Research Policy Handbook

Cost Transfer Policy for Sponsored Projects

Policy Authority

VPDoR (Office of the Vice Provost and Dean of Research)

Policy Contact

Definition, requirements, and procedures related to cost transfers involving sponsored PTAs.

1. Definition of Cost Transfer

A cost transfer is an after-the-fact reallocation of costs associated with a transaction from one Project-Task-Award (PTA) to another.

For the purpose of this policy, sponsored projects include federal, state, foreign, non-government, grants, contracts, sub grants and subcontracts, cooperative agreements, fellowships, clinical trials - see below Exception section for policy exemptions.

2. Cost Transfer Procedure

Costs should be charged to the PTA for the benefiting sponsored project when first incurred. However, at times it may be necessary to transfer a cost to a sponsored project subsequent to the initial recording of that cost. Such transfers require careful monitoring for compliance with Stanford University policy, federal regulations and policies, and the federal cost principles that underlie all fiscal activities of sponsored projects.

The cost transfer procedure requires thorough documentation to support the transaction, and requisite approvals. In addition, the transfer must be timely, complete, and comply with allowability, allocability, and reasonableness requirements.

3. Applicability

This policy addresses requirements related to cost transfers involving sponsored PTAs. These requirements are in addition to guidelines in Admin Guide 3.2.2, Cost Transfers.

4. Requirements Related to Cost Transfers

A. Timeliness

Cost transfers that represent corrections of errors should be completed within three months of when the error is discovered, and no later than six general ledger (GL) months after the original expense is posted to an award. Errors found during the required monthly expenditure statement review process should be corrected upon discovery. Transfers that do not meet the timeliness criteria require additional central review. Only the Office of Sponsored Research (OSR) OSR or Research Administration Policy and Compliance (RAPC) may authorize a transfer onto a sponsored PTA after six months with the concurrence of a school level approval.

Please click here for complete instructions for requesting exceptional approval for a late cost transfer.

For example, expenses for winter quarter (January, February, March) must be certified by the PI by mid-May in accordance with the given quarter’s certification deadline. If a transaction posted during the January GL month was discovered erroneous during the review and certification process, the cost transfer must be submitted by the last calendar day in July i.e., July 31st, and approved and posted on the July ledger.

		1	2	3	4	5	6
GL MONTH	JAN	FEB	MAR	APR	MAY	JUN	JUL
	Original* transaction posts in GL month		Qtr ends		Last month to review Winter Quarter expenses w/PI		Any corrections for transaction that posted in JAN must post with a journal submitted date within the 6 months and approved and posted on this GL month

*This applies to the original transaction only. It does not apply to a journal of a previous journal.

Exceptions to time restriction of cost transfers

Exception	Discussion
Transactions necessitated by unforeseen circumstances	These are not considered error corrections. Examples: allocations from Service Centers or Allocation PTAs transfers due to account set-up errors transfers due to new funding comes thru an unexpected mechanisms (e.g., an award comes in with a different prime sponsor than originally proposed or was thought to be a grant at proposal time, but once awarded is a contact)
Transfers between tasks of the same sponsored project	These are not considered error corrections because the expense remains in the same award.
Changes in expenditure types within the same sponsored project	Charges that do not impact changes to capital expenditure types.
Incorrect charges	Charges must be transferred off the non-benefiting sponsored project regardless of age of the expense.
Refunds and unexpected credits	Refunds benefiting a sponsored award must be allowed to post to the award even if it may necessitate a closeout correction.
Transfers onto sponsored PTAs after six months or after award closeout	Late charges are generally not allowed and must be transferred to a cost sharing PTA unless the expense also benefited a non-sponsored award, in which case it can be transferred to the other benefiting non-sponsored account. Only OSR or RAPC may authorize a transfer onto a sponsored PTA after six months with the concurrence of a school level approval. Click here for complete instructions for requesting exceptional approval for a late cost transfer.
Clearing an overdraft	At the end of a project to either a Cost Sharing PTA or to an unrestricted PTA depending upon the specific circumstances. See Section F of this policy “Overdrafts”.

Additional Exceptions:

Cost Transfers greater than 6 months not requiring OSR or RAPC approval.

Stipends on NIH Fellowships and Training Grants Transfers of stipends onto training grants and fellowships (to match NRSA stipend levels only) within the trainee/fellows appointment on an award may be made without OSR/RAPC or school concurrence provide they are being transferred from a non-sponsored PTA.

Cost Transfers onto and between University Research Awards (URAs) University Research Awards are internally funded awards and do not need quarterly certifications as required for all externally funded sponsored awards.

Cost Transfers onto Personnel Service Agreements (PSAs), Intergovernmental Personnel Agreements (IPAs) and Joint Personnel Agreement (JPAs). These are not sponsored awards but contracts purchasing personnel services between Stanford and Veterans Affairs (Palo Alto VA and PAVIR). IPAs and JPA do not require quarterly certifications.

B. Documentation

All cost transfers must be supported by documentation that fully explains the error as detailed below. An explanation merely stating that the transfer was made "to correct an error" or "to transfer to correct project" is not sufficient.

Cost transfer documentation must include a justification that clearly shows:

1. How the expense directly benefits the receiving PTA

2. How the expense is allowable on the receiving PTA (e.g., attach documentation of sponsor approval)

3. The allocation methodology used if transferring expenses to multiple PTAs

4. The reason the expense was charged incorrectly to the first PTA

5. That any systematic reasons which might cause this problem to be repeated have been addressed

6. The reason for any delay in the timely processing of the transfer

Note: Stating in a cost transfer justification that the transfer is “allowable, allocable, reasonable, and timely” does not in of itself constitute a sufficient justification. Rather, cost transfer justifications must explain how the given expense(s) being transferred is/are allowable, allocable etc. to the project(s) to which it/they is/are being transferred.

C. Sponsor Requirements

Sponsors may have award terms and conditions that preclude allowing certain cost transfers. Departments should consult their Office of Sponsored Research Post Award Research Accountant or Research Administration Policy and Compliance (RAPC) when in doubt about the acceptability of a proposed cost transfer.

D. Pre-Award Costs

For the effective and economical conduct of a sponsored project, it is sometimes necessary for costs to be incurred before the award document has been received. In such cases, departments should request that the OSR set up an Early PTA. Information about establishing an Early PTA can be found here.

The Early PTA becomes the permanent PTA when the award is effective; no cost transfers are needed. Pre-award costs must be charged to a pre-award account and may not be placed on an unrelated award and later transferred to the benefiting PTA. The restriction for cost transfers does not apply to transactions between an early PTA(ePTA) and the ultimate award PTA if necessitated by a sponsor requirement.

E. Costs Benefiting More than One Project

Federal regulations require that an expense be:

Solely to advance the work under the sponsored agreement, or
A benefit to both the project and other work in proportions that can be approximated through reasonable methods.

A cost that benefits more than one project should be allocated at the time of the expenditure. At no time should a sponsored project be used as a holding account for costs that will subsequently be transferred elsewhere. An Expenditure Allocation PTA may be appropriate for these situations.

F. Overdrafts

An overdraft exists if after the end date of an award expenses exceed funding. Expenses removed as a result of an overdraft should have been incurred during the last six months of the project. If an error is discovered after the end of the award, a transfer of expense should be made by removing the expense prior to award closeout.

If after the end date of an award an expense is determined to be unallowable to the project (but did benefit the project), the expense must be transferred to a Cost Sharing PTA for accounting purposes, although it cannot be counted towards a Cost Sharing commitment. (see RPH: Cost Sharing)

Current Version: 08.31.23

Original Version: 04.01.09