Cost Transfers – Sponsored Programs
The purpose of this guideline is to set forth the circumstances for transferring charges to and/or from a sponsored award.
As part of the conditions of receiving sponsored program funds, the University of Texas at Dallas(UTD) must comply with allowability and allocability requirements of the Budget (OMB) 2 CFR 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award Administrative guidelines(Uniform Guidance), State, Local, and any Sponsor term and conditions. One regulation, as outlined in Uniform Guidance 2 CFR 200.405 (c), prohibits “allocating to overcome fund deficiencies, to avoid restrictions imposed by Federal statues, regulations, or terms and conditions of the Federal awards, or for other reasons”. To help control this regulation, timeliness and completeness of transfer explanations are two of the important requirements in supporting allowability and allocability in accordance with the principles set forth in the Uniform Guidance. In addition, National Institutes of Health (NIH) Grants Policy Statement states, “Cost transfers to NIH grants by grantees should be accomplished within 90 days 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. 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 the next solely to cover cost overruns are not allowable. "Grantees must maintain documentation of cost transfers and make it available for audit or other review. The grantee should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. This policy addresses the reallocation of salary expenses and transfer of other direct costs.
This guideline is applicable to all individuals involved with the administration of federally-funded sponsored award activities, including central and departmental sponsored project administrators, principal investigators, and other research personnel.
A cost transfer is a reassignment (transfer) of charges within or between cost centers. Cost transfers are used to bill interdepartmental costs, to adjust billing errors, or for other reasons associated with the department’s regular financial operations.
Principal Investigator (PI) – The PI has a fiduciary responsibility for the management and administration of the sponsored project in accordance with sponsor and University guidelines, and therefore must approve all cost transfers.Departmental Administrator (DA) - The departmental administrator, in conjunction with the PI, are responsible for completing timely reconciliations between the University’s general ledger and underlying details i.e., Salary Expense Report and departmental records. The DA must ensure that all financial activity is properly recorded in the University’s financial system, which is the source for all financial reporting; the DA is responsible for ensuring all approved cost transfers are completed accurately and on time.Office of Post Award Management (OPM) – OPM is responsible for reviewing and approving sponsored program cost transfers.Office of Budget and Finance – Ensures all cost transfers are routed appropriately for approval.
To be permissible, cost transfers must meet the criteria established for both timeliness and appropriateness. Cost transfers should be initiated after the original transaction as soon as possible, preferably within 90 days of the month end closing date of incurring the expense.Requests for cost transfers after 90 days of the original transaction must include sufficient documentation and justification, and will be considered on a case by case basis.UTD is obligated to immediately remove incorrect charges made to sponsored accounts, regardless of time frame.When cost transfers to move expenses involve sponsored projects, it is critical that the transfer meet the rules for allowability, allocability, reasonableness, and consistency.
A retroactive cost transfer is justified in the following circumstances:
Examples of Cost Transfer Red Flags:
Cost transfers are generally not permitted for employees who have already certified their effort unless under extremely unusual circumstances.
An award is closed out when it is determined that no further date or funding extensions are required to meet the deliverables by the original project end date. Closeout refers to the activities that end an active sponsored project.
The closeout process for sponsored projects is a post-award activity and is handled jointly by Post-Award Management and Office of Finance (Accounting and Financial Reporting). Close out complies with OMB Uniform Guidance 200.343 Close Out regulation, as well as any sponsor, state and other applicable policies and regulations.During the closeout process, valid expenses have 45 days to hit the award after its end date and be billed to the sponsor. Any overages are sent to the department so it can complete an interdepartmental transaction (IDT) to remove those expenses from the grant within this 45 day window.Once a sponsored project account is closed and the final report has been submitted to the sponsor, no expenses may be charged to the closed account unless it benefits the sponsor. Any charges identified after the close of the account can only be transferred to a non-sponsored program account.*No expenses will be incurred 45 days after the end date of the award.*When all invoices are paid and necessary final financial reports are filed with the sponsor by the Office of Finance (no later than 90 days or sooner if the contract requires), the sponsored project is considered closed by OPM and no further transactions may be incurred on the project.Once a sponsored project account is closed and the final report has been submitted to the sponsor, no expenses may be charged to the closed account unless it benefits the sponsor. Any charges identified after the close of the account can only be transferred to a non-sponsored program account.For further information regarding the close out of an award, visit the Office of Finance Procedure - Financial Reporting and Award Closeout for Sponsored Projects
All cost transfers must include a detailed explanation and justification (e.g., rationale for allocation among projects) for the transfer. If a transfer is to correct an error, an explanation that merely states that the transfer was made to “correct an error” is not sufficient.Grantees must maintain documentation of cost transfers and must make it available for audit or other review. The person initiating the charge has primary responsibility for fulfilling these requirements. The initiating department is responsible for maintaining related records in accordance with university and award requirements.The grantee should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both.
*The documentation should clearly address the following:*If within 90 days of the original transaction date:
If in excess of 90 days of the original transaction date: In addition to the information listed above, the following is necessary:
Procurement Management – Travel Management
Uniform Guidance 2 CFR 200
opm:allowable_cost Allowable Cost on federally funded Contracts and Grants
The University of Texas at Dallas Expenditure Policy (UTDBP3097)
OMB Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance)
The Cost Accounting Standards (CAS)
The Office of Sponsored Projects
Issued: June 2015