Monitor the Account
Review Monthly Statements
Weekly Grant Summary Emails
Payroll Detail Reports
Research Affairs - Financial Management Reviews Assigned Accounts
Research Affairs - Financial Management Facilitates Potential Account Audits
Progress Reports (see Manage the Project)
Quarterly Effort Certification via PAR Reports and Affiliate Invoices
Research Affairs - Financial Management Performs Labor Adjustments
Revise Rate Slips as Necessary
Audits on Effort Reporting
Make Post Award Changes
How to Request Prior Approval
Changes that Frequently Require Prior Approval
Change in Status of PI or Key Personnel
Relocation or Transfer of a PI
Changes in Scope
Carryover of Unobligated Funds
Purchasing Equipment Not in Approved Budget
Roles & Responsibilities
The PI and/or Business Manager should reconcile all sponsored project accounts on a monthly basis. Reconciliation is a process of comparing account transactions recorded in the system to the department's supporting documents (e.g. vendor invoices, transfers) and resolving any discrepancies. This provides a reasonable assurance that transactions are authorized, valid, complete and accurate. Monthly reconciliations should include a review of both personnel and non-personnel costs. Once an award has been made to the institution, the PI is responsible for monitoring the account activity on a regular basis. Activities that require close attention:
- Personnel time and effort
- Cost transfers
- Overdrafts (discussed under Close the Award)
- Cost sharing (discussed under Start Work & Spend Funds)
- Financial Reports
- Project closeout
Monthly statements are emailed to PIs and school Finance Officers. These statements list the details of expenditures with the exception of payroll charges. Payroll detail is sent separately to PIs and school Finance Officers. These reports can be sent to others by sending a request to the PI's assigned Financial Analyst.
The PI can also review account balances in Banner Self Service under Budget Queries to assist with the expense monitoring process. To log into Self Service, visit http://myllu.llu.edu and click on the Business/Finance menu, select Forms & Docs, Forms folder, then Request for Sponsored Project Access. Log in to Banner Self Service and click on Finance Menu, then choose Budget Queries. Access can also be given to Business Managers to help PIs reconcile accounts.
Note: Training information on how to execute Budget Queries can be found by logging into http://myllu.llu.edu under Business/Finance, choose Forms & Docs, then click on the Documentation folder.
This weekly email is sent to PIs and is a snapshot of their sponsored projects. It lists high level information such as the Banner fund number, sponsor, project period, budgeted amount, inception to date expenses, and net available.
Every pay period, the PI and their academic Finance Officers are sent a report with the detail information for personnel charges on their awards. This detail is sent separately from the Monthly Statements because salary information is confidential and sensitive. Salary, wages, and fringe benefits for each employee paid off the award are listed and should be reviewed for accuracy. Changes can be coordinated with your assigned Financial Analyst.
A cost transfer is an accounting entry to re-classify an incurred expense to or from a sponsored project when the expense was initially charged to another account or object code.
In accordance with LLUAHSC policy and procedure (H-05): Cost Transfers on Sponsored Projects, costs should be charged to the correct account/s when incurred. However, it is appropriate to move expenses in order to:
- correct clerical errors,
- remove unallowable costs, or
- eliminate a deficit balance.
To initiate a cost transfer: Contact your assigned Financial Analyst by email or memo. Include the project fund numbers to debit and credit, the amount, the reason for the transfer, why the expenditure was initially charged to the incorrect project, and attach documentation. Documents should clearly identify the specific charge to be transferred (e.g. "J" for "journal voucher" or other appropriate expenditure reference) and include a printout showing where the original charge posted (usually a general ledger/system printout) accompanied by a copy of the invoice or journal voucher. Your Financial Analyst can help you assemble the needed documentation.
Cost transfers must be timely, fully documented, conform to institutional and sponsor allowability standards, and have appropriate authorizing signatures. A request to transfer an expense that posted over 90 days will require a Request for Cost Transfer form.
Budget revisions are changes in how project funds are used from the sponsored-approved budget. Sometimes the sponsor gives LLU the authority to approve budget revisions. In other cases, prior approval must be sought from the sponsor.
Since re-budgeting policies differ from agency to agency, begin with reviewing the terms and conditions of the award or consult with your Financial Analyst to determine if the change is permitted or if sponsor prior approval is necessary.
