In this Open Comment Period: Section 16 - Sponsored Projects Cost Transfers
Welcome!
In this Open Comment we present redesigned policy and procedural information for the policy topic Sponsored Projects Cost Transfers, in Section 16: Grants and Research Contracts, which will replace existing campus supplements 16.1.2, 16.1.6, and 16.1.7. The redesigned topic includes Cost Transfers policies, procedural steps for how to Process Cost Transfers for Sponsored Projects, and information on Types of Cost Transfers, Cost Transfers Principles and Expectations, Policy Exceptions, and Frequently Asked Questions.
Sponsored Projects Cost Transfers
Policy Statement
It is the policy of the University of Illinois that costs should be charged to the appropriate sponsored project when first incurred. There are circumstances in which it may be necessary to initiate a cost transfer to reallocate or redistribute expenditures to a sponsored project subsequent to the initial recording of the charge. Sponsored project cost transfers should be initiated promptly and supported by documentation justifying the transfer.
Principal Investigators (PIs) are responsible for managing their sponsored projects to minimize the need for cost transfers. PIs are also responsible for ensuring that when cost transfers are necessary, the costs transferred to (or between) their sponsored projects represent appropriate corrections of errors, and that cost transfers are completed as soon as the errors are detected.
All cost transfers must comply with federal and state laws, University policies, and individual sponsor terms and conditions. Some of the federal requirements are defined by the U.S. Office of Management and Budget (OMB) Circular A-21, 2 CFR, Part 220 (“A-21”) and U.S. Management and Budget (OMB) Circular A-110, 2 CFR, Part 215 (“A-110”), applicable for projects funded prior to 12/26/2014, and by CFR 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (“Uniform Guidance”), applicable for projects funded 12/26/2014 and later.
Reason for the Policy
Proper oversight of sponsored project funds is essential to uphold the University’s fiduciary responsibility to manage the funds in a manner consistent with the conditions specified by external sponsors. Inappropriate cost transfers will result in expenditures being disallowed and may also cause the sponsoring agency to impose additional restrictions or to reduce subsequent funding. Federal agencies and other sponsors regard the following activities as indicative of inadequate control systems:
- Frequent cost transfers
- Late cost transfers
- Inadequately documented or explained transfers, especially those which involve sponsored projects with overruns or unexpended balances
Applicability of the Policy
In order to maintain consistency in the treatment of cost transfers, the policy on cost transfers applies to all federal and non-federal sponsored projects. Under this policy, transfers must be submitted within 90 calendar days of the original transaction date in Banner to be considered a current cost transfer. When transfers are not adequately justified, or are made for inappropriate reasons, the campus unit is responsible for transferring the expenses to a non-sponsored departmental account.
This policy is not applicable to capacity grants from USDA National Institute of Food and Agriculture (“fed ag appropriation funding” in fund type 4Y).
Types of Cost Transfers
A cost transfer is a reallocation or redistribution of a previously charged expenditure transferred from one University fund to another fund after the charge has been posted in Banner. Consult the exceptions below for transactions that are not considered cost transfers by the University of Illinois.
Current Cost Transfers are those initiated during the accounting period in which the charges were originally recorded in Banner, or within 90 calendar days of the original transaction date in Banner.
Non-Current Cost Transfers are those processed more than 90 calendar days after the original transaction date in Banner. Non-current transfers require additional documentation.
Cost Transfers Principles and Expectations
In order for cost transfers to be allowable, the expense must be:
- An allowable charge to the project as defined by University policy, sponsor's policy, and the terms and conditions of the award;
- Allocable as a direct charge to the project and provide benefit to the project;
- Incurred during the period of performance;
- Treated consistently across like circumstances; and
- Cost transfers should be completed as soon as the need is detected and non-current transfers (older than 90 calendar days) should be kept to an absolute minimum.
Examples of cost transfers that may be allowable include:
- Transfer pre-award costs from unit holding funds if pre-award costs are approved by the sponsor.
- Move costs that were temporarily charged to an unrestricted fund prior to a new or renewal sponsored project being fully executed.
- Correct clerical or data processing errors.
- Correct costs charged to the wrong fund due to incorrect posting.
- Correct chart or fund codes of the C-FOAPAL string.
- Transfer costs to distribute effort (i.e. labor redistributions) to reflect actual effort expended.
