1 financial management of sponsored programs (grants & contracts)* presented by the departments...
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Financial Management of Sponsored Programs (Grants & Contracts)*
Presented by the departments of: Sponsored Programs
in Research and Graduate Studies Grants Accounting
in the Comptroller’s Office*sponsored by the department ofBusiness Administrator Services
as part of the Departmental Fiscal Management workshop series
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Presenters Grants Accounting
Debra Leonard
Diana Dubinsky
Lisa Heilman
Elaine Petrosky Sponsored Programs
Lori Burchard
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Sponsored Program Administration
Sponsored Programs (SP) implements procedures to help meet obligations associated with the management of grants and contracts
Grants Accounting (GA) in the Comptroller’s Office oversees management of the accounting and financial aspects of sponsored programs at KSU. They are responsible for all financial reporting.
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Grant Administration Pre-Award
Pre-Award is the period before a grant is awarded and a University account is established
Pre-Award procedures are administered by Sponsored Programs.
They provide assistance with: Funding opportunities Application process/ budget preparation Cost principles Agency regulations & guidelines Compliance issues
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Grant Administration Post-Award
Post-Award is the period after an award is received and accepted by the University. This includes the financial and operational management of the grant
A “sponsored program” is any grant, cooperative agreement, or contract between the federal or state government or another sponsoring agency, and the University
Each sponsored program is assigned a unique restricted account in the Financial Records System (FRS)
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Grant Administration Post-Award
Federal regulations & guidelines –
Office of Management and Budget (OMB) OMB Circular A-21 - Cost Principles OMB Circular A-110 - Administrative requirements OMB Circular A-133 - Internal control and audit
standards for states, local governments and non-profit organizations
Links to all three circulars are available at:
http://finance.kent.edu/ksuauditing/legal
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Grant Administration Post-Award
KSU Policy #3342-3-15 “Operational Procedures and Regulations Regarding Sponsored Programs Administration”
http://www.kent.edu/policyreg
When sponsor regulations or guidelines are absent, KSU policies and procedures apply
If regulations overlap, use the most restrictive requirements
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Grant Administration Post -Award
The Project Director/Principal Investigator (PI) has the primary responsibility to: Manage with care and diligence Adhere to all terms and conditions of the award Document all expenditures in accordance with
sponsor regulations Review federal and sponsor guidelines, grant
agreements, KSU and departmental policies Comply with reporting requirements
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Establishing a Grant Account Sponsored Programs receives notification of the
award, and forwards a “Request For A New Account” (See Exhibit A) to Grants Accounting
Grants Accounting sets up a restricted account When cost sharing has been identified in the
proposal budget a cost share account will also be established
The PI will receive an approved copy of the request with an assigned account number and name of the responsible grant accountant
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Establishing a Grant Account An account number beginning with 44(xxxx)
indicates a sponsored program (restricted) account The account number beginning with 1(xxxxx) on the
form indicates a cost share account if required (University match/contribution)
Most federal multi-year grants have automatic carry forward of unexpended funds. The account number will remain the same throughout the project period
A new account number may be assigned for each budget period within a multi-year grant when required for accounting purposes
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The Grant Budget Sponsored Programs, in consultation with the PI,
prepares a “Spending Plan” (See Exhibit B) by FRS subcode based on the approved budget
This budget is entered into the accounting system and reflected on the monthly account statement
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Cost Sharing& Matching Funds
Many government agencies are prevented by law from paying the entire cost of any sponsored program
Agencies require assurance that the University has met its cost sharing obligation
The University documents this cost share by setting up a separate account, linked to the grant account.
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Cost Sharing& Matching Funds
The cost share can be in the form of University contribution, other grants, or in-kind match from third parties
All cost shares must be documented in the cost share account in the same way expenses are charged to any other university account
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Cost Sharing& Matching Funds
Most cost sharing is faculty or staff release time spent working on the grant
This level of effort must be documented through a “Revision In Salary Distribution Charges” form (See Exhibit C) for the relevant personnel
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Cost Sharing& Matching Funds
At times the University is required or desires to contribute to the cost of equipment, supplies or other costs
For University contribution of non-personnel costs, the PI must initiate a budget transfer from the contributing department into the cost share account.
