UC IRVINE ADMINISTRATIVE POLICIES AND PROCEDURES
Business and Financial Affairs
Sec. 701-17: Cost Transfers (Non-Payroll) - Procedures
Responsible Office: Accounting & Fiscal Services
Issued: October 1998 (reviewed June 2005)
This policy is under revision due to the implementation of Uniform Guidance by the Office of Management and Budget on December 26, 2014.
References / Resources
- 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 Records Retention Schedule
- UC Business and Finance Bulletin
- A-47, University Direct Costing
- UCI Administrative Policies & Procedures
Contact: Contracts & Grants Accounting at (949) 824-8190
A. Responsibility and Accountability
The responsibility for compliance with federal costing guidelines and for maintaining supporting documentation for cost transfers is centered in the originating department/unit. Principal Investigators, and those to whom authority to approve cost transfers is delegated, are responsible and accountable for compliance with federal criteria that govern cost transfers:
- compliance with the general principles and the provsions of the research agreement
Factors also applying to cost transfers (see Section 701-15) include:
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 Transfer of Expense
Authorized individuals can initiate a non-payroll expenditure adjustment/transfer of expense for contracts and grants using the on-line Transfer of Expenditure (TOEB) and electronically approve and send the cost transfer directly to the Financial System without prior review by Contracts and Grants Accounting.
C. Delegation and Training
- Contract and grant cost transfers must be approved by an employee within the academic unit who has been delegated such authority. A Delegation of Authority to electronically approve 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.
- Individuals preparing and approving on-line transfers of expense for contracts and grants must attend a training session presented by the Accounting Office prior to utilization of the on-line Financial System.
D. Documentation and Retention
- Academic departments/schools, rather than Contracts and Grants Accounting, are the "department of record" for documentation in support of contract and grant cost transfers. Retention periods are specified in the UC Records Disposition Schedules Manual for contract and grant records.
- All documentation, including justifications and certifications related to the cost transfer, are maintained by the originating department and must be made available for post-authorization review. Prior to preparation of an on-line 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.
- All cost transfers must be supported by documentation that specifically references the fund that benefited from the goods or services. Examples of original documentation are:
- purchase requisitions
- purchase orders
- storehouse orders
- travel vouchers
- logs or records of high volume low-value charges with an acceptable distribution method (telephone costs, photocopy charges)
- job time and attendance records
- personnel activity reports (PAR).
- This documentation is maintained in the originating unit.
E. Separation of Control
On-line transfers of expense, submitted for contract and grant funds, require electronic notification from Contract and Grants Accounting to the Principal Investigator, Assistant Dean/Business Officer, or designee. This person should be listed on Table C of Administrative Computing Services' Request for Access to Financial Systems form.
F. Post Authorization Reviews
At the end of every month, two types of review are performed by Contracts and Grants Accounting. Activity identified in these two reviews will be assessed as to the appropriateness of the transfer and the adequacy of the supporting documentation. Blanket recertification of non-payroll expense documents (e.g., correction of a fund number on original documents, such as a departmental time sheet or purchase requisition) is not acceptable to Health and Human Services (HHS) officials, when done in an untimely manner and/or at termination of a fund with an unexpended balance or overdraft. Such documentation appears to support the original charge rather than the transfer.
- 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.
- The second review will involve a random sample taken from all other cost transfers.
- Review procedures for selected cost transfers include:
- Contracts and Grants Accounting notifies the preparer and/or approver of the cost transfer that will be reviewed for appropriateness and/or supporting documentation.
- 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 cost transfers prepared after the second month's general ledger.)
- 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 cost transfer.
- If the documentation is not submitted or if the 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:
- Notify the preparer and approver of the cost transfer, the Business Officer, and/or the Principal Investigator.
- Provide a rationale for the tentative decision.
- State a due date for a response that addresses why the 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 cost transfer review occurs.
- After receipt of the response, a final determination will be made on the appropriateness and adequacy of supporting documentation. 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.
- When performing the post-audit reviews, Contracts and Grants Accounting staff will also 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.