A cost transfer is an after-the-fact reallocation of costs associated with a transaction from one PTA to another PTA. Costs should be charged to the PTA for the benefitting sponsored project when first incurred. However, at times it may be necessary to transfer a cost to a sponsored project subsequent to the initial recording of that cost. Such transfers require careful monitoring for compliance with Stanford University policy, federal regulations and policies, and the federal cost principles that underlie all fiscal activities of sponsored projects.

The cost transfer procedure requires thorough documentation to support the transaction. In addition, the transfer must be timely, complete, and comply with allowability, allocability and reasonableness requirements.

POLICY STATEMENT

Stanford allows timely cost transfers involving sponsored PTAs in the following circumstances:

error correction
transfers between Tasks of the same sponsored project
disallowed costs
clearing an overdraft at the end of a project.

Requirements Related to Cost Transfers

Timeliness

Cost transfers that represent corrections of errors should be completed within three months of when the error is discovered, and no later than six months after the expense is posted to an award. Errors found during the required monthly expenditure statement review process should be corrected upon discovery. The six month deadline allows one month to correct any errors discovered by PIs during the certification process. For example, expenses for spring quarter (April, May, June) must be certified by the PI by the end of August. If a transaction made on April 1 were discovered during the certification process, it must be corrected by the end of September to be within the six month period.

If incorrect charges are discovered after certification, they must always be transferred off regardless of age. Transfers onto sponsored PTAs after six months are generally not allowed and must be transferred to a cost sharing PTA unless the expense also benefitted a non-sponsored award, in which case it can be transferred to the other benefitting non-sponsored account.

The time restriction for cost transfers does not apply to transactions necessitated by unforeseen circumstances (possible examples would include allocations from service centers or clearing accounts, changes caused by account set-up errors, or situations where new funding comes through an unexpected mechanism, etc.), since these are not considered error corrections.
Documentation

All cost transfers must be supported by documentation that fully explains the error as detailed below. An explanation merely stating that the transfer was made "to correct an error" or "to transfer to correct project" is not sufficient.

Cost transfer documentation must include a justification that clearly shows:
1. the expense directly benefits the receiving PTA
2. the expense is allowable on the receiving PTA
3. the reason the expense was charged incorrectly to the first PTA
4. that any systematic reasons which might cause this problem to be repeated have been addressed
5. the reason for any delay in the timely processing of the transfer.
Large transfers, and transfers within the first or last 90 days of a project, receive additional central review. Detailed documentation for these transfers will facilitate their timely review by the Office of Sponsored Research.
Sponsor Requirements

Sponsors may have more restrictive guidelines on cost transfers; departments should consult the Office of Sponsored Research when in doubt about the acceptability of a proposed cost transfer.
Pre-Award Costs

For the effective and economical conduct of a sponsored project, it is sometimes necessary for costs to be incurred before the award document has been received. In such cases, departments should request that the Office of Sponsored Research set up an Early PTA. The Authorization for Early Project, Task and Award Request form is available online.

The Early PTA becomes the permanent PTA when the award is effective; no cost transfers are needed. Pre-award costs must be charged to a pre-award account and may not be placed on an unrelated award and later transferred to the benefitting PTA. The restriction for cost transfers does not apply to transactions necessitated by a sponsor changing the award number.
Costs Benefiting More than One Project
Federal regulations require that an expense be:
1. solely to advance the work under the sponsored agreement, or
2. a benefit to both the project and other work in proportions that can be approximated through reasonable methods.
A cost that benefits more than one project should be allocated at the time of the expenditure. At no time should a sponsored project be used as a holding account for costs that will subsequently be transferred elsewhere. Clearing accounts are appropriate for these situations (see Allocations and Offsets, Administrative Guide Memo 38.1 ).
Overdrafts

An overdraft exists if after the end date of an award expenses exceed funding. Expenses removed as a result of an overdraft should have been incurred during the last six months of the project. If an error is discovered after the end of the award, a transfer of expense should be made by removing the expense prior to award closeout.

If after the end date of an award an expense is determined to be unallowable to the project (but did benefit the project), the expense must be transferred to a Cost Sharing PTA for accounting purposes, although it cannot be counted towards a Cost Sharing commitment. Please refer to Research Policy Handbook 3.5, Cost Sharing: Stanford University Policy and Procedure,