A cost transfer is the moving of a previously recorded expenditure to a sponsored project from another sponsored project or other account. The Uniform Grant Guidance 2 CFR 200 prohibits the transfer of funds from one account to another simply to clear deficits, or avoid restrictions on other accounts, or for other matters of convenience. Care should be taken to properly charge the correct account or project at the time of purchase and payment. However, there are a number of occasions when a cost transfer to a sponsored project would be appropriate.
Examples of acceptable reasons for cost transfers include:
- A clerical error in inputting/writing the account number
- The expenditures actually benefited an account(s) other than the one it was charged to or in addition to the original account
- The expenditure is being moved to a new account that represents a new budget period
- After review of account statements, the expenditure was determined to not be allowable or allocable to the project charged.
Allowability of Expenditures
Awards are given to the University to meet specified goals and objectives. Expenditures to sponsored projects must be incurred to meet those goals and objectives. In addition, expenditures charged to sponsored projects must meet allowability criteria established in the Uniform Grant Guidance 2 CFR 200 as well as University policies. The federal awards require that expenditures charged meet the requirements of the Uniform Grant Guidance 2 CFR 200.
The Uniform Grant Guidance 2 CFR 200 has set forth the following standards to be met for expenditures to be considered allowable:
- The costs must be reasonable - a prudent person would have paid the stated price at the time for the goods or services obtained.
- The costs must be allocable – the benefit to the project of the goods purchased or services obtained is clearly identifiable and assignable.
- The costs must be consistently treated as direct or indirect costs in similar circumstances.
- The expenses must not be specifically disallowed by federal and state policies or by the terms of the award.
Cost Transfer Requirements
Sponsored Projects Administration must approve all cost transfers to sponsored accounts.
All cost transfers must be submitted to SPA in writing. An Accounts Payable Transfer form must be filled out for all non salary transfers and an HR Account Code Transfer form must be filled out for all salary and fringe transfers.
Cost transfers should be processed within 90 days of the month end of the original charge and within 90 days of the end date of the project.
Expenditures involving fiscal accounts should be transferred within the fiscal year in which they were incurred.
Payroll Transfer Request
Cost transfers must be fully justified.
The justifications must:
- Include a description of the expenses being transferred.
- Give detailed information; specify the type of supply don't just say supplies.
- Explain why the charge was originally coded to an incorrect account. Errors must be described in full.
- Just stating to correct an error is insufficient. Describe the error.
- Explain in full how the charge benefits the new project.
- Explain how the supplies were used, etc.
- Explain how costs were allocated between two or more projects, if applicable.
- This is required whenever the full amount of the invoiced amount is not transferred. Explain what the allocation is based on.
- Explain why the cost transfer is late, if the original charge was incurred more than 90 days ago.
- Also indicate what steps have been taken to avoid late detection of errors in the future.
Cost transfers must be fully documented. Supporting documents such as invoices should accompany the request as well as detail of the accounting records showing the original charge. If the request is for a salary transfer from a prior period, a revised effort report must be included. Adequate documentation of cost transfers is required. Even allowable and allocable costs can be denied under audit if the documentation does not sufficiently explain the cost transfer as described above.
The form must be signed by the Principal Investigator and submitted to SPA. SPA will review the request and ensure adequate justification and documentation. The grant manager will review and approve the transfers. The Director of SPA or designee approves any waiver of cost transfer procedures including any transfers requested 90 days or more after the month end of the month in which the charge was incurred. Expenditures must be transferred to an unrestricted account of the PI if the cost transfer is not approved by SPA.
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