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Cost Transfer

A cost transfer is a reallocation of an expenditure between cost centers or account codes. When a sponsored project is involved, the transfer should be done only when making corrections which are necessary, allowable and applicable to the project to which the cost is being moved. A justification for why the cost is being moved and its purpose/benefit to the sponsored project to which the cost is being moved is needed on the journal or backup documentation.  Most importantly, cost transfers must be done within 90 days from the close of the month in which the charge originally posted to the general ledger.  Late reallocations beyond 90 days maybe allowed with adequate justification and documentation, but these are red flags to auditors and should be avoided.

The chart below outlines the steps, the responsible office or person, and the estimated time to complete the cost transfer process.

Steps Responsible Office or Person Timing
Reconcile and Review expenses on cost center ledgers and detailed payroll reports Department Business Administrator (DBA)

Principal Investigator (PI)
10-15 days after monthly financial system closing
Gather documentation and information on errors found during the monthly reconciliation of cost center and billing review Principal Investigator

Department Business Administrator (DBA)

Research Financial Accountant (RFA)
Up to 60 days from the close of the period in which the cost originally posted
Create online Journal or Pay role reallocation form (eRAF) in PeopleSoft and attach backup to process the transfer  Department Financial Staff

Research Financial Accountant (RFA)

**Research Financial Accountant (RFA)
Up to 90 days from the close of the period in which the cost originally posted
Route Journal/ eRAF for approvals via electronic workflow Department Business Administrator (DBA)

Research Financial Accountant (RFA)
5-7 business days
Review and process journal/eRAF to credit and debit the cost centers or account codes in the general ledger General Accounting Department 2-3 business days
Review and reconcile the corrections posted to the cost center and inform the PI and sponsor Department Business Administrator

Research Financial Accountant (RFA)
10-15 days after monthly financial system closing

* Cost transfers for unallowable cost found during the billing and drawdown review process will be moved by RFS to a department IDC cost center

Potential Cost Transfer Issues

Inadequate justification which does not address the questions of whether or not the transfer charges are allowable and allocable to the project to which they are being charged through the cost transfer can results in an adverse audit finding. Adequate justification should include the pertinent facts and be easily understood by anyone who may be reviewing it.

A Late Cost Transfer that is more than 90 days from the close of the month in which the charge originally posted to the general ledger is another red flag for auditors. This type of reallocation requires additional justification to explains why the correction is being done late and what steps the department and PI are taking to prevent it from happening in the future.

Frequent and poorly documented cost transfers are an indication that problems exist in the management of research. Everything must be done to ensure that a cost is allocated correctly upfront. Consequently, a sponsored project cost center should not be used as a holding account for costs which will subsequently be transferred to a new award once it is set up. The department IDC or residual funds should be used for this purpose instead.

Process Flowchart

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