1. Cost Transfers and Guaranteed Funding/Advanced Accounts

2. Objectives Increase the use of guaranteed funding/advanced accounts Decrease the number of cost transfers through pro-active grants management approach Reduce compliance risks and audit findings Sponsored Projects Training Program2

3. Cost Transfers Defined Cost transfers defined: ◦ After the fact salary or non-salary expense reallocation from one University chartstring to another Requirements under OMB Circular A-21 ◦ Transfers must be timely (within 90 days) and completely explained and justified ◦ Simply stating “to correct error” or “transfer to the correct project” is NOT adequate ◦ Late cost transfer explanations must fully address the reason for the lateness and corrective action to prevent a reoccurrence 3Sponsored Projects Training Program

4. Cost Transfers Background UVM has significantly more cost transfers, particularly late cost transfers, than similar Universities ◦ Creates fiscal management difficulties ◦ Leads to delayed financial reporting ◦ Creates compliance risk for the University Many Universities do not allow cost transfers more than 90 days after the original transaction 4Sponsored Projects Training Program

5. Cost Transfers Background Cost transfers were identified as a material weakness in FY08 A-133 audit ◦ Due to the high volume of transfers and lack of supporting documentation ◦ Lack of documentation to prove cost transfers from one project to another were not solely to cover cost overruns ◦ KPMG recommended UVM review its cost transfer policy The FY09 A-133 audit identified an additional finding about lack of approvals and clear documentation for cost transfers 5Sponsored Projects Training Program

6. Cost Transfer Background PeopleSoft is NOT designed to accommodate multiple retroactive salary distribution changes ◦ Leads to system processing failures and reconciliation issues ◦ Significant resources are devoted to processing retros and fixing errors ◦ Volume of retros indicate that quarterly review of effort is not consistently taking place 6Sponsored Projects Training Program

7. Cost Transfer Background Cause of cost transfers ◦ Many units have a culture that embraces a reactive approach, rather then proactive approach, to grants management  Untimely Purcard re-allocations and income/expense billing  Inconsistent monitoring of project budgets and expenses  Irregular review of committed, actual, and distributed effort on sponsored projects ◦ More than 90% of sponsored projects are setup after start date  Primarily due to delays in receiving the award document from sponsors 7Sponsored Projects Training Program

8. Cost Transfers: Who is affected? Principal Investigators ◦ Fiscal management difficulties Department & Dean’s Office Staff ◦ Time required to prepare & approve cost transfers ◦ Fiscal management difficulties HRS, Cost Accounting Services & BPRT ◦ Significant resources to review, process & resolve errors associated with retros Grant and Contract Administrative Services ◦ Resources needed to review & approve cost transfers ◦ Delayed financial reporting The University at Large ◦ Compliance risks, which could result in audit findings, significant fines, and potential loss of funding from sponsors 8Sponsored Projects Training Program

9. Cost Transfers: Compliance in Perspective Weill Medical College of Cornell University - $2.6M, March 2009 Yale University - $7.6M, December 2008 St. Louis University - $1.0M, July 2008 9Sponsored Projects Training Program

10. Cost Transfers: Solutions Proactive and continuous monitoring of sponsored projects ◦ Responsibility of PI to manage the grant, with administrative assistance from unit administrator ◦ Effort must be reviewed quarterly for accuracy  Prospective effort adjustments must be made ◦ Roles and responsibilities for those involved in the grant lifecycle must be clearly defined ◦ Award cost share commitments must be monitored closely from award setup to closeout 10Sponsored Projects Training Program

11. Cost Transfers: Solutions Once a chartstring is set up in PeopleSoft, and you have implemented the quarterly review process, retroactive salary adjustments should not be necessary ◦ Rarely retros may need to be processed, for instance due to a key punch error  Must be properly documented and processed in a reasonable time period (90 days) 11Sponsored Projects Training Program

12. Cost Transfers: Solutions Conditions for approval of a retroactive salary distribution change: ◦ Cost allowable and allocable to the grant to which it is transferred ◦ Transfer must be supported by a clear explanation ◦ Request must be authorized by all applicable departments ◦ Request must be submitted immediately following detection of the error ◦ Transfer must be in compliance with University policies and federal regulations 12Sponsored Projects Training Program

