI administrative responsibilities
Ensure that support staff are performing tasks adequately
Ensure that support staff are given required information in a timely manner
Ensure that all applicable Federal, sponsor and UT rules & regulations are followed
Ensure that award amendments are requested in a timely manner

11. Department Head responsibilities
The Department Head is responsible for ensuring that the PI and support staff perform their jobs in an adequate, timely, and compliant manner.
Technical
Financial
Administrative

12. Department Head technical responsibilities
Ensure that scope of work advances UT’s mission and the goals of the academic unit

13. Department Head financial responsibilities
Ensure that all charges are reasonable, allowable, allocable, and correctly classified as direct versus F&A
Ensure that all charges post to the correct sponsored project in a timely manner
Approve PI starting work before signed award document is received?
Approve Advance WBS Element, if necessary?
Pay for any charges not collected from sponsors
Including overruns, disallowances, cost sharing, uncollected or disputed sponsor invoices

14. Department Head administrative responsibilities
Ensure space exists to perform project work
Ensure that support staff are performing tasks adequately and are adequately trained
Ensure that processes and culture are present that promote financial compliance
Ensure that all applicable Federal, sponsor, and UT rules & regulations are followed

15. Dept accounting staff responsibilities
Same as for the PI, plus:
Process accounting transactions
Monthly account reconciliation
Provide PI and Department Head with adequate financial information to manage project
Solve problems
Liaison between PI and everyone else
Assist PI in compliance with regulations
Closeout in a timely manner

16. Campus / unit business office responsibilities
Set up project in IRIS
Work with PI, department accounting staff & research office to get WBS Element opened as quickly as possible
Periodic financial reporting
Periodic invoicing / cash receipts performed to maximize UT’s cash flow
Assist department accounting staff & PI with regulation compliance
Closeout in a timely manner

17. Campus / unit research office financial responsibilities
Review proposals and budgets for accuracy and financial compliance
Flow through financial rules to subcontractors
Help the PI, department accounting staff & business office get WBS Element opened as quickly as possible
Get fully executed award documents from sponsor ASAP so that invoicing can begin which maximizes UT’s cash flow
Maximize F&A recovery
Negotiate / disallow detrimental financial terms & conditions
Inconsistent costing, such as hourly rates versus % of effort
Unreasonable reporting deadlines
Non-standard invoicing and reporting forms
Backup documentation for expenditures

18. Sponsored project life cycle
PI has great idea
=>
PI prepares proposal document
Proposal approved by UT
Proposal submitted to potential sponsor
Sponsor accepts proposal
Sponsor & UT negotiate award & UT may award subcontracts
UT sets up R account in IRIS
PI starts technical work & incurs charges
Periodic invoicing / cash receipts
Interim technical & financial reporting
Project ends and all project costs are on R within 60 days
Final technical & financial reports due within 90 days of end date

19. Proposals Proposal document prepared by PI Includes statement of work
Includes budget & budget justification narrative
Includes known subcontractors
Submitted to the campus / unit research office
Routing / approval sheet signed by administrators
Including cost sharing and space
Research office reviews total document
Proposal submitted on behalf of the University

20. Awards
A successful proposal results in an award document between the sponsor and UT
Grant
Cooperative agreement
Contract, purchase order
Standard information included in award document
Start & end dates, award amount, budget, statement of work
Different award types have progressive levels of
Sponsor control & restrictions
Reporting requirements

21. Federal grants “For the public good” One or two page grant document
May not require UT to sign
Usually incorporates agency grant policies
Guide usually located on their web site

22. Flow-through awards
An award where the prime funding sponsor awards money to an awardee and the awardee awards part of the money to a sub-awardee
Example: NASA gives Vanderbilt a grant for $1 million & Vanderbilt sub-grants $100,000 to UT
UT’s sponsor is Vanderbilt, a private entity, because that is who our award agreement is with; however, it is Federal flow-through funding because we know that the prime sponsor is NASA
Same compliance requirements as direct Federal award

23. Restricted WBS Element
Restricted WBS Elements are cost collectors in IRIS
UT must spend the $ in accordance with the sponsor’s specifications
UT must maintain separate accounting of each project’s financial activity
Established by the campus / unit business office at the request of the department or upon receipt of an award document from the campus / unit research office

24. Advance WBS Element
A restricted WBS Element can be established before the executed award document is received
PI wants to start working on the project
If costs will be incurred, then where will they post?
Never to another sponsored project WBS Element!!!
Department evaluates likelihood of award and authorized PI to start work without an executed award agreement
Submits signed form to the campus / unit business office
Risks? See next slide.

25. Risks? Factors affecting risk of setting up an advanced WBS Element
Government or private sponsor?
Good and reliable past relationship with sponsor?
Competitive or non-competitive proposal?
Intent to award provided verbally or in writing?
Have we already started working?

