Case Study 3: GCRF Due Diligence at the University of Leicester Brian Berry and Trudie Wardle Photography by Design Services, University of Leicester
Context • Applied a number of GCRF calls • Received funding for 7 GCRF projects • Awards from RCUK for non-GCRF projects with ODA element • Awards from Newton fund • Awards from other funders for work with overseas partners e.g. British Council, British Academy • To date most of our partners are from established collaboration • Developed due diligence process to address funder requirements • Some areas of due diligence we are still developing
GCRF Awards at University of Leicester Leicester Funder FEC RC Number Devolved Lead Award Contribution of Budget Partners Y AHRC £100,805 £80,644 0 £0 Y MRC £681,481 £594,958 5 (4 O/S) £248,864 Y NERC £147,485 £123,794 7 (6 O/S) £41,475 Y STFC £31,369 £25,095 0 £0 Y ESRC £249,672 £204,717 3 (2 O/S) £39,140 N BBSRC £680,252 £544,202 £284,151 227,321 (Leic) (Leic) N AHRC £251,848 £206,301 £34,630 £27,704 (Leic) (Leic)
MRC GCRF funding terms This grant has been awarded on the basis that if any funds are transferred to another UK or overseas organisation then the Research Organisation awarded the grant must undertake due diligence checks to ensure that the funding will be appropriately used (as set out above). The Research Organisation may be asked to provide evidence that where funds have been transferred they have undertaken appropriate due diligence to ensure that any risks are recognised, understood and treated as necessary. The Research Organisation may be asked to provide additional information on how the due diligence checks were carried out.
What do we promise to do? • We promise to our GCRF funders that we will carry out desk based due diligence on all overseas collaborators to whom the University is responsible for devolving research funding • This desk based due diligence aims to: – establish the financial status, standing and reputation of the overseas organisation – check the key scientific contact person for the project in question – Assess areas where there may be risk and address them
Preparing for Due Diligence • Looked at due diligence process that we use for setting up new funders – This was developed in line with due diligence requirements carried by Development Office • Considered risk evaluation and due diligence of other organisations – E.g. Wellcome Trust, Universities (ARMA conference 2016) • Surveyed existing online and University library resources for performing due diligence • Talked with Insurance office and Finance office • Prepared a template form for our desk based due diligence exercise
When do we carry due diligence? • Currently carry out desk based due diligence checks at award stage • Whenever an overseas institution is in receipt of funding (irrespective of description in application: collaborator, partner etc.) • Looking to do a series of pre-checks at bidding stage – Practical difficulties due to short turnaround times • Sometime pre-check not needed due to long term collaborations. • Is the overseas institution a collaborator or partner (in kind contribution only or also receiving funds?) • If additional partners join the project later Photographer: Martine Hamilton Knight
Stages of desk based due diligence • Performed by Research Grants Team • Complete Due Diligence form for every overseas partner in receipt of GCRF funding – signed and dated and stored electronically • Notes recorded on SAP GM (grants management database) • Bank Account Form completed • Evaluation of risk translated into the terms offered in the collaboration agreement • Signed contract with the overseas collaborator
What do we look for in due diligence? • Institutional status • Financial reporting • Bank account details • Accounting systems • Contractual obligations • Scientific lead • Authorised signatory
Due diligence resources General Companies House/Charities Commission Lexis Diligence Nexis Diligence Google Organisations own website Annual reports Financial Times Overseas FAME Corruption Perception Index (country only) SEC Filings (US Only) Amnesty International Zawya.com Businessweek Forbes Rich List Digital Look Individual Scopus Retraction Watch Web of Science Personal homepage
Institutional Status • Does the researcher/partner have an institutional affiliation? • Identify which organisation we will contract with- not always as simple as it sounds • Does the overseas collaborator legally exist? • Start with….. Google. Is there a website presence? But website not enough! • Look for legal status of the organisation on the website • Can you find the articles of association online? • If no legal status can be determined – explore whether we can contract though a different organisation
Institutional Structure We are developing a questionnaire to capture the following: • How are grants administered? • What is devolved to departments? • What financial accounting system is used? • How are costs collated? How are costs monitored? Prevention of ineligible costs and virement? • What is the procurement policy? • Is there an internal audit?
Financial reporting • Identify recent audited accounts (ideally within the last two financial years) • Review the accounts to identify any risk raised by the auditors • This assists us in checking level of oversight of the collaborator and their ability to be accountable for the grant • What if there are no accounts? – Contact Financial Officer at the overseas institution either to obtain accounts – Obtain required re-assurance on the ability for proper financial reporting
Bank Account Details • Developed a Bank Account Form Institution's Banking Information template Contract Number Project Acronym – Send out with the draft contract Institution Name Bank Account Name • Generally overseas partner have Full address of Institution Street name and number Town their own bank account Country Post code/CEDEX Person in charge of financial aspects of this project • Bank Form needs to be Name First name(s) Phone Fax Email completed by the overseas Bank name Bank address (full address - PO box not accepted) partner and signed by their bank Street name and number Town Country Post code/CEDEX • No personal bank accounts Details of bank account IBAN allowed BIC – There may be exceptions but Bank Stamp & Signature of Signature of Account Holder and Bank Representative Stamp of Organisation only at discretion of our Research Finance Head DATE:
Accounting Systems Developing process to capture: • Has the partner received overseas grants, such as from British Council or other aid funding? • Are there examples of grants being managed by the partner? • Need to ensure that their system is able to provide links for individual transactions and reconcile income and expenditure Martine Hamilton Knight
Contractual Obligations • There must be a binding contract in place with the collaborator • Should mirror the funder terms and cascade the conditions to the collaborator • Contain appropriate clauses to address any identified risks • Contain full details for budgets and any sub-contracts • Partner remains accountable for the funds they receive. Unspent funds to be returned • Query on enforceability of the contract if there is contract breach?
Scientific lead • Identify key scientific contact • Check publications: – Web of Science, Scopus • Retraction Watch • Personal Homepage • Previous collaborative research projects • Web search for individual
Authorised signatory • Does the signatory appear to be authorised to do so and held accountable for the funds received? • Need to look at the governance structures. • Authorised signatory – Discussion point- how do we ensure person authorised?
Other considerations for due diligence • Do we consider these as part of due diligence? • Overseas Institutional policies: – Research Integrity – Ethics – Health and safety – Bribery and corruption – Equivalent of Research Governance • How would we evidence? • What processes should be followed for medical research entirely overseas?
Addressing the risks: Financial Payment profile: • Payments only made: – once the partnership agreement has been signed – to verified bank accounts – in instalments – unless pre-financing has been agreed, on receipt of a completed cost claim including supporting documents evidencing expenditure and reports – where applicable, on production of accepted deliverables • Advance payments sometimes necessary and subject to negotiation • For advance payments, require reporting before we release the next tranche of funding
Addressing the risks: Financial Invoices and Expenditures • Statement of expenditure in line with the reporting requirements of the funder • Equipment costs to be detailed and evidenced • Dates and details of staff employed to be provided where these are being claimed as Directly Incurred costs • Travel costs recorded in line with RCUK requirements • Invoices from international collaborators approved by the normal invoice authorisation procedures • Currency – all claims in GBP • Financial Statement Template
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