A cost transfer is the correction of an expense from the original funding source to the appropriate funding source. These transfers must be accomplished within 90 days of when the error is discovered and they must be supported by documentation that fully explains how the error occurred. An explanation of "To change the funding source" is not allowable.
If a situation requires that a cost transfer be done on an expense more than 90 days after the error was discovered, a UNDSMHS Cost Transfer Explanation Form must be completed, signed by the PI, Department Chair (or Director), and Research Administration, and accompany the correction paperwork.
Here are some points about cost transfers:
- Cost transfers are mechanisms for correcting errors.
- Cost transfers are not a means of managing cash flow. Grant project funds are not interchangeable.
- Any costs allocable to activities sponsored by industry, foreign governments, or other non-federal sponsors may not be shifted to federally sponsored agreements.
- Transfers of costs between budgetary periods for the purposes of covering overruns are not allowable.
- When transferring costs, the integrity of each grant project must be maintained.
- The fundamental principles of allowability of costs must be established for all transfers of costs.
- Proper documentation that explains the rationale for the cost transfer must be maintained.
OMB Circular A-21 guides that costs must be identified with specific activities in the sponsored agreement to which the costs are charged. (Circular A-21, section C.4).
Finally, cost transfers must be completed in accordance with the cost principles articulated in Circular A-21:
- Allowability
- Reasonableness
- Applicability
- Allocability
The most common cost transfer is the salary correction. Here is some information on salary corrections:
Salary Corrections
What is a salary correction?
A salary correction is a permanent adjustment to an employee’s source of salary. This adjustment is needed when the department has determined that an employee was paid from an incorrect funding source.
Salary corrections are not used to adjust the amount of salary that an employee receives.
When should we correct our salary?
Because salary corrections are always carefully monitored due to sponsor requirements, if an adjustment is necessary, the correction should be done in a timely manner (within 90 days). No corrections should be requested after effort has been certified on a Personnel Activity Confirmation report.
Salary corrections are NOT appropriate to reduce overruns on other grants or institutional funds; to avoid restrictions imposed by law or by the terms of the agreement; for the purpose of utilizing unexpended balances; if the expenses are to no direct benefit to the grant; or for other reasons of convenience.
Frequent or inadequately explained salary corrections raise serious questions about the allowability of the transfers themselves as well as the overall reliability of the department’s internal controls.
How do we correct our salary?
In order to be consistent with Appointment Revision Forms, and have an accurate audit trail for both internal and external auditors, a "Budget Retrodistribution Form" has been developed to adjust salary and fringes on sponsored projects.
Once this form has been completed and signed by the department, it should be sent to the SMHS Administration & Finance Office for review by Corey Graves and Terry Nelson (if necessary).
It is the responsibility of the department to keep a copy of the salary correction paperwork in case it is needed in the future.
Where can the salary correction forms be found?
Here are links to the forms used for salary corrections at UND:
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