New York University
School of Medicine
Policy # 3.3
Cost Transfers on Sponsored Projects
Responsible Office: Sponsored Programs Financial Services
Original Issuance: 8/8/03
Responsible Officials: Anthony Marsicano Last Revision:
I. Policy Summary & Purpose
II. Policy Statement
IV. Roles and Responsibilities
VI. Special Situations/Exceptions
VII. Other Related Documents
VIII. Applicable Regulations
I. Policy Summary & Purpose
This document establishes the policies and procedures for
transferring or moving costs from one program/project/org
to another as they apply to extramurally funded grant and
contract awards. The purpose of this policy is to ensure
proper financial accounting, reporting and compliance with
applicable federal and non-federal sponsor policies and guidelines.
This policy provides specific guidance relative to the accountability,
allowability, timeframe, documentation and authorization
requirements for cost transfers at NYUSOM. Adhering to this
policy will safeguard the Institution, its faculty and staff
from potential regulatory sanctions and loss of established
II. Policy Statement
This cost transfer policy establishes how a direct charge
expense related to either salary or non-salary transactions
may be moved or transferred from one program/project/org
to another after the charge has been posted in the financial
accounting records. All cost transfers across sponsored projects
must meet four allowability cost principles for selected
items of cost on grants, namely, reasonableness, allocability,
consistency and conformance (see III. Definitions).
It is always preferable to charge costs to the correct program/project/org
when they are incurred. However, cost transfers are sometimes
necessary to correct errors, transfer pre-award costs to
a grant subsequent to the formal award notification, remove
an unauthorized cost overrun during the grant closeout process
or remove unexpended balances that are either returned to
the sponsor or carried forward to a subsequent year of a
continuation grant. To be an allowable and justifiable cost
transfer, the transfers must be:
- In conformity with NYUSOM and sponsor allowability standards
- managed in a timely manner
- fully documented, and
- authorized by a designated official within Sponsored Programs
Specific requirements regarding allowability, timeliness,
documentation and authorization are identified below along
with implications in the event of non-compliance:
A.1 All cost transfers across sponsored projects must meet
NYUSOM and sponsor allowability cost principles/standards
and must be allocable to the receiving sponsored award. Cost
transfers are appropriate in the following circumstances:
a.1.1 Error Correction – May include clerical errors
(e.g., typographical errors or transposition of chartstring
digits). Other errors may be detected upon review of monthly
Organizational Budget Reports (OBR’s). It may be determined
that a payroll distribution had not been updated, or a charge
allocation to a program/project/org was inappropriate or
inconsistent with the scope and use of the item(s) purchased
on the grant to which it was originally charged. All errors
should be corrected as soon as they are detected.
a.1.2 Transfers between active program/projects/orgs – Costs
may be transferred between active program/projects/orgs for
various reasons, such as; pertinent information is received
subsequent to the date of original entry, or it was impractical
or impossible to allocate charges at the time of the original
A.2 Cost transfers for sponsored project activities are not
allowed in the following circumstances:
a.2.1 Cost Overruns - Unless clearly stated in the agency
guidelines, cost transfers from one sponsored project to
another solely to cover an anticipated overrun are not allowable.
Overruns must be transferred into discretionary accounts
or institutional accounts(operating) if funds are available.
a.2.2 Unexpended Balances – Unless permitted by the
sponsored agreement, cost transfers solely to eliminate unexpended
balances at the close of a project are not allowable. Unexpended
balances at the close of a project may need to be returned
to the sponsor, and is contingent on specific agreement language.
B. Timeframes for Cost Transfers
B.1 A cost transfer should be initiated as soon as the need
for a transfer is identified. It is expected that cost transfers
will be processed within 60 days of the end of the month
of the OBR in which the charge appears, but not later than
90 days after the original expense. For salary charges, the
number of days begins with the OBR date where the salary
period to be moved began.
B.2 In extreme cases, if a transfer is required after the
90-day period, more stringent guidelines by the federal government
must be met, therefore the supporting documentation must
include, in addition to the normal explanation and justification
for the transfer, a valid explanation of why the transfer
is late. Transfers processed after 90 days require the approval
of the Senior Director Sponsored Programs Financial Services.
