Cost Transfers

screwdriver and hammer crossed

To ensure that the University is in compliance with Federal regulations, the Principal Investigator (PI) and the Department are required to record appropriate project expenses timely, and to support them with adequate documentation. Every cost placed on an account is certified by an authorized institutional official for allowability, allocability tests, and direct benefit to a project. This certification is included on financial reports and vouchers requesting payments under the Federal agreements. A cost transfer invalidates this original certification.

Responsibility and Accountability

Cost transfers are used for correcting errors, are meant to be used infrequently and only in specific circumstances. The responsibility for compliance with federal costing guidelines and for maintaining supporting documentation for cost transfers is centered in the originating department/unit. Principal Investigators (PIs), and those to whom authority to approve cost transfers is delegated, are responsible and accountable for compliance with Federal Cost Principles, and for ensuring that costs transferred to the Federal funds are:

  • Incurred during the approved budget period
  • Allowable per the terms and conditions of the award and University policies
  • Necessary and reasonable for the performance of the award
  • Allocable
  • Consistently treated
  • Adequately documented

NIH Grants Policy Statement, Section 7.5, states that error corrections should be accomplished within 90 days of when the error was discovered. The University expects that all errors are discovered within 30 days of the close of the ledger of each month. Consequently, UC Policy BFB A-47 requires that cost transfers are processed timely, and no later than within 120 days from the close of the month in which the original charge posts to the ledger. Departments are required to explain untimeliness of a cost transfer completed after 120 days after the original transaction date and/or 90 days after the fund end date. Untimely processed cost transfers are routed for a 2nd level review and approval to Contracts & Grants Compliance.

The federal government expects grantees to maintain documentation of cost transfers. An explanation for cost transfers must answer the following questions:

  • Why is the cost transfer necessary?
  • Why was the correct fund not charged?
  • How does this expense contribute to achieving the project’s objectives?

Cost transfers not made within the 120 days require an explanation stating why the error correction is late and will be reviewed by C&G Accounting, Compliance.

Late cost transfers that are not approved must be moved to unrestricted funds.

Payroll Cost Transfers

Authorized individuals can initiate a payroll expenditure adjustment/transfer of expense for contracts and grants using UCPath direct retro funding update process and a Salary Cost Transfer (SCT). This custom process to move salary and/or benefits costs from one account or fund to another is managed by UCPath.

More Information (Login Required): UCI UCPath Transactor Support - Funding & General Ledger (GL)

In addition to specifying the salary and benefits details, and funding sources involved in a transfer, successful submittal of SCT requires completion of the following Questionnaire:

  • Explain how the error occurred and why the transfer is being requested. If partial transfer, explain the basis for proration and/or split.  
  • Who approved the transfer of funds?
  • How does the transfer benefit or impact the new funding source being charged?

Section 701-19 Payroll Certification System Guidelines for Federally Sponsored Projects, provides information about an after-the-fact review of salaries and wages charged to the federal awards.

Non-Payroll Cost Transfers

Authorized individuals can initiate a non-payroll expenditure adjustment/transfer of expense for contracts and grants using General Error Correction (GEC) document in Kuali Financial System (KFS). Timely completed cost transfers are approved by authorized personnel in the department or school administering the award and can be processed without prior review by Contracts & Grants Accounting. PI approvals are secured by department through KFS GEC document ad hoc routing to PI, or by attaching additional documents and/or emails. PI is provided with a link to a final GEC which can be viewed in KFS Action list.

How to Prevent Cost Transfers?

  • Review terms and conditions of the award to learn how it should be managed
  • Establish a financial plan
  • Maintain accurate projections
  • Meet with the PI monthly or at least every other month
  • Reconcile project expenses on a monthly basis
  • Communicate funding changes with HR, payroll, and recharge centers in a timely manner
  • Submit a Request for Approval to Spend Funds (RAS), if applicable

UCI requires that all individuals that are expected to perform payroll and/or non-payroll cost transfers affecting contracts and grants complete the Cost Transfers Training, and achieve 100% score on the eCourse assessment. Registration for this course is available on the UC Learning Center website under CGS.

Documentation and Retention

Academic departments/schools are the department of record for documentation in support of contract and grant cost transfers. Documentation not included in UCPath is maintained in the originating unit. Records documenting contract and grant financial activities are retained for 6 years after the end of the award, unless otherwise specified in the award agreement. Retention periods are specified in the UC Records Retention Schedule.