Cost Transfer Policy
Davidson College has a stewardship responsibility for all sponsored funds and proper management of sponsored project expenditures is essential to meet this obligation. The College recognizes that cost transfers are sometimes necessary to correct bookkeeping or clerical errors and to allocate closely related work that may support more than one project. Frequent, late, and inadequately explained transfers, especially those involving projects with cost overruns or unexpended balances, raise questions about the propriety of the transfers and call internal fiduciary controls into question. These activities may result in audit disallowances and monetary pay-backs including penalties and fines.
The purpose of this policy is to define cost transfers and specify the proper procedure and required approvals in requesting a transfer.
“Cost Transfer” is defined as an after-the-fact transfer of costs (labor or non-labor) from a sponsored or non-sponsored award to a federally funded award.
- Davidson College is committed to ensuring that all cost transfers (either in the form of labor re-distributions or non-salary journal entry) are appropriate and conducted in accordance with sponsor terms and conditions, federal regulations and College policy. The Office of Grants & Contracts expects that costs directly charged to federally sponsored awards will comply with the cost principles outlined in the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Final Rule, 2 CFR 200 (Uniform Guidance).
- All Principal Investigators (PI) are responsible for ensuring that transfers of costs to or from sponsored projects which represent corrections of errors are made within the time frames outlined in this Policy.
- Cost transfers must be supported by documentation which contains a full explanation of how the error occurred and a correlation of the charge to the project to which the transfer is being made. Explanations such as “to correct an error” or “to transfer to correct project” are not adequate.
- Transfers of costs to a sponsored project are allowable only where there is direct benefit to the project being charged. An overdraft or any direct cost item incurred in the conduct of one sponsored project may not be transferred to another sponsored project merely for the sake of resolving a deficit or an allowability issue.
- Cost transfers should not be used as a means of managing awards.
- Salary and non-salary cost transfers must be prepared and submitted within 90 days from the accounting date except in cases where the sponsor’s (federal or non-federal) terms and conditions are stricter than Davidson’s Policy. Regardless of the timing, salary cost transfers initiated after an effort report has been certified are subject to additional documentation and justification.
- Any cost transfers submitted after the applicable 90 day time period will require review and approval by the Office of Grants & Contracts and will be granted only under extenuating circumstances. Additional documentation and justification must accompany a cost transfer request outside the 90 day period. Cost transfers to remove an unallowable or un-allocable cost from a sponsored project must be completed regardless of timeframe.
The following procedure for the processing of cost transfers has been established to comply with the requirements of OMB Circular A-21 and OMB Uniform Guidance. Original charges should be directed to the appropriate benefiting sponsored project. If it is necessary to process a cost transfer that involves a sponsored project, a cost transfer request should be submitted to the Grants Accountant within 90 days of the accounting date and contain sufficient documentation and justification to support the cost transfer and withstand the test of a formal audit. If the request is approved, the Grants Accountant will prepare a journal voucher and process the cost transfer.
Examples of circumstances where cost transfers may be allowable:
- Transfer of pre-award costs from a College funding source to a project, where pre-award costs are allowable pursuant to the terms of the sponsored agreement.
- Correction of a clerical error, often involving transposed or mistyped characters.
Examples of unacceptable cost transfers:
- Transfers for purposes of fiscal expediency without regard to whether the cost is appropriate on the receiving project (e.g., reallocation of expenses from a project in deficit to a project with unexpended funds to clear the project in deficit).
- Transfers which do not explain why the error occurred and how the expense is appropriate to the project to which it is being moved.
It is the responsibility of each PI to:
- Review sponsored research projects on a regular basis (e.g. monthly) to ensure that all expenditures charged are correct and appropriate.
- Submit cost transfer requests in compliance with this Policy and associated procedures.
It is the responsibility of the Office of Grants & Contracts to:
- Maintain this Cost Transfer Policy.
- Provide assistance in interpretation and implementation of this Policy.
- Provide training to PIs on this Policy.
- Serve as final approver on all cost transfers.
- Periodically audit cost transfers to ensure compliance with College and federal regulations.
Administration of Policy
The Director of Grants and Contracts shall oversee this policy and review it at least once every two years. Changes to this policy shall be made in accordance with the college’s Policy on Policies.
Last Revised: 10/31/2015
Last Reviewed: 02/09/2016