C.1 Cost Transfers must be supported by documentation that
contains a full explanation and justification for the transfer.
Cost transfer documentation must include support for the
original transaction, e.g. related purchase order, vendor,
amount, employee name and social security number, and possibly
a copy of the detail transaction report from fame if it adds
C.2 If a transfer is to correct an error, an explanation
that merely states that the transfer was made to “correct
an error” is not sufficient. The explanation must indicate
why the original entry was incorrect and how the error occurred.
D.1 All cost transfers must be approved by both the financial
analyst and the Manager of Sponsored Programs Financial Services.
Any waivers must be approved by the Senior Director of Sponsored
Programs Financial Services. All cost transfers in excess
of $50,000 or 20% of the approved direct costs must be approved
by the Vice Dean for Administration of the NYUSOM.
E. Implications and Consequences of Non-Compliance with Cost
- Non-adherence to this and perhaps other federal policies
- Poor internal and audit controls
- Inadequate and ineffective grants management processes
- Potentially unfavorable audit outcomes
- Loss of privileges such as
* Expanded authorities – NYUSOM’s ability to oversee and authorize
rebudgeting, carryovers, and the cost transfers outlined in this document would
* Letter of credit – rapid, electronic cost reimbursement of grant expenditures
* Disallowances with potential damages - including penalties and interest
- Bad press may result in loss of future grant funding and philanthropy
- Subject to increased scrutiny of Inspector Generals’ Office Audit plan
- Loss of “low risk” grantee status which would increase audit
scrutiny and cost to institution
- Non-compliance could result in the following actions:
* Loss of privileges such as Stapleslink and P-Cards
* Restriction of transfers to departmental chartfield only, as a default
* Forfeiture of grant balances (grants referenced in the cost transfer)if cost
transfer is disallowed
Cost Transfer – A cost transfer is a reallocation
or movement of costs from one program/project/org to another
after the charge has been posted in the financial accounting
A cost may be considered reasonable if the nature of the
goods or services acquired or applied and the associated
dollar amount reflect the action that a prudent person
would have taken under the circumstances prevailing at
the time the decision to incur the cost was made. The cost
principles elaborate on this concept and address considerations
such as whether the cost is of a type generally necessary
for the organization's operations or the grant's performance;
whether the recipient complied with its established institutional
policies in incurring the cost; and whether the individuals
responsible for the expenditure acted with due prudence
in carrying out their responsibilities to the Federal Government
and the public at large as well as to the organization.
A cost is allocable to a specific grant, function, department,
etc., known as a cost objective, if the goods or services
involved are chargeable or assignable to that cost objective
in accordance with the relative benefits received or other
equitable relationship. A cost is allocable to a grant if
it is incurred solely in order to advance work under that
Grantees must be consistent in assigning costs to cost objectives.
Therefore, under NIH grants, although costs may be charged
as either direct costs or F&A costs, depending on their
identifiable benefit to a particular project or program,
they must be treated consistently for all work of the organization
under similar circumstances, regardless of the source of
funding, so as to avoid duplicate charges.
The fourth aspect of allowability, conformance with limitations
and exclusions as contained in the terms and conditions of
award-varies by the type of activity, the type of recipient,
and other variables of individual awards. The section titled " Allowability
of Costs/Activities" provides information common to
most NIH grants and, where appropriate, specifies some of
the applicable distinctions if there is a different treatment
based on the type of grant or grantee. Part III contains
additional information on allowability of costs for particular
types of grants/grantees/activities.
IV. Roles & Responsibilities
Principal Investigator - The Principal Investigator or his/her
designee initiates the request for cost transfers, providing
a detailed explanation for the cost transfer.
Department Administrator (or designee) – Prepares
cost transfer documents.
Manager - Sponsored Programs Financial Services – Provides
final approval of all NYUSOM cost transfers. Cost transfers
greater than $50,000 or 20% of the approved direct costs
budget must be authorized by the Vice Dean for Administration
of the NYUSOM.
Sponsored Program Financial Analyst – Responsible
for approving cost transfers and processing necessary entries
to satisfy the cost transfer request. Ensures that final
approval is documented and maintains complete records of
all cost transfers for future reference and/or audits. This
individual ensures the re-certification of effort reports
if transfer involves salary changes.
