Sponsored Projects Cost Transfers Policy
The purpose of this policy is to ensure that cost transfers that involve sponsored project accounts comply with requirements contained in federal regulations.
Regulations
OMB Circular No. A-21 states that, "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." Other federal regulations require cost transfers to be made in a timely manner. Timely is defined as taking place within 90 days of the incurrence of the cost (NIH). Cost transfers made after 90 days of their incurrence are considered unallowable.
NIH guidelines state that, "Cost transfers to NIH grants by grantees, or by consortium participants or contractors under grants, that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error is 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 budget period to the next solely to cover cost overruns are not allowable.
Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42, and must make it available for audit or other review (see "Administrative Requirements-Monitoring-Record Retention and Access"). Frequent errors in recording costs may indicate the need for accounting system improvements and/or enhanced internal controls. If such errors occur, grantees are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. NIH also may require a grantee to take corrective action by imposing additional terms and conditions on an award(s)."
Principal Investigator's Responsibility
To ensure that the University is in compliance with these regulations, the principal investigator is responsible for ensuring that cost transfers are:
- made within 90 days after the month in which the cost was originally recorded on the Financial Accounting System but no later than 60 days after the project terminates, and
- supported by a written explanation that describes in detail why the transfer is necessary. (See Cost Transfer Explanation Form)
Cost transfers not made within the time frames stated above will be reviewed on a case-by-case basis and require signature approved by the appropriate Chair's/Dean's office.
