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The federal government requires that the university, as a recipient of federal monies, processes any necessary cost transfers/accounting corrections within 90 days of the original transaction date. To ensure that we were compliant, the University has operated under the 60 day rule. which required accounting corrections be made within 60 days of the original transaction entry date. This provided a grace period to make corrections, that were absolutely necessary, up to 90 days, as required under Uniform Guidance. After conversations with the Chief Financial & Administrative Officers group, this rule is being amended to allow up to 90 days to make an accounting correction (also known as a cost transfer under Uniform Guidance) and will take effect on April 1, 2023. Therefore, if you submit corrections after 90 days occur, there is a high probability they will be denied for processing.

Definition

A cost transfer (aka accounting correction) is defined as an expense that is transferred from one account to another after the expense was initially recorded in the financial accounting system. The 90 days is measured from the effective date in the General Ledger and the Exp PA date in Grants Accounting.

JET; JET Documentation; and OBI Changes

Both JET and the JET documentation will be updated for this change April 1, 2023. JET changes go live on the evening of March 31, 2023.

JET CHANGES – YOU MUST DOWNLOAD A NEW TEMPLATE!!!!!!

JET has been updated as follows:

For Correction journals the screen has a new field (Original PA Date) and we changed the other Correction field and help text from 60 days to 90 days, please see below:

If you are correcting a Grants transaction, you will need to key both the Expenditure Item Date of the original transaction as well Original PA Date (both dates are available in OBI).  The Expenditure Item Date from the original transaction tells us when the charge was incurred (e.g., Invoice Date, date of service on Internal Charge, etc.), while the Original PA Date tells us when the transaction posted to the grant.  In calculating the need for a 90 day correction reason, it is based on the Original PA Date (when the transaction was posted to the grant).  The Expenditure Item Date will be used in posting the correction JE, so there is an audit trail from the original charge to the correction entry.

The JET template has also been modified to add the ORIGINAL PA DATE in column Q. 

Finally, we added the new field to the Lines Display:

Basis for Cost-Transfer Requirements

Project sponsors expect the grantee institution to establish and maintain adequate financial management practices and policies so that costs are appropriately charged at the time incurred and significant adjustments are not generally required. These rules must apply across the board, regardless of funding source. This means that we cannot have one rule in place for federal awards and another rule in place for other sources of funds.

The federal government has established policies concerning the assignment of costs to federally sponsored agreements, including the general government policies outlined in the  as well as federal and nonfederal agency-specific policy requirements.

To comply with the cost allowability and allocability requirements outlined in the , the institution must be able to explain and justify all charges transferred onto federal awards, whether the costs are transferred from some other federal account, a non-federal account, or a University account. Any necessary cost transfers should be completed in a timely manner and with a complete explanation, as these are, per the principles outlined in the , critical factors in supporting allowability and allocability.

Exceptions to the 90 Day Rule

However, there are some exceptions to the 90 day rule that may be approved for a cost transfer after the 90 days and include:

• Overspent accounts that need to be cleaned up: Grants, Internal Awards, Student organizations, and OUF. These are accounts that cannot be overspent because they have a set amount of funding. However, departments are required to have practices in place to regularly monitor these accounts and ensure that corrections are made within 90 days. This keeps the account in compliance with both the restrictions and the funding available.
• Unallowable costs: 
  • Charges to Foundation accounts that are an unallowable cost per gift agreement. If the gift agreement does not allow the charge, it must be removed from the account to remain in compliance with the gift agreement.
  • Charges to OU accounts that are unallowable (i.e., alcohol) and need to be moved to a source of funds that allows the charge. Charges to OU accounts that unallowable are driven by external requirements imposed on the University, usually by an external governing entity (such as the State of µÛÍõ»áËù).
  • No time limit exists for removing expenditures from a sponsored project account. If inappropriate expenditures are discovered on sponsored project accounts, they must be moved to a non-sponsored departmental account without regard to time limits.
• We recognize that transfers of costs from one sponsored project account to another are occasionally necessary to correct bookkeeping or clerical errors in the original charges. The University also recognizes that closely related work may be supported by more than one funding source and that in such cases, a transfer of costs from one funding source to another may be proper. However, frequent, delayed, or unexplained cost transfers, particularly when they involve projects with cost overruns or unexpended fund balances, raise serious questions about the propriety of the transfers themselves as well as the overall reliability of the University's accounting system and internal controls.
• Object code corrections on capital /noncapital equipment determined during tagging process. If you are unsure that you are purchasing capital equipment please visit the website Equipment Inventory for definitions of capital equipment and the correct object codes to charge. You can also review this Business Matters article on how to select the proper object code to charge. Failure to record to the proper object code could result in an audit finding for the University, so it is imperative that capital equipment is charged to the proper object code. Object codes help us correctly identify and apply the proper accounting treatment for capital equipment and this is audited every year by our external auditors.
• Clean up of functions or object codes (ex., charged to financial aid object code and is not an appropriate charge against a financial code or lease object code corrections). Functions and object codes drive the creation of the University external Financial Statements. So, if something is discovered as incorrect and will impact the financial statements it may need to be moved. That is why it is critical that departments have processes in place to review their transactions in a timely manner and get corrections in place if things are recorded in the wrong function or object code. If you have questions about the proper function, please reach out to General Accounting & Financial Reporting for assistance.
• If a department has charges that must be placed on a grant account prior to the award receipt, the department should setup a Departmental Guarantee Memo (DGM) with the Office of Research and Sponsored Programs. This allows the department to secure an account for spending, hiring, graduate student contracts, etc., prior to an award receipt. The department guarantees to cover the expenditures incurred, in the event the sponsor rejects the proposal or denies the expenditures. There are two types of DGM:
  • Pre-award account – spending 90 days prior to the award start date under expanded authority with sponsor approval.
    In some cases, grantors will allow the University to incur expenses on a grant before the actual start date, generally referred to as pre-award account. Under the expanded authorities granted to the university by some funding agencies, they will allow 90-day pre-award expenditures when the ORSP has prearranged prior approval.
  • At-risk-account – spending prior to receipt of the award or increment. ORSP recommends a DGM when there are activities and/or costs incurred prior to the award or increment receipt (at risk award), provided there is high expectation the award is forthcoming. The department assumes the financial risks and the Principal Investigator will not perform any compliance activities without approval (i.e., IRB, IACUC, etc.). The ORSP also recommends a DGM when the award has been received, but due to extenuating circumstances (e.g., compliance hold), the ORSP is unable to forward the award to Grants Accounting for setup.
  • To see more about how to setup a DGM, please visit: /°ù±ð²õ±ð²¹°ù³¦³ó/´Ç°ù²õ±è/²¹·É²¹°ù»å-²¹»å³¾¾±²Ô¾±²õ³Ù°ù²¹³Ù¾±´Ç²Ô/»å±ð±è²¹°ù³Ù³¾±ð²Ô³Ù²¹±ô-²µ³Ü…

