COSTTRANSFERPOLICY(Policyno.100.0)

COSTTRANSFERPOLICY(PolicyNo.100.0)

EffectiveDate: July1, 2007

Revision Date: 7/1/2016

Responsible Offices:Officeof theVice Presidentfor Research and Officeof Sponsored

Projects

Approval:Officeof theVice Presidentfor Research

CostTransfersonSponsoredAgreements

Purpose:

Brown University (Brown)expectsitsfaculty,staffandstudents,when dealingwith federaland othersponsored projects,to comply with all governmentandsponsor rules andregulationsand followestablishedstandardsfordetermining whenitis appropriate to initiate acosttransfer. Brown expectsthatcostsbechargedto the appropriate awardwhenfirstincurred but acknowledges thatthere arecircumstanceswhereit may be necessary to transferexpenditures to anotherawardsubsequentto the initial recording ofthe charge.

Policy:

To comply with allowabilityand allocability requirementsofthe Officeof ManagementandBudget (OMB)CircularA-21CostPrinciplesforEducationalInstitutionsor Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance),itis necessary to explain and justifythe transferofcharges to federalawards fromotheraccounts.OMBfederal requirements prohibit the use ofcosttransfersforthe purpose of “convenience”,i.e.,atransferlargely forthe purpose ofusing unexpendedfundson an awardthatis ending.Timelinessandcompletenessoftransfer explanationsareimportantfactorsinsupporting allowabilityand allocabilityin accordancewith federal requirements.

Definition:

Acosttransferis an after-the-factreallocation ofcosts,eitherlabor or non-labor,to asponsored funded award.

To be permissible,costtransfersmustmeetthe criteria establishedforboth timelinessand appropriateness.Costtransfersshould beinitiated as soon as possible afterthe original transaction,preferablywithin 90 days ofthe accounting dateof the transaction. Requestsfortransfersafter90 days mustincludesufficientdocumentation andjustificationand will beconsidered onacase by case basis.TheUniversityis obligated to immediately remove incorrectcharges madeto sponsored accounts,regardless oftime frame.

Typically,costtransfersare appropriate whentheyare allowable direct costs of the sponsored project and their purpose is to:

correct errors in processing the original charges;
move costs between funds for closely related work as defined by the project scope that is supported by more than one funding source;
reallocation of shared services;
transfer pre-award costs in accordance with the provisions of OMB federal requirements, (Circular A-110 Section C.25 or Uniform Guidance 2 CFR 200.308 Section d.1)
incur pre-award costs 90 calendar days prior to award or more than 90 calendardays with prior approval ofthe Federalawarding agency.

Inappropriate circumstancesinclude,butare notlimited to,the following:

transferssolely forthe purpose ofutilizing an unexpended balance;
transfersforthe purpose ofavoidingacostoverrun by charging another,unrelated sponsored agreement;
transfersthatcircumventpre- and/orpost-award restrictions;
transfers to avoidrestrictionsimposed by law or by termsofthe sponsored agreement;
transfers to activitiessponsored by industry,foreign governmentsor othersponsors shifted to federallysponsored agreements;
othertransfers for reasons ofconvenience.

The following are not considered cost transfers and do not require the completion of a Cost Transfer Explanation and Justification Form:

Transfersoftrue overdrafts (offsponsored awards to unrestrictedaccounts). Thesetransfersmay bemadeinlumpsum entries ratherthan identifying individual transactions.
Transfersofexpendituresbetween grants under the same award (i.e. between main and/orsub accounts),incases wherethere are nosponsor restrictionsonthe fundssetasideina particularsub account.
Transfersofpre-award expendituresthatwerechargedto a departmentalaccount,ifthe costs are allowable and allocable,andwereincurredwithin 90 days before the beginning date ofthe award.
Transfersofexpendituresincurredwithin the period of performance of the award butchargedto a departmental,unrestricted,or othernon-sponsored accountwhile awaiting the fullyexecuted sponsored agreement.
To avoid unnecessary costtransfers,an advance accountshould berequestedfromOSP by completing the UPASform.

Transferofanincorrectchargefromasponsored accountto a non-sponsored account.