- Transfer costs for shared goods and services (e.g. laboratory supplies, long distance telephone costs, printing/photocopying, etc.) that are allocable to more than one sponsored project.
Cost transfers are not allowed if they are done to:
- Move costs that do not directly benefit the project.
- Intentionally charge the wrong C-FOAP (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 institutional 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.
Policy Exceptions
Some journal vouchers (JVs) and feeder documents are not subject to the same degree of scrutiny by the University of Illinois. The following transactions are not considered cost transfers under this policy when the purpose is to:
- Correct data entry errors in the C-FOAPAL string related to the org, account, program, or activity code.
- Reallocate charges between active funds established for the same sponsored project with the same grant code.
- Remove expenditures by transferring charges to a non-sponsored fund.
- Post original intra-University billings.
- Process administrative adjustments such as entries by the Grants and Contracts Office (GCO) or University Accounting and Financial Reporting (UAFR) to correct F&A assessments, fringe benefit errors, small balance adjustments, cost of education or administrative allowances, etc.
Although these exceptions are not considered cost transfers and do not need GC-81 forms, you should still provide adequate documentation. Consult Sponsored Project Cost Transfers Procedures for additional guidance on documentation.
Note: The GC81 form is not required to be completed by GCO and other University Administration departments.
Sponsored Projects Cost Transfers Procedures
Process Cost Transfers for Sponsored Projects
Related Information
Frequently Asked Questions
Process Cost Transfers for Sponsored Projects
Before you begin this procedure, become familiar with the policies related to this topic.
A cost transfer is a reallocation or redistribution of a previously charged expenditure transferred from one University fund (C-FOAP) to another after the charge has been posted in Banner. Consult Policy Exceptions for transactions that are not considered cost transfers by the University of Illinois.
To process Cost Transfers for sponsored projects:
- Determine if the transfer is allowable as outlined in Cost Transfers Principles and Expectations.
- Determine if you need to process a current or non-current cost transfer. As a reminder, cost transfers should be completed as soon as the need is detected and non-current transfers (older than 90 calendar days) should be kept to an absolute minimum. Non-current transfers require additional documentation.
Current Cost Transfers are those initiated during the accounting period in which the charges were originally recorded in Banner, or within 90 calendar days of the original transaction date in Banner.
Non-Current Cost Transfers are those processed more than 90 calendar days after the original transaction date in Banner. Non-current transfers require additional documentation (see step 4 below).
- Use either a Banner Journal Voucher (JV) or Labor Redistribution form to transfer costs:
Non-Personnel Expenses – Use Banner Journal Voucher Form FGAJVCD, FGAJVCM, or FGAJVCQ. Consult the job aid, Creating a Journal Voucher Using FGAJVCD or FGAJVCQ, for step-by-step instructions on how to create journal vouchers. The following information should be included in the Text screen (FOATEXT):
- Explanation, including the reason for initial posting to incorrect C-FOAP, and benefit of the cost being transferred to the project
- Original date of the service or transaction
- Original transaction document number
- Preparer's name and telephone number
- If the cost transfer is non-current see step 4 below, and
- Urbana and Springfield – complete and submit the GC81form to GCO
- Chicago - note that the GC81form is on file in the department
Vouchers may be rejected by GCO if sufficient documentation is not provided in the Text screen (FOATEXT).
