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Business and Financial Policies and Procedures

16.1.5 Sponsored Projects Administration

Urbana-Champaign Campus Supplement

Sponsored Projects

The University conducts sponsored research, teaching, and other projects funded by sponsors outside the University. For additional information on the policy governing acceptance of contracts and grants, refer to the General Rules Concerning University Organization and Procedure. The homepage for the Grants & Sponsored Projects Office provides links to various regulations, policies, and forms. Refer to the Grants & Sponsored Projects Office homepage for updates and pending changes and to access the most current Facilities and Administrative and Fringe Benefit rates.

Sponsored projects are supported by entities outside the University, have a defined scope or objective, and include reporting requirements. They result from proposals submitted by the University and funded by an external organization, such as a federal, state, local, or foreign unit of government, a foundation, an association, or a commercial entity.

Sponsored projects such as grants, contracts, and cooperative agreements are solicited and/or accepted for purposes which are consistent with and enhance the teaching, research, and public service mission of the University. Sponsored activities are undertaken by the University with support from outside sponsors that expect an outcome that either directly benefits the sponsor or serves a public purpose the sponsor wishes to promote. At a minimum, the sponsor requires the University to report on how the funds are spent and what progress has been made in accomplishing the goals of the activity. All proposals for support under the category of sponsored activities must be submitted to the sponsor through the Grants & Sponsored Projects Office.

Sponsored project awards can take the forms described below. The distinction between sponsored project awards and gifts is defined in 11.2 Distinctions Between Gifts and Sponsored Activities (Grants & Sponsored Projects) of the Business and Financial Policies and Procedures. Gifts are contributions made to the University for which the donor receives no direct benefit and requires nothing in exchange beyond a general assurance that the intent of the contribution will be honored.

Grants - Grants are used when the principal purpose of the award is to accomplish a specified public purpose of support or stimulation authorized by Federal statute. Grants are also used by state agencies, local governments, foundations, associations, corporations, and other private entities. Grants differ from gifts in that they entail reporting requirements, and differ from contracts in that they do not typically involve specific deliverables. Grant terms and conditions are typically sponsor or program regulations that are referred to but not included in the grant document itself. Refer to Appendix I - Typical Terms and Conditions for Federal Research Grants for a summary of federal terms and conditions for grants.

Cooperative agreements - Cooperative agreements have the same principal purpose as a grant but are chosen as the instrument of award when conduct of the work involves substantial participation by the federal sponsor.

Contracts - Contracts are used when the principal purpose is procurement, i.e., acquisition of property or services for the direct benefit of the sponsor. Contracts entail specific deliverables, and terms and conditions are incorporated directly into the contract document.

Standard research agreements - The University has developed standard research agreements for commercial and other non-federal sponsors (including local governments and State of Illinois). These agreements have been developed in conjunction with the University Counsel and contain provisions that protect the University's interests. They can be obtained from the Grants & Sponsored Projects Office Website.

Sponsor-originated agreements - When sponsors furnish agreements to be used instead of standard agreements, they must be reviewed and approved by the Grants & Sponsored Projects Office, and as needed by the Office of Research Administration (ORA) in the Office of the Vice Chancellor for Research, and University Counsel. Where necessary, the ORA or the Grants & Sponsored Projects Office will negotiate with the sponsor to reach mutually satisfactory terms and conditions for conducting the work.

Subawards - Subawards are awarded by a pass-through entity using funds it received from a prime sponsor, rather than its own funds. Subawards are typically subject to the same terms and conditions of the prime award to the pass-through entity, plus any additional terms and conditions the pass-through entity feels it needs for the effective administration of the subaward.

Technical testing agreements - The University conducts specified tests on a service basis for external parties when the University has special or unique facilities not elsewhere available or accessible. 

Intergovernmental personnel agreements (IPAs) - IPAs may be extended to permanent University employees who are given temporary work assignments at federal agencies. These University employees must be faculty or academic professionals who have been employed by the University for at least one year before serving on the IPA assignment, and who are eligible to return to a University appointment at the end of the IPA service. While on IPA assignment, University employees continue to participate in the University's benefits coverage.

Scholarships and Fellowships - Scholarships are gratuitous payments to students to provide financial assistance during the period of their training. Fellowships are awards involving cash stipends for graduate students or postdoctoral scholars. Fellowships are not awarded for carrying on specific research, and the University requires no services of a fellow. When provided by external entities, scholarships and fellowships are managed in one of the following ways:

  • Awarded directly to students by external sponsors
  • Awarded by the University through the University Office of Student Financial Aid or the Graduate College
  • Received by University departments as gift funds and subsequently awarded to eligible students;
  • Administered by the University as "agency accounts" as a matter of convenience for entities that wish the University to manage payment to a particular student
  • Received as a grant and awarded to eligible students selected by the sponsor
  • Received as a grant when the sponsor imposes terms and conditions for which the University is responsible for compliance, irrespective of whether the sponsor or University selects the recipient

Only the latter two cases above are considered sponsored projects and covered by these sponsored project policies.

Sources of Policies, Rules, and Guidelines Applicable to Sponsored Projects

Sponsored project funds awarded to and administered by the University are to conform to University policies and guidelines and those of the sponsor. Projects where the University is a subawardee are subject to applicable policies of the sponsor providing the funding, as well as whatever other terms and conditions are specified by the prime awardee.

Federal

When the sponsor provides federal funding for the project, either directly or indirectly as pass-through funds, there are specific compliance requirements.

Statutory Requirements are created when laws are enacted, and these requirements take precedent over all other policies and regulations related to sponsored projects. A summary of statutory requirements is maintained by the Federal Demonstration Partnership (FDP) in the document entitled FDP Operating Procedures, Appendix A.

Office of Management and Budget Circulars for government-wide sponsored project management are as follows:

OMB A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations, applies to grants and cooperative agreements and provides guidance in such areas as property standards, procurement standards, reports and records. (Note that federal contracts are subject to Federal Acquisition Regulations rather than A-110.) Individual agencies implement this Circular in the Code of Federal Relations, which is typically the same as their grant regulation documents.

OMB A-133, Audits of States, Local Governments and Non-Profit Organizations, provides uniform requirements for audits of Federal awards. The University of Illinois is audited annually to ensure compliance with laws and regulations and maintenance of adequate internal controls. Audit reports for recipients subject to Circular A-133 are available at the Federal Audit Clearinghouse.

OMB A-21, Cost Principles for Educational Institutions, applies to grants, contracts, and other agreements with educational institutions and provides principles for determining costs applicable to federal sponsored agreements. (Note that A-21 applies to contracts and to subrecipients performing work under federal awards.)

Cost Accounting Standards are applied to educational institutions through OMB Circular A-21. The Cost Accounting Standards Board, an entity within the U. S. Office of Management and Budget, publishes Cost Accounting Standards (CAS) for commercial contractors and subcontractors. The four Cost Accounting Standards to which universities are subject to through OMB Circular A-21 are the following:

  • Consistency in estimating, accumulating, and reporting costs. This means that proposed budgets should not include costs at a lower level of aggregation for which the University's financial accounting system can account. For example, scientific supplies can be budgeted, but not separate items for reagents, chemicals, and pipettes.
  • Consistency in allocating costs incurred for the same purpose in like circumstances. This requirement is fully described in 16 Grants and Research Contracts - Cost Transfers.
  • Accounting for Unallowable Costs. This requirement is fully described in 16 Grants and Research Contracts - Cost Transfers.
  • Cost Accounting Period. This is the University's fiscal year-July 1 through June 30.

Due to CAS application to the University of Illinois, a Cost Accounting Standards Board Disclosure Statement was filed describing accounting practices for assigning direct and indirect costs to federal sponsored projects.

The disclosure statement must be amended if there are changes in cost allocation policies. UIUC is subject to periodic audits to determine if it is consistently applying its policies. For this reason, individuals responsible for the assignment of costs must be fully aware of the applicable policies, and conform with them diligently. Noncompliance with UIUC's established policies could lead to cost disallowances, refunds with interest and penalties, and increased audit surveillance by federal audit agencies and Inspectors General.

Federal Demonstration Partnership Terms and Conditions. UIUC is a member of the Federal Demonstration Partnership (FDP). Therefore, certain research awards from the major federal agencies shown in the table below are subject to FDP General Terms and Conditions and FDP Agency Specific Requirements, rather than the agency grant regulations. Awards received from an FDP agency as a subaward are subject to FDP terms and conditions only if the pass-through entity is an FDP institution. For example, a National Institutes of Health grant provided to the University of Illinois by Harvard University is subject to NIH policies that apply to Harvard (the NIH Grant Policy Statement), as well as to whatever requirements Harvard stipulates. As a non-FDP institution, Harvard cannot apply FDP terms and conditions to its awards to the University of Illinois.

Agency Award Types Covered
Air Force Office of Scientific Research (AFOSR) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Army Medical Research and Material Command(AMRMC) Research grants and cooperative agreements to FDP members
Army Research Office(ARO) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Cooperative State Research, Education, and Extension Service U.S. Department of Agriculture Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Department of Energy (DOE) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.

Environmental Protection Agency (EPA)
Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Aeronautics and Space Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Administration (NASA) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Institutes of Health (NIH) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Science Foundation (NSF) Grant awards made to participating FDP organizations. The FDP Terms and Conditions do not apply to NSF cooperative agreements and fellowship awards.
Office of Naval Research (ONR) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.

 

There is an FDP Terms and Conditions Website that provides the actual terms and conditions along with associated information.

Policy manuals, handbooks, and general grant conditions documents (for grants and cooperative agreements not covered by FDP terms and conditions.)
Links to many of these federal agency grant policy documents are found on the OBFS Website. A summary of FDP and non-FDP terms and conditions is found in Appendix I - Typical Terms and Conditions for Federal Research Grants. In the case of subawards from institutions that are not participants in the Federal Demonstration Partnership, these grant policy documents apply.

Federal Acquisition Regulations (FAR) are the primary regulations used by federal sponsors to govern contracts for supplies and services, including research services. FAR incorporates OMB Circular A-21 for the purpose of defining allowable costs. FAR is not applied to grants and cooperative agreements that are governed by OMB Circular A-110, agency grant regulations, or FDP terms and conditions. Federal contracts typically incorporate all of the FAR clauses applicable to a given project.

State/Private

Projects sponsored by State of Illinois and other non-federal sponsors must comply with applicable sponsor policies and the terms of individual sponsored agreements.

All Sponsors

Deviations from either University or sponsor policy must be explicitly negotiated and approved by authorized officials of the University and the sponsor.

Policies and Procedures Applicable to the Conduct of Sponsored Projects

This section sets forth the considerations necessary for proper administration of sponsored projects by principal investigators and unit administrators.

Assigning Costs to Sponsored Projects

Project costs are all allowable direct and facilities and administrative costs incurred by the University, including the value of the in-kind contribution (cost sharing) made by the University or third parties in accomplishing the objectives of the sponsored agreement during the project period. A project cost is:

  • Reasonable if the nature of the goods or services and the amount involved therefore, 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.
  • Allocable to a particular sponsored project if the goods or services involved are chargeable or assignable to the project in accordance with the benefits received.
  • Allowable when it is permitted by sponsoring agency guidelines, terms of a given sponsored agreement, and University policy. Unallowable or restricted costs are those defined as such by University policy. (See 16 Grants and Research Contracts - Cost Transfers).

Federal cost principles explicitly forbid subsidizing projects supported by commercial or foreign sponsors with funds provided by the federal government. For example, cost transfers from commercial or foreign projects to federal projects are rarely justifiable, and require extensive documentation.

Direct Charges to Sponsored Projects and Related Documentation Requirements

Expenditures can be charged directly to a sponsored project when the goods or services involved advance the work on the project and provide benefits commensurate with their cost. If an expenditure benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, the cost may be allocated or transferred to benefited projects on any reasonable basis. Salaries and wages are charged and documented in accordance with the policies and procedures in 16.1.3 Compensation for Personal Services Charged to Sponsored Projects. Other costs are charged directly to sponsored projects using any of the appropriate mechanisms described in Section Seven, Purchasing of the Business and Financial Policies and Procedures. Special requirements for assigning certain types of costs are found in 16 Grants and Research Contracts - Cost Transfers. Policies and procedures for transferring costs are found in 16 Grants and Research Contracts - Cost Transfers. All direct charges and cost sharing are confirmed in the semi-annual expenditure confirmation process described in the Post-Award Administration section below.

Allowances

Allowances are charged to sponsored projects in a similar way as F&A. They are captured in a central account, then reallocated. On training grants, allowances for educational costs in lieu of tuition are transferred to the Graduate College. Administrative allowances are credited to an administrative allowance revenue account, and distributed to departments according to the agreements in place for each project or type of project.

Program Income (Excluding Income Earned on Intellectual Property and Interest Earned on Cash Advances) and Other Credits

Program income means gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded non-research projects, the sale of commodities or items fabricated under an award, license fees, and interest on loans made with award funds.

Program income must be deposited in the sponsored project account in which the expenses were originally incurred, if the account is still active. Similarly rebates, refunds, proceeds from the sale animals, etc. must be credited to the project account. If the project is no longer active when the income or other credit is received, it is to be treated in conformance with the sponsor policy. Note that under federal policy, the University has no obligation to the federal government for license and royalty income, and income received after the termination of a project.

Occasionally an activity occurs that generates supplemental revenue that may be recorded in a grant account. If any such revenue-generating activity occurs, units must inform the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will coordinate with Office of Business and Financial Services, Accounting Division to determine if the activity produces unrelated business income. If a determination is made that the activity produces unrelated business income, the department may be required to provide detailed information on revenue and expenditures.

Changes in Projects that Require Explicit Sponsor Approval

In circumstances when principal investigators or project directors wish to make a change in a project that requires the sponsor's explicit approval, they (or their unit's support staff) are to prepare the request to the sponsor, providing necessary justification, obtain unit approval, and submit the request to the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will review the request to make sure the content and justification are suitable, and then forward it to the sponsor, or pass-through entity, in cases where the University of Illinois is a subawardee. Since the sponsor may reply directly to either the principal investigator/project director, the unit, or the Grants & Sponsored Projects Office, each should inform the other when they receive a reply from the sponsor.

Changes that can never be made without the sponsor's explicit approval are:

  • Change the scope or the objective of the project or program
  • Change a key person specified in the application or award document
  • Absence of the project director/principal investigator for more than three months
  • Reduction in time devoted to a federal project by 25% or more
  • Change in circumstances whereby additional Federal funding is needed to complete the project

Changes in Federally Supported Research Grants and Cooperative Agreements that Do Not Require the Sponsor's Explicit Approval Unless the Approval Requirement is in the Award or in Agency Regulations

Other after-the-fact changes that may require sponsor's explicit approval are shown in Appendix I - Typical Terms and Conditions for Federal Research Grants. Federal sponsors allow recipients to take the following actions without obtaining explicit approval from the sponsor. Note that the no-cost extension requires that the sponsor be notified.

Although no sponsor approval is required for these changes, departmental officials are responsible for determining that when these changes occur, that they do not alter the scope of the project.

No-Cost Extension

The University is authorized to approve a single no-cost extension of up to 12 months for eligible federal grants, provided it notifies the sponsor that it has elected to take such an extension, explains why the extension is needed, and provides this notification at least 10 days before the expiration date specified in the award. This one-time extension cannot be exercised merely for the purpose of using unobligated balances. The PI sends the justification letter to the Grants & Sponsored Projects Office. The letter is to include the length of the extension, the amount to be carried forward, and the plans for completing the project. The Grants & Sponsored Projects Office will notify the sponsor of the extension by countersigning the letter and forwarding it to the sponsor granting officer. For National Science Foundation grants, no-cost extensions are initiated through FastLane.

Any subsequent no-cost extension and any no cost extension greater than 12 months must be approved in advance by the sponsor. The request includes the same information provided for University-approved no-cost extensions, but must be countersigned by the sponsor before it can take affect.

Sample letters to sponsors for both kinds of no-cost extensions are available from the Grants & Sponsored Projects Office Website.

Carry-Forward of Unexpended Funds to Subsequent Budget Period

Multiple-year projects can carry-forward unexpended funds to subsequent budget periods.

Incurring Pre-Award Costs

At the unit's risk, project costs can be incurred up to 90 days prior to the starting date of a project. The procedure to establish an account for this purpose, or to use the expired account of a predecessor project, is described in the Project Account Management section above.

