Module 5 Closeouts and Audits of Sponsored Project Funds

1. Module 5Closeouts and Audits of Sponsored Project Funds Sponsored Programs at Penn

2. Closeout of Sponsored Project FundsAgenda • PI & Department responsibilities • Communication • Pre-closeout review • Adjustment period • Freeze/unfreeze grants • Technical & invention reports • ORS responsibilities • Unfreeze requests • Financial & non-financial reports • Disabling accounts SPP # 2126 Interim & Final Financial Reports SPP # 2128 Account Close-out

3. PI and BA Responsibilities

4. Communication • Must occur between • Business Administrator (BA) • Principal Investigator (PI) • Office of Research Services (ORS) and • Sponsor • During the award period, as we prepare for account closeout, and at closeout

5. Communication (cont.) • Items that should be communicated include: • Changes including extensions, renewals, and approvals of prior carryovers or re-budgeting • Issues such as overspending, non-compliance with budget or award terms • Delays in meeting deliverables or technical report deadlines

6. Determining Which Grants are Due to Expire/Freeze • Business Objects Org Summary.rep • A separate tab for funds freezing in the next 90 days as well as a tab for Due and Late Reports • Ben Financials Utilize 132.ORG “List of Terminated Grant and Contract Funds” and the 133.ORG”List of Grant and Contract Funds Due to Close”

7. ORG.Summary – Funds freezing in Next 90 days

8. ORG.Summary – Due and Late Reports

9. Pre-Closeout Review • Occurs during the last 90 days of the account • PI and BA meet to review and discuss: • Spending Rate, remaining funds, final anticipated expenses • Possible need for extension to complete project • Possible need for any adjustments • Possible need for an Advance Account or Account Continuation Request for following year (if salary charges are to continue past end date, this will be necessary)

10. Pre-Closeout Review (cont.) • PI and BA meet to review and discuss (cont.) • Account Continuation Request and Advance Account need, if applicable • Subcontract closeout(s), if applicable • Service center charges • Any unallowable expenses on award or other adjustments which still need to be made • Remember • Unallowable expenses should never be charged • Cost transfers must happen no later than 90 days from month end during the award • Cash received on fund

11. Pre Closeout Review Issues • Potential Issues • (Revenue) not equal to Expense - Implies Overdraft, Unallowable Object Code Charges • Remove Waywards utilizing 115.Org (BEN) Report or Subbudgets/Otherorgschgs/Waywards (Business Objects) Report • Overcharging 5332 Subcontracts above the first $25K per Subcontract causes incorrect charging of Indirect Costs.

12. What is the Adjustment Period? • Period of up to 60 days after Account end date • Allows for final review of project activity • Adjustments can be made prior to final reporting • 30 days: Account End Date + 15 days • 60 days: End of the next Accounting Period • 90 days: Account End Date + 60 days

13. Adjustment Period (cont.) • Run 134.ORG Report in BEN Financials or Fund Summary in Business Objects • Review the following areas • PBUD/PBIL should be equal • Revenue vs. Expense • Should be equal • If not, requires further review

14. Adjustment Period (cont.) • Review the following areas (cont.) • F&A and Employee Benefits (EB) – Were the correct rates appropriately applied? • Payroll – Any adjustments that may be needed must be made by the end of the adjustment period • Service Centers – Were these handled appropriately? • Other direct costs

15. Adjustment Period (cont.) • All adjustments must be processed by end of the fund adjustment period • Complete all approved, allowable, allocable, appropriate adjustments identified during pre-closeout review • Correct errors identified during adjustment period in accordance with cost transfer policy SPP # 2113 Cost Transfers and Payroll Reallocations

16. Final Review Prior to End of Adjustment Period • Review PBIL/PBUD and operating budget • Make necessary adjustments and cost transfers • Review subcontracts and respective closeouts • Communicate with ORS Accountant • Outstanding reporting/receivable issues • Determine and address • Unliquidated and unobligated carryovers

17. Best Practices for Communications • Make the subject line of your email mean something. • “Action Fund#, P.I., Description • Examples: • “Report 538500, Mendel, 5K23MH024680-03” • “Unfreeze 538000, Frankenstein, 5R01HG012345-05 • One email per fund action • Email ORS Accountant and notify them of the Direct, Indirect, and Total Expenses to report by the end of the adjustment period (sooner, if possible).

18. Freeze/Unfreeze Grant Functionality

19. Freeze Grants Functionality • Tool that allows authorized research administrators and ORS to limit activity against an award • Can be used during life of project and during the adjustment period • Can reduce cost transfers and overruns after the end of the fund project period • Improve timeliness and accuracy of final financial reports

20. Freeze Grants Features • Awards are frozen/unfrozen at fund level • Payroll can be frozen manually prior to the Account End Date • Functionality frozen automatically after Account End Date • New Purchase Orders/Requisitions • Functionalities frozen automatically after Adjustment Period End Date (APED) • Manual Journal Entries • C-forms • Feeder Journal Entries • Payroll

21. Freeze Grants (cont.) • If a fund has ended and, upon review, is in order • Contact ORS to confirm total expense to report and freeze the fund • If fund is not in order and additional adjustments are needed • Process them before the end of the adjustment period

22. Unfreeze Grants • If final adjustments to correct errors are not made prior to fund fully freezing • An unfreeze request can be made • Prior to submitting an unfreeze request to ORS • Proposed adjustments should be reviewed for allowability, allocability, and appropriateness

23. Unfreeze Request (cont.) • Are not necessary to: • Prepare budget journals • Pay already encumbered amounts on an existing P.O. • Unfreeze advance accounts (request an extension of advance account)

