* 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?
* What happens during the grant closeout process?
Conflict of Interest:
* How do I determine if a conflict of interest exists?
* 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?
* What is effort reporting?
* Are effort reports a useful tool for determining current and committed
effort in preparing proposals for submission to a sponsor?
*What is expanded authorities?
Facilities and Administrative Costs (Indirect
* 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
* What are indirect costs (facilities and administrative
* 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?
What is the NIH Commons?
What is the current policy regarding revisions to
Space @ Penn:
What is the Space@Penn web updater?
per diem or not to per diem?
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 http://www.whitehouse.gov/omb/circulars/a021/a021.html
). 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
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 (http://www.upenn.edu/researchservices/oct2003.html).
How long does it take to produce
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 AIS-PROB@pobox.upenn.edu.
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
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
For more information regarding the allowability
of costs, review the notice of grant award, sponsor guidelines or
the appropriate links below:
Sponsored Projects Manual - http://www.upenn.edu/researchservices/spmanual/a21.html
Research Investigator’s Manual - http://www.upenn.edu/researchservices/rih/chapter10.html
OMB Circular - http://www.whitehouse.gov/omb/circulars/a021/a021.html
NIH Grant Policy Statement - http://grants1.nih.gov/grants/policy/policy.htm
Research Services staff can also provide
guidance on the allowability of specific costs.
What happens during the Grant Closeout
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
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
For more information regarding preparing closeouts of grants, please
see our website www.upenn.edu/researchservices , contact your ORS
Accountant, or contact Kerry Peluso at 3-6705 or firstname.lastname@example.org.
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 http://www.upenn.edu/assoc-provost/handbook/ii_e_10.html.
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. (www.aau.edu/reports/report1.html)
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. (www.aau.edu/reports/report1.html)
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
• 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
• 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;
• 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
• 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
• 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
For further information, please contact Andrew
Rudczynski at email@example.com
or (215) 573-9250 or Jim Eberwine, Chair, Conflict of Interest Standing
Committee at firstname.lastname@example.org
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
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 www.finance.upenn.edu/vpfinance/fpm/2100/2100_pdf/2119.pdf
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
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
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
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
• 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
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 http://www.finance.upenn.edu/vpfinance/fpm/2100/2114.shtml
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 email@example.com
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 www.upenn.edu/researchservices/spmanual/index.html
or in the OMB Circulars which can be found at www.whitehouse.gov/omb/circulars/index-education.html.
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
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 www.thefdp.org. For further
information on the expanded authorities which have been issued to
Penn under the Federal Demonstration Project (FDP), please see http://www.nsf.gov/home/grants/grants_fdp.htm.
For further guidance on changes to your project, please see http://www.upenn.edu/researchservices/spmanual/changes.html
or contact Pam Caudill, Director of Pre Award at firstname.lastname@example.org
or Kerry Peluso, Director of Post Award Financial Administration
What is the Federal Demonstration
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 www.thefdp.org
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
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
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
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
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
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 (http://www.finance.upenn.edu/vpfinance/fpm/2100/2101.html).
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. www.upenn.edu/regulatoryaffairs.
is the correct mailing address for NIH Non-Competing Progress Reports
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
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: http://grants1.nih.gov/grants/type5_mailing_addresses.htm.
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 email@example.com.
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
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.
HOW TO REGISTER:
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,
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
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
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, firstname.lastname@example.org
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
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 www.finance.upenn.edu/vpfinance/fpm/2350/2364.shtml
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 www.finance.upenn.edu/vpfinance/fpm/2350/2355.shtml
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
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
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
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 (http://www.upenn.edu/researchservices/spmanual/index.html)
or the Financial Policies 2100 and 2530 (http://www.finance.upenn.edu/vpfinance/fpm/).