The purpose of this policy is to establish uniform procedures for identifying and reporting deviations from the proposed budget on sponsored projects in accordance with Office of Management and Budget (OMB) Circular A-110 Section 25, OMB A-133, and agency specific guidelines.
This policy applies to all Principal Investigators/Project Directors (PI/PD) revising their sponsored program budgets.
The University of North Carolina at Asheville is required to report deviations from budget and program plans, and request prior approvals for budget revisions.
Allocable – A cost is allocable to a project if goods and services involved are chargeable or assignable in accordance with the relative benefits received by the projects. In order to be allocable a cost must be treated consistently in like circumstances.
Allowable – A cost is allowable to a project if: (1) the costs are reasonable; (2) the costs are allocable to the specific project; (3) the costs are treated consistently in like circumstances; and (4) the costs conform to any limitation of the cost principles or the sponsored agreement.
Budget Revision – Budget adjustment are to reallocate funds from one budget pool to another to reflect the requirements of the project.
Cost Management Strategy – This is a budget adjustment created by lowering costs associated with a project. These strategies may include renting rather than purchasing equipment, using travel miles to lower airfare, hiring an undergraduate assistant rather than a research assistant, etc.
OMB Circular A-21 – Established principles for determining costs applicable to grants, contracts, and other agreements with educational institutions.
OMB Circular A-110 – Standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations.
OMB Circular A-133 – Standards for obtaining consistency and uniformity among Federal agencies for the audit of states, local governments, and non-profit organizations expending Federal awards.
Reasonable – A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflects the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.
A budget revision is an after-the-fact reallocation of the cost associated with a transaction from one account to another account(s). It is the expectation that all PDs/PIs and their supporting administrative staff understand the importance of reviewing their research accounts on a regular basis to ensure that costs are being allocated to the correct funding source initially, and that all costs charged to a funding source are appropriate and correct. It should be noted that when good faith attempts are made to allocate costs to their appropriate funding source initially, the need for cost transfers should be minimal.
Transferring costs between funding sources will only be allowed if the transfer is in accordance with institutional policies and is also fully compliant with all contractual terms and conditions, agreements and external regulations and guidelines. All cost transfers to and from sponsored projects must also meet the cost consideration requirements defined by the National Institutes of Health (NIH) Grants Policy Statement and OMB Circular A-21.
Cost transfers should be processed as soon as possible after the original transaction, but in any case not later than 90 days after the date of the original transactions. Transfers made after this period of time raise questions concerning the propriety of the transfer and could potentially heighten the level of scrutiny applied to all cost transfers college-wide. Requests for transfers made after 90 days will be considered only under extenuating circumstances. The UNC Asheville Finance Office is obligated to immediately remove and correct any incorrect charges made to sponsored accounts, regardless of time frame.
Cost transfers are appropriate when they are reasonable, allocable, allowable, and consistently applied direct costs of the sponsored project. Typically the purpose of cost transfers is to correct errors in processing the original charges, move costs between accounts for closely related work that is supported by more than one funding source, or to transfer pre-award costs in accordance with the provisions of OMB Circular A-110. At no time should federally funded accounts be used as holding accounts for expenses that will subsequently be transferred elsewhere, including two competing continuations of the same project for which the notice of award or the new account number has not yet been received.
Cost transfers may be appropriate in the following circumstances:
- Cost transfers to correct clerical errors
- Cost transfers to reallocate effort to reflect actual charges
- Cost transfers for the removal of unallowable expenses
- Cost transfers for the allocation of costs benefiting more than one project
- Internal cost transfers between non-sponsored accounts
- Cost transfers of out-of-period charges
Inappropriate circumstances for cost transfers include, but are not limited to, the following:
- Cost transfers used as an inappropriate cost management strategy
- Cost transfers between sponsored projects to avoid or eliminate cost overruns
- Cost transfers for any other reasons of convenience
- Cost transfers solely for the purpose of utilizing unexpended funds of a sponsored award
- Cost transfers that circumvent pre- and/or post-awards restrictions
C. Procedure to Request Revision of Budget
1. The PI/PD or their designee completes an Internal Prior Approval Request (IPAR) form:
a. The justification for the budget revision must answer the following questions (can be part of the PI/PD’s agency’s budget revision request):
i. Why are there funds available for rebudgeting?
ii. Why is this change necessary for the project?
iii. How will the funds to be used?
iv. Attach agency approval to modify the original budget.
v. Sign the IPAR and forward to the first line supervisor.
2. The first line supervisor will review the IPAR and either approve or deny the proposed budget change. The IPAR is then forwarded to the next supervisory level above the first line supervisor.
3. The next supervisory level will review the IPAR for the final time and either approve or deny the proposed budget change. Approved IPAR’s are forwarded to the Special Funds Accountant.
i. Review the documentation for appropriateness.
ii. Process the IPAR.
iii. Notify the PI when the budget revision is accomplished.
iv. File the IPAR in the PI/PD’s program file.