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Certified approvers are responsible for ensuring that costs incurred before the start date are charged correctly to the preaward or advance account.

Evaluate the risk involved in establishing an advance account or requesting preaward authorization.

Because disallowed preaward or advance account charges may result in significant expenditures being transferred to departmental accounts, it is important to consider carefully the risk factors involved with establishing one of these accounts. It is strongly advised that you contact the appropriate grant administrator before completing the advance / preaward account request form. Listed below are some risk factors to consider:

• All sponsors: the sponsor may not allow these accounts or may refuse to pay for costs incurred before the start date of the award.
• Business, associations, foundations:
  • the sponsor may have a policy that the start date of the project is the date of final signature (thus spending cannot begin until the award or contract is fully signed). The sponsor's policy supercedes the University's policy.
  • the principal investigator may assume the start date will be the same as the date listed on the proposal or may have an informal agreement to begin on a certain date. The sponsor, however, may not process the award contract on a timely basis. If the contract arrives at the University with a start date that is later than the proposed or assumed start date and the sponsor will not backdate the contract, any advance account charges are unallowable unless specifically approved by the sponsor.
• State of Minnesota agencies: the date of final state signature on the award usually determines the effective date. Advance expenditure authorization is occasionally granted. Consult the appropriate grant administrator before proceeding with the preaward or advance account request.

It is very important to be careful with advance or preaward accounts for subcontracts where a University principal investigator is subcontracted by another organization that holds a prime grant or contract with the sponsor. All of the above issues apply for approval by both the sponsoring organization and the prime sponsor.

Ensure that criteria for establishing the account are met:

Advance Account (an account established before all parties have signed the contract):

• all regulatory requirements must be satisfied before activity related to those issues can begin
• the principal investigator must comply with PI Eligibility education requirements
• the project must have a Proposal Routing Form fully processed through Sponsored Projects Administration
• the department must accept the financial risk in the event that the award is not made or the start date is changed must be within the period of the award

Preaward Account (an account established before the project start date, e.g., a federal award that starts on June 1 but the principal investigator needs to begin project setup on March 1):

• all regulatory requirements must be satisfied before activity related to those issues can begin
• the principal investigator must comply with PI Eligibility education requirements
• the project must have a Proposal Routing Form fully processed through Sponsored Projects Administration
• the department must accept the financial risk in the event that the award is not made or the start date is changed
• the preaward account start date must be within the preaward period allowed by the sponsor

Industry-Sponsored Clinical Trial Preaward Account:

• all regulatory requirements must be satisfied before activity related to those issues can begin
• the principal investigator must comply with PI Eligibility education requirements
• the department must accept the financial risk in the event that the award is not made
• see related information on processing an expedited Proposal Routing Form

Determine what approvals are needed

Breaks between Budget Periods (costs incurred to the sponsored account between renewal or continuation budget periods)

Renewals: if the renewal award will be assigned a new sponsored account number, it is necessary to obtain a preaward account.

Noncompeting renewals or continuations where the awards do not receive new account numbers.

• If the award is subject to expanded authorities, approval is NOT necessary when the break if for 90 days or less. In these cases, the acceptance of the "Notice of Grant Award" and incurrence of costs will imply preaward authorization on the part of the University.
• If the award is not subject to expanded authorities or if the break extends beyond 90 days, contact the grant administrator for assistance.

Extension requests (costs incurred to the sponsored account when a no-cost extension has been submitted to the sponsor but no response has been received at the University)

Institutional approval is NOT necessary because if in the event the request is denied, these costs will be removed from the sponsored account in accordance with Administrative Policy: Removing Uncollectible Costs Charged to Sponsored Projects.

Request an Account

Prepare the Preaward or Advance Account Request Form. Forward the form for approval.

1. Department Head or Designee (required)
2. Dean (if required)

This form supplies approvers with the information they need to review the request, thus saving time required to request additional information from principal investigators. It also provides the approvers with an explanation for why the costs are necessary for conduct of the project and an assurance that the costs are allowable under the award.

After the form is approved, send it to the appropriate grant administrator in Sponsored Projects Administration for account setup.

Receive notification of account setup

The grant administrator will review the request to make sure that it includes the necessary information.

The grant administrator will establish an account number and notify the principal investigator, unit administrator, Sponsored Financial Reporting and other appropriate University departments. The effective date of a preaward account will be the date of final signature on the preaward account request form (department head, or, if required, dean). The effective date of an advance account will be the anticipated start date of the project.

Charge the expenses.

Facilities and administrative costs will be charged. All costs incurred on an advance and preaward project must meet the same criteria as costs incurred after the award arrived. If you are unsure whether the cost would be allowed, please consult with the grant administrator to see if perior approval is necessary.

• Preaward costs on federal projects must be incurred within the timeframe allowed by the sponsor. For example, most federal agencies allow institutions to approve preaward costs within 90 days of the award's effective date. Costs incurred before this 90 day period require specific agency approval.
• Clinical trial preaward accounts: on charging documents, include in the justification that the charge is a start-up cost as defined in this policy.

Monitor preaward / advance account.

Expenditures:

• Effort must be certified at the time it occurs. Thus effort must be certified for work conducted on the project that has the preaward or advance account.
• Departmental and collegiate staff must review financial reports to ensure that preaward expenditures meet the criteria outlined above.
• Departmental staff must review financial reports to monitor spending levels. If spending appears to be excessive, staff should stop processing documents and refer the matter to the department head and Sponsored Projects Administration.

Age (the number of days since an account has been active)

• If the account has been established for more than 90 days, department staff must check the status of the award. Departmental and collegiate staff must use financial reports to monitor the age of the account. If the account has been established for an excessive period of time (e.g., more than 90 days), they must follow up with the sponsor or the principal investigator to ensure that the awarded funds will be forthcoming.
• Grant administrators in Sponsored Projects Administration monitor the age of preaward and advance accounts and request explanations or facilitate closing of unawarded projects.

Upon award start date or finalization, reconcile the preaward / advance account to the award.

• If no award is issued: the department is responsible for transferring the charges from the preaward / advance account onto the nonsponsored account listed on the preaward / advance account request form. Sponsored Financial Reporting (SFR) will terminate the preaward / advance account upon notification from SPA. If the department does not transfer the charges in 30 days from the request, SFR will process the charge transfer and charge a fee in accordance with Administrative Policy: Selling Goods and Services to University Departments.
• If some or all preaward or advance account charges are not allowed by the sponsor: If the sponsor disallows these charges, SPA makes a note on the Notice of Grant Award (NOGA) for the new award that the charges must be removed. The department is responsible for transferring them onto the nonsponsored account listed on the preaward / advance account request form. SFR handles these unallowable charges in accordance with Administrative Policy: Removing Uncollectible Costs Charged to Sponsored Projects.
• If award information changes: Occasionally the award will be issued by a different sponsor than that listed on the proposal, or the type of funding used will come from another source. In these cases, the account number may be changed upon award receipt. The department will be responsible for transferring charges from the advance account to the revised account number.