Balancing your research checkbook is like managing your personal finances. However, it’s much less common these days to do so with a paper bank statement and check register, as many people now use digital resources to follow their money. Regardless of how you do it, managing your income and expenses is important if you want to keep your finances healthy.
Reconciling research expenses is no different. Though you may not have a check register in which to balance monies, many universities today use online portals such as Peoplesoft Grants, that allows principal investigators and cost center managers to reconcile expenses.
Why is balancing your research checkbook important?
Managing the finances for your research project (or many research projects) is important for both for internal controls and to demonstrate accountability of financial resources to your funding agency.
According to Cris Milligan, assistant vice president for research administration at the University of Houston, reconciliation ensures that:
- Entries and balances are up-to-date
- Recorded transactions have no mistakes
- Unauthorized changes did not occur
- Problems get resolved quickly
- You are mindful of accounting end dates
Not balancing your research checkbook could lead to overspending, which can cause charges to come back to your University from the awarding agency. If you underspend, you may have to send money back because many agencies do not allow the last minute shopping spree.
Overspending and underspending is not good practice. If it becomes a problem, you could lose your funding.
But I don’t have time to manage every little expense …
Principal investigators are already short on time, managing labs and research teams, developing proposals, writing findings, making presentations. Oh, and then there’s that thing: teaching. So why not delegate cost center reconciliation to someone who has time and knowledge of financial activity?
If you find yourself short on time to balance your research checkbook, here’s a couple of things Milligan suggests to help keep your account out of trouble:
- Assign reconciliation activities to a supporting business administrator. These support staff are financially savvy and can ensure your account is balanced correctly.
- Delegate approval of reconciliation to someone other than the reconciler. This gives two sets of eyes on your activity and lessens the chance a mistake might occur.
What’s involved in balancing your research checkbook?
Reconciling research account expenses is more than just a simple checkbook balancing activity. Yes, you do need to ensure your monies have not exceeded your project balances. But you also need to review the expenses to make sure they are in step with federal, state, sponsor and university guidelines – and laws.
“Accountability for compliance with sponsor requirements and University policy rests with the primary investigator,” said Milligan. “Consequences of non-compliance with sponsor and university regulations may result in the loss of funding for the project, repayment of expended funds, and might jeopardize future funding to the PI, as well as to the University as a whole.”
It’s also important, according to Milligan, to log all errors and corrective actions as documentation for potential account audits.
The Big Idea?
When it comes to counting your research pennies, be sure to take the time to do it. Funding is competitive and losing your funding might impact some of the great work you need support to accomplish.