Case Study 3:
GCRF Due Diligence at the University of LeicesterBrian 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 LeicesterLeicester
Lead
Funder FEC
Award
RC
Contribution
Number
of
Partners
Devolved
Budget
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
£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
organisation
– 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
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 laterPhotographer: 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 resourcesGeneral Companies House/Charities Commission
Lexis Diligence
Nexis Diligence
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
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
only 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
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
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
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
of 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: InstitutionContractual requirements:
• to meet host country standards:
– Ethical (ethics approval to also be
obtained 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
overseas)?
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
of 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: ResearchContractual requirements:
• Report on the research outcomes
• Stipulate the expected deliverables from the
overseas 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
of Equals (The role of funders in
equitable and effective international
development collaborations)
Martine Hamilton Knight