Prespending Accounts

There are three conditions under which an investigator might request the establishment of a pre-spending account: (1) to get a head start on a federal project that is subject to Federal Demonstration Partnership (FDP) terms and conditions; (2) to begin a project on the designated start date, but prior to receiving an actual award notice from the sponsor; or (3) to establish an account for an industry-sponsored clinical trial prior to receipt of an initial check, when all other required components are in place.

Under FDP terms and conditions, recipients of awards governed by those terms have the option to begin project activities up to 90 days in advance of the official start date on the notice of grant award. This option enables investigators to order equipment, hire staff, or begin preliminary work on the project. Since start-up can be slow, this option provides additional time to get a project up and running. In this case, pre-spending may be requested up to 90 days before the official project start date.

A funding agency may be unable to provide an award agreement by the official project start date, particularly when funds are being subcontracted from another institution or when contracts are being negotiated with industrial sponsors. In extreme cases, awards may not be finalized until well into the project period. If an investigator wants to begin a project on time and has departmental endorsement, an authorized pre-spending account can be established. In this case, pre-spending may be requested on or after the official project start date, but before the award is received and finalized.

In order to establish a pre-spending account, an endorsed OSR-2 form should be submitted to the Office of Sponsored Research (OSR) with the following information: proposal for which pre-spending is requested, pre-spending start date, objects of expense to be opened, funding guarantee amount, and funding guarantee account. With this information, OSR will establish a pre-spending sponsored account which continues to be used after the award is received. The funding guarantee account designated on the OSR-2 form should be a non-sponsored account with adequate funding to support the guarantee. If, for some reason, the anticipated award is not received, expenditures incurred against the pre-spending account will be transferred to the designated departmental guarantee account. The most expeditious way to establish a pre-spending account for an industry sponsored clinical trial is to complete the pre-spending section on the OSR-CT form. A pre-spending account will be established once OSR has secured the following items: a fully executed agreement, final approved protocol and consent form, a copy of the IRB approval letter, the sponsor budget that includes 26 percent indirect cost, and a completed and signed OSR-CT form.

Note: Under normal circumstances, an OSR-2 is not required in order to establish pre-spending pending the non-competing continuation of an FDP award.

Since, in requesting a pre-spending account, the investigator and department understand that an FDP project has been approved for funding within the next 90 days, or that a late-arriving award has a designated start date that coincides with the OSR-2 requested start date, or, in the case of an industry-sponsored clinical trial, that subjects meeting study criteria are available, there is very little financial risk involved. Establishing pre-spending accounts provides better management information and eliminates cost transfers. Investigators are encouraged to take advantage of this option.