HMS

1

• HMS
• COST TRANSFER TRAINING
• May 18, 2006
• Sarah T. Axelrod
• Min Xiao
• Judy McSweeney

2
AGENDA

• Introductions
• What - Definition of a Cost Transfer
• Why do we need a Cost Transfer Policy?
• Your Financial Management Roles and
  Responsibilities

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AGENDA

• The Policy
• Updates to the policy
• 3 Types of Cost Transfers
• Under 90 days old
• Over 90 days old
• Special categories
• Departmental Cost Transfer Responsibilities
• FOA/OSP Cost Transfer Responsibilities
• Q A

4
COST TRANSFER DEFINITION

• A cost transfer is a transfer to a federally
  funded sponsored account of a charge previously
  recorded elsewhere.

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WHY DO WE NEED A CT POLICY?

• Federal regulations require that transfers to
  federally funded sponsored accounts be timely and
  properly documented (see OMB Circular A21 section
  C 4 (b))
• To demonstrate that adequate financial controls
  are in place, cost transfers should be kept to a
  reasonable minimum

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WHY DO WE NEED A CT POLICY?

• Late, frequent, and inadequately explained cost
  transfers
• Suggest poor financial management
• Lead to questions on the overall reliability of
  HMSs internal controls and accounting systems
• Cause audit issues

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YOUR ROLES RESPONSIBILITIES
As a Harvard employee working with Federal awards
you are responsible for

• Processing financial transactions against
  sponsored accounts
• Ensuring that sponsored funds are managed
  according to Harvard/HMS policies and sponsor
  terms and conditions

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YOUR ROLES RESPONSIBILITIES

• How do you accomplish your responsibilities?

• Enter accurate budgets using the Sponsored Budget
  Tool
• Monitor accounts using AWS2, HUDINI, and CREW to
  identify incorrectly charged or allocated
  expenses
• Read and be familiar with the Cost Transfer
  Policy
• Ask questions

9
THE POLICY

• The policy addresses ALL debit transfers to
  Federal Awards that were previously recorded
  elsewhere

• Cost transfers are identified by a journal naming
  convention, the journal name starts with CT
• Example CT STA Allocate glass washing OCT-04
• The description field of a CT journal indicates
  that a CT form has been processed or the reason
  why a CT form is not required is identified

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RECENT CHANGES TO THE CT POLICY

• All changes are for clarification, there are no
  changes to the core policy
• Policy states that CT due to late action memos
  MUST be made within 45 days
• An example of how to count the 90 days is
  included
• References to service centers are removed
• A note indicating that the naming convention
  should be used on all CT journals

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COST TRANSFERS UNDER 90 DAYS
Prepare draft journal entry in the description
field refer to Related Cost Transfer form
Complete form Answer questions 1 2 and get
signatures
Send the documentation to OSR for review and
approval
OSR approves and returns to preparer for posting
to GL and retention
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COST TRANSFERS UNDER 90 DAYS

• Cost transfers made within 90 days of the 15th of
  the month following that in which the original
  charge was recorded
• Transferred by journal entry at departmental
  level
• Accompanied by the Cost Transfer Explanation Form
  with questions 1 and 2 answered and signed as
  indicated
• Journal description See related Cost Transfer
  form
• Documentation sent to OSR for review and approval
  
• Returned to originator for posting to GL and
  retention with other accounting records

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COST TRANSFERS UNDER 90 DAYS

• Examples
• Original charge posted September 4th
• 90 days counted from October 15th
• Cost Transfer should be transacted on or before
  January 12th
• Original charge posted April 15th
• 90 days counted from May 15th
• Cost Transfer should be transacted on or before
  August 12th

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CT UNDER 90 DAYS - PACKAGE

• Cost Transfer Explanation and Justification Form
  (questions 1 and 2 completed)
• Draft Journal (NOT posted to the GL)
• Copy of Detail Listing of Original Transaction(s)
• Any Other Supporting Documentation

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CT Explanation Justification Form

• Valid explanations should include
• Question 1
• Description of expense being transferred
• - include why and when original charge
  occurred
• Why the expense was originally charged
  incorrectly
• Question 2
• Why expense(s) is allowable on the receiving
  account
• - direct benefit to the receiving account

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CT Explanation Justification Form

• Would an outside auditor reviewing the Cost
  Transfer Explanation Justification Form 3 years
  from now understand the cost transfer ?

