Cost Transfer Policy For Federal Grants, Contracts, and Cooperative Agreements (INTERIM)

Policy Contents


Policy Statement

This policy, and its guidelines and definitions, outlines the requirements for cost transfers that involve a federal grant or contract. It is the practice of Emerson College that all costs shall be charged to the appropriate account when first incurred. Costs may not be transferred to a federal award after they are initially recorded, except in accordance with this Policy. Emerson requires that all cost transfers be completed in a timely manner, and are supported by documentation that fully justifies the appropriateness of the transfer. 

Reason for Policy

In accordance with the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, it is necessary to justify transfers of charges onto federally funded sponsored awards, when the original charge was previously recorded elsewhere on Emerson's General Ledger (GL).

This policy and guidelines set forth standards that are consistent with applicable federal guidance Part §200.303 of the Uniform Guidance, “Internal Controls,” and Part II, Chapter 7 of the National Institutes of Health (NIH) Grant Policy Statement.

Definitions

Accounting Adjustment: A retroactive re-assignment of an expense from one account to another, regardless of account type or origin. 

Spend Category: A alpha-numeric code in the Emerson Chart of Accounts that identifies the type of expense, such as exempt or non-exempt personnel, capital or non-capital equipment, travel, supplies etc. 

Cost Transfer: A cost transfer is the retroactive re-assignment of an expense from a sponsored or non-sponsored fund to (but not from) a federal award. Other kinds of Accounting Adjustments involving federal awards or non-federal sponsored awards are not Cost Transfers.

Documentation: A detailed explanation and supporting documents as evidence to substantiate the allocability, allowability, and reasonableness of a specific transaction and its transfer to the correct fund.

Worktag: In the Workday accounting system, a worktag is a label assigned to each transaction to indicate its purpose. Worktags are combined to accurately categorize transactions. For the purposes of this policy, common worktags referred to are Cost Center, Fund, Grant, Spend Category, and Revenue Category.

Account: For the purposes of this policy, “Account” refers to a specific combination of worktags assigned to a specific funding source, whether for a sponsored award or for the College’s non-sponsored finances. 

PI (Principal Investigator): As defined by the Office of Research and Creative Scholarship, the individual responsible for the overall management of a research project- initiating the project; setting goals and objectives; and determining which project expenditures are necessary, allowable, allocable, and reasonable. A PI may delegate authority for this determination but may not relinquish the primary responsibility.

Procurement Card Interim Reallocation Process: The online method of reallocating charges from the default Cost Center assigned to a purchasing card to another authorized Cost Center or worktag. These reallocations occur within the purchasing card cycle of the original purchase.

Sponsored Award: A grant, contract, or cooperative agreement from an outside entity in which the funds awarded are restricted to a specific purpose, and requires adherence to a line-item budget, a statement of work, a specific period of performance, and terms and conditions as outlined by the sponsor.

Federal Award: A Sponsored Award from a government agency. 

Verification of Transactions: A process in which financial transactions are analyzed to determine if they meet the standards of reasonableness, allowability, and allocability, and are in accordance with sponsor and College guidelines.

Statements of Elaboration of the Policy

  1. Applicability of Policy
    1. Principal Investigators (PIs) and other College employees who are involved in the administration and conduct of sponsored awards are expected to be aware of and comply with this policy.
  2. Procedures for the Verification of Transactions on Sponsored Awards
    1. In accordance with the Uniform Guidance, the four guiding principles of Reasonableness. Allocability, Allowability and Consistent cost treatment must be applied in determining whether a cost can be charged to a Sponsored Award.
    2. Emerson College expects that all charges will be allocated to the appropriate Account when they are initially incurred. It is the responsibility of the PI to verify financial transactions on their Sponsored Award(s) in a timely manner. 
    3. The PI, with the assistance of the appropriate administrative staff (ORCS, school and department-level admins) should conduct a timely and regular review of Sponsored Award expenditures.  A regular Verification of Transactions will help minimize errors and reduce the need for Accounting Adjustments and Cost Transfers.
    4. When a costing error is identified, the PI and his/her department shall notify ORCS. An Accounting Adjustment to correct the transaction must be initiated promptly after the error is discovered.
    5. For Federal Awards, Accounting Adjustments must be accompanied by the additional Cost Transfer steps as outlined below. 
  3. Procedures for Correcting Expense Transaction Errors (non-Cost Transfer)
    1. There are two types of Accounting Adjustments, one for Salary and Wages, and the other for non-personnel expenditures. 
    2. Both types of Accounting Adjustments can be initiated by emailing a detail listing of the relevant transactions to Emerson College’s Accounting Department, along with the correct Account(s) to which the transactions should be moved. 
    3. All Accounting Adjustments should be accompanied by a sufficient justification for transferring the charges to the new Account, and an explanation as to why the charges were not initially made to the appropriate Account. 
    4. The following types of Accounting Adjustments are not subject to federal Cost Transfer requirements outlined in Section IV of this policy;
      1. Moving an expense between two Emerson (non-Sponsored or non-Federal) accounts;
      2. Moving an expense between any kind of Account and a non-federal Sponsored Award;
      3. Moving an expense from a Federal Award to any other kind of Account.
  4. Procedures for Processing a Cost Transfer
    1. When an expense is to be transferred from any kind of Account to a Federal Award, it is classified as a Cost Transfer.

