The Catholic University of America

Grants and Contracts Policy

Archived 7/30/15

I. Introduction
 
Externally-funded research is an important component of the University's mission of research, instruction and service. To comply with federal, sponsor, and other regulations, and to properly account for research expenditures and revenue, the University provides the following guidelines for grant and contract financial oversight. Principal Investigators are required to exercise oversight of the financial transactions and status of each grant and contract sufficient to ensure that charges are reasonable and necessary, allowable under the terms and conditions of the award, properly allocated to and among multiple awards and funding sources, and limited to funds awarded for the project. All Principal Investigators must be furnished with a copy of this policy and are expected to be familiar with it. To that end, all Principal Investigators must sign a form or otherwise indicate in writing that they have read this policy. This policy applies to all externally funded research at the University and to all faculty and staff who participate in this research.
 
II. Definitions
 
A.  Allocable - A cost is allocable to a grant or contract if the cost directly benefits the work done on that project.
 
B.  Allowable - For a cost to be allowably charged to a grant or contract, it must meet the following requirements:
 
o It must be allocable to that project;
 
o It must be reasonable;
 
o It must be consistently treated like other similar costs;
 
o It must be allowable under the terms of general federal cost principles, the guidelines of the funding agency and the specific grant or contract;
 
D.  Contract - Used interchangeably with "grant" for purposes of this policy, a contract is an agreement executed by a sponsoring agency requiring the University to perform certain services in exchange for agreed-upon payment terms.
 
D.  Cost Transfer - Movement of costs between a grant/contract and another grant/contract or a non-sponsored departmental organization code.
 
E.  Grant - Used interchangeably with "contract" for purposes of this policy, a grant is a financial award to the University, under the oversight of a Principal Investigator, for purposes of research, training or other projects as dictated by the sponsoring organization. For purposes of this policy, the terms "grant" and "contract" are interchangeable.
 
F.  Principal Investigator ("PI") - The PI is the person responsible for performance of the activities specified in the grant or contract. Usually this person is named in the grant or contract agreement.
 
G.  Reasonable - A prudent person would have purchased the same item at the same price.
 
III. Agreement Authorization
 
All agreements for grants and contracts must be made in the name of the University. All sponsored contracts must be signed by the Provost or his designee. Any cost sharing arrangements should be approved in advance and comply with the University's Cost Sharing Policy.
 
IV. Grant Responsibility
 
The Principal Investigator ("PI") has primary responsibility for the supervision of all grant activity, including the monitoring of financial activity to ensure that expenses are within the project budget line-item limits and are recorded accurately and timely. The PI is responsible for approving all expenses for his/her grant. The PI is expected to produce and review their grant reports on a monthly basis. The PI must ensure cost transfers and correction of errors are completed timely.
 
V. General Grant Expense Policies
 
Fundamental to all grants and contracts is the requirement that a particular grant or contract may only be charged for costs related to that project. The PI best understands the scope of the project, the effort committed to it by faculty and staff, and the relationship of the project to other projects with which resources may be shared. All costs charged to a grant must be allowable for that project as defined above.
 
While the PI may delegate day-to-day administrative activities, the PI remains responsible for the financial management of the grant or project. All expense submissions must be approved by the PI or his or her designee. (A proper designee should be in a position to be aware of and supervise all grant activity in the absence of the PI.) A department chair or Dean must approve any expense reimbursements made directly to a PI or charges made by a PI using a University procurement card.
 
Each grant is set up in the financial system according to the line-item budget approved by the sponsor. Grant expenditures must be made within the constraints of the overall and line-item budgets. Where allowed by the sponsor, the Grants and Contracts Office will move money between budget line items at the PI's request. Any budget movements between salary expense and other kinds of expense will need to include consideration for the indirect costs on that particular grant.
 
VI. Pre-Award Costs
 
Any costs incurred to propose or solicit a grant, including time spent, cannot be charged to a sponsored grant. No costs should be incurred for a grant project before funding is approved. If costs are incurred before the official start of a grant project, they should be charged to a non-sponsored departmental organization code and will not be charged retroactively to the grant.
 
VII.Faculty Compensation from a Federal Grant
 
Federal regulations specify limitations as to the rate of compensation a faculty member can receive from a federal grant. Please refer to the Faculty Handbook for these guidelines, and the OSP for any agency-specific limitations.
 
