Change - Cost Transfers Involving Sponsored Projects

A change in the definition of a cost transfer in Policy 1305 Cost Transfers Involving Sponsored Projects has been approved and is effective as of January 31, 2020. Three sentences have been added (see highlighted section below) to the existing definition and the definition now reads:

Cost Transfer

A Cost Transfer is the reassignment of an expense to or from a sponsored project after the initial charging of the expense in the University’s accounting system. Cost Transfers include reassignments of salary, wages, and other direct costs. Cost Transfers do not include reclassification transactions within the same sponsored award. In addition, because salary allocations are initially made based on estimated effort over an extended period, Cost Transfers do not include changes to these allocations when the actual effort is determined to be different prior to, or due to, effort certification by the PI. This holds true as long as the change in effort does not alter previously a certified effort. However, reassignment of salary charges made in error are considered to be Cost Transfers.

This change is consistent with language in the Uniform Guidance that recognizes that the initial charging of salaries to an award is often an estimate and that there can be fluctuations over time. It is the effort reporting process at Yale that certifies that the final amount of the salary charged is accurate, allowable, and properly allocated. 

During the current effort reporting period, Payroll Accounting Adjustments (PAAs) resulting from the effort reporting process that are no longer considered to be a Cost Transfer (as defined in the revised Cost Transfer policy) still require completion of the PAA justification form. The administrator should select questionnaire reason “Reallocate effort to reflect actual effort“ and indicate “To adjust labor based on the effort certification process” in the explanation field.

The PAA will not be subject to the 90-day provision and will not need a more detailed extenuating circumstances explanation. PAAs submitted in this manner will not be “rejected” or “returned” by the Office of Sponsored Projects (OSP).

Please keep in mind that Policy 1305 - Section 1305.2, Financial Reports Should be Reviewed Regularly to Facilitate Timely Discovery of Errors has not been affected by this revision. It states:

A departmental business manager or other designated staff member must provide the account owners (PI) with appropriate monthly financial reports and assist the PI in reviewing such reports on a timely basis. The PI must review the monthly sponsored project report to identify legitimate errors in a timely manner and communicate required changes to the business office promptly.

Please note that this revision does not change this expectation.

For awards that expire in the middle of an effort reporting period, departments are responsible for ensuring the accuracy of the salary charges before OSP issues a final financial report. OSP must be contacted if errors are discovered after the issuance of the final report. Payroll reallocations processed in order to avoid overdrafts or to fully expend projects at termination are unallowable charges.

OSP will assess the effectiveness of the revised definition after the completion of the open effort reporting period. Contact osp.trainings@yale.edu with any questions.