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* When are administrative and clerical expenses allowable on a federal award?

* How long does it take to produce an AIS?

* How do I determine if a cost is allowable?

* What is the Allowability Panel?

Closeout Process:
* What happens during the grant closeout process?

Conflict of Interest:
* How do I determine if a conflict of interest exists?

Cost Sharing:
* What is cost sharing?

* Where can I get more information on cost sharing?
* What if we can't meet our cost sharing requirement?
* Can F&A be used to meet cost sharing requirements?
* I can not charge clerical staff's salaries to my grant since they are not allowable. Can I use these expenditures to meet my cost sharing requirements?

* Who is responsible for funding and monitoring the cost sharing fund?

Effort Reporting:
* What is effort reporting?

* Are effort reports a useful tool for determining current and committed effort in preparing proposals for submission to a sponsor?

Expanded Authorities:
*What is expanded authorities?

Facilities and Administrative Costs (Indirect Costs):
* What is indirect costs (facilities and administrative costs)?

FDP (Federal Demonstration Project):
* What is the FDP?

Grant or Gift?:
* Is your research funding a grant or a gift?:

Human Subjects and/or Animals:
* What is required for a proposal using human subjects and/or animals?

Indirect Costs (Facilities and Administrative Costs):
* What are indirect costs (facilities and administrative costs)?

* What is an indirect cost rate?

*What is the correct mailing address for NIH Non-Competing Progress Reports (PHS 2590)?

*Should Carryovers of Unspent Funds (between budget periods) be addressed in Non-Competing Progress Reports?

NIH Commons:
What is the NIH Commons?

Revisions to FSR's:
What is the current policy regarding revisions to FSR's?

Space @ Penn:

What is the Space@Penn web updater?

Travel Reimbursements:

To per diem or not to per diem?
When do travel reimbursements require ORS approval?





When are administrative and clerical charges allowable on a federal award?

The September 1, 1994, revision of OMB Circular A-21 established the principle that administrative and clerical expenses are normally considered and treated as a Facilities and Administrative (F&A) cost. In order for these types of expenses to be considered an allowable charge on an award the award must be considered a MAJOR project as described in OMB Circular A-21 Exhibit C ). In addition, the expense must be specifically identified with and directly benefit the project, budgeted and approved by the sponsor and the University, and be supported by an explicit justification of need within the budget. These types of expenses include but are not limited to secretarial/clerical wages, office supplies, postage, dues and memberships and local telephone calls (which are currently not charged to grants/contracts), Internet Service Provider (ISP), cell phones, and pagers. It is important to note that the requirement of MAJOR project does not apply to non-federal sponsors. Administrative and clerical expenses are permissible on a non-federal project as long as they are allocable, allowable, and reasonable.

Detailed explanations and recommendations for the treatment of clerical and administrative expenses on federal awards are provided below:

Secretarial/Clerical Wages - The direct charging of this expense may be appropriate when the nature of the work performed by the individual is different than the routine level of such services provided by the department or when the volume of work is extraordinary. Examples of routine services considered to be F&A costs include, account monitoring, meeting arrangements, or typing general correspondence or reports and should not be directly charged to grants and contracts. In order to be allowable the activity performed must be specifically identified and justified in the grant/contract proposal. The specific language in OMB Circular A-21 addressing this expense states, "The salaries of administrative and clerical staff should normally be treated as F&A costs. Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity."

Office Supplies - These items may be considered an allowable expense on a grant/contract when they are for the sole direct benefit to the project. Examples of such supplies would include computer paper used during the technical course of a project and research notebooks. Office supply items such as pencils, paper clips, memo pads and post-its are generally considered a F&A cost. Reasonable judgment should be exercised when purchasing these supplies and charging to an award.

Postage - Routine correspondence is considered to be a F&A cost. However, the shipment of materials, mailing of project specific surveys to human subjects and deliverables under a federal award may be allowable if reasonable documentation is provided to assure that such costs are for the sole purpose of the award.

Local Telephone Calls - This expense is currently not directly charged to federal grants and contracts and this policy will remain in effect.

ISP - Due to the nature of an ISP and its general functionality, it is not appropriate to identify a grant or contract as being the sole beneficiary of the charge. Therefore, ISP charges cannot be charged to an award.

Cell phones and Pagers - Both cell phones and pagers are considered to be an inappropriate expense on an award. Since both can benefit the individual and can not be used solely for the award it makes an allocation of the expense difficult to defend in audit.

Dues and Memberships - This expense should normally be treated as a F&A cost unless it can be specifically justified as necessary for the performance of the award.

In conclusion, if a PI is considering any of the above expenses as a direct charge to an award, s/he must provide an adequate justification in the proposal explaining the unique requirement. Should these items not be specifically and adequately identified and justified in the proposal they will not be allowed by the University regardless if the sponsor awards the budget as proposed. If during the course of an award the need to charge any of the above expenses should arise, the situation must be discussed with ORS prior to incurring the expense.

Before submitting a proposal that includes these types of expenses, please call ORS to discuss the allowability of the expense to the proposed project. For more information and a table to aid in making decisions regarding these types of expenses, please see our October, 2003 newsletter (

How long does it take to produce an AIS?

The AIS (Account Information Sheet) is the form that is provided to the responsible researcher and administrators as notification that the award has been set up within Penn’s system and a fund has been assigned within BEN. The creation of an AIS is a multi-step process. Once a Notice of Grant Award (NOGA) is received from the sponsor, it is matched and compared to a proposal. If all the necessary information has already been provided to Research Services, an AIS should be received by the Department within 7-10 working days. We have recently revised our procedures to assign projects requiring a new fund number a higher priority in our work queue.

