Cost Transfers

screwdriver and hammer crossedTo 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. If cost errors are discovered, the PIs and the Departments are responsible for ensuring that cost transfers are made within a total of 120 days of the end of the month in which the original charge posts to the ledger. All cost transfers must be supported by a written explanation.

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. These requirements are specified in the APPENDIX I of the UC Policy BFB A-47: Direct Costing Procedures.  

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.

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 General Error Correction (GEC)/Cost Transfer Training, and achieve 100% score on the eCourse assessment. Registration for this course is available on the UC Learning Center website under CGS.