There may be situations when the University needs to advance funds to enable a subawardee to begin working on a project.
Federal guidelines under 45 CFR 74.22, 2 CFR 215.22 [formerly OMB Circular A-110 Subpart C __22(f)], as well as the NIH Grants Policy Statement allow for advance payments to lower-tier recipients (Subawardees) when those recipients lack sufficient working capital to perform the work. Additionally, OMB Circular A-133 requires monitoring of recipients of subawards.
In consideration of the federal regulations as well as University procedures that must be followed in order to initiate pre-payments, the following guidelines apply when the University chooses to advance payments to a Subawardee.
Step 1: Department Procedures to Request an Advance of Funds to a Subawardee:
- To request an advance payment for a Subawardee, the Initiator will state the request in the Internal Comments section of the Purchase Requisition (PReq);
- Along with the PReq, the PI/Department must submit:
- The completed Principal Investigator Subawardee Monitoring Assurance, which states the roles and responsibilities of the PI regarding Advance Payments, and is signed by the PI and DEO.
- This letter certifies that the PI has read and understands all UI Subawardee monitoring requirements.The Subawardee Request for Advance of Funds (Sample Letter Template), which is a letter from the Subawardee stating the need for Advance Payments, dollar amount, and is signed by the Subawardee.
Step 2: Division of Sponsored Programs and Grant Accounting Office Review:
The Division of Sponsored Programs (DSP) and Grant Accounting Office (GAO) shall review all material listed above and make a determination if there is sufficient justification to approve an advance fund request.
All subawards that have been approved for advance payment require a formal Subawardee Monitoring Assurance letter (see item 1 above) signed by the PI and DEO that will be placed in the DSP project file. Please note the Subawardee Request for Advance of Funds document (see item 2 above) will be valid for 5 years from the date of the letter.
The allowed schedule and amounts of advance payments are as follows:
- Initial payment: 20% of annual award amount, plus budgeted equipment
- Quarterly payments: one fourth of balance remaining after the initial payment
The advance payment schedule and the financial reporting requirements will also be written into the formal subaward agreement by DSP.
Step 3: Department/PI Procedures for Advance Payment Invoicing
Once the final, signed subaward agreement is received by the University and a PO# has been assigned by the Purchasing Department, advance payments will be allowed to proceed.
To initiate an advance payment (this includes both the initial and quarterly payments), the Department/PI must:
- Complete the Advance Payment Request (see form for required fields)
- Submit to Grant Accounting, B5 Jessup Hall
Department and PI Responsibility
During the project, the PI is responsible for monitoring that the project is proceeding as expected and that the subawardee is submitting financial reports by the required deadlines. The University will not allow additional advance payments in the event that required financial reports are not received. As the financial reports are submitted by the subawardee, the Department/PI is responsible for reviewing them for consistency with the subaward budget and compliance with the terms of the prime award. As a result of this review, the subawardee must be notified of any costs that are determined unallowable.
The Department/PI is responsible for collecting any funds that have been advanced that require reimbursement to the University. This could include costs that are determined unallowable or advances that exceed the final expenditures submitted by the subawardee. If these are uncollectable from the subawardee, the department will be responsible for the uncollected funds.
If you have questions about advance payments to subawardees, please e-mail the DSP Contracts Team or call 335-2123. Outgoing subawards are generally assigned to DSP staff according to the PI's college or unit. Click here for the DSP staff directory.