Any expenses not covered by transferred funds at the end of the fiscal year are charged to the PI’s department
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Cost Sharing& Matching Funds
Donations of external support, including gifts-in-kind and services are not documented in the cost share account
Documentation of the support is recorded on: The “Certification of Facilities and/or Other Items”
form (See Exhibit D) for donations of gifts-in-kind The “Certification of Professional Time” form (See
Exhibit E) for service donations These forms can be obtained from Grants
Accounting
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Month End FRS Reports
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Month End Financial Reports Month-end financial and payroll reports are
available from FRS by noon of the next business day after month-end
http://financial-info.kent.edu/ Account Statement (See Exhibit F) Report of Transactions (See Exhibit G) Labor Distribution Report (See Exhibit H) Position Control Statement (See Exhibit I)
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Monthly Account Reconciliation Procedures
Compare your internal records (supporting documentation) to financial reports to verify the accuracy of all transactions Budgeted vs. Actual Expenditures Open Commitments Balance Available
Notify your grant accountant of any errors in a timely manner
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Sponsored ProgramCost Principles
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Tests of Allowability of Costs(per OMB Circular A-21)
Costs must: Be reasonable Be allocable to a specific sponsored program Be given consistent treatment Conform to laws and regulations, the terms of
sponsored agreement and University policy
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Are the Costs Reasonable?
Charge must be necessary for the performance of the sponsored program
Restraints or requirements are imposed by such factors such as: Arm’s-length bargaining Federal and state laws Sponsored agreement terms and conditions
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Are the Costs Reasonable? All concerned parties must act with prudence
considering their responsibilities to: University KSU employees & students Government & the public at large
Must follow University policies and practices
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Are the Costs Allocable? A cost is allocable to a sponsored program if it:
Is incurred solely to advance the work being conducted under the sponsored program
Is necessary to the overall operation of the University and is assignable in part to a sponsored program; or
Benefits both the sponsored program and other works of the University in proportions which can be reasonably determined
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Are the Costs Allocable? Major considerations:
Costs allocable to one sponsored program cannot be shifted routinely to another sponsored program
Costs allocable to non-federal sponsors may not be shifted to federally sponsored programs
Costs may be split between programs if proportional benefits to those programs can be determined, or if the programs are interrelated
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Direct Costs vs. Indirect Costs Direct Costs - Those costs which can be identified
specifically with a particular sponsored project
Indirect Costs (F&A Costs) - Those costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity
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Examples of Indirect Costs Departmental Salaries - Secretarial salaries Postage - exception: direct charging may be
appropriate if it can be specifically identified as beyond the normal and customary administrative expense - example: mass mailing for survey
Telephone - basic telephone service (lines and equipment) - exception: long distance
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Unallowable Costs Common Examples:
Entertainment expenditures, including meals when not on travel status
Individual membership dues & subscriptions Airfare in excess of the lowest available rates Alcoholic beverages Personal use of a vehicle provided by KSU for grant-
related use Fines and penalties, including parking and library
fines
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Selected Expenditures
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Charging Expenses to a Grant Account
The PI has ultimate responsibility for ensuring that all expenditures charged to the sponsored program are correct
Approval of expenditures should go through normal departmental procedures
Allowable expenses must be charged directly to the grant or cost share account, not to a departmental operating account.
