Cost Transfer Procedures

Effective January, 2009

I.    OVERVIEW

1.01    Purpose

The purpose of this procedure statement is to set forth the definitions and cost principles related to cost transfers and the procedures for processing cost transfers at The University of Montana.  While these procedures are based upon the federal definitions and principles, in order to maintain consistency in the administration of cost transfers, the requirements will be applied to all sponsored programs regardless of the funding source.

1.02    Cost Principles

Federal, state and private agency policies and audit guidelines have become quite stringent as they relate to cost transfers to, from, or between sponsored projects. A key federal regulation from The Office of Management and Budget, Circular A-21, contains the following statement:

"Any costs allocable to a particular sponsored agreement...may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience."

Since The University of Montana has a stewardship responsibility for all funds made available for research, training and public service, these cost transfer guidelines will be applied consistently to all sponsored agreements regardless of the funding source in order to comply with UM's Cost Transfer Policy.

1.03    Definitions

•    A cost transfer is the moving of an expenditure from one index number to another, regardless of sources of funds.
•    Transfer of costs between account codes or sub-account codes within the same sponsored project index is not considered a cost transfer and does not require completion of a cost transfer form. These changes can be requested by an e-mail within 90 days of the expenditure to the appropriate restricted funds accountant in ORSP, explaining why the transfer to another account code is appropriate.

II.    COST TRANSFER PROCEDURES

2.01    Standard Procedures

If a principal investigator determines that a cost transfer is necessary and appropriate, a Cost Transfer Request Form should be completed and forwarded to that department's restricted fund accountant in the Office of Research and Sponsored Programs (ORSP) within 90 days of the original charge, or if at the end of a project, then 15 days prior to the final grant expenditure report due date, whichever comes first. The applicable sections of the cost transfer request form must be filled in accurately and completely. Insufficient data and/or inadequate explanations will be cause for requesting additional information to justify the transfer or returning the form to the principal investigator unapproved.   There are separate forms for Payroll Cost Transfers and Non-payroll Cost Transfers.

The reasons for transferring the expenditure must be sufficiently stated to establish that the transfer is within the approved guidelines of the budget to be charged and is in direct support of the project objectives. It is important to stress the benefit to the program receiving the cost. The explanation provided should be sufficient to clearly indicate both why the cost wasn't charged correctly initially and why the cost is a proper and allowable charge to the transferee project. Where appropriate, the explanation should also indicate what steps have been taken to prevent similar errors from occurring in the future. An explanation that merely states that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient and will not be accepted. In addition, cost transfers will not be approved if the justification given is to remove cost overruns on the transferor project, as this clearly violates the federal regulation cited above.

Requests should be signed by the principal investigator for each sponsored program budget involved in the transaction. This responsibility may not be delegated. If the transfer involves a non-sponsored program account, any authorized departmental signature is acceptable for that account. In cases where the transfer is in excess of $300, the completed cost transfer request form must be reviewed, approved and signed by the department chair/unit head.  If the department chair/unit head signs for either the transferor or transferee account, then the dean/supervisor should sign on the department chair line.

2.02    Cost Transfers After 90 Days

Cost transfers should be managed in a timely fashion.  However, cost transfers beyond the standard 90 days may be considered only when unique, unavoidable circumstances exist.  Any requests for cost transfers beyond the standard 90 day allowance must be accompanied by a memo from the department chair/unit head providing an explanation justifying the unusual circumstance and why the need for a cost transfer was not identified in a timely fashion.

2.03    Corrections Where Cost Transfers Are Not Required

Transfers necessary because of Business Services or Office of Research and Sponsored Programs clerical errors may be initiated by the ORSP staff without approval of the principal investigator, and do not require completion of a cost transfer form. Transfer of costs between object codes or sub-object codes within the same sponsored project do not require completion of a cost transfer form. These transfers can be requested by an e-mail to the appropriate restricted funds accountant in ORSP, explaining why the transfer to another object code is appropriate. As with all cost transfers, this request must be made within 90 days of incurring the cost or prior to the submission of the final grant expenditure report, whichever comes first.

III.    CORRECTING SYSTEMIC PROBLEMS

3.01    Systemic Problems

Frequent errors in the recording of costs may indicate the need for improvements in the principal investigator's or the department's grant management system. Therefore, where frequent errors occur, the principal investigator and/or department will be required to evaluate the need for improvements in this area and to make what improvements are deemed necessary by ORSP.