If Research Services does not have a proposal on file or the award differs significantly from the proposal, the department is contacted to provide a proposal and/or a revised budget as appropriate. If the award contains a subcontract or sub-accounts, additional information from the department will be necessary in order to set up the award. Once all the required information is obtained, the award is entered into the preaward database. The information is transmitted to the Operations group where the information must be entered into Ben Financials, the AIS is printed and audited and then fund attributes are established.

The timing of the above process varies by the complexity of the account-set up and other variables. If we are waiting for information from the Department or Sponsor, this will slow down the process. If the transmittal is not complete and on file, then there will be a delay until the information is provided. There are also times where our volume of work is higher than others such as at the end of June and the beginning of July where we have grant deadlines as well as many NOGA's, which also delay the process. Please note the remapping requests or after the fact changes such as additional sub-accounts, follow this same procedure, so providing correct mapping information initially will help to speed up the delivery time of all AIS'. It is also important that the e-mail addresses to which the AIS' are sent are kept up to date and monitored for any internal problems.

There have been occasions recently when we have not received the NOGA's from NIH in a timely manner. Please note that the issue date is NOT always the date that it is sent to Research Services by the sponsor.

If you have a question about the status of an AIS, please feel free to call the appropriate pre-award staff member or send an inquiry to


How do I determine if a cost is allowable?

To ensure appropriate institutional stewardship of research funds all expenditures must follow the rules for allowability enunciated in OMB Circular A-21 and federal regulations. Expenditures must meet the following criteria in order to be charged as a direct cost of a sponsor research project no matter what its purpose. The following criteria are known as the Cost Accounting Standards (CAS) Principles of OMB circular A-21.

• Reasonable - A prudent person would have purchased this item and paid this price.
• Allocable - Expenditures can be allocated to the sponsored project or activity based on benefits derived, cause and effect, or other equitable relationship.
• Allowable -Allowable or not unallowable as specified by the sponsoring agency and federal regulations.
• Consistency - like expenditures must be treated the same in like circumstances.


Reasonableness is a subjective measure that requires application of the “prudent person” test. An auditor may legitimately question a cost that is clearly allocable and not otherwise unallowable if, in the auditor’s judgment, the cost exceeds what a prudent person would have paid in similar circumstances.

For example, the cost of a luxurious hotel suite would be considered an excessive cost even if the travel were allocable and allowable to the project. Non-federal sponsors would require certification or justification of the excessive costs approved by the Principal Investigator, and may require approval directly from the fund sponsor. The vast majority of research funding at Penn comes from taxpayer dollars therefore we are required to spend
those funds cautiously and in a cost effective manner.


An expenditure is allocable to a project if the material or service being charged benefits that project. Allocability is not the same as allowability; an otherwise allowable cost, e.g., salary or travel, may be unallocable to a particular project if the project did not benefit from the cost.

For example if travel costs are an allowable cost for the fund source (i.e. the Sponsor Terms & Conditions allow travel), yet the individual traveling neither presented nor contributed to the research project, then the travel to the seminar did not directly benefit the project and that individual’s travel costs are considered to be unallocable and can not be charged to that research project. Often the determination of assignment of expenditures directly to sponsor research funds is not always clear. A cost is allocable to a specific grant, function, department, etc., if the goods and services involved are chargeable or assignable to that funding source in accordance with the relative benefit received or other equitable relationship.

PennNet charges include the computer port and connection to the Penn intranet and internet. PennNet charges can not be identified specifically with a particular sponsored project or activity, and can not be directly assigned to the project or activity relatively easily with a high degree of accuracy, and provide direct benefit to the project. Therefore PennNet costs are included in the University’s F&A cost pool. For example, even if a PI has only one fund source assuming that PennNet charges are allocable to that cost object would be incorrect. In order to be consistent, all of the University’s PennNet charges are classified as an F&A cost and therefore individual PennNet charges should not be charged directly to a federal fund source.

Likewise, local mail and telephone cost are included in the University of Pennsylvania F&A cost calculation since they can not be can be identified specifically with a particular sponsored project or activity. These costs are part of the normal operation of a laboratory and are included in the F&A cost pool. In general all local mail and telephone charges must be charged to an unrestricted departmental account.

If toll or long distance telephone calls can be identified specifically with a particular sponsored project or activity, or can be directly assigned to the project or activity relatively easily with a high degree of accuracy, and provide direct benefit to the project, the cost may be reallocated, on a monthly basis, to a federal sponsored fund, with proper documentation authorized by the Principal Investigator. Federal Express or any other type of express mail service that can be can be identified specifically with a particular sponsored project or activity, or can be directly assigned to the project or activity relatively easily with a high degree of accuracy, and provide direct benefit to the project, may be directly charged to a federal sponsored fund, with proper documentation authorized by the Principal Investigator on a timely basis. However, the cost of preparing or mailing grant applications can not be charged to a sponsored project.

Allowability for costs related to government-funded sponsored projects is determined by the provisions of the governing sponsored agreement, or by cost principles established by the federal government in OMB Circular A-21. For example, A-21 defines certain types of expenses, e.g., alcohol, lobbying, or entertainment, as categorically unallowable. Other costs may be unallowable per the specific terms of an award, e.g., unapproved foreign travel, capital equipment purchases, or patient care costs. These types of expenses are therefore, by definition, unallowable. A reminder about allowability: A cost, which is unallowable for a sponsored project may be an allowable expense for a non sponsored project account. These expenditures should be charged to an unrestricted departmental account.

