Overview
- A cost transfer is an after-the-fact reallocation of costs (either salary or non-salary) to a sponsored project within a 90-calendar day period from the accounting date.
- Salary cost transfers involve moving payroll expenses or stipends onto a sponsored project. Payroll expenses include salary and fringe benefits.
- Non-salary cost transfers involve moving expenditures for items other than payroll or stipends onto a sponsored project. Typical examples of non-salary costs include expenses for supplies, services, consultants, travel, and equipment.
- It is the policy of the University of Wisconsin-Madison that costs should be charged to the appropriate sponsored project when first incurred. There are circumstances in which it may be necessary to transfer expenditures to a sponsored project subsequent to the initial recording of the charge.
- Those transactions require monitoring for compliance with UW policy, Federal regulations, sponsor-specific guidelines, and the cost principles that underlie fiscal activities on sponsored projects.
Guidelines
- Cost transfers should be processed immediately after an error is identified; transfers must take place no later than 90 days after the end of the month of the original transaction.
- Transfers made after 90 days raise questions concerning the validity of the transfer. Requests for transfers made after 90 days will be considered only under extenuating circumstances.
- Frequent cost transfers, late cost transfers and inadequately documented or justified transfers (especially involving projects with overdrafts or unexpended balances) may be regarded by sponsors as indicators of inadequate control systems. Cost transfers are also targets for audits, which can lead to disallowances or penalties.
Do:
- Charge expenditures to the correct fund
- Correct errors as soon as detected and monitor monthly.
- Request advance account numbers for pending awards.
- Split allocable costs across multiple sponsored projects consistently.
- Provide clear, detailed justification statements.
- Perform ProCard edits in a timely manner
- Carefully prepare paperwork – errors in account numbers, reference numbers, amounts, etc., will only delay transactions.
Don’t:
- Use federal projects as defaults for ProCard purchasing system (PVS Net). Instead use unrestricted funding.
- Park costs for pending projects on other sponsored projects.
- Transfer costs from one sponsored project to another to eliminate a deficit.
- Apply all costs on one grant and then move some to another. If the costs are to be shared between related grants, costs should be split-coded at time of purchase whenever possible.
Cost transfer request process
- Costs transfer requests are entered and submitted electronically using UW-Madison’s cost transfer tool.
- Instructions and training materials for the cost transfer tool are available.
- When entering requests, fill out the online form and complete and attach any pertinent documentation such as:
- Copy of specific requisition/invoice
- Copy of invoice pertaining to the charge being transferred when a blanket order is involved
- Copy of invoice or other pertinent paperwork when transfer involves a direct charge or procurement card purchase
- Note: Documentation is always needed when sponsored projects are involved regardless of the direction of the transfer.
Salary cost transfers and effort certification
To streamline your salary cost transfer (SCT) request, we recommend that you work closely with your department effort coordinator. The effort aspect of the transfer often creates hangups. Make sure to communicate with the effort coordinator in your department to ensure that certified effort matches the SCT.
Resources
- Cost transfer policy: Includes extensive information about allowable costs and other issues
- Cost accounting standards (ppt): Presentation from RSP
If you have any questions regarding cost transfers on sponsored projects, contact your SMPH accountant.