Personnel Expenses - Use Banner Labor Redistributions Form PZAREDS. Consult the job aid Performing Labor Redistributions(PZAREDS) for step-by-step instructions on how to create labor redistributions. The following information should be documented and retained in your unit to support the effort charged to the project:
- Explanation, including the reason for initial posting to incorrect C-FOAP, and benefit of the cost being transferred to the project
- Date when the effort was provided, the individual's name and UIN, and pay period code
- Contact information for individual requesting the transfer
- For current transfers, skip to step 5. For non-current transfers (both non-personnel and personnel transfers), complete a GC81 form:
- Have the principal investigator sign the form to confirm that the charges are allowable, proper, and approved by them. If the principal investigator is not available, someone at a higher level, such as a unit (or department) head, dean or center director who:
- Has knowledge about the project and the work being performed
AND
- Can sign the form by acting on behalf of, in the absence of, the principal investigator
- Route the GC81 form as described below:
- Non-Personnel Expenses (Banner Journal Voucher):
- Urbana and Springfield – Submit the GC81 form with the Journal Voucher and retain a copy in your unit
- Chicago – Keep the GC81 form on file in your unit
- Personnel Expenses (Labor Redistribution form) – Keep the GC81 form with your copy of the Labor Redistribution form in your unit
- Retain copies of supporting documentation for all cost transfers in your unit:
- Journal voucher or labor redistribution transferring the costs
- Documentation for the original expenditure being transferred, including but not limited to vendor (original) receipts or invoices, or internal University service-unit billings
- Authorization to initiate the cost transfer and any related correspondence documenting the need and justification for the cost transfer; authorization should be from the principal investigator or from the responsible business person for the department
- Form GC81: Cost Transfer Justification For Sponsored Projects for non-current transfers
The documentation for cost transfers must be retained for the period stipulated in the record retention schedule and be made available for verification during the course of an audit or other review. If a cost transfer does not have adequate supporting documentation, it may be deemed unallowable by the sponsor, auditors, or your campus Grants and Contracts Office. If that happens, the unit is responsible for covering the unallowable costs with unrestricted funds from sources such as an indirect cost recovery (ICR) fund or a gift fund.
- If the expenditures being transferred or redistributed were previously confirmed (Urbana and Springfield) or certified (Chicago):
Urbana and Springfield - The unit confirmation contact may be required to submit a request for an updated semi-annual confirmation report (reconfirmation) through the Semi-annual Expenditure Confirmations system.
Chicago – If the personnel expenditures being transferred were previously certified during the annual effort certification process, the unit business manager should contact the GCO for guidance.
Forms Used in this Procedure
Form GC81 - Cost Transfer Justification for Sponsored Projects
Additional Resources
Job Aids: Journal Voucher Processing (GL 101)
Job Aids: Labor Redistribution (PR 130)
U.S. Office of Management and Budget (OMB) Circular A-21, 2 CFR, Part 220
U.S. Office of Management and Budget (OMB) Circular A-110, 2 CFR, Part 215
CFR 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
Semi-annual Expenditure Confirmations
Effort Reporting System
Cost Transfers Frequently Asked Questions
How can cost transfers be avoided and better managed?
The need for cost transfers can be reduced if you are familiar with the terms and conditions of the sponsored project. When the business managers and PIs regularly communicate, keeping each other informed of financial decisions, the number of cost transfers is considerably less.
You can avoid most cost transfers before the expenditure is incurred by following these suggested practices:
- Using the correct C-FOAPAL string or related index code when posting the expenditure
- Requesting an Anticipation Grant/Fund through the GC-70 application
- Ensuring arrangements for recurring charges are set up correctly and terminated in a timely manner
- Ensuring HR appointments are set up correctly
You can better manage the cost transfer process after an expenditure is incurred by:
- Monitoring sponsored project funds
- Reconciling sponsored project funds monthly
- Finalizing cost transfers within 30 days of the project end date
What steps minimize costs transfers while waiting for fully-executed awards?
If there is a legitimate need to expend funds for a project prior to the receipt of formal notification of an award from a sponsor, the use of an Anticipation Grant and Fund Code is recommended. An Anticipation Grant and Fund Code can minimize the volume of cost transfers for the project and it is another characteristic of good business practice.
When there is a high degree of certainty that an award will be made, units, at their own risk, may incur costs in anticipation of the award. In this situation, a fund code may be requested from the Office of Business and Financial Services (OBFS), Grants and Contracts Office (GCO) prior to the formal notification by completing a Request to Establish an Anticipation Grant/Fund Form, with the required approvals.
Use the GC70: Anticipation, Expired, or Overdrafted Grant/Fund Request web-based application to request an anticipation grant/fund from the GCO.
Can a sponsored project fund be used to accumulate costs for shared goods or services that benefit multiple projects?
A sponsored project fund should not be used as a clearing fund to accumulate costs for shared goods or services that benefit multiple projects or activities. Account for the accumulation and redistribution of these shared goods and services in an appropriate stores and services fund, auxiliary fund, or unrestricted departmental fund.
What’s the difference between a current and non-current cost transfer?
Current Cost Transfers are those initiated during the accounting period in which the charges were originally recorded in Banner, or within 90 calendar days of the original transaction date in Banner.
Non-Current Cost Transfers are those processed more than 90 calendar days after the original transaction date in Banner. Non-current transfers require additional documentation.
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