26. Restricted WBS Element setup
Required information
Signed Advance WBS Element request form or fully-executed award document
COEUS proposal # (for Knoxville)
Budget in IRIS
Delays can occur
Department must monitor new account setup progress
If award amount differs from proposed amount, then department must submit revised budget to campus / unit research office or business office ASAP

27. Timeline for setup
Restricted WBS Elements need to be established in a timely manner
Ideally, before the project start date
Provide adequate time for department to assign recurring costs
Payroll PIF’s, service centers, etc.
In reality, we are not always timely
Causes more work for everyone
Sponsors & auditors not happy

28. Sponsored projects in IRIS
Master data in various IRIS modules
Project Systems module has most master data
Funds Mgmt module has some master data & budget
Sales & Distribution module has invoicing master data
Accounts Receivable module has invoicing & collection activity
You should review this information and make sure that it agrees with your award document
If not, call campus / unit business office
Errors can radically affect your project!

29. IRIS transactions CJ20N contains many attributes
Dates, obligated award amount, F&A, cost sharing, PI, invoicing, function, sponsor, project profile, project type, etc.
Learn what all of these represent
Field names aren’t always descriptive
Read Business Process Procedure (BPP) on IRIS web site for definitions

30. Accounting structure CJ20N work breakdown structure Project definition
Header only, not a chargeable object
WBS elements
Chargeable objects with many attributes
Different levels & flexibility
Link to funds centers
Can cross organizational lines

31. Required structure Award document requirements
New award document number from sponsor always requires a new Project Definition & WBS Element
Different F&A rates within one award
This always requires separate WBS Element for those charges that are treated differently for F&A computation
Example – Department of Education - participant support costs

32. Optional structure Divide project for mgmt purposes
By technical phases of work
For different sub- or co-PI’s within UT
WBS Element linked to their funds center
They have spending control
They have accounting ledger access
You can see other IRIS accounting reports, not ledger
They get F&A recovery and research “credit”
Department must request new WBS Element
Campus / unit business office has no other way of knowing that they are needed

33. Complex structure Funds Center U013410024 Funds Center U073415055
Project Definition R
WBS Element R
(lead PI)
WBS Element R
(co-PI)

34. Charges to projects
Charges must be in compliance with the rules & regulations applicable to UT
OMB Circular A-21 and A-110
UT Fiscal Policy
Sponsor policy manuals
Award document clauses
Responsibility of PI and department
Consequences of incorrect charges

35. Types of charges Direct costs F&A costs
Salaries, staff benefits, supplies, long-distance phone calls, travel, equipment, subcontracts
Exception to “basic support” costs
Due to nature of project technical work
F&A costs
Facilities costs
Bldgs, equip, electricity, library
Admin costs
“Basic support” costs
Clerical & admin salaries, phone line charges, office supplies

36. What are F&A costs? Facilities & Administrative costs
Federally-approved rate applied to a specified cost base
Modified Total Direct Costs (MTDC) base
Salaries & Wages (S&W) base
Matrix of rates in effect
Campus, function, location, award year
Same rate for life of project (A-21 requirement)
Reimbursement for expenses already paid by UT to support research
These are real costs!

37. Expenses included in F&A
Facilities
Buildings
Sidewalks
Electricity / fuel
Equipment
Library
Security
Custodial
Administrative
Department clerical & admin staff salaries
Research & business offices
Basic office supplies & expenses
Portion of other admin costs – Dept Head, Dean, system charge, etc.

38. F&A cost sharing
Must be negotiated & approved in advance by campus / unit research office
A portion of collected F&A is returned to college / unit that generated it
Financial activity
F&A is charged to WBS Element at full, audited rate during month-end closing using cost element
F&A cost sharing is credited during month-end closing using cost element in an amount sufficient so that the net F&A charge is equal to the amount or % allowed by the sponsor

39. Transfers of costs Cost transfers should only be to correct errors
Subject to sponsor, Federal, State and internal audit disapproval
Excessive or late transfers
Cost transfers that do not document how target project benefited from the charge
New fiscal policy includes time limits and documentation requirements – similar to other universities

40. Ledger summary Remember that cumulative actual
expenditures and budget variance for
uses of funds includes F&A !
Obligated amount and budget for
total uses of funds should match!
Budget should equal zero!

41. Training classes 1 Overview of Accounting for Sponsored Projects
2 OMB Circulars & Cost Accounting Standards
3 Understanding F&A Costs
4 Direct Costing
5 Cost Transfers & Closeout
6 Cost Sharing
7 Subcontract Monitoring
8 Advanced Topics
9 Invoicing, Reporting & Cash Receipts
10 Sponsored Projects Reports in IRIS
Other – IRIS reporting for sponsored projects