Sponsored Programs - Business Management Guide

Grants and contracts received from sponsoring agencies help the University meet its mission of instruction and public service and are vital in achieving its research goals. The purpose of this section is to familiarize you with your responsibilities in managing sponsored programs. Due to the complex nature of managing these programs, only key responsibilities are highlighted.

Key Terms

Sponsored programs consist of grants and contracts whereby a sponsoring agency provides funds for the University to accomplish designated activities in an area of mutual interest or for the University to provide specific services or products to the agency. Accounting and reporting obligations and other requirements are specified when the funds are awarded.

The principal investigator (PI) is the University employee who is primarily responsible for administering the grant or contract. In addition, financial and technical responsibilities reside with the principal investigator (PI).

WBS (work breakdown structure) elements are used to collect revenues and costs for sponsored programs with specific start and end dates, endowments, gifts, loans, and all other restricted funds (e.g., R180014321, F179901010).

Both sponsored projects and gift-funded activities are externally supported, with funds provided typically in response to a request or proposal. In order to facilitate the proper handling of funds, PIs and department heads should ensure proper classification of funding as “gift,” “non-exchange,” or “sponsored project.” In some cases, the distinction between gifts and sponsored programs can be difficult to make. For assistance with this determination, please contact your campus/institute research office.

Obtaining a Grant or Contract

A researcher (or other employee interested in conducting sponsored activities) typically works with the campus/institute research office to prepare and submit a proposal for a grant or contract to the potential sponsoring agency. This employee is usually designated as the PI if the proposal is accepted and thus will be responsible for administering the program. The campus/institute research office and college and campus/institute business offices will assist PIs as needed throughout the process of developing proposals, budgets, etc. The campus/institute research and development offices also may help identify potential sponsors for a particular type of research or program.

The PI (or department head) does not have the authority to obligate the University or approve (sign) a grant or contract that requires the University’s agreement to certain terms and conditions. The normal contract review and approval process must be followed (see University Policy FI0420 and the purchasing and contracting section of this guide).

When the University receives a grant or contract, a budget and a WBS element must be established in the University’s financial and human resources system (IRIS) as described in Policy FI0205. (Also, see “R” WBS Elements below.)

The contracts discussed in this section do not include those involved in the purchase of goods or services from outside vendors. See the purchasing and contracting section of this guide and Policy FI0420 for details on other types of contracts.

“R” WBS Elements

Practically all of the sponsored program funds received by the University are accounted for as Restricted Current Funds. A separate WBS element must be established for each grant and contract awarded to document and account for the receipt and expenditure of such funds. Restricted grants and contracts processed through the University are assigned “R” WBS element numbers.

The “R” WBS element should include only identifiable costs of goods and services used to conduct the sponsored program as defined by the sponsoring agency. These costs are called direct costs. Examples include payroll and purchase orders for equipment and supplies. Costs incurred to support the University’s programs or activities not easily identifiable with any given project are called facilities and administrative (F&A) costs. These costs are a predetermined percentage of a specified base of certain direct costs established when the budget is developed. Examples of costs included in the F&A cost rate are utilities and janitorial services. Both direct and F&A costs are posted to the “R” WBS element for the grant or contract.

General Ledger Review

The PI must ensure all charges post to the correct sponsored projects in a timely manner. All charges must be allowable, allocable, reasonable, and directly related to the project. Cost transfers are high risk and should be avoided except to correct errors. Any cost transfers should be made within 90 days of the original transaction. Sponsors and external auditors are extremely critical of late charges, late transfers, and late adjustments to WBS elements for sponsored projects.

