Cost_Transfers

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					Cost Transfers
       CALS Research Division
 http://www.cals.wisc.edu/research/
       CALS Business Services
  http://www.cals.wisc.edu/bussvc/
           March 15, 2007
Today’s session will cover:
o   Overview of campus policy
o   Roles and responsibilities of the PI
o   General principles
o   Processing procedures
o   Justification statements
o   Timelines
o   Questions/suggestions
Overview of Campus Policy
    Cost transfer policy for sponsored projects
     www.rsp.wisc.edu/policies/costtransfer

o    Cost transfer policy    o   Extenuating
o    Terms and definitions       circumstances
o    Types of transfers      o   Cost transfers FAQ
o    Roles and               o   Transfer forms
     responsibilities        o   Allowable example
o    Project management      o   Unallowable example
o    Regulatory references
Definition of Cost Transfers

A cost transfer is an after-the-fact reallocation of
  costs, either salary or non-salary costs, to a
  sponsored project within a 90-calendar day
  period from the accounting date.

(Accounting date, for the purpose of this policy, is the end of the
   month of the journal date as shown in WISDM.)
Reason for policy

Proper management of funds is essential to
   uphold the fiduciary responsibilities of the
   University … responsibility to manage funds
   in a manner consistent with the University’s
   mission and the conditions specified by
   external sponsors.
Regulations
OMB Circular A-21:
o Sections C.1-C.4 -- concepts of allowability,
  allocability, and reasonableness
o Section C.4.b. – costs … may not be shifted to
  other sponsored agreements 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.
Regulations
Allowability:
A cost is allowable to a project if the costs:
o are reasonable;
o are allocable to the specific project;
o are treated consistently in like circumstances;
  AND
o conform to any limitations of the cost
  principles or the sponsored agreement.
Regulations
Allocability:
A cost is allocable to a project if goods or
  services involved are chargeable or assignable
  in accordance with the relative benefits
  received by the projects. In order to be
  allocable a cost must be treated consistently in
  like circumstances.
Regulations
Reasonableness:
Would a prudent person pay this amount for this
    item?
OR
If it were published on the front page of the
    Wisconsin State Journal, would that be okay
    with you?
Regulations
OBM Circular A-110:
o Subpart D.71: 90 days to close



Agency Specific Regulations
o See award terms and conditions of awarding
  agencies/sponsors
Roles and Responsibilities of the PI
PI/Department designee
Ensure that expenditures are allocable,
  allowable, and reasonable to a specific
  sponsored project.
Ensure that expenditures are allocated in
  accordance with award budget, sponsor
  guidelines, and UW-Madison policy.
Ensure that individuals have appropriate
  authority to incur and allocate expenditures.
PI/Department designee
Ensure that monthly monitoring of expenditures,
   timely correction of errors, and reallocation of
   expenses, including personnel effort, occurs.
Ensures compliance with UW-Madison Cost
   Transfer Policy.
Initiates and authorizes requests for cost
   transfers.
PI/Department designee
Provides complete, clear, and reasonable
   justification for transfers as required by this
   policy.
Manages project to minimize the need for cost
   transfers.
General Principles
Project management
Sponsored project expenditures should be reviewed on a
    regular basis to ensure that both salary and non-
    salary charges are correct and appropriate.
It is the responsibility of the PI and/or the PIs designee
    to authorize transactions and review expenditure
    activity.
Regular review should include determination that the
    charges are reasonable, allowable, allocable, and
    directly support the scope of work for the project.
DOs
Do – apply costs to appropriate sponsored
  project when first incurred

Do – request account numbers in advance for
  pending awards

Do – split code requisitions when items are to be
  used across multiple sponsored projects
DOs
Do – use an allocable split to charge costs to
  multiple projects (e.g., 50/50, 30/70, 25/40/35)

Do – set up MDS accounts and open vendor
  requisitions on individual sponsored projects

Do – provide clear, detailed justification
  statements
DOs
Do – verify with PI to which project(s) costs
  should be applied
Do – perform ProCard edits in a timely manner
  AND cross-train staff to handle ProCard
  editing
Do – carefully prepare paperwork; errors in
  account numbers, reference numbers,
  amounts, etc., will only delay transactions
DOs
Do – verify as best one can that chargeback
  centers have current/correct information
  regarding the grant/project to which costs
  should be applied

Do – process chargebacks/billings MONTHLY!
DON’Ts
Don’t – park costs on sponsored projects

Don’t – transfer costs from one sponsored
  project to another to eliminate a deficit

