1305 Cost Transfers Involving Sponsored Projects

Policy Sections

1305.1 Fundamentals of Cost Transfers

1305.2 The Appropriate Sponsored Project Should be Charged Initially

1305.3 Financial Reports Should be Reviewed Regularly to Facilitate Timely Discovery of Errors

1305.4 Authorization and Documentation of Cost Transfers

1305.5 Cost Transfer Approval

This policy applies to all members of the Yale community involved in the initiation, preparation, review, and approval of Cost Transfers as defined in Definitions, below.  It establishes and describes the requirements and procedures that apply when a Cost Transfer is needed.

The University is committed to ensuring that all Cost Transfers (either in the form of a payroll accounting adjustment (“PAA”), accounting adjustment (“AA”), or non-salary manual journal entry (“JE”)) are appropriate and conducted in accordance with sponsor terms and conditions, applicable regulations, and University policy.

This policy exists to ensure the allowability of the University’s charges for salaries, wages, goods, and services being transferred to or from a sponsored project after the initial charging of the expense in the University’s accounting system.  Additionally, this policy is issued to ensure compliance with sponsor terms and conditions, regulations, and University policies.  Timeliness and completeness of the explanation of the transfer are important factors in supporting allowability and allocability in accordance with federal and University requirements.

Approver

The individual whose role is to support the proper execution of a Cost Transfer by: i) confirming compliance with University policy and with sponsor terms and conditions, ii) reviewing that the transaction’s information and supporting documentation entered by the Preparer is reasonable, appropriate, and complete, iii) reviewing accounting information and the source of funds, and iv) approving the Cost Transfer in Workday.

Cost Transfer

A Cost Transfer is the reassignment of an expense to or from a Sponsored Projects Financial Administration (“SPFA”)-Managed Sponsored Award 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 Workday sponsored award so long as no funding or other restrictions exist that would disallow the reclassified transfer.  In addition, because salary allocations are initially made based on estimated effort over an extended period, Cost Transfers do not include modifications to the original effort from costing allocations when actual effort is determined to be different prior to, or due to, effort certification by the Principal Investigator (“PI”).  Reassignment of salary charges made in error or from a suspense account are considered Cost Transfers.

Preparer 

The individual who is responsible for providing (and obtaining from the Requestor, as needed) all necessary information to verify, complete, and support the proper execution of a Cost Transfer. This includes: i) gathering complete supporting documentation, ii) providing the appropriate and complete transaction description addressing the “Who”, “What”, “When”, “Where”, and “Why,” iii) entering valid and appropriate account(s), and iv) entering the Cost Transfer information into Workday.

Sponsored Projects Financial Administration (“SPFA”)-Managed Sponsored Awards

SPFA-Managed Sponsored Awards are identified as any grant worktag within funds “FD02 – Grants and Contracts-Federal” and “FD28 – Grants and Contracts-Non-Federal.”  Note: Industry clinical trials, which are grant worktags identified within fund “FD29 – Grants and Contracts – Industry Clinical Trials,” are excluded from this policy. 

All Principal Investigators (“PIs”), designated delegates (“PI-delegated Approvers”), and their Departmental Business Office (“DBO”) or designee are responsible for ensuring that Cost Transfers that represent corrections of errors are made promptly.

Cost Transfers must be supported by documentation that contains a complete explanation of how the error occurred and a correlation of the charge being transferred to the project to which the transfer is being made.  Explanations such as “to correct an error” or “to transfer to correct project” are insufficient.

Cost Transfers may not be used as a means of managing awards.  Cost Transfers to any sponsored project are allowable only where there is a direct benefit to the sponsored project being charged.  An overdraft or any direct cost item incurred during the conduct of one sponsored project may not be transferred to another sponsored project merely for the sake of resolving a deficit.  Cost Transfers should not be used at the end of a sponsored project to spend down remaining funds.

Cost Transfers should be prepared and submitted within 90 days from the 5^th day of the calendar month after the date the original transaction appears on the award.  Any Cost Transfer submitted after this date is considered a “late” Cost Transfer and must include additional supporting documentation addressing the circumstances causing the late transfer and remediation plans to ensure that future Cost Transfers will be done in a timely manner.  For example: The original transaction is posted to the general ledger on April 4^th.  The calculation of 90 days starts from May 5^th (the 5^th day of the calendar month that follows the date of the transaction).  The Cost Transfer must be prepared and submitted to SPFA by August 3^rd.

In cases when the sponsor’s (federal or non-federal) terms and conditions relating to the timing of Cost Transfers are stricter than Yale policy, the sponsor’s terms and conditions are applicable and supersede Yale’s policy.

Note: Agencies that fall under the Department of Health and Human Services (“DHHS”) [i.e., Agency for Healthcare Research and Quality (“AHRQ”), Centers for Disease Control and Prevention (“CDC”), Food and Drug Administration (“FDA”), Health Resources and Services Administration (“HRSA”), Substance Abuse and Mental Health Services Administration (“SAMHSA”), Administration on Aging (“AoA”), as well as other HHS agencies (excluding the National Institutes of Health)] are subject to the following condition in the HHS Grants Policy Statement: “Permissible cost transfers should be made promptly after the error occurs but no later than 90 days following occurrence unless a longer period is approved in advance by the [Grants Management Officer] GMO.”  Cost Transfers requiring sponsor prior approval must be routed to the appropriate Authorized Organization Representative (“AOR”) for institutional approval and submission to the sponsor.

Cost Transfers to correct an error must be completed regardless of timeframe if the correction removes costs from the sponsored award.

Yale University expects that costs directly charged to federally sponsored awards received by the University will comply with the cost principles outlined in 2 CFR Part 200.