- Revisions to contracts: Budgets are usually a part of contract agreements. The contract should state when a budget revision will require a contract amendment. To approve the change, the sponsor must issue an amendment/modification to the existing agreement. In addition to contacting his/her assigned Financial Analyst, the PI should also notify the Contract Analyst in Research Affairs - Financial Management that an amendment/modification is necessary.
- Significant budget revisions MAY be an indicator of a potential change in project scope and usually requires prior approval. As a rule of thumb, revisions (or expenditure deviations) involving a 25% deviation (increase or decrease) in a budget line item of the project's total costs in a given budget period are considered significant and require additional supporting documentation and support to approve the change.
- Any foreign travel on a grant usually requires prior approval from the sponsor, even it is included in the original proposal.
If the sponsor's prior approval IS required: The PI must prepare and submit a written request to the Director of Research Affairs - Financial Management indicating why the budget revision is needed and how the need relates to and benefits the project. If the director concurs with the request, a formal request on behalf of the institution will be sent to the grants management officer or the administrative contracting officer named in the award document.
If the sponsor's prior approval is NOT required: The PI must prepare and submit a written request to his/her assigned Financial Analyst, indicating:
- the project account number;
- which account category to withdraw funds from;
- which account category to add funds to;
- why the transfer of funds is needed;
- how the need relates to and benefits the project.
Every month the Financial Analysts do a high level review of their assigned sponsored project accounts. They use various reports and view account balances, projects to be closed in the near future, and reports that may be due. The Financial Analysts will contact PIs if any action is necessary.
Audit plays an essential and useful role in the conduct of successful operations. It serves to examine and evaluate the financial, administrative, and operational activities of the institution.
LLU is required to have a single audit every year by a public accountant or by a federal, state, or local government audit organization. Auditors test for things such as:
- activities that are allowed or unallowed;
- allowable costs/cost principles;
- cash management;
- eligibility (discussed under Find Funding);
- matching (discussed under Plan the Proposal);
- level of effort;
- earmarking; and
Financial Management facilitates the grants portion of this annual audit as well as internal audits. See LLUAHSC policy and procedure (H-14): Sponsored Project External Financial Audits for more information.
Once the institution has accepted an award or entered into an agreement with a sponsor, it must comply with all deliverables/reporting requirements specified in the award or contract terms and conditions. Deliverables vary by sponsor, but usually include interim technical or scholarly progress reports (to be prepared by the PI) and interim financial reports (to be prepared by Research Affairs - Financial Management). Continued funding and/or release of cash payments from the sponsor is often tied to the receipt of these interim reports. Financial Management should be consulted if questions arise regarding reporting requirements.
Sometimes payment can be held up by the sponsor if the PI has not submitted the required programmatic progress reports. More information on these reports can be found under Manage the Project.
Research Affairs - Financial Management prepares the draft interim and final financial reports for grants and contracts and sends them to the PI for any necessary corrections and approvals. Once the PI approves and returns the draft report to Financial Management, the final report is prepared, authorized on behalf of the institution, and submitted to the sponsor.
Federal sponsors require the submission of financial status reports as documentation of the financial status of grants according to the official accounting records of the grantee organization. Except for awards under Streamlined Non-competing Award Process (SNAP) and awards that require more frequent reporting, the final financial report (FFR) is generally required on an annual basis. Annual FFRs must be submitted for each budget period no later than 90 days after the period's close. The report also must cover any authorized extension in time of the budget period. If more frequent reporting is required, the notice of award will specify both the frequency and the due date.
All NIH FFRs must be submitted electronically through the eRA Commons. Financial Management is responsible for the FFR submission.
Non-federal sponsors usually have their own financial forms to be completed which can be found in the terms and conditions in the notice of award or agreement.
A milestone is a specified or significant event that is usually referenced in notice of awards or contract agreements. They are similar to deliverable reports. Most of the time, the PI is responsible for satisfying these milestones and communicating this to the sponsor in order to receive payment.
Effort is time spent on institutional activities, including research, instruction, administration, service, and clinical activity.
Effort reporting, a federal requirement, is a method for certifying that the salaries and wages charged to a sponsored project are consistent with the effort being contributed by investigators and other significant personnel. As a condition for receiving federal funding, the institution must maintain an accurate system for reporting the percentage of time (i.e. effort) that employees devote to sponsored projects. The institution's effort reporting system assures external sponsors that funds are properly expended for the salaries and wages of those individuals working on the projects they sponsor. See LLU's Primer on Effort Reporting for more information.
