GAP 200.150, Cost Transfers on Federally Sponsored Projects

I.    Purpose

II.   Definitions

III.  Timeliness

IV.  Procedure

V.   Extra Guidance for DHHS, NIH Awards

VII. Federal Regulations

 

 

I. Purpose

As outlined in GAP 200.320 Direct Costing on Sponsored Projects, it is critical that all costs placed on sponsored project WBSEs meet the costing criteria of allowability, allocability, reasonableness and consistency. If during the regular review of financial activity on a Federal award a cost is identified that needs to be removed from the project, that cost must be promptly transferred to a non-sponsored cost object (discretionary code, departmental cost center, etc.) in accordance with the procedures and tools described below.

Projects are required to provide adequate justification and documentation to support cost transfers, which are the movement of costs associated with a transaction between two cost objects, one of which belongs to federally-sponsored project. Adequate justification will demonstrate that the charge satisfies the principles of allowability, allocability, and reasonableness. Adequate documentation provides a record sufficient to support the transfer based on the nature of the cost transfer, the initial charge, and the timeliness with which it occurs.

A cost transfer is considered untimely when it is not processed within three accounting periods of the initial charge. Further documentation and approvals are required if the transfer is untimely.

Extensive use of cost transfers may call into question a project’s accounting process, therefore timely review of statements and prompt execution of cost transfers is critical. The Office of Post-Award Administration (OPAA) monitors monthly cost transfers to ensure compliance and to coordinate corrective action if necessary.

This procedure describes cost transfers, the process for executing payroll and non-payroll cost transfers, approval process for cost transfers based on the timeliness of the transfer as compared to the initial charge, documentation and record retention standards.

 

II. Definitions

Cost transfer: A cost transfer is the movement of costs associated with a transaction between two cost objects, of which at least one must be a federally sponsored project (x0x – x4x, and 35x, 38x, 25x or 28x WBSE). A cost transfer may refer to salary or non-salary costs.

The following actions are considered cost transfers:

• Moving charges BETWEEN cost objects belonging to separate federal sponsored projects
• Moving charges FROM a cost object belonging to a federally sponsored projects TO another cost object (such as an allocated cost object / department cost center)
• Moving charges TO cost objects belonging to federally sponsored projects FROM another cost object (such as an allocated cost object / department cost center)
  Note: these types of cost transfers are also considered original or initially recorded charges. Therefore, they are subject to procurement standards and documentation, including price quotations and/or sole source justification at the time of the transfer.

Unallowable cost transfers: A cost transfer between federally-sponsored codes are unallowable if they are made to cover cost overruns; avoid sponsor-imposed restrictions; other reasons of convenience.

Untimely cost transfers: A cost transfer is considered untimely when it is not processed within three accounting periods after the expense is initially recorded.

 

III. Timeliness

A cost transfer should be processed promptly after identifying the need for said transfer. Departments are responsible for executing and documenting cost transfers within three accounting periods of the initial charge. Grant Managers (GMs) should follow department procedure and approvals for timely cost transfers.

If a cost transfer is untimely, departments should evaluate the charge and follow the necessary procedures to remain in accordance with University and sponsor costing policies. Untimely cost transfers may not necessarily mean the related expenditure is unallowable; however, Duke University has implemented a review and approval process for untimely cost transfers. The following approvals will be required prior to executing an untimely cost transfer:

Untimely cost transfers approvals:

Cost transfers initiated between three and six months (between 90 days and 180 days) after the initial charge was recorded require departmental approval before the cost transfer can be executed.

Cost transfers initiated more than six months (180 days) after the initial charge was recorded are unallowable. If the initial charge involved federal funds, the costs must be transferred to institutional funds. Exceptions will be managed by the applicable Dean’s Office, or Office of Interdisciplinary Program Management (OIPM) if the Center/Institute is outside of School management.

Regardless of the timeliness, if the initial charge on a federally-sponsored project is found to be unallowable, it must be removed.

 

IV. Procedure

The procedure for executing a cost transfer is dictated by the nature (payroll v. non-payroll) of the initial charge.

A. Payroll

All payroll cost transfers are completed by using a Cost Distribution iForm, Supplemental Payment Form, or Non-Compensatory Awards Form.

If the cost transfer is for a supplemental payment, a Grant Manager (GM) will use the Manual Salary Cost Transfer (MSCT). If the cost transfer is for a non-comp employee, GMs will complete a paper Salary Cost Transfer to be keyed by Corporate Payroll Services.

If the cost transfer is untimely an explanation of the reason for the delay should appear in the “untimely justification” field on the cost distribution iForm.

Untimely salary cost distribution changes involving moving charges to cost objects belonging to federally sponsored projects will not be allowed if they occur more than six months after the initial charge. Note:  retroactive changes to effort distributions must always be completed in order to ensure alignment with an individual's effort certification statement(s); effort transferred onto federally sponsored projects more than six months after the initial charge must be cost shared.

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

Any cost transfer involving a non-payroll cost should use the ZF418 transaction in SAP. If the cost transfer is untimely justification explaining the reason for the delay in processing should appear in the “Extra Texts” field within SAP. Further guidance on the ZF418 tool may be found in this Reference Guide. Non-payroll cost transfers can only be processed as ZJ documents using the ZF418 transaction in SAP; manual SA journal vouchers are not allowable.

 

V. Extra Guidance for DHHS, NIH Awards

According to the U.S. Department of Health and Human Services (DHHS) and the National Institutes of Health (NIH) grants policy statements, untimely cost transfers (greater than 90 days from when the error was discovered) should not occur on grants unless the grant making organization has given prior approval for a longer period. Documentation for these transfers must include a certification of the correctness of the new charge by a responsible official. These policies supersede Duke’s internal policies and approvals processes.

 

VI. Federal Regulations

This GAP reflects the provisions of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR Part 200, otherwise referred to as the Uniform Guidance (UG). The UG became effective as of December 26, 2014, and revised as of November 12, 2020, and all awards issued on or after this date must be managed in accordance with its provisions. It is important to verify the applicable regulations for an individual award, which may be found in the Award Notice issued by the funding agency.

These guidelines pertain to federally sponsored projects and should be used as guidance for all sponsors unless specifically addressed in a non-federal sponsor’s policies and/or procedures.

This GAP supersedes previous GAP versions, Duke Policies, Guidelines, etc.

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.