Cost transfer is a process whereby any expenditure improperly assessed to a sponsored project account is transferred to the correct account. It is the responsibility of the PI to make sure transfers are made promptly after the error is discovered and within 120 days of the original charge unless close-out requirements necessitate a shorter period of time. PIs should contact the Grants & Contracts Business Manager.
Retroactive cost transfers represent one of the most common areas for audit disallowance. Reference Federal Regulations 2 CFR 200 for the complete definition of improper cost transfers.
RAE provides notices of upcoming end dates at 90-60-30 day intervals prior to the end of a project along with Information Navigator report RAE000018 Grants Ending Within 30/60/90/120 Days. Upon receipt, it is the responsibility of the Principal Investigator (PI) to notify RAE of any required requests for modification. A no-cost extension occurs when a PI requires more time, but not additional funds, to complete a project. The purpose for the extension should be to benefit the successful completion of research goals.
Many FDP grants and Expanded Authority grants are allowed one no-cost extension of up to 12 months without the sponsor's prior approval. However, RAE must provide formal notification to the agency.
If the grant has already had one no-cost extension as an option under Expanded Authority, requests based on additional justification for further no-cost extensions must be submitted to the sponsor through RAE. Most requests should be sent well in advance of the project ending date as some agencies require such requests be made 30 days prior to the project end date; therefore, the internal notification of the anticipated extension is requested no less than 45 days prior to the performance end date. The PI should justify the need for an extended period in scientific terms and should give a projected budget for the extension period. Please note that this is an average requirement. Some agency award terms and conditions require as much as 90 days notice of a request for a no-cost extension. Refer to the specific terms of the award for this requirement.
Advance Budget Authorizations
There are two types of special advances available to investigators through RAE:
1. Pre-Award Costs
Some federal grants that will be awarded under the Federal Demonstration Partnership (FDP) or other Expanded Authority Terms and Conditions allow pre-award spending within the 90 day period immediately preceding the grant’s effective date. Federal grants require the federal agencies' prior approval. To request RAE’s approval for pre-award spending, an investigator must submit a completed Temporary Authorization for Advanced OR Post-Award Account Expenditures to RAE. Pre-award costs are approved only when pre-award spending is necessary for the effective and economical conduct of the project.
Requests for pre-award costs should be made prior to the receipt of the grant. It must include a narrative explaining why the period of performance needs to begin early, a pre-award budget, and the pre-award start date. This request guarantees that the PI, department, center or college will cover all expended costs if for any reason the award is not made to the university or pre-authorized expenditures are disallowed. Approval of this form by the PI, department chair/center director, and college dean/VP or other authorized officer commits funds which are being used as the guarantee. The provost or designee has final approval for all temporary extensions.
2. Temporary Extension of Unexpended Funds or Additional Release of Funds by Agency
Investigators sometimes experience difficulties in starting or continuing personnel appointments when an award is assured or a funding release is anticipated but the arrival of the award documentation is delayed. RAE normally processes a temporary release for no more that 30 days at a time based on continued supporting documentation of anticipated award.
To request a temporary extension to an account, an investigator completes the same Temporary Authorization for Advanced OR Post-Award Account Expenditures to RAE. The request must include an anticipated effective start date of the renewal, the amount of unexpended budget to be released or a request for additional funds in excess of the unexpended budget to cover the extension period, and a guarantee statement that the PI, department, center, or college will cover all expended funds if for any reason the award renewal or additional funds is not made to the university. The request must be signed by the PI, department chair or center director, and college dean or division vice-president, if college/division funds are being used as the guarantee. The associate vice president for research will have final approval for all temporary extensions.
Investigators should include as an attachment to the request any correspondence they may have from the awarding agency indicating an award is going to be made to the university.
PIs have first-line responsibility for managing expenditures within the fiscal regulations and amounts specified by the sponsor. If an over expenditure occurs in a grant account, the PI is responsible for covering the deficit from his or her seed account. In the event that the PI is unable to cover the deficit, responsibility for correction then lies with the department or center and finally with the college or division.
