665  Cost Transfers Guide for Sponsored Projects

Approved by President
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Business and Finance
Responsible Officer:  Associate Vice President, Business and Finance

I. Purpose and Scope

Middle Tennessee State University (MTSU or University) is mandated to establish consistent practices for defining and processing cost transfers from University accounts to sponsored projects, or between sponsored projects. Cost transfers present an audit risk to the University and the intent of this policy is to assure the integrity of the University’s accounting system and internal controls. Additionally, this policy is issued to ensure that all cost transfers are legitimate and conducted in accordance with awarding agency terms and conditions, regulations, and University policies. 

II. Definition

Cost transfer. A transfer of expenditure to a sponsored project after the expense was initially charged to another sponsored project or institutional account. Cost transfers include reassignments of salaries and benefits, as well as other direct expenses, and associated indirect costs.

III. Policy Statement

It is the responsibility of Principal Investigators and Project Directors (PI) to review financial activity on their awards regularly to ensure all expenses are directly related to the project and allowable, allocable, and reasonable under the terms of the sponsored agreement. Financial review should be conducted periodically and at intervals sufficiently frequent to ensure that any cost transfers can be processed within the ninety (90)-day deadline established by this policy. Potential errors must be communicated to the Office of Research Services (ORS), when the errors are discovered.

A.  All cost transfers must be prepared and submitted for review and approval to ORS. ORS Award Management can assist in preparing cost transfer requests. 

B.  Cost transfer requests and all required documentation must be received by Accounting Services Grant Accounting from ORS within ninety (90) days from the original transaction date, except when the sponsor’s (federal or non-federal) terms and conditions are stricter than MTSU’s policy. The deadline of ninety (90) days is the standard established in federal regulations and grant policies. 

C.  The ninety (90)-day cost transfer time period applies when transferring expenditures to a federally sponsored grant or contract. No time limit exists for removing expenditure(s) from a federally sponsored grant or contract. If inappropriate expenditures are discovered on federal projects, they must be removed without regard to time limits.

Transfers that are recurring, late, or inadequately explained, particularly on awards with overruns or unexpended balances, raise questions about the propriety of the transfers, and the reliability of the University’s accounting system and internal controls. See Section VI. of this policy. 

Additionally, a cost transfer will be approved only if the cost to be transferred is:

1.  Allowable pursuant to federal requirements, sponsor terms and conditions, state regulations, MTSU policy, and award-specific terms and conditions.

2.  D