Principal Investigator’s Responsibilities

Be familiar with the federal regulations, Office of Management and Budget’s Uniform Guidance, as well as the sponsor’s rules and the provisions contained in the specific grant or contract.
Comply with University policies and procedures related to sponsored programs.
Prepare the proposal text.
Prepare the proposal budget, including personnel, equipment, travel, and other funds needed and their intended use. See Policy FI0205 for detailed procedures.
Obtain the necessary approvals, e.g., co-PIs, compliance committees, college, departmental, etc.
Submit the proposal to the campus/institute research office for review and approval in Cayuse.
Prepare the award budget (if different from the proposal budget) in a timely manner so that it can be entered in IRIS and a WBS element opened for posting expenses. Request an advance account.
Identify need for cost sharing funds.
Oversee subcontractor’s activities to ensure compliance with the primary agreement and that the charges are reasonable, allowable, allocable, and correctly classified as direct and F&A costs.
Ensure that all project personnel are informed of the sponsor’s award terms and conditions (e.g., confidentiality, data security, publication requirements).
Complete the funded program within budgetary and time constraints, University policies, sponsor guidelines, and other applicable regulations and certifications.
Ensure that all expenses charged are reasonable, allowable, allocable, and correctly classified as direct and F&A costs. Sponsors and auditors often question high risk expenditures including, but not limited to, entertainment, international travel, and equipment purchases.
Prepare and submit the required progress and technical reports to the sponsoring agency in a timely manner.
Complete the program technical objectives.
Verify the WBS element ledgers on a monthly basis, ensuring that expenses are allowable and recorded on the correct WBS element in a timely manner.
Request award amendments or sponsor-requested prior approvals in a timely manner.
Report inventions to the campus/institute research office in a timely manner.
Ensure that all expenses incurred during the project are posted to the project within 60 days of the program’s ending date so that the final financial reports can be prepared and submitted to the sponsoring agency by its deadline.
Ensure that the effort of research staff is certified in a timely manner, preferably on a monthly basis. (At a minimum, effort must be certified within 30 days of the end of each semester or within 30 days after the sponsored grant or contract end date, whichever is earlier.)
Prepare and submit final reports, including final invention reports, in conjunction with the campus/institute research and/or business office.
Identify and report problems to the appropriate campus officials in a timely manner.
Maintain adequate program records in accordance with University and sponsor policies.
Ensure that the effort of research staff is appropriate, accurate, and timely on all sponsored grants or contracts in accordance with policy.
Notify departmental and campus officials of any decision to discontinue the project or transfer to another institution.
Promptly notify appropriate departmental staff of any significant changes (e.g. 25% or greater) in an employee’s planned effort percentage on a sponsored project. The department should then promptly submit a pay funding change document that revises the cost distribution of that employee’s payroll charges.
Ensure project employees are placed on the appropriate accounts in a timely manner.

Department Head’s Role in Managing Sponsored Programs

The PI is responsible for managing the WBS element and directing the sponsored program. The department head, however, is responsible for the oversight of these activities. Proper attention and priority must be given to sponsored program administration to avoid unallowable charges, comply with requirements, and most importantly, help the University maintain good relations with sponsoring agencies and continue to receive these vital funds.

Your responsibilities include the following activities:

Ensure that the processes and organizational culture are present to promote financial compliance with federal regulations and University policies.
Ensure that the scope of work advances the University’s mission and the department’s goals.
Ensure that space exists to perform the project work.
Ensure that all personnel working on grants/projects, including students, complete an Outside Interest Disclosure form.
Ensure that all applicable federal, sponsor, and University rules and regulations are followed.
Ensure that PIs and departmental accounting support staff are aware of their responsibilities and that support staff are properly trained.
Review and approve proposals and budgets before they are submitted to the campus/institute research office.
Review departmental WBS elements for reasonableness and follow up immediately on overexpenditures or other unusual items. Any overexpenditures, unallowable expenditures, cost sharing, and uncollected or disputed sponsor invoices will be charged to the departmental funds.
Ensure all costs are charged consistently and appropriately to sponsored projects in a timely manner and that accurate invoices are sent to sponsoring agencies.
Ensure that invoices for payments received are identified and reconciled with the payment, the funds are collected in a timely manner, and funds are deposited to the appropriate WBS element.
Monitor new grants and contracts or continuations to ensure that agreements are processed and WBS elements are established in a timely manner.

Lesson Learned
A researcher requested that grant funds from a private company sponsoring his UT research be made payable to himself. The company reported the payments as taxable income for the researcher, and he was disciplined by the University.

The department head’s monitoring of WBS ledgers and following up on unusual items may have detected this situation.

Many regulations and guidelines (from the sponsoring organization, state or federal agency, etc.) may apply to a particular grant or contract, with requirements varying from one sponsored program to the next. Additionally, supplemental policies and procedures may vary by campus/institute. Your campus/institute research office is the best resource for identifying and interpreting applicable regulations. Further information is available from your campus/institute business office and in the University policies listed below.

Relevant University Policies

FI0205 (Sponsored Grants and Contracts),
FI0206 (Distinguishing Direct vs Indirect Costs),
FI0207 (Salary Policy),
FI0208 (Federal Salary Rate Limitation),
FI0210 (Cost Sharing),
FI0215 ( Effort Certification),
FI0220 (Cost Transfers),
FI0225 (Code of Business Ethics),
FI0230 (Subaward Origination and Subrecipient Monitoring),
FI0235 (Program Income),
FI0115 (Reconciling & Reviewing Department Ledgers),
GE0002 (formerly FI0125) (Conflict of Interests),
FI0420 (Contracts),
FI0605 (Equipment)

See Appendix for forms and reports used to manage sponsored program activities in IRIS.

Training Opportunities

See the Training Program for Sponsored Project Accounting on the Controller’s website.

Contact your campus/institute research office about training and certification programs specific to your campus/institute (e.g., Sponsored Projects Accounting Certification Classes and The Office of Research, Innovation and Economic Development).