Reasons that accounting corrections will not be processed include:

• Individual responsible for corrections has been out of the office for an extended time (i.e., leave). This is a not a legitimate reason for a cost transfer to happen late. Departments need to ensure that there is appropriate backup for people responsible for making accounting corrections within the 90 days.
• Training new people. While we understand that departments experience position turnover, training a new person is also not a legitimate reason for completing accounting corrections beyond the 90 days. So please ensure that as you are training new individuals, and that you have procedures in place to review transactions and get any necessary corrections made within the 90 day requirement.
• For grant accounts: Cost transfers that are made only for the intention of spending down sponsored project funds or as a matter of convenience are not allowed. Expenses transferred to a sponsored project account are very prone to audit and must be clearly supportable. Transferring costs because of a deficit or other reasons of convenience is not appropriate. Any shared costs should be pro-rated among the applicable accounts at the time the costs are incurred to the maximum extent possible. Charging costs to one sponsored project with the intent of repaying that sponsored project when an award is received is also not appropriate.
• Accounting corrections older than 90 days and the justification reason is not sufficient to make the correction.

Justification for Cost Transfer (aka Accounting Correction)

Any cost transfer or accounting correction should be supported by documentation that fully explains how the error occurred and if moving charges on grant accounts, a certification of correctness of the new charge by a responsible organizational official (for grant accounts) is required. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.

Payroll Accounting Corrections

Payroll Accounting Corrections must also follow the 90 day rule. Payroll corrections submitted after 90 days will not be processed.

Note about Internal Billings and External Billings

The 90 day rule does not apply to internal and external billings. Internal and external billings are to be completed within 30 days of the service date. This ensures that accounts are charged and revenue is recognized in a timely manner for services rendered or goods purchased.

Note about Student Tuition and Fee Assessments

The 90 day rule does not apply to student tuition and fee charges. Student charges are to be assessed within 30 days of the service date or within the first 30 days of the semester, whichever is later. This ensures that revenue is recognized and bills are issued to students in a timely manner. Students also need sufficient time to secure financial assistance, if needed.

Note about Fiscal Yearend Corrections – Do not have 90 Days to Complete Corrections

During fiscal yearend, corrections for the fiscal year being closed MUST BE MADE before the close of the fiscal year. Corrections for prior fiscal years will not be allowed after the fiscal year has been closed. This means that you will not have 90 days to complete accounting corrections for yearend close due to the close calendar and the necessary completion of the external financial statements. You can view the Finance Calendar for important due dates related to yearend accounting corrections at Finance Calendar.

Grant Accounts that May Have Less than 90 Days for Cost Transfers At Any Point During the Fiscal Year

Depending on sponsorship requirements and the final invoicing/financial report due dates on grant accounts, cost transfers may need to be completed in less than 90 days so the sponsor can be properly billed/financial reports filed and the award closed out after it has ended. Departments will need to ensure that they have processes in place to have charges placed on grant accounts within the required due dates associated with the particular sponsor requirements (which can vary from grant to grant). Failure to place charges on grant accounts in a timely fashion (and as required by the sponsor)  may result in charges being denied for reimbursement by the sponsor.

Questions?

For questions about cost transfers/accounting corrections involving grant accounts, please contact Grants Accounting by emailing financecustomercare@ohio.edu

For questions related to accounting corrections on other university accounts please contact financecustomercare@ohio.edu and your ticket will be assigned to General Accounting & Financial Reporting for guidance.

For questions related to Foundation accounts please contact oufacctg@ohio.edu.