Cost Transfer Policy and Procedures
Responsible Offices: Sponsored Projects Accounting
Effective Date: updated February 2024
A Cost Transfer is the reassignment of an expense to or from a sponsored project after the initial charging of the expense in Workday (WD). Cost Transfers include reassignments of salary, wages, and other direct costs. Cost Transfers do not include reclassification transactions within the same sponsored award (ie: from one GR# to another GR# under the same AW#). The purpose of this policy is to ensure compliance with federal policies and guidelines related to the transfer of expenses. This policy is applied to all sponsored projects.
Policy
Cost transfers must be sufficiently documented in accordance with the provisions of the Office of Management and Budget (“OMB”) as part of 2 CFR Part 200, Subpart E (Uniform Guidance). These provisions require the University to relate financial data to performance data and to ensure such data is accurate, current and complete. These standards also require that accounting records include cost accounting records which are supported by source documentation. This documentation will assist in determining the reasonableness, allocability and allowability of the cost in accordance with the terms and conditions of the award.
The University expects that all costs, regardless of source of funds, are charged correctly at the outset. Sponsored award charges must be in accordance with the sponsor’s terms and conditions and applicable regulations. For federally funded sponsored projects, the following regulation and conditions apply, unless otherwise stated in the award:
Under the Uniform Guidance, costs must meet the following conditions:
- Be necessary and reasonable for the performance of the award and be allocable to the award;
- Be allowable (the cost is allowed by federal regulations, sponsor terms and conditions, including program specific requirements and University policy);
- Treated consistently (a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost);
- Be adequately documented.
The Uniform Guidance also states that any cost allocable to a Federal award may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by regulations of terms and conditions of the Federal award, or for other reasons. Listed below are inappropriate reasons for cost transfers:
- Cost transfers solely for the purpose of transferring overruns or deficit balances
- Cost transfers solely for the purpose of utilizing unexpended funds of a sponsored award
- Cost transfers for any other reasons of convenience
The PI or their designee should contact and consult with SPA in advance of processing a cost transfer if it would affect one of the following situations:
- A final/interim financial report has been previously submitted to the sponsor
- A carryforward request is required/pending with the sponsor
- A final invoice has been submitted to the sponsor
Note: If the sponsor refuses to accept the revised report/invoice, then the department will have to reverse the PAA/journal and absorb that cost.
Faculty and staff are responsible for ensuring that Cost Transfers are processed in a timely manner. Cost Transfers should be prepared and submitted within 90 days from the date of discovery (per NIH Grants Policy Statement section 7.5). In cases when the sponsor’s (federal or non-federal) terms and conditions relating to the timing of Cost Transfers are stricter than this policy, the sponsor’s terms and conditions are applicable and supersede this policy. Note: The Department of Health and Human Services (e.g., funding from HRSA, CDC, AHRQ…) grants policy requires cost transfers to be made promptly after the error occurs but no later than 90 days following occurrence unless a longer period is approved in advance by the GMO.
Procedures
Cost Transfer/Correction Journals (non-personnel)
Departments should initiate timely cost transfers in Workday (WD) via Accounting Adjustment and Manual Journal entry transactions. The department should add the following information to the Memo Field on both the Accounting Adjustment and Manual Journal that fully addresses all of the following:
- Description of the expense being transferred, including the original date incurred, original paid transaction number (e.g., EX0001234) and date of discovery
- Explanation of how the error occurred on the wrong award/cost center
- Explanation of why it is appropriate to charge the receiving award/cost center
Note: Supporting documentation should be maintained/attached as necessary.
Salary (personnel) Cost Transfers
For transfers of salary charges, the department should process a Payroll Accounting Adjustment (PAA) transaction in WD. On the PAA, the user should select the appropriate “Change Reason” and then provide a full explanation (see bullets above) and the date of discovery in the Cloud Comment field in addition to any other required documentation.
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. All transactions on Sponsored Awards should be authorized by the Principal Investigator or a delegate who has direct scientific knowledge of the project being charged.
Grant managers and Department managing units (individuals responsible for account monitoring/ management) assist PIs in the timely review and reconciliation of expenditures, prepare/approve cost transfers in WD, maintain adequate documentation of 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, and are prepared and submitted a timely manner.
Sponsored Projects Accounting is responsible for maintaining the policy and accompanying procedures, and addressing questions regarding the policy. They will review and approve/disapprove cost transfers on Awards/Grants based upon the information provided on the corresponding WD transaction.
Please contact Sponsored Projects Accounting directly if you need additional information regarding cost transfers.