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One Campus Drive
Allendale, MI 49401

Purpose

The purpose of these guidelines is to provide information
regarding  cost transfers for grant related activities.  2 CFR Part
220,  (formerly OMB Circular A-21, Cost Principles for Educational
Institutions) establishes the principles for determining  costs
applicable to grants, contracts, and other agreements with 
educational institutions, as well as  defining the documentation
required for such costs.  To comply with the federal requirements,
it is necessary to explain and justify transfers of costs.

Definition

A cost transfer is an after-the-fact reallocation of cost from one
FOAP to another.  Although it is preferable to charge costs to the
correct FOAP when they are incurred, cost transfers may become
necessary in certain circumstances. 

Guidelines

In order to transfer cost to a sponsored project, the cost must meet
the following guidelines:

• Allowability: It must be allowable under the terms and
  conditions of the award, including the authorized budget and
  applicable regulations.
   
•  Allocability:   The goods and services received must benefit
  the award charged during the life of the award.  Goods or
  services  shared by more than one project are allocable in
  proportions that  can be approximated through actual use. 
   
• Reasonableness: A cost is considered reasonable if the
  nature  of the good or services acquired, and the price, reflect
  the action that a prudent person would have taken at the time
  the decision to  incur the cost was made.
   
• Consistency:  Application of costs must be given consistent
  treatment within university established policies.
   
• Timeliness: Cost transfers should be requested with 90 days
  from  when the initial charge posted. 

Click here  to access the Journal Entry form to request a Cost Transfer.
For transfers of labor costs, contact your assigned Grant Accountant. 
Supporting documentation is required to sufficiently document the
reason for the transfer request.   

Cost Transfer (Journal Entry) requests must be approved by the Principal
Investigator, and adhere to BANNER signature authority.  Once the
Journal Entry form is fully completed, it should be sent to the assigned
Grant Accountant for processing.

The Grant Accountant will review the request and the supporting
documentation.  A second accounting approval (normally the Associate
Controller) must also be obtained before the entry can be processed.

If more than 90 days have elapsed since the cost requiring transfer has
been incurred, then a special Cost Transfer Request form must be
completed.   This form requires a complete written explanation regarding
the delay and must be approved by the Controller before processing. 
Click here to access this form and instructions. 

Examples of commonly requested Cost Transfers:

• To correct an erroneous posting when the original source
  document or subsequent processing (e.g. Requisition, PO, Payroll
  transaction, or Accounts Payable transaction) contained an incorrect
  FOAP or amount;
• To distribute/allocate certain high numerical, but small individual
  charges, such as copy machine costs, mailing charges, telephone
  charges, and office supplies;
• To record a change in use of goods or services from what was
  originally intended;
• To align labor charges with actual effort provided;
• To redistribute purchasing card charges.

Examples of unallowable types of Cost Transfers that will NOT be
processed:

• Transfers requested for sole intent of spending down the remaining
  unexpended grant balance at the end of the project;
• Labor costs that have been certified in a prior effort certification period;
• Transfers requested for reasons of convenience, such as to shift
  costs to another sponsored agreement due to cost overruns;
• Transfer requests for costs incurred prior to the start date of the award.
  Costs incurred prior to the start date of the award are considered pre-
  award costs;
• Costs will not normally be transferred more than once.  Since the
  original cost transfer has already been justified, documented, reviewed,
  and accepted as appropriate, a second transfer of the same cost is
  highly suspect and should be unnecessary.