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Financial Management Problems

Overspent Projects

Overspending on a PTA Account can reflect poorly on the Principal Investigator, OSP, and Dartmouth College. It can indicate the award was not planned carefully enough to support a request of sufficient funding to complete the award. It can also be seen as indication of haphazard internal financial management of a sponsor's funds. Because the implications of overspending are so serious, a major responsibility shared by the Principal Investigator and the OSP Sponsored Research Manager is to carefully monitor the budget.

If a PTA Account ends with a deficit, the Principal Investigator's department or administrative area is responsible for covering the remaining expenditures. For those PTA Accounts that end with a deficit, prompt cost-transfer requests must be submitted by the department or the administrative area. The cost transfer will initiate the process of moving remaining outstanding expenditures from the PTA Account to the appropriate departmental GL account.

Underspent Projects

While the financial implications of under spending on a PTA Account are not nearly as serious, severe under spending, 20% or more of an award's total direct costs, can also reflect poor project planning, haphazard internal financial management of a sponsor's funds, or that the goals of the award were not met.

There is little virtue in ending a PTA Account with a large balance of funds. Rarely does the sponsor allow the institution to keep the money. Rather, it must be returned to the sponsor where it can create a fair amount of accounting inconvenience. Institutions that return large unused portions of sponsored research funds are not rewarded for their frugality.

This does not mean that there will never be instances when there are legitimate reasons for major under spending of a sponsored research award. Nor does it mean that unbridled spending of remaining sponsored research funds should take place in the waning months of a project. Rather, careful planning, monitoring, ongoing communication with the sponsor, and revising of the work plan as needed should be the norm throughout the life of the award.

Last Updated: 12/16/10