Fiscal Responsibility for Sponsored Projects

In most cases, fiscal responsibilities associated with the administration of grants and contracts reside with the department, center, or institute that administers the project account. University policies with respect to the handling of overexpenditures, cost transfers, audit disallowances, withholding of final payment, and bankruptcy of the sponsor are noted below. For further information, see the Office of Accounting Services for Research and Sponsored Programs (ASRSP) Web site at http://www.northwestern.edu/asrsp/index.html.

Expenditures Exceeding Awarded Amount

When financial reports are prepared by ASRSP, expenditures are reconciled to the awarded amount. When expenditures exceed the awarded amount, ASRSP contacts the PI to identify, within 30 days, a non-sponsored account with sufficient funds to absorb the overdraft to which excess expenditures will be transferred. This process requires agreement among ASRSP, the PI, and/or the department chair, dean, or center director. If no account has been provided within 30 days, the excess expenditures will automatically be transferred to a department/ center account.

Cost Transfers

Transfers of cost to or from grant-supported projects can be made to correct bookkeeping or clerical errors in original charges. Such transfers must be made promptly after the error is discovered.

The transfers must be supported by documentation that contains a full explanation of how the error occurred, with transaction numbers and dates and a certification that the transfer will correct the bookkeeping or clerical error.

Any costs allocable to a particular sponsored project may not be shifted to other sponsored projects in order to meet deficiencies caused by overruns or other fund considerations (see cost transfers.)

Disallowance of Expenditures Due to Audit

Most sponsored agreements contain provisions that allow the sponsor or its designee to audit relevant University financial records. If an auditor questions or disallows expenditures charged to an account, the PI will be notified and, if the disallowed costs are accepted by the University, such expenditures will be transferred to a non-sponsored account agreed upon by ASRSP, the PI, and/or the department chair, dean, or center director. If no account has been provided within 30 days, the disallowed expenditures will automatically be transferred to a department/center account.

Withholding of Final Payment

Many sponsored agreements require submission of interim and/or final deliverables, usually technical reports. Final payments to the University are often tied to receipt of contracted deliverables. When the sponsor has alleged that such deliverables have not met the sponsor’s specifications, it is the responsibility of the PI to work closely with the sponsor to make the report or work product acceptable to the sponsor. If the University is not fully reimbursed, the balance of the costs on the award will be transferred to a non-sponsored account agreed upon by ASRSP, the PI, and/or the department chair, dean, or center director. If no account has been provided within 30 days of notification, the balance of costs will be transferred to a department/center account.

Bankruptcy of Sponsor

If either ASRSP or the PI learns that a sponsor is experiencing financial hardship or may default on payments owed to the University, the other party should be notified immediately. ASRSP will work with the PI and/or the sponsor to collect any outstanding receivables for the account and evaluate the remedies, including early termination of the project. Responsibility for payment of expenditures incurred on a sponsored account rests with the department, school, or center. Legal assistance may be requested from the University.

Advance Payments

The University reserves the right to seek incremental or total funding in advance, or to decline a project if it believes the financial status of the sponsor is in doubt or if the sponsor is unknown to the University. If the sponsor is unwilling to provide a sufficient advance or incremental funding, OSR may require the department, school, or center to provide a pre-spending guarantee (see Pre-Spending on Sponsored Accounts.)