Cost Transfers

Policy statement and procedures Adopted August 2008

Policy Statement

Gallaudet University has established the following policy and procedures for the processing of cost transfers to comply with the requirements of the of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) and federal agency policies and procedures.

A cost transfer (CT) is a journal entry that transfers an expense onto/off a federally-funded sponsored award that was previously recorded elsewhere on Gallaudet’s General Ledger (GL) and requires institutional approval before it can be posted to the GL. All errors in the allocation of direct costs to sponsored agreements must be identified, corrected, and documented in a timely manner.

Reason for Policy

As a recipient of federal funding, the University is responsible for establishing policies that ensure compliance with the requirements of OMB Uniform Administrative Requirements and the terms and conditions of federal sponsors. This cost transfer policy ensures transfers of expenses to/off sponsored projects, conform with federal policies and guidelines.

In accordance with OMB, it is necessary to explain and justify transfers of charges onto federally funded sponsored awards, when the original charge was previously recorded elsewhere on Gallaudet’s GL. Timeliness and completeness of the explanation of the transfer are important factors in supporting allowability and allocability in accordance with federal requirements.

The Uniform Guidance states, “Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience” (Sec. C-4). To meet allowability and allocability requirements of the Uniform Guidance, timely and complete justification is required.

In addition, the National Institutes of Health (NIH) Grants Policy Statement says:

Cost transfers to NIH grants by grantees…should be accomplished within 90 days…. [T]ransfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the grantee…. An explanation merely stating that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient. Transfers of costs from one project…to the next solely to cover cost overruns are not allowable.

Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42, and must make it available for audit or other review. The grantee should have systems in place to detect such errors within a reasonable time frame. Untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both.

Roles and Responsibilities

Principal Investigators (PIs) take primary responsibility for ensuring compliance with federal regulations as well as the monitoring of expenditures, timely correction of errors, and proper allocation of expenses.

Departmental and Research Administrators (individuals responsible for account monitoring/management) assist PIs in the timely review and reconciliation of expenditures, prepare cost transfers and maintain adequate documentation of questionable costs, and ensure that all personnel engaged in the financial administration of federally funded sponsored awards are familiar with this policy; ensure that the costs transferred are allocable, allowable, and reasonable, prepare and submit timely approved cost transfer form, and retain copies of all related supporting documentation in accordance with the University record retention regulations; responsible for obtaining “authorized approver ” signature for all expenses under 90 day cost transfer if granted. If a cost transfer is rejected, it is the responsibility of the Departmental and Research Administrator to ensure that the cost is removed and assigned to a non-sponsored account in a timely manner.

Authorized approver(s) have the authority to sign under 90 day cost transfers. These individuals are the PI and Co-PI. In the absence of a PI authorized approver, this responsibility shifts to the PI’s dean/chair. Post Award officials provide oversight and are responsible for ensuring that PIs, Research and Departmental Administrators abide by this policy and accompanying procedures when processing cost transfers. University Controller is responsible for the approval of all over 90 day cost transfers before submission to Post Awards.

Finance Office (Post Awards) is responsible for maintaining the policy and accompanying procedures, addressing questions regarding the policy, approving over 90 day cost transfers, and approving under 90 day cost transfers.

Individuals preparing cost transfers should first contact their Departmental or Research Administrator with any questions regarding this policy or its application. This will ensure that administrators are aware of cost transfer questions and consistent guidance is provided.

Procedures

The University will identify and correct errors in allocating direct charges to sponsored agreements in a timely and consistent manner as well as provide proper documentation of these transfers.

To be transferred to a sponsored agreement, a cost must be allowable and directly related to that sponsored agreement. Transfers based on funding considerations (i.e., funds remaining at the close of the agreement) are prohibited. In the event an expense is determined to be unallowable or unallocable to the project, the expense must be transferred to a non-sponsored account immediately.

For further information on determining allowable and unallowable costs, see the Direct/Indirect Charging policy.

Post-Award

The classifications of post-award cost transfers and their procedures are as follows:

Cost Transfer Form Not Required

• Cost transfers requiring only an explanation in the journal entry support. The explanation maybe in the form of an email or other correspondence from the PI.
  • Cost transfers of aggregate expenses totaling less than $200
  • Cost transfers within 90 days for the transfer of pre-award expenses charged to a non-sponsored project in anticipation of sponsored funding (if allowed by sponsor)
  • Cost transfers within 90 days for the correction of data entry errors made while processing the original charge.