    2. A Cost Transfer request must be submitted to Accounting in the same fashion as an Accounting Adjustment, but must include a completed and signed Cost Transfer Justification Form. The form should be signed and dated by the Principal Investigator or other authorized official, and include adequate information addressing the following:

      1. How the error occurred; 

      2. Justification for why the charge(s) should be transferred to the Federal Award; and 

      3. Steps taken by PI and staff to ensure similar errors do not occur in the future.

    3. All documentation provided will be reviewed by the Office of Research and Creative Scholarship and the Finance office to evaluate the appropriateness of the Cost Transfer, which is subject to audit.
    4. Salaries and wages that are subject to a Cost Transfer must:
      1. Have an appropriate amount of fringe benefits (using the approved federal rates) included in the transfer; and
      2. Be retroactively certified via a suitable method of Effort or Payroll Certification for Faculty effort on Federal Awards within 30 days of the date of the Cost Transfer.
  5. Time Frame for Cost Transfers

    1. An Accounting Adjustment is classified as a Cost Transfer based on two factors:

      1. Whether an expenditure is being transferred to a Federal Award account; and

      2. The number of days that have elapsed between the date(s) of the original transactions and the date of the proposed Cost Transfer.

    2. Because a Cost Transfer is an after-the-fact correction, timely processing is essential. Cost Transfers represent a significant audit risk for the College. 
    3. The longer the duration between the original transaction date and the proposed transfer date, the stronger the justification and supporting documentation are needed.
    4. Cost Transfers are subject to the following schedule:
      1. Date of Original Transaction Cost of transfer requirements
        Within the same accounting month as Accounting Adjustment n/a. Not subject to CT requirements
        Within 90 calendar days after the original transaction(s) posted to an account Detailed transaction report showing the relevant expenditures; CT Justification Form signed by PI with Questions 1-3 answered
        More than 90 calendar days after the original transaction(s) posted to an account Detailed transaction report showing the relevant expenditures; CT Justification Form signed by PI with Questions 1-5 answered
         
        1. Timely Costing Error Correction (90-day rule). In accordance with OMB guidance and NIH Grants Policy, Cost Transfers should be accomplished within 90 calendar days of the original transaction date. The submission date on the Cost Transfer Request Justification Form shall be the official submission date.
          1. All Cost Transfers require the approval of ORCS.
        2. Late Cost Transfer (>90 days). A Cost Transfer is considered untimely or late when it is processed more than 90 calendar days from when the charge first appeared on the monthly detail transaction report. Untimely transfers requests will only be approved under extenuating circumstances. 
          1. All Late Cost Transfers require the approval of ORCS and the Controller.
  6. Justification and Documentation of Cost Transfers
    1. Acceptable Criteria for a Cost Transfer. A retroactive cost transfer is justified in the following circumstances: 
      1. Clerical and data entry errors -- Any request to correct an incorrect allocation of an expense or a clerical error should be accompanied by an explanation of how the error occurred. The correcting entry must include a statement certifying that the adjusted charge/credit is correct and appropriate for the new fund to be charged. Any explanation that merely states that the transfer is made "to correct error" or "to transfer to correct project" is not sufficient. 
      2. Reallocation of expenses where multiple projects benefitted.
      3. Transfer of eligible pre-award costs from a discretionary account.
      4. Other extenuating circumstances, in accordance with federal regulations, sponsor terms, and College policies.
    2. Unacceptable Criteria for a Cost Transfer. Federal regulations prohibit Cost Transfers based on the following justifications:
      1. Cost transfers solely for the purpose of transferring overruns or deficit balances
      2. Cost transfers solely for the purpose of utilizing unexpended funds of a sponsored award
      3. Cost transfers used as a cost management strategy
      4. Cost transfers for any other reasons of convenience.
    3. The frequency of Cost Transfers to or from a sponsored project may be an indication of poor award management or perceived as spending down on an award which may compromise the integrity of the research.
  7. Authorization, Approval, and Processing of Cost Transfers
Role Process Authorizations/Approvals
Principal Investigator
  1. Identify charges to be transferred to a federal award.
  2. Alert ORCS; work with ORCS to complete form and documentation.
For each CT, sign and certify that:
  • The change indicated on the grant/contract is correct;
  • The costs are allowable;
  • Funds are available to make the transfer; and
  • The grant/contract benefiting directly from the respective charges is the one indicated.
Cost Center Manager
  1. Provide detail listing of charges to be transferred to Federal Award.
For each CT, sign and certify that:
The charges to be transferred, and the Workday worktags listed, are correct.
 
ORCS
  1. Work with the PI to identify charges to be transferred to a Federal Award. 
  2. Assist PI with completing and signing Cost Transfer Request Justification Form, and compiling supporting documentation; obtain Cost Center Manager’s signature.
  3. Submit CT request and supporting documentation to accounting @emerson.edu.
ORCS reviews each CT for the following:
  • The change indicated on the grant/contract is correct;
  • The costs are allowable;
  • Funds are available to make the transfer; and
  • The grant/contract benefiting directly from the respective charges is the one indicated.
  • The justification for the Cost Transfer is acceptable, in accordance with federal guidelines
Controller
  1. Review and Approve Late Cost Transfer Requests (Over 90 Days)
The Controller reviews and approves CT requests that are over 90 days from the original Transaction Date. 

Cross Reference to Related Policies

Responsible Office

Key Offices to Contact Regarding the Policy and its Implementation

Links to Procedures and Forms