Transcript Proposal Budget Building and Related Issues

Cost Transfers
CALS Research Division
http://www.cals.wisc.edu/research/
CALS Business Services
http://www.cals.wisc.edu/bussvc/
March 15, 2007
Today’s session will cover:
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Overview of campus policy
Roles and responsibilities of the PI
General principles
Processing procedures
Justification statements
Timelines
Questions/suggestions
Overview of Campus Policy
Cost transfer policy for sponsored projects
www.rsp.wisc.edu/policies/costtransfer
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Cost transfer policy
Terms and definitions
Types of transfers
Roles and
responsibilities
Project management
Regulatory references
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Extenuating
circumstances
Cost transfers FAQ
Transfer forms
Allowable example
Unallowable example
Definition of Cost Transfers
A cost transfer is an after-the-fact reallocation of
costs, either salary or non-salary costs, to a
sponsored project within a 90-calendar day
period from the accounting date.
(Accounting date, for the purpose of this policy, is the end of the
month of the journal date as shown in WISDM.)
Reason for policy
Proper management of funds is essential to
uphold the fiduciary responsibilities of the
University … responsibility to manage funds
in a manner consistent with the University’s
mission and the conditions specified by
external sponsors.
Regulations
OMB Circular A-21:
o Sections C.1-C.4 -- concepts of allowability,
allocability, and reasonableness
o Section C.4.b. – costs … may not be shifted to
other sponsored agreements to meet
deficiencies caused by overruns or other fund
considerations; to avoid restrictions imposed
by law or by terms of the sponsored
agreement, or for other reasons of
convenience.
Regulations
Allowability:
A cost is allowable to a project if the costs:
o are reasonable;
o are allocable to the specific project;
o are treated consistently in like circumstances;
AND
o conform to any limitations of the cost
principles or the sponsored agreement.
Regulations
Allocability:
A cost is allocable to a project if goods or
services involved are chargeable or assignable
in accordance with the relative benefits
received by the projects. In order to be
allocable a cost must be treated consistently in
like circumstances.
Regulations
Reasonableness:
Would a prudent person pay this amount for this
item?
OR
If it were published on the front page of the
Wisconsin State Journal, would that be okay
with you?
Regulations
OBM Circular A-110:
o Subpart D.71: 90 days to close
Agency Specific Regulations
o See award terms and conditions of awarding
agencies/sponsors
Roles and Responsibilities of the PI
PI/Department designee
Ensure that expenditures are allocable,
allowable, and reasonable to a specific
sponsored project.
Ensure that expenditures are allocated in
accordance with award budget, sponsor
guidelines, and UW-Madison policy.
Ensure that individuals have appropriate
authority to incur and allocate expenditures.
PI/Department designee
Ensure that monthly monitoring of expenditures,
timely correction of errors, and reallocation of
expenses, including personnel effort, occurs.
Ensures compliance with UW-Madison Cost
Transfer Policy.
Initiates and authorizes requests for cost
transfers.
PI/Department designee
Provides complete, clear, and reasonable
justification for transfers as required by this
policy.
Manages project to minimize the need for cost
transfers.
General Principles
Project management
Sponsored project expenditures should be reviewed on a
regular basis to ensure that both salary and nonsalary charges are correct and appropriate.
It is the responsibility of the PI and/or the PIs designee
to authorize transactions and review expenditure
activity.
Regular review should include determination that the
charges are reasonable, allowable, allocable, and
directly support the scope of work for the project.
DOs
Do – apply costs to appropriate sponsored
project when first incurred
Do – request account numbers in advance for
pending awards
Do – split code requisitions when items are to be
used across multiple sponsored projects
DOs
Do – use an allocable split to charge costs to
multiple projects (e.g., 50/50, 30/70, 25/40/35)
Do – set up MDS accounts and open vendor
requisitions on individual sponsored projects
Do – provide clear, detailed justification
statements
DOs
Do – verify with PI to which project(s) costs
should be applied
Do – perform ProCard edits in a timely manner
AND cross-train staff to handle ProCard
editing
Do – carefully prepare paperwork; errors in
account numbers, reference numbers,
amounts, etc., will only delay transactions
DOs
Do – verify as best one can that chargeback
centers have current/correct information
regarding the grant/project to which costs
should be applied
Do – process chargebacks/billings MONTHLY!
