Cost Transfer
These procedures are issued in accordance with Policy 302, Cost Transfers.
Definition
A cost transfer is a reallocation of cost, from one project to another. Although occasionally necessary, federal regulations discourage and in certain instances disallow the movement of such expenditures. The purpose of this procedure is to ensure compliance with sponsored project and university policies and guidelines related to transfers of expenses. This procedure is applied consistently to all Rice University sponsored projects.
In the case of a sponsored project, a cost transfer is a reassignment of expenses either between similar sponsored projects, or between a sponsored project and a non-sponsored project. A cost transfer does not include:
- Reclassification of costs (e.g., correcting an expenditure type) within an award
- Transfer of costs within an award between projects
- An initial allocation of a charge from a clearing (default) project
- Data entry/data conversion corrections of labor distributions
These types of actions are not considered a cost transfer for the purposes of Policy 302.
Documentation
Cost transfers must be sufficiently documented in accordance with the provisions of the Office of Management and Budget (“OMB”) as part of 2 CFR Part 200, Subpart E. These standards require that accounting records include cost accounting records which are supported by source documentation. This documentation will assist in determining the reasonableness, allocability and allowability of the cost in accordance with the terms and conditions of the award.
Background
The Principal Investigator (PI) is responsible for the management of sponsored projects that are awarded to them. These include federal, state, and private grants and other sponsored agreements.
In addition to technical compliance, the responsibility for budgetary compliance rests with the PI. Each PI is responsible for ensuring that charges made to a particular award are allowed by the funding source and are directly related to the award or activity supported by that award. The PI should carefully consider whether an expense is an allowable, allocable and reasonable cost on a given award before the expense is incurred. In addition, the PI is responsible for reviewing expenses monthly.
Cost transfers are sometimes necessary and unavoidable; however, they should not be used as a method for routine expense management. They may be used to correct an error or to allocate expenses between closely related projects if both projects benefit directly from the expense. Cost transfers should not be requested simply to avoid over expenditure in one research award by transferring expenses to another research award, nor should they be used as a method to spend money because a project is nearing its end. Unallowable or inappropriate charges that appear on a sponsored project award must be moved to faculty fund project promptly.
Frequent, tardy, or insufficiently justified transfers raise serious questions about the propriety of the transfers, the overall reliability of the University’s accounting system, the ability of the PI and departmental staff.
Timely
In accordance with the Cost Transfers policy, cost transfers submitted later than 90 days from the end of the month in which the charge first appears on the award or submitted later than 30 days after the end date of an award are not considered timely. Cost transfers not submitted in a timely manner must also include:
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Approval of the department chair of each department (see Properly Approved, below).
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Additional documentation if expenses are to be charged to another sponsored project
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An explanation of the delay in processing the cost transfer.
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Include information on what steps are being taken to prevent future similar delays.
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Well-Documented
In addition to providing information on the original posting from iO, a cost transfer request on sponsored projects must include:
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A full explanation of how the error occurred.
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Why the expense was originally not known at the time of the original charge.
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How the expenditure directly benefits the project receiving the charge.
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A generic statement such as “to correct error” is insufficient and will not be accepted.
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See the Cost Transfer Justification Samples for examples.
Properly Approved
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The PI or designee must approve cost transfer requests before they are submitted. The PI or PI designee approval certifies the correctness of the proposed cost transfer.
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Cost transfers that are not timely also require the approval of the chair of each department affected by the cost transfer.
Cost Transfer Process in iO
The process for cost transfers in iO is dependent on the transaction source (converted or iO created) and the transaction type (labor and non-labor).
Cost Transfers for Costs Incurred Prior to July 1 (Both Labor and Non-Labor Converted Costs)
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Converted costs will be managed in iO using the Non-Labor Cost Transfer Form. For the costs to be transferred, a description of the cost transfer as well as the invoice information must be entered, as well as the current and new COA and POET accounting information. RCA will enter the information into the PPM Project Costs ADFDI template and upload into iO.
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Converted costs cost transfers are to be requested by the Department Administrator and uploaded to BOX for processing.
Cost Transfers for Non-Labor Costs Incurred After July 1
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Cost transfers for non-labor costs will be managed in iO using the Non-Labor Cost Transfer Form. For the costs to be transferred, a description of the cost transfer as well as the invoice information must be entered, as well as the current and new COA and POET accounting information. RCA will enter the information into the PPM Project Costs ADFDI template and upload into iO.
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Non labor cost transfers are to be requested by the Department Administrator and uploaded to BOX for processing.
Labor Cost Transfers for Costs Posted Beginning July 1
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Labor cost transfers will follow the general iO process for Labor Distribution changes. For changes to sponsored projects entered 90 days after the end date of the original labor distribution, the following is required:
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The field “Includes sponsored projects over 90 days:” must be marked “Yes” on the Labor Distribution form.
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A comment must be entered on the form explaining the reason for the cost transfers.
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Include the Department Chair as an Optional Approver on the LD template so the required department chair approval is obtained.
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Labor cost transfers are to be requested by the Department Administrator and forwarded to Payroll for processing via Adobe Sign.
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Other Cost Transfer Considerations
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For overspent projects, a cost share project must be created to capture the excess costs. A cost transfer must be completed to transfer the excess costs to the cost share project.
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Expenses posted beginning July 1 for Financial Aid related transactions will have to be corrected in the Financial aid system. Once corrected, the expense will be corrected in iO automatically.