Proper management of funds is essential to uphold the fiduciary responsibilities of UMD. Proper management and monitoring sponsored projects to minimize the need for cost transfers is critical. This entails all sponsored project expenditures be reviewed on a regular basis to ensure costs are correct and appropriate. On this page, you will find guidance on cost transfers, roles and responsibilities, and links to federal regulations and SPA contact information for additional questions.
A cost transfer is an after-the-fact reallocation of costs, either salary or non-salary, to or from a sponsored project. Sponsor requirements concerning the management of awards made to institutions such as UMD limit the circumstances under which cost transfers are allowed.
Some typical examples in which cost transfers are allowed are:
- Reallocation of a salary expense
- Reallocation of shared resource costs
- Reallocation of costs where multiple projects benefited
- Correction of a clerical error
Some examples in which cost transfers may not be allowed are:
- Reallocation of expenses because the award has unexpended funds
- Reallocation of expenses because the clerical error was not noticed within a 90 day calendar period
Sponsored Project costs should be charged to the appropriate sponsored account when first incurred. There are circumstances in which it may be necessary to transfer expenditures to a sponsored project account subsequent to the initial recording of the charge. Those transactions require monitoring for compliance with UMD’s policy, sponsor specific award terms, and the cost principles and administrative requirements that underlie fiscal activities on sponsored projects. It is vital that Principal Investigators or designee authorize and approve costs which are reasonable, allowable, allocable and that directly benefit the sponsored project.
When UMD accepts Federal funding for sponsored projects, it must comply with the allowability and allocability requirements of the Federal Cost Principles and the Uniform Administrative Requirements. To comply with these requirements, it is necessary to explain and justify transfers of charges onto federal and non-federal sponsored projects from other federal or non-federal projects. The cost principles prohibit the use of cost transfers for the purpose of “convenience,” including a transfer largely for the purpose of using unexpended funds on an award that is ending. Timeliness and completeness of transfers and the accompanying justification for the transfers are important factors in supporting allowability, allocability and cost compliance. It is important to document the rational for the transfer. Why should the charges be transferred to the receiving sponsored project and why are the charges allowable and allocable to the receiving sponsored project? An explanation that merely states “to correct error” or “to transfer to correct project” is not a sufficient justification,
By contrast, a late cost transfer is an after-the-fact reallocation of costs, either salary or non-salary, to a sponsored project more than 90 calendar days after the posting date. Late cost transfers require a detailed memo explaining why the cost being transferred more than 90 days after the transaction occurred and what corrective action has been taken to eliminate the need for cost transfers of this type in the future.
All cost transfers are initiated in UMD’s accounting system, the Kuali Financial System (KFS). Depending on the type of cost being transferred. Please see: https://kualifinancial.umd.edu/KFS/docs/financial_processing_basics_final.pdf for definitions to determine the appropriate electronic document (e-doc) to initiate the transfer. Cost transfers on all ledger 4 and 5 accounts are routed to Sponsored Programs Accounting (SPA) for review and approval. Note: Cost Transfers on all ledger 1 & 2 accounts route to General Accounting
SPA will verify the appropriateness of the transfer based upon award’s approved budget, justification and compliance regulations. If there are any questions, the SPA Financial Administrator will write a comment in the notes field and send the e-doc to the initiator. Additional questions may be directed to the SPA Financial Administrator.