VIII. Effort Reporting
 
Anyone who receives a payroll payment from federal grant funding will be required to certify the percentage of effort spent on each grant on a biannual basis. The Office of Management and Budget (OMB) circular A-21 provides examples of "Acceptable Methods for Payroll Distribution (J.8.c)." The University has selected "after-the-fact confirmation" where an individual confirms his/her salary distribution subsequent to the dates paid. Estimates of an individual's salary distribution are initially established before the work takes place on an appointment form. The salary distribution for the individuals working on sponsored projects must be monitored on an on-going basis and adjusted for changes in actual activity. Subsequent to the effort certification period, each faculty/staff member/student that has charged wages to a grant will receive a biannual effort certification report. On the effort certification report, he/she must confirm or change the percentage of total time spent on each grant, so that the payroll distribution reflects the actual work performed.
 
The PI is responsible for certifying to all effort expended on his/her sponsored agreements by approving all effort certification forms for those agreements. The effort certification forms for the PI must be approved by his/her supervisor. The University encourages the PI and all employees working under a grant or contract to keep this biannual requirement in mind throughout the year so that the employee and PI can certify reasonably to his or her level of effort on each project when requested. Accurate and timely effort reporting is a federal requirement and is audited every year. PIs who do not respond to the certification reporting request in a timely manner will be reported to their Dean and then the Provost. If the effort certifications are not submitted by the required deadlines, The Grants and Contracts Office will cease processing any expense paperwork until the effort certifications are received and complete.
 
IX. Cost Transfers
 
A. Allowability
 
Federal rules stipulate that costs must be charged to the grant to which they are related. Each PI should give careful consideration at the time of hiring setup to ensure that the costs for all research staff will be charged according to the anticipated effort on that particular project. A cost transfer request for movement of salary or other expenses can be made if the costs have been charged to the wrong grant or, in the case of salary costs, if the amount of effort on a grant has changed from what was originally anticipated and set up in the payroll system. Costs cannot be moved, under any circumstances, based upon which grant has budgeted funds available.
 
To request a cost transfer, a Cost Transfer Request Form must be provided to the Office of Grants and Contracts, including a specific justification and supporting documentation for the transfer. The justification should specify why the cost was originally charged to the first grant and why the cost directly benefits the new grant. Justifications must be more specific than "moving costs to proper project" or "correction of an error". All cost transfer requests require the approval of the PI, the Director of Grants and Contracts, and for situations where the PI's own salary is being moved, the PI's Department Chair or Dean.
 
B. Timeliness
 
PIs are responsible for reviewing their grant financial activity on a monthly basis. Any cost transfers should be requested immediately when the need for transfer is noticed and not more than 90 days after the original expense. If a transfer is not made within 90 days of the original expense, questions will be raised as to the propriety of the cost transfer.
 
After 90 days has elapsed, if the PI notices that a cost transfer is needed to correct an error, the PI must submit the Cost Transfer Request Form with a thorough explanation along with the supporting documentation as to why the transfer was not requested within the 90 day period. The University is obligated to move an unrelated cost out of a grant no matter how much time has elapsed; therefore, the Cost Transfer Request Form also requires an alternative non-sponsored funding source for transfer requests more than 90 days old. However, if more than 90 days has elapsed, the cost transfer will only be made to another grant if it is meets one of the following extenuating circumstances and receives approval from both the appropriate Dean and the Controller:
 
•  Another University department did not respond timely to a request that would have moved the charges sooner;
 
•  The grant award or agreement was not received until after the project start date and the expense being transferred is within 90 days of the date of the formal execution of the award;
 
The following reasons are not justifiable reasons for a cost transfer into another sponsored grant org:
 
•  PI or other key grant staff has been absent. It is the responsibility of the PI, working with his/her School, to ensure that the grant financial activity is monitored on at all times during an active project.
 
•  Funding was not yet received for the anticipated project but expenses were incurred. An expense should never be recorded initially in a grant for which it is not directly associated. The expenses can only be funded from a non-sponsored departmental funding source.
 
If it does not meet one of the extenuating circumstances mentioned above, the cost will be transferred to a non-sponsored organizational code (aka "org" or "DEPTID") within the PI's academic area. Under no circumstances will a transfer be made if one or both of the grants have been closed out.
 
If a PI notifies the Office of Grants and Contracts of transfers after 90 days has elapsed several times, the PIs name will be provided to the appropriate Dean and the Provost.
 
X. Stipends and Fellowships
 
The Provost's Office issues specific procedures and deadlines for applying scholarship funds to students. All grants and contracts are required to comply with published guidelines. Not all awards allow for tuition remission and/or fellowships. Grant restrictions which are more restrictive than university policy will override University policy.
 
