UW Research

Policies, Procedures and Guidance

GIM 15 – Transfer of Expenditures Between Budgets

Purpose

This GIM sets out the policy and outlines procedures for the administration of expenditure transfers for sponsored program funds consistent with federal regulations and sponsor policy statements.

Background

Federal, state, and private agency policies and audit guidelines are quite stringent as they relate to cost transfers between sponsored programs. Costs allocable to a particular sponsored agreement . . . may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience per cost principles set out in Title 2 in the Code of Federal Regulations (2 CFR), subtitle A, chapter II, part 220. (2 CFR Part 200- Uniform Administrative Requirements, Cost Principles and Audit requirements for Federal Awards, section 200.405 Allocable Costs.)

The Department of Health and Human Services (DHHS) has issued a definite policy statement containing specific guidelines on cost transfers. Since DHHS has the Federal audit responsibility at most universities, including the University of Washington (University), these guidelines are extended in audit practice to the University’s sponsored programs from other Federal agencies as well. State and public auditors use similar audit guidelines when reviewing nonfederal grants and contracts. Since the University has a stewardship responsibility for all funds made available for research and training, these cost transfer guidelines are applied consistently to all sponsored agreements.

Frequent or inadequately explained cost transfers raise serious questions about the propriety of the transfers themselves as well as the overall reliability of the department’s cost distribution system, and may result in a comprehensive audit by internal and/or external auditors. Departments must have procedures in place which ensure accurate accounting for costs and timely correction of errors.

Persons/Offices Affected

UW Principal Investigators and Departments, Subrecipients, Office of Sponsored Programs, Payables Administration, and Grant and Contract Accounting.

University Policy

Cost transfers into a sponsored programs budget must be made within 90 days of when the error is discovered. If, however, the transfer is requested more than 120 days after the transaction date, an explanation for why the transfer is late must be included. The 120 days is from when the transaction posted to the originating budget to when the transfer is submitted.

When it is necessary to correct these errors, departments must provide convincing evidence that the goods and/or services are properly allocable and that the budget receiving the transferred cost actually received a benefit from the goods and/or services involved.

A single cost is not to be transferred more than once.

Procedures and Guidance

Transfers of Goods and Services Transactions

When transferring non-salary expenditures to or from a sponsored project budget number, the conditions which must be adhered to are as follows:

  1. Transfers are to be processed within 90 days of discovering the error. In addition, submit transfers promptly after the end of the financial reporting period to facilitate timely submission of financial reports by Grant and Contract Accounting (GCA).
  2. Revenue transfers and budget number changes for outstanding requisitions (encumbrances) are governed by separate policies and procedures.
  3. The following information must be included on all cost transfers:
    • The reason(s) for transferring the expenditure must be sufficiently stated to establish that the transfer is within the approved guidelines of the budget to be charged and is in direct support of the project objectives. It is important to stress the benefit to the program receiving the cost in all instances.
    • The reason(s) the expenditure was initially charged to the incorrect budget.
    • Transfers involving equipment (Account code 06), equipment fabrication expenses and transactions using account code 05-40 or 05-41 are routed to the Equipment Inventory Office for review and final submission. Expenditure transfers must be processed within 90 days of when the error was discovered. If, however, the transfer is requested more than 120 days after the transaction date, an explanation for the timing of the transfer must be included. The 120 days is from when the transaction posted to the budget to when the transfer is submitted.
    • GCA periodically reviews selected transfers after posting to ensure compliance. Questions concerning allowable transfers should be referred to 206-616-9995 or email gcahelp@u.washington.edu. The Grant and Contract Accounting Office can also provide assistance in establishing budget monitoring procedures to minimize the need for expenditure transfers.

Cost Transfer Minimum Threshold

‘Low dollar’ cost transfers place a strain on administrative systems. Therefore, the following change has been implemented to improve the efficiency and effectiveness of our cost transfer process for non-material dollar amounts.

Procedure:
  1. Non-Grant & Contract Budgets:It is not necessary to process cost transfers involving individual transaction amounts equal to or less than $10.00.
  2. Grant & Contract Budgets, including program income and restricted gifts:It is not necessary to process cost transfers involving individual transaction amounts equal to or less than $10.00. However, departments must monitor the volume of these transactions on an individual budget to ensure they do not become material in relation to the award amount.

This threshold policy does not relieve the department from the responsibility of clearing all over-expenditures in a timely manner on any budget regardless of the dollar amount.

Documenting Salary Transfers

The same principles apply to payroll transfers as apply to non-payroll transfers. In addition, the following procedures apply to payroll transfers.

