UC IRVINE ADMINISTRATIVE POLICIES & PROCEDURES

OMB Circular A-21, Cost Principles for Educational Institutions

OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations

UC Disposition Schedules Manual

UC Business and Finance Bulletin

A-47, University Direct Costing

UCI Administrative Policies & Procedures
Section 701-15, Costing and Financial Documentation Procedures
Section 701-17, Cost Transfers (Non-Payroll) - Procedures
Section 701-19, Personnel Activity Report (PAR) - Procedures

A. Responsibility and Accountability

• allowability
• allocability
• reasonableness
• compliance with the general principles and the provsions of the research agreement

• timeliness
• relatedness
• consistency

Responsibility also means that audit-derived disallowed costs (including the transfer and portion of the disallowance extrapolated to the campus) will be borne by the unit(s) that caused them.

B. On-Line Payroll/Personnel System

C. Delegation and Training

1. Contract and grant payroll cost transfers must be approved by an employee within the academic unit who has been delegated such authority. A Delegation of Authority to electronically prepare and/or review payroll cost transfers to someone other than a Principal Investigator, Dean, Director, or Department Chair, must be in writing. The signed original Delegation of Authority is sent to Contracts & Grants Accounting.

2. Individuals preparing and/or reviewing on-line payroll transfers of expense for contracts and grants must attend a training session presented by the Accounting Office prior to utilization of the On-Line Payroll/Personnel System.

D. Documentation and Retention

1. Academic departments/schools, rather than Contracts and Grants Accounting, are the "department of record" for documentation in support of contract and grant payroll cost transfers. Retention periods are specified in the UC Records Disposition Schedules Manual for contract and grant records.

2. All documentation, including justifications and certifications related to the payroll cost transfer, are maintained by the originating department and must be made available for post-authorization review. Prior to preparation of an on-line payroll transfer of expense, written approval by the Principal Investigator and/or Chair must be obtained for cost transfers that:
   • involve a change in decision
   • were not prepared in a timely manner
   • may be considered suspect in an audit.

   This approval is maintained by the originating department as certification for the cost transfer.

3. Blanket recertification of payroll documents is not acceptable to Health and Human Services (HHS) officials. An example would be the correction of a payroll charge showing the "wrong" fund number on all related documents: the electronic inquiry document (IDOC), Personnel Activity Record (PAR) and departmental time sheets. The department must show positive or concrete evidence of the personnel's attendance. This may include lab notes and other lab records that may substantiate the time spent by the personnel on the contract or grant.

4. All payroll cost transfers must be fully supported by appropriate documentation which specifically references the fund that benefitted from the goods or services.
   1. Appropriate documentation would include:
      • IDOC (electronic inquiry document)
      • On-Line Payroll Transaction Authorization
      • Personnel Activity Report (PAR)
      • Attendance Sheets (departmental time sheets)

   2. The following additional documentation is required if the transfer is from an overdrawn contract/grant to an active contract or grant, or to a terminated contract or grant with unexpended funds:

      1) A dated statement signed by the principal investigator which can be included in the On-Line Payroll Transaction Authorization. It must indicate the specific task(s) performed during the period covered by the salary cost being transferred and clearly document the benefit derived by the contract/grant being charged. The statement must explain why salary was not charged initially to the contract/grant that received the benefit of the employee's effort.

   2) A copy of the employee's properly annotated daily attendance record for the period covered by the salary cost being transferred, with a certification signed by the principal investigator confirming that the revised record is correct (pertains to staff personnel only).

   3) A dated statement signed by the principal investigator which can be included in the On-Line Payroll Transaction Authorization. It must list specific dates (month, day & year) worked during the period covered by the salary cost being transferred, if the salary cost originally recorded in the Payroll Distribution was not transferred in its entirety (pertains to academic personnel only).

E. Separation of Control

F. Post Authorization Reviews

1. The first review will be extensive and will focus on the transactions and explanations for cost transfers that were:
• prepared four or more months after the original ledger date
• prepared within two months immediately before the project end date
• prepared after the project end date
• previously moved as a cost transfer
• affecting individual funds with overdrafts
• affecting unexpended balances for budget or award periods terminating within the last two months.

2. The second review will involve a random sample taken from all other payroll cost transfers.

3. Review procedures for selected payroll cost transfers include:
   1. Contracts and Grants Accounting notifies the preparer and/or approver of the payroll cost transfer that will be reviewed for appropriateness and/or supporting documentation.
   2. The review is normally completed within 1-2 weeks. Priority will be given to transfers that occur at or after a project end date.

      (Note: Financial status reports are based on information in the second month's general ledger after the termination date of the award. It is the responsibility of the department to notify Contracts and Grants Accounting of payroll cost transfers prepared after the second month's general ledger.)

   3. The review may involve:

      • a request to forward a copy of the documentation to Contracts and Grants Accounting
      • a visit to review the documentation at the department site
      • phone conversation
      • e-mail exchange
      • any other process that provides sufficient information to validate the payroll cost transfer.

   4. If the documentation is not submitted or if the payroll cost transfer is judged on a preliminary basis to be inappropriate under the given circumstances, and/or is not adequately supported by documentation, Contracts and Grants Accounting will:
      1) Notify the preparer and reviewer of the payroll cost transfer, the Business Officer, and/or the Principal Investigator.

      2) Provide a rationale for the tentative decision.

      3) State a due date for a response that addresses why the payroll cost transfer should be considered valid. The due date may vary depending on such variables as project end date and when in the project cycle the payroll cost transfer review occurs.

   5. After receipt of the response, a final determination will be made on the appropriateness and adequacy of supporting documentation. Payroll cost transfers that lack documentation or do not meet the standard for these criteria will be reversed or transferred to an unrestricted fund source within the originating unit.

4. When performing the post-audit reviews, Contracts and Grants Accounting staff will additionally conduct random site-visits and review documentation maintained at the department. The Accounting staff will work with departments to identify the cause and recommend solutions for areas where accounting practices need strengthening.