Cost Transfer for Sponsored Programs Policy
|POLICY TITLE:||Cost Transfer for Sponsored Programs Policy|
|DATE OF ISSUANCE:||This Policy was originally issued to vice presidents, deans, department heads and business administrators on June 3, 1994. This version of the Policy was approved on November 12, 2020.|
|ACCOUNTABLE DEPARTMENT/UNIT:||Controller’s Office. Specific questions regarding Policy content should be directed to the senior director, Sponsored Projects and Cost Analysis.|
|ABSTRACT:||The purpose of this policy is to set forth policy for transferring incurred costs on sponsored programs from one expenditure cost center to another.|
This statement sets forth the Policy for transferring costs to or from a sponsored award.
This Policy applies to all sponsored programs, federal, state and private, and all cost categories, including payroll costs.
1.2 General Understanding
1.2.1 Original Charges to Oracle Account – Project/Task/Award
Costs should be initially charged with certainty to the appropriate Oracle account project/task/award (PTA). The initial labor certifications and other non-salary charges for a sponsored award should be reviewed and authorized by someone with knowledge of the appropriate Oracle PTA to which the charge is allocable.
It is more appropriate and less questionable to charge costs to the correct Oracle PTA at the time they are incurred. Diligent monitoring of financial records and timely communication between principal investigators (PI) and departmental administrators should prevent the necessity for most cost transfers. However under certain circumstances, transfers may be appropriate.
Numerous or insufficiently documented cost transfers can result in questioned costs ineligible for reimbursement on the sponsored award or suspension of the university’s participation in federal programs. It is essential to provide detailed written explanations justifying all cost transfers.
Unallowable costs should never be charged directly to a federally sponsored award. If an unallowable cost is discovered during the normal periodic award reviews, a cost transfer should be immediately submitted to correct the error.
a. Allocable Cost
A cost as defined by the Office of Management and Budget (OMB) 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance) as allocable to a particular federal award or other cost objective if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received.¹
b. Allowable Cost
An allowable cost meets the following Uniform Guidance criteria:
- Be necessary and reasonable for the performance of the federal award and be allocable under these principles.
- Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items.
- Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity.
- Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost.
- Be determined in accordance with generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only as otherwise provided for in this part.
- Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period.
- Be adequately documented.²
c. Cost Transfer
A cost transfer is an after-the-fact adjustment or transfer of expenditures to or from a sponsored award by means of one of the following mechanisms:
- Payroll distribution adjustment of an allocation of effort processed in a prior month.
- Accounts payable redistribution adjustment of any non-salary charge to or from a sponsored award (e.g., travel, materials).
- Feeder cost transfer adjustment of any non-salary charge to or from a sponsored award from an internal feeder system.
d. Labor Certification
The official approval of effort allocations, which assigns salary costs to the appropriate Oracle accounts. This process takes place within the Oracle Labor Distribution (LD) Effort Certification System.
e. Reasonable Cost
A cost as defined by the Uniform Guidance is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-federal entity is predominantly federally funded.³
3.0 Roles and Responsibilities
The following roles and responsibilities have been established to provide reasonable assurance of internal control over compliance requirements. All CMU faculty and departmental staff are responsible for monitoring the expenditures throughout the lifecycle of the award to ensure that all charges to sponsored awards meet the requirements of the sponsor and comply with Uniform Guidance.
3.1 Principal Investigator (PI)
The PI is responsible for:
- The initial charges of allowable, reasonable and allocable direct costs to their sponsored awards and the timely review of the same to verify the costs are necessary for the project statement of work and ensure compliance with federal regulations and university policy.
- Requesting appropriate cost transfers to or from a sponsored award for costs not complying with applicable regulations and/or policy as soon as the discrepancy is discovered.
- Complying with the applicable closeout timeframe and managing the sponsored award prior to the end date and during award closeout to limit the number of last minute transactions and/or corrections.
3.2 Department Finance/Research Administrator
The department finance/research administrator is responsible for:
- Ensuring timely charging of allowable, allocable and reasonable costs to assigned sponsored projects.
- Completing and submitting cost transfers to Sponsored Projects Accounting (SPA) for approval under the direction of the PI while ensuring additional documentation requirements are met for sponsored projects.
- Maintaining supporting documentation for costs charged to sponsored projects in departmental records.
- Assisting the PI in complying with the applicable sponsored project closeout timeframe and procedures.