13. Cost Transfers: Solutions Guaranteed funding/advanced accounts should be used ◦ Ensures that chartstrings are set up and personnel effort is distributed before work on the project commences ◦ Essential to avoid retros on sponsored projects since more then 90% of awards are received after start date ◦ Under this practice, departmental suspense should be used for encumbrances only, not for actual expenses 13Sponsored Projects Training Program

14. Cost Transfers: Future Solutions Utilitize PeopleSoft functionality to attach all back up documentation for non-salary cost transfers to the journal entry (FY11) Cost transfer policy is being revised 14Sponsored Projects Training Program

15. Guaranteed Funding/Advanced Account Background Guaranteed funding/advanced accounts ◦ Mechanism to establish an award and associated chartstring(s) in PeopleSoft  When a PI receives notification from sponsor that a proposal will be funded, and  A department chairperson and/or dean agrees to accept the risk of covering expenses associated with the project if the award does not materialize. 15Sponsored Projects Training Program

16. Guaranteed Funding/Advanced Account Background Use of guaranteed funding/advanced account: ◦ Reduces salary and non-salary cost transfers ◦ Allows for clear and more efficient fiscal management of award ◦ Eliminates re-work for principal investigators, department administrators, and staff in central offices 16Sponsored Projects Training Program

17. Guaranteed Funding/Advanced Account: Solution Work should not commence on a sponsored project until chartstrings are setup in PeopleSoft ◦ Either through guaranteed funding/advance account or the receipt of the award document  Allows for both sponsored and cost share costs to be allocated to the proper chartstring  Will result in materially less cost transfers  Reduces compliance risk, potential audit findings, and possible fines and/or loss of funding 17Sponsored Projects Training Program

18. Guaranteed Funding/Advanced Account: Future Solution New guaranteed funding/advanced account policy and request form under development Sponsored Projects Training Program18

19. Guaranteed Funding/Advanced Account: Workflow Requests are routed through the Office of Sponsored Programs Pre-Award Services (PAS) ◦ Memo signed by PI and Chair indicating the intension to guarantee funding. The form can be found at : http://www.uvm.edu/~ospuvm/?Page=Forms/FormsMa in.html ◦ Confirmation from the sponsor of the award and the anticipated start date Proposals must be routed All protocols must be approved for IACUC, IRB and IBC 19Sponsored Projects Training Program

20. Guaranteed Funding/Advanced Account: Work Flow Request must include the following: ◦ Confirmation from the sponsor of the award, anticipated start date, and funding source ◦ Signed routing form ◦ Proposal ◦ Budget ◦ Appropriate protocol approval dates; if applicable ◦ Memo of intention to guarantee the award; signed by the PI and department chair 20Sponsored Projects Training Program

21. Guaranteed Funding/Advanced Account: Work Flow Requests are forwarded to Grant and Contract Administrative Services (GCA) from PAS GCA then sets up award in PeopleSoft ◦ Project is setup with sponsored and cost share chartstrings ◦ GCA notifies PI, department, and others as appropriate 21Sponsored Projects Training Program

22. Guaranteed Funding/Advanced Account: Work Flow Contract remains in guaranteed funding/advanced account status until award document is received ◦ Ensures sponsor is not billed and revenue is not recognized Upon receipt of executed award document, ◦ GCA modifies budget and other award information, as needed ◦ Activates the contract to allow billing to begin and revenue recognition to occur ◦ Chartstrings remain unchanged; thus no cost transfers are required Sponsored Projects Training Program22

23. Guaranteed Funding/Advanced Account: Required Practices Culture change to one that is proactive Guaranteed funding/advanced account requests must be initiated in a timely manner Department will be able to discontinue guaranteed funding/advanced accounts on individual awards as appropriate ◦ GCA would close down the award in PeopleSoft after the department removes expenses 23Sponsored Projects Training Program

24. Conclusion Increase the use of guaranteed funding/advanced accounts Decrease the number of cost transfers through pro-active grants management approach Reduce compliance risks and audit findings Sponsored Projects Training Program24

25. Questions/Contact Info Dean’s Office Office of Sponsored Programs, Pre-Award Services ◦ http://www.uvm.edu/~ospuvm/ ◦ Main Campus Office & Funding Information, 340 Waterman Building, 6-3360 ◦ Health Sciences Office, 231 Rowell Building, 6-4067 Grant and Contract Administrative Services ◦ http://www.uvm.edu/~gcaacct/ ◦ 223 Waterman Building, 6-1459 Sponsored Projects Training Program25