Two common situations in which the allocability of an expense will be critically reviewed are those where expenses are incurred before the start of a project period, and those where expenses are incurred just before the end of a project period. During the project period, while the work of the project is being carried out, sponsors may also look closely at the RATE of project expenditures.
When a new award is assured but the funding is delayed, it may be necessary to open an account immediately, so that personnel can be assigned, pre-award costs can be allocated, etc…This may be done as a Guarantee through the Post Award Office.
It is NOT appropriate to charge these costs to other sponsored accounts, even if you intend to transfer them later. You should also avoid charging these to non-sponsored accounts and then transferring them later. By opening a Guarantee account, you will not have to transfer expenses onto a new account when the award arrives, thus avoiding both administrative burden and audit exposure.
During the project period, Principal Investigators (PIs) can jeopardize their funding when spending EITHER accelerates at an unanticipated rate OR falls significantly behind project projections. While there may be very good programmatic reasons for accelerated or decelerated levels of spending, it is ALWAYS a good idea to keep the sponsor - both technical and administrative officers - informed in these situations.
Sometimes it may be necessary and appropriate to purchase equipment, supplies or other expenses late in the project period. In these cases, it is particularly important to document the allowability -- and particularly the allocability -- of the expense. It is a good idea to get the written approval of the Sponsor’s Grant or Contracting Officer whenever an expenditure might appear to be questionable.
Expenses incurred after the project period has ended are unallowable, unless the award contained provisions permitting them to be charged to the award. This includes expenses incurred for the production of final project reports. If you have work left to do on a project, but have run out of time, request a no-cost extension. This request must be coordinated through the Sponsored Projects Office. An exception to this is the National Science Foundation (NSF) automated FASTLANE system, where PIs request these extensions themselves on-line. Another exception would be requesting an extension where one is authorized under federal expanded authority.
Subcontracts
Many large grants and contracts have subcontracts associated with them. When invoices are forwarded to your department for approval, it is imperative that the Principal Investigator (PI) review these invoices for appropriateness (allowability, allocability and reasonableness). The provisions of your award typically flow down to your subcontractor. Therefore, you need to ensure that your subcontractor follows the terms and conditions set forth in the agreement, especially as related to cost. For example, if you are not allowed to purchase equipment unless specifically approved by your sponsor in writing, then neither is your subcontractor.