Practice better closeout management in trials 

Expert offers guidelines

Clinical trials administrators and other research staff could avoid common problems after research has been completed if they would follow a well-defined, closeout process, regardless of the type of award that was made, according to a research expert.

"Where I see institutions struggle is when they change their processes, doing one thing a certain way and another time doing it a different way," says Tim Patterson, manager of the Huron Consulting Group of Chicago. Patterson spoke about closeout management at the National Council of University Research Administrators (NCURA) conference, held Oct. 31 to Nov. 3, 2004, in Washington, DC.

"For example, if a university was doing a close-out for an award that had a financial report, they may do the closeout one specific way," Patterson says. "But if the closeout award did not have a financial report then they may deviate from the closeout process."

The same principles should be applied to both cases during the closeout process, Patterson adds.

"The same process should be used to close out every award and make sure things get done consistently across the board," he says. "When all is said and done, that’s what sponsors want to see because it helps bolster confidence in the institution’s practices."

Patterson lists these reasons why the closeout process often has problems and what might be done to improve it:

  • Closeout is a low priority.

The reason research departments in universities often struggle to close out awards is because this process is the last step in the life cycle of an award, Patterson notes.

"Like many last things and different procedures, that’s the one that can often get skipped because the burden is placed on setting up and producing financial reports," he explains.

  • Research departments are understaffed.

Also, while the number of research dollars awarded to universities by federal and nonfederal sources are growing at a rate that has resulted in some institutions doubling or tripling their research award volume within the past decade, the administrative support for research has not grown at the same rate, Patterson says.

  • Better training manuals are needed.

Another reason for problems with closeouts is that most institutions have not taken time to produce good training manuals or process improvement manuals for the clinical trials and research process, he notes.

"They find themselves relying on the people who’ve been there the longest," Patterson says. "And much like the game telephone,’ when you’re passing something down from one person to another, some things get missed," Patterson says. "Taking time to document a procedure or policy that’s going to be in place beyond the length of time people are with an employer is invaluable because you make sure things are done repeatedly and consistently year after year."

  • Time management is critical.

"You’re in a position to support the researcher and provide him or her with guidance in terms of reliable items on projects and reliable costs," Patterson says. "But you also have a situation where you get a ton of e-mails from the department or sponsors, asking for things."

While new award set-ups, purchase order requests, and other details sit waiting in an administrator’s in-box, the closeout process is invisible, he says. "No one puts a closing in your in-box, so if you don’t specifically do this it’ll fall off the radar and not get done."

  • Ignoring closeout process increases audit risk.

When federal officials check a trial’s balance or expenditures and compare this to the financial report or cash collected, there will be questions if they don’t match, Patterson says.

"One reason they might not match is because after you issue the following report, perhaps expenses continue to post to the account, and because you don’t have a good closeout process you don’t realize this," he says.

"For federal awards, a lot of sponsors have a letter of credit authorization to draw down funds, and the individual drawing the funds will go off of what’s posted to the account," Patterson explains. "If what’s posted is greater than what’s reported and you have a case of greater than cash receipts, the auditor will come in and say, What’s going on?’"

  • Ignoring closeout also poses financial risk.

"If expenses keep posting to an account and the window of opportunity to invoice or bill the sponsored entity has closed, then you may have expenses that could have or should have been invoiced," Patterson says. "But because you didn’t have a good closeout process, you didn’t do a thorough review of expenses posted, valid post-term expenses, then you might miss that final payment posted to the account, and the institution now has to cover that cost."

  • Document the closeout procedure.

"Develop a checklist that you will use every single time you close out the account," Patterson says.

It should include:

— Did you do the final invoice?
— Is the financial report done?
— Has all the cash expected come in and been received?
— Did expenditures to the account today match the expenditures you invoiced?

The closeout procedure should include checking to make certain all encumbrances or obligations are zeroed out to prevent other people in an institution from directing expenses to an award because they were ignorant of the grant and contract, Patterson says.

  • Make certain PI and department agree on all costs.

Getting the confirmation of expenditures, which is a consensus from the PI and the department, is critical, Patterson says.

The clinical trials office and the person writing the financial report and invoicing must make sure when a file has been closed that the PI and department agree that all costs posted to that award are appropriate to that project, he adds.

"They must agree on the final tally of costs," Patterson says. "They’re the only ones who know because they are responsible for administering the award, and no one in central administration is going to be able to say whether all expenses are posted."

  • Review summary list in validating expenses.

Review a project status report or an awards status report that lists the expenditure type that is posted to an account, Patterson says.

The research staff should provide the PI with information about how the costs have added up and what the remaining balance is for a particular account, he suggests.

For clinical trials, research staff should validate from the researcher that all cash that is expected to come in on the account has been received, he adds.

"The critical point is to make sure they agree that all final, expected payments have been received, because if you close it out before you receive a payment then you will hurt the institution’s ability to post a payment," Patterson says.

  • Notify PIs and staff of closeout time.

There’s a great deal of value in sending a notification letter to the PI and department staff to tell them that the award referenced in the letter will be going to term in 60 days, 30 days, or two weeks, Patterson says.

The letter could request that if the PI hasn’t already done so, then he or she should begin doing a process of review to make sure the cash has been received and the expenses are appropriate, he says.

"Some PIs will come back and say, I lost track of time and didn’t realize the invoice was in 30 days — I need more time, how do I go back to getting more time?’" Patterson notes. "So you work with them in terms of a no-cost extension."