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Expenditures – Equipment
Equipment is defined by University policy as any item costing $2,500 or more
KSU policy requires a purchase order for any purchase $2,500 or above
The Procurement Office can provide guidance on purchase requisitions, vendor selection and purchase orders
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Types of Equipment Special purpose equipment - equipment used
only for specialized research, medical, scientific, or other technical activities
General purpose equipment - equipment for which the use is not limited to specialized research, medical, scientific, or other technical activities Examples: Office equipment (computers) &
furnishings, copying & printing equipment
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Expenditures – Equipment Equipment not specified in the proposal budget
requires approval through Sponsored Programs and documentation provided to Grants Accounting prior to purchase
In general, funding agencies grant title of equipment to KSU at the time of the purchase; some agreements require equipment to be returned
Documentation must be maintained regarding the status and location of the equipment
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Expenditures – Telephone
Telephone Expenses Basic telephone service is not an allowable cost
to the grant, because it is part of the indirect cost rate
Grant-related toll calls can be charged back to the appropriate grant
Retain documentation of long distance calls charged to the grant
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Expenditures – Telephone Under certain circumstances phone service may
be charged to the grant if it: Is used solely to benefit the project Has been approved in the grant budget
Contact your grant accountant two months before you need to discontinue service
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Expenditures – Travel All travel must conform to KSU
travel regulations Travel Policy #3342-7-13http://finance.kent.edu/Comptroller/policy/713/
“Expense Statement” (See Exhibit J) submitted for reimbursement must specify in the comment section how the travel directly benefits the grant
http:/finance.kent.edu/ksufinancial/expense
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Expenditures – Travel
Document travel expenditures the same as any University-funded trip
Per Diems for meal reimbursement
http://finance.kent.edu/comptroller/expense
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Expenditures – International Travel
Funding for foreign travel may require that it be specifically budgeted or pre-approved
Travelers on federally sponsored trips must travel coach class on U.S. flag carriers, except in extraordinary circumstances
Most agencies do not consider travel to Canada to be foreign travel
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Subcontracts
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Subcontracts A subcontract agreement, signed by both
parties, must be in place before work can be charged to a grant account
Once an agreement is signed a purchase order (PO) will be issued that will encumber the subcontract commitment on the month-end financial report
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Subcontracts The invoice from the subcontractor must reference
both the grant account and the PO number The invoice should be detailed enough for the PI
to determine that all charges are allowable to the grant
The PI reviews and approves the invoice if the subcontractor has met appropriate scientific and reporting requirements
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Personnel
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Hiring Personnel
University policy and procedures must be followed when hiring personnel on a sponsored program.
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Hiring Personnel Standard forms used should be available in
each department and routed for approval: “Position Request and Authorization” (PRA)
(See Exhibit K) “Personnel Action Form” (PAF)
(See Exhibit L) “Offer of Graduate Appointment”
(See Exhibit M) “Student Appointment Form”
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Hiring Personnel Personnel working on grants must be paid at the
same level as employees doing similar work and raises must be consistent with university funded positions. They also receive the same benefits.
Hourly personnel receive the same annual salary increases as other classified employees.
Administrative staff are term appointments made on an annual basis. Salary increases are determined annually upon renewal and cannot be greater than university funded position increases.
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Hiring Personnel Graduate Research Assistants must earn the
same stipend as other Research Assistants in their home department.
Tuition is a fringe benefit of the appointment and also charged to the grant. It is not possible to charge the stipend to one grant account and the tuition to another grant account.
Graduate Assistants are not permitted to work in addition to their appointment without approval.
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Charging Existing Personnel Current employees may devote a portion of their
time and corresponding salary to a sponsored program or cost share when the arrangement is approved by their department ahead of time.
Secretarial and clerical staff are not allowable costs as they are included in the indirect cost rate calculation. If a program requires these services they must be clearly justified in the proposal and approved in the grant award.
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Charging Existing Personnel The “Revision in Salary Distribution Charges” form
(See Exhibit C) is used to: charge a percentage of effort to a cost share account charge a percentage of effort to a grant account revise a salary distribution between accounts
For assistance contact your grant accountant Salary amounts must be distributed based on actual
effort (percentage of time spent working on a project), NOT on how much money is available in the grant budget
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Charging Existing Personnel A “Revision in Salary Distribution Charges” form
(See Exhibit C) must be completed at the beginning of each project year for current university employees to allocate their effort to a grant.
Faculty members with effort on sponsored programs should complete a form at the beginning of each academic year (AY) to charge their time as allocated in the project budgets. This can be revised if effort changes.
