Cost Transfers

Establish procedures and controls for processing cost transfers.

A cost transfer is an after-the-fact reallocation of costs, either labor or non-labor, to a sponsored award, grant or contract. Cost transfers move expenses previously recorded in a project account to another sponsored project account. Sponsor requirements concerning the management of awards limit the circumstances under which cost transfers are allowed.

Cost transfers should occur in a timely manner and be documented with proper supporting justification. Award/grant/contract requirements for cost transfers require that they are reasonable, allocable, and allowable and that project accounts have adequate controls so that transfers can be monitored.

OMB Uniform Guidance

A cost is allocable to a particular cost objective (i.e., a specific function, project, sponsored agreement, department, or the like) if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored agreement if (1) it is incurred solely to advance the work under the sponsored agreement; (2) it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods.

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.

NIH Grants Policy Statement (October 2013) Part II, Subpart A, 7.5:
Cost Transfers, Overruns, and Accelerated and Delayed Expenditures

Cost transfers should be processed within 90 days of when the error was discovered. The transfers 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, consortium participant, or contractor. 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 another or from one competitive segment to the next solely to cover cost overruns are not allowable.

Grantees must maintain documentation of cost transfers, pursuant to 45 CFR Part 74.53 or 92.42, and must make it available for audit or other review. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both.

In determining the allowability of cost transfers and the allocability of costs, the factors to be considered will be timeliness in the submission of a request for cost transfer and the justification provided to support the cost transfer. Cost transfers will typically involve correction of clerical errors, correction of allocation of personnel cost (employee time and effort), correction of allocation of the cost of goods or services, or to transfer pre-award costs.

All cost transfers shall be thoroughly explained, properly documented and justified. The principal investigator will be responsible for providing documentation and justification. Any requests for costs transfers that lack proper justification or any request for costs transfers not approved by RFCUNY will be returned to the principal investigator (or if necessary, absorbed by the college's Recovery account or the Research Foundation's disallowance account). Questions regarding the cost transfer process should be directed to the RFCUNY project administrator.

No Cost Transfer shall be approved unless it is:

• Allocable to receiving project account (that the amount transferred accurately represents costs proportional to the benefit attributed to the receiving project account);
• Allowable under sponsor policies;
• A reasonable expense; and
• Properly documented and justified

Cost Transfers may be made:

• To transfer labor dollars to align with actual effort devoted to project (revised CUNY Staff Effort Notices and Personnel Activity Reports are needed for reallocation of release time and summer salary costs).
• To correct a clerical or bookkeeping error such as transposition of numbers. Stating "to correct error" or "transfer to correct account" is insufficient. A full explanation of how the error occurred, followed by the steps taken to prevent this error from reoccurring must be provided.
• Pending an award where work has begun prior to arrival of the award document. OMB Uniform Guidance (Section .502) generally allows pre-award costs up to 90 days before the award. A sponsored project account should be established in anticipation of expenses for a pending award. However, when this option is not available, expenses shall be posted to a non-sponsored account and later be transferred to the sponsored account provided they are identified as pre-award charges.
• Cost benefiting more than one sponsored agreement. When a particular charge to a sponsored project account benefits another sponsored project account, because of the interrelationship of the work involved, that charge may be transferred to the other sponsored project account provided that: (a) The initial charge could appropriately have been made to the other sponsored project account, (b) the transfer explanation is clear as to why the particular charge is appropriate to either of the sponsored project accounts, and (c) the transfer is processed within 90 days of the original transaction. In some cases, these types of transfers must be approved by the Sponsoring Agency.

No Cost Transfers will be made:

• To solve funding problems or for other reasons of convenience.
• After the allowable time (90 days or after project account closeout period) frame. Extenuating circumstances will be reviewed and considered on a case by case basis.
• To enable sponsored projects accounts to be used as 'holding', 'clearing' or 'rotating' accounts to redistribute costs to other accounts at a later date.
• To transfer costs from any unrelated account in overdraft status to a sponsored project account.
• For the sole intent of using up the unexpended balance in the last months of a project.

If the cost transfer is made (transacted) within 90 calendar days that in which the original charge was recorded:

• The principal investigator will complete a Request for Cost Transfer form and submit the form with supporting detail documentation relating to PS and OTPS costs (Request for Cost Transfer Labor Detail and Request for Cost Transfer OTPS Detail) to the appropriate Research Foundation Project Administrator.
• The project administrator will review the Request and approve or disapprove the request.
• If a request is not approved then the costs will remain in the originating account (not be transferred) or the costs will be absorbed by the college's Recovery account or the Research Foundation's disallowance account.
• Costs are transferred by a journal prepared by the Human Resources or Grants & Contracts department.

If more than 90 calendar days have passed following when the charge to be transferred was originally recorded in the General Ledger, an explanation for the lateness of the cost transfer is required along with description of the corrective action taken to eliminate such cost transfers. Cost Transfers after the 90-day period will need the additional approval of the Grants and Contracts Assistant Director.

Any supporting documentation justifying the lateness of the cost transfer should be attached to the journal entry.

If a cost transfer is required to correct a previously processed cost transfer journal, the date the transaction originally posted to the General Ledger should be used for timing purposes (not the date of the previous cost transfer).

Any transfer made after this period raises serious questions regarding the propriety of the transfer. Approval for cost transfers submitted later than 90 days will only be granted in extenuating circumstances.

If the cost transfer is made (transacted) after 90 calendar days when the original charge was recorded:

• The principal investigator will complete the Request for Cost Transfer Form and submit the form with supporting detail documentation relating to PS and OTPS costs (Request for Cost Transfer Labor Detail and Request for Cost Transfer OTPS Detail) and submit the form with supporting documentation to the Research Foundation Project Administrator. The Project Administrator will review the Request for Cost Transfer Form for compliance with the RF policy. If the Request meets the requirements of this policy, it will be forwarded to the respective Assistant Director of G&C for their review and approval. For single requests that are $100,000 and above, the Deputy CFO/Controller must also review and approve the documentation.
• If a request is not approved then the costs will remain in the originating account (not be transferred) or the costs will be absorbed by the college's Recovery account or the Research Foundation's disallowance account.
• Costs are transferred by a journal prepared by the Human Resources or Grants & Contracts department.