Project ManagementAccounts Receivable
Activate New Accounts
Policies and Procedures to evaluate the collectability of grant and contract account receivables:
Each employee in the PAASFC maintains a ledger on the collectability of the funds from an agency. PAASFC considers that all funding is collectable and will pursue the collectability with the NAU collection department if needed. Federal projects are to be refunded within 30 days from the receipt of the invoice. All other projects, if funding is not received within 90 days of the invoice date, we send out a follow up collection letter. All accounts are reviewed at least on a semi-annual basis to determine their collectability. This review will include determining the propriety of the balance. If the balance is not owed by the grantor then a memo is written to the Principal Investigator requesting an account to transfer the deficit.
Adjustments will be made on at least an annual basis to reflect the proper receivable balances. PAASFC will evaluate the chances for collecting the balances on funding that is not received within 18 months of the invoice date and/or the ending date of the project. The methodology for determining doubtful accounts and the necessary allowance will be fully documented. The documentation will be a combination of an aging schedule and past experience and judgment . The collection rate is very low and would be considered doubtful on any balances that are outstanding for over 18 months. If the funds are not collectable then a memo is written to the Principal Investigator requesting an account to transfer the deficit. If the Funds are not collectable because of the deliverables not being completed or whatever reason for funding not received after 18 months an allowance for doubtful accounts should be established for those accounts that the University determines may not be collectable.
Administration of Account
When PAASFC receives a request for a new activation to upload in Cayuse, the following information is required from OGCS:
- An Official Award
- Start and End Dates
- Cost Share Information (if applicable)
- Indirect Cost Information
- Budget Restrictions
- Whether it is Fixed Price or Cost Reimbursable
- Reporting and Invoicing Requirements
- Contract Number and/or Purchase Order Number
- Catalog of Federal Domestic Assistance number (CFDA), if the project is Federally funded
- The Project Title
- The Principal Investigator
Once this information is received, PAASFC will upload all information from Cayuse Interface to the PeopleSoft financial system. A Project ID # will be assigned. A Notice of Award Action form will be sent from PAASFC to all designated individuals (PI, Dept, Dept Rep, Fiscal Operations Manager, OGCS, etc.)
At the point when an account is activated on the PeopleSoft Financial System, it is ready to be used. It is important to keep in mind that each grant or contract account is different. Different restrictions on accounts will affect the manner in which your department and the P.I. will use them.
Budgets play a key factor. Some funding agencies are very restrictive in the use of funds.
Budgets are required for each account. Employees in the departments who work on the accounts should become familiar with the restrictions or allowances that are associated with each budget. Budgets are set up on a budget category basis. Examples of categories are:
- Salary and Wages
- Fringe Benefits or ERE
- Outside and Professional Services
- Indirect Cost
Restrictions generally apply to these categories and may not allow deviation from the budget except in a prescribed percentage. Example, if you are budgeted $10,000.00 for supplies and the budget restriction states, "No deviation above 5% of a budget category, not to exceed total award without authorization in writing by Grantor", and you need to spend more for supplies than budgeted, then you can only spend a total of $10,500.00 without requesting a formal change or modification to the budget, (10,000.00 * .05 = 500.00 + 10,000.00 = 10,500.00). The $500.00 would need to be recovered from other budget categories because you cannot spend more than the total approved award.
Audit of Sponsored Projects
PAASFC approves Expenses Transfers that have budget errors OR expenses over $10,000.00
Each PAASFC Administrative who manages the project will approve the expense transfers.
PAASFC does not approve travel documents.
All sponsored projects are subject to audit by the sponsoring agency. All audits are the responsibility of PAASFC. If a department/Principal Investigator is contacted directly by the Auditor, the Auditor needs to be referred to PAASFC. To reduce cost and time to sponsoring agencies and the university the Federal government has adopted a policy of appointing one Federal agency as the "cognizant audit agency." The Department of Health and Human Services (DHHS) is the cognizant audit agency for Northern Arizona University.Continuation Projects
A number of grant and contract projects become continuation projects. Often when an account is awarded and authorized it has an option to receive additional years of funding beyond what was initially awarded. In coordination with OGCS and the sponsoring agency, the Principal Investigator (PI) can request the additional awards.
In a significant number of instances the original project cannot be completed by the approved end date. It is extremely important that if a project needs additional time to be completed, a "no cost extension" should be requested of the funding agency. This should be done in writing no less than sixty (60) days prior to the official end date. This should also be coordinated with OGCS. Some agencies require 120 days, therefore review your guidelines for no-cost extensions.