Certain employees, as discussed above, are required to certify that they performed their committed percentage of effort on sponsored projects, whether or not their salaries and wages are being charged to the sponsored project. The computation of committed effort is the application of the committed percent to the body of total effort provided to the institution. Each department has the primary responsibility of ensuring compliance with LLUAHSC research policy and procedure (H-08): Effort Reporting, and must forward the certified PARs to RAFM within 30 days of receipt.
Time spent preparing proposals must be charged to the appropriate non-sponsored accounts, generally departmental accounts. Therefore, any employee paid 100% from sponsored projects cannot support the preparation or submission of any proposals (federal auditors will not accept the argument that the employee prepared the proposal during non-working hours). If an employee participates in proposal preparation activities to a significant degree (greater than 10%), their certified effort must be appropriately adjusted.
Personnel Activity Reports (PARs) are hard-copy documents that list the total activity for which the employee is compensated. These documents are generated by University Payroll. Total activity is listed with the account numbers the employee is paid from in conjunction with the level of effort being paid from the different accounts or sponsored projects. This report reflects this information from the payroll system. The employee must evaluate the effort and accounts and determine is it is accurate or if changes need to be made according to what they actually spend their time (effort) on. Changes must be noted on the PAR report. The employee must sign (certify) their name attesting that the information on the report is true and correct. Finally, the employee must obtain a second signature for verification purposes. Normally, this is the Principal Investigator.
PAR reports are legal documents and each document can reach the level of a false claim if improperly completed. A false claim can lead to fines, penalties, suspension, or incarceration.
Research Affairs - Financial Management sends out a memo to departmental administrators when Personnel Activity Reports are due, along with the PAR form. These should be returned to Financial Management within 30 days.
Please note the following before completing the form:
- VERIFY that the listed percentage reasonably reflect the actual time and effort expended during the quarterly period. If the information is accurate, please SIGN, DATE and OBTAIN second signature from the Principal Investigator or other responsible official having direct knowledge of performance.
- If it is not accurate, make the necessary changes in the space provided before obtaining the second signature. Should actual effort differ by less than 10% from the stated figure, no change is necessary.
- If the employee is no longer available for signature, please indicate the date of termination on the form and obtain a signature from the Principal Investigator.
- Should no amounts appear in categories such as Sponsored Research Project Administration, Department Administration, Instruction and/or Departmental Research and you feel that effort has been expended in those categories, reallocate the percentage from other areas to reflect actual expenditure of time and effort.
- Remember that the total percent of effort should equal 100%.
- Only consider the effort that you have expended for the benefit of the University.
Affiliate Invoices & Effort Certification are manually generated documents used to certify effort for NON-University employees. Effort reporting systems have not been set up with the various Loma Linda affiliates such as Faculty Physicians and Surgeons, Loma Linda University Health Care, LLUMC, etc. Therefore, Affiliate Invoices & Effort Certification documents serve two purposes: 1) to certify employee effort, and 2) to reimburse the affiliated entity for the time the employee spends working on the project.
Research Affairs - Financial Management sends out a memo to departmental administrators when Affiliated Invoices and Effort Certification are due, along with the Affiliated Invoice/Effort Certifcation form and a Payment Voucher. These should be returned to Financial Management within 30 days. Please note the following before completing the forms:
For the Affiliated Invoice and Effort Certification
- ENTER the correct Fund, Organization, Account, and Program (FOAP) codes to be charged for each sponsored project along with the affiliated organization to be reimbursed where indicated.
- COMPUTE and VERIFY that the percentages entered reasonably reflect the actual time and effort expended during the quarterly period, then have the employee SIGN, DATE, and OBTAIN approval signature from the Principal Investigator(s), and Affiliate Entity's President or Financial Officer where indicated.
- Remember that the total percent of effort must include all other activities not charged to a sponsored project, and must equal 100 percent.
- If the employee is no longer available for signature, please indicate the date of termination on the form, and obtain certification and signature from the Principal Investigator.
For the Payment Voucher
- COMPLETE a Payment Voucher form for reimbursement to the affiliated entity. Have the Principal Investigator approve and sign the Payment Voucher before forwarding the forms to Financial Management.
