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 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 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 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 Use Vendor’s Invoice and Miscellaneous Receipt