Cost Transfers and Guaranteed Funding/Advanced Accounts

Cost Transfers and Cost Transfers and Guaranteed Guaranteed Funding/Advanced Funding/Advanced AccountsAccounts

ObjectivesObjectivesIncrease the use of guaranteed

funding/advanced accountsDecrease the number of cost

transfers through pro-active grants management approach

Reduce compliance risks and audit findings

Sponsored Projects Training Program 2

Cost Transfers DefinedCost Transfers DefinedCost 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

Cost Transfers Cost Transfers BackgroundBackgroundUVM 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


Cost Transfers Cost Transfers BackgroundBackgroundCost 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


Cost Transfer BackgroundCost 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


Cost Transfer BackgroundCost Transfer BackgroundCause 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


Cost Transfers: Who is Cost Transfers: Who is affected?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 retrosGrant and Contract Administrative Services

◦ Resources needed to review & approve cost transfers

◦ Delayed financial reportingThe University at Large

◦ Compliance risks, which could result in audit findings, significant fines, and potential loss of funding from sponsors


Cost Transfers: Compliance Cost Transfers: Compliance in Perspectivein PerspectiveWeill Medical College of Cornell

University - $2.6M, March 2009Yale University - $7.6M,

December 2008St. Louis University - $1.0M, July

2008


Cost Transfers: SolutionsCost Transfers: SolutionsProactive 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


Cost Transfers: SolutionsCost 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)


Cost Transfers: SolutionsCost Transfers: SolutionsConditions 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


Cost Transfers: SolutionsCost Transfers: SolutionsGuaranteed 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


Cost Transfers: Future Cost Transfers: Future SolutionsSolutions

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


Guaranteed Guaranteed Funding/Advanced Account Funding/Advanced Account BackgroundBackgroundGuaranteed 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.


Guaranteed Guaranteed Funding/Advanced Account Funding/Advanced Account BackgroundBackgroundUse 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


Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: SolutionSolutionWork 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


Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: Future SolutionFuture SolutionNew guaranteed

funding/advanced account policy and request form under development


Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: WorkflowWorkflowRequests 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/FormsMain.html

◦ Confirmation from the sponsor of the award and the anticipated start date

Proposals must be routedAll protocols must be approved for

IACUC, IRB and IBC19

Sponsored Projects Training Program

Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: Work FlowWork 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


Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: Work FlowWork 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


Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: Work FlowWork FlowContract remains in guaranteed

funding/advanced account status until award document is received◦Ensures sponsor is not billed and

revenue is not recognizedUpon 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 requiredSponsored Projects Training Program 22

Guaranteed Guaranteed Funding/Advanced Account: Funding/Advanced Account: Required PracticesRequired PracticesCulture 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


ConclusionConclusionIncrease the use of guaranteed

funding/advanced accountsDecrease the number of cost

transfers through pro-active grants management approach

Reduce compliance risks and audit findings


Questions/Contact InfoQuestions/Contact InfoDean’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


Documents

Cost Transfers and Guaranteed Funding/Advanced Accounts