Policy Number: 96
I. POLICY AND GENERAL STATEMENT
It is the policy of The University of Texas Health Science Center at Houston ("university") to assure all expenditures are accurately reflected in the accounting records. To accomplish this, cost transfers may be necessary to move expenses to or from any account. The purpose of this policy is to establish appropriate guidelines for processing cost transfers when necessary.
Cost transfers are not allowed to cross fiscal years. This includes processing after fiscal year end.
Cost transfers for Sponsored Project Accounts will only be processed within 60 calendar days from the end of the month when the expense was incurred, unless the Cost Transfer Request is to move the expense from a Sponsored Project Account to an All Other Account. Cost transfers occurring after 60 days of the original transaction must be approved by the respective Dean’s Office; cost transfers occurring after 90 days of the original transaction and exceeding five percent (5%) of the annual award must be approved by the Executive Vice President, Chief Operating and Financial Officer, or designee.
Any other Cost Transfer Request should be submitted and processed as soon as possible after the need has been identified and necessary approvals received.
No salary cost transfers are permitted after effort certification reports are completed and signed by the individual or after the sponsored project closeout date unless it benefits the sponsor (i.e., a transaction is moved off of a sponsored account).
The allowability of project costs by federal sponsors is conditioned upon compliance with cost standards such as the requirements found in Office of Management and Budget (OMB) Circular A-21. In general, cost transfers affecting Sponsored Project Accounts are subject to the following allowability criteria:
- Complies with the terms and conditions of sponsored research.
- Supported by accurate effort certification reports in compliance with the Effort Certification Reports Policy, when applicable.
- Complies with financial reporting requirements (e.g. Billings and Financial Status Reports).
Sponsored Project Accounts: Those accounts involving sponsored projects:
All Other Accounts: All accounts other than those defined as Sponsored Project Accounts (e.g. state accounts, designated accounts, service department accounts, etc.).
For the purposes of applying this cost transfers policy, any Sponsored Project Account that does not require external financial reporting will be treated as an All Other Account. Confirmation of external financial reporting requirements is the responsibility of the Post Award Finance (PAF) Team.
Once departments have identified the need for a cost transfer, the procedures below must be followed.
A. Sponsored Project Accounts
For payroll-related cost transfers affecting Sponsored Project Accounts, departments must comply with the Retroactive Personnel Action Policy and submit a Personnel Action Request to the System Data Resources (SDR) Team. In addition, departments must also submit a Cost Transfer Request to the PAF Team.
For non-payroll-related cost transfers affecting Sponsored Project Accounts, departments must submit a Cost Transfer Request Memo to the PAF Team.
A Cost Transfer Request must include the following:
- Accounts involved.
- A full audit-supportable justification of how the error occurred. An explanation stating the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. An additional two or three sentences are needed to define the circumstances that necessitated the cost transfer request.
- Must be approved by the Principal Investigator and designated responsible department business officer of the appropriate operating unit.
- If the cost transfer is related to payroll, the cost transfer must then comply with the Effort Certification Reports Policy.
- If the cost transfer is not related to payroll, evidence must be provided that the expenditure has occurred (e.g. expense detail from the accounting system).
The PAF Team will review those Cost Transfer Requests impacting Sponsored Project Accounts to:
- Determine with the department if the cost transfer request is the best option.
- Determine if the cost transfer request is allowable within the rules and institutional policy governing the accounts.
- Ensure the cost transfer request is supported by appropriate audit-supportable justification documentation.
- Track individuals and departments with excessive amounts or numbers of cost transfers and recommend that such individuals or departments receive training to address the root cause(s) of the cost transfers.
The PAF Team will review Cost Transfer Requests and recommend approval or disapproval within three working days of receiving the Cost Transfer Request. Additional days may be required for year-end processing.
B. All Other Accounts
For non-payroll-related cost transfers affecting All Other Accounts, departments must submit the following information to General Accounting:
- Accounts affected by cost transfer;
- Amount to be transferred;
- Date of expense; and
- Expense detail from the accounting system.
C. Processing Time
For payroll expenditures, the SDR Team will process the cost transfer within five working days after entering the Retroactive Personnel Action into the system.
For non-payroll expenditures of Sponsored Projects, the PAF Team will process approved cost transfers within two working days.
For all other expenses, General Accounting will process the cost transfer within two working days.
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