Procedure Area: Vice President for Research
Responsible or Contact Office/Role: Office of Sponsored Programs
Approval Date: 8/14/2018
Per the guidelines in Office of Management and Budget Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (2CFR 200, Uniform Guidance), UVA is required to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2CFR 200.405 specifically stipulates that allocable costs need to be necessary and benefitting the award. Costs cannot be moved between sponsored awards to overcome fund deficiencies or to avoid restrictions imposed by sponsors. However, this prohibition does not preclude UVA from transferring costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards.
For example, the National Institute of Health Grants Policy Statement 7.5 stipulates cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the recipient, consortium participant, or contractor. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Incorrect charges that are discovered on a sponsored project must be moved off of the award to a fund source that can accept the expense (i.e. gift/endowment account) regardless of the age of the charge and when the error was detected. Expenditure credits and refunds will continue to post, irrespective of date, and will be returned to sponsor in a timely manner.
NIH also requires the recipients to maintain documentation of cost transfers and to make it available for audit or other review. The recipients are required to have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both.
Policy or Other Underlying Requirement Policy:
- FIN-017: Consistent Treatment of Sponsored Program Costs Policy
- FIN-021: Internal Control Policy
- FIN-023: Reconciling Unit Accounting Records
- Access to Recon@UVA
- Access to run UBI reports
- Understanding of sponsored award’s scope of work, budget and allocable charges
A cost transfer is a journal entry to transfer an expense to or from a sponsored award, altering the original recorded transaction in the financial system.
A retroactive cost transfer is a journal entry to transfer an expense to or from a sponsored award, 90 days after the original posting of the transaction.
Labor adjustments: Salary cost transfers, adjustments are made in the Oracle Labor Distribution module.
Other Than Personnel Services (OTPS) transfers: Non-labor (salary) cost transfers, are posted as usages in the Oracle GA module.
Roles & Responsibilities:
1. Principal Investigator (PI): Generally, a Principal Investigator is the primary individual responsible for the conduct and administration of a sponsored program received at UVA. A sponsored award with multiple PIs, will have a single person identified as the primary PI, while the others will be Co-PIs or Co-Is. An award PI in Oracle GA Personnel tab is the primary PI. For multi-disciplinary programs, Co-PIs are the project PIs in Oracle GA Project Personnel tab. A Principal Investigator is responsible for reviewing and approving charges to his/her sponsored award, including cost transfer requests.
2. Preparing/Requesting Administrator: The person responsible for identifying and preparing the cost transfer request and has access to source documentation and sponsored award budgets. Generally a Preparer can have the role of “Fiscal Contact” in the Integrated System and responsible for assisting PIs with the Recon@ process.
- For each Project-Award combination, responsible for reviewing all transactions during recon@ process and identifying costs that need to be transferred
- Responsible for ensuring that the charges being moved will meet the objectives of the receiving sponsored award, and are allowable, allocable and reasonable per the terms and conditions
- Responsible to ensure that the transfer is not to correct a deficit
- Responsible to fill out the cost transfer justification form, obtain signatures from responsible individuals and submit to OSP Post Award for review and approval
3. Department Chair: The person who has fiduciary responsibility and the appropriate knowledge and authority to authorize a cost transfer that is over 90 days.
4. OSP Reviewer/Approver: The OSP person responsible for verifying and approving/rejecting cost transfers. This person is also responsible to ensure that justifications for over 90 day transfers are accurate and corrective actions are appropriate.
In accordance with University policies FIN-023: Reconciling Unit Accounting Records, and FIN-017: Consistent Treatment of Sponsored Program Costs, departments are responsible for recording and reconciling all charges that post to their projects, identify incorrect charges and transfer costs to correct errors in a timely manner. This procedure provides guidelines for processing cost transfers complying with the UG, NIH and other sponsor requirements.
