An accounting adjustment must be used if an expense posted to the grant worktag is unallowable per the terms of the award agreement. GIM 15 outlines the policy for accounting adjustments on sponsored program awards.
A deficit transfer is appropriate when all expenses are allowable and total expenses exceed the award amount or the amount of cash received from the sponsor.
Deficit transfers and accounting adjustments both pose audit risks to the University of Washington:
- Deficit transfers can indicate that an award may have been mis-managed when overspending occurs
- Accounting adjustments can represent an audit risk for the University
- Multiple transfers indicate continuous errors
- Transfers of expenses after 90 days from posting indicate reconciliation issues and potential internal control weaknesses