1305 PR.02 Cost Transfers Involving Sponsored Projects
This document outlines the procedures necessary to properly execute an appropriate cost transfer involving payroll or other direct costs associated with sponsored projects.
The reassignment of an expense to or from a sponsored Award after the expense was initially charged to another sponsored or non-sponsored Award. Cost transfers include the reassignment of salary, wages, fringe benefits and other direct costs. Cost transfers do not include reclassifications of project, task, expense or organization (P,T,E,O) that are within the same award (A).
Note: Cost transfers processed through Oracle—in the form of labor distribution adjustments (LDAs) or non-salary journal entries (JSAs)—represent the vast majority of cost transfers at Yale. However, a number of cost transfers are executed through other systems, such as the Graduate Student Payment System (GSPS).
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 the Oracle Financial System.
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 source of funds, and iv) approving the cost transfer in the Oracle Financial System.
Lead administrators, operations managers, business support unit personnel, and office staff involved in the preparation and approval of cost transfers must be appropriately trained. It is the Lead Administrator’s responsibility to ensure all preparers and approvers have taken Cost Transfer Principles training, have passed the associated quiz and have been granted the appropriate level of financial system access. The following system training is necessary in order to complete cost transfers in the following financial systems:
- Journal Staging Area
- Labor Distribution Module
- Graduate Student Payment System
- Cost Transfer Principles
- Registration is available through www.yale.edu/training (Link 1) > Grant and Contract Training > GCA and GCFA Training.
Note: An individual who prepares a cost transfer cannot be the same individual who administratively approves that cost transfer. For general information about Labor Distribution (LD) and Journal Staging Area (JSA) applications, refer to the following procedures:
As outlined in Procedure 1101 PR.02, Financial Review and Internal Controls, there are several steps leading up to, during, and after a month-end close, which present an opportunity to review transactions for proper account management. The need for a cost transfer may occur during any one of these steps. Refer to Procedure 1101 PR.02 for the entire process, including the Form 1101 FR.01: Financial Management Checklist
Selected activities identified in Procedure 1101 PR.02 related to sponsored project management include:
- The review of suspense activity
- Close monitoring of the labor suspense account, Project 0300018 ensures timely salary reallocation and prevents future labor suspense charges with resulting cost transfers.
The labor suspense Project should not be utilized to 1) “park” expected costs that have not been received/executed by Yale, or 2) in lieu of requesting an At-Risk account. An At-Risk account should be requested when appropriate for any work performed in advance of receiving the official award document from the sponsor; otherwise the work on the anticipated award should not begin. Please refer to the At-Risk Accounts Guide for assistance.
- Clearing A/P bounces and A/P Holds throughout the month assists in a more efficient month-end and helps control future suspense.
- Conducting a pre-review of salary information. For example, running monthly and weekly Payroll Preview reports and the BUG311a Semi-Monthly Labor Commitments Exception report.
- A transactional review which will include but is not limited to, expense reports, OK-to-Pay invoices, shipping transactions, subaward payments, and high risk and unallowable expenditure types.
- An ongoing monthly maintenance of updating labor schedules, authorizing pending LD and JSA transactions, reviewing unprocessed and unapproved EMS transactions.
- A monthly review of the Account Holder Report and other available financial reporting tools.
Note: On a monthly basis, Principal Investigators (PI) and other account managers (e.g., program/lab/project directors) must receive monthly financial reports (i.e., Account Holder reports). The account manager(s) or other individual(s) responsible for award activity and the identification of erroneous charges should promptly communicate the need for any required corrections to the department business office or support center.
In order to submit a cost transfer, the preparer is expected to read and understand the requirements of Policy 1305: Cost Transfers Involving Sponsored Projects. Consistent with University policy, the preparer is expected to execute the following steps when initiating a cost transfer to ensure that the transfer is completely documented. Essential elements of a cost transfer include an appropriate and complete transaction description that addresses the Who, What, When, Where and Why associated with the transaction.
A. Step 1: Preparing the Cost Transfer in Oracle
Review the step-by-step instructions on accessing, entering, submitting and approving cost transfers for sponsored projects in Oracle, which is located in this Procedure’s Appendix. The Appendix contains supplementary information and is not intended to replace the Labor Distribution Adjustments (LDA) and Journal Staging Area (JSA) User Guides.
B. Step 2: Documentation/Information Requirements
The department business office (DBO), preparer, and approver are responsible for ensuring that all required documentation that properly supports the transfer is attached to the cost transfer. A checklist to assist the DBO in properly documenting a cost transfer is located on GCFA’s website. Click on GCFA Cost Transfer Checklist.
