Cost Transfer Policy Additional Regulatory References
Page Updated: December 17, 2020
Sponsored programs are subject to many terms and conditions from a variety of sources. Accordingly, the University of Wisconsin System Administrative Policy 342 (formerly G2): Extramural Support Administration, section 7 stipulates that all extramural funds are subject to the following rules and regulations:
- All applicable Federal Office of Management and Budget (OMB) Circulars.
- Rules and regulations of the granting agency.
- Guidelines established by the National Association of College and University Business Officers (NACUBO).
- State and UW System policies and procedures.
- State Statutes.
- Regent Policies.
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) and Office of Management and Budget (OMB) Circulars.
2 CFR 200 and OMB Circulars provide the overall guidance for use of Federal funds. It is expected that all recipients of Federal funds will comply with the terms and conditions of the appropriate subpart of 2 CFR 200 or Circulars in all circumstances. 2 CFR 200 applies to awards issued on or after December 26, 2014. OMB Circulars may apply to awards issued prior to December 26, 2014.
- 2 CFR 200, Subpart E—Cost Principles, §§200.402-200.405 or OMB Circular A-21 “Cost Principles for Educational Institutions” (05/2004) sections C.1-C.4 establish basic cost considerations which include the concepts of allowability, allocability, and reasonableness.
- 2 CFR 200, Subpart E §200.405(c), which is of particular importance, states: “Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons.” Similar guidance was provided in A-21, C.4.b.
- 2 CFR 200, Subpart D—Post-Award Federal Requirements, §200.343(b) states: “Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award.” Similar guidance was provided in OMB Circular A-110 “Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations” (09/1999) subpart D.71 (b).
- 2 CFR 200, Subpart F—Audit Requirements, §200.514 stipulates that each fiscal year an annual audit be conducted to “determine whether the auditee has complied with Federal statutes, regulations, and the terms and conditions of Federal awards.” An annual Compliance Supplement is issued with a matrix of compliance requirements for grants from each federal agency providing auditors specific instructions for reviewing auditee’s internal control systems as well as adherence to allowable cost guidelines and principles. Similar guidance was provided in OMB Circular A-133 “Audits of States, Local Governments, and Non-Profit Organizations” section E.500.
Policies of Federal Granting Agencies:
- The NIH Grants Policy Statement (NIHGPS) (Rev. 11/16) Part 7.5, suggests:
- "Cost transfers to NIH grants by recipients…should be accomplished within 90 days…. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the recipient…merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Recipients must maintain documentation of cost transfers, pursuant to 45 CFR 75.364, and must make it available for audit or other review…. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent recurrence. NIH also may require a recipient to take corrective action by imposing additional terms and conditions on an award(s)."
As Non-NIH agency guidelines may differ, please check individual agency policy for the allowability of Cost Transfers.