Some of the most common mistakes made regarding allowability of cost involve Travel and Entertainment costs. Travel cost must pass all four tests listed in OMB A-21, the Cost Accounting Standards. Travel costs must not include, travel cost for spouses, alcoholic beverages, luxury items, gift shop purchases, movies, mini bar purchases or any other items viewed as unallowable.

Entertainment costs include business meals for staff not in “travel status”. Travel status is defined as a University Employees traveling (out of town) on official University business (University Policy #2367). In general, reimbursement for meals for employees not in “Travel status” are considered Entertainment costs. This would include the cost of meals to welcome a new staff member to the department providing refreshments or having a pizza lunch as part on your normal laboratory or departmental meetings, regardless of the agenda items being discussed. These costs are considered Entertainment and must be charged to an unrestricted departmental account using object code 5214.

Catering services and luncheons given during an organized conference or seminar, which are necessary to achieve a specific aim of the research project, are allowable. These costs are allowable if and only if the meal cost are specially approved by the sponsor and are part of achieving the specific aim of the grant such as holding a scientific conference or seminar. The meal cost must be allocable to the fund source, meaning the participants of the meal were attendees of the seminar or conference. Any meals which include Penn employees and the speakers outside the conference or seminar are considered entertainment costs and must be charged to an unrestricted departmental account. If the Speaker is provided lunch during the conference and entertained at Dinner, the speaker is not entitled to the full per diem meal reimbursement for that day.

For more information regarding the allowability of costs, review the notice of grant award, sponsor guidelines or the appropriate links below:
Sponsored Projects Manual -
Research Investigator’s Manual -
OMB Circular -
NIH Grant Policy Statement -

Research Services staff can also provide guidance on the allowability of specific costs.

What happens during the Grant Closeout Process?

In order to meet our reporting deadlines, it is important that the PI, the departmental administrative staff, and the staff of ORS, work together. Prior to the end of the final budget period, the fund should be reviewed to ensure that it is almost ready for closeout. This is usually the best time to make any necessary adjustments. When the final budget period ends, the financial reporting process and closeout period begins. The adjustment period is the time when the financial report is due less 30 days. The 30 days is required by Research Services to review, reconcile Facilities and Administrative (F&A) costs, and prepare and submit the financial report.

The adjustment period is the time allowed for the final review of fund activity and the posting of required adjusting entries. When the adjustment period ends, the Research Services Post-Award Group issues the final financial report based on accounting information contained in the General Ledger fund. The general ledger report that assists in the close-out process is 134.ORG "Summary of Final Expenditure Report," which provides a summary of expense and encumbrances on a project-to-date basis. For federal grant awards, submission of Financial Status Report (FSR) SF-269 within 90 calendar days is normally required. Upon issuance of the FSR, BEN Financials fields are updated to reflect the date the FSR was issued.

When the Final Financial Report is submitted and all monies due the University are received, the grant fund is disabled as follows:
• Special Budget categories PBIL and PBUD are adjusted in accordance with the amount reported.
• FSRD and FSRI categories are posted to reflect the reported amounts of direct cost and indirect cost (F&A).
• Equipment assets are transferred to the school surrogate account.
If the fund is not ready for disabling once the Final Financial Report is submitted, Research Services will conduct a follow-up review 120 days after the submission date to determine the fund's eligibility for disabling. Once disabling criteria is satisfied, the fund Enable flag is set to "NO" and the date of disabling entered.

For more information regarding preparing closeouts of grants, please see our website , contact your ORS Accountant, or contact Kerry Peluso at 3-6705 or

How do I determine if a Conflict of Interest Exists?

The University has an obligation to the community of scholars and to the public to assure that research and scholarly activity is carried out under the highest standards of ethical conduct. Thus it is appropriate that whenever research or other creative activity is sponsored externally or with University resources, that there be a full and appropriate disclosure of financial interests which may affect the conduct of the research or scholarly activity or the education of students and that the conflicts of interest be appropriately managed. Financial Disclosure Policy for Research and Sponsored Projects, Almanac, Vol. 47, No. 21, February 6, 2001. ( In addition, the University has adopted a policy on conflicts of interest related to the conduct of clinical trials. The policy is available at

The term individual financial conflict of interest in research refers to situations in which financial considerations may compromise, or have the appearance of compromising, an investigator’s professional judgment in conduction or reporting research. The bias such conflicts may conceivably impart not only affects collection, analysis, and interpretation of data, but also the hiring of staff, procurement of materials, sharing of results, choice of protocol, involvement of human participants , and the use of statistical methods. AAU Task Force on Research Accountability, October 2001. (

The 1995 requirements established by the NSF and the PHS require investigators to disclose to their institutions significant financial interests that would reasonably appear to affect research funded by PHS or NSF. Institutions are then required to determine if a conflict of interest exists, and if so, how the conflict of interest can be managed, reduced or eliminated. AAU Task Force on Research Accountability, October 2001. (

Significant Financial Interests means anything of monetary value, including, but not limited to:
• Salary or other payments for services (e.g., consulting fees or honoraria);
• Equity interests (e.g., stocks, stock options or other ownership interests);
• Intellectual property rights (e.g., patents, copyrights and royalties from such rights); and
• Service as an officer, director, or in any other fiduciary role for a financially interested company, whether or not remuneration is received for such services.

