RSP 506–02: Cost Transfers on Sponsored Projects

To ensure that the reassignments of charges involving a sponsored project account are compliant with the requirements contained in federal regulations and sponsoring entity guidelines

United States. Office of Management and Budget. OMB circular A-21, Cost Principles for Educational Institutions

Office for Research and Sponsored Projects Administration

The principal investigator (PI) on a sponsored project is responsible to ensure that only allowable, allocable, and reasonable costs are charged to a grant, contract, or other sponsored agreement. Costs should be charged to the appropriate sponsored project when first incurred. However, there are circumstances that may require transferring expenditures to a sponsored project subsequent to the initial recording of the expense.

Transfers of costs either into or out of a sponsored project account require monitoring for compliance with ASU policy, federal regulations, sponsor-specific guidelines, and the cost principles that underlie fiscal activities on sponsored projects.

Federal agencies require grantees to have systems in place to detect and correct clerical, bookkeeping, or other posting errors within a reasonable time frame. To promptly identify costs that have been erroneously posted to a sponsored account, the PI or designated support staff should review and reconcile expenses at least on a monthly basis. Timely review of expenditures will help to correct errors and limit the number of cost transfers.

Cost transfers increasing a sponsored project’s expenditures should be requested within 90 days after the month in which the cost was originally accepted in the university’s financial accounting system. No time limit exists for removing inappropriate expenditures from a federally sponsored account. If an inappropriate expenditure is discovered on a federal project it must be removed regardless of a time limit.

A shorter cost transfer request period is necessary near the project end date. Final financial reports are typically due to sponsors 30 to 90 days after the project end date. This requires that all cost transfers must be completed no later than 60 days after the project terminates (unless the final financial report is due in less than 90 days following project termination requiring an earlier fiscal closeout of the project). This earlier cutoff is necessary to promptly charge the project and not delay submission of the financial report. Transfer requests on terminated projects may not be approved and will be reviewed by ORSPA on a case-by-case basis.

Federal and other sponsor regulations require written justification, certified by a responsible university official (e.g., PI, authorized account signer) on all cost transfers that documents:

1. why the error occurred resulting in the need for a transfer
2. what corrective action will be taken to avoid the error in the future
3. why the cost transferred is allowable, allocable and a reasonable charge on the new account

   and

4. how the charge supports performance of the project scope of work.

Explanations that merely state that the transfer was made “to correct an error” or “to transfer to correct project” are not sufficient to justify new charges on a sponsored project account. Transfers from one sponsored project to another sponsored project to reduce cost overruns, to spend unused balances, to avoid restrictions imposed by law or agreement terms, or for other reasons of convenience are strictly prohibited by sponsors.

Requests transferring nonpayroll expenditures to or from a sponsored project are supported by a Non-Payroll Cost Transfer Request (CTR) form. The Advantage A611 report identifying the original transaction to be moved should be attached along with any additional documentation supporting the correction.

Transfer of payroll expenditures to or from a sponsored project are processed and retained in the Payroll Redistribution application in the PeopleSoft Human Resources Information System (HRIS). Payroll transfers for transactions processed before July 1, 2007 by the legacy payroll system HRMS are supported by Sponsored Payroll Expense Transfer (SPET) request forms.

Retroactive payroll adjustments may affect a previously certified effort report. Changes to payroll distribution of a certified report and time period previously accepted within effort reporting will result in a newly sequenced effort report requiring re-certification.

2. Explain specifically how the error or other circumstances occurred that would justify the cost transfer. Statements such as “to correct errors” or “to transfer to correct agency/org” are not acceptable.

3. Attach a copy of the Advantage A611 report reflecting the transaction(s) to be corrected and any other documentation supporting the correction.
4. Prepare the JV or IX document in Advantage and put on hold.
5. Copy and sign the JV or IX document and forward with the CTR form and A611 report to Grant and Contract Accounting.

6. Prepare the PeopleSoft HRIS Payroll Redistribution.
7. Explain specifically how the error occurred and include justification for the cost transfer.

8. Review and verify the transactions to be corrected.
9. Validate appropriateness of transfer to new account (object codes, period of time, available funds, etc.).
10. Review justification.

11. Return the original request form(s) to the principal investigator with an explanation.

12. Complete the necessary entries to effect transfer of nonpayroll expenses.

13. Approve Payroll Redistribution in PeopleSoft HRIS.