Definition, requirements, and procedures related to cost transfers.
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.
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. In addition, the transfer must be timely, complete, and comply with allowability, allocability, and reasonableness requirements.
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
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.
For example, expenses for winter quarter (January, February, March) must be certified by the PI by the end of May. If a transaction posted during the January GL month was discovered during the review and certification process, it must be corrected no later than the July month end close.
Original* transaction posts in GL month
Last month to review Winter Quarter expenses w/PI
Any corrections for transaction that posted in JAN-16 must post before this GL month closes
*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
Transactions necessitated by unforeseen circumstances
These are not considered error corrections. Examples:
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.
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 RFCS may authorize a transfer onto a sponsored PTA after six months with the concurrence of a school level approval.
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”.
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
Large cost transfers that exceed $10K or 10% of the award, and transfers within the first or last 90 days of a project, and transfers that do not meet the timeliness criteria receive additional central review. For the transfer of all non-salary charges subject to the above criteria, a PDF of the general ledger** showing the expenditure(s) requesting to be moved MUST be attached to the cost transfer transaction by the originator. Attaching detailed documentation for these transfers will facilitate their timely review by the Office of Sponsored Research (OSR).
**Acceptable versions of the general ledger include ReportMart3 279, OBI 285 Expenditure Detail Report, OBI 149 - Quarterly Review and Certification, OBI CER Expenditure Balance and Expenditure Details reports, and Expenditure Transactions (PTD) screens of FFIT.
C. Sponsor Requirements
Sponsors may have more restrictive guidelines on cost transfers; departments should consult the Office of Sponsored Research or Research Financial Compliance & Services (RFCS) 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 necessitated by a sponsor changing the award number.
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.
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)