COST ACCOUNTING STANDARDS POLICY
COST TRANSFERS (Issued December 18, 1998)
Purpose
Effective Date
Definitions
Applicability
Allowability
Timeliness
Appropriate Circumstances
Explanation & Documentation Requirements
Procedures
Signing Authority
Forms
Contacts
Return to CAS Policies
I. PURPOSE
To establish guidelines for processing cost transfers that comply with federal regulations.
II. EFFECTIVE DATE
This policy is effective on January 1, 1999. The policy applies to all costs incurred (or sponsored agreement budget periods beginning) on or after that date.
III. DEFINITIONS
Cost transfer
A cost transfer is an after-the-fact
reallocation of a cost from one account to another.
Cost transfers are usually implemented
via:
-
Journal Entry (JE) Used for correction of
bookkeeping / subcode errors
-
Grant Transfer Request (GTR) Used for all
non-payroll transfers except those covered by Journal Entry
-
Retroactive Payroll Requisition (PR-2) Used
for retroactive payroll transfers
All cost transfers must be marked with a
cost transfer transaction code (TC=3) to distinguish the transfer on the
ledger.
IV. APPLICABILITY
This policy applies to cost transfers to or from federal and non-federal sponsored projects
V. ALLOWABILITY
To be allowed, a cost transfer must be timely, made under appropriate circumstances, fully explained and documented, conform with University and sponsor allowability standards (that is, allowable under the terms of the sponsored agreement) and have appropriate authorizing signatures.
VI. TIMELINESS
Cost transfers must be timely, made as
soon as possible after the original transaction and within 90 days after
the run date of the report where the original transaction appears.However,
all cost transfers needed to correct errors in the original charges must
be made regardless of timing.
transfers made after the 90-day period
will require an explanation as to why the transfer was not completed within
the 90-day period.
Also, please note that cost transfers
moving a charge from a departmental account, which occurred in a prior
fiscal year will be credited to a general institution account, not the
departmental account.
VII. APPROPRIATE CIRCUMSTANCES
A cost transfer is made under appropriate circumstances when the charge qualifies as an allowable direct cost of the sponsored project being charged. OMB Circular A-21, Section D.1, states that "direct costs are those costs that can be identified specifically with a particular sponsored project or that can be directly assigned to such [a project] with a high degree of accuracy."
-
Typically, cost transfers are appropriate
when their purpose is:
-
To correct posting, bookkeeping or subcode
errors in the original charges.
-
To reallocate costs between accounts. Costs
must be reallocated for reasons other than transferring costs from overexpended
projects to projects with available funds. The costs must be allowable,
be allocated to the projects based on the proportional benefit, and be
clearly documented. Example: Chemicals are purchased on one sponsored project
but were used on three sponsored projects. The cost of these chemicals
would proportionately be distributed to the benefiting projects. If a cost
benefits two or more projects or activities in proportions that cannot
be determined because of the interrelationship of the work involved, the
costs may be allocated on any reasonable basis to the benefiting projects,
provided that the basis is documented.
-
To transfer costs to a continuation award
or among sub-accounts under the same agency award (when permitted by sponsor).
-
To move an unallowable cost off a sponsored
account.
-
To transfer over-runs from a sponsored account
to a department account, which consists of allowable charges.
- To transfer pre-award costs when the sponsor will accept such costs. Please note that, whenever possible, a preassigned account number should be established pending receipt of a sponsored agreement to facilitate charging preaward expenses. This account number will require assured coverage of expenditures in case the sponsored agreement does not materialize. Circular A-110 Section .25(e)(1) generally allows preaward costs up to 90 days prior to award for research grants and cooperative agreements unless prohibited by the sponsoring agency. For details about specific agency requirements, contact OGCPA.
-
To retroactively adjust salary costs between
projects to reflect an individual's actual effort on the projects (PR2
form required). The need for this kind of cost transfer may arise either:
-
When a Payroll Requisition (PR-1), created
when an individual's distributed effort changes, is submitted after its
effective date, and therefore a retroactive adjustment is necessary. These
transfers are necessary in order for payroll charges to be properly allocated
to the appropriate project.
-
When salary costs must be adjusted because
actual effort for a project differs from the effort originally charged.
Please note that whenever a cost transfer
involves salaries, care must be taken to ensure that they are consistent
with certified time & effort reports. Cost transfers that contradict
certified time & effort reports will be permitted only under highly
unusual circumstances.