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Summer Appointments Summer faculty appointments on grants are not
automatic. A PAF must be submitted for summer work indicating it as an additional appointment. Compensation is based on the previous academic year salary (1/39th for each week worked)
A PAF must be completed for temporary summer staff including graduate students working on temporary appointments during the summer
Forms should be submitted by the end of spring semester for timely processing and payment
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Employeevs. Non-Employee Status
An employee is paid through the KSU payroll system.
A non-employee is paid via a “Check Request” (See Exhibit N) through Procurement. http://procurement.kent.edu/check_request.pdf
The “Independent Contractor Determination” form (See Exhibit O) provides guidelines to decide whether a person is an employee or non-employee.http://procurement.kent.edu/contractor.pdf
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Employeevs. Non-Employee Status
An individual is considered an employee if: performs the services rendered subject to the will and
control of the University (the employer) the University has the legal right to control both the
method and the result of the services provided hours of work are set by the University, and a
continuing relationship exists he/she has been paid through payroll by the
University during the current calendar year
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Employeevs. Non-Employee Status
An individual is considered a non-employee if: established in private business in the field of the goods
or services provided follows an independent trade providing the goods or
services to the public has private liability insurance covering the goods or
services provided maintains private facilities, tools, equipment, and/or
other resources necessary to provide the goods or services
the nature of the goods or services is such that they are not and cannot be provided by University employees
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Non-Employee Payment To pay a non-employee submit:
A “Check Request” (See Exhibit N) The “Independent Contractor Determination” form
(See Exhibit O) A “Consultant Agreement” form (See Exhibit P) or a
detailed invoice
http://www.kent.edu/rags/Research/Research-Forms-Library.cfm
Contact Treasury, Tax, & Risk Management Services for assistance with tax-related questions Phone 23751
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Non-Employee Payment The detailed invoice must include:
Name of company or consultant Social Security Number or Taxpayer I.D. Number Nature of services rendered and their relevance to
the grant-supported program Dates of service Basis for calculating the fee paid Amount to be paid
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Non-Resident Aliens Before paying or reimbursing expenses to non-
resident students, employees, or visitors: Contact Sandy McKitrick in the Payroll Department for
assistance in completing the required forms and complying with federal tax regulations
Phone 28641 A copy of the person’s visa and passport is needed The individual must apply for a social
security number as soon as
possible
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Effort Certifications
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Effort Certifications An “Effort Certification Report” (See Exhibit Q) is
an after-the-fact confirmation that employees paid from grant funds or cost share accounts performed services related to the grant.
The report records the effort (work) for which the employee is compensated
Effort Certification is required when any effort is expended on a sponsored program
This is a requirement of OMB Circular A-21 and is subject to audit
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Effort Certifications –Base Effort vs. Incidental Effort
“Base Effort” is 100% of the work for which an employee is paid salary/wages by the University
“Incidental Effort” is work in excess of the normal, for which supplemental compensation is paid. Includes: Honoraria Intra-university consulting Continuing education Evening and weekend teaching Regional campus teaching
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Effort Certifications – Effort Reporting Periods
Faculty and Contract employees will certify their effort three times each year, at the end of: Fall Semester Spring Semester Summer Semester
Certifications for hourly employees are completed at the end of each month
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Effort Certifications Process Effort Certification Reports are generated
from the payroll records and sent to departments
Reports are reviewed, changes made if necessary and signed by employee or responsible individual
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Effort Certifications Process
Reports are returned to the Effort Certification Coordinator (in the Comptroller’s office) within 10 working days
If there are significant differences (5% or more during the certification period) a “Revision in Salary Distribution Charges” form (See Exhibit C) must be initiated to revise the salary/wages charged to the sponsored program
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Cost Transfers
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Cost Transfers A cost transfer is the moving of an expense from
one account to another. Forms to initiate transfer:
“Revision in Salary Distribution Charges” (See Exhibit C)
“Request for Revision in Charge” (See Exhibit R)
“Interdepartmental Charges” (See Exhibit S) “Inter-Department Charge Request Form
(See Exhibit T)
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Cost Transfers& Federal Regulations
Four general circumstances under which cost transfers may be appropriate: To correct errors in the original charges Legitimate re-budgeting as a result of a change
from the initial work plan To reallocate costs among related grant accounts To reallocate costs incurred by the department on
behalf of the grant, such as long distance telephone calls, and copy charges
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Cost Transfer Documentation Documentation required for non-salary cost
transfers: Date of original transaction Original Account Number Reference Number Payee/Description Amount of original transaction Justification for transfer Account to be charged
Questionable cost transfers without adequate documentation will be disallowed
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The Importance ofTimeliness
Cost transfers must be made within 90 days of the original transaction to avoid an audit disallowance
Transfers after 90 days will require approval from Sponsored Programs and are only allowable under unusual circumstances
External auditors may assume that certain transfers have been made simply to use up excess funds
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Disallowed Costs Disallowed costs that are allowable under
University policy will be charged back to the department
Disallowed costs that are also disallowed by the University will need to be reimbursed to the University by the PI
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Grantor Payments
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Grantor Payments Grants Accounting (GA) handles the receipt of
checks and wire transfer payments to sponsored programs from federal, state, and local agencies, foundations, and corporations.
