Post Award Primer and Terminology, Management and Reporting Tools, Closeouts and Audits

1. Post Award Primer and Terminology, Management and Reporting Tools, Closeouts and Audits Sponsored Programs at Penn

2. The FDPFederal Demonstration Partnership is a cooperative initiative among federal agencies and institutional recipients of federal funds. It was established to increase research productivity by streamlining the administrative process and minimizing the administrative burden on principal investigators while maintaining effective stewardship of federal funds.  Penn is a participating institution Many of the recommendations of the FDP have been included in expanded authorities.

3. Carryover Authority & SNAP • Carryover Authority • Generally R’s, K’s and P01’s, but always check the Notice of Grant Award. • SNAP Streamlined Non-competing Award Process • Generally R’s, K’s • A grant must have carryover authority if it is under SNAP

4. Importance of Expanded Authorities/FDP Allows some administrative privileges authorized by A-110: • Automatic carryover of unobligated balances across budget periods and competitive segments (except when noted in the Award) • Up to one year no cost extension if requested 10 days prior to end of budget period (to complete project & not spend the $)

5. Importance of Expanded Authorities/FDP • Waive most cost related and administrative “prior approvals” except: • Change in scope or objective of the project • Change in key personnel • Requests for additional funding • Other exceptions as noted • Allows for 90 day Pre-award startup costs

6. Understanding this most basic concept helps you understand when a fund # should expire, require a closeout, or when an advance account may be needed as the project continues. • IT IS VITAL TO UNDERSTAND THIS!!!! Remember! • At Penn, grants with automatic carryover retain same fund # for the entire segment. • An exception to this rule is subcontracts. • All grants without automatic carryover receive a new fund # every new budget period.

7. Revenue Recognition PBIL and PBUD FSRD and FSRI Operating Budget Object Code 1220 Receivable Adjustment Period MTDC Encumbrance/Unliquidated Obligation Unobligated Balance Letter of Credit Basic Terms to Know

8. Revenue Recognition Revenue • Our entitlement to be reimbursed by the sponsor for the allowable expenditures of the grant • An equal $ of Revenue is recognized for every $ of allowable expense in object code 4600 Grant Revenue • Unallowable expenses and expenses above the award amount do not recognize revenue • Revenue does not necessarily reflect the cash received from the sponsor WHAT’S WRONG WITH CHARGING AN INDIRECT COST DIRECTLY TO THE GRANT ?

9. Other Potential Sources of Revenue on a Grant Fund • University Funded Cost Sharing - Object Code 4822 • TIF (Interest) Income - Object Code 4780 • Program Income - Object Code 4620 In the end (at closeout and disablement of the fund), all sources of Revenue must equal Total Expense.

10. Grant Receivables(Object Code 1220) • As payments are received from the sponsor, the Receivable decreases (a credit) • As Revenue is recognized (a credit), the Receivable increases (a debit) • Positive Receivable: Expenditures > Cash Received • Negative Receivable: Cash Received > Expenditures

11. Grant Receivables(Object Code 1220) LOC Letter of Credit funds have a zero receivable. The actual receivable resides in a special holding fund for all funds under the specific LOC.

12. PBIL- The Maximum Billable Award PBUD - Authorized Project Budget FSRD - The Total Direct Costs reported to the sponsor FSRI - The Total Indirect Costs reported to the sponsor Special Object Codes(entered by Research Services)

13. More on PBIL PBIL • Serves as the control and limits revenue recognition up to award amount • Gets reduced to reported amount and guarantees that revenue recognition above reported amount does not occur • Will always be rounded to nearest dollar. Cents will only show if there has been a carryover of funding from a previous fund (increase) or has been adjusted to the reported amount (decrease)

14. More on PBUD PBUD Most often equal to PBIL except on advance accounts

15. Operating Budget(Entered by Administrator)

16. Unliquidated Obligations/Unobligated Balance • Unliquidated Obligations • Commitments of the budget period not yet paid • When reported funding gets reserved in the next budget period so they can be paid • Must liquidate within 90 days (A-110) • Can not be reported in the final period • Unobligated Balance • unspent and uncommitted • may be able to carryover automatically or with approval

17. Sponsored Programs at Penn Project Management and Reporting Tools

18. Project ManagementAgenda • Communication • Establishing the Project Environment • Managing Monthly • Monitor Expenditures • Cash Management

19. Communication • Report monthly to PI • Establish payroll distribution • Establish level of effort anticipated for each individual on project – Be mindful of Salary cap limitations • Restrictions on spending • Special Terms and Conditions within Award Notice • Monitor Subcontracts = Confirm amounts & work done • Review each invoice (SPP #2131, #2135 Sub-recipient Monitoring policies) • Communicate regularly with ORS • Extensions / Continuations and other project changes • Financial reports, delinquent sponsor payment • Inform Sponsor via ORS of any Programmatic changes • Assesses allowability of costs