Significant Financial Interests does not include:
• Salary, royalties or other remuneration from the University;
• Income from service on advisory committees or review panels for public or non-profit entities;
• Income from seminars, lectures, or teaching engagements sponsored by public or non-profit entities;
• An equity interest that when aggregated for the Investigator and the Investigator’s spouse or dependent children, meets both of the following tests:
• Does not exceed $10,000 in value as determined through reference to public prices or other reasonable measures of fair market value; and
• Does not represent more than five percent (5%) ownership interest in any single entity; or
• Salary, royalties or other payments that when aggregated for the Investigator and the Investigator’s spouse or dependent children, are not expected to exceed $10,000 during the next twelve-month period;
• Interests of any amount in publicly traded, diversified mutual funds; and
• Payments to the University, or via the University to the individual, that are directly related to reasonable costs incurred in the conduct of the research.

When an Investigator believes that there may be a potential conflict of interest based on the criteria stated above, he/she must complete a Confidential Financial Disclosure Statement and submit it to the Office of Research Services with (or in advance of ) the research proposal. Investigators must update financial disclosures during the period of the award when new reportable Significant Financial Interests are acquired.
The Office of Research Services will distribute the Confidential Financial Disclosure Statement to the Conflict of Interest Standing Committee which will review the Statement and determine if, in its judgment, any actual or potential conflicts of interest are present, and if so, recommend to the Vice Provost for Research how such conflicts could be eliminated, reduced or managed.

Examples of conditions or restrictions that might be imposed to manage reduce or eliminate actual or potential conflicts of interest include:
• Public disclosure of Significant Financial Interests:
• In any published report on the research;
• To subjects participating in the clinical trial in the informed consent documents; or
• To research staff or students engaged in the trial.
• Monitoring of research by independent reviewers;
• Modification of research plan;
• Disqualification from participation in the portion of the funded research that would be affected by the Significant Financial Interests;
• Divesture of Significant Financial Interests; or
• Severance of relationships, such as consultantships, which create actual or potential conflicts.

An award will not be accepted by the Office of Research Services, nor can a University supported project be initiated until a decision is made and agreed to by the Investigator(s) and the Vice Provost of Research.

Each Investigator is required to report annually to the Conflict of Interest Standing Committee on the status of the conflict of interest or whenever any significant change in circumstances occurs.

For further information, please contact Andrew Rudczynski at or (215) 573-9250 or Jim Eberwine, Chair, Conflict of Interest Standing Committee at or(215) 898-0420.

What is Cost Sharing?

Cost Sharing or matching refers to that specific portion of project or program costs that is not funded by the sponsor.

Types of Cost Sharing:

Mandatory: Mandatory cost sharing refers to those costs which are either required by the terms of the award, or by federal statute, that the University must contribute toward the project in order for an award to be made.
Voluntary Committed: Any cost associated with a project, which has been identified in the proposal, but for which funding has not been requested from the sponsor. Some common examples include a percentage of effort for faculty or senior researchers included in a proposal budget or stated in the text of the proposal for which compensation is not requested or the purchase of equipment for the project, identified in the proposal, for which funds have not been requested.
Voluntary Uncommitted: Any cost associated with a project and not funded by the sponsor, which has not been identified in the proposal, or in any other communication to the sponsor as a commitment of the University. Effort of faculty or senior researchers that is over and above that which is committed and budgeted for in a sponsored agreement, e.g., donated faculty effort on a project over and above that which was proposed for the project. Academic year effort on a project for which only summer salary was proposed also would be considered uncommitted cost sharing if such effort was not listed either on the budget page, or in the body of the proposal.
Matching: Refers to the requirement of some sponsored projects that grant funds be 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.

For further information on cost sharing, including the appropriate identification, accounting, and reporting of it, please refer to Sponsored Projects Policy #2119 which can be found at or contact your ORS Accountant.

Where can I get more information on Cost Sharing?

Simply put, cost sharing or matching refers to that specific portion of the project or program costs that is not funded by the sponsor. The proper administration of funds with cost sharing is very important. If you are responsible for the administration of a fund with cost sharing, it is important that you are aware of your responsibilities at the onset of the project. More information on administering these funds can be obtained at:
Questions regarding cost sharing should be forwarded to your ORS Contract Administrator or Accountant.

What if we can’t meet our cost sharing requirement?

If the budget includes a requirement for cost sharing, it is important that you monitor the fund to ensure that you will meet those requirements. If at some point you realize that you will be unable to meet those requirements, it is essential that you contact the sponsor as soon as possible to request a budget modification or amendment to the award. ORS should be involved in this process. Please contact your Contract Administrator regarding requests such as these. If you contact the sponsor during the project with adequate justification, the sponsor will generally be willing to consider the change. However, as with most issues, it is unlikely that you will be able to obtain such approval after the end of the award. If you have not met the cost sharing requirements, generally the funds provided by the sponsor will be reduced by the same percentage as you have reduced the cost sharing. For example, if you had an award for $100,000 with a $10,000 cost sharing requirement and you are only able to provide $7,000 in cost sharing (70% of the required cost sharing), the sponsor will only reimburse you for $70,000 of the original sponsor’s budget (70% of the $100,000 award).

Can F&A be used to meet cost sharing requirements?

Only if it is included in the approved cost sharing budget from the sponsor or in the terms and conditions of the award.

I can not charge clerical staff’s salaries to my grant since they are not allowable. Can I use these expenditures to meet my cost sharing requirements?

No. If it is not allowable to charge a particular expense on a grant or contract, it is not allowable to be used as cost sharing. Cost sharing expenditures are subject to the same rules and requirements as the expenses charged to the specific grant.

Who is responsible for funding and monitoring the cost sharing fund?

The department will be responsible for funding the cost sharing by posting a revenue entry to object code 4822 in the established cost sharing fund for the amount of the required cost sharing. The department is responsible for monitoring the fund and ensuring that the appropriate and allowable expenses are charged to the fund. The department is responsible to ensure that the cost sharing requirements are met.

