Policy 5:33 - Cost Transfers on Federally Sponsored Projects

Policy Contact: Grants and Contracts Administration

  1. Purpose

    The purpose of this policy is to ensure compliance with federal policies and guidelines related to the transfer of and expenses onto a federal Sponsored Project.

  2. Definitions
    1. Cost Transfer: the reassignment of an expense to a federally Sponsored Project or federal pass-through project after the expense was initially charged to another fund. Cost Transfers can include both salary and non-salary expenditures. They typically involve funds that begin with 3F, 3M or 3T.
    2. Allocable Costs: those costs for goods or services that are chargeable or assignable to the federal award or an applicable cost objective in accordance with relative benefits received or other equitable relationship. (2 CFR 200.405)
    3. Allowable Costs: those necessary and reasonable costs to accomplish the project goals; conforming to any limitations or exclusions in the federal award; consistent with federal statute and federal, SDBOR, and University policy; accounted for consistently as either a direct or an indirect cost pursuant to generally accepted accounting principles; adequately documented; and not included as a cost for cost sharing or matching requirements for any other federally-financed program. (2 CFR 200.403)
    4. Reasonable Costs: those costs which, in nature and amount, do not exceed what would be incurred by a prudent person under the circumstances prevailing at the time the decision to incur the cost was made. (2 CFR 200.404)
    5. Sponsored Project: an activity funded by a non-University entity requiring the University, by written agreement, to conduct certain work under a set plan, a set schedule, and a set budget, typically for the purpose of supporting research, instruction or public service through tangible or intangible deliverables that are the ultimate result of the Project.
  3. Policy
    1. The objective of grant management is to ensure that all costs are initially charged to the correct federal Sponsored Project.
    2. In those limited circumstances where that objective cannot be met, and in order to comply with federal cost allowability, reasonability, and allocability requirements, it is necessary to complete a Cost Transfer Form and fully explain and justify transfers of expenses onto federally Sponsored Projects from other Sponsored Projects and non-Sponsored Projects or funds. These Cost Transfers tend to occur as a result of clerical or accounting errors, or other unforeseen issues, and so considerable scrutiny is paid to them.
    3. Cost Transfers should be made within 90 days from the end of the month in which the cost occurred. The transfer should be supported by documentation that explains how the error occurred, if applicable, and justification and assurance that the new charge is allowable, allocable and reasonable to the project.
    4. Cost Transfers made beyond 90 days after the end of the month in which the cost occurred, require additional explanation of tardiness and what corrective action has been taken to eliminate the need for Cost Transfers of this type in the future. These transfers also require approval from the Vice President for Research and Economic Development, designee or successor.
    5. The following Cost Transfers are not allowable if made solely for the purpose of the following and would need to be placed on a fund where they would be allowable:
      1. Covering overruns whether actual or anticipated (unless the overspent project is closely related to the project to which the costs are being transferred);
      2. Spending down grant funds;
      3. Circumventing award restrictions; or
      4. Transferring expenses to or from an award which has been closed or which has had its final expenditure report submitted to the sponsor.
    6. Multiple transfers of the same cost are not allowed.
    7. Roles and Responsibilities
      1. Principal Investigator ("PI")/Department support staff: These individuals are responsible for completing the supporting forms with as much detail so that a reasonable person can understand what is occurring and for providing relevant documentation for the process to ensure accurate records for audit.
      2. Grants and Contracts Administration ("GCA") Monitor: The GCA Monitor is responsible for reviewing and ensuring accurate and timely submission for Cost Transfers. They are also responsible for ensuring the PI and departments are in compliance with this policy and sponsor terms and conditions.
      3. Cost Transfer Coordinator ("CTC"): The CTC is responsible for processing and filing the Cost Transfers for auditability.
      4. Vice President for Research and Economic Development ("VPR") or designee: The VPR or designee is responsible for reviewing and approving a Cost Transfer over 90 days after the original charge has been posted to Banner and for returning it to the CTC for final processing.
      5. Accounting personnel: These individuals are responsible for ensuring there is a Cost Transfer Form attached with any qualifying transactions and a Journal Voucher prior to processing the request.
  4. Procedures
    1. Journal Voucher (鈥淛V鈥)
      1. When a JV is completed to move expenses onto a federal grant fund, a Cost Transfer Form will need to be attached to the JV prior to it being processed by the Accounting Office.
    2. Fund Source Change (鈥淔SC鈥) or Summer Personnel Action Form ("PAF")
      1. When an FSC or Summer PAF is completed to move payroll onto a federal grant fund after it was initially charged to a different fund, the Cost Transfer Form  will be initiated by the CTC and routed via DocuSign to PI/support staff for input and approval, the GCA Monitor for review, and back to the CTC for processing to be included in the grant file.
    3. There are several instances for which a Cost Transfer Form is not needed. These include:
      1. Cost Transfers involving direct cost amounts equal to or less than $200 per incident.
      2. Transferring expenses from one fund to another fund on the same grant.
      3. Correcting improperly classified account codes within the same grant.
      4. If an FSC is initiated the same month that the employee is being paid.
      5. If a JV is initiated within the same accounting period (month) of the original charges.
        1. A regular review of post-award expense transactions will reduce the need for Cost Transfers, and in most cases, submitting a JV or payroll change within the same month of the original expense will immediately correct erroneous transactions.
      6. JVs to align the allocation of tuition remission with effort on a sponsored award.
        1. Note that the reallocation of tuition remission must follow the same salary distribution of relevant work effort.

  5. Responsible Administrator

    The Director of Grants and Contracts Administration, successor, or designee is responsible for annual and ad hoc review of this policy and its procedures. The University President is responsible for approval of this policy.

Approved by President on 11/16/2018. Revised 08/05/2024 (clerical). Revised 02/20/2025 (clerical). Revised, Approved by President on 12/10/2025.

Sources: 

Associated Forms: Journal Voucher Form; Summer Personnel Action Form; Fund Source Change Form; Cost Transfer Form