Procedure RA2067 Cost Transfer Justification and Workflow

Table of Contents

• Definitions
• General
• Procedure
• Labor Distributions
• Non-Personnel Cost Transfers in SIMBA
• Justification Requirements
• Roles and Responsibilities
• Exceptions
• Violations
• Audit Coordination – Financial and Procedural
• University Records Retention and Disposition
• Exhibits
• Contact Information
• Cross References
• Procedure Status
• Date Approved
• Most Recent Changes
• Revision History

Definitions

See Policy RA67 Cost Transfers on Sponsored Awards for definitions of key terms.

General

This procedure outlines the process for completing cost transfers in accordance with Policy RA67 Cost Transfers on Sponsored Awards. Cost transfers that impact sponsored awards include costs being reallocated off-of, on-to, or in-between sponsored awards, which include associated cost share, salary cap, and program income Internal Orders (IOs). The policy and procedures for cost transfers that do not impact sponsored awards are managed with the Finance Office.

Procedure

Cost transfers are usually driven by an after-the-fact review of expenditures that have already posted to sponsored awards (original transactions). Principal Investigators (PIs), department administrators, Finance Hubs, and Research Administrators (RA) all play a role in monitoring budgets and expenditures on sponsored awards and making corrections as needed.

Labor Distributions

Labor Distributions are typically utilized for labor/personnel cost transfers. This procedure is outlined in RA2060 Labor Distributions. Only labor/personnel cost transfers made more than three (3) months after the original payroll posting require a justification and should generally answer the questions outlined below for non-labor cost transfers, as appropriate.

Non-Personnel Cost Transfers in SIMBA

The Systems for Integrated Management, Budget, and Accounting (SIMBA) Grant Non-Personnel Cost Transfer Tile is used for non-personnel cost transfers. Initiators must complete the questions on the form prior to completing the journal entry or after executing a journal upload. Using the Tile ensures that justifications are documented and upon completion of the form, SIMBA will automatically create a PDF file of the initiator’s responses and upload as an attachment to the journal entry.

The following Knowledge Base (KB) article has been created to help users with the functionality of the tile:

• SIMBA: Transfer Non-Personnel Costs for Sponsored Programs (KB0021587)

Justification Requirements

Personnel cost transfers that are requested more than three (3) months after the pay period in which the labor was paid, and non-personnel cost transfers should answer the following questions in writing:

1. An explanation of why the expense was charged to the wrong cost collector
   • Initiators must explain the “what happened” in answering this question. It is not enough to say, “correcting an error” or “to transfer cost to correct grant.” For instance, if there was miscommunication or a delay in setting up the award, this must be described.
2. An explanation of why the expense should be allocated to a different cost collector
   • Initiators must explain how the expense will benefit the grant to which it is being transferred. If a cost is being reallocated off a grant and onto a non-sponsored award, it is acceptable to state that a cost was deemed unallowable after-the-fact or the award is overspent and therefore costs had to be removed from the grant.
3. A description of the actions taken to diminish the likelihood of such errors occurring in the future
   • Initiators must describe what steps they will take to reduce cost transfers in the future. While there will always be some cost transfers, they should be considered exceptional, not the norm. Initiators may have to monitor budgets more regularly or review cost allowability standards, rules, or regulations more often in the future.
4. If transferring a partial expense for non-personnel transfers, a description of the basis or methodology used to determine the portion of the expense to be transferred
   • Initiators must clearly explain how the partial expense was calculated; e.g., based on effort reports, lab usage logs, documented time spent, number of samples processed, square footage used, proportional use of a service, documented project activity, or other measurable criteria. Initiators should avoid using rough estimates or unsupported percentages.

For personnel cost transfers that are requested more than three (3) months after the pay period in which the labor was paid, the above justifications should be included in writing on the Labor Distribution or on the Journal Entry.

For non-personnel cost transfers, the above justifications must be included in the Grant Non-Personnel Cost Transfer Tile in SIMBA. Non-personnel cost transfers should normally be initiated within 90 days or less of the original transaction date.

Roles and Responsibilities

Roles and responsibilities are outlined in Policy RA67 Cost Transfers on Sponsored Awards.

Exceptions

Exceptions to this procedure may only be approved by the Assistant Vice President for Post Award Contractual Compliance, for sponsored awards, or the Associate Vice President for Budget and Finance or authorized delegate, for non-sponsored activities.

Violations

Violations of University policy should be reported to the appropriate supervisor, unit manager, Human Resources representative, or the office responsible for the relevant policy or procedure. If these channels are insufficient or unavailable, individuals may submit an anonymous report through the Penn State University Hotline, accessible via the Reporting at Penn State website.

Audit Coordination – Financial and Procedural

The RA or the Strategic Finance Partner (SFP) team is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets.

The RA or the SFP team is responsible for working with Internal Audit and Post Award Contractual Compliance when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The RA or the SFP team would also be responsible for collaborating with Post Award Contractual Compliance, the external auditor, and/or a central university office related to these procedures.

University Records Retention and Disposition

University Records must be retained and managed in accordance with Policy AD35 University Archives and Records Management and the University's Records Retention Schedules.

Additional questions may be directed to the Office of Records Management.

Exhibits

There are no exhibits associated with this procedure.

Contact Information

For questions or additional details, please contact the Office of Post Award Contractual Compliance.

Cross References

• Policy AD35 University Archives and Records Management
• Policy FN18 University Approval Authorization Policy
• Policy RA21 Development of Proposal Budget
• Policy RA60 Cost Management
• Policy RA64 Personnel Costs
• Policy RA67 Cost Transfers on Sponsored Awards
• Procedure RA2060 Labor Distribution
• Procedure RA2064 Effort Certification
• SIMBA: Labor Distribution Workflow KB Article
• SIMBA: Transfer Non-Personnel Costs for Sponsored Programs (KB0021587)
• Supplementary Compensation Information for Full-Time Academic and Exempt Staff
• Uniform Guidance 2 CFR 200 §200.430 Compensation

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Procedure Status

Date Approved

February 12, 2026

Most Recent Changes

• February 24, 2026 - new procedure

Revision History

• February 24, 2026 - Original