What is Effort Reporting?

E ffort reporting is a method of documenting the correct distribution of activity or "effort" of faculty and staff. OMB Circular A-21: Cost Principles for Educational Institutions, requires that Penn's payroll distribution system:
• Reasonably reflect the activity effort for which an employee is compensated
• Use a method that recognizes the principle of after-the-fact confirmation so salary costs distributed represent actual costs, hence effort reporting

What is the Importance of Effort Reporting?

Federal regulations applicable to sponsored research at colleges and universities (OMB Circular A-21, Section J.8, entitled "Compensation for Personal Services") require that each institution maintain an acceptable effort reporting system. The purpose of an effort reporting system is to provide a reasonable basis for distributing salary charges among direct activities (e.g., sponsored research, instruction, and clinical activity) and between direct and indirect activities (e.g., between sponsored research and administration). Since Effort Reports are the source documents to support salary charges to sponsored projects, it is essential that this data be based on reasonable estimates of actual effort expended in the various effort categories.
Providing inaccurate effort estimates on the Effort Report form, whether knowingly or through carelessness or mismanagement, may result in mischarges of costs to the federal government and other sponsors. Each individual with responsibility for effort reporting must therefore thoroughly understand the proper method of completing Effort Report forms and ensure effort percentages reported on the forms reasonably reflect actual effort expended during the report period. (See "Sponsored Projects Policy #2114 Personnel Activity (Effort Reporting)" at and )

Are effort reports a useful tool for determining current and committed effort in preparing proposals for submission to a sponsor?

No. Effort reports are a snapshot of how an individual’s salary was distributed in a previous semester. They are not indicative of current distributions. As an example, a faculty member may receive an award with a start date of November 1st, and their distribution is changed to allocate 25% of their salary to that award. The effort report for the fall semester will only have two months of salary distributed to that award (November & December), so even though the person is now devoting 25% of their time to the award, over the six month fall semester only 8% of their salary was charged to that award, so the effort report will list 8% effort.

For further guidance on issues related to Effort Reporting, please contact Bob McCann, Director of Cost Studies at or 215-598-1469.

What is “Expanded Authorities”?

Federal regulations require prior approval from an awarding agency for a variety of project changes. Several years ago, the federal government's Office of Management and Budget (OMB) reduced the number of required prior approvals in an effort to streamline the grants management process by issuing “expanded authorities”. However, some required prior approvals do remain. More detailed information is presented in Penn’s Sponsored Programs Manual which can be found at or in the OMB Circulars which can be found at

Many federal agencies have waived cost-related prior approvals and permit an institution to decide budget changes under their "expanded authorities." These expanded authorities are automatically in force for most grants that support research, but they do not apply to contracts. In addition to the cost-related prior approval waiver, the following changes are permitted without prior agency approval:
• Pre-award costs up to 90 days prior to award (Please note that this does require ORS approval. Please contact your ORS Contract Administrator to receive further information.)
• One-time expiration date extension of up to 12 months (Please note that this does require ORS approval. Please contact your ORS Contract Administrator at least 30 days prior to your end date to receive more details on how to receive a no cost extension.)
• Carryover of unobligated balances to subsequent funding periods (Please contact your ORS Contract Administrator or Accountant for further information.)
Please note that while expanded authorities do apply to most federal grants, they do not apply to all and can vary somewhat by agency. Any terms included in the Notice of Award from the agency supercede any authority provided by these expanded authorities.
Certain other changes, however, still require prior approval of the awarding agency:
• Changes in project scope or objective
• Change of PI or other key personnel
• Absence of the PI for more than three months, or a 25 percent reduction in effort spent on the project by the PI
• Need for additional funds
• Other changes specifically cited in the award or in agency-specific guidelines

As a participant in the Federal Demonstration Project (FDP), the University receives the most favorable grant terms and conditions from FDP participating agencies. For further information, please see For further information on the expanded authorities which have been issued to Penn under the Federal Demonstration Project (FDP), please see

For further guidance on changes to your project, please see or contact Pam Caudill, Director of Pre Award at or Kerry Peluso, Director of Post Award Financial Administration at

What is the Federal Demonstration Partnership (FDP)?

The Federal Demonstration Partnership (FDP) is a cooperative initiative among federal agencies and institutional recipients of federal funds. It was established to increase research productivity by streamlining administrative processes and minimizing the administrative burden on principal investigators while maintaining effective stewardship of federal funds. On July 1, 1996, the University of Pennsylvania became a member of the FDP. If you are a researcher and a recipient of federal grants, you have benefited from FDP successes, which include ninety-day pre-award spending authority, institutionally approved no-cost extensions up to one additional year, and automatic carryover of unobligated funds from one budget period to the next. In its current phase (Phase IV), the FDP boasts ninety institutional members, ten federal agencies, and two professional organizations. Given the ever-increasing federal regulatory environment and the strain on the relationship between academe and the federal government, FDP provides a unique forum for dialogue, demonstration, and debate among all the key players.
More information regarding the FDP, the participating agencies, and the resulting benefits for award administration at Penn can be obtained at or

What are Indirect Costs?

Indirect costs represent those expenses that are necessary for the conduct of sponsored projects that are not easily identified with a particular grant or contract. Indirect costs include building and depreciation, utilities, purchasing, accounting and other central and departmental administrative costs. Indirect cost rates are used to distribute these costs to individual sponsored projects and recover these costs from our sponsors.

