Grant Management & Financial Oversight |
Learn how to run financial review meetings that keep brilliant-but-budget-averse PIs engaged, compliant, and to keep them coming to these meetings. An engaged PI will want to remain compliant and will ask questions when necessary.
"So, what exactly is an encumbrance?”
This question took me aback, not because of the question itself, but rather because it was asked by a senior Principal Investigator (PI) who had been leading studies for over 30 years. This same PI had ostensibly been attending monthly financial review meetings for all that time. And yet, here we were, reviewing her ledgers, and she didn’t know what an encumbrance was. For those not familiar with encumbrances, this is a way to reserve funding for a future expense on a financial ledger and serve as a placeholder to ensure that funds are not accidentally spent on something else.
And it got me thinking... Our PI’s are brilliant. Most of them have an MD or PhD (and some have both) and have probably forgotten more about their research subject than most of us will ever know. And yet, their understanding of financial management is so often insufficient.
This gap in knowledge isn’t necessarily their fault. If you look at the types of training that PIs attend, rarely is it geared towards training PI’s on understanding and reading grant reports. But they did sign up to be responsible stewards of their award, and that means they need to be able to read a ledger, or at least the parts that matter.
And that’s where we come in: as research administrators, it’s our job to figure out which parts of the ledger are worth their attention and teach them what they need to know.
The Easy Part
Most PIs care deeply about the overall health of their award: How much have we spent? How much do we have left? Are we on track? These are the questions most PI’s want to know the answer to. A simple summary (awarded, expended, amount remaining, and percent of the project period elapsed) gives the PI a "vital signs" snapshot before you dive deeper. If the burn rate looks healthy, great. If they've spent 80% of the budget with 40% of the project period left, that's the conversation to have first. However, you can’t stop here (even if the PI wants to). The PI has a deeper obligation to manage their funds appropriately that go beyond this “bottom-line thinking.”
The Hard Part
Work with the PI to ensure they understand the different sections of the budget and don’t be afraid to explain things that may seem obvious. Accounting language is not always intuitive; be ready to explain things like appropriation and YTD (year-to-date), and any other terms or acronyms they may not be familiar with.
As PI, they are responsible for ensuring that all expenses on their awards are correct and applicable to the project. This means that they need to take the time to review their funds down to the line item. Fund Managers can make sure that laboratory supplies were budgeted on a specific award, but it’s the PI who knows whether that beaker was actually used for the project in question. If you’re meeting monthly (which you should be), reviewing all expenditures should not be too overwhelming and will help catch errors early.
We should also walk our PIs through the personnel reports and ask them to confirm that the monthly effort charged to the award reflects the time team members are dedicating to the project. The statistician who is split 50/50 on two awards, but who spent the last three months dedicating all of their time to the project that ends this quarter? That needs to be fixed, and fast.
The Stuff You Can Ignore
You do not need to walk a PI through indirect cost calculations, cost transfer history, or the nuances of object code categories. Save that for your own review. Information overload is the enemy of engagement, and an overwhelmed PI is one who stops showing up to financial review meetings altogether.
The Really Hard Part
Meet with the PI monthly. Seriously. Get your financial review meetings on the calendar as a standing monthly meeting and hold the line on that cadence. Cost Accounting Standards require that errors be identified and corrected within 90 days. If you are only meeting quarterly, you are cutting it too close, and that assumes your PI attends every single meeting, we all know they will not. When a PI cancels (and they will), a monthly meeting schedule means you are still connecting at least every 60 days. That keeps you comfortably within the 90-day compliance window. A quarterly schedule with one cancellation suddenly becomes a five-month gap, and now you have a problem. Monthly meetings also keep the volume of information manageable. Reviewing one month of transactions is a 15-minute conversation. Reviewing three months of transactions can feel like an audit.
The Bottom Line
PIs do not need to become financial experts. They need to trust that their award is healthy, confirm that their expenses are accurate, and verify that their people are being paid correctly. Build your financial reviews around those three goals, keep the meetings short, keep them monthly, and keep the jargon to a minimum. Your PI will thank you, and so will your compliance record.