20. Support the Project • Work with PI on on-going basis • Ensure that interim reports & proposals are submitted on time • Disclose Inventions and Patents • Prepare for Progress Reports and Non-Competing Continuations

21. Establishing the Project EnvironmentPayroll Set-up • Identify who belongs on distribution • Identify amount of funding and % effort • Distribution Stop Date s/b set to the Account End Date • Salary Encumbrances are calculated through the Current Budget End Date or Distribution Stop Date (whichever is earlier)

22. Procurement • Ben Buys Commodity Matrix • Methods of Purchasing • When should C-1, C-1A, C368, Purchase Order, or P-Card be used • http://www.purchasing.upenn.edu/buyinfo/matrix.php • Competitive Bids Required on aggregate purchases > $5,000 unless purchase is with a University Contract Supplier or with a supplier participating in the Penn Marketplace.

23. Cost Share • Types of Cost Share • Mandatory – costs required by terms of award that the University must contribute toward project in order for award to be made. • Voluntary Committed – costs associated with project (identified in proposal or budget justification) for which funding has not been requested from sponsor. • Voluntary Uncommitted – costs associated with project NOT identified within proposal or budget justification and NOT funded by sponsor. • In-Kind / Matching - Refers to funds being matched in some proportion with non-sponsored project funds, or that the grantee participate to some extent in the cost of the project. Matching requirements may be in the form of an actual cash expenditure of funds, or may be an “in-kind” match, which is the value of non-cash contributions to the project. • Tracking Cost Share Commitments • Costs must be expended as proposed and recorded throughout life of project (separate fund ?) • Same allowability rules apply & same performance period as primary award

24. Program Income • Definition • Gross income earned that is directly generated by a sponsored activity or earned as a result of the sponsored activity • Some examples: Income from fees or services performed from external entities or within University, Revenue from sale of tissue harvested from project. • Methods of Program Income • Additive = income is added to sponsor commitment. • Deductive = income used to reduce sponsor commitment. • Matching = income used to finance portion of departmental commitment. • Tracking Program Income • Program income rec’d from external entities must be deposited into o/c 4620 • Revenue earned by University dept for fees or selling goods or services to another Univ. dept is consider internal revenue and must be recorded using o/c 5500. • Program Income fund is to be set-up to account separately for the costs of collecting and spending the Program Income Awards in which Gross Program income may be off-set by the costs of collecting the income to enable reporting Net Program Income. ($5,000 threshold)

25. Issues Surrounding Specific Expense Categories

26. Equipment • Definition – tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit • Must be necessary for project purposes • During the award period • Is not reasonably available for use elsewhere in the University • Award notice does not constrain equipment purchases • Must obtain necessary bids, unless sole source justification • Document whether Equipment is • Government owned • Government furnished • Disposition after the project has ended • Know sponsor regulations

27. Foreign Travel • Foreign Travel must be included in proposal or otherwise be allowed by sponsor. Be sure to justify and document changes (approval, if applicable) if not in proposal • Department must maintain documentation in the file that supports the trip’s purpose • Foreign air travel paid with federal fundsmustbe on US-flag air carriers • Limited exceptions and they can be found out: www.access.gpo.gov/nara/cfr/cfr-retrieve.html#page1 • Exceptions, which must be documented, generally include: • US-flag air carrier does not go to destination • Total trip time extended more than 24 hours • Lay-over extended more than 6 hours • Foreign carrier eliminates 2 or more changes

28. Consultants • Evaluate: Consultant, Employee or Subcontractor? • Use C-12 Independent Contractor Determination & Certification http://www.finance.upenn.edu/comptroller/tax/contractor_certif.shtml • Consulting agreement needs to be completed and forwarded to ORS for approval & signature • Document role of consultant • Needs to be working towards goals of project to which he/she is charged • Review sponsor guidelines for consultants • Ensure approvals are obtained, if applicable • Consultant rates may be limited for some sponsors

29. Purchases • PI approval process for purchases • Assess allowability, allocability and reasonableness • Verify budget and availability of funds • Procure bids • “Buy American” on federal awards when possible • Don’t buy capital equipment at end of project

30. Service Centers • Definition: • A department or functional unit within a department, which performs specific service for a fee • Examples: Cell Sorting facilities, Resonance Imaging facilities, and Animal Care facilities • ORS responsible for review & approval of rates • Services provided charged based actual use of services • Charges for services allocated monthly -Financial Policy #2115 University Service Centers • Make sure Service Centers use correct fund account • PI & BA should review Service Center charges regularly • The BA may not know what services were provided, or if the amount charged is appropriate