When transferring salary expenditures to or from a sponsored project budget number, the conditions which must be adhered to are as follows:

  1. For non-faculty personnel:
    • If salary corrections are required, the department should submit the salary transfer and note the change on the quarterly Grant and Contract Certification Report (GCCR) including the correct budgets and corresponding salary amounts. There is no need to regenerate the GCCR as the correction will appear on the next GCCR following the salary transfer. Do not use whiteout.
    • The transfer must be completed by the Principal Investigator or an individual who has been delegated authority by the Principal Investigator in writing and has knowledge of how the work benefited the receiving budget (see GIM 2, Delegation of Signature Authority).
    • The PI or responsible official should then certify (sign) and date the report which is stored in the departmental file for audit.
  2. For faculty salaries already certified, the Faculty Effort Certification (FEC) Report must be revised to reflect the revised distribution of effort and resubmitted to the Management Accounting and Analysis Office along with a copy of the posted salary transfer. In addition, use the free form comment section of the FEC to explain why the change is now appropriate when the effort was previously certified as being a reasonable reflection of effort.
  3. Consistent with non-salary transfers, the requests must be processed within 90 days of when the error was discovered. In addition, submit transfers promptly after the end of the financial reporting period to facilitate timely submission of financial reports by GCA.
  4. The transfer must include the following:
    • The reason(s) the expenditure was initially charged to the incorrect budget.
    • The reason(s) the expenditure was initially charged to the incorrect budget.
    • Payroll transfers must be made within 90 days of when the error is discovered. If, however, the transfer is requested more than 120 days after the transaction date, an explanation for why the transfer is late must be included. The 120 days is from when the transaction posted to the budget to when the transfer is submitted.
    • When it is necessary to correct these errors, departments must provide convincing evidence that the services are properly allocable and that the budget receiving the transferred salary actually received a benefit from the services involved.

Cost Transfer Compliance

In the examination of expenditure transfers, auditors are especially skeptical of both salary and non-salary transfers involving budgets in a deficit condition or those having unexpended funds at the expiration date. If such conditions exist, it is particularly essential to provide convincing evidence that the transfer is not for reasons of budgetary convenience.

Frequent or inadequately explained cost transfers raise serious questions about the propriety of the transfers themselves as well as the overall reliability of the department’s cost distribution system. Departments must have procedures in place which ensure accurate accounting for costs and timely correction of errors.

The untimely discovery of errors could ultimately be an indication of poor internal controls within the department.

Consistency Between Payroll Documents and Activity Reports

It is essential that the salary distribution reported on the FEC be consistent with actual effort performed. When the salary distribution reported on the FEC reflects a material difference from the actual effort distribution, a salary transfer should be submitted to reflect the change. In addition, OPUS distributions should be reviewed and corrected if necessary to ensure that current and future distributions reflect the correct allocation of effort. When a salary transfer for a faculty member is processed prior to certification the change will display on the electronic FEC the following business day. Once the FEC is certified it cannot be changed. If there are changes required it will need to be recertified. This will require the FEC to be printed and a modification to the salary source section of the FEC form prior to recertification and submission to Management Accounting and Analysis (MAA) (See GIM 35).

Late Awards

Care should be taken to not start work on a project before funding is assured. When an award is late, or account set-up is delayed, salary and non-salary expenditure transfers may be avoided by using the University’s procedure for obtaining budget numbers in advance (See GIM 9 for Advance Budget Number Assignments). When it is not possible to establish an Advance Budget, interim appointment(s) may not be made to another sponsored funding source. An interim appointment should be corrected promptly upon receipt of the award and establishment or extension of a University budget number.

Responsibilities

Principal Investigator

  • Authorizes the proposed budget for submission to the sponsor
  • Monitors expenditures on a sponsored program
  • Authorizes transfers, when appropriate
  • Ensures sponsored program maintains a tracking system to account for salary expenditures and transfers

Grant and Contract Accounting

  • Periodically review selected cost transfers to ensure compliance.

Definitions

Faculty Effort Certification (FEC)
Periodic review and certification that the distribution of faculty salaries represents a reasonable reflection of effort.
Grant and Contract Certification Report (GCCR)
Documentation to certify the reasonableness of salary and wages charged to sponsored projects, with the exception of faculty salaries, which are certified via the Faculty Effort Certification process.

Other Related Resources

Subject Document
Cost Principles for Educational Institutions Per Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Chapter I, Chapter II, Part 200, Uniform Guidance)
NIH Grants Policy https://grants.nih.gov/policy/nihgps/index.htm
Grant and Contract Certification Report procedures http://f2.washington.edu/fm/gca/spending-invoicing/payroll-topics/grant-contract-certification-reports-formerly-payroll-certificatio
Grant and Contract Accounting Deficit Transfer Process http://f2.washington.edu/fm/gca/close-budget/closing-types

Contacts

Subject Contact Email Phone
Non-grant and contract salary transfers MyFinancial Desktop customer Support myfdhelp@u.washington.edu 206-543-3877
Salary transfers involving grant and contract budgets Grant and Contract Accounting (GCA) gcahelp@uw.edu 206-616-9995