Cost Transfer Form Required

• Cost transfers within 90 days For cost transfers processed within 90 calendar days from the date of the original charge, the following procedure will apply:
  • If the transfer is to a federally sponsored project and does not meet the criteria outlined in section 1 above, the PI will prepare and approve a Cost Transfer form.
  • The approved Cost Transfer form will be submitted to the Finance Office for review and approval. Once approved, the Finance Office will prepare a journal entry to process the transfer.
• Cost transfers over 90 days For cost transfers processed more than 90 calendar days from the date of the original charge, the following procedure will apply:
  • If the transfer is to a federally sponsored project and does not meet the criteria outlined in section 1 above, the PI will prepare and approve a Cost Transfer form.
  • Cost transfers 90 calendar days from the date of the original charge require the signature of the appropriate dean and the University controller.
  • Supporting documentation (emails, copies of award notices and other correspondence) must accompany the Cost Transfer form.

Requests to process cost transfers over 90 calendar days from the date of the original charge will be approved only in extenuating circumstances. These circumstances do not include administrative oversight, staff shortages, PI unavailable, etc. These transfers will be reviewed and decided on a case by case basis.

For further information on salary cost transfers, see the Effort Certification policy.

Forms/Instructions

• Cost Transfers

Related Information

External Resources

• NIH Grants Policy Statement

Internal Information

• Direct/Indirect Charging Policy

Definitions

Terms	Definition and Examples
Allowable costs	“Costs that are (a) reasonable; (b) allocable to sponsored agreements under the principles and methods outlined in OMB A-21; (c) given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) conform to any limitations or exclusions set forth in OMB A-21 or in the sponsored agreement as to types or amounts of cost items” (OMB A-21, Sec. C-2). Example: A piece of equipment required to conduct the study is an allowable cost to the project, but entertainment costs are not.
Authorized budget	Each project has a budget approved by the sponsor and the University. This is a target document indicating intended categories of fund expenditures. Depending on the sponsor’s award provisions, it may be modified, as required, in the course of project performance. Some sponsors have restrictions as to the kinds and amounts of modifications that may be made in the budget.
Direct cost transfer	Cost transfers are defined as after the fact re-allocations of costs, either labor or non-labor, to a sponsored project.
Direct costs	“Those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy” (OMB A-21, Sec. D-1). Example: Travel is normally charged as a direct cost to a project.
Effort reporting	Process used by the University to comply with federal regulations that require the University to certify time spent and salary charged to a sponsored project.
Reasonable costs	“A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made” (OMB A-21, Sec. C-3).
Unallowable costs	“Unallowable cost means any cost which, under the provisions of any pertinent law, regulation, or sponsored agreement, cannot be included in prices, cost reimbursements, or settlements under a sponsored agreement to which it is allocable” (CAS 9905.505). These unallowable costs cannot be included in the budget. Example: Entertainment costs on federally sponsored projects are unallowable costs.

Responsibilities

Role	Responsibility
Principal investigator (PI)	Ensure the appropriateness of all charges on sponsored projects. Ensure the consistent application of direct costing practices to his/her federally sponsored projects. Prepare proposal budgets, justify expenses, charge costs, track expenses and prepare Cost Transfer form, if required.
Department head	Establish effective processes and controls to ensure compliance with this policy. Communicate these practices to all responsible employees within the department.
Dean/Provost	Establish effective processes and controls to ensure compliance with this policy. Communicate these practices to all responsible employees within the departments.
Finance Office	Establish effective processes and controls to ensure compliance with this policy. Train PIs on appropriate charging and reviewing of costs. Establish sponsored projects and cost-sharing accounts in the University’s financial system. Ensure the appropriateness of all charges on sponsored projects. Ensure the consistent application of direct costing practices to their federally sponsored projects. Ensure appropriate documentation exists on cost transfers.
Vice President of Administration and Finance	Establish effective processes and controls to ensure compliance with this policy.

History

Origination date: August 2008 Last amended date: May 2020Next review date: