ROWAN UNIVERSITY POLICY

Title: Cost Transfer Policy                                                                                          

Subject: Office of Sponsored Programs

Policy No: OSP: 2015: XX

Applies: University-wide                                                   

Issuing Officer:  Senior Vice President for Health Sciences

Responsible Officer:  Vice President for Research                                     

Adopted: 03/13/2015

Last Revision:

Last Reviewed: 03/13/2015

I.   PURPOSE

To establish guidelines for requesting and performing cost transfers in sponsored programs that are funded by Federal and State monies. 

II.  ACCOUNTABILITY

Under direction of the Senior Vice President for Health Sciences, the Vice President for Research shall provide oversight to the Office of Sponsored Programs to ensure compliance with this policy.  

III.  APPLICABILITY

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

A. 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 Awards

B. State of New Jersey Circular 07-05-OMB: Grant Agreements – Agency Contracts

C. Rowan University Policies

1. Contracting and Procurement
2. Travel Related
3. Fixed Asset 

V. POLICY

A. Principal Investigators are in the best position to determine what research costs are necessary for performance of a sponsored agreement. Consequently, they shall assume primary responsibility for justifying cost transfers to or between their sponsored agreements when such transfers are necessary. The principal investigators must review the fiscal status of their sponsored agreements at least monthly and promptly correct expense transactions that are incorrectly recorded. Ultimately, a principal investigator is responsible for resolving any disallowed cost transfer, which may result in the reimbursement of disallowed costs.

B. A cost transfer is an expense (both salary and non-salary) that is transferred from one Federal or State grant to an alternate account, and vice versa, after the month the initial expense is recorded in the financial accounting system.

C. 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 require that universities establish internal controls to ensure that costs associated with a particular sponsored agreement are allowable, reasonable, allocable, and timely.

D. Cost transfers should be made within three months following the month in which the costs were originally recorded in the financial accounting system. The cost transfer must be supported by a statement justifying the reason for the transfer and how it relates to the project, explanation that clearly explains how the error(s) occurred, copies of the expense documentation (invoices, travel expense report, etc.) being transferred, a statement that defines the measures taken to prevent a reoccurrence of the error and certification of the correctness of the new charge by a responsible official of the grant account.

1. An explanation merely stating that the transfer was made to “correct error” or “to transfer to correct project” is not sufficient.
2. A cost transfers from one budget period to the next solely to cover cost overruns is not allowable.
3. Examples of acceptable explanations include the following:
   1. Payroll forms were not processed timely because the financial plan for the award was being revised.
   2. Individual transferred from one project to another, but the appropriate paperwork could not be processed before the payroll deadlines.
   3. Individual was transferred from one project to another for only one pay period.
   4. Data entry error occurred when entering the fund number on the original transaction.
   5. The individual that prepared the original transaction misunderstood the principal investigator’s instructions.
   6. The principal investigator mistakenly gave the wrong information to the individual that processed the original transaction.

E. 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 a draft is submitted.

F. 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, 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

To ensure that sponsored project cost transfers comply with federal regulations, the Office of Sponsored Programs has established the criteria that a cost transfer must meet based on 2 CFR 200. Below is a description of each cost transfer grouping and the cost transfer criteria that apply to each group:

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 these cases, a salary cost-transfer is needed to correct the initial paperwork error and distribute the salary to the proper account.
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

Cost transfers that are necessary to correct clerical or bookkeeping errors will be allowed up to 3 months following the month in which the cost was originally recorded on the Financial Accounting System. Such transfers, however, must be supported by an explanation that describes how the error occurred.

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. 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 Appropriately Attribute Discretionary/Departmental Fund Expenses

1. Expenses sometimes are initially charged to a discretionary/departmental 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 discretionary/departmental funds. Telecommunications and overnight delivery expense bills are examples of non-bulk purchases that sometimes have to be charged to discretionary/departmental funds. When it becomes known what fund actually benefitted from the purchases the expenses are distributed (i.e. transferred) to those funds.
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 discretionary/departmental 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 fund” 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 fund” pre-award expenses should be transferred within 3 months, from the start date of the sponsored project, to the fund 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 to correctly improperly classified account codes
2. Cost transfers between Parent Grant and Internal Sub Grants having concurrent budget periods.
3. Cost transfers between one segment of a grant to the non competing continuation year grant. If a new fund 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.
4. 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.
5. Routine Inter Departmental Transfers (IDTs) initiated by the Service Department.
6. 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.

H. Cost transfers that would result in the revision of a Final Financial Status Report or final invoice will be reviewed on a case-by-case basis.