Cost Transfers

Policy statement and procedures
Adopted August 2008

Policy Statement

The University will follow the restrictions and requirements of Office of Management and Budget Circular A-21, Cost Principles for Educational Institutions (OMB A-21) and applicable federal regulations with respect to charging direct and administrative costs (F&A or indirect) to federally sponsored projects. 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 A-21 and the terms and conditions of federal sponsors. This cost transfers policy ensures transfers of expenses to sponsored projects conform with federal policies and guidelines.

OMB A-21 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 OMB A-21, 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. (pp. 83-84)

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 nonsponsored 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

1. 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 nonsponsored 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

1. 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 sections 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.
2. 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 sections 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

Additional Contacts

All extensions are tty/voice unless otherwise noted.

• Finance Office (main office, ext. 5299; grants accountant, ext, 5273)

Related Information

External Resources

• NIH Grants Policy Statement

Internal Information

• Direct/Indirect Charging Policy

Definitions

Responsibilities

History

Origination date: August, 2008
Last amended date:
Next review date: August, 2009