The Grants Accountant periodically receives requests for changes among and between budget categories that were approved in the contract and recorded on the project activation form. Flexibility for moving funds between budget categories may or may not be permitted by the funding agency; for example, the following section appeared in a contract with a state agency:
The expenditure of funds made available through this contract must adhere to the line items in the attached budget. The CONTRACTOR may request a budget revision to the contract budget by letter, giving full details supporting such request, and submitting a revised budget summary page in the appropriate form and detail, and such adjustment may not be made without prior written approval of the STATE.
It is recognized that the principal investigator/project director needs flexibility in managing project budgets for optimum utilization of funds. In addition, this flexibility would encourage the appropriate expenditure of all project funds in meeting the project objectives.
In view of the importance of managing projects within approved budgets, requests for budget changes should, if possible, be anticipated in advance and a determination made (by the Office of Research) if the funding agency must approve the changes. Approval will be based on the request meeting one or more of the following criteria:
1. If the contract is specific on the issue of moving funds between budget categories, prior approval is to be obtained from the funding agency.
2. If the contract is silent, a maximum of ten percent (10%) change from a budget category may be internally requested through the Office of Research provided that the justification is given by the principal investigator/project director. (Although this is a somewhat standard practice, this procedure may not be approved by the state auditors. A sound justification, in writing, for the change with approval of the principal investigator/project director may preclude receiving an audit finding).
The financial management of non-defense federal funds on non-construction awards may be governed either by OMB Circular A-21, "Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions," OMB Circular A-110, "Grants and Agreements with Institutions of Higher Education, et al.," Federal Acquisition Regulations (FAR), or the Education Department General Administration Regulations (EDGAR). Furthermore, each individual federal agency may have its own contract terms and conditions. In the absence of specific contract requirements, "Subpart C Post-Award Requirements" from OMB Circular A-110 may be helpful for financial management of projects as applied to Tennessee Technological University.
Non-government funding agencies have their own policies regarding transfer between budget categories; for example, Martin Marietta Energy Systems, Oak Ridge, requires all changes in budget categories to be requested, preferably in advance. If a letter of approval is not on file, it is possible an audit finding will be made.
If a change in a budget is requested, the Request for Budget or Program Revision form is to be completed and submitted to the Office of Research for review. Review of the budget revisions will take into consideration the original intent of the project; how the budget revision(s) will support the goal(s) of the project; and if the revision is reasonable, allocable, and allowable (see policy on Direct Costs). In the event the request is declined, the principal investigator/project director will be requested to review the budget in line with the project goals/objectives.
A request for changes in budget categories will be initiated by the Office of Research to the funding agency's contract division. A request for a budget revision may be denied by the chair, dean, or Office of Research if any of the following occurs:
- Lack of accurate and complete accounting information.
- Insufficient backup documentation.
- Lack of necessary and sufficient justification.
- Lack of appropriate approvals.
- Insufficient funds to cover transfer of expenses. The awarding agency may also restrict the transfer of any funds that would be used for purposes other than those consistent with the original intent of the award.
- Insufficient lead time per agency requirements.
The Office of Research will communicate the agency’s response to the principal investigator/project director.
Updated March 2, 2012