Other Prior Approval Requirements of Federally Supported Grants and Cooperative Agreements that are Typically Waived

In addition to the three conditions described above, most federal sponsors also waive the prior approval requirements for the following actions. The document entitled "FDP Prior Approval and Other Requirements" describes how the participating Federal Demonstration Partnership agencies implement these and other requirements for research projects. For non-research grants and cooperative agreements from FDP agencies, and all grants and cooperative agreements from non-FDP agencies, consult the sponsor grant policy documents, many of which can be accessed through the Grants & Sponsored Projects Office Website, or contact the post-award staff at the Grants & Sponsored Projects Office. Sponsors are considered to have approved an item or action if it was included in the proposal and not explicitly addressed as unacceptable in the award.

Rebudgeting

Sponsors can allow budget transfers among direct cost categories, rebudgeting of direct to F&A costs and vice versa, and transfer of funds allotted for training allowances to other categories. Note, however, that NSF still requires prior approval to rebudget funds provided for participant support costs, and other agency terms and conditions can limit rebudgeting. Rebudgeting is reflected in UFAS only when explicit sponsor approval has been obtained. Where sponsor approval is required for rebudgeting, units can use the sample letter on the Grants & Sponsored Projects Office Website for this purpose.

Costs that Require Prior Approval under Federal Cost Principles

Costs include equipment and improvements to equipment, alterations and renovations, and faculty consulting in excess of the base salary. Note that the Federal Demonstration Partnership agencies limit unapproved alterations and renovations to $25,000 (except for NIH which permits up to $300,000 before sponsor approval is required). The Army Research Office (ARO) still requires prior approval for all equipment.

Subawarding Work to a Subrecipient Not Named in the Proposal

Some sponsors place no restriction on a recipient's prerogative to subaward work to a subrecipient when such subawarding was not envisioned in the original proposal. Nevertheless, the University of Illinois requires that Principal Investigators/Project Directors obtain Grants & Sponsored Projects Office approval.

Sponsor Approvals for Projects other than Federal Research Projects

Federal projects other than research projects and projects funded by non-federal sponsors usually require sponsor approval for changes that federal research projects can make without explicit sponsor approval. When these situations arise, the requests are to be made as described above for changes requiring explicit approval.

Some federal agencies, including some of those participating in the Federal Demonstration Partnership, place restrictions even on research projects. Appendix I - Typical Terms and Conditions for Federal Research Grants provides additional information on conditions FDP participating agencies place on these actions.

Where the University's award is received from a prime awardee, rather than directly from the sponsor, all required prior approvals are sought from the prime awardee, and not the sponsor. In the case of subawards from institutions that are not participants in the Federal Demonstration Partnership, the sponsor's non-FDP grant regulations apply.

The Grants & Sponsored Projects Office Website has sample letters available for seeking sponsor prior approval for no-cost extensions, rebudgeting, carrying forward funds across project years.

Responsibility for Compliance

According to Section C.4.d (1) of Cost Principles for Educational Institutions (U. S. Office of Management and Budget: OMB Circular A-21), the recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles. This establishes the University's responsibility for compliance with these and other cost regulations.

The PI and department are responsible for complying with the applicable sponsor requirements for sponsored projects and for the prudent management of all expenditures and actions affecting the award. Documentation for each expenditure or action affecting an award must reflect appropriate organizational reviews or approvals which should be made in advance of the action. Organizational reviews are intended to help assure that expenditures are allowable, necessary and reasonable for the conduct of the project, and that the proposed action:

  • is consistent with award terms and conditions;
  • is consistent with sponsor and University policies;
  • represents effective utilization of resources; and
  • does not constitute a significant project change.

Principal Investigators and their departments are responsible for assuring that costs assigned to federal projects are compliant with sponsor requirements. Restricted cost categories and other inappropriate charges can be readily detected in audits, and resulting disallowances must be reimbursed to the federal government. In most cases, this will be the financial responsibility of the department. Final technical reports, where required, are the responsibility of the principal investigator. Payments withheld because of delinquent technical reports become the responsibility of the unit.

Post-Award Administration

This section sets forth the requirements for managing sponsored project accounts, including billing, financial reporting, and other administrative aspects of sponsored project management.

