Segregation of Duties– Sponsored Programs

1. Segregation of Duties– Sponsored Programs APM 2.25.55.01

2. Overview • The policy outlines good internal controls for sponsored activity including: • Segregation of duties • Proper authorization, verification, and managerial review • Appropriate documentation • Delegation of authority form • Effective Date: October 1, 2008

3. Overview • APM 2.25.55—Segregation of Duties • APM 2.25.55.01—Segregation of Duties- Sponsored Programs • Supplements APM 2.25.55— Segregation of Duties • APM 2.25.55.02 – Delegation of Authority Form • This training focuses on proper authorization, verification, and managerial review to meet compliance requirements

4. Relationship of 2 Policies

5. Requirements • Compliance requirements from the Office of Management and Budget Circulars include: • A-21 – Cost Principles for Educational Institutions • A-110 – Administrative Requirements • Other requirements per the award • Ensure only allowable and allocable costs are charged to an award

6. Principal Investigator (PI) • The PI’s role includes: • Ultimate responsibility for an award • Ability to delegate authorization • PI cannot delegate responsibility for award • PI cannot delegate managerial review

7. Delegation Form • Delegation form (Form) used to document delegation of authorization • Only used for sponsored programs • Form maintained in the Department • Key document in course of audit

8. Delegation Form

9. Delegation Form

10. Delegation • Delegates for authorization must have: • Direct knowledge of the sponsored award • Awareness of terms and conditions of award • Awareness of compliance requirements • Knowledge of the transaction • Delegate must be a University employee

11. Authorization • Authorizer—appointed individual who can initiate activity for a sponsored program • Authorization indicates the transactions meet the compliance requirements of: • Allowability • Allocability • Period of availability • Awarded budget

12. Authorization • Documentation for cost transfers: • Sufficient – if cost transfer is < 60 days • PI or Delegate certify costs are allowable • PI or Delegate documents how costs benefit the award • Why transfer is necessary

13. Authorization • Documentation for cost transfers: • Substantial – if cost transfer is > 60 days • Documentation must answer: Who What When Where Why How • What is being done to ensure the circumstance does not occur again? (Due diligence)

14. Authorization • Documentation for cost transfers: • Never • “To spend out award” • “To move costs to grant” • “Due to pressure from UM System”

15. Verification • All transactions must be verified • Confirms the accuracy and timeliness of accounting transactions • Confirms that cost transfers are properly documented with sufficient and/or substantial documentation

16. Managerial Review • PI has ultimate responsibility for the award • PI cannot delegate managerial review • The monthly managerial review is the final opportunity to ensure programmatic and financial compliance

17. Exception to Segregation

18. Managerial Review • To confirm: • Appropriate segregation • Costs are allowable and allocable • All costs are posted to the award • Costs are within the period of availability • Timely review of financial reports including a budget to actual comparison • Address deficits or excess costs • Remove unallowable costs

19. Differences from Financial Requirements • Managerial review should be performed monthly to facilitate timely error corrections • If verification is done by the PI, still need to review and sign budget variance report.

20. Frequently Asked Questions • The following Frequently Asked Questions (FAQs) address practical application of this policy.

21. FAQ’s – Fiscal Office Impact • How does the policy impact the Fiscal Officer? • If the PI delegates authorization, the departmental Fiscal Officer confirms the: • expenditure was authorized by a delegate, • accuracy of accounting information, • agreement with University Collected Rules, Business, and Accounting policies.

22. FAQ’s – SPO Impact • How does the policy change the interaction between Departments and the Sponsored Programs Office (SPO)? • No interaction changes with the SPO. • Accounting Offices will still check PS Authorization for authorized signatures.

23. FAQ’s – PI Impact • How does the policy impact the PI? • The PI is responsible for authorization of ALL transactions; the PI can delegate this responsibility. • The Form is adequate documentation for delegation.

24. FAQ’s – PI Impact • Are there exceptions to when the PI can authorize transactions on an award? • Yes. The PI cannot authorize transactions for their own business reimbursement (e.g., travel or expense reimbursement).

25. FAQ’s – PI Impact • Does the PI need to complete a Form if he/she signs all invoices? • No. The Form is needed only if someone other than the PI will be authorizing transactions without the PI’s signature.

26. FAQ’s – PI Impact • Can a Co-PI delegate authorization? • Yes. The Co-PI has the same authority and responsibility as the PI, as long as the Co-PI is: • a University employee, and • named by the sponsor on the award document.

27. FAQ’s – Pre-Authorization • Do expenditures on awards need pre-authorization? • No, a department may optionally require pre-authorization.

28. FAQ’s – Authorization • What documentation is required for cost transfers? • The authorizer should look for: • substantial or sufficient justification, • timeliness of the cost transfer, and • EVR agreement with payroll information.

