1. What items do auditors place special emphasis on when reviewing federal awards?
Costs transferred after the original charges were recorded and transfers not supported by adequate documentation or justification are questioned and challenged more rigorously and MAY be an indication of a lack of internal controls.
2. What are some questions that need to be investigated/answered when compiling an acceptable cost transfer request form?
You need to be able to provide detailed information as to why a charge was originally placed on the account you are moving it off of and demonstrate through your explanation why this cost is allowable and allocable to the proposed account that you are transferring the charge to.
As you can see, it is sometimes necessary to discuss the charge with the Principal Investigator or a lab technician to get an accurate answer on these cost transfers. They also may need to be more than one or two sentences in order to adequately meet the federal requirements as well as the auditors’ requirements.
3. Can you provide me with examples of proper explanations for a cost transfer?
Please see both examples below. If ever you need additional help with this process, your assigned staff accountant in ORACS is also able to assist you in determining what is needed for the cost transfer form to be filled out correctly.
Example 1: Please move the following charges from account 5-2XXXX to account 5-2YYYY. The project period for account 5-2XXXX pertaining to (insert research project title) ended 05/31/2007 and 5-2YYYY is the continuation account for the (insert research subject) grant. The new account number was just issued on 10/12/2007. The charges pertain to the time period for the new year of the award. (It is recommended to get a contingent account assigned in order to accurately track these expenses until your “5” account has been assigned. Please refer to the ORPA website for these instructions.)
Example 2: Please reallocate the following commercial card charge from Dr. Smith’s NIH grant, account 5-2XXXX to account 2-XXXXX, Dr. Smith’s start-up account. The charge was for the purchase of furniture for the lab. When reconciling the P-card charges, the bookkeeper did not realize that the items listed were for furniture and charged Dr. Smith’s NIH grant in error. Upon review of the September ledgers, the department administrator realized that the account 5-XXXXX had been incorrectly charged.
4. Can you provide me with examples of improper explanations for a cost transfer?
Please see both examples below. Again, if you ever need additional help to ensure you have all elements of a complete cost transfer, your ORACS staff accountant is a great resource.
Example 1: These 3 charges were charged to account 5-2XXXX in error. This charge relates to the research done on 5-2YYYY.
In order to make this example an appropriate justification, you need to explain what kind of error it was (typo, keypunch error by A/P or Purchasing, incorrect account number entered at time of transaction) and HOW it relates to the research done. This can be explained by describing the supply or item and how it benefited the research done on this grant.
Example 2: These 2 charges were charged to account 5-2XXXX due to a key punch error. It would be more appropriate for them to be charged to 5-2XXXX.
In example 2, the first part of the explanation is acceptable, however, the second half is not. It requires more detail as to how the charge is allowable and allocable to the research. You need to provide information as to what makes it appropriate for this research.
Simply stating that you are “transferring the expense”, “correcting the coding” or that an expense “should be charged to the grant” are all examples of inadequate wording for an explanation.
If the cost transfer does not follow the regulations for allowability, allocability, and reasonableness, it will not be permitted.
5. Can I e-mail a scanned copy or send a fax version of the cost transfer request form?
ORACS will accept either electronic or original documents in order to process cost transfers. If electronic DO NOT send ORACS a hardcopy. This is to avoid duplication or errors.
6. Are the CWO correction forms from Purchasing still going to be accepted?
No, these forms will no longer be accepted. You will have to submit the request on a cost transfer request form and provide appropriate back-up (this could be the purchase order that shows the correct number being requested).
7. Do requests to move stew (suspended) charges need to be submitted on a cost transfer request form?
Guidance for which stew charges are subject to the cost transfer request form will be detailed in the e-mail sent by ORACS informing the department of its stew charges. Not all stew charges will require a cost transfer request form.
8. If I am moving an expense from one subcode to another subcode within the same research account, do I need to submit a cost transfer request form?
No, an official cost transfer request form is not required, but can still be used, if you so desire. These can be submitted on a memorandum or e-mail and need to be accompanied by the ledgers that are applicable.
9. If I am moving an expense for a master to a sub or sub to a master, do I need to submit an official cost transfer request form?
No, an official cost transfer request form is not required, but can still be used, if you choose to do so. These can be submitted on a memorandum or e-mail and need to be accompanied by the ledgers that are applicable.
10. Is it true that a second signature is no longer required?
This is true. However, anything after 90 days will require a second signature on the cost transfer request form. Accounts that are in final closeout stage must still be made within 60 days for the transfer to be made.
11. Are there any other required documents beside the cost transfer request form?
Yes, you will need to submit the supporting ledgers showing where the charge is currently placed and any other supporting documentation that verifies your explanation. Please keep in mind that it is the department’s responsibility to keep all documents pertaining to their accounts in case an auditor needs them. You should refer to the document retention requirements of the award to determine the timeframe that you will need to retain these documents for.
12. Are non-federal grants included in this policy?
Yes. This policy pertains to ALL cost transfer requests that involve an account that begins with the digit “5.”
13. How is the 90 day time period calculated?
If the cost transfer is made within 90 days following the month end the original cost was recorded on the ledger, it is considered less than the 90 day time period and will not require a second signature. (An error on the July ledger must be requested by October 29, an error on the March ledger must be requested by June 29)
14. Does this procedure apply to payroll transfers?
Yes, payroll changes are processed when forms are completed and submitted via the HRMS policy. Please be sure to get them completed before 60 days after the account ends and with proper explanation on the form.
15. Can we still contact Accounts Payable when they record a charge in error to our “5” account?
Any corrections needed to a “5” account need to be directed to ORACS and your ORACS staff accountant. Accounts Payable can assist in researching the error if you do not have any support for the charge, and if AP determines the error occurred from a “keying error” then AP will correct it and no cost transfer form is required. If it arose from anything else AP can provide support to you for resolution, possibly with another department where the error originated, and you will need to submit a cost transfer request form.
16. My ledger “5” account is in deficit and I need to move costs off to another account. Can I move the costs to another restricted account? I have a service center account.
No, the costs can not be moved to a service center account. The costs should be moved to an unrestricted account. Service center accounts maintain annual budgets of all costs related to the service provided and related revenues. Use rates are determined based on the budget so all users pay the same rate. The service center account should only hold costs related to such service.
17. What are some examples of a “responsible person”?
Some examples are a staff accountant, senior accountant, administrative assistant, administrator, principal investigator, and the chair person in the department. The list is not limited to just these titles, so please ask your ORACS staff accountant if you are unsure.