Cost Transfers, Billing Authorizations, and
Accounting Corrections

A cost transfer is the moving of an expense incurred on one OHIO account, to a different OHIO account. All cost transfers must comply with the requirements contained in federal regulations, as identified below:

OMB Circular No. A-21 states that, “Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.” Other federal regulations require cost transfers to be made in a timely manner. Timely is defined as taking place within ninety (90) days of the incurrence of the cost. OHIO uses a tighter deadline of sixty (60) days. Cost transfers made after sixty (60) days of their incurrence are considered unallowable, unless there is an extenuating circumstance, which must be properly documented and approved by GCA.

NIH guidelines state that, “Cost transfers to NIH grants by grantees, or by consortium participants or contractors under grants, that represent corrections of clerical or bookkeeping errors should be accomplished with ninety (90) days of when the error is discovered.” OHIO uses a tighter deadline of sixty (60) 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 grantee, consortium participant, or contractor. An explanation merely stating that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient. Transfers of costs from one budget period to the next solely to cover cost overruns are not allowable.”

Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42 and must make the documentation available for audit or other review. Frequent errors in recording costs may indicate the need for accounting system improvements and/or enhanced internal controls. If such errors occur, grantees are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. NIH also may require a grantee to take corrective action by improving additional terms and conditions on an award(s).

If the PI/PD determines that costs were charged to the project in error, he/she must prepare, or directly supervise the preparation of an Accounting Correction Form. The accounting correction (cost transfers) request must specify why the expense is an appropriate cost against the account to which it is being transferred and why it was not charged correctly initially. According to University Standard Operating Procedure, all cost transfers must be submitted to GCA for approval within sixty (60) days of incurring the cost. If the GCA staff sees a pattern of inappropriate charges necessitating large numbers of cost transfers, they or General Accounting will contact the PI/PD to discuss modifications to the PI/PD’s procedures to ensure expenses are charged appropriately from the onset.

DON'T FORGET: If the PI/PD determines that costs were charged to the project in error, he/she must prepare, or directly supervise the preparation of, an Accounting Correction Form within 60 days of incurring the cost.

<< Previous Section Next Section >>