Looking at it another way, indirect costs are those costs that are not classified as direct. Direct costs can be identified specifically with particular cost objectives such as a grant, contract, project, function or activity. Direct costs generally include:
1. Salaries and wages (including vacations, holidays, sick leave, and other excused absences of employees working specifically on objectives of a grant or contract – i.e., direct labor costs).
2. Other employee fringe benefits allocable on direct labor employees.
3. Consultant services contracted to accomplish specific grant/contract objectives.
4. Travel of (direct labor) employees.
5. Materials, supplies and equipment purchased directly for use on a specific grant or contract.
6. Communication costs such as long distance telephone calls identifiable with a specific award or activity.
For more information, please contact Bob McCann, Director of Cost Studies (

What is an Indirect Cost Rate?

An indirect cost rate is simply a mechanism for determining fairly and conveniently within the boundaries of sound administrative principle, what proportions of Departmental/organization administration costs each program should bear. An indirect cost rate represents the ratio between the total indirect costs and benefiting direct costs, after excluding and or reclassifying unallowable costs, and extraordinary or distorting expenditures. (i.e., capital expenditures, subgrants, subcontracts). The indirect costs in the numerator of the equation should bear a reasonable relationship to the direct costs from the denominator. This will allow for each program or activity represented in the direct costs base to assume its fair share of indirect costs when the rate is applied.

Is your research funding a grant or a gift?

Faculty members receive the bulk of their funding for research through sponsored research projects (contracts and grants). To ensure that funds provided from external sources to support research and other projects are administered in accordance with University policies as well as those of the sponsor, all externally sponsored projects for research or other purposes will be administered through ORS.

Another important source of external funding for faculty is from gifts. Gifts to the University of a restricted or unrestricted nature are not viewed as sponsored research projects and are not processed through ORS, but rather through the normal gift transmittal procedures. Gift solicitation and acceptance should be coordinated with the appropriate Development Officer in each school.

Any funding provided by U.S. government agencies are sponsored research projects. The same is generally true for funding from associations or foundations, such as the American Heart Association or Mellon Foundation. However, in some cases, it is not always clear if a source of external research funding is properly classified as a sponsored research project (“grant or gift”, since an actual contract would rarely be confused as a gift).

In order to assist faculty and business administrators in determining if a source of external funding is a grant or a gift, the following guidelines are provided. Proper characterization is needed to ensure the intent of the sponsor or donor is reflected and that Penn: i) complies with any terms specified by the sponsor/donor, ii) properly recovers its costs, both direct and indirect, and iii) complies with any research compliance reporting requirements. Classification of a given award will require the exercise of some judgment if its characteristics are such that the true nature of the award is not immediately clear. In cases where there is a question whether external funding should be treated as a sponsored project or gift, the Executive Director of ORS will consult with representatives of the school(s) involved, the Corporate and Foundation Relations Office and the Office of the Treasurer to determine its appropriate classification.

The following are characteristics are generally associated with a gift:
1. The funding does not commit the University to a specific line of scholarly or scientific inquiry as demonstrated by a specific work plan or proposal.
2. There are no formal financial accounting requirements or budgetary restrictions associated with the funding.
3. The funding is irrevocable.
4. There is no formal requirement that research results be reported to the Sponsor. However, a donor of a gift may be kept informed of research results or expenditures to demonstrate good faith on the part of Penn.
5. A gift imposes no requirements regarding the disposition of either tangible property (e.g., equipment, records, technical reports, theses or dissertations) or intangible property (e.g., inventions, copyrights or rights in data) which may result from the project.
6. There is no specific period of performance or during which funds must be used.
7. There are no other contractual obligations imposed as a condition of the funding.
The determination of a gift vs. grant will not be based upon indirect cost recovery or the avoidance of the gift tax. For further information, see Financial Policy 2101 (

What is required for a proposal using human subjects and/or animals?

When submitting a proposal for institutional signature, please note that as part of the approval process, Research Services confirms that the appropriate approvals for the use of human subjects and animals are in place.

For all new proposals, the approvals for both human subjects and animals can be “pending”, unless prior approval is specifically mandated by the sponsor. The National Institutes of Health allows for “just-in time” submission of protocols which means that protocols can be submitted to Regulatory Affairs after the submission of the proposals, but approval must obtained prior to the award. It is important to review the sponsor requirements while preparing the application.

For non-competing continuations the NIH rules are as follows:

Human Subjects - The protocol number and the date of the last approval must be shown on the transmittal sheet. This date must not be earlier than one year before the start date for which the Progress Report is submitted. Verification of approval must be on hand before submitting a non-competing NIH application. It is sometimes necessary to submit for annual reapproval early in order to comply with NIH requirements.

Animals - The protocol number and the date of the last approval must be shown on the transmittal sheet. The protocol provided must be an active protocol. Progress reports for continuation support should NOT be submitted until the necessary verification of IACUC review has been obtained.

While it is not required, it is helpful to attach a copy of the most recent approval letter from Regulatory Affairs regarding your proposal when it is submitted to Research Services for review and approval.

For additional information on the use of research subjects, visit the Regulatory Affairs website.

What is the correct mailing address for NIH Non-Competing Progress Reports (PHS 2590)?

Non-Competing Progress Reports to continue support of a PHS grant must be submitted to the awarding component's grants management office using the PHS 2590 forms at least two months before the beginning date of the next budget period.
How many copies should be submitted?
Submit the completed, signed original progress report and two copies. Do not bind or staple the original. An incomplete or incorrectly prepared continuation progress report may result in a delay in award of funds.
If you are unsure as to which institution your award was made from, refer to the two letter code in your grant award number (ex. “CA” = awarded by NCI, National Cancer Institute; EY= awarded by NEI, National Eye Institute).
Correct mailing addresses are maintained at the following URL:

Should Carryovers of Unspent Funds (between budget periods) be addressed in Non-Competing Progress Reports?

