From time to time, I receive calls from faculty members who are facing a financial problem on one of their projects. Most of these issues are routine in the management of research, including problems with spending and budgeting, but there have also been the panicked, middle of the night phone calls when millions of dollars mysteriously “go missing.” Fortunately, almost all of these instances of massive amounts of money missing have been innocent accounting acrobatics, but a few of these calls came too late; the auditors were already on the way and not much was left but to pack up the lab and polish up the CV.

A faculty member recently told me that he trusted his finance person “100%” and that he signed whatever she gave him to sign—always a red flag for me. He added that there was no need to ask any questions, because “she doesn’t question what I do in the lab, so why should I question what she does?” At closeout, he signed off on more than $2.5 million in federal dollars spent on his research without once reviewing the numbers. During the accounting department’s final review, it was discovered that more than $40,000 in charges were incorrectly charged to his project. Ultimately, because of that error, the money was returned to the government and the faculty member concluded his project with a $40,000 life lesson.

I frequently use the phrase made popular by President Ronald Reagan (who learned it from a Russian writer): “Trust, but verify,” because even well intentioned individuals make mistakes. Even when you fully trust someone, you should never sign off on something without verifying it. Your signature indicates that you believe the information to be accurate, truthful and correct. As the principal investigator, your signature indicates your full responsibility and culpability for everything in the document.

As if it wasn’t tough enough to be a grant-funded research scientist, you also need to get comfortable with the things you probably didn’t learn about in grad or medical school, like budgets, procurement, staffing and all the million and one other details that keep your research moving forward.

Some suggestions:

• Budgets. Get intimate with the budgets for each of your projects. Make time each month to review spending on all projects and cost centers with your finance person. Look at every single charge, because the devil really is in the details. Monthly reviews are the best ways to identify charges that don’t belong on your project. Once you are in agreement with the finance person I recommend that both of you sign the corrected budget and that you keep a copy of the signed budget.
• Tracking Charges. Your institution is required to have software in place to manage the accounting process. I recommend that faculty members with multiple projects use their own shadow system to track charges between meetings with their administrator so that they are aware of the remaining funds on their projects. Having this will smooth your monthly meetings. It will also inform your decision-making, especially when you have an unexpected expense and need to know if you can charge it to the project.
• Forecasting. The biggest expense on most research projects is personnel costs, which are stable and can help us project future expenses. You or your finance person should be able to do some basic forecasting based on how much money you spend each month (your burn rate) when added together with any upcoming planned expenses. When coupled with tracking your charges, this will likely prevent you from arriving at the end of your project with a lot of money left over or running out of money before your project ends. If you can get all the projections for all your projects on one page, it will help you time grant submissions so that you don’t end up without any money to support you and your research. I’ve seen several faculty members run out of money across all their projects. While most of these faculty members were able to pick up time in the clinic, taught a class, found temporary support by working on a colleague’s grant-funded project or by obtaining institutional funds to tide them over until their next grant was funded, a few ended up leaving the institution altogether.

Becoming a financial spreadsheet superstar takes time and effort. Very few principal investigators I know were mentored on the finer financial points of research and even fewer formally learned about this in their PhD program. I promise you that building your administrative muscle is worth it. Just think, understanding your projects’ finances will allow you to go to sleep each night, wrapped up in a warm blanket made from all the spreadsheets you reviewed and approved, comforted in your ability to fully stand behind your them.

About the Author

Screen Name

Sam Gannon, EdD

About Me

Sam Gannon lives at the intersection of research and research administrators. Rely on him to bring the compliance perspective, but in a very nice and friendly way. When not talking up research integrity, financial compliance or a new institutional education program, Sam is probably on the floor someplace building Legos with his three kids, drinking coffee & dreaming about a vacation at the beach.