3.3 Sponsored Projects Accounting (SPA)
SPA is responsible for:
- Reviewing and approving all sponsored project cost transfers, payroll or non-payroll, prior to processing into the accounting records.
- Reviewing selected categories of costs charged directly to sponsored projects at closeout to assure compliance with federal or sponsor regulations and/or university policy.
- Conducting meetings or conference calls with department at least quarterly to review sponsored awards and discuss compliance.
- Recommending appropriate action if noncompliance is found on a sponsored award.
4.1 Cost Transfers
The administration of cost transfers is extremely important and sensitive when federal funding is involved. Federal agencies are especially concerned that costs be specifically identified with the funded activity they benefit with no, or minimal, use of cost transfers. Expenditures of funds for federally sponsored projects are subject to the allowability, allocability and reasonableness standards of Uniform Guidance and the negotiated agreements between the university and the federal government.
Therefore, it is required to provide detailed written explanations justifying all cost transfers for federally sponsored projects.
To be considered for approval, sponsored project cost transfers must meet all of the following criteria:
- Timely, documented and explained in detail.
- Adhere to the sponsor's standards.
- Include all appropriate authorizing signatures.
4.2 Sponsor Requirements
Sponsors may have more restrictive guidelines on cost transfers. Departments should consult with SPA when in doubt about the acceptability of a proposed cost transfer.
4.3 Cost Transfer Deadlines
Cost transfers should be prepared by the department and submitted to SPA as soon as the need for the sponsored project transfer is identified, but under most circumstances, not later than 90 days from the original transaction date or the original date of labor certification.
Cost transfers during award closeout: To facilitate the 90-day award closeout requirement, it is a best practice to complete all reviews and potential sponsored project cost transfers within 45 calendar days of the award end date prior to the SPA closeout review.
Regardless of the reason, transfers made to or from any sponsored award after 90 days raise additional questions concerning the propriety of the transfer and could potentially heighten the level of scrutiny applied to all cost transfers university-wide. Requests for transfers made after 90 days must include detailed documentation describing the extenuating circumstances leading to the delay and the appropriate approval signatures. A determination as to the legitimacy of the extenuating circumstances will be evaluated on a case-by-case basis by the director, Sponsored Projects Accounting/Receivables. There must be extraordinary circumstances and/or conditions beyond the control of the department. Guidance on extenuating circumstances can be found in the Cost Transfer frequently asked questions.
4.4 Cost Transfer Approvals
All sponsored project cost transfers require signatures from the PI, the preparer (usually a departmental administrator/business manager) and the sponsored project accountant.
Only in the case of exceptional circumstances will cost transfers, including payroll reallocations, be permitted more than 90 days after the original charge or effort certification. The exceptional circumstance for the cost transfer must be documented in detail and will require signatures of the associate dean and the director, Sponsored Projects Accounting/Receivables, whose determination of extenuating circumstances is final. Table 4 -1 summarizes required signatures.
Table 4‑1: Required Signatures
|Signature(s)||< 90 days||> 90 days|
|Associate Dean(s)||Not Required||Required|
|Director of SPA||Not Required||Required|
4.5 Cost Transfers for Contracts and Subcontracts Subject to the E-Verify Requirements
As a federal contractor, Carnegie Mellon is required to use E-Verify to verify the employment eligibility of all employees assigned to work on federal contracts and subcontracts containing the Federal Acquisitions Regulations (FAR) E-Verify clause.
4.5.1 Timeframes to Initiate E-Verify
|For Contracts Awarded After September 9, 2010||Newly Hired Employees Assigned to An E-Verify Federal Contract||Existing Employees Assigned to an E-Verify Federal Contract|
|First 90 days after the date of the contract award||Within 3 days of the date of hire||Within 90 days of the contract award or 30 days of being assigned to work on the contract, whichever is later|
|More than 90 days after the date of the contract award||Within 3 days of the date of hire||Within 30 days of being assigned to work on the contract|
4.5.2 Salary cost transfers
A salary cost transfer may be allowed for E-verify awards if the timing of the cost transfer is processed within the E-Verify timeframes. Evidence that the E-Verify requirements have been met will need to be provided at the time of the cost transfer. The E-Verify timeframes supersede the 90-day cost transfer period.
5.0 Related Information
- 2 CFR Part 200 – Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)
- Cost Transfer for Sponsored Programs Frequently Asked Questions Guidelines [pdf]
- Cost Sharing Guidance Document [pdf]