Boise State University Policy # 5090
Effective Date: April 2013
To establish requirements necessary to ensure the allowability and timeliness of transfers of direct cost expenditures to sponsored projects.
– OMB Circular A-21 “Cost Principles for Educational Institutions” (05/2004) sections C.1-C.4; A-21, C.4.b-c; A-110 “Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations” (09/1999) subpart D.71(b); A-133 “Audits of States, Local Governments, and Non-Profit Organizations” section E.500;
– NIH Grants Policy Statement (NIHGPS) (Rev. 10/2010) Part II, Subpart A.7.5
Applies to any cost transfers to a sponsored project. This policy should be known and understood by deans, chairs, college and department administrators, principal investigators, other accounting/finance personnel, grants administration personnel, and internal audit personnel
Vice President for Research and Economic Development (VPRED), 426-5372
Office of Sponsored Programs, 426-4420
Original Charge – The date the original transaction is posted to the university’s general ledger.
Cost Allocation – A routine reallocation of costs such as shared service or service center charges being distributed to sponsored and/or non-sponsored awards based on a reasonable method of determining allocability.
Cost Transfer – An after-the-fact reallocation or correction of costs, either salary or non-salary, to a sponsored project within a 90-calendar day period from the date of the original charge.
Late Cost Transfer – An after-the-fact reallocation or correction of costs, either salary or non-salary, posted to a sponsored project more than 90 calendar days from the date of the original charge.
Allocation/reallocation -The assignment or reassignment of a cost or group of costs to one or more cost objectives based on a reasonable standard.
Allowable Cost – A cost is allowable if the type of cost is permitted to be charged under the terms and conditions of the sponsored award and the cost is allocable, reasonable and treated consistently through application of those generally accepted accounting principles appropriate to the circumstances.
Allocable Cost – A cost is allocable to a sponsored agreement if: (1) It is incurred solely to advance the work under the sponsored agreement; (2) it benefits both the sponsored agreement and other work of the institution in proportions that can be approximated through the use of reasonable methods; or (3) it is necessary to the overall operation of the institution and, in light of the principles provided in A-21, is deemed to be assignable in part to sponsored projects.
Non-salary Cost Transfer – The transfer of expenditures for items other than payroll onto a sponsored project. Typical examples include expenses for supplies, services, consultants, travel, and equipment.
Reasonable Cost – A cost is reasonable if the nature and amount of the cost reflects actions that a prudent person would have taken under circumstances prevailing at the time. Among other factors, a reasonable cost is one generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement, and is consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
Consistent – Application of the cost is given consistent treatment within established University policies and procedures; costs for the same purpose are treated and classified the same way under like circumstances.
Salary Cost Transfer – The transfer of payroll expenses onto a sponsored project. Payroll expenses include salary and fringe benefits.
- I. Policy Statement
- Boise State University must uphold standards established by the Office of Management and Budget (OMB) and sponsoring agencies for administration of sponsored projects. Thus it is necessary to explain and justify transfers of charges from other federal projects, non-federal projects, or university sources to sponsored projects. This policy establishes requirements necessary to ensure the allowability and timeliness of transfers of direct cost expenditures to sponsored projects.
- II. General
- A. Costs should be charged to the appropriate sponsored project when first incurred. There are circumstances where it may be necessary to transfer expenditures to a sponsored project after the original charge. Those transactions require monitoring for compliance with university policy, federal regulations, sponsor specific guidelines, and cost principles.
- B. When the university accepts federal funding, it must comply with the allowability and allocability requirements of the Federal Cost Principles and the Uniform Administrative Requirements. To comply with the allowability and allocability requirements, it is necessary to explain and justify transfers of charges onto sponsored projects. The cost principles prohibit the use of cost transfers for the purpose of “convenience,” including a transfer largely for the purpose of using unexpended funds on an award that is ending. Timeliness and completeness of transfers and the accompanying justification for the transfers are important factors in supporting allowability, allocability and cost compliance.
- 1. To maintain consistency in the treatment of cost transfers, this policy applies to all federal and non-federal sponsored projects. All cost transfers must be accomplished within 90 calendar days of the original charge. When cost transfers are not adequately justified or are made for inappropriate reasons, the department is responsible for transferring the expenses to a non-sponsored department ID.
- 2. Cost transfers to correct errors on sponsored projects must be completed regardless of timeframe if the correction benefits the sponsor.
