Spending of Research Funds


As a public sector institution, the University is required to abide by legislation governing procurement in Ontario’s broader public sector.  Procurement Services has established a number of tools (such as UShop) and procedures, based on value of the intended acquisition, to ensure that items are purchased in the most transparent and accountable manner possible. For more details on these tools and resources, see the section ‘How to purchase goods or services’ on Procurement Services’ website.

Principal Investigators and Business Officers should be in close communication around purchasing and paying for items charged to research funds. While VPRI staff can assist you with questions about eligible expenses under the terms and conditions of a sponsored research award, if you or your Business Officer have questions about proper procurement procedures, including how best to acquire goods and services and by what means, please contact Procurement Services.

If you would like to see more details on the University of Toronto’s Purchasing Policy, you can review the section of Financial Services’ Guide to Financial Management  section entitled:  Purchasing (including Policy and Regulations).

Advanced Spending

Research funds are established following the budget approved by the sponsor over the duration of the award, whether the sponsor pays the University in advance, or requires invoicing based on costs incurred.

On occasion, Principal Investigators may have a need to incur an expense prior to funds being available.  Provided that the funding sponsor’s terms and conditions are observed, PIs can request an approval for advanced spending.

Authorization for advanced spending is at the full discretion of the Dean or Principal of the Division where the PI holds the research fund.  Requests to the Dean or Principal using the Advance Spending Request form include the following:

  1. reason for advanced spending request and amount;
  2. details of the anticipated budget amount that will cover the advance (e.g. as noted in the Funded Research Digest, or in the Sponsor Award notice or Agreement)
  3. duration of advance spending period (period between the time of the request and the expected availability of funds to cover the advance)
  4. Confirmation that sponsor guidelines permit advance spending

When a Dean/Principal agrees to support an advance spending request, s/he is also underwriting the expense:  in the event that the funding does not materialize the amount advanced is absorbed by the Division.  The Dean/Principal must communicate their approval for the exact advance spending amount, confirming that the Division is underwriting the amount, before VPRI staff can facilitate the required budget adjustment on the research fund.

Advanced Spending Request Form

Adhering to the Sponsor’s Approved Budget

Integral to the approval of research applications by academic unit Chairs or Divisional Deans is the assumption of financial responsibility, including risk, for the utilization of research funding. This is particularly true in cases where expenditures are incurred by a Principal Investigator that are ineligible or exceed the maximum budget amount approved by the Sponsor in their Award Letter or Agreement with the University. It is critical to understand the terms and conditions of fund use.

In cases where ineligible costs are charged to a fund or overspending occurs, the costs may be moved to the PI’s fund centre and ultimately become a financial liability for the academic unit or Division. Principal Investigators are strongly encouraged to consult with their divisional business officer or the RSO/IPO staff member responsible for the Fund (name appears on the FReD) in cases of uncertainty about eligibility of expenses or budget line item flexibility prior to taking action, It is normally more difficult to get sponsors to agree to budget adjustments after the expense is incurred.

Principal Investigator’s Role

The Principal Investigator is responsible for ensuring costs incurred on their research award(s):

  • fall within the budget amount
  • follow any specific budget line item maximums (e.g. a sponsor may limit the amount that can be spent on a particular budget item such as salary, travel, equipment, etc.)
  • occur within the eligible period covered by the research award. (A PI cannot incur a cost prior to the end date of an award for an acquisition or an even that will occur after the end date of the award)

Overspending or expenses not paid by the sponsor at the end of the research award will be subject to the close out process, where overspending or deficits are transferred to the Principal Investigator’s Fund Centre.

Chair’s Role

The Chair is ultimately responsible for all financial activity authorized by a member of the department’s faculty or staff.

If a principal investigator authorizes ineligible expenses, or eligible expenditures in excess of the available award funds, and has no other eligible source of funding, the academic unit/division must absorb these expenditures.


The Principal Investigator is responsible for ensuring costs incurred on their research award(s):

  1. fall within the budget amount
  2. follow any specific budget line item maximums (e.g. a sponsor may limit the amount that can be spent on a particular budget item such as salary, travel, equipment, etc.)
  3. occur within the eligible period covered by the research award.  (A PI cannot incur a cost prior to the end date of an award for an acquisition or an event that will occur after the end date of the award.)

The Department and/or Division is ultimately responsible for all financial costs  authorized for a research fund by a PI or the PI’s delegate(s).  If no other eligible sources of funding are available when overspending occurs, the Department and/or Division must absorb the cost(s). Any overspending cost not absorbed or not transferred to the department/or division’s fund centre, will be subject to the close out process, where the overspending cost is transferred to the PI’s fund centre.