Cost transfers processed within 90 days of original posting:
For OTPS, usage batches can be entered into Oracle following these steps (supporting documentation can be uploaded using the Paperclip feature on the cost transfer batch):
Type in the expenditure comment field: Original reference number, original expenditure item date, original GL transfer date and enter an explanation that answers the following points:
- The initial reason as to why the expense was incorrectly charged in the first instance
- How the expense directly benefits the receiving PTAO and is allowable (merely stating “this is allowable and allocable” is not sufficient)
For Expenditure Type corrections, the comment should state “correcting expenditure type.”
Avoid common errors such as:
- missing original expenditure item date or original GL Transfer date
- one sided entry, or entries not netting to zero
- using an expenditure types that start with “Expenditure Credit”
- transferring charges from agency 'YY' accounts to University Award accounts unless the charge originated in the University system (this would be viewed as an attempt to avoid University procurement regulations)
For Labor Adjustments, after the fact salary adjustments due to labor allocation error should be processed through the Labor Distribution system. Department enters corrected allocations for the impacted pay period, netting to 0%. The labor adjustments are routed to OSP Post Award for review and submission. The employee name, assignment number, pay period(s), and reallocation reason (see attached reason codes) are entered in the comment section by the department processor.
OSP Post Award reviews reallocation of labor distribution, ensures charges are allocable and allowable on the receiving award, confirms the reason code in the comments section and submits the labor adjustment. Post Award enters any additional information that may be relevant to the approval, such as if the award is at-risk or pending action in ResearchUVA, etc.
Retroactive cost transfers (both labor and OTPS) that are over 90 days from the original posting date:
Transferring costs after 90 days from original posting date shows inadequate internal controls over charging sponsored project costs. Such transfers require additional justifications, corrective actions and approval from the PI and department chair.
All sections of the Online Retro Cost Transfer Justification Form need to be filled out and approved by the preparer, Principal Investigator and the Department Chair prior to processing the cost transfer usage batch or entering a labor distribution adjustment. The online form will systematically route to the Office of Sponsored Programs after approvals have been obtained and OSP is responsible for reviewing and approving the retroactive cost transfers. If approved, the Online Retro Cost Transfer Justification system will issue an approval # to be entered into the labor distribution adjustment or cost transfer usage batch comments field. If returned by OSP, the online system will notify the requester and the returned form can be resubmitted with additional information. If rejected by OSP, the system will notify the requester, but the justification form cannot be revised and resubmitted. A new form needs to be started if cost transfer needs to be processed.
- Why was the expense(s) originally charged to the award from which it is now being transferred?
- Describe how the expense(s) being transferred directly benefits the receiving award? (merely stating 'this is allowable and allocable' is not sufficient. Add justification of allocation methodology (e.g. FTE of lab personnel, square footage of lab etc.)
- Why is this cost transfer being requested 90 days after the original G/L positing date?
- What internal controls have been implemented as a corrective action to prevent such events from re-occurring?
Exceptions: In rare circumstances, when there is administrative delay in setting up the PTAO (expenditure account) in the financial system, costs are generally held in a non-sponsored award and moved to the newly set up PTAO, please follow the abbreviated steps as an exception to the standard retroactive cost transfer process:
- Create a retro request submission
- Answer each justification question with the same response of “administrative delay” (system requires each question be filled out)
- List the retro justification form requester as the approver for all sections of the form (PI, Dept. Chair) and submit the form
OSP will review and if in agreement will approve the form. If not, OSP will return the form with comments explaining why and will request a full retro justification form be filled out.
Please note: Recharge or Service Center allocations are not considered cost transfers, and as such will not be subject to this procedure.
Supporting documentation must be filed in such a manner that allows the documents to be readily retrieved and presented when requested for audit review (i.e., by Project-Award combination).
This documentation must be retained by the department in accordance with guidelines specified by the University Records Management Office to satisfy University, state and federal audit requirements, as well as state and federal records retention requirements.
- Recon@UVA Trainings
- NIH Grants Policy Statement - https://grants.nih.gov/policy/nihgps/index.htm
- University Business Intelligence - https://qviewprod.admin.virginia.edu/QlikView/index.htm?
- Uniform Guidance
- RES-009: Compliance with Sponsor Requirements - https://uvapolicy.virginia.edu/policy/RES-009