DON’Ts
Don’t – park costs on sponsored projects
Don’t – transfer costs from one sponsored
project to another to eliminate a deficit
Don’t – default ProCard accounts to sponsored
projects
DON’Ts
Don’t – use generic/standard statements to
justify transfers
Don’t – apply all costs on one grant and then
move to the next grant to apply costs; if the
grants are related and costs are to be shared,
costs should be split-coded as purchased
Processing procedures
Submit all transfers to CALS Business Services
unless specifically instructed otherwise.
All transfers are entered logged/tracked.
Transfers involving sponsored project accounts
will be routed from CALS Business Services to
CALS Research Division for review and
approval.
Types of transfers
Salary cost transfers
Non-salary cost transfers
Transfers within 90 days
Transfers beyond 90 days
Processing procedures
NON SALARY TRANSFERS
Form available:
http://www.cals.wisc.edu/bussvc/forms/index.html
Submit transfer forms in duplicate – original plus one
copy; submit only one copy of documentation.
Transfers involving sponsored project funding, attach
one copy of documentation to support the charge being
transferred.
Processing procedures
Use Legacy class codes only on Non-Salary
Payment Transfers.
“Type” are on Payment Transfer forms:
“P” (partial) – apply to a req.; leave req. open
“F” (final) – apply to a req.; close req.
“M” (miscellaneous) – does not affect a req.
Processing Procedures
SALARY CASH TRANSFERS
Form available http://www.cals.wisc.edu/bussvc/forms/index.html
Accurately fill out the appointment ID, name & SSN
(mistakes are found when template used).
Make sure SFS account codes are indicated.
Enter year in the pay period in addition to the month(s).
The salary cash transfer should accompany a PayData
form which shows how the individual should be
paid.
Processing Procedures
SALARY CASH TRANSFERS (continued)
Check PHIQ in the legacy 3270 system to see what
should go in the WAS section. Do not only rely on
your copy of the PayData form.
Exceptions when you should call CALS Payroll:
-You are correcting a payment that has already been
processed on an earlier salary cash transfer.
-You know that campus payroll made payment on a
different fund because of a “block” or other funding
problem.
Processing Procedures
SALARY CASH TRANSFERS (continued)
When you move only a part of the funding to another
fund, you need two lines in the SHOULD BE
section. The lines will be (a) what stays on the
original fund with no amount in the TOTAL
TRANSFER column and (b) what is to be
transferred to the new fund with the amount to be
transferred in the TOTAL TRANSFER column.
Processing Procedures
Transfers may be disallowed by campus, even
with our best efforts.
Audits can result in disallowances well after
transfers are processed and even possibly after
an award has ended/closed.
Justification Statements
Recommendations
Be aware of agreement terms and
conditions to assure allowability of costs.
Apply costs directly to sponsored project to
alleviate the need for cost transfers.
Incorporate an authorization, verification,
and review process by PI into sponsored
project processes.
Recommendations
Provide a clear, complete, thorough
justification statement.
Prepare the transfer in a timely manner,
well in advance of the 90 day limitation.
Red flags!
Frequent/repeated transfers from a given
entity.
Canned language.
Transfers in the last month of the award or
after the end of the award.
Explanations that raise more questions than
answers.
Issues of concern
Documentation is not provided.
Transfers involving unallowable purchases
(e.g., computers, travel, equipment,
furniture … items defined as
unallowable per terms/conditions of
award).
Issues of concern
Incomplete justifications:
• Edit error
• Wrong funding charged
• Correct class code
• Cost center error justification used when it
isn’t a cost center error
• Accounts payable mistake
• To apply charge to correct account
• Computer purchase for XXX to use on project
Issues of concern
Insufficient explanations:
• Placing travel costs on project for which
the traveler has no relationship
• UPS/FedEx charges without explanation
of what was shipped
• Documentation that does not explain
what type of service was provided
Issues of concern
Contradictory justifications:
• Stating expenditures is for one project
but moving expenditure to an entirely
different project
• Long, lengthy, confusing statements –
telling too much can lead to more
questions; be clear/concise!
Issues of concern
Confusion:
• Indicating a transfer is being made for
cost sharing is confusing; cost sharing is
the portion of project or program costs that
are not borne by the Federal Government.
“Sharing costs” across multiple projects is
more likely the intended statement.
Issues of concern
Confusion:
• Stating that items being transferred are
for lab use, but the transfer does not split
costs allocably across the projects.
