Responsible Officer: Director
Responsible Unit: Sponsored Projects Accounting
Effective date: July 1, 2008
Last revised on: December 1, 2017

Background

The University has a stewardship responsibility for all sponsored funds and proper management of sponsored project expenditures is essential to meet this obligation. The University recognizes that cost transfers may be necessary to correct bookkeeping or clerical errors and to allocate closely related work that may support more than one project.

Frequent, late, and inadequately explained transfers, raise serious questions about the propriety of the transfers and call internal fiduciary controls into question. This is especially the case with such transfers that involve projects with cost overruns or unexpended balances. These activities may result in audit disallowances and monetary paybacks, including penalties and fines.

The University is committed to ensuring that all cost transfers, including labor distribution adjustments and/or non-salary journal entries are appropriate and conducted in accordance with sponsor terms and conditions, Federal regulations and University policy. The following is the policy statement regarding cost transfers associated with sponsored projects.

Policy Statement

Timeframes for Cost Transfers:

  • Non-Salary cost transfers: must be prepared and submitted within 90 days from the date the transaction is charged to the project.
  • Salary cost transfers: related to the effort certification process must be prepared and submitted within 30 days after the end of the effort certification period to reconcile the salary expenditures to the individual’s certified effort.

University policy does not supersede sponsors’ policies that require a shorter period for cost transfers and/or corrections to effort.

  • The Office of Sponsored Research (OSR) expects that all costs directly charged to Federally sponsored awards will comply with the cost principles outlined in Uniform Guidance 2 CFR Part §200, Subpart E.
  • Cost transfers are allowable only where there is a direct benefit to the project being charged. Under no circumstances is it acceptable for a cost to be charged to a project that it does not benefit. This practice is inconsistent with applicable cost principles and will result in improper financial reporting and inappropriate reimbursement from the sponsor.
  • All Project Directors/Principal Investigators (PD/PIs) and their Business Managers are responsible for ensuring that cost transfers to correct errors on sponsored projects are made within the timeframes outlined in this policy.
  • Any cost transfers submitted after the applicable timeframe identified in this policy will require review by OSR. Approval for such cost transfers will be granted only under extenuating circumstances. Additional documentation and justification must accompany a cost transfer request outside the applicable time period.
  • Cost transfers to remove charges that do not meet the cost principles outlined in Uniform Guidance 2 CFR Part §200, Subpart E must be completed regardless of timeframe.
  • Cost transfers must be supported by documentation which contains a justification of why the error occurred, how the expense relates to the project being charged and a plan to prevent similar errors in the future.
  • Cost transfers are not to be used as a means of award management.

Roles and Responsibilities

PD/PIS AND DELEGATED AUTHORIZED PERSONNEL RESPONSIBILITY:

  • Reviewing and reconciling sponsored projects on a regular basis (at least monthly) to ensure that all expenditures are correct and appropriate
  • Managing projects effectively to minimize the need for cost transfers
  • Submitting and approving cost transfers in compliance with this policy and associated procedure(s)
  • Retaining all supporting documentation of the cost transfer in accordance with applicable record retention requirements
  • Ensuring that all personnel engaged in financial administration of Federally funded projects are familiar with this policy and procedure

OSR RESPONSIBILITY:

  • Developing and implementing cost transfer procedures in accordance with Federal regulations
  • Providing assistance in interpretation and implementation of this policy
  • Providing training to campus on this policy
  • Providing final approval for cost transfers greater than 90 days from the accounting date of the original transaction
  • Periodically reviewing cost transfers to ensure compliance with University and Federal regulations

INTERNAL AUDIT RESPONSIBILITY:

  • Independently evaluating compliance of this policy and associated cost transfer procedures

Definitions

  • Allocable: Costs that benefit the award charged. Costs shared by more than one project should be allocated in proportions that can be approximated with a high degree of accuracy through actual use.
  • Allowable: Costs allowable under the terms and conditions of the award, including the authorized budget and applicable regulations.
  • 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.
  • Cost transfer: An after-the-fact reallocation of costs, either salary or non-salary, to a sponsored project within a 90-calendar day period from the original accounting date.
  • Late cost transfer: An after-the-fact reallocation of costs, either salary or non-salary, to a sponsored project greater than 90 calendar days from the original accounting date.
  • Original Charge: The first posting of a cost to the general ledger.
  • Reasonable: The nature of the goods or services acquired, and the amount paid reflect the action that a prudent person would have taken at the time the decision to incur the cost was made.

Procedures and Related Policies

Contacts

For questions regarding this policy and its related procedure, please contact ResAdminOSR@unc.edu. For questions regarding Pre-Award management or Post-Award administration, please contact the assigned Sponsored Programs Specialist. For invoicing, reporting and other financial matters, please contact the assigned Sponsored Projects Accountant. OSR Staff assignments may be found in RAMSeS or on the OSR website.

References

Revision History

Prior Revisions: 12/1/2017 Revised policy to clarify expectations of timely cost transfers.

The policies in the Office of Sponsored Research Policies & Procedures Manual supersede any OSR policies, procedures and appendices previously included in the University Business Manual, a publication of UNC Chapel Hill’s Finance Division.