January 4, 2012 (rewrite)
A-1. Cost Transfer. Any Banner transaction that moves an expense either from one budget to another, or from one expense code to another, as a correcting entry to the original posting.
B. Policy. A cost transfer signals to an auditor that something requiring correction has occurred and that further investigation may be needed. In particular, when a cost transfer is processed onto a sponsored project budget near the project’s termination date, an auditor may interpret it to mean that the Principal Investigator (PI) is trying to simply expend the balance remaining in the project budget. This policy establishes the proper procedures and internal controls required for cost transfers in general, as well as specifically for sponsored projects.
While ideally all expenses are processed and posted to the correct project budget, the University recognizes that errors occur and cost transfers to correct those errors may be necessary. Cost transfers are used when an expense is incorrectly processed on one budget and require the expense to be transferred to the correct budget. Cost transfers may also be used when correcting an expense code used for a particular item. Cost transfers may not be used to transfer income from one account to another. (Note: The rule code IDG [See APM 75.30] should only be used either to record income for a service provided, such as lab testing, or for cost transfers that are internal to the University.)
C.Process/Procedures. The following guidelines are provided to ensure cost transfers are proper and authorized. The Payroll Cost Transfer form found on the OSP website is only to be used for transferring payroll expenses. All other types of cost transfers should be completed in Banner with adequate explanatory text.
C-1.Timely Corrections. The allowability of a cost transfer onto a sponsored project improves when the error is corrected within a reasonable time period (i.e. within 90 days of the end of the month when the charge first appeared). Cost transfers at the end of the project should be avoided, and in no event will cost transfers onto a project be allowed in excess of 90 days after termination date.
C-2.Proper Explanation Required. PIs and Grant Administrators (GAs) are ultimately responsible for the justification of the cost transfer. The justification must state in detail: how the error occurred; why the transfer is required; and how the expenditure is of benefit to the project. Statements such as 'to correct error' or 'clerical error' are not sufficient to withstand an audit. Cross-referencing text (cost transfer number, date, explanation, and name of person entering cost transfer) must be added to the original document on which the error occurred in order to be able to track expenses and to reduce the chance that the same cost transfer is made more than once.
C-3. Required Supporting Documentation. All supporting documentation for cost transfers must be maintained in the unit for three years after the termination of the project.
C-4. Guidelines for Non-Payroll Cost Transfers. All cost transfers onto a sponsored project budget need to include the following steps:
a) Prior to initiating a transfer, review FGIBAVL to ensure that the receiving budget is not overdrawn and that the account category receiving the transferred expense has adequate funds to cover these costs. Account categories with insufficient funds will require a budget transfer, reviewable by OSP, for allowability.
b) Ensure that the expense being transferred is within the project period of the receiving sponsored project, as defined in the Banner form FRAGRNT.
c) Capital outlay > $5K may not be transferred without review and approval by OSP as these expenditures are sensitive, will affect F&A, and may be unallowable.
d) Ensure that any transferred expense is an allowable expense on the receiving budget. Refer all allowability questions to the Cost Accounting Unit of OSP.
e) Prior to transferring any expense, review FOATEXT to preclude the transfer of a previously transferred cost. See C-2, above.
C-5.Payroll Cost Transfers. Payroll cost transfers onto or off of sponsored projects must use the form found on the OSP Website and include the following steps:
a) Determine the employment dates involved (multiple pay cycles are allowed) and the amount of salary to be transferred.
b) If the change is retroactive and ongoing, complete an EPAF for processing through the normal approval and Banner posting cycle. In the Remarks section of the EPAF, indicate that you have requested a cost transfer for $xx.xx (amount) from XX/XX/XX to XX/XX/XX (employment dates).
c) Complete the Payroll Cost Transfer (PCT) Form. Questions one and two must be answered. If the PCT is more than 90 days past the end of the month of the posting date of the first pay period, questions three and four must also be answered. Each employee and project director/PI receiving the expense must sign and date the PCT form. This signature authority may not be delegated.
d) Attach any supporting documentation to the completed PCT form. Examples of supporting documentation include the NWPREX report, the NHIDIST screen, and the PHAHOUR screen for partial pay periods.
e) Send the PCT form with supporting documentation to OSP at mail stop 3020.
f) Ensure the Personnel Activity Report (PARs) [see APM 45.09] agrees with the information included on the cost transfer.
g) Payroll cost transfers cannot be completed online in Banner.
C-6. Cost Transfer Limitation. A cost will not be transferred more than once, unless it was disallowed.
D. Contact Information. Any questions regarding cost transfers should be addressed to the Office of Sponsored Programs at 208-885-6651 or OSP Email.