Hi Heather,

Is University of Idaho on cash-basis accounting? UArizona is, and so far we have been able to explain this by stating since we are cash basis, the expenses are incurring the F&A in effect at the time of the the actual posting to the project.

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In a recent NSF audit our entity was cautioned because we had costs that were incurred in one rate year, but ended up being cost transferred in a different rate year and therefore used the “incorrect” F&A rate based on the original transaction date (we have a tiered rate NICRA). I’m wondering whether this has come up in anyone else’s audits and if so how it was resolved. Issues with this finding:

1. I’m pretty sure that everyone’s financial system charges the F&A as of the posting date, so if you have a tiered upward rate any delayed invoices or payroll processing those costs are going to charged at the rate in effect in your system at the time the transactions post. We pay on a two-week lag here.
2. For non-standard transactions such as cost transfers there will be both delayed credits and delayed debits to expenses. Given that cost reviews generally happen after the fact I would guess that the credits are more frequent than the debits and therefore for a tiered upward rate the overall benefit might be to the sponsor rather than to the institution.

I’m concerned that this could potentially become a larger issue for everyone, so again, if you have successfully resolved for a finding such as this I would love to know about it.

Thank you.

Heather Nelson, Associate Director

Office of Sponsored Programs

University of Idaho

(208) 885-6680

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