Due to the ever-changing face of regulations and policies affecting research-focused universities, hospitals and other institutions, it can be challenging to adequately handle the essentials of grant management. For most institutions, the essentials of grant management are made up of many considerations. An area of note is staying current with compliance requirements as related to allowable costs.
At the most fundamental level, when an office of sponsored research receives federal funds they are accountable for a variety of items including: spending funds in accordance with the authorized purpose; developing and implementing systems to ensure proper stewardship of funds; streamlining financial management and procurement; ensuring time and effort reporting; and finally, adhering to terms and conditions of the award.
In our experience working with the nation’s leading research instructions, some of the more commonplace compliance pitfalls involve unallowable costs or misallocation of costs.
Essentials of Grant Management – Tracking Allowable Costs
Let’s look at the common compliance pitfall of unallowable or misallocation of costs.
A common scenario is when a researcher purchases a much-needed piece of specialized equipment for research related to a specialized research area. When preparing the purchase request, it is often the case a researcher realizes that the only account with enough money is a National Institute of Health (NIH) grant for research funded by a separate award. Because both grants are funded by NIH, is it appropriate for the researcher to charge the equipment to the separate grant?
According to the NIH, the following four cost principles address four tests to determine allowability of costs:
- Allocability: A cost is allocable to a specific grant if it is incurred solely in order to advance work under the grant; and is deemed assignable, at least in part, to the grant.
- Reasonableness: A cost may be considered reasonable if the nature of the goods or services acquired reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.
- Consistency: Grantees must be consistent in assigning costs. Although costs may be charged as either direct costs or facilities and administrative costs, depending on their identifiable benefit to a particular project or program, they must be treated consistently for all work of the organization under similar circumstances, regardless of the source of funding, so as to avoid duplicate charges.
- Conformance: Conformance with limitations and exclusions as contained in the terms and conditions of award—varies by type of activity, type of recipient, and other variables of individual awards.
Based on these four criteria, the scenario about the equipment purchase, outlined above, is generally not acceptable.
Resources for the Essentials of Grant Management
Tracking costs is just one area of the essentials of grant management. We’ll take a further look at essentials of grant management in an upcoming post.
The nation’s largest Federal grant-making agencies ask organizations to adhere to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. An effective research office applies the time and needed resources to understand current policy and ongoing changes set by Federal grant-making agencies.
Use of grant management software is a key part of handling the essentials of grant management. An automated system helps track costs as stipulated by the sponsor, generates reports and helps ensure compliance. Leading institutions use grant management software to present costs consistently as well as manage and assign costs associated with its facilities and administrative rate.
Please contact the IT Works team to learn more.