Transcript Cost Transfers - Financial Services

Policy and Procedure
Definition
 A cost transfer is the reassignment of a previously
incurred expense from one account to another
 Transfers are considered the correction of errors and
excessive transfers may indicate a lack of proper internal
controls
 Can include salary or non-salary expenditures
 Includes the transfer of pre-award costs, correction of a
clerical error, routine allocation of shared services,
reallocation of costs between similar or related projects
Purpose
 To comply with the Office of Management and Budget
(OMB) Circular A-21 cost requirements governing
allowability and allocability
 NIH Policy stating transfers should be accomplished
within 90 days and supported by documentation fully
explaining the error and certification of the new
charge by the responsible organizational official
OIG Audit Report
 Federal requirements for cost transfers require that
they are timely, supported, reasonable, allocable,
allowable, and that grant accounts must have adequate
internal controls so they can be monitored. In
addition, specific University requirements must also
be followed.
OIG Audit Report (cont’d)
 Transfers of costs from one funding source to another
may be proper for closely related work supported by
more than one funding source. However, frequent,
tardy, and inadequately supported transfers,
particularly if they involve projects with significant
cost overruns or unexpended fund balances, raise
serious questions about the appropriateness of the
transfers and the overall reliability of the university's
accounting system and internal controls.
Audit Findings
 Yale University – late funding resulted in cost transfers but the
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required documentation justifying and certifying the charges
was missing
University of Chicago – extensive policies and procedures were
in place but not followed as required for documentation and
certification
University of Massachusetts – transfers not done timely and
with inadequate justification
Roger Williams Hospital – unallowable cost transfers as
subawardee
Florida International University – transfers with incomplete
documentation, grants used as clearing accounts, transfers after
grant closed resulted in a $11.5 million settlement
Cost Transfer Policy
 Minimize the need for excessive cost transfers with
effective grant management and internal controls
 Transfers need to be timely, justified and certified
 Timely – within 90 days of the original expense date
and within 30 days of the project expiration date
 Justified- full explanation of the circumstances under
which the error occurred and justification for transfer to
the new account
 Certified- signed by the business office and chair or
dean
Cost Transfers - Timeliness
 Cost transfers must be completed within 90 days of the
original expense
 Payroll related expenditures within 30 days of the end
of the month in which the expense originally posted
require no documentation
 Transfers moving expenses to a grant or contract
cannot be submitted after 30 days past the expiration
date of the award
 All transfer requests within the 30 last days of the
grant or contract period require written justification
Cost Transfers - Justification
 Detailed explanation of the error or issue. What
happened, how it happened, and what has been done
to correct it
 Explanations stating “to correct error” or “transferring
to correct project” are not sufficient
 Unacceptable transfers include:
 moving cost overruns and disallowed costs to other
sponsored accounts
 moving costs to spend out remaining sponsored
balances
Cost Transfers – Certification &
Documentation
 All transfer requests must include signatures from the
appropriate Expert Business Office or departmental
designee and the chair or dean of the college
 Backup documentation should include copies of
invoices and screen prints supporting original expense
and transfer justification
 Expenditure item date should be the same as on the
original transaction
Lessons Learned
 Training and Development
 need to understand the requirements and regulations
 maintain a culture of compliance from the start
 implement effective training programs
 Communications
 communicate issues to the appropriate parties as timely as
possible
 teamwork is vital, we all have a vested interested in doing
things right
 Documentation
 good records are the key to surviving an audit
Cost Transfer Scenarios
 Scenario 1 – Transfers within the same entity
 State account to State account
 Research Corp account to Research Corp account
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Intra-University (IU) form only
Cost Transfer Scenarios
 Scenario 2 – transferring between entities moving
expense off a POETA
 From State POETA to Research Corp Account
 From Research Corp POETA to State Account
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Use IU form, Vendor’s Invoice and Miscellaneous Receipt
Cost Transfer Scenarios
 Scenario 3 – transferring between entities moving
expense off a GL account
 From State GL to Research Corp Account
 From Research Corp GL to State Account
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Use Vendor’s Invoice and Miscellaneous Receipt