Caution:An accountforan existingsponsored agreement mustnever be used as a holding accountforany pre-award expenses,includinglabor.

The following are considered cost transfers and require the completion of a Cost Transfer Explanation and Justification Form(AppendixC):

Transfersto correctdata entryor clerical errors (i.e.to correctdata entryor transposition error:GR527364should have beenGR527346).
Transferofexpendituresfroma non-sponsored accountto an existingaward (i.e., to transferprojectcostsfromthedepartmentalaccountto the sponsoredawardbecausethe sponsor issueda modification to the existingagreement ratherthan issuinga new award and therefore the accountnumber remainedthe same).
Recurring androutine transfersto allocate directexpenses (i.e. telephonetollcharges andservicecenter recharges).Thecostsmustbe allowable,charged inatimely manner,and allocated based onthe benefitderived.
Transfersofexpendituresfromthe prior year accountto the competing or noncompeting continuation accountifpermitted by the termsofthe award.Theexplanation shouldcontain the sponsor award number forboth the prior year andthe competing or non-competing continuation award.
To avoid unnecessary costtransfers,an advance accountshould berequestedfromOSP by completing the UPASform.

Cost Transfers Made After the 90 Day Period

Brown recognizes thatthere may be extenuatingcircumstancesforcosttransfersto be processed afterthe 90 day limit.Transferswhich are not made promptly,dueto extenuating circumstances,mustinclude an adequate explanation forthe delay.Allcosttransfersmade after the 90 day periodwill beconsidered only aftercareful review and approval of the Director of the Office of Sponsored Projects or designee.Transfersover 90 days will require an explanation indicatingthe measures thathave been putin placeto preventfuture occurrences.In addition,additionalinformation may berequestedifOSP determinesthatlate transferis indicative ofasystemicproblem.

Certain circumstances which necessitate a late cost transfer include but are not limited to the following:

Theofficialaward document,including amendmentsor modifications,was received afterthe startdate ofthe project,causinga delay inthe establishment ofan accountnumber.
Theaccountnumber assignmentwas delayed because ofnegotiation issues which prolonged the award acceptance.
Theofficialapproval fromthe sponsor forspecificexpenditureswas received afterthe expensetransaction(s)was processed.
Theofficialapproval fromthe sponsor forspecificactions,such as a no-cost extension,was received afterthe expensetransaction(s)was processed.

NOTE:ExtenuatingcircumstancesDONOTinclude absences ofPIor responsible administrator, and/orshortage or lack ofexperience ofstaff.Itis the responsibilityofBrown andthe PIto ensurethe availabilityofqualified staffto administerand exercisestewardshipover sponsoredprojectsin accordancewith policies and procedures.Thisincludes those related to regular/timely (typically monthly) monitoring ofexpendituresandtimelycorrectionoferrors and reallocation ofexpenses.

Cost Transfers for Payroll Accounting Adjustments (PAA’s)

PAA’sareconsideredcosttransfersandmustbeincompliancewith the University’sCost

TransferPolicy.

Departmentsareresponsibleforperiodically reviewing effortdistributionforappropriatenessand accuracy ofeffortexpended on all projects.Itis recommendedthatthe review be donemonthlyor noless frequentlythan quarterly.OMBfederal requirementsrequireadjustmentsto salary allocations inresponseto significantchanges inwork activity.Failureto adjustsalary allocationsinatimely manner will resultin errors to salary charges to grants,leadingto over/under recovery ofsalaries.

Procedures:

Documentation and Justification Requirements

Each costtransferrequestmustbeclearly explainedwith supporting documentation.TheCostTransferExplanationandJustificationForm (AppendixC)must be completed. Thepersoninitiating the transactionhas primary responsibilityforfulfilling these requirementsandmaintaining the related records.All records mustberetained in accordancewith the recordretention requirementsofthe sponsored agreementandthe University.

Thewritten explanation andsupporting documentation mustclearly addressALLofthe following:

accountoriginally charged and award/accountto becharged;
a description ofthe expense(s) beingtransferred;
date ofthe original charge(s);
documentation forthe original charge(s) if not executed in Workday (i.e.: For p-card charges provide original credit card receipt and p-card log); or operational transaction ID (i.e.: ER-12345) if executed in Workday;and/orotherdocumentation that describes andsupportsthe business transaction;
why the receiving accountwas notoriginally charged;
why itis appropriate to chargethe receiving account.

