Case Study 3: GCRF Due Diligence at the University of Leicester - - PowerPoint PPT Presentation

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 Lead Funder FEC Award RC Contribution Number

• f

Partners Devolved Budget

Y AHRC £100,805 £80,644 £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 Y ESRC

£249,672 £204,717

3 (2 O/S) £39,140 N BBSRC £680,252 £284,151 (Leic) £544,202 227,321 (Leic) N AHRC £251,848 £34,630 (Leic) £206,301 £27,704 (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.

• 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

• rganisation

– check the key scientific contact person for the project in question – Assess areas where there may be risk and address them

What do we promise to do?

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
• f 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
• ffice
• 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
• verseas 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
• nline?
• 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
• versight of the collaborator and their

ability to be accountable for the grant

• What if there are no accounts?

– Contact Financial Officer at the

• verseas institution either to obtain

accounts – Obtain required re-assurance on the ability for proper financial reporting

Bank Account Details

• Developed a Bank Account Form

template

– Send out with the draft contract

• Generally overseas partner have

their own bank account

• Bank Form needs to be

completed by the overseas partner and signed by their bank

• No personal bank accounts

allowed

– There may be exceptions but

• nly at discretion of our

Research Finance Head

Contract Number Project Acronym Institution Name Bank Account Name Street name and number Town Country Post code/CEDEX Name Phone Email Bank name Street name and number Town Country Post code/CEDEX IBAN BIC Bank Stamp & Signature of Bank Representative DATE:

Institution's Banking Information

Full address of Institution Person in charge of financial aspects of this project First name(s) Details of bank account Fax Bank address (full address - PO box not accepted) Signature of Account Holder and Stamp of Organisation

Accounting Systems

Developing process to capture:

• Has the partner received overseas

grants, such as from British Council or

• ther 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

• verseas?

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,

• n 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

Financial Statement Template

• Captures information required for the end of the grant financial statement

– Final payment only released on receipt of this and the documentary evidence

• Template contains 3 tabs:

– a brief summary statement –actual costs pulled through automatically from the next 2 tabs, so this requires no input other than certification of costs – a transaction list of non-pay items – copies of receipts and invoices required for items listed here – staffing costs – should be evidenced by the number of days multiplied by a daily rate certified/stamped by someone from finance/payroll function

• Leicester PI confirms that the outputs delivered match the costs declared

Addressing the risks: Financial

• Provide summary reports of income and

expenditure during project

• Available for audit if requested
• Final financial report required – with return
• f balance to funder (if pre-financed)
• Retain financial control on budgets where

possible e.g. travel budget

• Use agencies/other overseas bodies for

employment

• All devolved budgets are inclusive of any

local taxes

• Any institution not previously paid by the

University is registered by Department after the completion of a New Supplier Form

New Supplier Form

Martine Hamilton Knight

• Reviewed by Procurement Office and

Accounts Payable

• Captures following information:

– Supplier Details: name, address, type of organisation – Purchase Details: product, service etc. – Expected total spend – Procurement compliance

Addressing the risks: Institution

Contractual requirements:

• to meet host country standards:

– Ethical (ethics approval to also be

• btained from Leicester)

– Regulatory – Financial management

• International codes of conduct
• Require researcher to have formal

employment contract

• Where possible institution to engage any

sub-contractors

• Right to seek evidence of insurance
• IR35-sole trader. Complete self employment

questionnaire

Photographer: Martine Hamilton Knight

Addressing the risks: Institution

Discussion points: 1. Separate agreement with each overseas collaborator on the grant?

– One single collaboration agreement with all collaborators (UK and

• verseas)?

2. Require overseas collaborator to engage any local subcontractors etc? 3. How to determine a fair Limit of Liability for a contract with overseas partners

– Should we use the Exclusive jurisdiction clause?

4. What level of insurance can we expect overseas partner to have in place? 5. What legislation can we reasonably expect adherence to?

– diversity, ethnicity, equality, non-discrimination, human rights, child protection, modern slavery etc.

Addressing the risks: Meeting Funder rules

• Devolve additional ODA Funder Terms to the overseas institution
• Use MRC T&C as benchmark:

– Ensure that the Project undertaken as part of this MRC grant is compliant with ODA rules and regulations as set out by the GCRF. The Parties are deemed to be aware

• f the ODA rules and regulations attached as Appendix F and can be found on:

www.rcuk.ac.uk/documents/international/gcrfodaguidance-pdf/ – Acknowledge the support received from the GCRF. The Parties shall use words to the effect of “This work was supported by the Global Challenges Research Fund and funded by the MRC grant number MR/P02548X/1.” – Assist Leicester and the MRC with any additional reporting requirements throughout the whole life time of the grant, during the grant and on completion.

Addressing risks: Research

Contractual requirements:

• Report on the research outcomes
• Stipulate the expected deliverables from the
• verseas collaborator
• Requirement for projects “meetings”
• Steering committees (terms of reference)
• Advisory boards
• Access to Arising Intellectual Property
• Sample storage
• Material transfer
• Safe data storage and transfer (Export regs?)
• Anonymisation
• Publication

Martine Hamilton Knight

Exercises

An application led by your institution An award led by your institution

• Partner countries: Nigeria, Kenya,

Ethiopia and Switzerland

• University partner in Nigeria, Ethiopia

and Switzerland

• Consultant in Ethiopia
• Company partners in Kenya and

Ethiopia (providing in-kind support but also requiring some funding)

• A clinical study of patients in 2

locations:

• Kenya- named academic
• India- named academic is part time

employee of NHS and has affiliation to the named institution

• No UK patients
• Samples will be sent to UK for

analysis

• Devolved budget to all Parties

What questions would you ask at application stage to minimise risks and aid due diligence? What due diligence would you perform? What questions would you need to ask?

Group discussion on ethics and governance as part of due diligence

• Ethics:

– When would you carry ethics review? – Would you require overseas partner to evidence ethics review?

• Governance:
• If we are Sponsor, what site agreements would we use?
• If no Research Governance required (all patients overseas), what

checks should lead perform?

• Other considerations?

Minimising risks at application stage

• Relationship with partners- collaborator,

sub-contract, consultancy

• Project “map”

– Which institutions will be involved UK and overseas? – Who is lead researcher for each institution? – Who is their substantive employer? – What is relationship between lead researcher and the institution? – If UK researcher is directing the research overseas how would this be managed?

Minimising risks at application stage

• How will the money flow to each partner?
• Would we need to use an employment

agency?

• Would we incur VAT (plus local taxes)?
• Do they fall under the IR35 for sole trader?
• Ethics
• Governance
• Exchange rate where possible buffer-

where to value? Worst case in last 24 months

• Involve PI in managing collaborator

expectations of when funding will be available and how it can be used

Final points

• We have just started the journey on

ensuring we carry effective due diligence

• We are learning from others
• Will there be a shift in emphasis from

checks on the overseas institution to a collaborator in real sense of the word?

• UK Collaborative on Development

Sciences (2017): Building Partnerships

• f Equals (The role of funders in

equitable and effective international development collaborations)

Martine Hamilton Knight