Purpose

Reason for Policy

Federal regulations (2 CFR §200.405) require NIU to explain cost transfers to sponsored awards to ensure that the transfer is not occurring for the following reasons.

• To overcome deficiencies caused by overruns or other financial considerations.
• To avoid restrictions imposed by law or by the terms of the sponsored agreement or for other reasons of convenience.

A cost transfer is an after-the-fact reallocation of costs to a sponsored award. Costs for a specific sponsored project should be charged to the appropriate sponsored project when the expense is incurred. Doing so is important for proper cost allocation and enables accurate accounting of expenses necessary to support sponsor payment and indirect cost recovery.

Auditors and sponsors routinely monitor cost transfers to assess the internal controls NIU has in place to ensure charges to a sponsored award are allowable, reasonable, and provide a direct benefit to the project. It is recognized that transfers may be necessary to correct bookkeeping or clerical errors or to allocate closely related work, but transfers need to be done in a timely manner. An acceptable timeframe is within 90 days of the original transaction date though NIU’s year-end financial reporting requirements may limit this timeframe.

To avoid compliance findings that can affect NIU’s eligibility for funding, NIU should avoid cost transfers with the following characteristics:

• Costs transferred more than 90-days after the original transaction date.
• Transfers lacking adequate documentation or justification.
• Transfers made for convenience or to circumvent award restrictions.
• Transfers made to another grant account at the end of a project to relieve cost overruns.
• Transfers made from a local cost center or a grant account to spend out a project.

Intended Audience

• Senior Administration – Vice Provosts, Associate Deans
• Director, Department Chair, Division Head
• Faculty and Staff
• Departmental/Divisional Business Administrators
• Finance Personnel
• Sponsored Programs Administration Personnel

Definitions

• is necessary for the conduct of the project;
• is allowed by the terms and conditions of the award;
• is consistently treated between sponsored and non-sponsored funds;
• is not included as cost share against another sponsored project.

• Move costs that were temporarily charged to an unrestricted local fund prior to executing a new award.
• Correct clerical or data processing errors.
• Correct costs charged to the wrong fund due to incorrect posting.
• Transfer costs to distribute effort (i.e., labor redistributions).
• Transfer costs for shared goods and services (e.g., laboratory supplies, long distance telephone costs, printing/photocopying, etc.) that benefit more than one project.

• Move costs that do not directly benefit the project.
• Intentionally charge the wrong grant account (i.e., park the charges).
• Move costs that are incurred outside of the period of performance (unless specifically allowed by the sponsor).
• Transfer expenses from any source, including unrestricted local funds, solely to spend unused sponsored project balances.
• Transfer costs to another sponsored project for one or more of the following:
  • Eliminate an overdraft caused by overruns or other financial considerations, such as budget constraints, project completion date, or early termination;
  • Avoid restrictions imposed by law or by the terms of the sponsored agreement; or
  • For other reasons of convenience.

Roles and Responsibilities

Principal Investigator

Has primary responsibility for ensuring compliance with federal regulations as well as monitoring of expenditures, timely correction of errors and proper allocation of expenses.

Department Staff

Assist PIs in the timely review and reconciliation of expenditures, prepare cost transfers and maintain adequate documentation of questionable costs, and ensure that all personnel engaged in the financial administration of sponsored awards are familiar with this policy; ensures that the costs transferred are allocable, allowable, and reasonable; coordinate with SPA to initiate and document cost transfers, prepare, and submit timely approved Cost Transfer Request Form when required.

Sponsored Programs Administration (SPA)

Maintains the policy and accompanying procedures for costs transfers and addresses questions regarding the policy.  Grants and Contracts Associates approve cost transfers less than 90 days. The Associate Director Post Award approves cost transfers greater than 90 days. The Assistant Vice President for Research and Sponsored Programs approves cost transfers greater than 120 days.