No account should run over budget. If it appears that additional funds will be required to complete the project, then additional negotiation will need to take place between NAU and the funding agency. Again, OGCS will help you do the negotiation. The majority of agencies will not provide additional funds unless there has been a significant change in the scope of work to be provided. If there is a change in the scope, then budget considerations should be addressed at that time. This is the exception not the rule and those using grant and contract funds should not spend the funds awarded with the idea that they can request additional funds later. If an agency is open to awarding additional funds there will generally be a statement indicating so in the original agreement.
All of these situations should be addressed prior to the occurrence, don't wait until the last minute.
Depending upon the situation, the account will either be extended or a new account may be set up.
It is important for PIs and their support staff to be aware of what the restrictions are and what stop or end dates need to be honored.
These agreements are binding and need to be treated as any other contract you may enter into. Any changes should be in writing and any response from a funding agency should be in writing. Verbal agreements are just as binding, but are far more difficult to prove. Get it in writing.
Any changes to any externally restricted funds should be communicated to PAASFC. Once a change is authorized PAASFC updates the PeopleSoft Financial system.
All transfers of expense should follow the Cost Transfer guidelines
. All IDT documents, should have supporting documentation attached and departments should retain a copy of those documents processed.
Each area that has grant/contract accounts and have individuals being paid from those accounts will receive effort distribution reports.
This system should, within reason, reflect the workload of employees; accounting for 100% of the work for which each individual is compensated.
Whenever it is apparent that a change in workload will occur or has occurred, the change must be documented over the signature of a responsible official and if significant, the change should be entered into the system.
The report should reasonably reflect the percentage of activity applicable to each sponsored agreement. To confirm that the distribution of activity represents a reasonable estimate of the work performed, each report must be signed by the employee and by a responsible official having first-hand knowledge of the work performed.
These effort distribution reports are used for audit purposes to determine that each account is charged its correct amount and are required by the federal government.
It is important that these reports are signed and returned to the Post Award Office, Box 4070.
For more information about this subject visit our Effort Distribution Reports page.
NAU policy for capitalization of assets items costing $5,000.00 or more in value and have a useful life of more than one year should be capitalized. See Property Control policy.
Title of Fixed Assets
In order to determine where the title of property, purchased with external funds, will reside one must examine the funding agencies guidelines.
The Federal government uses $5,000.00 or more per unit cost to determine whether title resides with the Federal government or the University for property purchased with Federal funding. For items costing under $5,000.00 title resides with the University. For items costing $5,000.00 or more ownership is vested with the Federal government. We must pay particular attention to items in which ownership is vested with the Federal government in determining use of those items. The University may continue to use Federal government property on the same project or program for which it was purchased even though Federal funding has ended. If the property is no longer needed for the particular program for which it was purchased the property may be used for other programs or projects which receive Federal funding from the original funding agency. If no programs under that particular funding require the use of the property or equipment then that equipment may be used on other programs which receive funding from other Federal agencies. In the event there are no other Federal programs for which the property may be used then the University must submit a request for disposition instructions to the original Federal funding agency. The Federal government is required to issue disposition instructions within 120 calendar days from the date of the request. If disposition instructions are not received within the appropriate time frame then the University is required to sell the property. The proceeds of the property shall be disbursed using the Federal calculation found in Circular A-110. If disposition instructions are received then the University follows the order of disposition in the notice.
Other non-federal agencies may have different guidelines and should be determined on an individual case basis.
For property purchased on fixed price contracts title generally resides with the University. It is important to always review the rules and regulations applicable to each individual project.
Indirect cost represents costs associated with the administration of a project that cannot be identified to a particular account.
Examples of Direct Costs are:
- Salary or Wage of those working on the project
- Director or P.I.
- Grad Assistants
- Student Workers
- Associated Fringe Benefits for above
Indirect costs are charged to grant projects to cover administrative expenses that cannot be charged directly to the account. For example, the staff of PAASFC works solely on grant accounts, but no one from PAASFC receives their pay directly from a grant account.
In order to track the time PAASFC spends on each account and apportion an amount of its salary to each account based on the time spent on each project would cost more than would or could be gained.
Payroll, Accounts Payable, Purchasing, Custodial, Utilities, and Maintenance are all examples of work performed in regard to grant accounts, but are not paid from Sponsored Projects directly.
