Office of Research & Creative Scholarship
Cost Transfers for Sponsored Programs
Please note: This policy is currently under review and subject to change. Please contact the Executive Director for the Office of Research and Creative Scholarship with any questions.
- General Guidelines
- Criteria for Cost Transfers
- Documentation for Cost Transfers
- Approval of Retroactive Cost Transfers
This policy statement provides guidelines for cost transfers associated with sponsored projects at Emerson College. Sometimes it is necessary to make correcting journal entries (cost transfers) to ensure that original charges and/or credits are recorded in the proper FOAPAL in Banner. A "Cost Transfer" form should be completed and submitted to the Office of Research and Creative Scholarship for final approval and processing. Cost transfers to correct charges/credits other than payroll related costs are recorded in the General Ledger Systems. Payroll cost transfers for correction of labor and benefit charges are recorded in the Human Resource Systems.
Individuals responsible for sponsored project administration may request necessary reclassification of sponsored expenses. Since the original entry is presumed to have been adequately reviewed and approved, any change should be fully justified. The Principal Investigator must ensure that funds are available to permit any transfer of charges/credits. Documented explanation and justification should be provided in order to permit subsequent reviewers (the Office of Research and Creative Scholarship, external auditors, etc.) to evaluate the appropriateness of the cost transfer.
For sponsored agreements, retroactive cost transfers for the purpose of expending available funds still remaining on a project are not allowable. Other unacceptable purposes for retroactive cost transfers include circumventing award restrictions, avoiding a cost overrun by charging another unrelated agreement, or transferring an expense to an expired sponsored project.
Regulations governing cost transfers are specified in OMB Circular A-21 and in certain federal sponsors' regulations:
"Any costs allocatable to a particular research (sponsored) agreement...may not be shifted to other research (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 research agreement, or for other reasons of convenience." (Circular A-21, §C.4.b.)
Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42 [record retention requirements] and must make it available for audit or other review.
- Frequent errors in recording costs may indicate the need for accounting system improvements and/or enhanced internal controls.
- Sponsors may require a grantee to take corrective action by imposing additional terms and conditions on an award.
A "Cost Transfer" form should be used to request, document, justify, and certify a correction to the accounting records. Transfers should be made within 90 days (3 months) from the end of the month that the charge appears on the monthly expense statement. For example, if the cost to be transferred is recorded on 1/7/201X, then the retroactive cost transfer should be processed within 90 days of 1/31/201X (by 4/30/201X).
Acceptable Criteria for a Retroactive Cost Transfer
A retroactive cost transfer is justified in the following circumstances: Clerical and data entry errors -- Any request to correct an incorrect allocation of an expense or a clerical error should be accompanied by an explanation of how the error occurred. The correcting entry must include a statement certifying that the adjusted charge/credit is correct and appropriate. Any explanation that merely states that the transfer is made "to correct error" or "to transfer to correct project" is not sufficient. Frequent errors in the recording of costs may indicate the need for improvements in the grantee's accounting system and/or internal controls.
Cost Transfers for Non-Payroll Charges A "Cost Transfer" form should be supported by documentation that contains a full explanation and justification for the transfer. Documentation consists of either 1) a copy of the original invoice document or 2) the monthly expense transaction statement showing the transaction(s) charged/credited to the incorrect cost center.
Time & Effort Report Revisions to the time and effort (and corresponding dollars) of personnel charged or credited to a grant account should be reflect in the Time & Effort Report that have been certified for the pay period(s). If you are diligent about tracking your time and effort reporting monthly, there should be little need for retroactive transfer of payroll charges.
Cost Transfers for Payroll Charges Retroactive cost transfers used to correct labor and benefit charges are corrected through the Human Resource System by use of the Cost Transfer for Labor Distribution form. Documentation for the transfer should consist of a copy of the Time & Effort Report, the Human Resource Systems report, and a full explanation and justification for the transfer.
The Principal Investigator must certify on the form the following:
- The change indicated on the grant/contract is correct;
- The costs are allowable;
- Funds are available to make the transfer; and
- The grant/contract benefiting directly from the respective charges is the one indicated.
- The Principal Investigator's signature is required for the transfer.
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