Expenditures can be made after GA receives the award documentation and establishes an account. This does not necessarily mean that cash has been received.
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Grantor Payments Grants Accounting handles the receipt of funds
including: Letter of Credit Invoices Pre-Payments
The receipt of funds is transparent to the PI Grants Accounting is responsible for invoicing
sponsors
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Program Income With most grants the income is received from the
funding agency. In some grants there is income generated from the program. This may include
Sales of Publications Conference/Workshop Fees Usage or rental fees Patent and copyright royalties
Program income can come from both federal and non-federal sources (A-110 Subpart C.24)
If income is received directly by the academic department, contact GA for assistance in proper handling of deposit
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External Reporting
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Financial Reports Most sponsoring agencies require the grantee to
submit reports on the grant expenditures at the end of the grant period. Some agencies require periodic reports.
Grants Accounting prepares financial reports based on expenditures recorded in the grant and cost share accounts
Grants Accounting approval is required on all financial reports prior to submission
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Financial Reports The PI is responsible for:
Submitting all expenses for payment so they are recorded in the FRS grant account in a timely manner for inclusion in the financial report
Verifying that the information in the final financial report is correct and agrees with his/her records
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Performance/Technical Reports
Interim Progress Reports are required annually for most federal grants Responsibility of PI Submit in timely manner to ensure release of
continuation funding in multi-year projects Due 2-3 months prior to end of current funding period
depending on agency May need to be completed more frequently based on
agency requirements
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Performance/Technical Reports
Final Progress Reports are required within 90 days of termination of federal grants Considered essential by agencies Future awards to universities with delinquent reports
may be delayed Contents of report prescribed by agency. Sponsored
programs can provide direction. If financial information required as part of report it is to
be provided by Grants Accounting
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Reporting Requirements Copies of all financial, progress, and final reports
to be sent to Sponsored Programs for official file Other reports that may be required are:
Equipment reports Patent and Invention reports Annual audit reports Annual or final certifications
These reports will be prepared by Sponsored Programs in consultation with PI
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Resources Comptroller’s Office 22392
Grants Accounting Debra Leonard 20988
[email protected] Diana Dubinsky 20990
[email protected] Lisa Heilman 20985
[email protected] Elaine Petrosky 20986
http://finance.kent.edu/comptroller
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Resources Research and Graduate Studies
Sponsored Programs 22070 Carol Toncar 22289
[email protected] Lori Burchard 27946
http://dept.kent.edu/rags-alpha
Internal Audit 22341 http://finance.kent.edu/ksuauditing
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Resources Procurement Department
Payments 22607 Purchases 22276 http://finance.kent.edu/boms/procurement
Telecommunications 27922 Human Resource Services
and Solutions 22901 Payroll Department 22637 Treasury, Tax, & Risk Management
Services 23751
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Sponsored ProgramsGrants and Contracts
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