Cost Transfers Affecting Sponsored Projects
Fulfill University of Kansas fiduciary responsibility to sponsoring agencies and university researchers, in accord with the cost allowability and allocability requirements of 2 CFR Part 200 Uniform Guidance*.
All involved in sponsored research
A cost transfer is defined as an expense that is transferred between a sponsored project and another account after the expense has already been posted in the financial accounting system. These guidelines also apply to reclassification of sponsored project expenditures within a given award.
Roles and Responsibilities:
- The Principal Investigator (PI), Department, Research Center/Institute, Shared Service Center (SSC) staff acting on behalf of the PI, is responsible for:
- Managing the project to minimize the need for cost transfer by reviewing project expenses on a regular basis for allowability and allocability on the project;
- Providing the written cost transfer request and appropriate supporting justification to Post Award Services in the Office of Research for review and approval.
- Post Award Services is responsible for:
- Oversight of cost transfer procedures and for determining allowable and unallowable costs charged to sponsored projects based on federal and sponsor guidelines;
- Review and approval of cost transfers and supporting documentation in accordance with University’s policy and sponsor guidelines.
Cost Transfer Management:
Cost Transfer Timeline:
To ensure appropriate management of sponsored projects, all cost transfers must be submitted:
- Non-payroll - within 89 calendar days from the date the cost was incurred (see definition);
- Payroll expenses – within 89 days of the first day of the pay period when the payroll expense was incurred.
Any cost transfer submitted 90 calendar days or more from the expense incurrence date (see definition) will be considered late, and will only be accepted in exceptional circumstances. Case-by-case review of the circumstances will be performed by the Office of Research to determine if processing will occur.
Typically allowable cost transfers:
Before a non-payroll or payroll cost transfer to a sponsored agreement is approved, an Office of Research Post Award Services staff member reviews the cost transfer request to ensure it meets specific criteria. All expenditures charged to sponsored projects must meet the following criteria:
- Allowability: Post Award Services staff member reviews the cost transfer request to determine whether the cost is allowable under 2 CFR 200 Uniform Guidance and sponsor guidelines.
- Reasonableness: Both the nature and amount of a cost must reflect prudent action at the time the decision was made to incur the cost;
- Allocability: A cost must be incurred solely to advance the work under the sponsored agreement. It must reasonably benefit the sponsored agreement. It must be necessary to the overall operation of the institution and can be assignable to a specific sponsored project;
- Each cost must be given consistent treatment according to generally accepted accounting principles appropriate to the project; and
- Each cost must conform to principles outlined in OMB or specific agency guidelines.
Examples of typically allowable cost transfers include:
- Transfer of allowable pre-award costs;
- Reassignment of personnel in accordance with their appropriate effort on a project;
- Correction of account number transposition errors;
- Re-allocation of expenses incurred on departmental funds that are easily identified with project activities through maintenance of logs or other departmental records.
The following cost transfers may require additional information due to their high-risk nature:
- Transfers to or between federal projects;
- Transfers to a federal project occurring at the end of the project (within 89 days of project end date);
- Transfers with inadequate explanation;
- Payroll transfers.
Unallowable Cost Transfers:
A transfer of an expense to a sponsored project will not be approved for reasons including, but not limited to, the following:
- To meet deficiencies caused solely by overruns or other funding limitations
- To avoid restrictions imposed by law or by the terms of the sponsored agreement
- For other reasons of convenience.
*Projects awarded prior to 12/26/2014 with no funding adjustments or supplements are subject to OMB Circular A-21.
Any cost transfer submitted 90 calendar days or more from the expense incurrence date will be considered late, and will only be accepted in exceptional circumstances. Case-by-case review of the circumstances will be performed by the Office of Research to determine if processing will occur.
Associate Director, Post Award Services
KU Office of Research
Account Number - A five-digit number identifying an accounting transaction type (expense, revenue) within a budget category. For example 13800 = Research Supplies
Posting Date - For the purposes of this policy, the posting date is the date when expense was posted to the financial system; it is a Transaction Date shown in DEMIS.