YES, if such carryovers exceed 25%. While most NIH awards are covered under FDP and carryovers of unexpended funds are allowable, if such carryovers exceed 25%, they require further action. Upon preparation of a non-competing progress report, the grant fund should be carefully reviewed. If a carryover in excess of 25% of the budget is anticipated to exist at the end of the budget period, this must be addressed in the non-competing progress report. Information on the reason for the carryover and plans for future spending should be included.
Please note that while individual financial reports on awards may not be required until the end of the project, the University is required to submit a quarterly expenditure report for all NIH awards. This report provides NIH with the total amount of funds which have been spent on specific projects through the end of the quarter. These amounts come directly from BEN at the end of each quarter (March 31, June 30, September 30, December 31).
Not addressing anticipated carryovers in the non-competing progress reports may result in a decrease in continuation funding. If you have any questions regarding carryovers, please contact your assigned ORS accountant, designated assistant director or Kerry Peluso, Post Award Director at

What is the NIH Commons?

The NIH eRA Commons is a web-based system that allows NIH extramural grantee organizations, grantees, and the public to receive and transmit information electronically about the administration of biomedical and behavioral research. To be able to use the NIH eRA Commons you must be registered as a user and be assigned a role within the Commons.

Roles are assigned to an individual based on the function of the individual. Three of the available roles are appropriate to be assigned to personnel outside of Research Services. They are as follows:

AO - The Administrative Official (AO) reviews grant applications before the final application is submitted to the NIH by the Signing Official (SO). The role of an SO is reserved for those Research Services personnel who have been granted signature authority on behalf of the Trustees of the University. Depending on the institution workflow process, it is possible for the SO and AO to be the same person (in this case the institution would only need a SO account). An AO can also create additional AO and PI accounts.

PI - The Principal Investigator (PI) is an individual designated by the grantee organization to direct the project or activity being supported by the grant. The PI is responsible and accountable for the proper conduct of the project or activity. The role of the PI within the eRA Commons is to complete the electronic grant process.

ASST - The Assistant role (ASST) indicates a basic NIH eRA Commons user who can be assigned as a PI delegate for eSNAP/X-Train (see below). Users with this role have no access within the Commons other than updating their Personal Profile. However, it will be possible for the PI to delegate “PI Authority” or “Submit Authority” to the ASST authority to these accounts to aid in administrative tasks.

The NIH eRA Commons is organized into sections. Depending upon the privileges/roles granted to an individual, specific sections may be viewed and accessed. Those sections of interest to the field are listed below:

Personal Profile - The Personal Profile (PPF) section lets users maintain their personal information on file at the NIH (including information such as degrees, publications, and contact information). This section is available to all registered users.
Status - This section lets Principal Investigators (PIs) review the current status of all their grant applications and review detailed information associated with the grant. Signing Officials (SOs) or Administrative Officials (AOs) associated with the institution are able to see a summary view of grant applications, review Notices of Grant Award, and access Progress Report face pages.

eSNAP - The electronic Simplified Non-competing Award Process (eSNAP) section lets extramural grantee institutions submit electronic versions of Type 5 (non-competitive) progress reports to the grants management community. This is currently in pilot status. It will be available to AOs, PIs and SOs in the future.

IAR - The Internet Assisted Review (IAR) section lets reviewers submit critiques of grant applications and view each other's reviews before the actual meeting. Scientific Review Administrators (SRAs) and Grants Technical Assistants (GTAs) are able to view all critiques and generate preliminary score reports and pre-summary statement bodies.

X-Train - The electronic Trainee Activities System (X- section lets Program Directors (PDs) of grantee institutions create and update trainee appointments. See the X-Train User Guide for more information about this module.

Links - This section provides links to websites that provide information related to the NIH eRA Commons and related applications.

Help - This section provides online Help for all aspects of using the NIH eRA Commons.


The Office of Research Services is the only office authorized to submit applications on behalf of The Trustees of the University of Pennsylvania. Accordingly those individuals with signature authority within Research Services will be designated as Signing Officials. As detailed above, roles that can be assigned at the school or center level are PI, AO and Asst. The AO role has the authority to create and modify additional AO accounts, as well as to establish PI accounts. Each school within the University must designate a senior administrator to be designated as an AO. Research Services will create the account for that individual who can create additional AO and PI accounts. A memo has been sent to all Senior Business Administrators requesting the names of the individuals who will be the designated AO.

For more information about the NIH eRA Commons, visit

What is the current policy regarding revisions to FSR’s?

Approximately a year ago, Research Services commenced a project to address all delinquent FSR’s (Financial Status Reports) and to eliminate future delinquent FSR reporting. As a result of this initiative, the number of delinquent FSR’s for the University was reduced by 82%. This was possible due to the efforts of Research Services staff as well as everyone involved within the departments. The staff of Research Services is very appreciative of those departmental staff members who assisted in making this reduction possible. However, there are still some delinquent closeouts which need to be addressed. In addition, if we are to meet our goal of 100% compliance with reporting deadlines, everyone needs to continuously and consistently focus on this area.

Recently we have had some requests from departments for further clarification on Research Service’s policy regarding revisions of FSR’s. The following is an excerpt from Andy Rudczynski’s memo dated June 28, 2001 regarding this issue. This policy as written still applies.