24. Unfreeze Worksheet

25. Unfreeze Grants (cont.) • Submit your request to: • School of Medicine departments • Send worksheet and details (including documentation) to Office of Research Services Support (ORSS) Grant Manager with a cc to ORS Accountant • ORSS will review and, if approved, will forward to Research Services Accountant and cc Assistant Director • All other Schools • Send worksheet and details to ORS Accountant and cc Assistant Director • Unfreeze requests are normally addressed within two business days

26. ORS Responsibilities

27. ORS Reporting Period Tasks • Once frozen, ORS reviews • Terms and conditions of award and sponsor reporting requirements • Report 734.RA in BEN Financials (similar to 134.ORG) or fund summary report in Business Objects • PBUD/PBIL for accuracy

28. ORS Reporting Period Tasks (cont.) • Expense at fund level for allowability • Revenue • 4600, 4620, 478X, 4822, TIF, Program Income & Other Revenue • Reconcile F&A, EB and Cash • Review over expenditures • ORS will communicate any issues identified and request a response from the BA

29. ORS Reporting Period Tasks (cont.) • Overdrafts • ORS will contact department regarding resolution • If no response is received by report due date, fund will be reported up to award amount and ORS will process journal to transfer resources from departmental fund to grant fund to offset overdraft via object code 4822 SPP # 2129 Write-off of Overdrafts and Disallowances

30. ORS Reporting Period Tasks (cont.) • Unexpended Balance • Will be reported to sponsor • Carryover will be processed and/or requested as appropriate • Residual cash will be remitted to sponsor according to agreement • Carryovers and/or unliquidated obligations will be determined and handled as appropriate

31. ORS Reporting Period Tasks (cont.) • Unexpended Balance (cont.) • Financial report will be issued by ORS no later than due date and a copy will be sent to department • ORS will process any closing entries based upon final reports

32. Revised FSRs • Only done in rare circumstances • When revising to increase total expenses, most sponsors will only accept revised reports for limited period of time following the end of the award. Some agencies will not accept upward revised FSRs. • When revising to decrease total expenses, there is no time limit. These should be completed immediately upon identification of the need for a revised FSR. SPP # 2137 Revised Final Financial Reports

33. Disabling Funds • How does a fund get Disabled? • ORS runs 717.RA report in BEN Financial weekly • To identify funds that meet disable requirements • ORS checks “Enable” flag • Enters date in BEN Financials

34. Requirements to Disable Funds • Financial Report must be submitted if required- (Last FIN Report Filed = Next FIN Report Due) • FSRD and FSRI s/b posted reflecting Direct and Indirect Costs reported • PBIL=PBUD=FSRD+FSRI=Total Expenses on books • No Encumbrances can remain • Object Code 1220 Receivable must =0 • Equipment in Object Code 183X must be transferred to School Surrogate Accounts via an Object Code 4826 Equipment Transfer • BRIM (ORS billing system) is reconciled (requires ORS action)

35. ORG Summary - Analysis of Expired Funds Why isn’t my fund disabled?

36. Miscellaneous - Cost Sharing • Cost Sharing • “ A portion of the project costs that is not funded by the sponsor” • How is it recorded in our system? • Must be separately accounted • What needs to be done at closeout? • Mandated cost sharing must be reported to the sponsor SPP #2119 Cost Sharing/Matching Requirements

37. Miscellaneous – Interest Bearing Funds • Interest Bearing Funds • When does an award fund receive interest? • Monthly basis • How do I know if my fund is interest bearing? • T&C of award determine • Can I spend these funds? • T&C of award determine • At Closeout, what happens to these funds? • T&C of award determine

38. Miscellaneous – Program Income • Program Income • What is Program Income? • Gross income earned & directly attributable to the sponsored activity • How is Program Income handled? • Additive vs. Deductive • How is Program Income handled at closeout? SPP #2121 Accounting for Program Income

39. Miscellaneous –Record Retention • What do I need to retain? • How long do I need to keep it? • SPP #2132 Record Retention

40. Miscellaneous –Award Transfers • If a PI is planning to leave the University, ORS staff should be contacted as soon as possible to expedite the process • “Statement of Relinquishment” or similar document • Information required • ORS signature • Not finalizing costs may delay transfer of funds to the next University • Any property being transferred must be addressed

41. Non-Financial Close Out Issues • Final technical and/or progress report • Final invention statement • Final property report

42. Getting Assistance on Closeouts • For financial matters: • Contact ORS accountant or Post-Award Assistant Director • Regarding extensions, requests for budget or other modifications to agreement, or non-financial matters: • Contact your Contract Administrator

43. Questions???

44. Audits Sponsored Programs at Penn

45. Pre-Award Audits • Performed by agency to verify • Accuracy of costs on application • Adequacy of University systems and controls • Usually performed by or at the request of the sponsor • Federal Awards • DHHS is Cognizant Agency • Sponsoring Agency

46. Agency or Programmatic Audits • Performed on Active or Terminated awards • Federal Awards normally a result of a request by the Sponsor • Review by Dept of Health & Human Services (DHHS) • Foundations and Associations • Other

47. Investigative/Criminal Audits • Usually based on allegations of fraud • Misuse of funds on awards including: • Purchasing Card charges • Petty Cash abuses • Audit of how we comply with regulations • If Federal OIG audit • Subpoena powers

48. Internal Audits • University audits projects to • Evaluate system controls • Assess compliance with University and sponsor policies and applicable OMB circulars • Investigate reports of fraud

49. Compliance Audits • Assess compliance with • Sponsor regulations • University policies • Human Subject/Animal issues

50. F&A Cost Proposal Audits • Audit occurs cyclically • During the F&A negotiation process • F&A recovery rates are affected by expenditures • Interviews of PI and BA to determine basis for assigning space to research • Space drives the rate • 32.5 points of 57% rate