Don’t – default ProCard accounts to sponsored
  projects
DON’Ts
Don’t – use generic/standard statements to
  justify transfers

Don’t – apply all costs on one grant and then
  move to the next grant to apply costs; if the
  grants are related and costs are to be shared,
  costs should be split-coded as purchased
Processing procedures
Submit all transfers to CALS Business Services
unless specifically instructed otherwise.
All transfers are entered logged/tracked.
Transfers involving sponsored project accounts
will be routed from CALS Business Services to
CALS Research Division for review and
approval.
Types of transfers
Salary cost transfers

Non-salary cost transfers

Transfers within 90 days

Transfers beyond 90 days
Processing procedures
NON SALARY TRANSFERS
Form available:
      http://www.cals.wisc.edu/bussvc/forms/index.html

Submit transfer forms in duplicate – original plus one
copy; submit only one copy of documentation.
Transfers involving sponsored project funding, attach
one copy of documentation to support the charge being
transferred.
Processing procedures
 Use Legacy class codes only on Non-Salary
     Payment Transfers.

“Type” are on Payment Transfer forms:
“P” (partial) – apply to a req.; leave req. open
“F” (final) – apply to a req.; close req.
“M” (miscellaneous) – does not affect a req.
Processing Procedures
SALARY CASH TRANSFERS

Form available http://www.cals.wisc.edu/bussvc/forms/index.html
Accurately fill out the appointment ID, name & SSN
   (mistakes are found when template used).
Make sure SFS account codes are indicated.
Enter year in the pay period in addition to the month(s).
The salary cash transfer should accompany a PayData
   form which shows how the individual should be
   paid.
Processing Procedures
SALARY CASH TRANSFERS (continued)

Check PHIQ in the legacy 3270 system to see what
  should go in the WAS section. Do not only rely on
  your copy of the PayData form.
Exceptions when you should call CALS Payroll:
  -You are correcting a payment that has already been
  processed on an earlier salary cash transfer.
  -You know that campus payroll made payment on a
  different fund because of a “block” or other funding
  problem.
Processing Procedures
SALARY CASH TRANSFERS (continued)

When you move only a part of the funding to another
  fund, you need two lines in the SHOULD BE
  section. The lines will be (a) what stays on the
  original fund with no amount in the TOTAL
  TRANSFER column and (b) what is to be
  transferred to the new fund with the amount to be
  transferred in the TOTAL TRANSFER column.
Processing Procedures

Transfers may be disallowed by campus, even
  with our best efforts.

Audits can result in disallowances well after
  transfers are processed and even possibly after
  an award has ended/closed.
Justification Statements
Recommendations
Be aware of agreement terms and
  conditions to assure allowability of costs.
Apply costs directly to sponsored project to
  alleviate the need for cost transfers.
Incorporate an authorization, verification,
  and review process by PI into sponsored
  project processes.
Recommendations
Provide a clear, complete, thorough
  justification statement.
Prepare the transfer in a timely manner,
  well in advance of the 90 day limitation.
Red flags!
Frequent/repeated transfers from a given
  entity.
Canned language.
Transfers in the last month of the award or
  after the end of the award.
Explanations that raise more questions than
  answers.
Issues of concern
Documentation is not provided.

Transfers involving unallowable purchases
  (e.g., computers, travel, equipment,
  furniture … items defined as
  unallowable per terms/conditions of
  award).
Issues of concern
Incomplete justifications:
• Edit error
• Wrong funding charged
• Correct class code
• Cost center error justification used when it
   isn’t a cost center error
• Accounts payable mistake
• To apply charge to correct account
• Computer purchase for XXX to use on project
Issues of concern
Insufficient explanations:
• Placing travel costs on project for which
  the traveler has no relationship
• UPS/FedEx charges without explanation
  of what was shipped
• Documentation that does not explain
  what type of service was provided
Issues of concern
Contradictory justifications:
• Stating expenditures is for one project
  but moving expenditure to an entirely
  different project
• Long, lengthy, confusing statements –
  telling too much can lead to more
  questions; be clear/concise!
Issues of concern
Confusion:
• Indicating a transfer is being made for
  cost sharing is confusing; cost sharing is
  the portion of project or program costs that
  are not borne by the Federal Government.
  “Sharing costs” across multiple projects is
  more likely the intended statement.
Issues of concern
Confusion:
• Stating that items being transferred are
  for lab use, but the transfer does not split
  costs allocably across the projects.
Issues of concern
Problems:
• When a transfer is received, the
  justification may say one thing, but it
  becomes questionable when WISDM is
  reviewed it is evident that the transfer
  amount is simply clearing a deficit.
Issues of concern
Problems:
• Justification indicates that RSP or CALS
  requested the transfer. You need to
  explain “why” the transfer is needed
  AND provide documentation, not say
  “because someone told you to.”
Example
Transfer lab supplies purchased on MDS
  account on fund 144-AB12 to fund 144-
  CD34 where items were used.