If an error is made resulting in an audit disallowance, corrective action will be determined on a case by case basis by RAE with the help, knowledge, and assistance of the PI.
Any error indicating over-expenditure of funds, whether it be by audit disallowance or otherwise, will be met with current or future returned overhead funds or other unrestricted fund; PIs are notified when refunds occur. Refunds to sponsors as a result of an error or if audit disallowance is found should be signed by the PI like any other expenditure of funds.
Institutional Approval of Requests to Modify Budget
Uniform Guidance 2 CFR 200 also provides for federal agencies to allow for rebudgeting of funds under certain conditions without agency approval. These actions may be done internally with review and concurrence of RAE unless prohibited by specific agency or award guidelines which prohibit it. Some conditions which prohibit internal approval and require agency authorization include the following:
- Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
- Change in a key person specified in the application or award document.
- The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or PI.
- The need for additional federal funding.
- The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa, if approval is required by the federal awarding agency.
Prior Approval for Post-Award Changes
When researchers consider rebudgeting or other post-award changes and are uncertain about the allowability of such changes—particularly when such items are not mentioned in the agency or award regulations, cost principles, or other policy documents—they are strongly encouraged to consult in advance with the designated RAE Grants & Contracts Business Manager and Grants Specialist. Some of the most common post-award changes that require agency prior approval are as follows:
1. Changes in the scope of objectives of the grant-supported activities
Significant change in responsibilities or replacement of the approved project director (PI), or other persons expressly identified as key personnel by the agency in the Notice of Grant Award or by the grantee in the application.
Continuation of the project during any continuous period of more than 3 months without the active direction of an approved project director or PI.
Undertaking any activities or expenditures disapproved or restricted as a condition of the award, including restrictions imposed by standard provisions such as cost principles.
A request for additional federal funds, excluding those situations where the need for additional funding results from an increase in the base upon which indirect costs are calculated (because of otherwise allowable rebudgeting actions, such as rebudgeting into the personnel category whereby allocations of indirect costs increase).
The transfer of amounts previously awarded for trainee costs (stipends, tuition, and fees) to other categories of expense. Rebudgeting within the category of trainee costs or into the trainee costs category is allowable without the awarding office's prior approval.
2. Budget Amendments
When a major budget change (as determined by the grantor) is necessary, a letter from the associate vice president (AVP) for research should go to the agency requesting necessary changes in the form of a contract or award amendment. The amendment will reflect the necessity of amendments or internal budget changes (projects under the FDP need only the approval of the AVP provided no change is made to items shown in "Prior Approval" above). When an agency approval for an amendment is required, it usually takes the same period of time as request for a no-cost extension or program change. A 30-60 day period should be planned for the agency response PRIOR to executing the amendment in university accounting records or in committing or authorizing expenditure of funds.
When a contract or award allows for internal budget changes, a budget amendment/transfer form should be forwarded to RAE with the proper signatures and justification for transfer for approval and processing.
3. Budget Revisions
Reallocations within awarded budgets are usually possible, but the sponsoring agencies have different restrictions on deviations from the approved budget. The National Institutes of Health (NIH) and the NSF are among the federal agencies that have granted authority to the University for self-management of certain budget deviations. Requests for budgetary reallocations require the use of the University Budget Transfer form. PIs uncertain of the budgetary restrictions imposed by any particular sponsor should first consult the award document and any of its inclusions by reference. The PI may also consult the Award Summary and Budget Form issued by RAE for that account, or they should consult their department business offices. If Budget Amendment forms are submitted that are deemed to require agency approval, they will be returned to the PI with supporting documentation, or a request for agency authorization will be coordinated with the PI by the RAE Grants Specialist. When an agency approval for an amendment is required, it usually takes the same period of time as request for a no-cost extension or program change. A 30-60 day period should be planned for the agency response PRIOR to executing the amendment in university accounting records or in committing or authorizing expenditure of funds.