Office of Sponsored Programs
The Ohio State University

Sponsored Projects Cost Transfers Policy

The purpose of this policy is to ensure that cost transfers that involve sponsored project accounts comply with requirements contained in federal regulations.


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 90 days of the incurrence of the cost (NIH). NIH considers cost transfers made after 90 days of their incurrence to be unallowable.

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 within 90 days of when the error is discovered. 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 it available for audit or other review (see Administrative Requirements-Monitoring-Record Retention and Access). 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 imposing additional terms and conditions on an award(s).”

Principal Investigator’s Responsibility

To ensure that the university is in compliance with these regulations, the principal investigator is responsible for ensuring that cost transfers are:

  • made within 90 days after the cost was originally recorded on the Financial Accounting System but no later than 60 days after the project terminates, and
  • supported by a written explanation that describes in detail why the transfer is necessary. (See Cost Transfer Explanation Form)

Cost transfers not made within the time frames stated above will be reviewed on a case-by-case basis and require signature approval by the appropriate Chair’s/Dean’s office.

Ninety Day Rule Frequently Asked Questions

This FAQ has been prepared to clarify the rationale and scope of the policy:

Why is the time period 90 days?
Ninety (90) days has emerged as the standard used by government and business auditors to determine whether costs are reasonably assigned to their proper account and function. It is a standard established by regulation (See NIH policies and OMB Circular A-21). The preferred practice is to have costs immediately budgeted and posted to their proper function in all cases.

Is this standard applicable to all sources of university funds?
No, the information in this policy applies only to sponsored project funds.

Is this standard applicable to all university service centers?
Yes, this standard is applicable to all university service centers or any departmentally based service or recharge activity to a sponsored project.

Is this standard applicable to payroll adjustments?
Yes, this standard is applicable to payroll expenditures and associated adjustments. It is especially important that payroll expenditures are budgeted and recorded on the proper accounts as they occur. Payroll expenditure transfers will cause Effort to recalculate. A new Effort report will generate, and a new certification will be required.

How should payroll expenditures assigned to sponsored projects be coordinated with released funds processes?
Salary postings to sponsored awards should be made either directly on the award at the time the budget is established or within 90 days of the occurrence of the salary expense.

Does this policy apply to subaward?
Yes, the policy applies to all subaward agreements.  It is recognized that executing subaward agreements with other institutions often requires additional time that may extend beyond a 90-day time period. However, because the vast majority of subawards involve federal funds, it is critical that subawards are executed as timely as possible so that expenditures can be promptly recorded.

How should legitimate expenditures be recorded if necessary to be incurred before a sponsored project is established?
The Office of Grants and Contracts will assist a department in establishing appropriate prespending mechanisms that associate the expenditures with the pending award. It is not appropriate to use a generic departmental account and move expenses to the funded award beyond 90 days.

What if a vendor doesn’t provide an invoice for services rendered within 90 days?
Although rare, this circumstance can occur. The University cannot pay for services for which it has not been invoiced. If a vendor invoices later than 90 days after the provision of services, the University will pay upon receipt and note for the record that the invoice was late.

What if a department is disputing an invoice with a vendor and the dispute extends beyond 90 days?
The dispute should be clearly documented between a department and the vendor. The university has an obligation to timely notify vendors if goods and services are not satisfactory and to timely pursue resolution of outstanding issues. Delays due to the normal course of other business intervening, change in personnel or other departmentally based factors are not acceptable reasons for delaying posting of expenditures.

Are personal reimbursements subject to the 90 day rule?
Yes, personal reimbursements are subject to the 90 day rule. It is entirely reasonable to expect that employees with travel expenses or miscellaneous reimbursements can account for those expenses within 90 days of their return to campus. In cases of extended foreign travel that may extend for periods longer than 90 days, reimbursements can be made at the conclusion of the trip.

How do you define occurrence?
An expense occurs when it is posted to the general ledger.