| Monitoring and Managing Expenditures
REAL-TIME EXPENDITURE TRACKING
Principal Investigators at Fort Lewis College are urged to maintain their own expenditure tracking system using one of any number of excellent spreadsheet or database software systems currently available. With the help of such a tool, a PI can update records on a regular basis, and still reconcile them to official Campus reports.
Expenditure Tracking Tool
A tool has been developed by Judy Johnson in the Accounting Office to assist with this task that is similar to a checkbook. It utilizes Excel’s spreadsheet, and the shell is entitled “GrantPIWorksheet.” Any PI interested in using this tool should contact Judy directly at 247-7379. She will be happy to share this tool and assist with its implementation.
The following section will assist those who would like to try developing their own tool. There is some flexibility as to design possibilities for such a tool provided the required information is included. The design should allow for each purchasing document, payroll record, travel expense or other document to be deducted from the award total for the appropriate budget category. When the actual expense appears on the Campus’s general ledger, a month/year date is noted, and any necessary adjustment is made to the original entry.
The structure should contain individual records that include several item fields, or individual columns, for:
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Date the transaction is initiated
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The budget category to which it is assigned
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Vendor/individual name
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A brief description of the transaction
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Purchase order or other identifying number
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Date the order is received, travel is completed, etc.
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A column containing the total allocation for the budget category, along with any adjustments as separate entries
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Encumbrance, expense, and balance columns
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Month/year date that the expense clears the general ledger
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Columns should have the ability to generate totals and balances for each budget category.
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For purposes of this illustration, an encumbrance is any commitment that has not yet cleared the general ledger as an actual expense. If a spreadsheet is being used, the encumbrance is simply moved from the encumbrance column to the expense column when it clears the general ledger. If there is a difference between the amount of the actual expense and the encumbered amount, an adjustment is made, and any substantive differences are investigated to determine the reason for the difference.
Shipping charges are often hard to estimate and can account for a substantial portion of a purchase’s total cost. It is, therefore, wise to estimate these costs and enter them as separate encumbrances, in addition to the merchandise total. If shipping costs are consistently encumbered in this manner as a separate line item or record, the PI will be able over time to come very close to estimating these costs accurately.
When the PI’s records are reconciled to the general ledger, the total expense column on the general ledger for a given budget category will agree with the total expense column in the PI’s records. If they do not, any differences must be investigated and corrections must be made.
PRE-AWARD SPENDING
Occasionally it is appropriate to incur pre-award expenses against an approved award if the funding has been delayed. This action is not without risk, however, if for some reason the funding is withdrawn by the agency. Usually a “guarantee account” is required that will absorb any expense incurred if the funding should not be forthcoming. The PI should consult with the funding agency, their Department, and Grants Management in determining if this arrangement can be successfully completed. Under no circumstance is it acceptable for expenses to be incurred prior to the start date of the project with the intent of transferring those expenses to the new funding source at a later time, thus creating audit exposure.
SPENDING PATTERNS
Some funding agencies are monitoring the rate of expenditure for research projects much more closely than in the past, and have been known to withdraw funding because of deviations from the original project proposal. Spending patterns should keep pace with the project, and continued funding can be affected by spending more quickly or more slowly than projected. It is expected that the awarded funds will be spent as proposed in the original approved budget, with a reasonable degree of flexibility as allowed by the specific agency. Each funding agency expects to be informed of any deviations in projected spending, not just those requiring prior approval for re-budgeting.
ALLOWABLE LATE-IN-PERIOD EXPENSES
Under unusual circumstances, it is possible to make major and minor purchases of equipment and supplies late in the project period, defined as within 60 days of the project end date. If it is necessary to do so, make certain that the funding agency program director and administrative officer are consulted, that written approval is obtained prior to these purchases, and that the allowability and allocability of such purchases is well documented. In general, expenses incurred after the end of the project period are not allowed unless they are specifically provided for in the award notice. If there is work to be completed on the project after the original end date, a no-cost extension of the project should be requested. During a no-cost extension, the work continues for a designated period of time at no additional cost to the granting agency. The PI will be required to document the need for an extended period, and it is not appropriate to make such a request for the sole purpose of “spending out” any remaining budget amounts. These types of expenses are highly scrutinized and will not be allowed if they cannot be proven to have directly benefited the continuation of work on the project, and if they are not approved by the agency in advance.
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