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1305 Cost Transfers Involving Sponsored Projects
Director, Office of Sponsored Projects Financial Management
Office of Sponsored Projects
January 1, 2007
January 31, 2020
This document sets forth Yale University’s policy regarding Cost Transfers, including the transfer of payroll and other direct costs associated with sponsored projects.
Purpose of the Policy
To assure the allowability of the University’s charges for salaries, wages, goods, and services on sponsored projects 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.
- The University is committed to ensuring that all Cost Transfers (either in the form of a payroll accounting adjustment or non-salary journal entry) are appropriate and are conducted in accordance with sponsor terms and conditions, applicable regulations, and University policy.
- All Principal Investigators (“PIs”) and their Business Managers 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 to any sponsored project are allowable only where there is 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 or an allowability issue. Cost Transfers should not be used as a means of managing awards.
- Cost Transfers must be prepared and submitted within 90 days from the fiscal month-end close date of the calendar month in which the transaction appears on the award, except in cases where the sponsor’s (federal or non-federal) terms and conditions are stricter than Yale’s policy.
Note: Agencies that fall under the Department of Health and Human Services [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 GMO.” Cost Transfers requiring sponsor prior approval must be routed to the appropriate Office of Sponsored Projects Award Manager for institutional approval and submission to the sponsor.
Any Cost Transfers submitted after 90 days from the fiscal month-end close date of the calendar month in which the transaction appears on the award requires the Office of Sponsored Projects Financial Management (“OSP”) review and approval. It should be noted that the OSP approval will only be granted under extenuating circumstances and confirmation of approval by the sponsor when applicable.
- Cost Transfers to correct an error must be completed regardless of timeframe if the correction benefits 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 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 Initiator is reasonable, appropriate, and complete, iii) reviewing accounting information and the source of funds, and iv) approving the Cost Transfer in Workday.
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 actual effort is determined to be different prior to, or due to, effort certification by the PI. Reassignment of salary charges made in error, however, are considered to be Cost Transfers.
The individual whose role is to support the proper execution of a Cost Transfer by i) gathering complete supporting documentation, ii) providing the appropriate and complete transaction description addressing the Who, What, When, Where and Why, iii) entering a valid and appropriate account(s), and iv) entering the Cost Transfer information into Workday.
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 regulation 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 Guide 1304 GD.02 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) as appropriate. (Refer to Guide 1304 GD.01 for additional information.)
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 errors in a timely manner and communicate required changes to the business office promptly.
Individuals who prepare, approve, or authorize Cost Transfers involving sponsored projects must complete the University’s Cost Transfer training in order to obtain access to process Cost Transfers. Additionally, all Cost Transfers involving sponsored project funds, whether for labor or goods and services, require preparation and approval ensuring that no one person has complete control over all aspects of a financial transaction.
The DBO, Initiator, and Approver are 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 in making any Cost Transfer; therefore, 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;
- 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 online 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 fiscal month-end close date of the calendar month in which the original transaction appeared 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”), is over 90 days following occurrence;
- being executed due to the removal of a conflict of interest (“COI”) hold;
- in the final months of, or after, the award period for the award that is to receive the transferred cost;
- for any animal related charges; and
- related to summer salary for faculty with academic year appointments (9 month only).
Note: The frequency of Cost Transfers may be an indication of poor awards management.
OSP Financial Management has the authority to approve and post Cost Transfers to the University’s financial system. OSP Financial Management will reject any Cost Transfer not meeting the requirements of this policy, while removing 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 OSP Financial Management. Cost Transfers found later to be inappropriate will be charged to the department’s general funds. Refer to Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects.
Roles and Responsibilities
Principal Investigator (“PI”)
- Reviews monthly Account Holder 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.
- 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 or Business Support Unit or Lead Administrator
- Provides PIs with the Account Holder Reports and assists PIs in reviewing those reports, preferably on a monthly basis.
- Ensures that Cost Transfers requested by PIs are executed promptly and include a proper justification and required documentation.
- Advises PIs about University policies and procedures, sponsor policies and procedures, and regulations regarding Cost Transfers.
- Ensures that the Initiator and Department Approver is not the same individual.
- Ensures retention of complete documentation for Cost Transfers by reviewing and verifying attachments are properly loaded into the Workday system.
Office of Sponsored Projects
- Reviews, approves, rejects, and escalates submitted Cost Transfers.
- Provides Cost Transfer policy and procedural training.
- Authorizes individuals to prepare and approve Cost Transfers.
- Initiates remediation actions to correct demonstrated weaknesses and internal controls regarding the preparation and approval of Cost Transfers.
- Provides guidance on the interpretation of sponsor terms and conditions.