3702 (D)

UMB Policy on Cost Transfers

Financial Affairs   |   Approved August 8, 2024

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Responsible VP/AVP

Dawn M. Rhodes, DBA, MBA

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Applies to Faculty, Staff, Students

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Purpose

To set forth the standards for University of Maryland, Baltimore (UMB) for payroll and non-payroll cost transfers.

Policy Statement

This cost transfer policy is in accordance with 2 CFR Part 200 {Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards}, which provides that costs must be allowable, allocable, reasonable, and timely. The principles related to cost transfers on Federal awards are applied in general to other funding sources for consistency in application of this policy.

Cost transfers should be minimized. All attempts should be made to charge costs correctly with the original posting, as required by Federal regulations, generally accepted accounting principles (GAAP), and sound management practices. Posted transactions, charged to sponsored awards, should be reviewed monthly to identify corrective actions to be taken.

Late expense posting or cost transfers can negatively impact billing to sponsors.

Payroll cost transfers (budget retros and direct retros) must be processed as soon as a department is aware that an employee’s activities changed or as soon as the error is recognized.

Every effort should be made to properly allocate effort during the payroll distribution cycle for sponsor billing and financial reporting purposes. Payroll cost transfers performed after the certification of effort that cause the payroll distribution to not align with the certified effort distribution are discouraged and require significant documentation, approval, and recertification of effort.

All payroll cost transfers affecting sponsored awards that are performed after ninety (90) days from the date of the original transaction must contain an explanation as to the delay in performing the cost transfer and include additional approvals.

Non-salary cost transfers must be processed as soon as the error is recognized.

A reasonable and valid justification consistent with sponsor guidelines is required for all cost transfers affecting sponsored awards. All cost transfer documentation must be retained by the department for audit and review purposes.

Cost transfers charging sponsored awards will not be processed more than one year from the date of the original transaction or beyond the sponsor’s financial close-out policy (typically 120 days from the end of the period of performance for most Federal agencies), whichever time period is shorter, unless related to audit. Cost transfers beyond sponsor’s policy may be approved on a case-by-case basis.

Definitions

Cost Transfer – The movement of costs from one SOAPF (defined below) to another to correct an error or to align payroll distribution with after-the-fact effort certifications.
SOAPF – The account combination code that links the different financial attributes of an award:

• Source – identifies federal or non-federal funds
• Organization – identifies the financial department responsible for the award
• Activity – identified by the department for tracking of a specific activity
• Purpose – identified by the department for tracking of a specific purpose
• Function – identifies the science of a particular award (i.e. Research, Clinical Trial, Fellowship, etc.)

Date of Original Transaction – For nonpayroll cost transfers, the date of the original transaction for purposes of this policy is the posting date of the initial charge in the UMB financial system. For payroll cost transfers, the date of the original transaction for purposes of this policy is the begin date of the initial pay period of the payroll charges being transferred.
Budget Retro – Automated process to redistribute payroll expenses by the employee’s home department triggered by the entry of an Employee Funding Profile (EFP) with an effective date prior to the current payroll period.
Direct Retro - Process used to redistribute payroll expenses in situations when the Budget Retro process is unable to be used. Departments complete the Direct Retro Request form indicating the specific period and specific dollar amounts or % to be transferred. Upon approval by SPAC’s Costing and Compliance Unit. the payroll cost transfer will be entered to redistribute the payroll to the appropriate SOAPF.

Scope and Exceptions

This policy applies only to the transfer of expenses, not revenues or other account types. This policy also does not apply to internal billings where one department or unit is supplying goods or services to another department or unit.

Roles and Responsibilities

Schools/Department/Unit Administrators

• Principal Investigators (PIs) are responsible for reviewing the charges on their awards in order to timely identify errors and communicate with their department administrators to facilitate the appropriate charging of original costs
  . PIs must also sign cost transfers more than ninety (90) days old that affect their awards.
• Department Administrators are responsible for reviewing the charges on their awards to ensure the timely detection and correction of errors and for appropriately requesting and documenting cost transfers.

SPAC Team

• SPAC’s Cost Team is responsible for reviewing and approving payroll cost transfers performed using direct retros.
• The SPAC Team is responsible for reviewing, approving, and facilitating the recertification of effort forms.