When an employee commits a certain amount of effort on a project, for example, 20%, we often refer to this as proposed or committed effort. This is the level of effort the sponsor expects the employee to work on the project. During the effort certification process, an employee's level of effort may not be exactly 20% throughout the year. It is acceptable for this commitment level to reasonably fluctuate. Generally, total effort is analyzed on an annual basis. Therefore, after a year concludes, and effort averaged out to be 20%, no further analysis or changes are needed.
If there is a significant difference (greater than 10% of the committed effort) in the level of effort proposed/committed and certified, Financial Management may need to do a labor transfer to adjust levels of effort and salary and wages. Your Financial Analyst will determine when these adjustments are necessary.
During the project, rate slips may need to be revised to reflect steps progressions, reclassifications, or adding/removing other department or sponsored project accounts. It is highly recommended that these rate slips be completed and submitted prior to an anticipated change in order to avoid transfers and other unnecessary activities.
Rate slips can be downloaded from the Human Resource Management page on VIP.
A sponsor has the right to perform an audit at any time to determine if employee effort certifications are accurate and complete. Adverse findings could result in severe penalties. If sponsors discover inaccurate or incomplete effort certifications, they have the right to disallow the costs and recover the funds.
Sometimes a project can change or evolve from how it was first proposed or funded by a sponsor. The important thing to remember is that all sponsors have specific terms and conditions regarding certain changes after an award is made. Research Affairs - Financial Management or the Clinical Trial Center (CTC) will determine if the terms and conditions of an award permit a change after a project has been awarded, also referred to as post award or significant changes, and if prior approval must be obtained from the sponsor (see list of changes that often require prior approval). All post award changes must be made in accordance with LLUAHSC policy & procedure (H-38): Post Award Changes to Sponsored Projects.
It is important to consult with Financial Management or CTC no less than 30 days prior to the effective date of a desired change in order for the institution to determine what action is necessary to remain in compliance.
Expanded Authorities for Federal Grants: Sometimes the sponsor gives LLU the authority to approve certain changes, e.g. grants with expanded authorities. In this case, internal prior approval by Financial Management is sufficient. In this case, the PI must initiate the request in writing by following the instructions below and address it to the Financial Management Director.
When prior approval by the sponsor is required, such requests should also follow the instructions below for requesting prior approval.
Note that instructions for the following significant changes are described elsewhere:
For contract agreements: Research Affairs - Financial Management or the Clinical Trial Center (CTC; for clinical trial agreements) will process requested changes. Generally this is done with an amendment. PIs should initiate such requests by contacting Financial Management or CTC no less than 30 days before the date of the desired change.
For grants, such requests should be addressed and sent to the Financial Management Director (no less than 30 days before the desired change) and include the following information:
- the sponsor's award number;
- the institution's award number (Banner fund or LLeRA);
- the exact nature of the requested change, including specific budget categories affected if it is a budget revision;
- the benefit to the project which will result from the change;
- any significant effect which the requested change might have on the scope or direction of the project;
- other information specifically requested by the sponsor.
If the Financial Management Director concurs with the request, a formal request on behalf of the institution will be generated and forwarded to the sponsor.
Since all sponsors have different terms and conditions regarding changes after an award has been made, it would not be feasible to describe every possible scenario. Instead, below is general guidance on the most frequent activities that may require prior approval. Always consult with your Financial Analyst prior to any anticipated or desired changes.
A PI leaving LLU for another position at another institution may, with the agreement of the sponsor, be able to transfer an award to another academic or non-profit organization. Since sponsored projects are awarded to the institution, LLU must also agree to relinquish the award.
Changes in scope (which can be changes in specific aims, direction, type of service delivery or research training, objectives, or other areas that constitute a significant change from the purposes of the project) will most likely require prior approval from the sponsor.
Sponsors vary in interpreting changes to a project's scope or objectives. Actions that may be considered a change of scope include, but are not limited to:
- Transferring the performance or substantive programmatic work to a third party via a consortium agreement (subcontract), contract, or other means;
- IACUC and IRB changes; including changes in the number of research subjects or animals used, or substituting one animal model or species for another, and any changes from the approved use of animals or human subjects. The award terms and conditions or sponsor policies may specify other changes that also will require sponsor approval. In addition, ALL changes to animal and human study protocols require institutional prior approval through the IRB and IACUC committees.
