Oregon State University

209-08: Cost Transfers/Redistribution

Grant, Contract & Gift Accounting Manual
Section 209: Policies
Effective: 09/10/2007
Revised: 02/24/2014

Purpose

To prescribe the conditions under which cost transfers may be accepted as charges to sponsored agreements or other restricted funds.

Background Information

Cost transfers occur when expenditures are moved to or from a sponsored project fund.  The administration of cost transfers is critical because expenditures may only be charged to a particular sponsored project if they can be specifically identified with the funded activity they benefit.  Office of Management and Budget Circular A-21 states that expenses “. . . may not be shifted to other sponsored agreement in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.”  The Circular also provides “Any cost allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally sponsored agreements.” 

Inadequate documentation can result in audit findings and/or a disallowance of the cost.

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Applicability

Persons in Oregon State University (OSU) departments who work with financial aspects of sponsored projects – principal investigators, project directors, accountants, and others.

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Policy

Transfers of costs to or from sponsored agreements that represent corrections must be made promptly after the errors are discovered.  The transfer/redistribution must be supported by documentation that contains a full explanation of how the error occurred and a certification of the correctness of the new charge.  An explanation that merely states that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient. 

The documentation for cost transfers must be retained for the period stipulated in the record retention schedule and be made available for verification during the course of an audit or other review.

Once a transfer is made, the new source of funding is considered correct.  Further transfers of that same cost are not allowable.

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Procedure

A. Types of Transfers or Corrections

  1. Correction of Errors
    Correction of clerical errors must be made promptly after errors are discovered. The transfer must be supported by text explaining how the error occurred, i.e.: obvious typographical error.
  2. Unallowable Cost
    If you have been notified by the Office of Post Award Administration that this cost is not appropriate on the grant/contract and is to be paid from state funds, just state that fact.
  3. Closely Related Work
    When closely related work is supported by more than one funding source, a cost transfer may be made between those indexes, provided it is a proper charge and the transfer is supported by an explanation.

    A proper explanation might be: “Both these projects concern DNA research conducted by Dr. Meeks and it has been determined that this glassware charge more properly belongs on E0078A.”

When closely related work is supported by more than one funding source, a cost transfer between funds may be made under these conditions:

  • The cost is proper and allowable.
  • The transfer is made within 90 days of the time of the original charge.

Justification for the transfer is documented by the PI/Dept.  and kept for audit purposes and review by the Office of Post Award Administration.  The Business Center making the cost transfer d should file a copy in Nolij under the document number.

B. Text Checklist

  1. The text of a cost transfer JV must include the following: The reason why the expense was charged incorrectly to the  original  project  
  2. How the expense directly benefits the receiving project  
  3. The reasons for any delay in a timely processing of the transfer  (After 90 days)
  4. The transactions should be corrected document-by-document, line-item by line-item, referencing the original document number and/or referencing to the support documentation in Nolij under the JV number.  (ex-see Nolij J0XXXXXX for detailed information)  
  5. Contact Name (First, Last) and phone number

If the above information is not included in text, approval of the document could be delayed or disapproved.  Explanation must be self-explanatory for possible future audits.

C. Timeliness of Transfers

Cost transfers should be made within 90 days of the original charge.  Transfers in excess of 90 days require approval from the Office of Post Award Administration.  Approval can be requested by including additional text with the appropriate justification in FOATEXT of your journal voucher.  Transfer will not be approved without valid explanation of late transfer, see section B Text Checklist.

Payroll corrections are completed through the HRIS Payroll system by using a Labor Distribution form.  Refer to the Payroll Manual for further information.  Note that any changes or cost transfers must be supported by accounting records. Progress reports sent to sponsoring agencies must reflect data reported on effort reports.  Payroll changes are very limited after fiscal year end close. 

Note: Prior year corrections must contain appropriate justification on the labor distribution form and be approved by the Office of Post Award Administration Manager.  The approved redistribution will be entered by the Business Affairs Payroll staff.

If payroll correction is for a prior quarter, and the Personnel Activity Report (PAR) form has already been signed and filed in Nolij, it will be necessary to correct the PAR form.  The individual will need to re-sign the form.  The corrected PAR form should then be filed in Nolij. The department is required to retain backup documentation for review. (See Section 211: Personnel Activity Effort Reporting (PAR)

Once the grant or contract has ended, the 90-day rule does not apply.  It will be necessary to follow the policy for closeout.  See Section 300: Closeout of Award in the GCG Manual.

D. Backup Documentation

Purpose: Documentation is a key element in providing support for a cost transfer and explains the purpose of why the cost transfer was done. Cost transfer documentation is needed for OSU's external auditors. Additionally, Federal auditors carefully examine cost transfers made by universities. Thorough explanations and documentation is essential to avoid audit comments and possible disallowances.

Documentation should be able to provide the reviewer with a clear purpose as to why you are making the entry. Documentation must also be clearly labeled, should be understandable to the reviewer, and include an acceptable type of approval as outlined below.

Examples of Documentation Types:

  1. Transaction Detail Reports
  2. Banner Reports
  3. Data warehouse reports
  4. Supporting schedules-such as excel documents and stand-alone reports from independent operating systems.
  5. Other documents-if specific e-mails or word documents provide a better understanding of the entry, you should attach those documents to the entry. Previous journal entries that were done incorrectly can provide support on a corrected journal entry.

Acceptable Types of Approval

  1. E-mail from PI approving or confirming change
  2. Written request for change from PI
  3. Detail report signed by PI, that includes correction

All journal voucher entries and complete supporting documentation should be  filed in Nolij by the  Business Center for verification during the course of an audit or other review.

Record Retention for Business Centers

  1. 3 years after final financial report is submitted and the project is closed, or
  2. All records for any project under audit must be kept, even if it exceeds 3 years.

http://archives.library.oregonstate.edu/handbook/chapter5/titles_D_N.html#19

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