Finance Administrative Policies and Procedures
Section: 4- Grants and Contracts Accounting
Policy Procedure: 4-3.12
Subject: Requesting a Cost Transfer to/from a Sponsored Project
Effective Date: 7/17/1997
Responsible Department: Grants and Contracts Accounting

Overview

The purpose of this procedure is to provide guidelines and procedures for requesting cost transfers to or from Sponsored Projects. Cost transfers are subject to audit scrutiny and therefore must meet cost allowability and allocability requirements.

Procedures

A. Cost Transfers of Personal Service Expenditures:

1. Complete a salary distribution change (fund change) form.

2. Provide a valid and complete explanation if the cost transfer changes the amount of salaries and fringe benefits being charged to the Sponsored Project(s). Acceptable reasons for a cost transfer to be submitted include:

a. To recognize effort in a past pay period on a newly established UDAK project.

b. To correct a posting or accounting error made in a prior period.

c. To correct allocation of past period charges based on the employee's actual effort distribution as certified on his/her Quarterly Activity Report.

d. To move excess or unallowed charges to the appropriate UDAK.

3.  Tranfers made more than 60 days after the posting date will be considered a late transfer and will require additional justification explaining why the transfer was late.

4. Route the salary distribution change through normal approval channels in Finance and Administration. GCA will review the salary distribution and explanation/justification after the payroll accounting system is updated and will contact the Business Manager if corrections are necessary.

B. Cost Transfers of Cost Overruns and Non-Personal Service Expenditures:

1. Complete a "Request for Cost, Commitment, or Encumbrance Transfer Form - Sponsored Projects". See forms section for links to forms and examples.

2. Forward the original cost transfer form to GCA for review and approval. GCA will review it and either contact the department for corrections or approve the request. Upon final approval GCA will process the cost transfer journal entries.

Excluded from these procedures are:

  • initial transfers of charges for supplies, services, etc., from inventory or from a service/recharge center to Sponsored Projects in accordance with established accounting procedures.
  • corrections of processing or keying errors that occur within MUSC's accounting system.
Forms

Request for Cost, Commitment, or Encumbrance Transfer - Sponsored Projects

Blank Form

Sample Form

Definitions

A "Cost Transfer" occurs when costs, commitments, or encumbrances are moved from a Non-Sponsored Project to a Sponsored Project, or vice versa, or from one Sponsored Project to another.

General Guidelines

A. Justification Requirements:

Cost transfers required to correct errors or achieve proper, consistent, and equitable distribution of costs will be allowed if adequate justification if provided and necessary approvals are obtained. Documentation must be included that explains how the error occurred. Additionally, a certification of the correctness of the new charge by a responsible departmental official. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient."

A salary distribution change that increases or decreases the amount of salaries and fringe benefits being charged to Sponsored Project(s) should be made as soon as possible after the need for the transfer is recognized..

Questions regarding cost transfers should be addressed to the appropriate Grants and Contracts Accounting Accountant based on departmental assignment (see Distribution of Grants by Administrator) or at 792-2850.

B. Allowable and Unallowable Cost Transfers:

1. Examples of allowable cost transfers include:

a. Expenses not allowable on a Sponsored Project moved to a Non-Sponsored Project due to sponsor guidelines.

b. Personal services (salaries and fringe benefits) expenditures moved to a new award if award notification from the sponsor has been delayed.

c. Personal services expenditures necessary to align payroll charges with an employee's certified Quarterly Activity Report.

d. A cost overrun that has occurred once a Sponsored Project has terminated.

e. An expense posted to a Sponsored Project with an invoice date or pay period end date after the Sponsored Project has terminated

2. Examples of unallowable cost transfers include:

a. Moving charges from an over-expended Sponsored Project to another Sponsored Project with a free balance.

b. Moving charges to an active Sponsored Project when the charges have been posted to the project after its termination date.

c. Moving equipment and supplies charges to a Sponsored Project with a free balance within 90 days of termination.

d. Moving charges from a Sponsored Project to one which is about to terminate and has available uncommitted funds which will be lost if not expended.

e. Moving charges from a corporate award to a Federally sponsored award, particularly if the two awards deal with the same area of research.

Instructions

a. Date of Request, From, Department, E-mail: Enter this information for the Business Manager or designee responsible for the transfer request.  The department sends GCA the Request for Cost, Commitment, or Encumbrance Transfer Form.

b. From UDAK: Enter the UDAK where the expense is currently posted.

c. To UDAK: Enter the UDAK to receive the transfer.

d. Posting Date: Enter the posting date in the accounting system. This will apply when requesting transfer of a particular expense. (If the project is overspent in a budget category that was not caused by one particular expense transaction, leave blank.)

e. Account Posted To: Enter the 5-digit account object code number to which the expense is currently posted.

f. Reference Number: Enter the RQ#, PO#, FA#, or Purchasing Card # that applies. If this project is overspent in a budget category that was not caused by one particular expense, enter "MASS".

g. Account Transfer To: Enter the 5-digit account object code number to receive the transfer.

h. Amount: Enter the expense dollar amount or the cost overrun dollar amount.

i. Explanation & Justification: Provide answers for Questions 1 and 2

j. The Business Manager or designee must sign the request form. If the expense is being transferred from one department/unit to another department/ unit, both department/unit Business Managers must provide approval signatures.