Account Monitoring and Reconciliation Can Reduce Cost Transfers

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1 Account Monitoring and Reconciliation Can Reduce Cost Transfers Instructor Introductions Stephanie Rosario Campus Controllers Office/SPA Grant Accountant Supervisor Mindy Vallejos Office of Contracts and Grants Subcontract Manager Sharon DeCarlo Campus Controllers Office/SPA Projects Accounting Manager 1

2 Objectives Gain an overview of Account Monitoring and Reconciliation Identify responsibilities in the review and approval processes of transactions Understand key concepts related to Subrecipient Monitoring Comprehend the differences between Cost Allocations and Cost Transfers Understand how to minimize Cost Transfers Prepare a Cost Transfer for seamless approval process Account Monitoring & Reconciliation Account Monitoring is a process that all fiscally responsible staff complete to ensure transactions are accurately accounted for in the University s financial records. To be in compliance with applicable policies, regulations, rules, contracts, and grants. 2

3 Account Monitoring and Reconciliation Important to review Financial Statements To be in compliance with OMB s A-21 and Uniform Guidance Ensure all transactions are allowable, allocable, reasonable, and consistently treated in like circumstances Correct errors early rather than later Account Monitoring and Reconciliation Who should be monitoring accounts Fiscal Staff Fiscal Managers Principal Investigators (PI) 3

4 Account Monitoring and Reconciliation Financial Review Each transaction should have two sets of eyes: Reviewer and Approver Review financial reports every month Detailed review of transactions, matching each with related documentation Compare actuals to budget Salary posted correctly Investigate and resolve discrepancies early Account Monitoring and Reconciliation Financial statements and reports SpeedType (ST) Summary Balance Sheet Operating Summary Financial Detail Outstanding Encumbrances 4

5 Financial Statements and Reports SpeedType Summary High-level view of available balances Deficit balances Balances in suspense or clearing SpeedTypes Balance Sheet Abnormal balances Look for balances in: Company Card Personal Charges Travel Advances, AP Manual Any other accounts that should clear Financial Statements and Reports Operating Summary Abnormal Balances Balances in suspense or clearing account codes Odd account codes for the SpeedType s activity Financial Detail Unexpected transactions Missing transactions Abnormal account codes Credits to expense/debits to revenue Outstanding Encumbrances Review for accuracy Already calculated into Available Balance 5

6 Financial Reconciliation The Goal of a Reconciliation Ensure all transactions are documented and appropriate for the SpeedType and Account Code Provide management with reasonable assurance that resources are safeguarded and transactions are authorized, valid, complete, and accurate Identify and correct errors in a timely manner (and not wait until June) Demonstrate good stewardship and accountability Account Monitoring and Reconciliation Training Exercise 6

7 Subrecipient Monitoring: What is it? The Uniform Guidance requires pass-through entities to evaluate each subrecipient's risk of noncompliance in order to determine the appropriate monitoring level, monitor the activities of subrecipient organizations to ensure that the subaward is in compliance with applicable Federal statutes and regulations and terms of the subaward, and verify that subrecipients are audited as required by Subpart F of the Uniform Guidance. Responsibility of monitoring the programmatic and financial activities of our subrecipients to ensure proper stewardship of sponsor funds. Subrecipient Monitoring Failure to adequately monitor the compliance of subrecipients could result in reputational damage to the University and Schools, and jeopardize current and future funding. It is the responsibility of CU Boulder, as the pass-through entity, to ensure the good stewardship of sponsored funding. All funds assigned to subrecipient organizations should receive the same diligence as sponsored funds that remain at CU Boulder. 7

8 Subrecipient Monitoring Pass-through must consider imposing additional federal award conditions, if appropriate, such as: Require reimbursement; Withhold funds until evidence of acceptable performance; More detailed reporting; Additional monitoring; Require grantee to obtain technical or management assistance; or Establish additional prior approval Subrecipient Monitoring Monitor the Subrecipient: Ensure proper stewardship of sponsor funds Adhere to program requirements specified in the award Tasks are performed by the PI/department at all stages Invoices Scientific progress 8

9 Cost Allocation vs. Cost Transfer Cost Allocation is defined as a process of identifying, aggregating, and assigning costs to cost objects. In our business, this is assigning costs to sponsored research projects. A single charge benefiting multiple projects needing to be allocated across multiple accounts. Equipment as an example. Cost Allocation vs. Cost Transfer A Cost Transfer is an after-the-fact reallocation of costs, either salary or non-salary costs, to a sponsored project. These should be processed as soon as the error is noticed but no later than a 90 day period from the original accounting date. Examples of when cost transfers are acceptable Correction of a clerical error Reallocation of a salary expense Transfer pre-award costs from discretionary fund Examples of when cost transfers are not acceptable Clearing deficits Using remaining balance 9

10 Cost Allocation vs. Cost Transfer Training Exercise Cost Transfers Minimizing cost transfers Cost transfers should be considered the exception, rather than the rule, and must be kept to a minimum Ensuring expenditures are accurate and appropriate and posted to the intended Speedtype/Account Code Diligent monthly review of financial reports and timely communication between principal investigators and departmental administrators 10

11 Cost Transfers Timing of Cost Transfers Transfers processed within the first 30 days from the original posted expense are considered to be acceptable corrections of errors Transfers processed between 30 and 90 days from the original posted expense must include written justification and all relevant back-up documentation Transfers completed greater than 90 days from the original posted expense are considered exceptions and require substantial and reasonable justification Cost Transfers Tips for a seamless approval Include a complete and clear explanation, as well as all supporting documentation (FIN9.2 now has an attachment feature to the journal entry) Each cost transfer must identify the original transaction, referring to the original Journal ID number, and the Journal date Salary adjustments or cost transfers of salaries and wages should be made BEFORE work effort has been certified by the employee 11

12 Recap Today we: Discussed Account Monitoring who, when, and why Discussed the financial review process Learned which financial reports to use during the reconciliation process Learned what is Subrecipient Monitoring Discovered the difference between Cost Allocations and Cost Transfers Obtained information for a seamless cost transfer when needed Resources: OUC Accounting Handbook Campus Controllers Office Departmental Financial Management Guide The Guide Cost Transfer policy Cost Transfers journal entry help page 12