A 'Cost Transfer' is a transfer of an actual expense, previously charged elsewhere, to a sponsored program.
Cost Transfers include:
- A transfer of expense from one sponsored program to another sponsored program. (transfer in between)
- A transfer of expense from a non-sponsored program (endowment, agency account, etc.) to a sponsored program (transfer in)
- A transfer from a sponsored program to a non-sponsored programs (transfer out)
Cost Transfers do not include:
- A transfer of budgets within a project (budget revision)
Examples of allowable cost transfers are:
- Transfer pre-award costs from departmental holding accounts
- To correct clerical error
- To reallocate effort to reflect actuals
- For routine allocation of shared services
- To allocate service center charges, etc.
- To clear overdrafts from federally-sponsored projects to unrestricted funds
To comply with the cost allowability and allocability requirements of OMB Circular A-21, it is necessary to explain and justify transfers of charges into federal awards from other federal or non-federal-federal accounts.
Timeliness and completeness of explanation of the transfers are important factors in supporting allowability and allocability in accordance with the cost principles of the circular.
Campuses can and should restrict cost transfer requests that are made more than a certain length of time after the original charge was made, either by making such transfers unallowable, or by requiring that over-drafts be paid against unrestricted department funds, or by requiring an explanation for the tardiness of the request.
Cost transfers from one budget period to the next solely for the purpose of curing cost over runs should never be allowed as it violates both NIH and NSF grants policy guidelines.
And at no time, may cost transfers be made more than 90 days after the entire federal award has expired.
Justification and Documentation for Cost Transfers
Transfer of costs to or from extramurally funded contracts, grants or cooperative agreements should be made in accordance with applicable campus procedures and include:
- An explanation for the transfer that includes
- Why the expense was originally charges to the account from which it is now being transferred
- Why the charge should now be transferred to the receiving grant or contract and
- What actions will be taken in the future to prevent the need for another transfer of this type.
In the event the transfer is taking place more than 90 days after the close of the accounting period, an explanation should be required of the delay which includes a signed statement by the principal investigator of the steps taken to insure that such transfers will not occur again along with any other supporting documentation attached.