Late Cost Transfer Escalation Procedure for Contracts & Grants (Effective August 1, 2010)
Cost Transfers which occur after 120 days (4 general ledger cycles) from the original ledger month end date are considered excessively late. Transfers made after the 120 day period may be considered non-compliant with University policy and therefore deemed unallowable by federal auditors. Departments must assume the risk for these transfers if found unallowable during an audit. The escalation process will be used strictly for rare and unusual circumstances. In these circumstances, the request will be evaluated based on set criteria and approved by: Principal Investigator, Department Head/Chair, Extramural Funds Accounting Manager, Controller, and Vice Chancellor of Research. Departments must correct any inappropriately recorded charges on federal funds regardless of timeliness.
Approval of requests for late cost transfers will be rare and only granted in unusual and unique circumstances that result from actions outside the control of the originating department. If granted, this approval does not relieve the originating department from the financial responsibility for the untimely recognition of these expenses. If disallowed by the federal agency, the originating department will be held responsible for any disallowance, fine, or penalty resulting from negative audit findings relating to any cost transfers processed as a result of an escalation request.
In general, the following situations will be considered for an escalation:
- Cost transfers resulting from late notification of award by the sponsor when a Request for Approval to Spend Funds (RAS) would not have been possible. A RAS should be used whenever possible.
- Cost transfers resulting from an unanticipated change to the fund number on a multiple year award.
Transfers with the following situations that do not fall under the escalation requirement:
- Cost transfers between subs within the same fund
- Cost transfer correcting object codes within the same fund
- Transfers from a contract or grant fund to a non-contract or grant fund (unrestricted fund) will be processed even after the 120 day limitation.
Escalations will not be granted in the following situations:
- Failure of staff to prepare cost transfers in a timely manner.
- Failure of Principal Investigators to inform department administration of needed cost transfers.
- A transfer from one sponsored fund to another sponsored fund
- A transfer from an unrestricted fund into a sponsored fund
As part of normal departmental responsibilities, Principal Investigators and departments are responsible for actively managing awards, identifying transactions that require correction, executing required cost transfers in a timely manner, and assembling the late cost transfer escalation request when necessary. 8/12/10 2 Questions about this process can be addressed to Tyler Clark, Extramural Fund Manager at email@example.com or call extension 3068.
To request an escalation, the originating department must complete the follow 4 steps:
1. The originating department preparing the Escalation Form is responsible to have it signed by the Principal Investigator and department head/chair (must go through approval process indicated in Sequential Order Section).
2. The originating department completes the appropriate paper cost transfer form; Payroll (UPAY) or Non-Payroll (UFIN).
- The Principal Investigator, department head/chair, or other academic official must sign the UPAY or UFIN.
- The originating department preparing the Escalation Form is responsible for obtaining additional signatures if multiple departments are involved in the cost transfer. The department receiving the charge is required to obtain the following signatures;
- if a contract or grant, the Principal Investigator, department/chair, or other academic official.
- if a non-contract/grant, an authorized signature is required.
- The reason on the UPAY and UFIN must be a detailed justification for the expense transfer. It must answer ALL of the following questions to be accepted for consideration:
- Explain why the expense was not originally charged to the appropriate fund and why the expense was charged to the account/fund from where it is now being moved.
- Describe how the cost benefits the award to which the cost is being transferred to. What makes the expense appropriate to the account now receiving the expense?
- How does this cost contribute to achieving the project’s objectives?
- What action is being taken to eliminate future need for cost transfer of this type?
3. Supporting Documentation is required and to be attached to the form.
4. 120 Day Memo (Must identify the reason for tardiness and how it will be prevented in the future.)
Sequential Order for Escalation Signature Form
All 120 Day Escalation Forms must be submitted in sequential order as indicated below (Steps 1-4). If the form is submitted out of sequence it will be returned to the originating department and denied. Resubmission will be required for consideration. 8/12/10
- Originating department prepares the escalation request and obtain all necessary signatures.
- Submit the 120 Day Escalation Form to the Extramural Funds Accounting Manager for review. If approved the escalation form will be routed to the Controller for review and approves or denies escalation requests. The Extramural Funds Accounting Manager is responsible for processing escalation requests which includes tracking the request, communicating the decision on the request, and processing cost transfers for approved requests.
- The Controller or designee reviews and approves or denies escalation requests prior to routing to the Vice Chancellor of Research.
- Vice Chancellor of Research reviews and endorses or denies escalation requests. The decision of the Vice Chancellor or designee is final.
On-Line Transfer of Expenses (TOE) Over 120 Days Due to Approval Process
If you have submitted a transfer of expense in the on-line TOE system, but it has been delayed in the approval process forcing the processing period past the 120 policy, use the following steps to complete the TOE:
a. Do not submit the TOE electronically, it will be rejected.
b. Access the original TOE submitted in the online system and print a copy which will reflect the audit trail.
c. Prepare a paper UFIN120 and attach a copy of the TOE transfer.
d. Submit the paper copy of the TOE to Extramural Fund Accounting for approval.
Note: If the original submission of a TOE is past the required 120 day time period, it is considered excessively delinquent and will NOW need to be escalated for review. Please refer to the procedures as noted in the Cost Transfer 120 Day Escalation Procedures section.