Please refer to Policy 1305: section 1305.3 -Authorization and Documentation of Cost Transfers for Policy details.
A properly documented transfer includes the following:
- Documentation that provides evidence of the existence of the charge on the award from which the cost is being removed (i.e., Account Holder detail transaction report, or other DWH Portal or BUG Library financial report) that dates and verifies the original charge [applicable to JSA only].
- PI (or delegated initiator) written authorization that is signed and dated (email is acceptable) for the cost transfer. The authorization must be completed as follows:
- For JSA’s, the authorization should include the approved cost allocation methodology when allocating charges based on interrelationship (refer to Guide 1304 GD.02: Cost Allocation Methodologies for additional information).
- For LDAs, if an Effort Report was previously certified the PI must provide a detailed explanation as to why the Effort Report was certified without reallocating the Actual Effort % to an appropriate account. A copy of the Effort Report form(s) is required as an attachment to the cost transfer as part of the supporting documentation.
Note: If an effort report was certified with a new account added and the certifier reallocated effort prior to certification, PI explanation is not required.
- For LDAs, if the transfer involves moving expenses from a labor suspense account:
- Documentation should include evidence that the core issue was resolved (e.g., a screenshot showing that the labor schedule was updated, a setup report indicating the award is ongoing) and/or the reason why an At-Risk Account was not established.
- Approval from the PI may not be necessary. For example, in instances where the transaction is clearing labor suspense (Project 0300018) to the same award due to the award being “on hold” and the original charging instructions remain the same the PI signature/approval is not required. However, documentation (i.e., labor schedule or BUG report that reflects previous charging history) must be attached verifying the salary/effort for the individual is continuing, rather than being initiated, on the award at the same level as the original charging instructions for the award.
- A detailed statement explaining the reason for the cost transfer, including an explanation as to how the error occurred.
- A description of how the cost applies to or benefits the award to which the cost is being transferred.
Note: For labor cost transfers, the award benefit statement must indicate percent of effort devoted to the project(s).
- Additional supporting documentation/explanation must be provided by the Initiator and attached by the Preparer should any of the following conditions exist:
- The cost transfer is for expenses that are more than 90 days from the end of the calendar month in which the original transaction appeared on the award except in cases where the sponsor’s terms and conditions are stricter than Yale’s policy and require cost transfers to be completed within a different timeframe (i.e., HHS). All transfers must be submitted timely and typically within 90 days from the end of the calendar month in which the original transaction appeared on the award. Cost transfers submitted more than 90 days from the end of the calendar month in which the original transaction appeared on the award requires an explanation of the extenuating circumstance that prevented the timely review and correction of expense. Cost transfers related to HHS awards(excluding the National Institutes of Health) that are more than 90 days from occurrence require sponsor prior approval. Refer to Policy Statement section of Policy 1305 for additional information.
- The cost transfer is being processed during the final months of or after the award period for the award that is to receive the transferred cost. These charges are typically red flags and the explanation must substantiate why costs are being transferred near or after the budget end date of the award.
- The cost transfer is for expenses that are animal related. If the transfer is to move the cost of purchasing animals from one sponsored or non-sponsored award to another sponsored award, the associated animal per diem costs and any other related charges should also be identified in the cost transfer. In order to transfer animal related charges to a sponsored award, the award must be linked, as a consequence of a congruency determination, to an appropriate IACUC protocol number and indicated in the attached explanation.
- The cost transfer is for expenses related to summer salary (for faculty with academic year appointments [9 month only]). If the labor transfer involves summer salary, a copy of the Faculty Summer Compensation Request form and associated instruction that authorized the original payment must be attached to the cost transfer request as supporting documentation.
Note: A cost transfer to reduce a sponsored award’s over-draft by transferring a charge(s) to another sponsored award or a new competitive segment for the same award is not permitted according to Federal sponsor policies.
Preparers should contact the approver, their immediate supervisor, lead administrator and/or the Principal Investigator to resolve any problems related to the cost transfer request.
- Step 3: Review of the Proposed Cost Transfer by the Approver
In evaluating the cost transfer submitted by the preparer, the Approver reviews the transfer to confirm that all supporting documentation accurately and completely satisfies the requirements specified above in Step 2, that all required documentation attached within the Oracle LD, JSA, or GSPS system properly supports the transfer, and, with respect to the Award receiving the charges, that the charges conform to section 1305.1 of the Policy 1305: Cost Transfers Involving Sponsored Projects.