Project Account Management

New Projects

The Grants & Sponsored Projects Office provides notices of awards to the principal investigator's department. In those instances where the principal investigator or the department receive an official award notice from the sponsor, they are to forward it to the Grants & Sponsored Projects Office to become part of the formal record of the award. The Grants & Sponsored Projects Office cannot establish a budget without the official award notice. When the Grants & Sponsored Projects Offices receives notice of award electronically, it forwards the notice immediately to the PI and unit business administrator, even before the award is formally accepted or an account established. The Grants and Contract Office's official award notice is made after the award is accepted and the account is established.

Requests for new accounts - All project accounts are established by the Grants & Sponsored Projects Office, Accounting Section. These accounts include the project budget and incorporate numerous account attributes that facilitate the post-award administration of these projects.

Anticipation accounts - It is often beneficial to make staff appointments and incur other expenses prior to the formal notification of an award by the sponsor. When it can be determined with a high degree of certainty that an award will be made, campus units, at their own risk, may incur costs in anticipation of the award. Units should use the Revised Form GC70, Request for Anticipation Grant/Fund - Request to Use Expired or Overdrafted Grant/Fund to establish an anticipation account. Most federal agencies allow pre-award costs for 90 days prior to the formal starting date of a grant, provided that incurring these costs is in the best interest of the project. Others do not allow costs incurred before the project start date, though in some instances, the formal award is received after the project start date. Units should be informed about whether or not pre-award costs are permitted before requesting and placing charges on an anticipation account.

In cases where the funding period has ended and follow-up funding is expected but not yet received, units may elect at their own risk to continue charging the expired account for up to 90 days. Before doing so, they must either complete a Revised Form GC70, Request for Anticipation Grant/Fund - Request to Use Expired or Overdrafted Grant/Fund and obtain approval from the Grants & Sponsored Projects Office, or make an appropriate indication on the Notice of Terminating Accounts form and return it to the Grants & Sponsored Projects Office.

Continuation Projects

A continuation project exists when a project is initially authorized for an extended time (usually two to five years) but funds are provided by the sponsor on an annual basis, generally subject to satisfactory progress as indicated on the progress report and availability of funds.

Because of the difficulties associated with discontinuing and re-starting a project when funding is delayed, units may elect to continue a project pending receipt of delayed continuation funding. Should the funding not be awarded, or should it be awarded at a lower-than-anticipated level, units are responsible for any expenditures not covered by the sponsor.

Usually, the same general and subsidiary ledger accounts are used for all years of a multi-year, continuing project.

All of the major federal funding agencies and many other non-federal sponsors require project status reports before they will provide continuation funding. Principal Investigators are responsible for knowing the format and timing requirements of progress reports, and for providing them to the sponsor.

All major federal agencies allow unused grant funds to be carried forward into future budget periods, though some, like the National Institutes of Health, place some restriction on the amount or percentage that can be carried forward or subject large carry-forwards to special review.

Renewal Projects

A "renewal" exists when a project expires, and the proposal for continued support is subject to competitive review and results in a new award. This is different from a continuation project where continued funding is contingent only upon satisfactory progress and availability of funds. New general and subsidiary ledger accounts are established for renewal projects, except in those instances where the sponsor extends the funding period and provides additional funds to the existing award number.

Transferred projects

The Grants & Sponsored Projects Office provides assistance to faculty and departmental personnel when awards are transferred to and from the university. For specific guidance, please contact the Grants & Sponsored Projects Office when transferring awards to the university.

Pre-Audit of Sponsored Project (Ledger 5) Vouchers

The Grants & Sponsored Projects Office pre-audits the Ledger 5 transactions listed below, because they represent a high risk for audit disallowances. Units must forward the following transactions directly to the Grants & Sponsored Projects Office.

  • Consultant and honorarium payments, object codes 5400 through 5499 (includes non-employee travel expenses)
  • Subaward payments, object codes 5600 through 5699
  • Earnings transfers
  • Cost transfers
  • Cash deposits (program income, refunds or reimbursements)
  • All leases (equipment, space)
  • Equipment Requisitions
    • $5,000 or more for State of Illinois projects
    • $25,000 or more for other sponsors

Post-Audit of Expenditures

The Grants & Sponsored Projects Office periodically post-audits certain categories of expenditures on federal projects for allowability under OMB CircularA-21. At least annually, it reviews transactions that charge any cost designated as unallowable or restricted under federal cost principles to a federal project (including projects from other entities that "pass through" federal funds). Unjustifiable transactions are transferred to appropriate departmental funds. If subsequently justified as allowable, they may be transferred back to the sponsored project account.

