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Policy Contact: Grants and Contracts Administration

1. Purpose

   The purpose of this policy is to ensure that Cost Transfers involving Sponsored Project funds comply with the requirements contained in federal regulations.

2. Definitions
    
   1. Cost Transfer: the reassignment of an expense to a federally Sponsored Project or federal pass-through project after the expense was initially charged to another Sponsored Project or non-sponsored fund. Cost Transfers can include both salary and non-salary expenditures. They typically involve funds that begin with 3F, 3M or 3T.
       
   2. Allocable Costs: those costs for goods or services that are chargeable or assignable to the Federal award or an applicable cost objective in accordance with relative benefits received or other equitable relationship. (2 CFR 200.405; OMB Circular A-21, at pt. C4).
       
   3. Allowable Costs: those necessary and reasonable costs to accomplish the project goals; conforming to any limitations or exclusions in the Federal award; consistent with Federal statute and Federal, SDBOR, and University policy; accounted for consistently as either a direct or an indirect cost pursuant to generally accepted accounting principles; adequately documented; and not included as a cost for cost sharing or matching requirements for any other federally-financed program. (2 CFR 200.403; OMB Circular A-21, at pts. C2, C7, C8, C9).
       
   4. Reasonable Costs: those costs which, in nature and amount, do not exceed what would be incurred by a prudent person under the circumstances prevailing at the time the decision to incur the cost was made. (2 CFR 200.404; OMB Circular A-21, at pt. C3).
       
   5. Sponsored Project: an activity funded by a non-University entity requiring the University, by written agreement, to conduct certain work under a set plan, a set schedule, and a set budget, typically for the purpose of supporting research, instruction or public service through tangible or intangible deliverables that are the ultimate result of the Project.
       
3. Policy
    
   1. The objective of grant management is to ensure that all costs be charged to the Federal grant, contract, agreement, or award to which it was first incurred.
       
   2. In those limited circumstances where that objective cannot be met, and in order to comply with federal cost allowability, reasonability, and allocability requirements, it is necessary to fully explain and justify transfers of expenses onto federally Sponsored Projects from other Sponsored Projects and non-Sponsored Projects or funds. These Cost Transfers tend to occur as a result of clerical or accounting errors, or other unforeseen issues, and so considerable scrutiny is paid to them.
       
   3. Cost Transfers are only permitted between two or more Sponsored Projects so long as the costs are allowable under each of the projects in accordance with applicable Federal statutes and regulation, as well as the terms and conditions of the Federal awards sponsoring the projects. (2 CFR 200.405(c)). Should such costs arise from services provided by University Service/Recharge Centers, those costs must be derived from Billing Rates as established by University Policy 5:8.
       
   4. Cost Transfers should be made within 90 days from the end of the month in which the cost occurred. The transfer should be supported by documentation that explains how the error occurred, if applicable, and justification and assurance that the new charge is allowable, allocable and reasonable to the project.
       
   5. Cost Transfers made beyond 90 days after the end of the month in which the cost occurred, require additional explanation of tardiness and what corrective action has been taken to eliminate the need for Cost Transfers of this type in the future. These transfers also require approval from the Vice President for Research and Economic Development or Associate Vice President of Research Assurance and Sponsored Programs, or their successors.
       
   6. Documentation on Cost Transfers must be maintained, at minimum, to the standards provided in 45 CFR 74.53 or 92.42 and must be available for audit or other review.
       
   7. The following Cost Transfers are not allowable if made solely for the purpose of:
      1. Covering overruns whether actual or anticipated (unless the overspent project is closely related to the project to which the costs are being transferred);
      2. Spending down grant funds; 
      3. Circumventing award restrictions; or 
      4. Transferring expenses to or from an award which has been closed or which has had its final expenditure report submitted to the sponsor.
          
   8. Multiple transfers of the same cost are to be avoided.
       
4. Procedures
    
   1. Journal Voucher (“JV”)
      1. When a JV is completed to move expenses onto a federal grant fund, a Cost Transfer Form will need to be attached to the JV prior to it being processed by the Accounting Office.
          
   2. Fund Source Change (“FSC”)
      1. When a FSC is done to move salary after it was charged to a different fund, the Cost Transfer Form will be filled out and included in the grant file.
          
   3. There are a number of instances for which a Cost Transfer Form is not needed. These include:
      1. Cost Transfers involving direct cost amounts equal to or less than $200 per incident.
      2. Transferring expenses from one fund to another fund on the same grant.
      3. If a fund source change is initiated the same month that the employee is being paid.
      4. Correcting improperly classified account codes within the same grant.
      5. Adjustments made within the same accounting period (month) of the original charges.
         1. A regular review of post-award expense transactions will reduce the need for Cost Transfers, and in most cases, submitting a JV within the same month of the original expense will immediately correct erroneous transactions.
      6. JVs to align the allocation of tuition remission with effort on a sponsored award.
         1. Note that the reallocation of tuition remission must match the salary distribution of relevant work effort.

5. Responsible Administrator

   The Director of Grants and Contracts Administration, successor, or designee is responsible for annual and ad hoc review of this policy and its procedures. The University President is responsible for approval of this policy.

Approved by President on 11/16/2018. Revised 08/05/2024 (clerical).

Sources: ; ; ; University Policy 5:8

Associated Forms: Journal Voucher Form; Fund Source Change Form; Cost Transfer Form