5.1 Monitor Spending
1. PI and Administrator Responsibilities
The PI has overall responsibility for the technical and fiscal management of a sponsored project. This includes managing the project within funding limitations as well as adhering to reporting requirements and assurance that the sponsor is notified when significant conditions related to project status change. A PI's fiscal management responsibilities include regular monitoring of of each awarded project's expanses against period budgets.
While responsibility for the day to day management of project finances may be delegated to administrative staff, accountability for compliance with Stanford policy and sponsor requirements ultimately rests with the PI.
2. Monitor Expenses
Expenditures in eCertification are the official record of project expenses and the basis for cost reimbursements to Stanford.
Expenditures for sponsored projects and cost sharing accounts must be reviewed by a knowledgeable individual, i.e., the PI or designee (typically the financial or research administrator) so that adjustments can be made in a timely manner, and that rates of expenditures can be monitored to assure availability of funds. To be considered timely, monthly expenditures must be reviewed within two months of the end of the month being reviewed. This review is documented by means of the reviewer's attestation in the eCertification System
Any questionable charges must be brought promptly to the PI's attention, and, if needed, corrected by an appropriate transfer. Transfers should be initiated as soon as possible after a need has been identified. Cost transfers that represent corrections of errors should be completed within three months of when the error is discovered, and no later than six general ledger (GL) months after the original expense is posted to an award. Procedures governing transfers of expense are defined in RPH 15.8
You should monitor actual expenses against budgeted and identify and address variances (the difference between a budgeted costs and the actual expense incurred.)
When analyzing data keep in mind:
- Effort adjustment in the Labor Distribution systems will appear as a charge/credit to a future period on all reports
- A one time expenditure or credit may skew the burn rate (i.e. a large equipment expense)
- Cyclical or trend based work can effect a straight line forecast (i.e. summer downsize and fall ramp up)
Determine the impact of a variance, both financial and programmatic. Determine whether it is recurring and must be addressed or if it is just a one time aberration. What budget category was debited and credited? Why did the variance occur? What will you do about it?
Forecast future costs based on actual costs to date.
Analyze forecasts and discuss with the PI items such as: Is spending to date in sync with the % of work complete? Will you need to request a “no cost extension”? Do subcontractors need to be contacted? If the PI makes changes, prior approvals from the sponsor or the university may be required. Check re-budgeting authority and Terms & Conditions.
Monitor spending. Use expense to date to calculate how much can be spent monthly for the remaining months of the award to keep within budget.
Award amount = $300,000
Expense to Date [5 months] <$175,000>
Remaining Balance = $125,000
At burn rate of $35,000 monthly you need $245,000
It's important for the Research Administrator to monitor the rate of expenditure on a sponsored project because PIs are responsible for the ongoing fiscal management of awarded projects, including regular monitoring against project period budgets. Federal regulations establish the approved project budget as the financial expression of the project, and sponsors may evaluate the project against the budget at any time.
Although sponsors allow some flexibility with respect to re-budgeting, un-obligated balances, and pre-award costs, Stanford and sponsors expect expenditures to be reasonably consistent with the approved project and budget.
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 can include, for example, significant expenditures beyond the amount authorized on the award, or requests for additional funding. PIs are obligated to request prior approval when budget and program plan revisions indicate a significant change in scope. Consult with OSR or your school based management team 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 the scope or the objective of the project or program
- Change in the PI
- Disengage for more than three months or a 25% reduction in time devoted to the project, by the approved PI and/or key personnel
- Additional federal funding
- The transfer, by contract or other means, of a significant part of the research or substantive programmatic effort (i.e. subaward).
The Uniform Guidance recognizes that a PI can be absent from campus but fully engaged in his or her research team by means of Skype, video, computer or other means of communication.
PIs are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section.
- Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
- Change in a key person specified in the application or the Federal award.
- The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved Project Director or Principal Investigator and key personnel.
Note that number 3 above does not use the term "absence" but "disengagement" from the project. The distinction is a PI/PD or key personnel can be off campus and still engaged in the research, which would not require prior written approval.
The new term "disengagement" in the Uniform Guidance will become part of Stanford Policy prospectively and retrospectively.
Specific to the School of Medicine, evidence of engagement or disengagement from a sponsored project should be documented on Attachment A of the Sabbatical Leave form which must be reviewed and approved by the School Dean's office, and forwarded to the Institutional Official who will review, countersign and uploaded it into the appropriate SeRA record(s).
The PI is working in New Zealand on coral reef research as part of the statement of work. She is absent from the Stanford Campus but still engaged in the research.
During the life of a sponsored project, it may become necessary to modify certain aspects of the original award. Such changes may involve rebudgeting of funds among expense classes or adjusting the length of a project period. Many federal agencies have transferred the authority to approve such changes to awardee institutions. Review the terms and conditions of your award and consult your IO (institutional Official).
Use the SeRA Central Office Request form to make the following requests
The SeRA Central Office Request form allows department administrators to submit requests to the Office of Sponsored Research (OSR), Research Management Group (RMG) and Industrial Contracts Office (ICO) via the SeRA system for institutional officials to contact sponsors for notifications, requests and approvals, or changes to Oracle accounts - PTAs for sponsored projects.
Benefits of the SeRA Central Office Request form:
- SeRA records when the request was submitted; what information was provided; who is working on it; and the status of the request and all requests are searchable
- Eliminates emails to one person and delayed response since request are sent to the central offices' queues which allows for assignment to the next staff member if staff are out of the office.
- Users can see who the request is assigned to and the processing time to date.
