Common grant accounting challenges
Research administrators face grant accounting challenges when managing multiple funding sources. Funding can come from a variety of sources:
- Sponsored research
- State funds
- Clinical income
- Contracts
- Endowments
- Special commitments, such as faculty startup funds
Tracking funds from multiple sources can be a daunting task and ultimately affect administrators managing these funds. Specifically, when funding comes from multiple sources like federal funds and institutional funds, to meet cost share commitments, it’s important that a grant accounting system handle the exact tracking, budgeting, and reporting necessary to fulfill the requirements of the funds used. So a grant accounting system has to be flexible enough to track and monitor funding from multiple different accounts, different sources, and potentially sub-portions of accounts, as well as provide reports and other functions to group these funds together in a single view.
Useful grant tracking reports
As an example, administrators should find it fairly straightforward to generate an “All Funds Financial Summary” report. This report should easily track multiple types of funding sources, including both budget-driven and revenue-driven funds. This report should organize columns to contain information for user-defined funding groups, and the rows of the report should display totals by the appropriate revenue or expenditure category.
The top row of values should display the total budget for budget-driven funds and the beginning balance for revenue driven funds. This format is often used in the analysis of the overall financial state of an organizational unit, as well as supports the combination of information from disparate corporate entities that use different account structures or general ledger systems.
When related charges use multiple funding sources
When managing multiple funding sources for research projects, it’s also critical to use an accounting solution that easily tracks budgetary units like a department’s administrative division, a recharge center or core facility, or individual faculty or investigators.
In this case, each of these types of expenditures must be tracked individually, as efficiently as possible. This may even involve the concept of “crossing accounts,” which refers to cases where related expenditures are applied to multiple funding sources.
An example of “crossing accounts” occurs when a faculty member or scientist is given startup funds. These funds may come from a variety of sources, such as indirect cost recovery, unit operating fund accounts or from another unit assisting with a portion of the cost. The budget and expenses associated with this commitment must be tracked and monitored to ensure the faculty member knows their current balances and to ensure that the right funding source is contributing the correct amount. Therefore, you should maintain a grouping system independent of funding source. A grant accounting software system can help by allowing for the generation of these independent groupings, or cost centers. Reports can then be quickly and easily generated based on these subsets of data or cost centers.
Overcoming grant accounting challenges
In the examples noted above, we have identified innovative ways to overcome grant accounting challenges faced by department and center administrators who track multiple funding sources. The key is to implement grant accounting systems that have these capabilities built in. We’d be happy to help you find the right solution for your needs. Contact our friendly team to learn more!
