The rockefeller university

Overview

It is the policy of the Rockefeller University that costs should be charged to the appropriate sponsored project when first incurred. Within this policy the University recognizes that cost transfers are sometimes necessary to correct bookkeeping or clerical errors in the original charges and to allocate closely related work that may support more than one project. Frequent, late, or inadequately explained transfers, especially those involving projects with cost overruns or unexpended balances, are unacceptable and can raise serious questions about the appropriateness of the transfers and call internal controls into question. Inappropriate cost transfers will result in audit disallowances and may also incur monetary paybacks including penalties and fines.

Auditors and sponsors will flag as suspicious cost transfers with the following characteristics:

• Costs transferred long after the original charges were recorded.
• Transfers with inadequate documentation or justification.
• Transfers made at the end of a project that move cost overruns or spend out a project.

An explanation which merely states that the cost transfer was made to “correct an error” or “to transfer to correct project” is not sufficient. Cost transfers and their accompanying justifications must be reasonable, equitable, and in realistic proportion to the benefit provided.

Policy

Original Charges should be directed to the appropriate benefitting sponsored project. If it is necessary to request a cost transfer that involves a sponsored project, requests should be made promptly and contain sufficient justification and documentation to support the cost transfer.

Under no circumstances may costs that benefit one sponsored project be charged temporarily on another sponsored project. Grant expenditures that may not be charges to the appropriate project for any reason may be charged to a non-restricted account and transferred to the appropriate grant award at the earliest opportunity. Failure to follow this policy will result in incorrect financial reporting and as a consequence inappropriate reimbursement from the sponsor.

Expenses must be reallocated for reasons other than covering an over-expenditure or under-expenditure. The costs must be allowable and should be allocated to the projects based on the proportional benefit of the cost to the project.

Procedures

Research Laboratories are responsible for reviewing the sponsored research monthly summary and transactional reports on a regular basis (e.g. monthly) to ensure that all expenditures charged are correct and appropriate. The most common reasons for cost transfers are to reallocate costs that have been originally charged to a central administrative award, correction of a clerical error (transposed or mis-typed characters) or to reallocate effort to reflect actuals. The Grants Office will notify Research Laboratories when they encounter grant overdrafts or note significant under spending. The individual laboratory staff is responsible to investigate deficit or surplus activity on the grant and to take appropriate action.

All cost transfer requests, including salary transfers, must be supported by a written justification. The reason for each cost transfer must be clearly explained with supporting documentation. After the Principal Investigator or his/her designee has approved the cost transfer request, it will be submitted to Finance’s post-award Grants Office for review and processing.

Cost transfers to all federal grants must be made within 90 days of the original charge. In certain circumstances (i.e. when federal pass-through contracts are received months after the original starting date of the project), a transfer may be appropriate even though the 90 day deadline is not met. These transfers will be reviewed under scrutiny and may need further justification and additional approvals.

The Cost Transfer Request Form must be used for all non-salary cost transfers involving a sponsored project and are subject to the following documentation requirements:

• Monthly Summary and Transactional Report page that shows the original charge.
• An explanation of the reason the original charge was not made to the appropriate cost center and why this charge is appropriate for the project.
• The signature of the PI or his/her designee authorizing the transfer.

One form may be used to document several transfers if they are part of one journal and if the circumstances surrounding them are identical.

Email or written notification of salary source changes is sufficient however any retroactive salary source change must be requested using the Salary Source Change Form and must also contain the documentation as noted above with the exeception of the Monthly Summary and Transactional Report page.

Improper Cost Transfers – Definition and Examples

OMB Circular A-21 (Cost Principles for Educational Institutions), Section C.4.b states:” 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.”

This regulation (A-21) specifically describes transactions that would be improper cost transfers

between sponsored agreements. While it is not appropriate to transfer improper costs as specifically described in the regulation between sponsored projects, it may be possible to request a cost transfer from a sponsored project to another budget entity (i.e., Laboratory accounts).

The following examples illustrate improper and unallowable cost transfers between or to sponsored projects:

• When the transfer is for the purpose of utilizing unexpended funds.
• When the transfer is for the purpose of avoiding or alleviating a deficit.
• When the transfer is for the purpose of moving a cost that is unallowable on one project to another.
• When the transfer is for the purpose of circumventing award restrictions.
• When the transfer is for the purpose of reimbursing a temporary “loan” of funds from another sponsored project.

Examples of unacceptable stand-alone explanations include:

• To correct coding
• To transfer expense
• To correct an error
• To spend out a project
• Expense charged to a wrong account

Examples of acceptable explanations include:

• Cost benefiting more than one sponsored agreement
• Correction of typing error in entering the award number
• Upon careful review of our records we request…to better reflect his/her effort for that period.

Transfers which appear to be improper or otherwise unallowable will not be approved by the Finance Office. If you need additional guidance or have questions please contact the Grants Office on ext. 8308.