- Applying new technology;
- Shifting research emphasis from one disease area to another;
- A clinical hold by the Food and Drug Administration (FDA) under a study involving an Investigational New Drug or Device Exemption (IND/IDE).
Carryovers of unobligated funds at the end of a budget period in a multi-year federal project, or at the end of a project period for a non-federal project, are handled differently by different sponsors. Research Affairs - Financial Management or CTC should be consulted for the specific requirements of the award.
For NIH awards using SNAP, funds are automatically carried over to the subsequent budget period. However, the PI should indicate in the annual progress report whether the estimated unobligated balance (including prior-year carryover) is expected to be greater than 25 percent of the current year's total approved budget. If so, s/he must provide an explanation and indicate plans for expenditure of those funds in the SNAP report.
Equipment is defined as non-expendable, tangible property having a useful life of more than one year with a unit cost of $2,500. With Financial Management's assistance, the PI should review the award notice or contract and sponsor policy to determine the prior approval requirements for equipment purchases not in the approved budget.
Remember, if the equipment purchase reflects a change in scope on a federal project, prior approval from the sponsor is required.
Principal Investigators have the primary responsibility for:
- monitoring sub-recipients (a.k.a. subcontractors) for compliance with federal regulations and both prime and subaward terms and conditions;
- monitoring periodic progress reports submitted by the subrecipient PI. Non-compliance with technical reporting requirements or dissatisfaction with level of subrecipient progress should be reported immediately to Research Affairs - Financial Management;
- reviewing subrecipient invoices for compliance with the terms of the contract. Payment of invoices should usually be tied to technical reporting requirements and adequate progress on the project;
- and verifying that the subaward scope of work has been completed.
The PI must sign all subcontractor invoices and attach to a Payment Voucher. The payment voucher and invoice should be forwarded to Financial Management for approval. Once Financial Management approves the payment, the voucher will be sent to University Accounting for processing.
Please note that when a LLU PI is a subrecipient by use of a subcontract issued by another institution or organization, the award should be managed like a primary award because the award is subject to both the primary award and contract terms and conditions. If the prime award is funded by a federal agency, federal regulations will also apply.
The Subrecipient must:
- be aware of and comply with prime award and subcontract terms and conditions;
- submit invoices to the LLU PI with signed certification according to the terms in the subcontract agreement;
- maintain acceptable financial systems and accurate reports that identify the expenditures of project funds;
- maintain effective control over and accountability for all funds, property, and other assets;
- comply with applicable cost principles and administrative requirements (OMB Circulars, CFRs, state laws); and
- ensure all reporting requirements are met.
Research Affairs - Financial Management is responsible for:
- ensuring that the institution's subrecipient monitoring procedures comply with federal and other applicable regulations and are consistent with sound business practices;
- advising sub-recipients of all applicable federal laws and regulations, and all appropriate flow-down provisions from the prime award;
- the routine review of expenses-to-budget;
- the periodic performance of on-site visits, or regular contact, if necessary;
- the option to perform audits if necessary;
- review of A-133 audit reports filed by sub-recipients and any audit findings;
- reviewing corrective actions cited by sub-recipients in cases of continued inability or unwillingness to have required audits or to correct non-compliant actions and issue management decisions.
If it becomes necessary to revise a subaward's terms and conditions during its performance period, the LLU PI should submit an amendment request in writing to the Contracts Analyst in Research Affairs - Financial Management. If the prime sponsor's prior approval is also required, Financial Management will acquire approval before completing the change.
As a pass-through entity, LLU is responsible for ensuring that sub-recipients with federal award expenditures in excess of $500,000 per year comply with the audit requirements of OMB Circular A-133 (see subpart D, Section 400(d)).
This federal regulation stipulates that sub-recipients must grant access to all records and financial statements to LLU and the auditors necessary for the pass-through entity to comply with this part of the Circular. During the budget review process, Research Affairs - Financial Management will send and collect a Subrecipient Audit Certification form from all potential sub-recipients who may receive funding passed through a LLU entity from a federal sponsor.
To purchase equipment with sponsor funds, the purchase should have been included in the proposal and approved by both the sponsor and Research Affairs - Financial Management when an award is made. See instructions for purchasing equipment not in approved budget.