If you have any questions about eligible expenses, including the timeframe within which those expenditures can occur, refer to your FReD, speak with your Business Officer, or contact staff in VPRI.

Sponsor Carryforward Policies

One of the key determinants in managing award expenditures is the sponsor’s policy with respect to unspent award funds:

  • at the end of the current award budget period
  • at the end of the award

The approaches can be summarized as follows:

  • full carryforward whereby all unspent funds may be carried forward for expenditure in a subsequent period
  • partial carryforward allowing carryforward only of amounts required to liquidate purchase order commitments
  • no carryforward

Principal investigators should refer to the Funded Research Digest (FReD) or contact the appropriate VPRI staff member listed at the bottom of the FReD to obtain additional details on what specific carryforward rules may apply to a research fund. The carryforward rules of the Sponsor dictate how the funds are managed in future years so it is important that the rules concerning carryforward are known both for between budget years and at the end of a Research Award. The effects are outlined below.

Effect on Funds Management – Multi-year awards

Full Carryforward

In the case of multi-year awards with annual appropriations, a liberal carryforward policy that allows unlimited carryforward of unspent appropriations from one year to the next, in effect, extends the planning period.

No (or Limited) Carryforward

A policy disallowing or setting a limitation with respect to unspent appropriations to be carried forward to the next budget period must be factored into research planning:

  • unspent funding is lost funding and, therefore, it is critical to plan the research accordingly
  • where the existing multi-year budgets do not reflect the actual progress of the research, steps should be taken through the VPRI contact to arrange a reallocation of the funding among the annual budgets.
  • under such a policy it is critical to ensure that all expenses to-date are reflected in financial reports or invoices for instalments to the sponsor by:
    • ensuring all payments are processed before the critical date.
    • where this is not possible, advising the relevant Research Accountant to accrue, i.e. record an expense, for goods or services received but not yet paid.

Disruptions to Research

Circumstances may arise which have a significant adverse effect on the research activity funded by a sponsor or may be perceived as having a potentially significant adverse effect. Examples of these are as follows:

Principal investigator:

  • temporary absences due to sabbatical or sick leave,
  • change in academic status that results in ineligibility to hold a research award,
  • transfer to another university,
  • death.


  • funding problems associated with an industrial partner in the case of matching programs,
  • inability of a research partner to continue with research in the case of collaborative arrangements.

As a general rule, there should be no further expenditure of award funds until both the Office of the Vice-President Research & Innovation staff and the Sponsor have been notified and consulted.

Where notification by the principal investigator is not possible or practical, the Departmental Chair should assume this responsibility.

It is advisable to inform the relevant staff member in the Vice-President, Research & Innovation in this regard on all related correspondence. VPRI staff can advise on the Sponsor’s policy and assist the researcher or his/her department.

Where applicable, Human Resources and Equity must receive official notification of a change in employment status to ensure that the appropriate action is taken with respect to salary payments. In this regard, amounts paid in error to the principal investigator, or any other person, are not eligible charges against the award and, accordingly, become the responsibility of the hiring department.


A “No-post” is the term used when funds in a research fund are unavailable for use, usually because there is an ethical protocol required. The University is obligated under Tri-Agency policies governing the ethical conduct of research to freeze funds when an ethical protocol (human or animal) is required but is not in place.  This includes when a protocol expires.

A “No-post” is lifted once a valid protocol is in place. If a no-post has been applied to your fund and you have questions, please contact the VPRI staff member listed at the bottom of your FReD. If you have inquiries about completing a new ethical protocol application, or a renewal, please contact.

  • any other terms and conditions the sponsor or the University may require in order to ensure that the University’s obligations on the PI’s behalf can be met to the sponsor’s satisfaction.

If you have any questions about inter-institutional, whether it’s to initiate a new one or about managing an existing one, please contact the VPRI staff member identified on your FReD.

Off-site Award Administration

Payments to Hospitals or Other Institutions to Recover Costs

There are two instances where offsite award administration may be necessary:

  1. A University of Toronto researcher has received a research award which includes contributions towards the research activities of researchers located at other eligible institutions, usually Canadian universities or research hospitals.
  2. It is sometimes the case that a researcher who holds an award through the University has a usual place of business at an affiliated hospital. This most frequently occurs when the affiliated hospital is not eligible to hold the award according to the sponsors terms   In this case the researcher must have a hospital appointment and a cross-appointment or status only appointment with the University.