Issues of concern
Problems:
• When a transfer is received, the
justification may say one thing, but it
becomes questionable when WISDM is
reviewed it is evident that the transfer
amount is simply clearing a deficit.
Issues of concern
Problems:
• Justification indicates that RSP or CALS
requested the transfer. You need to
explain “why” the transfer is needed
AND provide documentation, not say
“because someone told you to.”
Example
Transfer lab supplies purchased on MDS
account on fund 144-AB12 to fund 144CD34 where items were used.
Parking charges on one grant/project and
then moving to another grant/project is
unallowable.
Example
Transferring charges from 144-AB12 to 150A123 unrestricted fund due to over
expenditure on 144-AB12.
Transferring an account deficit to an unrestricted
source of funding is allowable. However,
justification statement should not reference
deficit nature of account.
Example
Transfer from 133-AB12 to 144-CD34 –
ProCard defaults to 133-AB12. Transfer to
correct sponsored project on which items
were utilized.
ProCard charges should be applied to correct
sponsored project at biweekly point of review
– transfer after-the-fact is unallowable.
Example
Fleet vehicle charges were fully applied to 142AB12. The travel costs were to be shared
equally between two sponsored projects –
Hatch and WCB sponsored projects. One-half
of the assessed travel costs are being
transferred to 133-HF15 WCB.
If total travel costs are split 50/50, this transfer
would be allowable.
Example
However, if the justification is simply to share
travel costs ...
And, if the amount being transferred is simply
that amount appearing as a deficit balance on
the account …
Then, the transfer would be unallowable.
Example
Accounting error.
Unallowable – errors may be allowable;
however, simply stating an accounting
error occurred would provide an
insufficient justification. Explain how
the error occurred and what actions have
been taken so such does not reoccur.
Example
Transfer postage charges from 133-AB12 to 133AB34. Postage charges are for newsletter
mailings as defined within sponsored project.
Postage charges on 133-AB12 are being
transferred to successor sponsored project
133-AB34 per terms of agreement.
Allowable – clearly justifies action taken.
Example
To correct error.
Unallowable – correction of errors may be
allowable; however, simply stating that
an error occurred would provide an
insufficient justification. Fully explain
errors and actions taken so they do not
reoccur.
Example
Transfer from 144-AB12 to 144-AB34 because
144-AB34 was just now set up.
Temporarily parking (holding) charges on
sponsored projects is unallowable – parking
charges is acceptable on unrestricted fund
sources only; or advance account numbers
may be requested for pending awards.
Example
Transfer of student salary costs from 133-AB12
to 133-AB34 because PI did not have time to
review and advise Department of proper
payrolling of student employee.
Lack of responsible project management by PI
and/or Department designee is unallowable.
Example
Tuition remission is not allowed on 144-AB12
per USDA-Forest Service terms and
conditions. Remission costs are being moved
to unrestricted funding 101 A074300 4.
Allowable – remission costs are directly tied to
stipend and can ONLY be transferred off a
project if mandated by award
terms/conditions.
Example
Fringe benefits allowed on 133-AB12 per American
Heart Association terms and conditions cannot
exceed $2,000. Fringes exceeding $2,000 are
being moved to unrestricted funding 101
A074300 4.
Allowable – fringe benefits are directly tied to
stipend and can ONLY be transferred off a
project if mandated by award terms/conditions.
Example
Fund and account ended 11/30/06; moving supplies
to 144-XXXX that has not ended.
Unallowable –costs cannot be moved to an open
federal project just because it is open and another
project has ended.
Example
Moving supply costs to 144-XXXX
Unallowable –costs cannot be moved to an open
federal project just because it is open and another
project has ended.
Timelines
Timelines
Monitor extramural projects each month.
Process transfers immediately upon realization that an after-thefact reallocation of costs is warranted.
CALS Research Division goal: process all transfer requests
within the same month received
When actions are required, provide information, documentation,
or paperwork requested within one week. If we do not have
your response, documentation, or paperwork within two
weeks, we will move the costs in question to your
department's XXX-XXXX unrestricted account so as not to
delay the pending transfer.
Timelines
BE AWARE …
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Do NOT delay processing transfers. Past experience has
shown that excessive numbers of transfers are processed at
year-end. There is NO guarantee that all transfers will be
processed if volume is as extreme as in years past.
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Best efforts need to be taken to eliminate unnecessary
transfers.
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Monthly/timely processing of transfers is highly emphasized.
Questions/Suggestions