When to Use the SeRA Central Office Request form
No Cost Extension Request: In the event the proposed work is not able to be completed prior to the award end date and the PI wants to extend the period of performance.
Sponsor Approval for Rebudgeting: When you want to expend funds differently than the sponsor approved budget and the sponsor requires prior approval to do so.
Sponsor Approval for New Subaward: If the PI wants to issue a subaward to an entity not previously approved by the sponsor.
Sponsor Approval for Carry Forward: When the award requires sponsor prior approval for carry forward between budget periods.
Sponsor Approval for Travel: If use of award funds for travel requires the prior approval of the sponsor.
Sponsor Approval for Equipment Purchase: If purchase of equipment requires prior approval of the sponsor.
Sponsor Approval for Changing PI: If current PI will relinquish active direction of the project and the project will continue at Stanford with a substitute PI and prior sponsor approval is required before the change is implemented.
Sponsor Approval for PI Effort Change: If PI will devote substantially less or more time to the project than proposed (as defined by the specific award terms) and prior sponsor approval is required before the change is implemented.
Sponsor Approval for Scope of Work (SOW) Change: If the PI or sponsor requests a change in the Scope of Work or objectives of the project.
Sponsor Approval for Key Personnel Change: If there will be a change in Key Personnel (other than the PI) and prior sponsor approval is required before the change is implemented.
Check Next Funding Increment Status: You would like OSR, RMG or ICO to check on the status of the next expected funding increment.
Other – Preaward (Institutional Official): If the request type does not fall within or is not included in the Select Request pull-down menu.
New Task: You would like OSR to create a new Oracle Task Number under an existing Oracle Award/Project.
Budget Reallocation: You would like OSR to rebudget funds from one Expense Category/Type to another Expense Category/Type within or among Oracle Tasks or reallocate funds from Research to Fabrication project.
New Cost Sharing Award-Task: You would like OSR to create a new Cost Sharing Award-Task for an existing Project
New Fabrication Project-Task: You would like OSR to create a new Fabrication Project-Task for an existing Award
New Program Income Award: You would like OSR to create a new Program Income Award for an existing Project
Modify Existing PTA Attribute: You would like OSR to change an Attribute of an existing PTA
Make Expenditure Type Chargeable/Non-Chargeable: You would like OSR to make an expenditure type chargeable or non-chargeable in an existing PTA.
Other Postaward (Accountant): If the request type does not fall within or is not included in the Select Request pull-down menu.
3. Stanford Policy
A. Monthly Review of Expenditure Statements
In addition to monthly reconciliation, expenditures must be reviewed by the research administrator (Task Manager) and reviewed and certified by the Principal Investigator each quarter. The reviewer must certify their review quarterly via the eCertification System. The PI can begin to review and certify as soon as the Research Administrator has completed and documented their review of quarterly expenditures in the eCertification System.
Review by the research administrator should include compliance areas such as those covered in the detailed steps below.
B. Quarterly Review and Certification of Expenses
The PI has overall responsibility for the technical and fiscal management of a sponsored project. This includes the management of the project within funding limitations, adherence to reporting requirements and assurance that the sponsor will be notified when significant conditions related to project status change. While responsibility for the day-to-day management of project finances may be delegated to administrative or other staff, accountability for compliance with Stanford policy and sponsor requirements ultimately rests with the PI.
The eCertification System is the official record of project expenses and the basis for cost reimbursements to Stanford. This system is where the PI will review and certify project expenditures.
Sponsored project and cost sharing accounts must be reviewed and certified by the PI quarterly in the eCertification system for every sponsored project and cost sharing account.
The purpose of the review and certification is to confirm that all expenses charged to the account are allowable, allocable to the project, and reasonable. The certification of salary expenditures confirms that salaries charged to the account are supported by a corresponding expenditure of effort during the time period being certified. The certification also assures that other expenditures are for items or services purchased and used during the project period as specified by the award.
Faculty who are not Principal Investigators and whose salary is charged to sponsored projects must review and certify their payroll distribution.
The following certification statement appears in the eCertification System.
As the principal investigator I confirm that to the best of my knowledge, salary and wages charged to this project are appropriate in relation to work performed on this project. All other costs charged to this project are, to the best of my knowledge, appropriate. Where required, corrections have been or will be made through the accounting system.
Expenditures must be reviewed and certified by the certification due date, which is approximately 75 days after the end of the academic quarter being certified.
Adequate explanation and documentation for all project charges expenditures must be maintained for four years after the Stanford sponsor closes out the award. Where documentation cannot be provided as to the allowability, allocability and reasonableness of any project expenses, including but not limited to expenses incurred late in the project period, the sponsor may deny them. In this case, the PI, department or school will be expected to cover the expense from unrestricted appropriate sources. All data in the eCertification System will be retained by ORA in accordance with University record retention requirements for sponsored projects (see Guide Memo 3.1.5: Retention of Financial Records).
Any departure from the policy or procedures regarding summarization of Quarterly PI Review and Certification must be approved in advance by the Office of the Vice Provost and Dean of Research (DoR) and Research Financial Reporting (RFR) within ORA.
4. Federal Regulations
A. Clauses in Federal Cost Type Contracts
For federal cost-type contracts, PIs must assure compliance with the Limitation of Funds and or Limitation of Cost clauses. These clauses include the requirements that the contractor shall notify the Contracting Officer in writing whenever it has reason to believe that
(1) The costs the Contractor expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the estimated cost specified in the Schedule; or
(2) The total cost for the performance of this contract, exclusive of any fee, will be either greater or substantially less than had been previously estimated.