Expenditure Processing

Controller’s Office

  • The Controller’s Office provides the PI with information as needed to effectively manage his/her award.
  • The Controller’s office monitors the financial activity on contracts and grants to ensure compliance with University policies and procedures and sponsor requirements.
  • The Controller’s office coordinates all audits within the contracts and grants area performed by the University’s independent auditors, federal agencies and other sponsoring agencies.
  • The Controller’s office is also responsible for the preparation and negotiation of the Federal Facilities and Administration (indirect) cost rates and fringe benefit rates.

 

Although the Controller’s office prepares monthly financial reports for each project, it is the responsibility of the PI to ensure that all expenditures are allowable. In particular, federal grant expenditures must be allowable as defined in OMB Circular A–21. The manager of Grants and Cash Management is available to answer any questions a PI may have regarding the allowability of costs.

Facilities & Administrative Costs (F&A) or Indirect Costs

  • Facilities & Administrative (F&A) Costs are costs that are incurred for common or joint objectives. Therefore, these costs cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.
  • F&A cost rates can be expressed as a percentage of total direct costs, a percentage of salaries and fringe benefits, or a predetermined rate required by a sponsor.
  • The F&A cost components are classified under two major cost categories: (1) Facilities and (2) Administration.
    Facilities costs include depreciation, interest on debt associated with certain buildings, equipment and capital improvements, operations and maintenance (physical plant) expenses, and library expenses. Administration costs include the costs associated with general University administration and expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under Facilities.

 

The F&A cost rate is prepared by the Controller’s office and is negotiated with and approved by the University’s cognizant federal agency.

SP must be contacted for the F&A cost rate applicable to a specific contract or grant, and to determine how this rate should be included within a proposal.

Payment of an Expenditure

It is the responsibility of the PI to ensure that purchases are allowable within the grant guidelines. For federal grant projects—items which are not allowed—include, but are not limited to: entertainment, alcoholic beverages, promotional items, advertising, club dues, and legal fees. As the primary grant manager, it is recommended that the PI become familiar with the cost principles found in OMB Circular A–21. Questions concerning allowable costs should be directed to the Controller’s office.

The University's grant accountants are available to meet with a project’s PI, department secretary, or administrative assistant to review how to fill out and submit the appropriate forms for the payment of an expenditure and answer any budget-related questions. No expenditure payment will be approved prior to the receipt of the official award notification of funding by the sponsor.

Consultants

This is intended to outline the procedures to be followed when paying an individual for independent/consultant services.

Before attempting to pay someone for work performed, it must be decided whether the individual is indeed a consultant or if he/she should be paid as an employee. The most important criterion is that the nature of the work performed is unique, that is, not offered at SVSU and not performed for a sustained period of time. The IRS uses a 20–Factor Analysis to determine whether a worker is an employee or independent contractor. This Analysis is used by SVSU’s Controller’s office to make the final determination between consultant and employee.

If it is decided that the individual is a consultant, the following documentation is required:

  • A signed memo from the PI of the sponsored project to be charged (the PI is ultimately responsible for any and all expenditures). This memo must contain a description of work performed, how the work relates to the project, how the work benefits the project, and the total to be paid. This memo must be submitted prior to the first request for payment.
  • A signed invoice from the consultant which must include the consultant’s full name, home address, social security number, a brief description of work performed, hours or days worked, rate of pay, and total amount due. This invoice must be submitted with each request for payment.

This documentation is necessary in order to provide a record for the I.R.S., showing that the individual qualifies as a consultant and to support the payment of the individual as a consultant using sponsored project funds.

Please be advised that each consultant situation is reviewed individually. In some cases, additional documentation may be required. If you have any questions regarding the procedures outlined above, please contact the Controller’s office.

Travel Policy

Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are traveling on official business for the University as stated in the approved budget. It is important to first understand SVSU’s travel policy, which can be accessed at: Travel Policy . Further, if the project’s sponsor requires compliance with regulations as outlined in OMB Circular A–21, another set of rules also applies. It is necessary that the PI become familiar with the policies that govern their award to avoid unallowable costs. (Also see program announcement for additional restrictions and guidance.)

Equipment

According to University policy, equipment purchased with sponsored project funds is defined as having a unit cost of $5,000 or more and a useful life of greater than one year.

Equipment to be purchased with federal funds must be approved by the sponsor in advance and listed in the proposal. If you wish to purchase equipment not listed in the proposal, you must receive prior approval through SP and the funding agency.

The purchase of general-purpose equipment (for example, office equipment and furnishings, reproduction and printing equipment, or computers) is allowable only if the equipment is primarily used to carry out project activities and the purchase has been approved by the sponsor.

Procurement

When purchasing any individual items (goods or services) with a unit cost of $1,000 or more, the PI may need to provide written bidding or sole source documentation to the Purchasing Department and the Controller’s office. The documentation must be received and considered by Purchasing prior to commitment of an order.

