Post-award changes and approvals

Announcement: On December 26, 2013, the Office of Management and Budget (OMB) issued Uniform Guidance that will replace the administrative, accounting, audit rules and principles currently promulgated in OMB Circulars A-21, A-110, and A-133. The Uniform Administrative Requirements, and Cost Principles found at will apply to new and incremental funding awarded on or after December 26, 2014. Existing Federal awards will continue to be governed by the terms and conditions under which they were awarded.

When and how to get prior approval

In general, approval of a budget by a sponsoring agency constitutes prior approval for the performance of activities and the expenditure of funds as detailed in the budget. Most agencies will allow the grantee to depart from the original budget provided that:

  • The expenditures are necessary to the successful completion of the project
  • The expenditures are allowable under the governing cost principles and grantor policies
  • Prior approval is obtained when required.

Note that prior approval is a sponsor function, but NSF, USDA, NASA, NIH and ADAMHA and others have delegated most prior approvals to the University.

In addition, agency approval may also be necessary for changes including, but not limited to, the following:

  • A change in the scope or the objectives of the project
  • An increase in the funding
  • A change in the principal investigator, other key personnel, or the addition of subawardees
  • A change in the budget that is not covered by the  rebudgeting authority originally granted by the sponsor
  • A change in the performance period

Prior approval procedures/budget reallocation

Budget reallocation (re-budgeting) within a sponsored program, after it is awarded, is allowed if there is a legitimate need to change budgeted costs, provided the reallocation conforms to the sponsoring agency’s guidelines and is consistent with the University’s policies and procedures. Budget reallocation is not allowed for the purpose of relieving financial pressure on a department’s unrestricted budget, or on other sponsored projects to assign costs that could not otherwise be assigned.

The principal investigator may complete the Budget Reallocation Request Sponsored Programs Form addressing the following points:

  • A cost estimate of the change and the budget categories that will be altered
  • The need for the change in relation to the scientific progress or training effectiveness of the program
  • Why funds are available to be transferred to another budget category
  • Whether the re-budgeting will have any significant effect on the scientific or educational direction of the project
  • For travel, a statement of how the travel will directly benefit the project 
  • For equipment, a listing of each piece of equipment, noting whether it is for general purpose or special purpose, and how it will be used

BUDGET reallocations are allowed for sponsored programs. Budget reallocation entries must be completed through budget request. User must ensure that Facilities and Administrative costs (F&A or indirect costs) are appropriately calculated for each adjustment if required.  Entries without proper F&A costs will be reversed and must be resubmitted.  

The following are guidelines for calculating F&A costs:

  • Review the award notice to determine if F&A costs are included and the required F&A rate.
  • When F&A costs are included in the award, the relationship between direct cost base and F&A costs must remain the same as provided in the award notice.  The maximum recovery of facilities and administrative costs must not change.
  • When F&A costs are calculated based on modified total direct cost (MTDC), the following categories are applicable budget reallocation. MTDC excludes the following account codes:
    • Patient care
    • Tuition
    • Rent
    • Equipment
  • The reallocating direct costs from one of the excluded direct categories, additional F&A costs must be rebudgeted. Example: Rebudgeting $1,000 from equipment to other contractual services with a 50% F&A rate.
    • Direct costs $1,000/1.50 = $667
    • F&A Costs $1,000 - $667 = $333 (Banner Account 639997)
  • When reallocating $667 from the MTDC category to an excluded direct cost category such as equipment, F&A costs are reduced by $333 which may be rebudgeted to the Non-MTDC (equipment) category.
  • When reallocating budget from a MTDC budget category to another MTDC category, no F&A cost budget change is required.
  • When F&A costs are calculated based on total direct costs, there are no exclusions; therefore, no change in F&A is required.

In the event the index has a deficit balance at index closeout, whether resulting from the budget reallocation, an indirect cost adjustment or other transactions, the department overhead index will be charged for the deficit unless the department promptly identifies a funding source for the deficit.

If it is necessary to re-budget for administrative and clerical costs after receiving the sponsored programs award, the following conditions should be met:

  • A written justification is prepared which is equivalent to the justification that would have been included in the original proposal.
  • The dean or the dean’s designee gives approval.
  • Justification and approval are to be maintained on file in the Grants and Contracts Accounting office.

Treatment of Administrative and Clerical Costs

How to get agency approval

The principal investigator should prepare a letter to the sponsoring agency including the following information:

  • Cost estimate of the change
  • The need for the change in relation to the scientific program or training effectiveness of project
  • The budgetary categories which will be altered and
  • Any significant effect the change will have on the scientific or educational direction of the project

The principal investigator should obtain the countersignature from Sponsored Programs Administration.

Prior approval requirements for the various sponsoring agencies are subject to change; the Office of Sponsored Programs Administration should be contacted for current information. 

Failure to obtain prior approval

Failure to obtain prior approval for all actions requiring such approval may result in the disallowance of costs. Retroactive approval is allowed in highly unusual or exceptional circumstances, and when denying such approval would affect in a material manner the successful performance of the project objective. Authorized officials granting retroactive approval shall be held responsible for providing documentation for the grant file regarding the reasons why prior approval was not obtained in a timely manner, the manner in which the project objectives would be adversely affected if approval was withheld, and a certification that approval would have been given had the request been submitted on time.