These costs are indirect costs and accounts are charged an indirect cost rate to help the University recapture at least a portion of the costs associated with dealing with outside funding.
For more information about this subject visit our Indirect Costs page.
Overtime Pay for Non-Exempt Classified Staff on Sponsored Projects
Why is it not a best practice in having
a grant/sponsored project as the default for the NAU Pro-Card?
This is an interesting question per on the surface using a
grant as a Pro-Card default account appears to be a harmless and easy course of
action, however it is not on several levels.
Level 1: It is
generally accepted by the federal government, sponsoring agencies, and auditors
that if direct costs are “easily identified and assigned.. with a high degree
of accuracy,” as required in OMB Circular A-21, the initial charging of a cost
to a project constitutes the proper allocation of that cost. Because the default account is set up for
transactions that have not been identified, reconciled nor moved to the appropriate
funding then there is heightened risk that expenditures will hit on the grant
that do not benefit that project thus be considered as unallowable.
Level 2: The risk of the Sponsor Agency Auditors perception
of using agency funds designated solely for a proposed and approved project of
having the potential of being used as “bridge funding” to augment other
projects and/or institutional
Level 3: Because 99%
of sponsored projects are cost reimbursable (the institution is reimbursed for
the expenses after they occur) then the risk of invoicing and/or drawing down
funds to cover unallowable expenditures is greatly amplified. If this were to occur the institution would
not only owe the actual amount of the unallowable cost but also any indirect
charges based on that cost, and of
course fines, penalties and interest.
Level 4: NAU’s yearly
A-133 Audit: By allowing a grant to be a
Pro-Card default account and taking into consideration the risk described in
the three levels above, the auditors would have to disclose the practice as a
“Significant Deficiency” per SAS112 (Statement of Audit Standards). In-turn all of our prime sponsors for which
we are an sub-awardee would need to be notified along with ABOR and the public
that NAU internal controls are not sufficient to ensure compliance, which would
jeopardize NAU’s goal to increase
research funding over the next few years.
Paid Absences and Fringe Benefits
To provide for overtime compensation for more than 40 hours worked in a work week by a non-exempt classified staff member.
Human Resources Department (Overtime 2.03)
Non-exempt classified staff
Staff assigned to a sponsored project are eligible for overtime compensation in accordance with the university's policies and procedures established by the Human Resources Department.
Sponsored project personnel often have split appointments between two or more Project ID#s. If the overtime work can be directly identified with a specific appointment and Project ID#, the overtime compensation is charged to the Project ID#. If the overtime work is related to the employee's general duties and the employee is paid from multiple Project ID #s, the overtime charges must be allocated proportionately.
Procedure for Non-Exempt Employees
- Non-exempt employees must receive overtime compensation or compensatory time off for extra hours worked. These include employees not determined to be exempt.
- Overtime work shall be approved in advance by the responsible supervisor. The appropriate supervisor is responsible for scheduling overtime. Employees shall not work overtime unless specifically authorized to do so by their supervisors.
- When a non-exempt employee works multiple non-exempt positions, the number of hours worked in each position are cumulative in determining eligibility for overtime.
- Non-exempt employees cannot waive overtime requirements. All overtime hours worked must be recorded on a time sheet. If an employee attempts to work extra hours without supervisor approval the employee may be subject to disciplinary action. Conversely, if supervisory personnel direct employees to work overtime without recording it, notice must be given to the Human Resources Department so appropriate action can be taken.
Participant Support Costs
Treatment of Paid Absences
Vacation, holiday, sick leave pay and other paid absences are included in salaries and wages and are charged to Federal Projects as part of the normal charges for salaries and wages. Separate charges for the cost of these absences are not made.
Treatment of Other Fringe Benefits
Our organization charges the actual cost of each fringe benefit direct to Federal projects. However, it uses a fringe benefit rate which is applied to salaries and wages in budgeting fringe benefit cost under project proprosals. The following fringe benefits are treated as direct costs: FICA, health insurance, pension plan, unemployment insurance, and workers compensation.
The sponsoring agency
provides funds to the university to conduct a workshop, conference, seminar,
symposia or other short-term training or information sharing activity. A
participant is not involved in providing deliverables to NAU or to a third
party. A participant would not be terminated or replaced if they did not
perform certain services. Participants in the activity may be paid for that
participation if such payments are in the approved budget. Contact the assigned
Post Award Administrator for assistance in determining if a participant payment
The recipients of
training provided at a workshop, conference, seminar, symposia or other
short-term instructional or information sharing activity funded by an external
grant or award, or the training beneficiaries of the project or program funded
by an external grant or award. All Participant payments are reported to the IRS
on a 1099 misc.
