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Introduction
Transfers of costs from one project to another are occasionally necessary to correct bookkeeping or clerical errors in the original charges. Closely related work may be supported by more than one funding source and, in such a case, transfer of costs from one funding source to another may be proper. However, frequent, tardy and/or inadequately explained cost transfers raise serious questions about the propriety of the transfers as well as the department's accounting system and internal control procedures. This is especially true when the projects involved have significant cost overruns or unexpended balances.
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.
Cost Transfer 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 60 days of the original charge or prior
to the submission of the final grant expenditure report, 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 returning the form to the principal investigator.
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. If the unit submitting the cost transfer does not have a department chair, then the unit head should sign on the department chair line. If the department chair signs for either the transferor or transferee account, then the dean should sign on the department chair line.
If the cost transfer is more than $500, it will be forwarded to the Associate Vice President for Research (AVPR) or designee for approval. The AVPR or designee may contact the Principal Investigator for further information and will notify the principal investigator of any cost transfer request that is not approved.
Cost Transfers Not Requiring Submission of a Cost Transfer Form
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 60 days of incurring the cost or prior to the submission of the final grant expenditure report, whichever comes first.
Correcting 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.
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