Financial Management

Introduction

The Principal Investigator is responsible for implementing the sponsored project award in accordance with sponsor guidelines, hiring staff, expending sponsored project funds, and conducting the as described research in the proposal and agreed to with the acceptance of the award. In many areas of the College, the financial management of a sponsored project award is delegated to a Department Grant Manager. While the award then becomes a shared responsibility among the Principal Investigator, the Department Grant Manager, and the Sponsored Research Manager. The Principal Investigator is still ultimately responsible for the overall success of the project, including adherence to sponsor's guidelines. 

A financial management summary table has been developed as a quick reference tool. It presents an overview of the most common financial management activities a Principal Investigator will encounter. It does not go into any detail or attempt to explain the process and reasoning behind a particular policy.

Dartmouth Collection of Award Funds

The manner in which funds arrive from a sponsor to Dartmouth College should not impact a Principal Investigator's ability to pay for project expenditures that meet the allowability, allocability, and reasonableness guidelines. The primary role of the Principal Investigator in relationship to these activities is in documenting the project's progress and conveying technical reports to the sponsor in a timely manner.

Billing

Some Federal and Private Agencies require billing as a method of payment. It is the responsibility of the Sponsored Research Accounting Assistant in OSP to produce both monthly and quarterly bills for these PTA accounts. Billing is normally done on a reimbursement basis for expenses charged during a particular month or quarter. Check deposits and "aging" are also tracked.
Please note that billing of expenses on a PTA account should only be done by OSP.

Letter of Credit

The Office of Sponsored Projects is responsible for the draw down of funds on awards from: Health and Human Services (HHS), Department of Education (OED), National Science Foundation (NSF) and National Endowment for the Humanities (NEH). The Manager of Cash Management/Reporting manages the cash flow through OGA to determine the dollar amount to draw down from the appropriate agency on a weekly basis. The Manager of Cash Management/Reporting is required to reconcile the draws in a quarterly report to the agency.

Gifts to Support Sponsored Research (Gift Recording)

Some sponsored project awards from private agencies such as foundations require their awards be gift recorded. When a check from one of these agencies is received at OSP, it is deposited into a Clearing Account. Gift recording notifications are then produced in OSP and sent to Gift Recording where they are processed. The money is then put into the appropriate general ledger account. This is done primarily for the agency's tax purposes and also to recognize the efforts of the Development Office.

Allocation of Funds on a Predetermined Schedule

Perhaps the most common method of transferring funds from a sponsor to Dartmouth College is by means of a predetermined schedule of payment. On a scheduled date, a check will arrive from, or be issued by the sponsor to be deposited in the College's general ledger account. Checks are made payable to the Trustees of Dartmouth College. Expenditures are then charged against the PTA account and paid for out of a general ledger account.

Five Principles of Financial Transactions Management

There are five overall principles to managing the financial transactions of sponsored project funds. Policies and procedures within the OSP have been developed in support of these principles. The five principles are:

Consistency

• Transactions must be handled in a consistent manner. That is, policies and procedures have been established to address similar types of transactions in a routine manner.

Timeliness

• Transactions must be handled within a reasonable period of time consistent with time frames outlined for federal agencies, a private sponsor, and Dartmouth College.

Justification

• There must be a reason for the transaction that supports the project's goals, and adheres to guidelines outlined by federal agencies, a private sponsor, and Dartmouth College.

Documentation

• Sufficient documentation to support the transaction must exist. The documentation must be retained, organized, and complete enough to stand up to an audit.

Certification

• Transactions must be approved and carry all the correct authorizing signatures.

Financial Management Problems

Overspent Projects

Overspending on a PTA Account can reflect poorly on the Principal Investigator, OSP, and Dartmouth College. It can indicate the award was not planned carefully enough to support a request of sufficient funding to complete the award. It can also be seen as indication of haphazard internal financial management of a sponsor's funds. Because the implications of overspending are so serious, a major responsibility shared by the Principal Investigator and the Sponsored Research Manager is to carefully monitor the budget.

If a PTA Account ends with a deficit, the Principal Investigator's department or administrative area is responsible for covering the remaining expenditures. For those PTA Accounts that end with a deficit, prompt cost transfer requests must be submitted by the department or the administrative area. The cost transfer will initiate the process of moving remaining outstanding expenditures from the PTA Account to the appropriate departmental GL account.

Underspent Projects

While the financial implications of under spending on a PTA Account are not nearly as serious, severe under spending, 20% or more of an award's total direct costs, can also reflect poor project planning, haphazard internal financial management of a sponsor's funds, or that the goals of the award were not met.

There is little virtue in ending a PTA Account with a large balance of funds. Rarely does the sponsor allow the institution to keep the money. Rather, it must be returned to the sponsor where it can create a fair amount of accounting inconvenience. Institutions that return large unused portions of sponsored research funds are not rewarded for their frugality.

This does not mean that there will never be instances when there are legitimate reasons for major under spending of a sponsored project award. Nor does it mean that unbridled spending of remaining sponsored project funds should take place in the waning months of a project. Rather, careful planning, monitoring, ongoing communication with the sponsor, and revising of the work plan as needed should be the norm throughout the life of the award.