Cost Transfers. Red Flag or White Flag?

Transcription

1 Cost Transfers Red Flag or White Flag? Mona Weer, Financial Manager Office of Research & Sponsored Programs, The University of Montana Paulette Jones, Administrator Center for Environmental Health Sciences, The University of Montana

2 Cost transfers are huge red flags for auditors. An auditor will assume that the initial transaction was not handled properly.

3 Cost Transfer Policies Federal, state and private agency policies and audit guidelines have become quite stringent as they relate to cost transfers between projects. Circular A 21 C.4.b. contains the following statement: Any costs allocable to a particular sponsored agreement.may not be shifted to other sponsored agreements in order 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.

4 When developing an Institutional policy, here are some items to keep in mind: What are limits? dollars amounts time frame What are allowable circumstances?

5 Who will sign? PI Dean or Chair Who processes cost transfer? Central office Department

6 Timeliness within 90 days after expense posts or within 30 days of project end which ever comes first

7 Over 90 days shows lack of controls = not paying attention May require additional documentation stating why transfer was not made in timely manner and what is being done to prevent from happening in the future

8 When the original charge was processed it was certified as: Allowable Allocable Consistent Reasonable

9 Now you are saying that it was wrong. Cost transfer should answer the following: who what when where why

10 Documentation should include: Benefit to the receiving project Allowability and allocability to the receiving project

11 Reason for transfer Correction of clerical error Move between same project funds Retro active costs due to delayed contract Project over run Unexpended funds

12 At no time should a sponsored project be used as a holding account for costs that will subsequently be transferred elsewhere.

13 Unallowable cost transfer explanations: Use up unexpended budget Transfer over budget from one project to another

14 Examples of Cost Transfer Red Flags Transfers to or between sponsored projects Transfers older than 90 days after the original transaction Transfers in the last month of the award or after the award has expired Large numbers of cost transfers (relating to a particular department or grant)

15 Examples of Cost Transfer Red Flags cont Grants or contracts with a zero balance at the end of the award Labor distribution adjustments to previously certified effort Transfers without a full explanation and/or "cookie cutter" explanations Transfers among "closely related" projects

16 Salary reallocation cost transfers: Has Time & Effort been certified? Is salary being used as match?

17 SPONSORED PROGRAMS - Cost Transfer Request Form (JE2) Click here to read Cost Transfer Procedures. This form uses C/D (credit/debit) like other UM JV forms. Contact ORSP if you need assistance. NOTE: Cite transactions below consecutively as both C/D. DATE: 04/05/12 FROM: Banner Index Number Dept PI or RO TO: Banner Index Number Dept PI or RO If moving part of an expenditure, please type an X in Partial column. Index Account Doc. # Actv Code Trans Date* Transaction Description Partial Amount C/D Please attach additional spreadsheet if needed. Then, enter hash total from the spreadsheet on this line. *If transaction date is older than 90 days, attach explanation from department chair/unit head. Hash Total: 0.00 JUSTIFICATION: 1) Explain what the charge is for and how the transferee project benefitted from this activity: 2) If the transfer is between two sponsored programs, explain how the two projects are related: 3) Explain why the cost was initially charged to an incorrect index code: AUTHORIZATIONS: Original signatures required. From: To: Transferor Principal Investigator (PI) or Date Transferee Principal Investigator (PI) or Date Responsible Official (RO) for state index Responsible Official (RO) for state index DEPT CHAIR or EXEC OFFICER (if over $300) Date DEPT CHAIR or EXEC OFFICER (if over $300) Date Prepared By: Ext # Date: 04/05/12

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19 Questions?

20 Mona Weer Financial Manager Paulette Jones Administrator Forms located at: