- Negotiation of Terms
- Account Setup
- Action Memos
- Sponsored Budgets
- Spending at Risk: Pre-Award Spending and Advance Accounts
When contract negotiations are complete and/or an award notice arrives, OSP alerts the Principal Investigator (PI) and the PI’s department that the account is ready for setup. The department and the Office for Sponsored Programs (OSP) then work together to obtain approvals and define the account structure, and an Action Memo is issued to the PI. The key steps in this process are described below.
Negotiation of Terms
The Office for Sponsored Programs (OSP), or, in the case of Industrial Sponsored Research Agreements, the Office of Technology Development (OTD), has responsibility for reviewing the terms and conditions of all sponsored research agreements and working with the Principal Investigator (PI) and FAS Research Administration Services to negotiate any necessary changes.
A key objective of award negotiations is to ensure that the University and the PI do not relinquish the right to make the ultimate decisions on the manner in which the research is to be conducted or the results disseminated. Guiding principles are both academic and financial. On behalf of the PI, the University seeks to guarantee that the sponsor cannot unilaterally amend, suspend, or terminate the project; that there is no prohibition on publication of results; and that ownership or control of intellectual property resulting from the research need not be relinquished.
For each sponsored award, at least one Harvard account must be created to which income and expense transactions can be posted. OSP's Account Setup page describes the rules governing this process. A brief digest below:
The Chart of Accounts (CoA) is the financial coding system used to define the accounts in an institution’s general ledger. When an Award Notice arrives from a sponsor, OSP notifies the department and solicits its recommendations on the account structure based on the Sponsored Chart of Accounts Business Rules (posted on OSP's Account Setup page). Following this discussion, OSP and the FAS Finance Office work together to assign six of the seven segments in the 33-digit Harvard account string to create the account (not including the Object Code, which changes with individual transactions).
Each award has at least one main account (designated by an “M” on the Action Memo) but can also have one or more “part-of” accounts (designated by a “P” on the Action Memo, and indicated by the Org and Subactivity segments) and/or one or more subawards to outside institutions (designated by an “S” on the Action Memo and indicated by the Subactivity segment).
The six-digit Activity segment reflects the research use or purpose of the funds. The sponsored Activity segments assigned to FAS range from 320000 to 367499 and from 430500 to 434499. While an award must be assigned a different Fund for each segment, the Activity segment often stays the same. The Activity segment of a sponsored account is also used to track Cost Sharing.
An important “invisible” feature of the Harvard Chart of Accounts is the “A-21 code,” a tag embedded in the Activity segment of each account that reflects the type of sponsored Activity, as defined by the Office of Management and Budget's Circular A-21 (which outlines cost principles for educational institutions). The A-21 code should correspond to the indirect rate used in the project budget. The four A-21 codes applicable to sponsored activities are
When an account has been set up for a new award, OSP issues an “Action Memo” in GMAS. A link to the Action Memo is automatically generated in GMAS and emailed to the PI, with copies to appropriate administrators. The Action Memo communicates the account number, project period, obligated funds, and perhaps some of the special terms and conditions to the PI. Note: one should always check the sponsor-issued Award Notice in GMAS for a full list of terms and conditions. Action Memos are also issued for modifications to an award during its period of performance.
The approved budget can be found in the sponsor award letter, in the original proposal, or in a submitted revision.
The department may enter the line-item budget into the General Ledger once the Account has been set up. Once this has been completed, the budget provides a useful mechanism for monitoring expenditures. The budget in the General Ledger is the budget that will be reflected in GMAS. Any subsequent change to the budget requiring either internal or sponsor approval should also be entered into the budget of record.
In the FAS, there are two tools that can be used to enter or modify sponsored budgets:
Sponsored Budgets are uploaded directly into the General Ledger using the ADI functionality. The Oracle Budget privilege immediately opens the ADI download utility. Budgeting Responsibility is arranged with the Data Security and Reporting Administrator in the FAS Financial Office through your departmental financial contact. Training on this process is available on A Better Learning Environment (ABLE).
FAS Sponsored Program Accounting Reports (FASSPAR), a tool developed specifically for the FAS, shows the entire budget, calculates fringe and overhead costs automatically, stores draft budgets for eventual upload, and uses budget categories that match the language of proposal budgets. FASSPAR works with all current popular browsers (Internet Explorer, Firefox, Safari, etc.). The FASSPAR budgeting capability does not require a Budgeting Responsibility in order to create a draft budget, but a Budgeting Responsibility is required for uploading a budget to the General Ledger. Since many departments in the FAS prefer that the budget of record be entered by their own grant or financial office, administrators should be aware of their department’s policy prior to uploading budgets in FASSPAR. Administrative access to FASSPAR is arranged with the Data Security and Reporting Administrator in the FAS Financial Office through the departmental financial contact.
Spending at Risk: Pre-Award Spending and Advance (At-Risk) Accounts
Advance (At-Risk) Accounts
Establishing an Advance Account or "at risk" account allows charges to be tracked properly, prevents the accumulation of charges in unrelated “holding” accounts while waiting for official sponsor authorization, and reduces the likelihood of late cost transfers. All “at risk” accounts should be monitored with special care.
Advance Accounts may be appropriate in situations where the PI wants to begin work on the project while the terms of the award are in negotiation. Any charges incurred are the department’s responsibility if agreement on acceptable terms cannot be reached.
In certain circumstances, it is appropriate to establish an Advance Account when an account number is needed to make an appointment, but the account will not be charged. This situation is common for NIH training grants where “year logic” is used, to keep appointments synchronized with funding cycles. For NIH NRSA fellowship continuations, proposals will be routed through OSP according to usual process and the relevant NIH deadline.
Advance Accounts are requested through GMAS. See the Roles and Responsibilities document for information about approvals.
Notwithstanding the problems that might result from spending funds from an award before a final agreement is executed, it is possible to request authorization for pre-award spending on grants and cooperative agreements with most federal agencies and to charge award-related expenses up to 90 days prior to the award start date. Authorization of pre-award spending should not be confused with authorization of an advance account. Pre-award spending is approved by the University through GMAS. See also Roles and Responsibilities.