Note: Transfers made after 90days mustincludeajustificationforlateness. Explanationssuch as “to correctaclerical error” or “to transferto acorrectproject”are not adequate and will be denied.Transfersofcostsfromone budgetperiodto the nextsolely to cover costoverruns are notallowable.

Procedurefor Payroll Accounting AdjustmentMadePriorTotheCertificationofEffort

Modifythe employee’s costing allocation in Workday if necessary
SubmitaPAAforany retroactivechanges in effort
Submit certified effort report
ThePAA mustincludethe appropriate justificationas noted above

Payroll Accounting AdjustmentMade After EffortReportHasBeenSigned

Itis stronglyrecommendedthatPAA’sberequestedBEFOREthe EffortReporthas beencreated forthe period.However,itis recognizedthatthere may be reasons or extenuatingcircumstancesforlabor to beredistributedafterthe certificationstatement has beenissued andinsomecases signed.

OnceanEffortReporthas beensigned andreturned to OSP,nofurtheradjustmentsto thatindividual’s distributionofeffortare allowed unless approved by the OSP.Changes to previously certified efforterodethe credibilityofthe certifieras well as the entire effortcertificationprocess.

Changes to acertified effort reportare notallowed exceptinlimited circumstances, whichrequirethe following:

Sufficientdocumentation thatsupportsallowabilityand allocability,andwhy the effortwas originally certified incorrectly,and

Approvalofthe Director of Office of Sponsored Projects or designee.

APPENDIXA

ROLESANDRESPONSIBILITIESRELATEDTOCOSTTRANSFERS:

The major responsibilitieseach partyhas inconnectionwith the University’sCostTransferPolicy are as follows:

Cost Center Manager

Review sponsored accountsonaregular (e.g. monthly)basis to ensurethatall expenditurescharged,both personnel and othercosts,arecorrectand appropriate.
Thisreview shouldincludethe determination thatthe charges are reasonable,allowable,and directlysupportthe scope ofwork forthat project.
Personnelcharges shouldrepresentareasonablereflectionof employee’s effort.
Anyerrors discoveredmustbecorrectedinatimely manner.
Establisheffectiveprocesses andcontrolsto ensurecompliancewith thispolicy.
Ensure sponsor fundsare expendedinamanner consistentwith the policies and procedures ofthe Universityandthe termsandconditionsspecified by external sponsors.
Assume responsibilityforor assign an administratorto process the expenditure incompliancewith appropriate universitypolicies and procedures,and departmentalguidelines.
Ensure appropriate documentation has been obtained;i.e.original receipt, written justification,etc.to supportthe transaction.
Ensure appropriate approvals have been obtained.

Principal Investigator /Employee/GraduateStudent

Ensure sponsor fundsare expendedinamanner consistentwith the policies and procedures ofthe Universityandthe termsandconditionsspecified by external sponsors.
Ensure appropriate documentation has been obtained;i.e.original receipt, written justification,etc.to supportthe transaction.
Ensure appropriate approvals have been obtained.
Review sponsored accountsonaregular (e.g. monthly)basis to ensurethatall expenditurescharged,both personnel and othercosts,arecorrectand appropriate.
Thisreview shouldincludethe determination thatthe charges are reasonable,allowable,and directlysupportthe scope ofwork forthat project.
Personnelcharges shouldrepresentareasonablereflectionof employee’s effort.
Anyerrors discoveredmustbecorrectedinatimely manner.

Office of Sponsored Projects

Develop andimplementcosttransferpolicies,procedures,andtraining in accordancewith the regulationssetforth inOMBfederal requirements.
Distributeeffortreportsforall employees identified as expending effortonsponsored projects.
Monitorcosttransfersto ensurecompliancewith the University’sCostTransferPolicy.

Auditandconfirmthe allowabilityofcosttransfersandfacilitateany necessary correctionswith the cost center manager.
Reportquestionablepracticesandrecurring problems to theAssociateVPforResearch andthe DirectorofInternalAudit.

