4b. Spending / apply costs

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1. When can I start spending?

Once the Division of Sponsored Programs (DSP) accepts an award on behalf of the university, DSP, in conjunction with the Grant Accounting Office (GAO), issues the Award Activation Authorization Notice (AAAN).

Then:

The GAO sets up the project account (Master File Key, or MFK).
You can submit an Advance MFK request if the agency permits pre-award spending.
A link to the AAAN is emailed to the PI and departmental administrators.
A copy of the AAAN and corresponding award documents are available in the DSP Research Tracker.

After you receive the AAAN, you may begin spending on the project. Use this account solely for the purposes of the funding award for which it was established.

2. Can I spend money before the project start date?

Expenses incurred before the award start date may not be charged to a sponsored project unless specifically authorized in writing by the sponsor. Many federal agencies allow pre-award spending up to 90 days before the formal start date. When pre-award spending is permitted and an award is expected, you may request an Advance MFK—an account established before award documents are fully processed.

3. How do we receive funding?

Acceptance of an award does not automatically transfer funds to the university. The GAO is responsible for submitting invoices or funding requests to sponsors.

Award budgets are established to help you plan and spend funds within approved sponsor amounts.

4. How do I purchase goods and services?

You may purchase goods and services through external vendors or university service centers. Work with your departmental or research administrator on all procurement activities to determine the appropriate method and resources.

External vendors

The UI Purchasing Department works to obtain quality goods and services at the lowest reasonable cost. Purchasing methods vary based on the type of goods or services and applicable dollar thresholds. Refer to the Purchasing Policy and Procedure Guide.

University services

University Core Facilities are centralized laboratories and stores that provide state-of-the-art research resources to facilitate biomedical research. They are available on a fee-for-service basis.

Information Technology Services (ITS) – Research Services collaborates with investigators, faculty, and research support groups and provides operational and consulting support across a range of applications.

Other university service centers also provide goods and services. Internal sales must comply with the University Service Center Policy.

5. What are my responsibilities as the project director?

As project director, you are responsible for:

Accounting for how funds are spent.
Managing funds in accordance with the financial principles outlined in 4a. Fiscal Responsibility.
Complying with all funding regulations and award terms and conditions.
Adhering to departmental requirements for fund management.
Staying within the approved project budget.
Submitting required reports in a timely manner.

Pay particular attention to the following:

Cost sharing

Some awards require mandatory cost sharing, meaning the institution must contribute to project costs. Before applying, obtain departmental approval for cost-sharing commitments. Any cost sharing included in the proposal or budget—whether required or not—is considered a commitment. Refer to the UI Cost Share Policy and Procedure Statement for more information.

Effort commitments

Effort, as defined by the federal government and the university, is an individual’s time devoted to professional activities, regardless of the total hours worked, and may not exceed 100%. When preparing funding requests, ensure sufficient effort is available to meet project responsibilities as well as other obligations, such as teaching, patient care, public service, and other sponsored projects.

Program income

Revenue generated from a federally funded award is considered program income. Refer to the award notice for guidance on how to manage this income.

Administrative-type costs

UI provides guidance on charging administrative-type costs to sponsored projects. Refer to Costing Considerations for Charging Federal Awards.

6. How do I monitor the fiscal status of my funds?

Effective financial management practices include:

Reviewing award guidelines and understanding all terms and conditions.
Communicating with your department rather than making assumptions.
Identifying and controlling who has spending authority.
Spending only as permitted by the sponsor.
Regularly reviewing university financial reports to verify expenditures (this task may be delegated). Refer to the UI Monthly Review of Transactions Policy
Submitting required reports on time to ensure continued funding.
Understanding when unobligated balances may be carried forward and requesting approval through Sponsored Programs as needed.
Avoiding overspending; deficits are the department’s responsibility.
Following the university’s charging practices.
Meeting all final reporting and closeout deadlines.
Following established procedures for closing out or transferring a project. Do not assume a project is complete simply because funds have been spent.

7. What do I need to know about international travel?

The Fly America Act requires the use of U.S. flag air carriers for federally funded international travel. Federal Travel Regulations allow the use of foreign air carriers in certain code-sharing situations. To comply, the flight must display a U.S. carrier code on the ticket or related documentation (e.g., boarding pass, receipt, or e-ticket).

Because verifying ticket costs and compliance can be complex, documentation is required for certain foreign ticket purchases, particularly those obtained through nonlocal agencies or consolidators.

UI-preferred travel agencies are familiar with Fly America requirements. You are strongly encouraged to use a UI-preferred travel agency for international travel. Refer to all university travel policies for additional guidance.

8. How are Facilities & Administrative (F&A) costs charged to my award?

Facilities and Administrative (F&A) costs are calculated based on rates negotiated with the federal government. These costs are incurred by the institution but cannot be directly assigned to a specific sponsored project.

UI policy requires charging the maximum F&A rate allowed by the sponsor and activity type. These costs should be included in the proposal budget at the time of submission. Refer to the University of Iowa F&A Rate Agreement for details.