Federal Grants Cost Transfer Policy

Purpose of the Federal Grants Cost Transfer Policy
The Colleges expect costs to be charged to the appropriate sponsored project when first incurred. However, there may be circumstances in which it is necessary to transfer expenditures to or from a sponsored program subsequent to the initial recording of the charge in accounting system. Review of sponsored project activities should include the determination that charges are reasonable, allowable, consistently treated, and directly support the scope of work for the project. To be allowable, the cost transfer request must be timely, fully documented, conform to the Colleges’ and sponsor’s standards (including Federal regulations), and have appropriate authorization.

At no time should federally funded accounts be used as holding accounts for expenses that will subsequently be transferred elsewhere.  Also, transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.

Explanation of Federal Grants Cost Transfer Policy
Proper management of funds is essential to uphold the fiduciary responsibilities of the Colleges. Frequent, late, inadequately documented, or unexplained transfers, especially those that involve sponsored projects with overruns or unexpended balances, raise serious questions about the propriety of the transfers, and may result in required corrective actions, additional award terms and conditions, expenditure disallowances and/or subsequent reduction in funding. Knowledge of award and policy requirements and ongoing monitoring will improve the quality of financial reporting, improve compliance with regulatory requirements, and reduce the administrative burden, inefficiencies and risks inherent in corrections.

Cost Transfer Requirements
A. Timely -- Cost transfers must be initiated immediately after the error is identified and completed within 90 days of the posting of the original charge to the accounting system. If a transfer is completed after the 90-day period, additional documentation regarding why the cost transfer is late and what steps will be implemented to avoid late cost transfers in the future is required. If incorrect charges are discovered they must be transferred from the sponsored project regardless of timeframe.  Timely review of project expenditures is vital to ensuring compliance with this requirement.

B. Appropriate – Cost transfers are appropriate when they are reasonable, allocable, allowable, consistent, and conform to the Colleges’ and sponsor’s guidelines.

C. Documented -- Cost transfers must include proof of the original charge (e.g., an invoice) accompanied by supporting documentation that fully explains how the error occurred and a certification of the correctness of the new charge. As a guide, the National Institutes of Health’s Grant Policy Statement 7.5, states, “An explanation merely stating that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient.” If a cost transfer is made within 90 calendar days from the original charge, questions 1 and 2, below, must be answered; if over 90 days, questions 1-4 must be answered.

  1. Why was the expense originally charged to the department/program from which it is now being transferred?
  2. Why should this charge be transferred to the proposed receiving department/program?
  3. Why is the cost transfer being requested more than 90 calendar days from when the original transaction was posted in the accounting system?
  4. What action will be taken to eliminate the future need for cost transfers of this type? When is this action being taken?

D. Authorized – Cost transfers may only be initiated by the PI/PD. The initiator’s signature must be documented on the cost transfer form.  Cost transfers that involve sponsored projects and a department must also be signed by the Department Chair.  Cost transfers that involve both sponsored programs and endowment funds must also be approved by the responsible administrator of the endowment.  Cost transfers requested outside the 90 calendar day timeframe must also be approved by the Provost.  The date of each signature/approval must be documented. 

Roles and Responsibilities
PI/PD

  1. Oversees the management of the sponsored project to minimize the need for cost transfers.
  2. Ensures individuals who initiate transactions related to a sponsored project have the required authority and knowledge of policies.
  3. Completes regular (at least quarterly) reviews of expenditures.
  4. Initiates requests for cost transfers to correct errors or reallocate costs in a timely manner.
  5. Provides complete, clear and reasonable justification for cost transfers as required by this policy.
  6. Confirms the cost transfer is allowable, reasonable, consistently treated, and allocable to the funding source to which it will be charged, and conforms to the Colleges’ and the sponsor’s guidelines.
  7. Verifies the cost transfer request is completed properly and that sufficient documentation is provided to support the request.

Business Office

  1. Reviews and approves cost transfers and supporting documentation in accordance with the Colleges’ policy, sponsor guidelines and budget.
  2. Provides training on utilizing PeopleSoft to manage and analyze costs in accordance with the Colleges’ policy and the sponsored project. 
  3. Advises PI/PD, departmental and college staff on grants cost transfer policy and procedures.
  4. Provides training on the Federal Grants Cost Transfer Policy and principles of sponsored project post-award administration.

Disallowed Cost Transfers/Allocations
As required by Federal regulations, the Colleges retain external auditors to conduct extensive reviews of Federal grant and contract expenditures, which includes detailed reviews of cost transfers. In the event a cost transfer does not meet the sponsor’s requirements, the dollar amount of the transfer will be disallowed and the department responsible for the sponsored project must reimburse the sponsored project for the amount of the disallowed cost.

Summary

A. All cost transfers involving sponsored grants should be made within 90 days of the original charge but errors must be corrected whenever identified without regard to this time limit. There may be unusual circumstances when a cost transfer may be appropriate after the 90-day deadline but transfers of this nature will be subject to increased review.

B. The transferred cost must be appropriate (as defined above) under the terms of the grant receiving the charge.

C. Written justification and documentation must accompany the cost transfer request. Use the Federal Grant Cost Transfer Request form available online here.

D. Cost transfer requests will be returned to the PI/PD if:

  • Inadequate documentation/explanation is provided.
  • The request does not meet the time deadline and the required additional explanation and action plan has not been provided.
  • The request is not properly authorized.
  • As addressed in UG §200.405, the purpose of the transfer is to:
    1. Avoid or reduce a deficit on a sponsored grant;
    2. Avoid restrictions imposed by Federal statutes, regulations or pre- or post-award restrictions;
    3. “Use up” unspent funds from a sponsored grant; or
    4. Otherwise represents a cost management strategy.

CONTACT

Business Office
22 Seneca Street
Geneva, NY 14456

Phone: (315) 781-3343
Fax: (315) 781-3655
businessoffice@hws.edu

Hours: 8:30 a.m. to 5:00 p.m.

 

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Hobart and William Smith Colleges
Geneva, NY 14456
(315) 781-3000

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