Overview of Cost Transfers in Sponsored Research Accounting
Sponsored Research Accounting
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A cost transfer is the reassignment of a previously
incurred expense from one account to another
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Transfers are considered the correction of errors and
excessive transfers may indicate a lack of proper internal
controls
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Can include salary or non-salary expenditures
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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
Sponsored Research Accounting
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To comply with the Office of Management and
Budget (OMB) Circular A-21 cost requirements
governing allowability and allocability
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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
Sponsored Research Accounting
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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.
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In addition, specific University requirements must
also be followed.
Sponsored Research Accounting
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Transfers of costs from one funding source to
another may be proper for closely related work
supported by more than one funding source.
•
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.
Sponsored Research Accounting
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Yale University
– late funding resulted in cost transfers but
the required documentation justifying and certifying the
charges was missing
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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
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Florida International University
– transfers with incomplete
documentation, grants used as clearing accounts, transfers
after grant closed resulted in a $11.5 million settlement
Sponsored Research Accounting
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Minimize the need for excessive cost transfers with
effective grant management and internal controls
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Transfers need to be timely, justified and certified
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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
Sponsored Research Accounting
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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
Sponsored Research Accounting
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Detailed explanation of the error or issue. What
happened, how it happened, and what has been
done to correct it
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Explanations stating “to correct error” or
“transferring to correct project” are not sufficient
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Unacceptable transfers include:
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moving cost overruns and disallowed costs to other
sponsored accounts
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moving costs to spend out remaining sponsored
balances
Sponsored Research Accounting
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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
Sponsored Research Accounting
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Training and Development
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need to understand the requirements and regulations
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maintain a culture of compliance from the start
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implement effective training programs
•
Communications
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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
Sponsored Research Accounting
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Scenario 1
– Transfers within the same entity
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State account to State account
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Research Corp account to Research Corp account
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Internal Transfer Request (IT) form only
Sponsored Research Accounting
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Scenario 2
– transferring between entities moving
expense off a POETA
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From State POETA to Research Corp Account
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From Research Corp POETA to State Account
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Use Internal Transfer Request (IT) form, Payment Services
Request (Vendor’s Invoice) form and Miscellaneous Receipt
Sponsored Research Accounting
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Scenario 3
– transferring between entities moving
expense off a GL account
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From State GL to Research Corp Account
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From Research Corp GL to State Account
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Use Payment Services Request (Vendor’s Invoice) form and
Miscellaneous Receipt
Sponsored Research Accounting
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Cost transfers involve the reassignment of expenses from one account to another in sponsored research accounting. Timely, supported, and properly documented transfers are essential to ensure compliance with federal requirements and internal controls. This overview highlights the definition, purpose, OIG audit report findings, and examples of audit findings related to cost transfers in various universities. Non-compliance with cost transfer policies and procedures can lead to financial implications and affect the reliability of the accounting system.
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Presentation Transcript
Cost Transfers Policy and Procedure Sponsored Research Accounting 1
Definition 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 Sponsored Research Accounting 2
Purpose 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 Sponsored Research Accounting 3
OIG Audit Report 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. Sponsored Research Accounting 4
OIG Audit Report OIG Audit Report (cont d) (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. 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. Sponsored Research Accounting 5
Audit Findings Audit Findings Yale University late funding resulted in cost transfers but the 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 Sponsored Research Accounting 6
Cost Transfer Policy 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 Sponsored Research Accounting 7
Cost Transfers Cost Transfers - - Timeliness 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 Sponsored Research Accounting 8
Cost Transfers Cost Transfers - - Justification 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 Sponsored Research Accounting 9
Cost Transfers Cost Transfers Certification & Documentation Documentation Certification & 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 Sponsored Research Accounting 10
Lessons Learned 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 Sponsored Research Accounting 11
Cost Transfer Scenarios Cost Transfer Scenarios Scenario 1 Transfers within the same entity State account to State account Research Corp account to Research Corp account Internal Transfer Request (IT) form only Sponsored Research Accounting 12
Cost Transfer Scenarios 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 Use Internal Transfer Request (IT) form, Payment Services Request (Vendor s Invoice) form and Miscellaneous Receipt Sponsored Research Accounting 13
Cost Transfer Scenarios 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 Use Payment Services Request (Vendor s Invoice) form and Miscellaneous Receipt Sponsored Research Accounting 14
