Table of Contents>Cost Transfers
PURPOSE
· To ensure the allowability and adequate documentation of transfers of incurred costs to sponsored projects. For Payroll Reallocations see SOP: Payroll Reallocations, for Cost Sharing see SOP: (coming soon), for Tuition via SAM see SOP: (coming soon).


POLICY STATEMENT
· Financial Policy Manual: 2113 Cost Transfers and Salary Reallocations
http://www.finance.upenn.edu/vpfinance/fpm/2100/2100_pdf/2113.pdf
· Sponsored Project Manual (Research Services) http://www.upenn.edu/researchservices/spmanual/cost.html


REASON FOR PROCEDURE

· To provide a mechanism by which allowable and allocable costs can be allocated to the appropriate account, as stipulated in OMB Circular A-21


WHO SHOULD KNOW THIS PROCEDURE

· Deans
· Center and Institute Directors
· Department Chairs
· School of Medicine Administration
· School of Medicine Faculty/Investigators
· Business Administrators
· Office of Research Support Services
· Penn Research Services


GENERAL INSTRUCTIONS
· To be acceptable, cost transfers must meet the following criteria:


1. Occur in a timely manner (i.e., costs should be transferred within 90 days of the month end in which the transaction originally occurred).
2. Are allowable under sponsor and University policies.
3. Adequately describe the purpose of the entry, including an explanation of the reason for the entry.

· The PI is responsible for ensuring that transfers of costs to sponsored project, which represent corrections of errors, are made promptly upon determination that an error has occurred. All cost transfers should be made within 90 days of the month end in which the transaction originally occurred.

· An overdraft or any direct cost item incurred in the conduct of one sponsored project may not be transferred to another sponsored project account merely for the sake of resolving a deficit.

· To be transferable, the cost must be a proper and allowable charge to the project. Transfers of costs to any sponsored project account are allowable only where there is direct benefit to the project account being charged.

· Timeliness of Cost Transfers
It is important that cost transfers occur as soon as the error is discovered and not later than within 90 days of the month end in which the transaction originally occurred. If the transfer must be made after the 90 days, the reason for the delay must be documented and approved by the Director- Post Award, Research Services. In no instance may costs be transferred after the Grant and Contract Fund Closeout Adjustment Period, without a formal unfreeze request and the prior approval of Research Services.

· Documentation
Transfers must be supported by documentation, which contains a full explanation of how the error occurred and how the project will benefit from the cost. If other than correcting a wayward transaction or feeder system error, the signature of the PI is required. File documentation in each affected account and the journal entry file. (link to Monthly Reconciliation SOP)

· Types of Allowable Cost Transfers

1. Errors/Corrections
Costs can be transferred for the following reasons:
a) To correct clerical or accounting errors, such as transposition of numbers
b) Amend charges posted to wrong fund by service center providers
c) Resolve any misunderstanding of instructions from the PI
Such transfers must be documented with a full explanation of how the error occurred and an explanation of the way in which the expense benefits the project to be charged.

2. Transfer of Expense Items Unliquidated at Project Termination
Journal entries are necessary to transfer the cost of items charged to a prior year account number but unliquidated (not posted to the account) when Research Services issues the Financial Status Report. A description of the purpose of the entry and an explanation for the transfer must be provided.

3. Transfer of Costs to a Continuation Year of a Project
This type of cost transfer is usually necessary because of a delay in the receipt of a Notice of Grant Award (NGA). The requirements for the journal entry are the same: a description of the purpose of the entry and an explanation of the reason for the entry. An advance account should automatically be requested, with the submission of the progress report, for continuations that receive a new fund number.


PROCEDURES

· Review monthly costs allocated to research project.
· Should any costs be inappropriate, determine if this is a wayward transaction. If it is a wayward transaction, see SOP.
· If the transaction is not wayward, determine with the Principal Investigator (PI) the appropriate account to be charged and verify that the charge is allowable and allocable to the appropriate account.
· Prepare a journal entry form (http://www.med.upenn.edu/research/penn/documents/manualjl.xls) including the explanation for the transfer. If other than the correction of a wayward transaction or feeder system error, the signature of the PI is required.

· Entering the journal entry into FinMIS
G/L Journal Entry - General Responsibility


1. Select: \Navigate Journals Enter
2. Batch Zone

  • Follow the batch naming convention in the FinMIS Reference Manual. Be sure to begin with the ORG, use three capital initials and include the year. For example: 4000.ABC.12/12/00.01

3. Journal Entry Zone: Enter the Name (same as in Batch Zone)
4. Select Category "07" Grant and Contract Adjustments
5. Provide a detailed description of the entry.

  • When correcting clerical or accounting errors or when transferring costs to a continuation year of a project, the description should include the following: provide a description of how the error occurred. Since you are making a correction to the original charge, the assumption is that an error occurred. Never use the terms "to correct an error" or "to charge the correct project." Provide a correlation of the item to the project to which the cost is being transferred (i.e., explain how the cost benefits the project). For a supply item from a vendor, such as Fisher, the description should be Fisher PO# xxxxxx. The description is especially important for the PIs when reviewing the reports.

    6. Press Tab or Enter through the Journal Entry Zone until you reach the Context field.
    7. Context field: Use Quick Pick and select #7, 02 Adjustment to Previous transaction.
    8. Type of Adjustment field: Use Quick Pick and select Correction of Previous Transaction.
    9. Reason field: Space is limited, so if necessary, use the Additional Comments field that follows. This field should be as detailed as possible. Explain how the item that is being transferred benefits the project that will be charged.
    10. Reason for 120-day delay: This field must be completed if the correction is more than 120 days from original posting date.
    11. Additional Comments: Complete only if necessary to adequately explain the entry.
    12. In the Journal Entry Lines Zone: Complete the Accounting Flexfield

  • When a cost is journaled to an account, then transferred incorrectly to another account, the most recent transaction ID and date should be used. Auditors review this field so it should provide the audit trail.

    13. Enter the appropriate debits and credits
    14. Description field: The description from the Journal Entry Zone displays. This description appears on your reports. A more descriptive explanation can be entered by clearing the field [Ctrl F] or by adding more to the displayed description.
    15. Press Enter to go to the Context Box.
    16. Context Box: Press Quick Pick, Select "07" Grant and Contract Adjustments" if 5 fund, Enter the Original Batch ID. Enter the original transaction date
    17. When you have completed all necessary fields, press [Ctrl S]. Check and Reserve the funds.


CONTACTS
· Departmental Business Administrators
· Department Chair
· Office of Research Support Services
· Research Services


FORMS AND ATTACHMENTS

· Download Manual Journal Entry Form
http://www.med.upenn.edu/research/penn/documents/manualjl.xls


MISCELLANEOUS

· OMB Circular A-21
http://www.whitehouse.gov/OMB/circulars/a021/a021.html


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