- the participant is not
involved in providing deliverables to the university or to a third party. A
deliverable can be defined as a research report to a third party or providing
research results to a third party.
- the participant would
not be “terminated” and a replacement found if he or she did not perform
certain services, other than failure to attend or participate in the sponsored
event or training program.
The sponsored budget
must allow payments of small non-compensatory payment (stipend) and/or
reimbursement of travel costs or other out-of-pocket costs incurred to support
attendance at a workshop, conference, seminar, symposia or other short-term
training or information sharing activity. Participant support is distinguished
from student support in that non-compensatory stipends for student support are
for the objective of obtaining a degree, whereas participants are usually not
students and, if they are, the non-compensatory stipend is not to support their
degree-seeking enrollment. Participant expenses may be paid for directly or a
reimbursement made to the individual.
Participant Certification Form
Participant Payments (not reimbursements) are processed using a Requisition/Purchase Order and must be accompanied by the Sponsored Project Participant Certification form and approved by PAASFC. Use Category Code 96408/Account Code 754100. When initiating the Receiver to release payment(s), email a completed Participant Payment Disbursement form to Accounts Payable to schedule one or multiple payment dates.
reimbursements are processed according to Comptroller Policies and Procedures 421-02: Interviewees / Non-Employees and 420-01: Faculty and Staff Reimbursements. Use
Category Code 96408/Account Code 754100.
Regulation & Guidance
Many granting agencies require that they give specific written prior approval before financial budget changes are made. Contact PAASFC or the Office of Grant and Contract Services (OGCS) for the specific requirements of your sponsor. Written approval required by the University to the sponsoring agency include the following:
- Change in scope or objective of the project
- Absence or change in Principal Investigator or key personnel
- Change in grantee organization
- Any changes specifically prohibited by the terms and conditions of the award.
All written requests to sponsors, when necessary, will be initiated and justified by the Principal Investigator. The Principal Investigator signs and forwards the request to the OCGS after reviewing it. If OGCS endorses the request it will be forwarded to the sponsoring agency. Please note that the changes to the project will not be made until written approval is received by OGCS from the sponsor. Prior approval requirements vary depending on the agency. Please note that some agencies (such as PHS) grant the University "Expanded Authority" to approve some of the above changes without obtaining prior approval from the sponsoring agency. Also, National Science Foundation (NSF) allows OGCS, as our Organization Prior Approval Representative, authority to approve some of the above changes. If any further information on prior approval is needed, contact the Office of Grant and Contract Services.
The Office of Management and Budget (OMB), working cooperatively with federal agencies and non-federal parties, establishes government-wide grants management policies and guidelines through circulars and common rules. These policies are adopted by each grant agency and inserted into their federal regulations. The two circulars most pertinent to our financial accountability concerns are A-110 and A-21.
- OMB Circular A-110. This circular sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations.
- OMB Circular A-21. This circular establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions
Arizona Revised Statutes
As a state institution, NAU is required to comply with all Arizona revised statutes. All grants, contracts and other legal commitments entered into by the university must be in compliance with these statutes.
Arizona Board of Regents
Because NAU is under the governance of the Arizona Board of Regents (ABOR), it must also comply with ABOR regulations in grant and contract administration as found in their policy manual.
Office of Grant and Contract Services (OGCS)
- The dissemination of funding information.
- The submission of proposals.
- The negotiation of external agreements.
- The authorization of external agreements
- The authorization of the departments to proceed with a first funded grant or contract.
- Approving any budget changes and changes in directors on existing projects.
- Provide information to the college/department on updating the policy and procedures on non-financial information such as
- Patent Policy
- Copyright policy
- Use of humans in research
- technical report requirements of the agencies
Post Award Accounting Services and Fiscal Compliance (PAASFC)
- Post-Award activities for accounting and administration of all grants, contracts, and programs of funds restricted by outside agencies.
- Institutional management on grants and contracts beginning immediately after the award.
- Approve requisitions and reimbursements over $10,000 and payroll activity.
- Plan, develop, and maintain an effective accounting system.
- Maintain the official PAASFC account file and corresponding audit records.
- Monitor budgets and all accounting records.