31. Manage Monthly • Plan expenditures in advance • This will make the project easier to manage throughout life of project • Run and analyze appropriate reports • Financial Policy #1402.5 Monthly Closings/Reporting • Send detailed reports to PI • Remove unallowable and wayward charges • Compare expenditures to projections • Manage changes through full system • Changes in award value affect payroll • Changes in subcontracts or equipment affect F&A charges

32. Manage Project Changes Proactively • Use proposal as “home base” • Anticipate necessary changes • Contact ORS for approval • Get sponsor approval through ORS • Change of scope or effort • Plan ahead for extensions

33. Monitor Expenditure Rates • Sponsors question unusual expenditure rates • Have we changed scope of work? • Are we still breathing? • Communicate with Sponsor (cc ORS)

34. Cost Transfers • The transfer of costs to sponsored projects where the costs initially had been incorrectly charged to another account. Any cost transfers that occur need to be properly justified and documented. • University Financial Policy Number 2113 Cost Transfers and Payroll Reallocations states "Cost transfers must be prepared and submitted within 90 days from month end in which the transaction appears on the fund." Failure to adhere to this policy may result in the University disallowing the transfer which would result in a write-off to the administering department.

35. Cost Transfers • Must be an allocable, allowable and justified charge to the particular award • Department must maintain documented justification for transfer • Must be made within time constraints

36. New Cost Transfer J/E Categories • On 7/1/2010, an additional BEN Financials Journal Entry Responsibility titles Journal Entry – G&C Costs Transfers was introduced to improve monitoring, tracking and compliance with the University’s cost transfer Financial Policy # 2113. • Initially added 15 G&C UN90 and 16 G&C OV90 • On 10/4/2010, updates were made BEN Financials Journal Entry Responsibility to add 2 additional Categories. • 17 UPHS Gds/Svs • 18 UPHS Payroll

38. Cost Transfer Principles • Cost transfers are for correcting legitimate ERRORS • Cost transfers should NOT be used as a means of managing cash flow • Project funds are NOT interchangeable • Integrity of each grant account must be maintained • Allowability of costs must be maintained

39. Cost Transfers • Documentation • Supported by full explanation and justification, as well as a certification of the propriety of the transfer • Explanations such as “to correct error” or “to transfer to correct project” are not sufficient • Approval can be documented by • PI signature • Printed e-mail messages from PI

40. Cost Transfer “Red Flags” • Transfers made in excess of 90 days after the original charge • Improper J/E Categories (15 G&C UN90, 16 G&C OV90) • Transfers without a full explanation • High volume of transfers • Timing and “route” of transfers • Late transfers to funds with unexpended funds • Transfers from funds with overdrafts to other 5 fund(s) • Transfers between funds with scientific overlap

41. Advance Accounts for Continuation Awards • Recommended for non-competing renewals requiring new fund #’s for each period • Department requesting the advance account bears the risk of having to fund any costs incurred if the funding never materializes • Med School sets up NIH advances for full budget period • All other Schools set up Advances for 3 month period

42. Monitoring Accounts Receivable • For Letter of Credit awards, check revenue & cash received. There should be no cash on hand. • On Letter of Credit, confirm that PBIL is correct • Contact ORS to address payment problems with sponsors • Departments should review AR and contact ORS regarding aged receivables of concern • For awards on payment schedule, contact Bob Speakman • For all other awards, contact Gokila Venkateswaran • For Med School awards, ORSS representative is Danielle DiIanni

43. Checks, Payments and Project Budget Increases • Hand carry check to ORS immediately, with project identification • Do not deposit check • Should AIS be increased because of check?

44. Run and Review Reports • BEN Reports • 102.ORG – Summary CNAC-ORG-FUND level • 115.ORG – Fund Summary • 133.ORG – Due to Close • 134.ORG – Summary of Final Expenditure Report • Data Warehouse • Fund Summary • Org Summary • Corporate Documents • Payroll • Correct Errors

45. Reporting Tools “There are so many reports I’m not sure where to look first.” Ben Reports BEN FINANCIALS PennERS Business Objects -Webi GRAMS SALMGMT PennERA

46. GRAM – The online PI view • GRAM / BEN Reports • Reports used primarily by Principal Investigators • Reports represent a Current Budget Period perspective • Not easy to determine PJTD Numbers or amount to close out at (other than Budget Available) • Critical for Operating Budget to be posted to the Budget Period Start

47. Actual Spent represents Current Budget Period Only • Further Detail can be clicked on, but none is available for Prior Budget Periods

48. Management of All Grants in ORG

49. Fund Level Management

50. Expense Detail