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Cost Transfers and Guaranteed Funding/Advanced Accounts


... Future Solution New guaranteed funding/advanced account policy and request form under development ... from PAS GCA then sets up award in PeopleSoft Project ... – PowerPoint PPT presentation

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Date added: 25 February 2020
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Title: Cost Transfers and Guaranteed Funding/Advanced Accounts

Cost Transfers and Guaranteed Funding/Advanced
  • Increase the use of guaranteed funding/advanced
  • Decrease the number of cost transfers through
    pro-active grants management approach
  • Reduce compliance risks and audit findings

Cost Transfers Defined
  • Cost transfers defined
  • After the fact salary or non-salary expense
    reallocation from one University chartstring to
  • 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

Cost Transfers Background
  • UVM has significantly more cost transfers,
    particularly late cost transfers, than similar
  • 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 Background
  • Cost 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
  • The FY09 A-133 audit identified an additional
    finding about lack of approvals and clear
    documentation for cost transfers

Cost 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 Background
  • Cause 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
  • 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 affected?
  • Principal Investigators
  • Fiscal management difficulties
  • Department Deans 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 retros
  • Grant and Contract Administrative Services
  • Resources needed to review approve cost
  • Delayed financial reporting
  • The University at Large
  • Compliance risks, which could result in audit
    findings, significant fines, and potential loss
    of funding from sponsors

Cost Transfers Compliance in Perspective
  • Weill Medical College of Cornell University -
    2.6M, March 2009
  • Yale University - 7.6M, December 2008
  • St. Louis University - 1.0M, July 2008

Cost Transfers Solutions
  • Proactive and continuous monitoring of sponsored
  • 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 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 Solutions
  • Conditions 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
  • Request must be submitted immediately following
    detection of the error
  • Transfer must be in compliance with University
    policies and federal regulations

Cost Transfers Solutions
  • Guaranteed funding/advanced accounts should be
  • 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

Cost Transfers Future Solutions
  • 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 Funding/Advanced Account Background
  • Guaranteed 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

Guaranteed Funding/Advanced Account Background
  • Use 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

Guaranteed Funding/Advanced Account Solution
  • Work 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

Guaranteed Funding/Advanced Account Future
  • New guaranteed funding/advanced account policy
    and request form under development

Guaranteed Funding/Advanced Account Workflow
  • Requests 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//
  • Confirmation from the sponsor of the award and
    the anticipated start date
  • Proposals must be routed
  • All protocols must be approved for IACUC, IRB and

Guaranteed Funding/Advanced Account Work 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
  • Memo of intention to guarantee the award signed
    by the PI and department chair

Guaranteed Funding/Advanced Account Work 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
  • GCA notifies PI, department, and others as

Guaranteed Funding/Advanced Account Work Flow
  • Contract remains in guaranteed funding/advanced
    account status until award document is received
  • Ensures sponsor is not billed and revenue is not
  • Upon 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 required

Guaranteed Funding/Advanced Account Required
  • Culture 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
  • GCA would close down the award in PeopleSoft
    after the department removes expenses

  • Increase the use of guaranteed funding/advanced
  • Decrease the number of cost transfers through
    pro-active grants management approach
  • Reduce compliance risks and audit findings

Questions/Contact Info
  • Deans Office
  • Office of Sponsored Programs, Pre-Award Services
  • http//
  • Main Campus Office Funding Information, 340
    Waterman Building, 6-3360
  • Health Sciences Office, 231 Rowell Building,
  • Grant and Contract Administrative Services
  • http//
  • 223 Waterman Building, 6-1459