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CT UNDER 90 DAYS Sample Journal
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COST TRANSFERS UNDER 90 DAYS

• Exercise 1.1
• Would you approve the Cost Transfers handed out?
• If not, why not?

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COST TRANSFERS OVER 90 DAYS
Prepare draft journal entry in the description
field refer to Related Cost Transfer form
Complete form Answer all FOUR questions and get
signatures
Send the documentation to FOA who will approve
and forward to OSR
OSR approves and returns to preparer for posting
to GL and retention
20
COST TRANSFERS OVER 90 DAYS

• Cost transfers made after 90 days of the 15th of
  the month following that in which the original
  charge was recorded
• Transferred by journal entry at departmental
  level
• Accompanied by the Cost Transfer Explanation Form
  with questions 1 - 4 answered and signed as
  indicated
• Journal description See related Cost Transfer
  form
• Documentation sent to FOA for review and approval
  
• Forwarded by FOA to OSR for signature
• Returned by OSR to originator for posting to GL
  and retention with other accounting records

21
COST TRANSFERS OVER 90 DAYS

• Cost transfers made more than 90 days after the
  15th of the month following that in which the
  original charge was recorded
• ONLY GRANTED IN EXTENUATING CIRCUMSTANCES

22
COST TRANSFERS OVER 90 DAYS

• NOT EXTENUATING CIRCUMSTANCES
• Absence of
• Principal Investigator
• Responsible administrator
• Shortage of staff
• Lack of experience of staff

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COST TRANSFERS OVER 90 DAYS

• Examples of extenuating circumstances
• NOTE THAT ALL CT FORMS REQUIRE SUPPORTING
  DOCUMENTATION
• Late issuance of an Action Memo (45 day limit!)
• Late issuance of a notice of grant award
• Failure of another department to take action

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CT OVER 90 DAYS - PACKAGE

• Cost Transfer Explanation and Justification Form
  (Questions 1 - 4 completed)
• Draft Journal (NOT posted to the GL)
• Copy of Detail Listing of Original Transaction(s)
• Documentation to Support the Exception (Copy of
  Action Memo, Correspondences with Other
  Departments)
• NOTE Please call OSR/FOA to discuss the CT
  request prior to completing the package

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COST TRANSFERS OVER 90 DAYS

• Exercise 1.2
• Would you approve the Cost Transfers handed out?
• If not, why not?

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SPECIAL CATEGORIES

• Cost transfers that only require a journal entry
• BE SURE TO USE THE NAMING CONVENTION AND NOTE THE
  EXCEPTION IN THE DESCRIPTION FIELD

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SPECIAL CATEGORIES

• Cost transfers made within the accounting period
  of the original charge
• Cost transfers of aggregate expenses totaling
  less than 500

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SPECIAL CATEGORIES

• Cost transfers between subactivities of the same
  fund/activity segment values having concurrent
  budget periods

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SPECIAL CATEGORIES WITHIN 90 DAYS

• Transfer of preaward expenses charged to a
  departmental account
• Routine allocation of costs (e.g., lab supplies)
• Cost transfers to correct transactions to invalid
  code combinations involving the fund and/or
  activity and/or subactivity

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SPECIAL CATEGORIES

• Exercise 1.3
• Do the following transactions require a Cost
  Transfer Form?
• If not, why not?

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UNALLOWABLE CTs

• Situations that DO NOT allow for Cost
• Transfers
• Zeroing Out accounts
• Solve funding problems
• Meet deficiencies caused by cost overruns
• Balancing the budget
• Shifting costs to avoid budget restrictions

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DEPARTMENTAL RESPONSIBILITES

• Ensure compliance with the University Cost
  Transfer Policy
• Complete/enter draft cost transfer journals
• Complete cost transfer package and forward to OSR
  or FOA
• Retain hard copies of all related documentation
  in accordance with applicable record retention
  regulations
• Ensure that all personnel engaged in financial
  administration of federally funded accounts are
  familiar with the University Cost Transfer Policy

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FOA/OSP RESPONSIBILITES

• Be available to assist in interpretation and
  implementation of the University Cost Transfer
  Policy
• Train in the application of the Cost Transfer
  Policy
• Review cost transfers
• Approve cost transfers

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QUESTIONS

• Questions now?
• Questions later
• Min Xiao 432-6281
• min_xiao_at_harvard.edu
• Sarah T Axelrod 432-3284
• sarah_axelrod_at_hms.harvard.edu
• Your OSR contact