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ROWAN UNIVERSITY POLICY

Title:

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Cost Transfer Policy
Subject: Cost

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Transfers
Policy No: OSP: 2015:

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01
Applies: University-wide
Issuing Officer: Senior Vice President for

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Finance and CFO
Responsible Officer:  Vice President for Research
Adopted:

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03/

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13/2015
Last Revision: 02/03/2020
Last Reviewed:

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01/

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14/

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2020

I.     PURPOSE

The purpose of this policy is to To establish guidelines for requesting and performing salary and non-salary cost transfers in sponsored programs that are funded by Federal and State monies.related to sponsored program funds when costs are transferred to a sponsored project that were initially charged to another fund or account

II.    ACCOUNTABILITY

Under direction of the Senior Vice President and CFO for Health SciencesFinance, the Vice President for Research shall provide oversight to the Office of Sponsored Programs Director of Contract and Grant Accounting to ensure compliance with this policy.

III.    APPLICABILITY

This policy applies to all sponsored project(s) whose sponsor is a federal or state agency, department, or entity. This includes any sponsored projects that are passed through a non-federal or non-state entity, whose primary sponsor is a federal or state agency, department, or entity.

This policy applies to all faculty, employees and students of the University and grants and sponsored projects whose purpose of the project(s) is research.

IV. REFERENCES

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Principal Investigators, their designees or delegates, department business administrators, and post award grant analysts or staff that are responsible for ensuring costs are related to the sponsored project and/or who prepare and maintain support documentation associated with the cost.

This policy applies to all journal entries or journal vouchers that are charged to the sponsored project fund or account that was originally charged to another sponsored project or fund.

IV.  REFERENCES

1. Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200 (2 CFR 200) - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal

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1. Awards
2. State of New Jersey Circular 07-05-OMB: Grant Agreements – Agency

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1. Contracts

1. Rowan University Policies and Procedures (located in Confluence) https://confluence.rowan.edu
   1. Contracting and Procurement
   2. Travel Related
   3. Fixed Asset
Added to ensure Rowan policies are refernced for guidance.
2. 2. Effort Certification

V.  POLICY

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1. Principal Investigators are in the best position to determine what research costs are necessary for performance of a sponsored agreement. Consequently, they

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1. assume primary responsibility for justifying cost transfers to or between their sponsored agreements when such transfers are necessary. The principal investigators

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1. should review the fiscal status of their sponsored agreements

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1. periodically and

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1. upon discovery correct expense transactions that are incorrectly recorded.

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2. A cost reallocation is not a cost transfer. Cost reallocations do not represent errors but are established procedures for distributing expenses on a regular basis. However, since sponsored projects are restricted funds, business justification on how the cost meets the purpose of the restricted fund still apply. Some examples include but not be limited to:
   1. Service Center billings performed within 90 days of the charge
   2. Purchasing Card reallocations performed within 90 days of the charge
   3. Printing or other central administrative service charges that are distributed to cost centers
   4. Parent and sub/child accounts and funds that are under the same award number
   5. Changes to effort reports when effort reports are under certification and review by the Principal Investigators

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1. A cost transfer is an allowable expense (both salary and non-salary) that is

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1. initially charged to other funds or accounts not associated with the federal or state sponsored project. When any cost transfer is incurred during the pre-award period, during the 90 days prior to the end of the sponsored project, after the end of the project, and/or during the reporting period (annual or final) of the project, proper care and due diligence must be performed to ensure costs are allocable, appropriate, and meet regulatory requirements.

1. The Federal government has established policies, concerning the assignment of costs to federally sponsored agreements, in 2 CFR 200 and specific agency policies on cost transfers. These policies

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1. may require cost transfers to meet additional timing and documentation requirements.
2. Cost transfers should be made within

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1. 90 days following the month in which the

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1. cost was charged to or transferred from the sponsored project account/fund. The cost

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1. transfers must be supported by

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1. statements justifying the reason for the transfer and how it relates to the project,

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1. a comprehensive and complete explanation of how the error(s) occurred,

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1. expense support documentation (invoices, travel expense report, etc.)

