GAP NO. 200.150
Cost Transfers On Federal Sponsored Projects

I.	General
II.	Timeliness
III.	Documentation
IV.	Record Retention
V.	Additional Resources
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I. GENERAL

A cost transfer is a movement of costs associated with a transaction between two cost objects, of which at least one must be a federally sponsored project (30x – 34x projects as well as subcontracts related to federal projects). This includes salary and non-salary costs. An exception to the definition of a cost transfer is allocating charges from an allocated or non-restricted cost object to a federal sponsored project. These actions are considered original or initially recorded charges.

This procedure does not apply to non-federally sponsored projects. For corrections involving non-federally sponsored projects, refer to GAP 200.020, Journal Vouchers.

All federal expenditures should be initially charged to the correct G/L account and federally sponsored project. However, occasionally expenses are charged erroneously. When an erroneous entry affects a restricted federally sponsored project, the correction must be made on a timely basis and sufficient information must be provided to allow for a clear audit trail back to the initially recorded expense. The federal government regulations state “We will assess if the transfers are supported by documentation that fully explains how errors occurred and if responsible grantee officials certify the correctness of the new charges.”

Errors in recording costs indicate the need for improvement in the accounting process and/or internal controls. When errors occur, departments are required to evaluate these areas and make the necessary improvements.

Cost transfer documentation and timeliness of corrections involving federally sponsored projects is the department’s responsibility. SAP report ZF106 can be used to identify all cost transfers by department.

Cost Transfer Examples:

• Correcting charges BETWEEN 3xx federally sponsored projects are cost transfers. For example, if lab supplies are incorrectly charged to 3431234 and are moved to the correct federal sponsored project 3031234.
• Correcting charges FROM 3xx federally sponsored projects TO another cost object (such as an allocated cost object / department cost center) are cost transfers. For example, if meeting expenses are erroneously charged to a federal cost object 3031234 and later moved to a department cost center 4xxxxxx.

The following are NOT Cost Transfers UNLESS they are untimely: If any of these transactions are untimely, then they need to be coded as cost transfers and the untimely documentation requirements apply.

• Allocating charges from an allocated cost object/department cost center to a 3xxxxxx cost object are considered original or initially recorded charges; they are not cost transfers. Examples include allocation of long distance phone bills, break-out/distribution of purchase or framework orders and service center bills that can not be allocated at the time of purchase.
• Initially recorded charges such as expenses charged through a Purchase or Framework Order, Procurement Card, Service Center , copying charges, etc., are not cost transfers.

A cost transfer from one sponsored project to another may not be processed in these instances:

• to cover cost overruns with funds in other sponsored projects
• to avoid restrictions imposed by the Sponsor
• or for other reasons of convenience.

Before an expense can be charged to a sponsored project it must first meet all the requirements of GAP 200.320, Direct Costing on Sponsored Projects.

The Office of Research Costing Compliance (RCC)  monitors monthly cost transfers covered by this procedure for compliance. RCC will coordinate corrective action with the Management Center and Department.

 

II. TIMELINESS

A cost transfer should be processed promptly after the error is discovered. For more information regarding the verification of financial transactions, refer to GAP 200.012, Reconciliation of Financial Transactions. Untimely cost transfers may raise serious questions concerning the propriety of the cost transfer and may be subject to a cost disallowance. A cost transfer is considered “untimely” when it is not processed within three accounting periods after the initially recorded charge. Violations of the deadline do not necessarily mean that the related expenditure is unallowable from a regulatory perspective.

Please note, as of October 1, 2006, untimely cost transfers are no longer allowed on DHHS non-NIH grants without prior HHS approval. The entire DHHS (including NIH) may soon establish policies to this stricter standard.

Duke has a Non-Salary Cost Transfer Policy and a Retroactive Changes to Effort Policy that outlines the approval process for untimely cost transfers.

Chart to assist in determining when an Untimely Cost Transfer Justification is required.
GUIDELINE FOR UNTIMELY COST TRANSFER JUSTIFICATION

For payroll cost transfers, the Untimely Cost Transfer Justification should be provided in the “untimely justification” field on the Cost Distribution iForm. The justification must provide a full explanation of the reason for the delay in processing the correction (cost transfer). The justification should also identify steps taken to prevent the error from occurring again, if appropriate. See documentation requirements below.

For non-payroll cost transfers , the Untimely Cost Transfer Justification should be provided in the “Extra Texts” field within SAP. The justification must provide a full explanation of the reason for the delay in processing the correction (cost transfer).

 

III. DOCUMENTATION

A cost transfer is documented by processing a Cost Transfer or for payroll a Cost Distribution iForm, Supplemental Payment Form, or Non-Compensatory Awards Form.

A. Payroll

All payroll cost transfers are completed by using a Cost Distribution iForm, Supplemental Payment Form, or Non-Compensatory Awards Form.  Additional documentation can be entered in the untimely justification field. Additional documentation is not required unless the cost transfer is untimely.

For untimely payroll cost transfers, a clear audit trail must be provided. The justification must include how the error occurred or, if no error occurred, a reason for the delay in processing the cost transfer. Copies of source documentation can be copied in the comments field.

B. Journal Voucher (JV) Keyed in SAP by Department

A cost transfer involving a non-salary cost is processed on a Journal Voucher using document type ZJ and must meet the requirements of this section and Section II, Timeliness. Failure to provide the required documentation could result in the expense being moved to the departments discretionary cost center. Reference the SAP Quick Reference – ZF418 Non-Salary Cost Transfer Tool for how to process a cost transfer. 

 

IV. RECORD RETENTION

The department keys the Journal Voucher directly in SAP. If the Text and Additional Notes fields in SAP cannot contain sufficient information to allow for a proper audit trail of the transaction, the department must maintain the paper documentation. The paper documentation must be retained for a period of seven years or for three years after a project terminates, whichever is longer. It is imperative that the department implement internal procedures that allow the paper documentation to be readily accessible if the cost transfer is required during an audit.

 

 

V. ADDITIONAL RESOURCES

For assistance regarding the data required in a Cost Transfer, contact:

Office of Sponsored Programs: 684-5442

Research Costing Compliance

For assistance in entering a Journal Voucher in SAP contact:

Accounting Systems and Procedures: 684-2752

To request an Assigned Journal Voucher Number

• University users: Submit a request via the web; the request option is available at the top of the Assigned JV list.
  
  
• DUHS users: Call 286-6371

Additional General Accounting Procedures that may assist you with the Cost Transfer process:

GAP 200.010, Fiscal Calendar

GAP 200.012, Reconciliation of Financial Transactions

GAP 200.020, Journal Vouchers

GAP 200.080, Equipment Screening & Shared use on Federal Grants & Contracts

GAP 200.100, Capital Equipment Purchases on Sponsored Projects

GAP 200.320, Direct Costing on Sponsored Projects

 

 

Note: This guidance is administrative in nature and is not a cost reimbursement policy. Failure to comply may or may not result in adjustments of charges to the award. Noncompliance with this policy does not mean this cost is unallowable from an external perspective. Any adjustments of charges will be as required under applicable federal cost reimbursement principles. If a cost is removed from an award for any reason, whether or not related to this guidance, the cost will generally be charged to departmental funds.

GAP History
Issued:	March 1996
Revised:	April 2002
Revised:	July 2002
Revised:	February 2003
Revised:	April 2003
Revised:	October 2003
Revised:	July 2006
Revised:	February 2007
Revised:	November 2008
Revised:	January 2009