- 3. Proper management of funds is essential to uphold the fiduciary responsibilities of the university. Federal agencies and other sponsors may regard the following activities as indicative of inadequate control systems:
- a) Frequent cost transfers
- b) Late cost transfers
- c) Cost transfers with high dollar amounts
- d) Inadequately documented or poorly explained transfers
- e) Cost transfers that involve sponsored projects with overruns or unexpended balances
- f) Cost transfers between federal projects
- g) Cost transfers initiated after the sponsored project has ended
- III. Cost Transfer Requirements
- A. Timeliness- cost transfers must be completed within 90 days of the posting of the original charge to the general ledger and immediately after the error is identified. If a transfer is completed after the 90-day period, additional documentation regarding why the cost transfer is late and what steps will be implemented to avoid late cost transfers in the future is required. If incorrect charges are discovered they must be transferred off the sponsored project regardless of timeframe.
- B. Documentation-cost transfers must be clearly explained with supporting documentation. An explanation stating the transfer was made “to correct an error” or “to transfer to correct project” or “late EAF” is not sufficient. If a cost transfer is made within 90 calendar days from the original charge, questions 1 and 2, below, must be answered; if over 90 days, questions 1-4 must be answered.
- 1. Why was the expense originally charged to the department ID from which it is now being transferred?
- 2. Why should this charge be transferred to the proposed receiving department ID?
- 3. Why is the cost transfer being requested more than 90 calendar days from when the original transaction was posted in the University’s general ledger?
- 4. What action will be taken to eliminate the future need for cost transfers of this type? Is this action being taken?
- See the Cost Transfer FAQ on the Office of Sponsored Programs (OSP) website for examples of adequate and inadequate justifications.
- C. Sponsor requirements-sponsors may have more restrictive guidelines on cost transfers. Personnel should consult with the OSP when in doubt about the acceptability of a proposed cost transfer.
- IV. Cost Allocation Requirements
- A. Routine reallocation of costs to sponsored projects must be completed within 90 days of the original charge.
- B. Cost allocations must be supported with a reasonable methodology (see the Cost Transfer FAQ on the Office of Sponsored Programs website for examples of reasonable methodologies).
- V. Roles and Responsibilities
- A. Principal Investigator
- 1. Ensures expenditures are allocable, allowable and reasonable to a specific sponsored project.
- 2. Oversees the management of the sponsored project to minimize the need for cost transfers.
- 3. Ensures expenditures are allocated in accordance with award budget, sponsor guidelines, and university policy.
- 4. Ensures individuals who initiate transactions related to a sponsored project have the required authority.
- 5. Completes monthly review of expenditures.
- 6. Initiates requests for cost transfers to correct errors or re-allocate costs in a timely manner or delegates the authority to do so to departmental or college administrators.
- 7. Provides complete, clear and reasonable justification for cost transfers or cost allocations as required by this policy.
- 8. Ensures compliance with this policy.
- 9. Confirms the cost transfer is allowable, reasonable, and allocable to the funding source to which it will be charged.
- 10. Verifies the cost transfer request is completed properly and that sufficient documentation is provided to support the request.
- B. Office of Sponsored Programs (OSP)
- A. Exercises stewardship over sponsored projects in accordance with specific award terms and conditions and sponsor policy.
- B. Advises principal investigator, departmental and college staff on cost transfer policy and procedures.
- C. Reviews and approves cost transfers and supporting documentation in accordance with university policy and sponsor guidelines.
- D. Provides training on Cost Transfer Policy and principles of sponsored project administration.
- VI. Approvals
- A. Cost transfers may be initiated by the principal investigator or an administrator who has been authorized to do so by the principal investigator. The initiator’s signature or typed facsimile must be documented on the cost transfer form. The date of the signature must be documented.
- B. Cost transfers involving sponsored projects must be approved by the OSP. The OSP sponsored project administrator’s signature or typed facsimile must be documented on the cost transfer form. The date of the signature must be documented.
- C. Cost transfers that involve both sponsored programs and Local funds must be approved by the appropriate department or college personnel and the OSP.
- D. Cost transfers that involve both sponsored programs and Appropriated funds must be approved by the Budget Office and the OSP.
- E. All cost transfers involving sponsored programs are reviewed and approved by the OSP Operations Supervisor, or the Associate Director or the Executive Director of the OSP.
- VII. Disallowed Cost Transfers/Allocations
- As required by federal regulations, the university retains external auditors to conduct extensive reviews of federal grant and contract expenditures, which includes detailed reviews of cost transfers. In the event a cost transfer does not meet the sponsor’s requirements, the dollar amount of the transfer will be disallowed and the department or unit responsible for the sponsored project must reimburse the sponsored project for the amount of the disallowed cost.