Purchases in excess of $2,500 will require three bids and a LLU Procurement Analysis Form (see section 5.1 of institutional procedure H-32A: Procedures for Research Equipment).
PIs are also responsible for the following activities for equipment purchased with sponsored funds:
- proper use and maintenance
- maintain an up-to-date equipment location and movement tracking record. As these records change, PIs should also notify University Accounting to update their equipment records as well.
- appropriate disposition of equipment purchased for a project period including conducting a final equipment inventory review.
Travel is generally allowable as a direct cost to a sponsored project where such travel was in the proposed budget, approved by the sponsor, and will provide direct benefit to the project. All travel costs must be reasonable and necessary and follow the LLU travel policy.
An approved LLU Travel Application must be on file before the date of travel designating the appropriate sponsored project to be charged. An LLU Expense Report should be used to reimburse the employee for expenses incurred related to travel and to charge the award. Travel applications and expense reports can be downloaded or completed at: http://myllu.llu.edu/ under Travel Management Services.
- Traveling a day early to a conference is not reasonable and necessary and may not be charged to the grant.
- LLU travel policy does not allow for payment of the extra insurance offered by rental car companies, therefore this may not be charged to the grant.
- Per Diem charges are to cover the extra costs of travel and are not expected to cover all costs. Food or incidentals such as snacks may not be charged to the grant in addition to the per diem.
- Upgraded rental cars and airplane cabin seats (first class) are not chargeable to a grant.
- Travel for those not working specifically on the project may not be charged to the grant.
- Travel to find funding sources is not chargeable to a grant.
If the award is funded by the federal government, U.S. flag carriers must be used by domestic grantees to the maximum extent possible when commercial air transportation is the means of travel between the United States and a foreign country or between foreign countries.
Please also note that any foreign travel on a grant usually requires prior approval from the sponsor, even it is included in the original proposal.
A consultant is an individual or other entity outside LLU, with specialized expertise, that LLU hires to give professional advice, make recommendations, or address a specific problem. They have little or no responsibility for overall project effort and are usually retained on a short-term basis. Human Resources Management may require a Contractor vs Employee form to be completed in order to determine the individual's status as a consultant. Your Financial Analyst will let the PI know when this form is required.
The PI is responsible for monitoring performance and should not approve payment if work has not been completed. The consultant will send invoices to the PI who will review the invoice to make sure the costs are reasonable and appropriate. The invoice must be signed by the PI to approve payment, attached to a Payment Voucher, and submitted to Research Affairs - Financial Management for approval. Once the payment voucher is approved, Financial Management will forward it to University Accounting for processing.
PIs are expected to complete a sponsored project within the originally specified project period. However, if unexpected circumstances arise and the project cannot be completed within the original project period, the PI may have the option to receive a no-cost extension in accordance with LLUAHSC policy and procedure (H-12): No-Cost Extension for Sponsored Projects.
- A no-cost extension should be requested only when the scope of work cannot be completed within the project period and no additional funds are needed to complete the project.
- No-cost extensions should NOT be requested if the project is complete and unexpended funds remain.
Some federal agencies give the institution the authority to approve a 12-month no-cost extension without sponsor approval. Generally, this authority is noted in the notice of award under expanded authorities. In cases where the institution has not been granted that authority, prior approval must come from the sponsor.
To request a no-cost extension when sponsor prior approval is required, the PI prepares and submits a letter to the Director of Research Affairs - Financial Management. When the no-cost extension must be approved by the sponsor's grants specialist or contracting officer, Financial Management will review the letter and submit it to the sponsor. Include in the letter:
- Why the specific aims will not be completed as scheduled;
- A summary of scientific progress and the work remaining;
- Additional time needed;
- Estimated summary budget for use of funds remaining at the end of the project period; and
- A signature line for Financial Management if sponsor approval is required.
No-cost extensions for agreements or subcontracts (where LLU is the subcontractor) should be requested through the Financial Management Contracts Analyst by the PI completing a Request to Issue/Modify/Terminate a Sub-agreement form. Requests to extend a subcontractor budget periods past the primary award's date are not allowed.
In order to minimize the possibility of a lapse in funding, requests for no-cost extensions must be submitted at least 90 days before the end of the project period.