Note: Step-by-step instructions on accessing, entering, submitting and approving cost transfers for sponsored projects in Oracle are located in this Procedure’s Appendix. The Appendix contains supplementary information and is not intended to replace the Labor Distribution Adjustments (LDA) and Journal Staging Area (JSA) User Guides.
- Step 4: Approving and Posting Batches in Oracle
Once the Approver approves the cost transfer (by pressing the “post batch” button), Oracle will process the transaction and validate the Approver’s entries against pre-defined system validations. The Approver will either receive confirmation that the batch was posted, or an error message that will require the batch status to be changed to “Ready for GCFA Approval” in order for the transfer to be routed to GCFA for central review and approval.
“Ready for GCFA Approval” Status – This status occurs systematically or once the Approver changes the status of a cost transfer in Oracle to “Ready for GCFA Approval”. Under normal circumstances, GCFA’s initial review is performed within 5 business days.
If for any reason a cost transfer does not meet all policy and procedure requirements and cannot be centrally approved, the “Reject and Remediation” section below will apply.
- Secondary Approvals
LDAs that involve a previously certified effort report, require the review and approval of the GCFA Executive Director, GCFA Associate Director and/or the Associate Vice President for Research Administration (AVP).
The GCFA Executive Director or Associate Director has the authority to approve, on behalf of the AVP, when the LDA transfer, a) does not involve a change in sponsored project effort, b) credits a sponsored award and charges a non-sponsored award resulting in a net benefit to the sponsor, c) does not change or affect the certified effort percentages, or d) reconciles the payroll charges with the certified effort report, which was adjusted by the certifier at the time of certification.
The AVP will review and approve, if appropriate, LDAs involving a change in percentages to an already certified Effort Report and requiring recertification due to a change to a sponsored award(s). It is essential that all supporting documentation is collected and attached to the cost transfer request.
- If the AVP approves the cost transfer, GCFA will post the approved batch and recertification of the effort report will be required.
- If AVP approval is not granted and the charges being transferred are crediting another sponsored project, the charges in question will be transferred to the department’s suspense account. An e-mail communication is sent to the Department Approver and/or the PI with an explanation outlining the reasons provided by the AVP for denying the request.
Note: If the removal of charges results in a change to a previously certified effort report, the certifier will need to recertify the effected effort report. In some cases, cost sharing may be required. For additional information, refer to Section 1315.05 of Policy 1315: Effort Reporting: Certifying Effort on Sponsored Projects.
- Rejecting the Cost Transfer
Preparers and Approvers must provide complete and accurate explanations, justifications, and supporting documentation in order for a cost transfer to be posted to the University accounting system.
The rejection of a cost transfer will typically stem from either the charge not being allowed on the award or the charge not being properly documented and fully justified.
Rejected cost transfers may result in a charge to the department’s suspense project account. Specifically, the debit portion of the transfer will be moved and posted to the suspense account, project 1052982. This action does not preclude a department from resubmitting the cost transfer at a later date with the appropriate documentation or justification supporting the cost transfer.. It should be noted that,the credit side of a cost transfer is always processed.
For each cost transfer (including cost transfers charged to department’s suspense project account) that is rejected as a result of the central review and approval process, an email notification is sent to both the Preparer and Approver providing the reason for the rejection.
Cost transfers that are rejected in Oracle may result in one of the folllowing rejected batch status:
- Rejected - Authorization
- Rejected - Award Benefit
- Rejected - Documentation
- Rejected - Explanation
- Rejected - Ext Circumstance
- Rejected - Restriction
- Suspense - Authorization
- Suspense - Award Benefit
- Suspense - Documentation
- Suspense - Explanation
- Suspense - Ext Circumstance
- Suspense - Restriction
Rejected cost transfers in the JSA application are locked for edits/changes and unposted. When this occurs, departments will need to delete the batch in Oracle. If the department fails to delete the batch within a reasonable amount of time, typically within 30 days, GCFA will delete it. Rejected cost transfers in the LD application will be deleted by GCFA in order to make the salary line available for resubmission.
Multiple cost transfers that are rejected for an individual department is an indicator of weaknesses within the department’s preparation and approval process, which will most likely result in remediation (See Section B. Remediation below).
When a cost transfer is rejected by GCFA, the PI and/or department may appeal the decision to the Expenditure Review Panel (ERP). In situations where the cost transfer is being rejected due to insufficient documentation, the ERP will not review the appeal until sufficient documentation is provided and first reviewed by GCFA. The ERP’s decision on whether or not to approve the cost transfer is final.