The Purchasing Department is responsible for managing the bidding process for most of the goods and services required by University departments. Within its scope of operation, Purchasing handles the qualification of potential bidders, the solicitation and analysis of bids, and the awarding of business to vendors. It is important, therefore, that each PI communicate their needs and plans for major purchases (as defined above) to the Purchasing Department as early as possible so there will be reasonable time to accomplish the bidding procedure.

Purchasing documentation will help to ensure that the acquisition of goods and services is done in a competitive, fair, and timely manner.

Property Management

University policy guidelines require that all non-expendable property having an acquisition cost of $5,000 or more and having a useful life greater than one year is subject to property control. Property control includes the maintenance of property records, the tagging of equipment items, and periodic physical inventories (at least every two years).

A representative from the Controller’s office will coordinate the tagging and inventory of all equipment items with the assistance of the PI. The PI is held responsible for the location of the equipment as well as the maintenance.

The information on record, which is necessary for the maintenance of the property inventory file, is as follows:

  • purchase order number
  • SVSU account number
  • description of item
  • manufacturer
  • cost
  • building and room location
  • model and serial numbers
  • workstation number, if applicable
  • acquisition date

 

Interpreting Monthly Accounting Reports

PIs or program directors can monitor their grant accounts by accessing XMMI through the University’s Datatel system (PI’s who don’t have access to XMMI will receive a Monthly Management Report or MMR). The XMMI and MMR track monthly and year-to-date expenditures for each grant account. Although some budget items are recorded monthly, many expenditures are updated weekly. Using XMMI on a consistent basis helps the PI fulfill his/her role as the primary grant manager and allows him/her to correct any inconsistencies immediately. A brief training on how to interpret these reports and access XMMI is available from the manager of Grant and Cash Management in the Controller’s office.

Personnel

If indicated in the grant budget, one of the first steps in implementing a sponsored program will be the hiring of project personnel. The SVSU Department of Human Resources (HR) will help with this process. All positions funded by grants and contracts require that a full affirmative action search be conducted. However, recruitment efforts may vary depending on the type and level of the position. Recruitment procedures, checklists and forms are listed at www.svsu.edu/hr under policies. HR will also prepare contracts of employment in cooperation with the PI. Yearly performance reviews are required. Personnel forms such as the HR Action Form may need to be updated annually or semi-annually, depending on the grant’s end date.

Cost Transfers

Cost transfers are occasionally needed to correct errors in original charges. There are instances, however, where cost transfers can be avoided simply by reviewing the original charge to see that it is set up correctly. Directly charging the appropriate program (account) initially results in fewer cost transfer requests.

There is the potential of audit disallowance on cost transfers which are poorly documented and/or not completed in a timely fashion. Some common cost transfer problems include:

  • failure to complete in a timely fashion;
  • failure to adequately document why the transfers were made; and/or
  • failure to obtain certification from the PI or other responsible program official.

When requesting a cost transfer through the Controller’s office, written documentation, signed by the PI, must be provided that includes the reason for the transfer, the account originally charged, as well as the purchase order or check requisition number. All cost transfers that take place more than 90 days after the original charge must be supported by written justification for the lateness of the transfer, as well as the documentation discussed above. The PI needs to consider the end of the University fiscal year (June 30) and the end of the grant fiscal year when making cost transfers.

Financial Reports

Financial reports (including final financial close-out reports) which are required by the sponsor are the responsibility of the Controller’s office. The objective of the office is to ensure that the financial reports submitted by SVSU to sponsors are presented fairly, timely, and contain complete and reliable information. Financial reports are generally due within 90 calendar days of the end of each budget period, but may vary according to specific program guidelines. It is the responsibility of the PI to ensure that all transactions for the budget period are completed and expensed against the sponsored project account by the end of each budget period. Any balance not obligated on a sponsored program will be returned to the sponsor unless the sponsor has authorized (in writing) that the unexpended funds may be retained by the University or carried over for use in continuing years of the project. All reports containing any financial information must be reviewed by the Controller’s office before submittal.

Effort Reporting

Faculty, staff and student effort is needed to achieve a grant's scope of work.  If effort is charged to the grant account or reported as cost share, it must be recorded in a timely manner.  The Project Time Log (SB website) and the In-Kind database (www.svsu.edu/inkind) are two methods available to salaried employees to track grant effort.  SP recommends that effort be logged daily and certified monthly by the person performing the effort.  Grant effort is verified three times per year by the person performing the effort and the PI (PI effort is verified by the PI's supervisor or dean).

Audit

Federal awards are subject to annual audits by the University’s independent auditors as dictated by the Office of Management and Budget Circular A–133. This audit is performed to ensure that the University is managing its federal awards in compliance with applicable laws and regulations. The audit includes tests of internal control systems affecting all federal awards, as well as tests of individual transactions. The results of the audits are reported to the federal government (Department of Navy, SVSU’s cognizant agency).

In addition to the annual audit, the University may be subject to audits of individual awards. These audits are typically conducted by the sponsoring agency. The PI would be notified of this upcoming visit and should enlist the support of the Controller’s office and SP in preparation for the visit. Any resulting report will be filed with the Controller’s office and SP.