MODULE 6: Project Management Overview
Expenditure Statement Review
Monthly Project Grant Statements are:
- available through the Information Warehouse;
- the official record of project expenses; and
- the basis for cost reimbursements to Princeton.
The DA must review the monthly expenditure statement for accuracy and unusual or absent charges. Questionable items must be brought to the PI's attention, and adjustments made as soon as possible. (See Cost Transfer Section below.)
As part of their normal project monitoring, DAs should be monitoring the rate of expenditure on a sponsored project as part of the ongoing fiscal management of the award. This includes regular monitoring against project period budgets. The Federal government considers the approved project budget the financial expression of the project, and thus will evaluate project progress against the budget.
Although sponsors allow certain flexibilities with respect to re-budgeting and pre-award costs, Princeton University and sponsors expect expenditures to be reasonably consistent with the approved project and budget when a line item budget is part of the approved proposal. In the case of NIH modular budgets, only the items listed in the budget justification (e.g., personnel, equipment, and consortium costs) are subject to formal re-budgeting for purposes of accounting to the sponsor.
Sponsors may question or restrict expenditures that appear inconsistent with the project plan and budget. PIs are obligated to request prior approval when budget and program plan revisions indicate a significant change in scope.
Indicators of a change in scope may include reprogramming costs between major cost categories, for example, spending significantly more on equipment or materials and supplies than budgeted. Consult with ORPA for additional guidance and for endorsement of the formal request to the sponsor.
For federal grants, advance written approval by the sponsor is required for change in project scope; reduction in PI level of effort by 25% or more; and PI's absence from the project of more than three months.
In all cases, prior written approval must be obtained from the authorized grant or contract officer.
Usually, the final months of the grant will accumulate relatively few expenses as many of the larger commitments take place in the early stages of the award period. However, if it becomes necessary to purchase equipment or other costly items late in the project period, the PI should contact the DA to request these purchases. In these cases, it is particularly important to document the allowability and allocability of the expense.
Expenses including salaries may not be charged to a project after the project end date. An exception may be made if the product or service was acquired and consumed during the project period but is billed to the university after the project end date, or if specific written approval was received from the sponsor.
Technical supplies or other project materials may be ordered at any time, as long as the materials will be acquired and consumed during the project period.
If a requisition is submitted before the project end date, but the materials are received after the project end date, the expenses will be considered unallowable and unallocable.
Committing dollars for an expense does NOT mean that the item was USED during the project period. Common sense says that, if you order a new piece of equipment on the last day of the project period, it is unlikely that that piece of equipment will be used for project performance. In rare cases, a last-minute acquisition may be necessary.
Last-Minute Purchase Requisition
- Were the purchased items used during the project period?
- Would you assume these items were allocable to the project?
An Example of Out-of-Period Expenses
Are these project costs allowable?
In the equipment acquisition example, equipment costs are allowable to the project, as long as there is documentation that the equipment was actually ordered, received and used specifically on the project (during the project period).
In the final reports example, if costs to prepare final reports are not charged during the project period they are NOT allowable to the project, even if budgeted and adequate funds remain.
If you will not be able to produce final reports during the project period, and you have the funds left in project accounts, request a "no-cost extension" from the sponsor. This will allow you to spend project funds after the conclusion of the project for the purposes specified in the extension. Check the terms and conditions of the award for the requirements for advance notice before requesting a no-cost extension.
Sponsored Project Report
This report is available to help monitor project spending, and is available through the Information Warehouse. It provides project summary information, by BPG code, including monthly expenditures, project-to-date expenditures, budgeted amounts, and remaining balances.
The DA should periodically review this report to ensure that expenditures are being incurred as outlined in the approved budget. When expenditures will exceed the budget by more than 25%, the DA and PI should initiate a re-budget request to ORPA.
The PI is expected to plan and direct the project work so that it will be completed within the time and funds authorized. At times it is necessary and appropriate to initiate a request for additional time to complete the project, without additional funds (a no-cost extension). A no-cost extension lengthens the project period beyond the project end date. There is no additional funding, as the phrase "no-cost" suggests. A no-cost extension should be requested when funds are left in the project budget and there is a programmatic need to extend the project period.
