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Management

Can you offer advice or strategies to help PIs with financial record-keeping?

Reader Question: I do a good job recording my research data, but can't say the same when it comes to my lab financial records. Do you have any advice or strategies for PIs on maintaining their own financial records in addition to those kept by the fiscal office?

Expert Comments: Financial record-keeping is part of a principal investigator’s responsibilities. While the fiscal office maintains records and can help, don't depend on that office to monitor your expenses. You are ultimately accountable.

PIs usually are required to manage the budget according to the terms and conditions of the award, so make sure you understand those terms. Look into your institution’s record-retention policy and schedule to learn what type of financial records will be acceptable and how long you need to retain each record.

The National Institutes of Health (NIH) requires grantees to keep records for three years, but some institutions require them kept for up to five years.

Are you named as the fiscal officer of your grant? Many PIs are. If so, you have an even stronger obligation to keep accurate financial records.

The PI as fiscal officer must ensure that the account is never overextended. If that occurs, or if there is spending for unauthorized purposes, he or she will have to appeal to the department chair or dean to cover those costs.

Another reason for keeping accurate records is that the NIH might conduct an audit. When it reviews your quarterly reports, it may consider how well you manage expenses in determining whether to continue funding your project.

Your institution may have record-keeping forms on hand that you can use, or that it recommends. To obtain them, check the institution's Web site or contact the fiscal office or similar department.

Here are some specific suggestions to guide you, most of which come from the NIH itself.

Using the same budget that was used for the proposal to secure your grant, make a checklist of all the categories in that budget and then keep track of each expenditure under every category. For example, regularly record all direct costs like these:

• Personnel Salaries
• Equipment
• Travel
• Transportation
• Material and Supplies
• Publications
• Subcontracts
• Consultant Services
• Computer Services
• Communications
• Repairs and Maintenance

There are several kinds of software that can make your job easier. For example, the query tool on Peoplesoft can help you extract financial data. If you do not have Peoplesoft, there likely is a similar tool on the software your facility uses.

As you monitor, be sure to consider your rate of expenditures, spreading them wisely over the allotted time period of the grant. The NIH suggests asking yourself questions like these: Am I pacing myself? Am I spending too much money in the first month or two of the project? Am I not spending the money fast enough?

Resources:

• NIH Cost Considerations
• NIH: Pay Attention to How You Spend Your Money

Comments by Melissa Fleischer, Esq., President, HR Learning Center, Rye, N.Y.

Additional comments: Substantiate dollars you spend on salaries. Avoid overspending in any one area. If you overspend, your institution probably will seek that money from your department if the grant disallows it.

Carefully work with your accounting department to make sure you’ve correctly budgeted. If you need to make changes, talk to your program officer. In many cases, he or she will work with you and answer any questions, particularly if you keep them informed of your progress.

Be careful about spending money on people and supplies that won’t look good to independent observer. For example, don’t buy supplies from a vendor for whom you serve on the board or in which you have a personal stake. And don’t hire relatives, no matter how qualified.

Especially if your project is large and complex, it may be wise to have an outside, independent evaluator examine your records occasionally and make recommendations. While it may cost 8 percent to 10 percent of your budget, it can be money well-spent.

Keeping your own records in good order can be arduous and painful, but you must do it. You can’t fully delegate this task to your institution’s bookkeepers. Your own records will give you much better credibility if you must justify expenditures.

Always plan for, and be prepared for, an audit.

These comments are from Stacy Abate, director of grants, Georgian Court College, Lakewood, N.J., excerpted from her May 27 audio conference for Principal Investigators Association. Copies of the full conference are available on compact disk, MP3, and in PDF format.