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Principal Investigators (PIs) who want to obtain an account (a sponsored project chart string) before the start date of a new or renewal sponsored project, or before the award has been accepted/processed by the University must establish an advance or preaward account. PIs and their department should request a preaward or advance account at any time that spending needs to occur prior to the time a new or renewal award is processed; this permits allowable costs to be direct charged to that award without the necessity for a retro distribution (RTD) or other cost transfers. Costs charged to pre-award or advance accounts should be limited to the minimum amount needed for the pressing programmatic needs of the project (as determined by the PI and their department) because the University cannot bill for such costs until the official award is made by the sponsor, and the University has not yet formally received or accepted the award.
Advance accounts may be established when the University has received award paperwork and the project’s start date as listed in the pending award documents is on or after the current date, but award negotiations have not yet been completed.
To avoid delaying the start of the research, the Principal Investigator may request an advance account to begin the project on or after the start date listed in the draft agreement. Charges on this advance account will be allowable because once the agreement is signed, the start date on the award will coincide with the effective date of the advance account. While typically used for contracts, advance accounts may also be used for grants and cooperative agreements if the need arises.
Some sponsors allow charges to be incurred prior to the start date listed in the agreement. Federal grant sponsors often permit charges up to 90 days before the start date and many businesses funding clinical trials allow start-up costs on their awards. In these cases, the Principal Investigator can request a preaward account.
Even though the charges are incurred outside the dates of the final award they are allowable because sponsor policy permits them. Establishing a pre-award account is the institutional preferred method for charging such costs. However, in lieu of obtaining a preaward or advance account, departments may charge the expenses to a departmental account and transfer them to the sponsored project account after it has been finalized. However, if the latter method is used, the department must move the expenses within the cost transfer deadlines (see Administrative Policy: Processing Accounting Transactions).
Pre-award accounts are typically initiated for a period of time not to exceed 90 days. Departments may only continue spending beyond that time if there remains a reasonable expectation that an award will be forthcoming.
Education and Compliance Requirements
Principal Investigators must be current on their required investigator training (Responsible Conduct of Research) and all key personnel must have an approved, current REPA (Report of External Professional Activities) and any related conflict of management plan before an account string can be established.
Charging Costs to a Sponsored Pre-award or Advance Account
All costs incurred on an advance or preaward account must meet the same criteria as costs incurred after the award arrives. This can at times be difficult to determine since the University may not yet have received the official terms & conditions governing the award. PIs and Departments assume such risks and must pay any costs not ultimately paid by the sponsor. Subawards will not be issued on pre-award or advance accounts and cost share accounts cannot be set up.
Exemption for Certain Continuation Awards
Federal awards subject to the Federal Research Terms and Conditions, and many non-federal awards typically allow costs to be moved between budget periods in the same competitive segment without agency approval. The department need not file a preaward/advance project request form for this type of award, but the department remains responsible if a continuation or supplemental award is not issued or does not cover the costs, preaward or advance accounts are, however, required for new or renewal awards, since receipt of these types of awards pose a higher risk. PIs and department administrators must review their agency’s terms and conditions carefully to determine if agency prior approval is needed.
Reason for Policy
Principal Investigators have legitimate business reasons for needing preaward or advance accounts and for incurring costs planned for future budget periods. These accounts are established by the University to reduce audit risk and to allocate costs immediately to their benefitting activity, but they also put the University at risk because sponsors may decide not to issue an award to the University, may decline to cover the time period authorized for pre-award spending, or may be unwilling to negotiate acceptable award terms with the University.
This policy balances that risk with legitimate business needs and ensures that University funds are “advanced” to cover only those costs that are necessary to initiate or sustain important sponsored project activity. This policy outlines internal controls and procedures that ensure accountability over the funds, meet required sponsor regulations, and provide documentation for audits.