Grants & Sponsored Projects Office Responsibilities

The Grants & Sponsored Projects Office is responsible for assuring that all the University's obligations for the project have been met. This responsibility is fulfilled by coordinating with the units and principal investigators to provide the necessary reports and other documentation. In the case of projects with subawards, the Grants & Sponsored Projects Office ensures that subrecipients have submitted a final billing, and that it has been paid. The following final close-out documents are submitted to the sponsor, as required:

  • Final billing and/or expenditure report
  • Patent report
  • Equipment report
  • Release and assignment forms

The Grants & Sponsored Projects Office then closes general and subsidiary ledger accounts, and deobligates any unused balances, and returns funds to sponsor for all cost reimbursable awards.

Record Retention Requirements

State and Federal awards- All financial, technical, and other records pertinent to the project must be retained for three years following submission of the final financial report, unless the terms of the award provide for a different period. Electronic or copied paper versions of records may be used in place of the original records.

Record retention for other sponsors is as specified in the award or in sponsor policy.

If litigation commences within three years of the end of the project or project period, records must be retained until the litigation reaches its final outcome.

Access to Records

The Auditor General of the State of Illinois, the federal awarding agency, the agency Inspector General, Comptroller General of the United States, or any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient's personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period, but shall last as long as records are retained.

When responding to a federal Freedom of Information Act (FOIA) request for research data relating to published research findings produced under an award that was used by the Federal Government in developing an agency action that has the force and effect of law, the University must provide, within a reasonable time, the research data so that they can be made available to the public through the procedures established under the FOIA.

Rights to Audit

The Auditor General of the State of Illinois employs a public accounting firm to annually audit federally funded sponsored project expenditures. This audit is conducted in accordance with the provisions of OMB Circular A-133 "Audits of Institutions of Higher Education and Other Non-Profit Institutions." In addition, the Office of Naval Research, the University's administrative cognizant federal agency, may engage federal auditors to assist them with their oversight responsibilities. At the request of ONR, these auditors conduct audits of the facilities and administrative cost study, the graduate assistant tuition remission rate, the fringe benefit rates, the Cost Accounting Standards Disclosure Statement, the procurement system, property accounting system, and potentially any aspect of internal controls of expenditures charged to federal funds. Moreover, federal and non-federal sponsors, if permitted by the terms of their awards to the University, may conduct or have conducted on their behalf, audits or "reviews" of expenditures and/or compliance issues related to their awards.

Audit Coordination and Results

The annual audit of federal expenditures, conducted in accordance with OMB Circular A-133, is coordinated through the Grants & Sponsored Projects Office. Audit fieldwork generally begins in April and concludes in October. Departmental Business Managers are notified if a project in their unit is selected for audit as part of this process. Business managers, investigators and staff are expected to cooperate with the Grants & Sponsored Projects Office audit liaison to address auditor requests.

Sponsors occasionally request a program specific audit, expenditure review or other monitoring activity. Such requests should be referred to the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will coordinate these types of activities, including the participation of the department and the PI.

In all cases of audits or "reviews" of sponsored projects, the Grants & Sponsored Projects Office is the official liaison between the auditors and any University unit. Grants & Sponsored Projects will contact appropriate departmental personnel if an auditor wishes to visit a department to obtain information. Units should alert the Grants & Sponsored Projects Office immediately, preferably before providing any information, if contacted directly by an auditor engaged in any of the above-mentioned audits or any other audit connected to sponsored projects.

Findings resulting from audits and monitoring activities can impact the University's ability to obtain future state and federal funding. It is imperative that the units and investigators actively participate in addressing audit recommendations. Disputed and disallowed costs resulting from an audit or review must be removed from the sponsored project account immediately and transferred to other appropriate university accounts.

Please send questions regarding this policy manual to OBFSPolicies@uillinois.edu.

First Published: May 2002 | Last Updated: July 2023 | Last Reviewed: April 2023

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