Purpose

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

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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 grants/contracts 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.

B. Text Checklist

When entering a cost transfer journal voucher, ask yourself the following questions.

Does your text clearly show:

1. The reason why the expense was charged incorrectly to the first   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   
5. Contact Name (First, Last) and phone number?

   Any “No” answers on this checklist could result in delays or ultimately in the disapproval of the transfer.

Keep this standard in mind:

Would an outside auditor reviewing this documentation three years from now understand this explanation?

C. Timeliness of Transfers

To the maximum extent possible, cost transfers should be made within 90 days of the original charge.  When greater than 90 days, request approval from the Office of Post Award Administration.  Approval can be requested by including additional text with the appropriate justification to FOATEXT in your Banner journal voucher entry form.

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 submitted to the Office of Post Award Administration, 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 forwarded to the Office of Post Award Administration. The department is required to retain backup documentation for review.

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 kept by the department for verification during the course of an audit or other review.

Record Retention

1. 3 years after final financial report is submitted and the project is closed, or
2. For awards that are renewed quarterly or annually, 3 years after quarterly or annual financial report is submitted unless specified as longer by the terms of the contract, or
3. All records for any project under audit must be kept, even if it exceeds 3 years.