Workwith externalauditorsas they monitorthe University’scompliancewith cost transferregulations.

Internal Audit

Independentlyevaluate compliancewith costtransferpolicy and procedures.

APPENDIXB

DEFINITIONS:

Advance Account:An accountthatis establishedinthe general ledger prior to the receipt of an award.

AllowableCosts:

Allocable - Incurred solely to advance the work under the sponsored agreement; benefits to both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods; necessary and deemed to be assignable in part to the sponsored agreement.

Reasonable - Necessary for the performance of the sponsored agreement; reflect the action a prudent person would take under the prevailing circumstances; in accordance with the sponsored agreement terms and conditions; consistent with established Institute policies and practices.

Consistentlytreated- Uniformlyapplied across all funds; incurred forthe same purpose,inlikecircumstancesand aretreated as eitherdirectcostsor indirect(facilitiesand administrative)costs.

Cost Transfer:Acosttransferis an after-the-fact reallocation ofcosts, eitherlabor or non-labor,to asponsored funded award.

Direct Costs:Coststhatcan beidentified specificallywith a particularsponsored project;coststhatcan be directly assigned relatively easily to a projectwith a high degree of accuracy.

Effort:The proportion oftime spent on activities related to aPrincipalInvestigator's or employee's duties,forwhich universitycompensation is received. Total effort must always equal 100%. External activitiessuch as consulting are notincluded.

Facilities and Administrative Costs (F&A):Coststhat areincurredforcommon or joint objectives, andtherefore cannot beidentified readily or specificallywith a particularsponsored project.F&Acostsincludesuchitems as utilities and other plantcosts, andcertain general expenses (e.g. salaries of administrative andclerical staff, office supplies, postage, photocopying etc.)that areto some degree attributableto the project/program.Costs normally treated as F&Acostscannot becharged directlyto asponsored project unless the specific activities related to the project areclearly differentintype or significantly differentinscale fromthe University norm.

Late Cost Transfer:Acosttransferthatis requestedto be made 90 or more days afterthe accounting date of the original transaction.

Sponsored Project:A project/programfunded by a grant,contract, or cooperative agreement under whichthe university agrees to performacertain scope ofwork, accordingto specificterms andconditions foraspecified budgeted amount.

APPENDIX C

Brown University

Office of Sponsored Projects

Cost Transfer Explanation and Justification Form

A cost transfer is a journal entry that transfers expenses onto an externally-funded sponsored project that was previously recorded elsewhere on Brown’s General Ledger and requires institutional approval before it can be posted to the General Ledger. The completed Cost Transfer Form serves as institutional approval and is required for all journal entries subject to the Cost Transfer Policy.The Cost Transfer Policy provides guidance on determining if the journal entry requires the following Cost Transfer Form.

Procedures:

Ifcosttransferis madewithin 90 days of month end closing date from the original transaction please answer questions1 and 2.

*Note: 90 days means 90 calendar days from the 5thbusiness day of the subsequent month in which the charge was originally transacted.

For example, if the original charge posted on 5/10/16, 90 calendar days are counted from 6/7/16.

Ifcosttransferis made 90 days after end of month closing pleasecomplete questions1, 2,3,and 4.

For journals, emailthecompleted form and all supporting documentation to your OSP Grant/Contract Accountant with the journal entry number in the subject line. Example naming convention: SF0000012345.

For Payroll Accounting Adjustments (PAA), attach the completed form to the PAA entry in Workday.

Why was the expense(s) originally charged to the account from which it is now being transferred? (Include identifying information: cost center, grant, employee, effort %, dollar amount)

Explain why the expense(s) is being transferred to the proposed receiving account. Describe how the expense(s) directly benefits (i.e. are allowable and allocable) the award. *Ensure that no sponsor restrictions would preclude this transfer and that the transfer complies with sponsor and university policies.

Why is this cost transfer being processed 90 days after the month end closing date of the original transaction(s)?

If applicable*, what corrective action has been taken to correct systemic problem(s) that would eliminate future need for cost transfers of this type?

*Frequent occurrences of late transfers over 90 days require completion of this question. In addition, OSP may require you to complete this question if they determine the late transfer is indicative of a systemic problem.

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