Charging Costs to an Award Prior to Award Acceptance

Policy Approval Authority President
Responsible Division Division of Research and Innovation Partnerships
Responsible University Office Sponsored Programs Administration
Responsible Officer(s) Assistant Vice President
Contact Person Dara Little, dlittle@niu.edu
Primary Audience Faculty
Staff
Status Active
Effective Adoption Date 03-22-2010
Last Review Date 01-01-2017
Policy Category/Categories Finance / Risk Management
Human Resources / Employment
Research Ethics / Intellectual Property

Purpose 

This policy outlines the requirements for obtaining a grant account number before the sponsored award process is complete and for incurring costs on a grant account outside of the official project start and end dates.

Reason for Policy

There are instances when a Principal Investigator (PI) may need a grant account (44 fund) to initiate charges on a sponsored project before the formal award process is complete. Rather than charge expenses to a non-sponsored “local” account and having to process cost transfers after the award is officially executed, the grant account can be set up to enable the PI to begin work related to the sponsored project. This process is often referred to as setting up a contingency account. A contingency account is not actually set up during this process. The contingency account is for back up purposes only and is only used to cover expenses deemed unallowable under the award or if the award is not received.

Intended Audience

  • Senior Administration – Vice Provosts, Associate Deans
  • Directors, Department Chairs, Division Heads
  • Faculty and Staff
  • Departmental/Divisional Business Administrators
  • Finance Personnel
  • Sponsored Programs Administration Personnel

Policy

Principal Investigators who wish to obtain a grant account to incur chargeson a sponsored project before the formal award process is completemust receive approval from their Department and Sponsored ProgramsAdministration. This review and approval is necessary to mitigate the risksassociated with incurring expenses before the award process is complete.It is ultimately the PI’s department that assumes the risk because anycosts incurred on the grant account that are not covered by the awardwill be charged to the department pledged contingency account.


Some primary risk factors include:

  • The PI may assume that the project start date will be the same as the date listed in the proposal or be a date that is identified during informal discussions with the sponsor. However, the sponsor may not process the award in a timely fashion and the project start date may be later than the PI anticipated. If the sponsor is not willing to back date the project start date of the award to allow the costs incurred to be charged to the grant, the costs will be moved from the grant account and charged to the department pledged contingency account.

  • For contracts, many sponsors may consider the start date of the project to be the date of final signature; spending cannot begin until the contract is signed. Because contracts often require some level of negotiation, processing times can vary so it is difficult to know what the date of final signature will be.

    Note: The start date of the project for many State of Illinois contracts is date of last signature.

  • The sponsor may request that the PI reduce the proposal budget or remove certain categorical items during the award negotiation process. The PI should be certain of the final budget that will be approved by the sponsor before incurring costs on a grant account. Any costs that are greater than the award amount or deemed unallowable by the sponsor will be moved from the grant account and charged to the department pledged contingency account.
The PI must request approval by SPA for one of the following in order toincur costs on a grant account outside of the project start and end dates.

Advance Account

An advance account allows the PI to obtain the grant account number beforethe formal award is fully executed. Usually, advance accounts are used to initiateHRS paperwork for grant related personnel and for procurement purposes.An advance account may only cover costs incurred within the project periodidentified in the sponsor’s award.

Pre-Award Spending

Pre-Award spending is similar to setting up an advance account withone distinct difference. With pre-award spending, work may begin andproject related expenses can be charged to the grant account prior tothe project start date indicated on the sponsor’s notice of award.Federal regulations provide for pre-award costs on grants up to 90 calendardays before the award. Some agencies require prior approval to incur pre-awardcosts while others waive this requirement and transfer approval authority tothe grantee (i.e. NIU). Both the National Science Foundation (NSF) and NationalInstitutes of Health (NIH) allow the grantee to approve pre-award spending.Always check with SPA to determine sponsor approval requirements.Break between Budget Periods (i.e. bridge spending)

Some PIs may have an incremental award; wherein the sponsor agrees to fund aspecific number of years at a pre-determined amount per year as long as the projectis progressing and the sponsor has funding available. A request can be made tokeep the grant account active to continue paying personnel to ensure continuity ofthe project while waiting for the sponsor’s next funding increment to be received.PIs may also seek bridge spending when a no cost extension request is in processwith the sponsor.
Reminder: The decision to incur project expenses before receiving a fully executed award or approval for a no cost extension must be made prudently and should be considered only when there is sufficient documentation that an award is imminent and the terms and conditions of the award are known.


All costs incurred must be:

  • Allowable and in accordance with applicable regulations
  • Included in the proposal budget; and
  • Necessary to conduct the project.

Procedure

The PI must complete a Electronic Institutional Prior Approval Request (IPAS)andsubmit it to SPA to establish a grant account. The IPAS requires the PI to identify acontingency account. The department or college generally provides the account. The account can be a 02 or 41 account, but cannot be another grant (44 fund) account.

Reminder: The contingency account will only be used to cover any expensesthat are deemed to be unallowable under the award or if the sponsor fails to issue an award.

SPA will make every effort to review the request within 48 hours or two business days. However, review of the request in no way guarantees that it will be approvedwithin this 48-hour timeframe.

Upon SPA approval, the Grants and Contracts Associate (GCA) will set up an accountin PeopleSoft, or for bridge spending, allow the PI to continue spending on theexisting grant account. The PI, Department Chair/Unit Head, and individual signingfor the contingency will receive electronic notice when the request has beenapproved. If SPA must set up a new account, the notice will include the grantaccount number.

Note: Changes to advance account, pre-award, or break in budget periodspending requests must be submitted through SPA and may require a newContingency Fund Availability Form. Such changes include (but are notlimited to) extending the fund availability dates and increasing the amount.

Contact Information

Policy Questions and Waiver Approvals

Kellie Dyslin, Associate Director, Pre-Award Support
(815)753-7090
kdyslin@niu.edu

For advance accounts and pre-award spending:/h4>

Rachael Andel, Award Coordinator
(815)753-6493
rachael_andel@niu.edu

For spending between budget periods:

Contact your Grants and Contracts Associate

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