Following are two methods of handling these situations:

Expense Recovery

Expense recovery is the more common practice when a researcher who holds an award through the University has a usual place of business other than the University, or the research sponsor does not permit sub-grants:

  • Purchases of goods and services and salary payments are made by the other institution
  • The other institution invoices the University for recovery of actual expenses.

Refer to Payments to Hospitals or Other Institutions to Recover Costs.

In this approach the other institution may be viewed as a supplier of a service to the University.

The University retains responsibility for financial management of the award.

Therefore, this arrangement is only acceptable where the principal investigator and the Chair of his/her department are confident it will not compromise compliance with sponsor and University requirements. This includes compliance with University conflict of interest policies, the purchasing policy , and regulations for travel and other reimbursable expenses.

There should be a written agreement between the University (represented by the Chair of the principal investigator’s department) and the other institution with respect to these arrangements.

Inter-institutional Agreements (formerly known as a sub-grant)

A Sponsor may permit you to transfer a portion of your research award to a co-investigator for their efforts on the funded project. Transferring funds is facilitated by a formal inter-institutional agreement between UofT and the co-investigator’s institution/organization, and is only initiated based on direction from you (or your delegate) to VPRI staff.  VPRI staff will interact with administrative counterparts at your co-investigator’s institution.  When both UofT and the other institution have signed the inter-institutional agreement, your co-investigator can begin their work.

To establish a new inter-institutional agreement, or to modify an existing one (e.g. extend the term, increase the budget, change reporting requirements, etc.), contact to the VPRI staff noted on your FReD indicating:

  • The name of your co-investigator, and their institution
  • The administrative contact at your co-investigator’s institution where the inter-institutional agreement is to be directed
  • The period of time to be covered by the agreement
  • The budget amount, and any specific budget line item maximums
  • The type of research progress reporting required and when it is due
  • Any other terms and conditions you believe are important to assist you in monitoring the inter-institutional agreement and progress towards research goals and objectives.

VPRI staff will take these details and draw up an agreement that incorporates your requirements, and also add:

  • that all sponsor terms and conditions that UofT must meet are also incumbent on the receiving institution (e.g. ethics, eligible expenses, etc.)
  • financial reporting requirements, including report format and due dates (or invoicing if the sponsor is funding UofT based on costs incurred.)

An inter-institutional agreement (IIA) may be considered where the above “Expense Recovery” approach is not considered appropriate.

An IIA is an arrangement whereby a portion of the award is transferred to the other institution which accepts responsibility to:

  • administer the project in accordance with the terms of the award, and
  • issue all necessary reports to the University, and as prescribed by the University, to meet its responsibilities for reporting to the sponsor.

The essential financial difference between an IIA and an expense recovery arrangement is that under an IIA the financial control policies of the other institution apply rather than those of the University.

For this reason this arrangement may require prior written authorization of the sponsor. Please confirm with the relevant staff member in the Vice-President Research & Innovation office.

The Vice-President Research & Innovation staff will send an (IIA) to the other institution outlining the terms and conditions and payment schedule with a request to return a signed copy of the IIA to acknowledge agreement.

Special requirements

Sponsors may have special requirements in this regard, such as the National Institute of Health (U.S.) requirement for a specific consortium agreement.

Relevant staff within the Vice-President Research & Innovation can provide advice in this area.

Limitations – funds advanced under an IIA  will only be released when funding is received from the sponsor and all required reports have been filed by the partner institution. The only exception to this general rule is in the case of Tri-Agency Awards where the amount of transfer is $200,000 annually or less. If the Tri-Agency annual amount awarded to a partner institution is greater than $200,000, payment of amount in instalments will be done upon negotiations with the partner institution.

Donation award restriction

Transfers to other institutions are not permitted in the case of awards funded by a donation for which a charitable donation receipt was issued under the Income Tax Act. Legal opinion advises that, under its charitable registration, the University may not transfer to another institution funds for which it has issued such a receipt even if the donor approves such a transfer.

The CFI Program and Policy Guide states:

The eligible recipient will operate and use the research infrastructure, and will assume responsibility for insuring all CFI-funded research infrastructure, including powered vehicles. It will also exercise de facto control over and hold a majority interest in the research infrastructure for a period of five years from the date of acquisition and installation of the research infrastructure, or for a period the CFI deems appropriate.
Here is the Universities statement of O&M of research infrastructure funded by the CFI.

Reporting to Sponsors

Most sponsors require regular financial and project updates through formal reports. Reporting requirements for a particular award will be confirmed upon finalization of the award and will be summarized on the Funded Research Digest (FReD) established by VPRI staff.
For more details with respect to reporting to sponsors, you can visit the University’s Guide to Financial Management, Reporting to Sponsors and Donors section.

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