XI. Unallowable Expenses
 
Certain expenses are unallowable for reimbursement by the federal government. These expenses may be permitted under university policy and may be entirely valid and appropriate for the project, but they cannot be claimed as direct or indirect costs of federally sponsored projects. It is very important that all costs that are unallowable be classified as such, as failure to do so can have severe negative consequences for the University. The Grants and Contracts office has full authority to request more information or reject the reimbursement of a cost from a grant if there is inadequate evidence to support that the cost is allowable. If that's the case, the cost will need to be covered by a non-sponsored departmental organization code.
OMB Circular A-21 and other regulations define what is allowable and unallowable. Two general conditions define unallowable costs: 1) costs for an unallowable activity or 2) costs for an unallowable object.
Specifically Unallowable Activities:
  1. Organized fund raising
  2. Lobbying
  3. Commencement and Convocation
  4. General public relations and alumni activities
  5. Student intramural activities and clubs
  6. Defense or prosecution of criminal, civil, and administrative proceedings, including claims against the federal government
  7. Other items specified in federal or sponsor regulations
All expenses in support of these activities are unallowable and are generally recorded in separate organizations or accounts to ensure that the transactions are identified for reporting.
Specifically Unallowable Costs
  1. Most advertising and recruitment costs
  2. Alcoholic beverages (itemized receipts required)
  3. Entertainment
  4. Losses on another grant or contract
  5. Fines and penalties
  6. Promotional materials (employee morale items are allowable)
  7. Moving costs if employee resigns within 12 months
  8. Certain types of travel costs (e.g., first class travel)
  9. Cash donations to other parties
  10. Memberships in civic, community or social organizations
  11. Goods and services for personal use of employees (e.g., automobiles)
  12. Investment management costs
  13. Lobbying costs (not allowable using any type of university funds)
  14. Housing and personal expenses of university officers
  15. Other items listed in the unallowable cost section of OMB Circular A-21
All questions about the proper recording of expenses should be directed to the Office of Grants and Contracts.
 
XII. Recharge Operations
 
Certain technical services, such as wind tunnels, melters, etc., may be used by a number of projects. These service centers may be charged to a number of grants and contracts. The Office of Grants and Contracts must review and approve the cost mechanism used for these charges, in advance of any charges. For more information about recharge operations and service centers, see Service Center Policy.
 
XIII. Reporting
 
The Business Systems Office will provide system training to run financial reports for PIs and their designees for oversight of grant and contract funds. The Office of Grants and Contracts shall be responsible for the timely submission of financial and property reports to sponsors as required by the contract agreement. PIs are responsible for reviewing the financial reports as requested. Technical or programmatic reports are the sole responsibility of the PI.
 
XIV. Cost Overuns
 
If the grant's costs exceed the amount provided under the terms of the agreement, the deficit must be transferred to a non-sponsored departmental organization code. At the time of the project closeout, the Grants and Contracts Office will notify the PI and the applicable Dean of the overrun. A proper funding source for the deficit must be provided within 30 days of the project closeout. Under no circumstances can a cost overrun be transferred to another grant or contract unless the terms of the agreement support such a transfer.
 
XV. Close Out of Grants and Contracts
 
Funds may not be obligated after the termination date of the sponsored agreement. The PI is responsible for ensuring that all purchases of equipment, supplies, or services are completed prior to the close of business of the final day of the award period. The Office of Grants and Contracts will not approve expenditures for items purchased after the close-out date. The PI should coordinate with the Office of Sponsored Programs if he or she wants to request a no-cash extension to the project.
 
In order to ensure the grant is closed out within required deadlines, for federal grants, the PI should submit all payment documentation within 45 days from the end of the project date for any purchases that occurred within the project timeframe. For non-federal grants, the PI should contact the Office of Grants and Contracts for deadlines.
 
The Office of Grants and Contracts will work with the PI to produce final reports of activity for the sponsor and to close out any remaining funds, under the terms of the agreement, as allowed by federal or sponsor regulations.
 
XVI. Audit Requirements
 
Sponsored grants and contracts are audited annually by an external auditing firm and can be audited at any time by the sponsoring agency or its delegate.  Sponsor audits can occur during the project or several years after the project closeout date. The Controller’s Office, in conjunction with the Office of Grants and Contracts, coordinates the audits and information requests.  
 
If a PI receives notice of an audit, the PI should notify the Controller’s Office immediately.  If the Controller’s Office or Office of Grants and Contracts requests any supplemental information from the PI for an audit, the PI is responsible for answering these requests immediately.  
 
XVII.  Revenue Recognition and Billing
 
Revenue is recognized, by the Office of Grants and Contracts, as expenses are incurred.  Bills are generated and mailed directly to the sponsor by the Office of Grants and Contracts based on the contract specifications.  The Office of Grants and Contracts is responsible for any draw-down of funds. 
 
XVIII.  Direct Grant Disclosure
 
Grants issued directly to faculty and staff will be considered a potential conflict of interest and must be disclosed to the University through the annual Conflict of Interest Disclosure. 
 
XIX. Federal Indirect Cost Proposal and Negotiation 
 
The Controller’s Office prepares and negotiates the Federal Indirect Cost Proposal.