A. A “Request for Cost Transfer Form” must be
completed for all cost transfers (Except for permanent salary
and wage transfers, covered in section b). The form should
be completed as follows:
Sections A & B are to be completed by the Department Administrator in conjunction
with the PI
Section A: Identify Item being transferred including:
- Type of Expense (i.e. equipment, supplies, salaries)
- Vendor (or employee if salary transfer)
- Description of item
Date of Original Charge
Amount of original charge
Chartfield combination (formerly account number) where original charge was
Chartfield where charge is to be moved
Section B: Explanation and Justification for Transfer, include reasons for:
- Charging the original program/project/org
- Transferring the charge
- Charging the proposed program/project/org
- Processing the transfer more than 90 days after the original charge (if applicable)
Section C: Principal Investigator (PI) signature and date
Financial Analyst signature and date
Manager of Sponsored Programs Financial Services signature and date.
Journal Entry Preparer and date of entry
Note: Effort Certification needs to be re-certified at this time
A.2 The Request for Cost Transfer form is completed in the
- The form (Blocks A and B) is completed by the department
administrator in conjunction with the PI, who signs and dates
the Cost Transfer form.
- The form is forwarded to the Sponsored Program Financial Analyst (SPFA) for
review, approval and signature. (If the SPFA does not approve the transfer,
the form is returned to the PI with an explanation)
- The SPFA forwards it to the Manager of Sponsored Programs Financial Services
for review, approval and signature. (If the Manager does not approve the transfer,
the form is returned to the SPFA with an explanation)
- In those cases where the transfer exceeds $50,000 or 20% of the approved
direct costs budget, the form will be sent by SPFS to the Vice Dean for Administration
of the NYUSOM for review, approval and signature.
- The journal entry is processed by the SPFA
B. Salary and Wage Transfers – Salary and wage transfers
may result from permanent re-assignment of time and effort
between projects or by an interim re-assignment of effort.
Interim transfers are performed using the standard Request
for Cost Transfer Form (covered in section “A” of
this procedure). Permanent transfers of salary are performed
B.1 Permanent Change in allocation
All permanent changes to payroll allocations must be made
using the Confidential Personnel Profile (CPP) form.
- The department administrator prepares a Confidential
Personnel Profile (CPP) with a prospective effective date
and submits it to the PI for his or her approval and signature.
- The approved CPP is reviewed by the Budget Office and then goes to the Sponsored
Programs Payroll Allocation group to be processed, including any minor adjustments.
- If the effective date is retroactive greater than 90 days as described in
Section II B, a cost transfer form is required to document the transfer and
a journal entry prepared to re-allocate the charge. Documents are to be forwarded
to the Manager of Financial Services for approval and processing.
- Effort Report must be re-certified by the PI, or the Administrator in the
case of a non-professional effort report, if the period covered by the transfer
has previously been certified by the employee whose salary is being transferred.
A journal entry will not be processed unless the effort report is re-certified.
B.2 Temporary Change
All temporary changes should be made using a cost transfer
(i.e. employee is temporarily assigned to a specific project
funded by source other than current salary allocation).
VI. Special Situations/Exceptions
Non-Sponsored Program – It is not necessary to use
a cost transfer when transferring expense between non-sponsored
program accounts, however, one can be used if you feel it
necessary to provide needed support. A memo and clearly explained
journal would be sufficient.
Fast Track Cost Transfer – A request for a cost transfer
will be put on a “fast track” if the request
is made within 60 days after the end of the month in which
the activity occurred and meet one of the following criteria:
- Transfer is less than $1,000 in total or
- To correct an error (such as a typographical or transposition error) originating
from Accounts Payable, Purchasing, Animal Facility, etc.
Fast Track cost transfers can be processed by using a “Request
for Cost Transfer Form” and annotating “Fast
Track” in Section B, “Explanation and Justification”.
It would only require the signature of the Principal Investigator
and the Sponsored Program Financial Analyst and a less detailed
VII. Other Related Documents – N/A
VIII. Applicable Regulations
OMB Circular A-21, Part C, 4b
NIH Grant Policy Manual, Part II-35
A. “Request for Cost Transfer”
B. Confidential Personnel Profile Form