Conditions: After an expense has been recorded in the financial ledger, it may be transferred (with appropriate documentation and a complete explanation) only under the following conditions:
Conditions that apply to all funds:
· To correct an error, such as an incorrect accounting distribution
Conditions that apply to sponsored project funds only:
· Transfers between internal orders of the same grant
· Costs benefitting more than one sponsored project
· Transfer of costs from one funding source to another may be proper for closely related work supported by more than one funding source. Keep in mind that frequent, late, and inadequately supported transfers raise serious questions about the appropriateness of the transfer(s) and the overall reliability of the University’s accounting systems and internal controls. This is of heightened concern when occurring on grants with unexpended balances or when a charge is moved from a grant with an overdraft to another sponsored project.
· Transfer of expenses on a project that could not be established because of contract negotiations.
Ways to Avoid Cost Transfers:
If managing a contract, grant, or cooperative agreement, anticipate the receipt of the award. Consider requesting a Notice to Proceed (NTP). Under certain conditions, a PI may request an account prior to the actual receipt of the award. If a sponsor has approved funding, but is slow in sending the official award documentation, the business office may submit a Notice to Proceed request to SPS. In this case, a University-backed NTP will be set up. If funds are not awarded, the University will be responsible for covering any costs.
If a PI requests an account be created prior to the actual award and there is no documentation or correspondence from the sponsor indicating the approved funding, a department backed NTP can be set up. It is important to note that if funds are not awarded, the PI's department or school will be responsible for covering any costs.
Strengthen financial management control procedures
· Ensure that review procedures are being met; verify that payroll transactions are properly authorized, completed, and documented.
· Review and reconcile FSSR reports promptly to ensure that charges are accurate, complete, and applicable.
· Monitor budgets as submitted to the sponsor and compare them to actual charges, along with pending and projected expenses.
· When the award is received, become familiar with any special terms and conditions. Note any expenses that the sponsor deems as unallowable.
· Toward the end of a project, work with SPS to request timely extensions from the sponsor if the work is not complete and the remaining funds will need to be utilized to complete the work.
If the cost transfer involves a sponsored project and meets any of the following criteria, it is considered high risk and will undergo heightened scrutiny:
· Transfer of costs onto or between federally sponsored projects.
· Transfers to federal projects occurring at the end of a project.
· Transfers involving non-salary charges greater than 90 days.
· Transfers between federally sponsored projects which clears an overdraft.
· Transfers which expend unspent funds on a project that is closing.
· Any salary distribution charges occurring after a PAR has been certified.
In the next installment will feature a summary of this series.