29. FAQ’s – Authorization • What effect does the policy have for anyone authorizing transactions on an award? • The PI may delegate authorization to anyone that has: • direct knowledge of the activity, • awareness of terms and conditions of award, • awareness of compliance requirements, and • knowledge of the transaction.

30. FAQ’s – Authorization • How does this policy apply to charges to a sponsored award from a feeder system? • The PI or delegate must provide authorization to the feeder system owner before transactions are initiated.

31. FAQ’s – Authorization • What is the Fiscal Officer’s role in authorization? • The Fiscal Officer should verify that transactions are authorized by either the PI or the delegate. • The Fiscal Officer must maintain the documentation.

32. FAQ’s – PS Authorization • Is the information on the Form required to be entered into PS Authorization? • No, although a campus may optionally choose to do so.

33. FAQ’s – PS Authorization • Does PS Global Authorization give the Fiscal Officer authorization for sponsored award activity? • No, it only provides authorization for Financial requirements, it does NOT meet the “direct knowledge” Compliance requirement. • Delegates must have direct knowledge of the sponsored activity.

34. FAQ’s – Managerial Review • Can the PI delegate managerial review? • No, the PI has ultimate responsibility for the award and managerial review cannot be delegated.

35. FAQ’s – Managerial Review • What should be maintained to document the PI’s managerial review? • The PI should sign and date the: • budget to actual comparison report for the ChartField string, • written justification for cost transfers, and • detail list of transactions for the award if authorization and verification are not segregated.

36. FAQ’s – Managerial Review • What should the PI look for in the managerial review? • Costs not related to the award, such as: • clerical errors, • salary posted to the award when no effort was made toward the award, • supplies or travel not related to the award, • costs outside the period of availability, or • duplicate charges. • Costs related to the award that are missing.

37. FAQ’s – Delegation Form • How does this policy change the current process for authorized signers? • The PI completes a Form to document delegation for authorization. • Delegates must have: • direct knowledge of activity, • awareness of terms and conditions, • awareness of compliance requirements, and • knowledge of the transaction.

38. FAQ’s – Delegation Form • Can the PI use one Form to delegate authorization for multiple sponsored awards? • No. Each Form should reflect delegations for an individual ProjectID. • This will facilitate filing and retrieval of the Form to provide audit support for delegations of authority by ProjectID.

39. FAQ’s – Delegation Form • Can one Form be used to delegate authorization for multiple individuals on one sponsored award? • Yes. Multiple delegations of authorization can be indicated on one Form.

40. FAQ’s – Delegation Form • What if one of the delegates for authorization leaves the Department? • The Form should be updated to reflect changes in delegation. • All Forms must be kept as supporting documentation.

41. FAQ’s – Delegation Form • Can the PI put a dollar and/or time limit on the delegations? • Yes. However, the form should be updated when changes occur.

42. FAQ’s – Delegation Form • Where do I keep the Form? • The Form is retained by the Department to support delegated authorization on an award. • Some Sponsored Programs Offices may require a copy for the permanent award files.

43. FAQ’s – Delegation Form • Who receives a copy of the Form? • The Form should be sent to the: • delegate(s), • departmental Fiscal Officer, and • SPO or other campus offices if required.

44. FAQ’s – Delegation Form • What are the retention requirements for the Form? • The Form has the same retention period as any documentation for the award • Three years after filing the final reports or longer if required by the award, and • Until all external (OIG) audits are closed. • It is maintained by the Department in either paper or electronic form.

45. FAQ’s – P-card • When does authorization occur for a P-card transaction? • Written authorization may be provided by the PI or delegate before the purchase is initiated. • Written/electronic authorization by the PI or delegate must be provided before the monthly P-card reconciliation deadline.

46. FAQ’s – P-Card • What if all charges for a P-card default to a sponsored award? • Unless all charges on a P-card will be posted to the award, the default should be a non-sponsored ChartField string. • Make all ChartField corrections before monthly reconciliation deadline for P-card.

47. FAQ’s – Requisitions • When does authorization occur for a purchase requisition or e-Pro requisition ? • When the allowability is documented, such as an email, or approved by a delegate through WorkFlow. • The PI or delegate should authorize all requisitions to be directly charged to an award.

48. Concluding Points • Segregation of duties • Authorization, verification, and managerial review • Delegation form and retention • Timely verification and PI review • And don’t forget to…

49. Maintain Documentation.. 49

50. Additional References • APM 2.25.55 – Segregation of Duties • APM 2.25.55.01 – Segregation of Duties-Sponsored Programs • APM 2.25.55.02 – Delegation of Authorization Form • BPM 213 – Adjustment of Income & Expense Items • Fiscal Misconduct Reporting Line