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1. .
   1. Examples of acceptable explanations include the following:
      1. Incorrect project fund identified at time of purchase.
      2. Correct allocation and usage of goods and services.
      3. Receipt, purchase order, or other source documentation contained an error at time of purchase.
      4. Allowable pre-award expenses.
      5. Sponsored project fund not created at time of award.
      6. Sponsored project fund not created at time of purchase of good or service.
      7. Correction identified during periodic review.
2.  An explanation merely stating that the transfer was made to "correct error" or "to transfer to correct project" is not sufficient.
3. A cost transfers from one budget period to the next solely to cover cost overruns is not allowable.
Examples of acceptable explanations include the following:
4. 1. 2. Payroll forms were not processed timely because the financial plan for the award was being revised.
      3. Individual transferred from one project to another, but the appropriate paperwork could not be processed before the payroll deadlines.
      4. Individual was transferred from one project to another for only one pay period
.Charges had to be placed against an alternate account because an authorized signer for the award was unavailable
5. 1. 1. .
      2. Data entry
error occurred when entering the index number on the original transaction.
6. The individual that prepared the original transaction misunderstood the principal investigator's instructions.
7. The principal investigator mistakenly gave the wrong information to the individual that processed the original transaction.

E. Grantees must maintain copies of the approved cost transfers as well as the supporting documentation that must be made available for audit or other review. Frequent errors in recording costs may indicate the need for additional training and/or enhanced communication among the principal investigator, Accounting Services department, and Payroll Services department to ensure compliance with all appropriate university payroll, reimbursement, accounting, and personnel policies and practices.

VI. ATTACHMENTS

A. Attachment 1, Sponsored Project Cost Transfers

ATTACHMENT 1

SPONSORED PROJECT COST TRANSFERS

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A. Cost Transfers to correct salary distribution

1. The University's payroll system distributes an employee's salary charges to the sponsored project and other University accounts based upon paperwork submitted for the employee. The distribution accounts entered on those forms are based upon the employee's projected work activities. In some cases, the work plan changes are not known in time for payroll forms to be revised and submitted prior to an upcoming payroll. In those cases, the payroll system will distribute the salary expense to an incorrect account therefore a salary cost transfer is needed to correct the error.
2. A salary cost transfer must be requested by completing a Cost Transfer Form; SOM employees should also submit a Change in Source of Funding Form. The transfer must be made within 3 months following the month in which the expense was originally recorded on the Financial Accounting System.

B. Cost Transfers to Correct Clerical and Bookkeeping Errors

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1. 1. 1. , misinterpretation or transposition error (technical error).
   2. Examples of unacceptable explanations include the following:
      1. An explanation merely stating that the transfer was made to “correct and error” or ‘transfer to/from correct project” is not sufficient.
      2. A cost transfer from one budget period to the next solely to cover cost overruns.
      3. A cost transfer solely to move deficit spending from one sponsored project fund or account to another, unrelated sponsored project fund or account.
      4. A cost transfer associated with a pay period where an effort report has been certified and reviewed during effort certification.
      5. A cost transfer to use up an expended balance or cash surplus expense.
2. Cost transfer requests made over 90 days following the month in which the cost was

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1. charged are subject to additional justification, review and approval by the Office of Grant and Contract Accounting and may require more supporting documentation and detailed explanation. Additional approvals from department chairs or deans may be required.
2. Principal Investigators, their designees or delegates, department business administrators, and/or post award grant analysts who are assigned the tasks of ensuring costs to sponsored projects are allocable and allowable, must prepare the journal entry or voucher and the support documentation.
3. Effort certification is the process in which Rowan University establishes and confirms effort expended on a sponsored project; the effort reports are created using past payroll expenditures/charges on sponsored projects. Since salary distributions are initially set-up in the Banner payroll system based upon an estimate and that extend over a period of time, which flow into the effort certification process, changes and adjustments to salary/labor redistributions made during an open effort reporting period may not require additional supporting documentation related to this policy.
4. Cost transfers will not be charged back to a previous fiscal year in Banner once the University has provided its initial Financial Statement drafts to the auditors during the beginning of the annual year-end audit test work period. Only entries approved by the Accounting Services department and reviewed by the auditors can be processed once the draft financial statements have been
5. Grantees and administrative offices of the incorrectly charged account must maintain copies of the approved cost transfers as well as the supporting documentation that must be made available for audit or other review. Frequent errors in recording costs may indicate the need for additional training and/or enhanced communication among the principal investigator, Contract and Grant Accounting department, Budget department, and Payroll Services department to ensure compliance with all appropriate university payroll, reimbursement, accounting, and personnel policies and practices

C. Cost Transfers to Move Expense between Projects that are related

1. When the same person serves as the Principal Investigator under two more federal awards, the ostensibly discrete projects supported by those awards may actually comprise a single program of related projects. In some cases, even awards with different PIs may support projects that comprise such a program.
2. The concept of related projects differs from the concept of common costs. Common costs are costs that are incurred for the benefit of two or more projects and allocated between those projects on some reasonable basis.
3. Cost transfers between projects that comprise a program of related projects may be made if the following conditions are met:
   1. 1. 1. 1. The transfer is made within 3 months following the month in which the cost was originally recorded in the Financial Accounting System, and
            2. The PI is able to determine and justify the allocation of the costs to each related project.

D. Cost Transfers to Distribute Departmental Clearing Fund Expenses

1. Expenses sometimes are initially charged to a "clearing" fund because the correct allocation of the expense cannot be determined at the time the expenses are first incurred. Bulk purchases, such as postage, copying cost, and some lab supply orders account for most of the expenses charged to clearing funds. Telecommunications and overnight delivery expense bills are examples of non-bulk purchases that sometimes have to be charged to clearing funds. When it becomes known what index actually benefitted from the purchases the expenses are distributed (i.e. transferred) to those indices.
2. Cost transfers that distribute expenses for non-bulk purchases (such as telecommunication and overnight delivery bills) must be requested on a Cost Transfer Form. The cost transfer must be supported by an explanation that states that the costs were charged to the clearing fund until it could be determined how the costs were to be allocated.
3. Cost transfers initiated to allocated clearing fund expenses must be made within 90 days after the month in which the expenses were initially recorded in the Financial Accounting System.

E. Cost Transfers to Move Pre-Award Costs

There are a number of agencies that permit pre-award spending, which are costs incurred up to 3 months prior to the beginning date of the award. If pre-award spending is allowed, an "advance index" should be established to record allowable expenses three months prior to the expected sponsored project award date which would eliminate the necessity of generating a cost transfer. Without an "advance index" pre-award expenses should be transferred within 3 months, from the start date of the sponsored project, to the index created specifically for that award.

F. Cost Transfer not requiring a Cost Transfer form

There are a number of instances for which a Cost Transfer Form is not needed:

1. Cost transfers made within the same accounting period (month) of the original expenditure.
2. Cost transfers to correctly improperly classified account codes
3. Cost transfers between Parent Grant and Internal Sub Grants having concurrent budget periods.
4. Cost transfers between one segment of a grant to the non competing continuation year grant. If a new index is created for the continuation grant since the agency requires a monthly/quarterly/annual financial report any expenditure incurred after the end date of the prior segment can be automatically transferred without a cost transfer.
5. Cost transfers between one segment of a grant to the competing renewal grant as long as the award is granted carry-forward authority for transferring the balance from one budget period to the next without the sponsor's prior approval and does not require annual financial reporting for each budget period.
6. Routine Inter Departmental Transfers (IDTs) initiated by the Service Department.
7. Cost transfers which do not involve Restricted Funds awarded with Federal or State funds.

G. If more than three months have passed after the issuance of the University Financial Statements in which the original charge had been made, a cost transfer will only be granted in extenuating circumstances, such as:

1. Late issuance of a Notice of Grant Award or Contract and full execution of a subcontract subsequent to the start of a budget year or other period of performance.
2. Failure of another department to take action on a properly submitting Cost Transfer Form.
3. Cost transfer is initiated within the allowable timeframe but returned for additional signatures, justification, and/or supporting documentation.
4. Transfer expenditures on a Federal/State project to a non-grant/unrestricted fund which was incurred prior to the expiration date in order to eliminate a deficit or after the expiration date in order for the grant to be closed and inactivated.
5. An extenuating or unusual circumstance as deemed appropriate and authorized by the Responsible Organizational Official of the grantee.

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