If GCFA determines that regularly rejected cost transfers are indicative of a weakness at the Preparer or Approver level, GCFA will work to remediate the problem, which may include any of the following: i) retrain certain department staff, ii) reduce the GCFA review threshold for cost transfers submitted by a particular department, Preparer, and/or Approver, or iii) deny access to Oracle for the preparation and/or approval of future cost transfers by certain individuals and/or departments.
- As a PI, what if I need to start my research and incur costs prior to receiving the actual award document or fully executed contract, what can I do?
In situations in which an award is delayed, contact GCA to determine if an At-Risk Account can be created. At-Risk Accounts are subject to compliance requirements contained in Guide 1304 GD.01: At Risk Accounts.
- Why can’t I post my cost transfer in Oracle?
The following are the most commonly experienced “roadblocks” when attempting to post a cost transfer:
- Incorrect authority/responsibility in Oracle: In order to post a cost transfer that affects a sponsored award, the user needs to be in the “Approve” function.
- In LDA, the correct responsibilities are the following:
- “YULD_Phase 2 Dept LD Accountant With Grants” for the Preparer
- “YULD_Department_Grant_Approver” for the Department Approver
- In JSA, the correct responsibilities are as follows:
- “YUGL_Phase 2 Staging User” for the Preparer
- “YUGL_JSA_Department_Grant_Approver” for the Department Approver who is using the Grant & Contract Cost Transfer Process
- GCFA Approval required: If the cost transfer requires secondary approval, (See Secondary Approvals located above under Central Review and Approvals, section B) posting will not occur until GCFA approval is received. In these cases, the Departmental Approver must change the status to “Ready for GCFA Approval.” This notifies GCFA that there is a cost transfer awaiting review.
- Wrong status: To approve and post a batch of cost transfers by a department, the batch status in Oracle must be set to “Approved by Department”.
- In LDA, the Department Approver must select the “Dept Approval” button
- In JSA, the Departmental Approver must select the “Post” button that appears in the lower left-hand corner of the screen. Note: If the “Post” button is NOT selected, the cost transfer remains unposted and will not appear in the general ledger.
3. Will a LDA and/or JSA batch be deleted if they remain unposted at the end of the month?
No. Cost transfers involving sponsored awards will not be automatically deleted from OracleHowever, if a JSA batch is rejected and the department does not delete the batch within a reasonable timeframe, the batch will be deleted by GCFA.
- I have an unposted LDA and/or JSA that needs review and approval but the current period ended and is closed. Should I delete the batch and create a new duplicate transfer in the open period?
- For LDAs, departments need not take any action, as batches will automatically be carried over in Oracle from one month to the next.
- For JSAs, individual departments have the ability to change the period of a batch manually in Oracle. To do so, click the Review Batch button, choose Tools from the menu at the top of the page, and then select Change Period.
5. How can I check the status of a batch of cost transfers that I submitted?
The Preparer or Approver can pull up a JSA or LDA batch and check its status in Oracle.
- If the status is listed in Oracle as “Ready for GCFA Approval,” the batch is still under review.
- If a JSA batch has a status of “Rejected”, the batch is Unposted and locked for any changes. The batch is deleted by Department.
If a cost transfer batch (JSA or LD) has a status of “Suspense”, the batch is Posted by GCFA and resulted in a charge to the department’s suspense project account.
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 (Preparer and/or Approver)
- Provides PIs with Account Holder Reports and assists PIs in reviewing those reports, preferably on a monthly basis.
- Ensures that cost transfers requested by PIs are performed promptly and have complete justifications.
- Advises PIs about University policies and procedures, sponsor policies and procedures, and regulations regarding cost transfers.
- Verifies that the Preparer 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 Oracle system.
Office of Grant and Contract Financial Administration
- Reviews, approves, and escalates submitted cost transfers. Provides training on procedures and authorizes individuals to prepare and approve cost transfers.
- Rejects cost transfers if it is inadequately justified or documented.
- May initiate remediation to correct perceived weaknesses at the Preparer or Department Approver level. Such remedies may include 1) retraining certain department staff, 2) lowering the GCFA review threshold for cost transfers submitted by a particular department, Preparer, or Department Approver, or 3) denying access to Oracle for the preparation and/or approval of future cost transfers by certain individuals and/or departments.
- Provides guidance on the interpretation of sponsor terms and conditions.