Parking charges on one grant/project and
  then moving to another grant/project is
  unallowable.
Example
Transferring charges from 144-AB12 to 150-
  A123 unrestricted fund due to over
  expenditure on 144-AB12.

Transferring an account deficit to an unrestricted
  source of funding is allowable. However,
  justification statement should not reference
  deficit nature of account.
Example
Transfer from 133-AB12 to 144-CD34 –
  ProCard defaults to 133-AB12. Transfer to
  correct sponsored project on which items
  were utilized.

ProCard charges should be applied to correct
   sponsored project at biweekly point of review
   – transfer after-the-fact is unallowable.
Example
Fleet vehicle charges were fully applied to 142-
   AB12. The travel costs were to be shared
   equally between two sponsored projects –
   Hatch and WCB sponsored projects. One-
   half of the assessed travel costs are being
   transferred to 133-HF15 WCB.

If total travel costs are split 50/50, this transfer
    would be allowable.
Example
However, if the justification is simply to share
  travel costs ...
And, if the amount being transferred is simply
  that amount appearing as a deficit balance on
  the account …
Then, the transfer would be unallowable.
Example
Accounting error.

Unallowable – errors may be allowable;
  however, simply stating an accounting
  error occurred would provide an
  insufficient justification. Explain how
  the error occurred and what actions have
  been taken so such does not reoccur.
Example
Transfer postage charges from 133-AB12 to 133-
  AB34. Postage charges are for newsletter
  mailings as defined within sponsored project.
  Postage charges on 133-AB12 are being
  transferred to successor sponsored project
  133-AB34 per terms of agreement.

Allowable – clearly justifies action taken.
Example
To correct error.

Unallowable – correction of errors may be
  allowable; however, simply stating that
  an error occurred would provide an
  insufficient justification. Fully explain
  errors and actions taken so they do not
  reoccur.
Example
Transfer from 144-AB12 to 144-AB34 because
  144-AB34 was just now set up.

Temporarily parking (holding) charges on
  sponsored projects is unallowable – parking
  charges is acceptable on unrestricted fund
  sources only; or advance account numbers
  may be requested for pending awards.
Example
Transfer of student salary costs from 133-AB12
  to 133-AB34 because PI did not have time to
  review and advise Department of proper
  payrolling of student employee.

Lack of responsible project management by PI
  and/or Department designee is unallowable.
Example
Tuition remission is not allowed on 144-AB12
  per USDA-Forest Service terms and
  conditions. Remission costs are being moved
  to unrestricted funding 101 A074300 4.

Allowable – remission costs are directly tied to
   stipend and can ONLY be transferred off a
   project if mandated by award
   terms/conditions.
Example
Fringe benefits allowed on 133-AB12 per American
   Heart Association terms and conditions cannot
   exceed $2,000. Fringes exceeding $2,000 are
   being moved to unrestricted funding 101
   A074300 4.

Allowable – fringe benefits are directly tied to
   stipend and can ONLY be transferred off a
   project if mandated by award terms/conditions.
Example
Fund and account ended 11/30/06; moving supplies
  to 144-XXXX that has not ended.

Unallowable –costs cannot be moved to an open
  federal project just because it is open and another
  project has ended.
Example
Moving supply costs to 144-XXXX

Unallowable –costs cannot be moved to an open
  federal project just because it is open and another
  project has ended.
Timelines
Timelines
Monitor extramural projects each month.

Process transfers immediately upon realization that an after-the-
   fact reallocation of costs is warranted.

CALS Research Division goal: process all transfer requests
  within the same month received

When actions are required, provide information, documentation,
  or paperwork requested within one week. If we do not have
  your response, documentation, or paperwork within two
  weeks, we will move the costs in question to your
  department's XXX-XXXX unrestricted account so as not to
  delay the pending transfer.
Timelines
BE AWARE …

•   Do NOT delay processing transfers. Past experience has
    shown that excessive numbers of transfers are processed at
    year-end. There is NO guarantee that all transfers will be
    processed if volume is as extreme as in years past.

•   Best efforts need to be taken to eliminate unnecessary
    transfers.

•   Monthly/timely processing of transfers is highly emphasized.
Questions/Suggestions

				
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