Approximately 45 days prior to the end date of the project, ORPA will send the PI and DA a reminder that the end date of the project is approaching. The memo will contain specific guidance on how to proceed with a no-cost extension request. If prior approval is required by the sponsor, requests for such changes should be initiated by the PI, countersigned by ORPA , and forwarded to the sponsor well in advance (at least 60 days) of the project expiration date. General guidance is noted below.
The federal government has granted universities expanded authorities for managing certain grants, which allows ORPA to approve some re-budgets and one-time no-cost extensions for up to 12 months. Any further extensions of time require the prior approval of the sponsor. Sponsor approval is also required for federal contracts and grants not under expanded authorities.
Non-federal sponsors typically require a formal request letter and/or the execution of an amendment to the grant or contract to effectuate changes or extensions of the terms and conditions of an award. Contact your ORPA representative for guidance in this situation.
These extensions, although approved by Princeton University, must be requested by the PI.
The sponsor retains the right to say "yes" or "no."
An extension may not be granted, just because there is money left over. A good explanation as to why the extension is needed, and how the money will be used is required. Because of this reality, it is always a good idea to request the extension in enough time to manage an orderly accomplishment of project work, and to have a contingency plan in case the sponsor does not approve the extension.
As a recipient of federal funds, the University must maintain an accurate payroll distribution system allowing for periodic certification of effort devoted to specific activities. The effort amounts appearing in the effort certification browse screen in the Labor Accounting (LA) system should directly correspond to the level of effort expended on the project by each individual per month.
All faculty who serve as investigators on sponsored agreements are personally responsible to certify the amount of effort that they and their employees spend on sponsored activities. (See Effort Certification Policy).
The University fulfills the effort reporting requirement through the use of the Labor Accounting (LA) online system and the online Principal Investigator (PI) Sponsored Research Project Effort Certification System application. The effort certification process is done three times per year (February (covering the prior fall semester), July (covering the prior spring semester), and September (covering the prior summer months)). PIs are provided 60 days to complete the effort certification process for the semester.
Once effort has been certified, it cannot normally be transferred to another sponsored project. It is strongly recommend that the PI work with grant staff to review effort and dollars charged to sponsored projects for accuracy before certifying. LA provides a function where effort report data can be marked as “Reviewed” by grant staff.
OMB Circular A-21 allows that "...in the use of any methods for apportioning salaries, it is recognized that, in an academic setting, teaching, research, service and administration are inextricably intermingled. A precise estimate of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a high degree of tolerance is appropriate." - OMB Circular A-21, section J.10
PI/DA Periodic Reviews
It is considered best practice for the DA to review with the PI the financial status of the project at least monthly. Reviews should occur more frequently if questions or concerns arise. Failure to review sponsored project expenditures in a timely manner may call into question the allowability of those costs.
At a minimum, the DA should provide the PI with monthly financial statements from the Information Warehouse for each account showing the transactions recorded since the previous review period. The PI is responsible to ensure that salaries and other expenses charged to the project, e.g., materials, supplies, travel, and any other expenditure, are APPROPRIATE. In accordance with the cost principles of OMB Circular A-21, these charges are allowable, allocable to the project, and reasonable, i.e., the amount paid for them was what a prudent person might be expected to pay.
Effort certifications should be reviewed and approved by the PI within 90 days of receipt of the certification. The effort amounts appearing on the effort certification forms should directly correspond to the level of effort expended on the project. All financial information pertaining to salaries should be considered confidential.
Financial reports pertaining to the project, including forecasted information if available, should be reviewed to ensure that funds are sufficient to cover anticipated expenses.
Princeton expects a project to be managed in accordance with the sponsor's terms and conditions and within the established budget. Deficit accounts occur when the expenditure amount exceeds the awarded budget. Continual charges to deficit accounts create future problems, such as the need for cost transfers, lack of funding needed to absorb the deficit, and possible unallowable costs. As a result, charging to deficit accounts should only occur when:
- the funding agency has approved, in writing, additional funding which is expected to be received within 90 days of the expenditure and will be credited to the same account; and
- the cost being charged is within the guidelines of the terms and conditions of the award.
Reviewing forecasted data will enable the PI and the DA to anticipate potential deficits before they occur. If deficits are anticipated, the PI and DA are expected to adjust spending levels, if possible, to minimize deficits. The PI should talk with the Department Chair or center / institute director regarding any expenses that may not be covered by sponsored research funds.