Allocability [of expense] - A cost is allocable to a project if goods or services involved are chargeable or assignable in accordance with the relative benefits received by the projects. In order to be allocable a cost must be treated consistently in like circumstances. For further information see Uniform Guidance 2 CFR 200 or OMB Circular A-21.
Allocation Methodology - Detailed explanation of how the expense was allocated between multiple funding sources. Must include the justification of project benefits and how the specific allocation percentage were calculated.
Allowable - A cost is allowable to a project if:
- The costs are reasonable
- The costs are allocable to the specific project
- The costs are treated consistently in like circumstances
- The costs conform to any limitation of the cost principles or the sponsored agreement
Appropriate - If a cost meets the criteria of being allowable, allocable, and reasonable it is appropriate.
Award - A funding mechanism between the University of Kansas and KU Center for Research and a sponsor whereby the sponsor commits funding to the University for a specific scope of work and for a specific period of time.
- Each cost must be given consistent treatment according to generally accepted accounting principles appropriate to the project
- Each cost must conform to principles outlined in OMB or specific agency guidelines
Cost Transfer - A cost transfer is defined as an expense that is transferred between a sponsored project and another account after the expense has already been posted in the financial accounting system. These guidelines also apply to reclassification of sponsored project expenditures within a given award.
[Cost Transfer] Review - A process whereby transactions are analyzed to see if they meet the standards of reasonableness, allowability, and allocability, and are in accordance with Agency and KUOR guidelines.
DEMIS - Departmental Executive Management Information System, is a web-based reporting tool that allows users to extract the revenue, expenditures, and encumbrances along with other details from a data warehouse of PeopleSoft data.
Documentation - Includes a complete explanation of the allocability, allowability, and reasonableness, and any other supporting documents pertaining to the specific transaction, including the DEMIS report and a copy of the invoice, where applicable.
Effort - A percentage of time devoted to a project by a principal investigator or other project personnel.
Fiduciary Responsibility - Responsibility to manage funds in a manner consistent with the furtherance of the University’s mission and the conditions specified by external sponsors, when applicable.
Incurrence Date -
- The date when the services were provided (eg: phone bill for July - the incurrence date will be July 1st),
- Travel happened (eg: travel dates 5/1-5/15 - the incurrence date is 5/1),
- Work was done (eg: pp 4/10-4/23 the incurrence date will be 4/10),
- Date the item was purchased (invoice date).
Late Transfer - A transfer requested 90 calendar days or more from the expense incurrence date (see above).
Non-Personnel Costs - For purposes of this policy, non-payroll costs are supplies, consultants, travel, equipment, and other non-salary related expenditures.
PI (Principal Investigator) - The individual responsible for the technical, financial, and administrative aspects of the sponsored project. The PI is the individual determining that the expenditures are necessary, allowable, allocable, reasonable, properly approved, and adequately documented. A PI may delegate the approval authority to a designee.
Project - A set of activities including budget, scope of work, period of performance and PI. An award (the legal obligation of funds) may contain one or more projects.
Pre-Award Costs - Cost Incurred prior to the official start date of the project, as indicated in the award document.
Reasonable - Would a prudent person pay this amount for this item or "If it were published on the front page of the Lawrence Journal World, would that be okay with you"? For further information see Uniform Guidance 2 CFR 200 or OMB Circular A-21.
Personnel Costs - For purposes of this policy, personnel-related costs are payroll expenses (salary and benefits) as well as stipends that are recorded as payroll costs in the general ledger.
Sponsored Project - A project funded by an award from a grant, contract, or cooperative agreement under which the Institution agrees to perform a certain scope of work, according to specified terms and conditions, for a specific budget.
06/02/2017: Fixed broken link.
07/21/2016: Formalized an existing Office of Research process in policy