After consultation with several Senior Business officers we are implementing the following University policy for the submission of final Financial Status Reports. Generally speaking, FSR’s are due 30, 60 or 90 days after the end of a project. In order to meet this requirement of federal and other sponsors, ORS will submit final FSR’s no later than the day they are due. Therefore, departmental BA’s will need to communicate with ORS to assure that all necessary adjustments to grants are made within the specified adjustment period. We will work under the assumption that funds are in reportable condition once they are fully frozen.

Should subsequent examination of a grant account reveal that a revised final FSR must be submitted, it must be done within the ensuing 30 days of the discovery of the error and no more than 180 days after the termination date of the project. Please note, a revision will not be issued until all transactions bringing grant funds in line with proposed adjustments have cleared the system.

All requests for revisions will require a detailed justification and approval from the Senior Business Official of the School. Once approval is granted, the BA will have no more than 30 days to complete all necessary adjustments. Once the proposed adjustments have cleared, the revision will be issued. We would expect the Schools to determine policies and procedures for what constitutes an appropriate justification for a revised FSR and if appropriate, a corrective plan. Attached please find ORS guidelines to aid in setting School policies and procedures regarding this matter.”

In February 2001, NIH released a Guide Notice “to remind grantees of Financial Status Report (FSR) requirements and to advise that NIH is renewing efforts to ensure recipient compliance with these requirements.” Failure to meet these requirements “may lead to delays or withholding of awards, loss of automatic carryover authority, loss of advanced payments, loss of expanded authorities, removal from participation in NIH-funded awards under the Federal Demonstration Project, and designation as a high-risk grantee.” Working together, we have made great improvements in this area over the past year. Going forward, this continues to be a main area of focus for the University. Please see page 7 of this newsletter for a quick reference of the ORS Guidelines regarding FSR revisions. If you have any questions regarding the closeout process or finalizing expenses on a fund, please contact Kerry Peluso at 3-6705, or your assigned ORS Accountant.

What is the Space@Penn Web-Updater?

The University has developed a new application, Space@Penn Web-Updater, to enable the real time update of space usage and occupancy information at the source, the desktops of school, center, and department administrators. The Offices of Research Services and Facilities Services have been introducing this new application to senior school administrators this summer and the Financial Training Department is developing a short training program available this fall for all individuals that will be assigned responsibility for the update of space information. The primary purpose is the need for current and accurate information of space used for sponsored research. FY03 is the base year for our next Facility and Administrative (F&A) rate proposal to be submitted to DHHS.

To per diem or not to per diem?
When considering a business trip using sponsored funds it is important to not only review the terms and conditions of the award prior to making travel plans but to be familiar with Penn’s policies regarding travel.

For example, a sponsor may permit the use of per diem rates for lodging and subsistence. However, Penn’s Financial Policy No. 2364 Other Transportation explicitly prohibits the use of per diems for lodging. The Policy further states that the actual lodging receipts are required for reimbursement. As with all expenses on a sponsored program the lodging cost must be reasonable and should be a standard room in a non-luxury hotel. Of course, travelers should always take advantage of conference hotel rates and Penn rates. For further information go to Penn’s Financial Policy No.2355 Lodging

The use of per diem rates for meals, however, is permitted by Penn. The convenience for some travelers when using per diem rates for meals is that the traveler is not required to keep receipts. However, the per diem rates used by a traveler are established by the Federal government, specifically the General Services Administration (GSA). The site to obtain per diem rates is: and is updated annually for domestic and monthly for foreign destinations.

Keep in mind, if the traveler chooses to use per diem rates for meals and incidental expenses but submits a receipt for a particular business meal an adjustment to the rate must be made. Depending on the meal, the adjustment would be as follows 20% for breakfast, 20% for lunch, and 60% for dinner. An example of how an adjustment would be applied is as follows:

•Determine the per diem for the city by looking up the city on the above URL.
- Tokyo City’s subsistence per diem is $132 per day.
- A receipt is submitted for a business dinner.
- The total adjustment is $132 x 60% = $79.20
- $132 – $79.20 = $52.80 remains for meals and incidental expenses for that day.

In addition, if a meal is provided at a conference and the traveler is claiming a per diem similar adjustments must be made.

The key to planning any trip using sponsored program funds is to know the policies and regulations so the traveler will be reimbursed appropriately.

When do travel reimbursement requests require ORS approval?
Research Services review and approval is required only on travel reimbursements that include either foreign travel or entertainment expenses. When reviewing reimbursement requests, ORS determines the general allowability of the cost category, while it is the responsibility of the PI and business administrator to determine the allocability and timeliness of the charge. For instance, if a request is made for reimbursement of a trip to London to present a paper at a scientific meeting, ORS would determine if foreign travel was allowed by the sponsor and, if federally funded, was a US carrier used for the flight. It is up to the department to determine that the trip was directly related to the sponsored project being charged, that the charge is made in a timely manner and that the appropriate documentation is provided.

Most approval delays occur when unallowable costs are included in the reimbursement request. Travelers should check the policies of the funding agency, as well as the University policies to determine allowability of costs and any specific cost exclusions. For instance, federal policy requires that US flag carriers be used for government financed international air travel to the extent service by these carriers is available. Foreign air carriers cannot be used based solely on cost or convenience. Other examples of unallowable costs are meals for University employees not in travel status, refreshments at meetings, alcoholic beverages, social functions, gifts and flowers.

To expedite the approval process, unallowable costs should be removed from the expense report or charged to another type of account, if appropriate. If sponsor approval was required for a particular charge, a copy of the approval should accompany the expense report.

University policies relating to travel expenses can be found in the Sponsored Project Manual ( or the Financial Policies 2100 and 2530 (

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