A cost transfer occurs when an expense, associated with a sponsored award or not, is transferred from one FOAPAL to another. It may only be made under one of the following conditions:

• To correct an erroneous recording.
  • Example: an incorrect FOAPAL was used to code the original invoice or purchase order.
• To reflect the redirection of goods or services between a research program and a non-research program. An authorized department administrator must certify each of the following things:
  • The original (direct charge) expense is valid and the proper FOAPAL was used at the time to record it.
  • The original accounting for the charge is no longer valid.
  • The new FOAPAL is the proper one.
    • Example: a case of beakers originally ordered for and charged to a teaching program is transferred to a sponsored research project.
• To redistribute certain high volume, low cost expenses incurred by multiple departments, but charged to a single, departmental FOAPAL.
  • Departmental usage logs or records must be maintained to support the redistribution of expenses. Refer to the Records Management Manual for information about retention guidelines.
    • Examples of redistributable costs: copy machine rental costs, telephone charges, mailing charges, office supplies expenses

Requirements. A cost transfer must comply with all of the following requirements.

• The transfer amount must be related to a specific expenditure or individual unit of measure.
• The transfer amount must be the same as what was originally recorded in the general ledger, or, as applicable, it must be an appropriate pro-rata portion of the original cost.
• The disbursement document reference code associated with the recording of the original charge, such as a purchase order or invoice number, or payroll report date, must be provided.
• A detailed justification for making the cost transfer must be provided.

Preparing a Cost Transfer: When preparing a cost transfer, try to prepare it from the point of view of an auditor. Will the Document Text fully explain why this transfer was done? Is there complete and adequate transparant description explaining the purpose and necessity of the transfer?

Document Text: If you have a printed journal, or access to FIS, you can see this information. This is the initial information reviewed by auditors. The correct process is to note the “5-Ws” within the Document Text:

• Who and Where: Identify who is initiating the transfer. For transfers between fund sources, please note that the PI’s written authorization (which should address why this expense benefits the project and is consistent with its scope of work) is attached as part of the backup. Also, include the name of the department/divisional person who approved the transfer, and phone #.
• What and Why: Why was the original fund charged for this expense? What is the reason for this specific transfer?
• When: Certify that this transfer is within the federal 120 day guideline. If not, an adequate explanation must be provided for the delay.

Description Line: This will appear as a line item in your reports. Using the following format insures a clear audit trail. Original Expense Name (abbreviate) with Original Expense Date (MM/DD/YY).

• Document Reference Number: Enter the Original DOC#. If you have a PO# and and Invoice #, always use the Invoice #.

EMF strongly recommends as a campus practice not to transfer an expense to a federal fund if the expense is a relatively small dollar amount but risky in terms of its allowability. Instead, find another non-federal source that would be appropriate for the expense. This practice should especially be applied to potential transfers of over 120 days from the original expense. See below for more information for transfers over 120 days.

Reference: EMF Cost and Budget Transfer Guide

Note: EMF has noted an increasing number of explanations for transfers that do not adequately meet federal audit standards. EMF will be recommending refresher training to anyone who repeatedly submits inadequate or incomplete explanations. In extreme cases, EMF will rescind the person’s access to the XECG rule code until the training has been taken.

• A divisonal or departmental research accountant must review and approve each cost transfer for policy and sponsored award term compliance.
• The transfer amount must be recorded using the appropriate form or financial system.
  • Transfer of Payroll Expense
  • Non-payroll expenditure adjustment request
  • Financial journal
• The transfer must be recorded in the general ledger within 120 days from the close of the month in which the original charge first posts. For example, if the original document posted erroneously on Jun 15th, the transfer should take place prior to October 14, and so on.
• An adjustment is allowed beyond the 120-day period only if all of the following conditions apply:
  • The adjustment was unavoidable under the circumstances.
  • A fully documented account of the events resulting in the need to make the adjustment is provided.
  • For an adjustment to a sponsored award, the explanation must be signed by the principal investigator, department head, or other authorized academic official.
• The division or department responsible for the transfer must retain all supporting documentation, including but not limited to written PI approvals for the transfers.
• To obtain access for processing XECG transfers, see the EMF Contact list for a trainer. See also the procedure outlined in the EMF Cost and Budget Transfer Guide.