- Preparation of all financial reports and invoice to the sponsor. Review and sign all financial reports to outside agencies.
- Counsel and advise Principal Investigators, directors, and account representatives in all financial affairs, agency rules, regulations and policies involving grants and contracts.
- Serve as liaison between the University administration and faculty in administrative requirements of the agreement.
- Serve as the sponsors' office University contract for all post-award activity.
- Review and endorse any requests made of the sponsor relating to any financial affairs.
- Coordinate the account close-out process including all financial reports.
- Execution of the technical aspects of the projects, including completing and submitting the technical, property, invention, patent and copyright reports if required.
- adhere to University requirements for animal care, human subjects and hazardous materials safety and security.
- Ensure all costs are reasonable, allowable and allocable per OMB circular A-21
- Staff the project complying with University requirements on hiring.
- Complete and return the "Effort Distribution" reports to PAASFC.
- Process purchase requisitions, Personnel Action Request (ePAR forms), and budget changes/transfers.
- Review the monthly accounting statements. Make sure all manual records tie to the University official accounting statements.
- Request extensions, if needed, in writing to the sponsor at least sixty (60) days prior to the official end date. Coordinate with the Office of Grants and Contracts.
- Request budget modifications in writing to the sponsor in coordination with the Office of Grants and Contracts Services for agencies who require them, before the deviation occurs.
Revenue is what you gain by performing a service or providing goods.
- Cash is Cash
- Cash is not Revenue
- Revenue is Revenue
In PeopleSoft revenue is recognized on an accrual basis, not a cash basis. This means revenue is recognized when the earnings process is virtually complete.
A majority of grant and contract projects are cost reimbursable. As explained earlier, the University is entitled to receive payment when expense has been incurred. Therefore the earnings process is virtually complete and revenue is recognized even though the cash has not been received.
Due to this feature, expense and revenue will be equal at the beginning of each day after the nightly cycle and on the monthly reports.
Some accounts that are not Federal or Federal Pass-Through funds are programmed in PeopleSoft where revenue is recognized on a cash basis. Funds are deposited directly to revenue.
Supplemental Pay for Personnel on Sponsored Projects
To allow for additional compensation for supplemental activity performed for a sponsored project.
Faculty, administrative staff, and exempt classified staff.
Sponsor regulations as implemented by university policy generally prohibit routine payment of supplemental pay for full-time employees. Provision for supplemental pay must be authorized in the sponsor's award document and be authorized by the required university officials. Prior written approval must be obtained from the sponsor for supplemental pay charged to federal or sub-federal funds when provision for supplemental pay was not approved in the proposal or award document.
Faculty Supplemental Pay
Chairs and deans may approve supplemental pay if:
- The supplemental work does not conflict with the normal total responsibilities to the university for teaching, research, public service, and committee and administrative duties.
- The supplemental work is to be performed for a department other than the employee's assigned department, or is a separate or remote function.
- Prior written approval of the employee's chair/director and dean has been obtained.
- The proposal and/or the award document include specific provisions for supplemental pay, or prior written approval has been obtained from the sponsor.
- The rate of pay is consistent with the employee's base salary from other university funds
- The employee has not exceeded the hour or percent of pay limitations permitted for that type of appointment
Exempt Employees Supplemental Pay
- Exempt employees are not eligible for overtime compensation for extra hours worked. Generally, this definition includes executive, administrative and professional employees.
- Exempt employees are not eligible to receive overtime payment or compensatory time off. There are instances, however, when flexible work hours may be permitted at the department head's discretion to accommodate such things as peak work periods, for example, in the case of an exempt employee who worked an excessive number of hours in a pay period or who routinely works more than 40 hours in a workweek.
To initiate supplemental pay for faculty or staff from a sponsored project ID#, the project director must complete a supplemental compensation request prior to making final arrangements to begin work.
Instructions are as follows:
- Supplemental Compensation Requests MUST be approved PRIOR to making final arrangements to begin work. When approvals are completed, copies of the form will be returned to the dean/director, project manager and the employee.
- This form should ONLY be submitted for supplemental compensation of FULL-TIME employees during periods of regular employment (e.g., full-time faculty during the academic year only.) All other requests (e.g., summer employment for faculty) should be submitted on a Personnel Action Request form (ePAR).
- Compensation Rate shall be determined according to ABOR policy, with the concurrence of the appropriate vice president. Concurrence of Human Resources is also required for classified staff rate.
- Submit ePAR thru workflow.