The University expects that all costs, regardless of source of funds, are charged correctly at the outset.  Sponsored award charges must be in accordance with the sponsor’s terms and conditions and applicable regulations.  For federally funded sponsored projects, the following regulations and conditions apply, unless otherwise stated in the award:

Under 2 CFR Part 200, costs must meet the following conditions:

• be necessary and reasonable for the performance of the award and be allocable to the award;
• be allowable (the cost is allowed by federal regulations, sponsor terms and conditions, including program specific requirements and University policy);
• treated consistently (a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost);
• be determined to be in accordance with generally accepted accounting principles (“GAAP”);
• not included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period; and
• be adequately documented.

Goods and services should be charged or allocated among sponsored projects at the time of the original purchase whenever possible and practical, to avoid unnecessary Cost Transfers.  (See Allocability of Costs and Form 1304 FR.09.)  The PI and the Department Business Office (“DBO”) are expected to make personnel and corresponding Payroll Costing Allocation determinations before any individual devotes effort to the project.  When appropriate, an At-Risk Account should be utilized (e.g., pre-award costs).  (Refer to Allocation Principles and Methodologies for additional information.)

A Departmental Business Office (“DBO”) or designee is required to provide the PI with appropriate monthly financial reports and assist the PI in reviewing such reports on a timely basis.  PIs are required to review the monthly sponsored project report to identify errors in a timely manner and communicate required changes to the business office promptly.

Note: The frequency of Cost Transfers may be an indication of poor awards management.

Individuals who prepare, approve, or authorize Cost Transfers involving sponsored projects must complete the University’s Cost Transfer Principles training in order to process Cost Transfers.  Periodic re-training of this course is required to continue participation in the Cost Transfer process.  Additionally, all Cost Transfers involving sponsored project funds, whether for payroll or non-payroll, require that different individuals prepare and approve Cost Transfers to ensure that no one person has complete control over all aspects of a financial transaction.

The DBO, Preparer, and Approver are each responsible for ensuring that requested transfers are made promptly and all required documentation supporting the transfer is uploaded to the transaction in the financial system according to Policy 1105 Retention of University Financial Records or attached to the Cost Transfer.

Note: Documentation requirements supporting Cost Transfers are located in Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects.  Care must be exercised when preparing a Cost Transfer. When a Cost Transfer is necessary, the following information is required:

• authorization in writing that is signed and dated (email is acceptable) from the PI, or designee.  Note: PI authorization is not required for PAAs that are generated from the effort certification process.  Faculty members who certify their own effort satisfies the approval;
• a detailed statement explaining the reason for the Cost Transfer, which should also include an explanation as to how the error occurred;
• a description of how the cost benefits the award to which the cost is being transferred; and
• documentation that provides evidence of the existence of the charge on the award from which the cost is being removed that dates and verifies the original charge (applicable to manual journal entries only).

Additional supporting documentation/explanation must be provided if any of the following conditions exist.  The Cost Transfer is:

• more than 90 days from the 5^th day of the calendar month after the date the original transaction appears on the award or, if charged to an award from any of the Department of Health and Human Services agencies (excluding the National Institutes of Health, see above Policy Statement “Note” in section 1305.1), is over 90 days following occurrence;
• in the final months of, or after, the award period for the award that is to receive the transferred cost; and
• for any human subject or animal-related charges.

SPFA reviews select submitted Cost Transfers (as outlined in Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects) and, if approved, posts them to the University’s financial system.  SPFA returns (via “send back”) any Cost Transfer not meeting the requirements of this policy and request that any additional information and supporting documentation necessary to ensure compliance with this policy is re-submitted.  If attempts at gathering sufficient documentation are not met, SPFA may deny the Cost Transfer and remove the inappropriate cost from the relevant award, as required.

Note: Successfully submitting a Cost Transfer in the University’s financial system does not necessarily mean the Cost Transfer was approved by SPFA.  Cost Transfers found to be inappropriate will be charged to the department’s general funds.  Refer to Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects.

Principal Investigator (“PI”)

• Reviews monthly Account Holder Reports, Effort Certification Statements during the certification periods, and any other necessary reports to identify errors in a timely manner and promptly communicates required changes to the departmental business office to enable charges to be made correctly to the appropriate awards.
• Provides written or email authorization for Cost Transfers which represent the proper allocation of expenses or the correction of errors. Note: PI authorization is not required on PAAs generated from a changed effort certification statement, as the certification of effort fulfills this requirement.
• Establishes sponsored-project budgets and plans and documents cost allocation methods.

Delegated PI Approver

• Provides written or email authorization for Cost Transfers which represent the proper allocation of expenses or correction of errors.

Departmental Business Office (“DBO”) or Business Support Unit or Lead Administrator

• Provides PIs with the Account Holder Reports and/or other reports as necessary. Assists PIs in reviewing those reports, preferably on a monthly basis.
• Ensures that Cost Transfers requested by PIs are executed promptly and include proper justification and all required documentation.
• Advises PIs about University policies and procedures, sponsor policies and procedures, and regulations regarding Cost Transfers.
• Ensures that the Preparer and Department Approver are not the same individual.
• Ensures retention of complete documentation for Cost Transfers by reviewing and verifying attachments are properly loaded into the Workday system.

Sponsored Projects Financial Administration (“SPFA”)                   

• Reviews, approves, returns/sends back, rejects/denies, and/or escalates submitted Cost Transfers.
• Provides Cost Transfer policy and procedural training.
• Provides guidance on the interpretation of sponsor terms and conditions.
• In conjunction with the Office of Research Compliance, initiates remediation actions to correct demonstrated weaknesses as well as implements internal controls regarding the preparation and approval of Cost Transfers.