VIII. EXPLANATION & DOCUMENTATION REQUIREMENTS
The reasons for each cost transfer must be explained clearly and completely with the help of supporting documentation when appropriate in order to prevent audit disallowances. The department has primary responsibility for fulfilling this requirement and maintaining the related records.
-
When a cost transfer requires a Gtr or PR2
form, the original form and supporting documentation must be submitted
to OGCPA for approval, which will forward it to Sponsored Programs Accounting
(SPA) for approval, and then processing.
-
When a cost transfer requires a JE form,
the original form and supporting documentation must be submitted to SPA.
EXPLANATIONS
Great care must be exercised to ensure
that cost transfers are explained clearly and completely. When transfers
are inadequately documented or made for inappropriate reasons disallowed
costs will be absorbed by departmental sources.
Detailed and valid written explanations must clearly explain the following:
-
The nature of the original transaction
-
Why the receiving account was not originally
charged
-
Why it is appropriate to charge the receiving
account
Examples of incomplete and invalid explanations that are not acceptable as stand alone explanations include the following:Incomplete Explanations
-
Administrative error or oversight
-
To correct an error
-
To charge correct account
-
To correct salary distribution
Invalid Explanations
-
Late because Principal Investigator out of
town
-
Administrator on vacation
-
Department duties did not allow time for
correction
-
Work volume delayed charging the correct
account
DOCUMENTATION
The following documents must be attached
to cost transfers:
- Detail of monthly report (FBM092) highlighting the posting that supports the original charge(s).
-
Any other documents you may consider necessary
to support the explanation for the cost transfer.
IX. PROCEDURES
All transfers of expenses to or from a sponsored account after the original charge was posted are subject to the requirements of this policy. Cost transfers must be submitted to OGCPA/SPA for approval using the appropriate form (see FORMS section), and providing all supporting documentation.TRANSFERS REQUIRING BRIEF EXPLANATIONS AND A JE FORM
-
transfers to correct a keypunch, subcode
or transposition error. The explanation at the bottom of the journal should
contain the following: "To correct keypunch error: 7104 should have been
8104" or "To correct transposition error: 8703 should have been 8073."
TRANSFERS REQUIRING FULL EXPLANATION AND A GTR FORM
-
To reallocate costs between accounts.
- All transfers moving unallowable costs off a sponsored account to a departmental account.Specific subcodes for unallowable costs have been developed.Please use the appropriate subcode if applicable and if not covered, use subcode 6511 (Unallowables).
-
transfers of expenditures to a continuation
award or among sub-accounts, under the same agency award when permitted
by the sponsor.The explanation should contain the following: To transfer
project costs to continuation account or sub-accounts.
-
To transfer preaward expenditures as authorized
by sponsor or approved internally by OGCPA. The explanation should read:
To transfer preaward project costs as authorized by sponsor or OGCPA.
- To transfer overruns from a sponsored account to a departmental account, which consists of allowable charges. This transfer will constitute institutional cost sharing. Costs can be moved in sum under subcode 6500 (Cost Sharing).This transfer should be debited to a specified cost sharing account. The explanation at the bottom of the entry should state: To move overrun from sponsored account to department account. (See University's Cost Sharing Policy)
One form can be used to document several
transfers if they are part of one journal and if the circumstances surrounding
them are identical. Any cost transfer that is inadequately documented and/or
justified will be returned to the department.
TRANSFERS INVOLVING SALARIES (PR-2)
The PR-2 form will only correct items
that have already posted to your Financial Records System. If you want
the current labor distribution changed; then you need to issue a new PR-1.
PR-2 for salaries must include the employee
identification number and the period the salary covers. It must include
complete explanation and documentation.
X. SIGNING AUTHORITY
Cost transfers (except JE-which only requires
signature of Associate Controller, SPA) require the approval signatures
of the principal investigator, OGCPA, and the Associate Controller, SPA.
The University Controller will sign Gtr and PR-2 transfers over the 90-day
period.
XI. FORMS
-
JE Form and Procedures
-
GTR Form and Procedures
-
PR2 Form and Procedures
XII. CONTACTS
If you have any questions about this policy, how to treat a specific cost, or need information, please contact the Associate Controller for Sponsored Programs at x6-4423, the Assistant Controller of Cost Accounting at x6-4535, or the Internal Auditor at x6-4516.
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