Vigilance and Automation Cut Cost Transfers Dramatically
The care and attention of principal investigators (PIs) and grants management professionals, and automations instituted in Workday have combined to help dramatically cut error-correcting cost transfers.
With the completion of the first quarter of FY25, the Business and Finance Division has identified an estimated $165,000 in cost transfers involving federal research grants, one-fourth of the same period last year.
“Only $165,000,” Controller Tara Thomason repeated. “This is amazing. If we stay at that level over the next three quarters, we should fall below the $1 million threshold of materiality for a research university of our size.”
Doing so, Thomason said, could ensure that FY25 is the first year of two successive years of clean uniform guidance audits that we need to move from high-risk auditee status to low-risk status.
In Q1 of FY24, cost transfers for federal research grants exceeded $640,000.
Cost Transfers Reduced by 66% in FY24
Thomason also reported that cost transfers among our federal research awards in FY24 were down 66% from FY23 to $1.4 million. In fact, the majority of those cost transfers, occurred between July 2023 and January 2024 — prior to Business and Finance and the Office of the Vice President for Research launching a host of interventions that clearly have made a difference.
Thomason praised the vigilance of University researchers and GO Center post-award specialists in preventing the types of errors that would otherwise have led to an overload of audit-busting cost transfers.
“We are grateful to our PIs, their research staff and our grants management services professionals for expediting the accurate submission of grant-reimbursable expenses,” Thomason said. “Their attentiveness has made an enormous difference in reducing our cost transfers.”
What Are Cost Transfers?
Cost transfers occur when expenses are posted in Workday to the wrong grant number, or they are posted to the proper grant number with incorrect dollar values or improper expenses. A “late cost transfer” occurs when an expense is posted outside the customary 90-day time window permitted by a federal grant.
In most instances, those errors had not been caught during the earlier steps of assessment, recording, reporting and approval of research expenses — all of which are done prior to posting to Workday.
A new policy and Workday procedure adopted in February 2024 automatically disallows any grant-reimbursable expense from being billed to a research grant if it is submitted more than two months after the last day of the month the original expense was incurred — or no more than 90 days later.
In our FY23 Uniform Guidance Single Audit Report, KPMG found that 63 percent of audited cost transfers were due to them having occurred outside that 90-day window.
FY24 Uniform Guidance Audit is Underway
KPMG will begin its FY24 uniform guidance audit of the research cluster of our federal awards in November. The firm already has begun its audit of Student Financial Services.
“Typically,” Thomason said, “we will have a good sense of our audit status by late January. And we can begin framing our corrective action plans.”
The FY24 Uniform Guidance Single Audit Report is expected to be posted on the federal clearinghouse website by the end of March 2025.