Skip to main content

Cost Transfers


This policy is to serve guidance for payroll and non-payroll cost transfers as they relate to federal, state, and specific sponsor's guidelines regarding sponsored programs at the University of Houston.  


It is the policy of the University of Houston to assure that all expenditures are accurately reflected in the accounting records. To accomplish this, cost transfers may be necessary to move expenses from one cost center to another. The purpose of this policy is to establish appropriate guidelines for processing cost transfers.

Cost transfer requested must meet the guidelines for allowable, allocable, reasonable and consistency. If sponsored project has more stringent requirements than the university policy (MAPP 05.02.03), the requirements of that sponsor or sponsored project agreement shall govern. 

Federal regulations and university policy allows such transfer to correct errors, usually within 90 days from the close of the month in which the charge originally posted to the general ledger. All reallocation are required to have adequate justification and supporting documentation.


1. Cost Transfer - An after-the-fact reallocation from one cost center to another within 90 days from the close of the month in which the charge post to the general ledger.

2. Late Cost Transfer - An after-the-fact reallocation of payroll and non-payroll more than 90 days from the close of the month in which the charge post to the general ledger.

3. Original Expenditure Date - The date of the first posting of the expenditure to the general ledger.

4. Allowable - Costs that are necessary and reasonable under the terms of the sponsored award. Costs that are consistent with policies and procedures of the awarding agency and the University of Houston.

5. Allocable - Costs that benefit the sponsored project charged. Costs that are shared by more than one sponsored project must be allocated to the projects based on the proportional benefit.

6. Reasonable - A cost, in its nature and amount, does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.

7. eRAF - Electronic Payroll Reallocation form used in PeopleSoft HR to reallocate salary and fringes after-the-fact to designated cost centers.

8. ePAR - Electronic Personnel Action Requested form used in PeopleSoft HR to hire, terminate, and adjust the employment status of the employee.

9. GL Journal - A general ledger journal created in PeopleSoft Finance to reallocate non-payroll expenditures.

10. Closeout - A process done after a sponsored project has closed to inactivate the associated cost center.


Cost transfers are necessary in order to correct an error or to move or allocate expenses into cost centers. Additionally, at no time should a sponsored project be used as a holding account for costs that will subsequently be transferred elsewhere.

Initiating Cost Transfers

Errors requiring reallocations are identified during one of the following processes, and will be handled in the following manner:

1. During Reconciliation: Every month at the close of the prior month's accounting period, departments reconcile their designated cost centers. When an error is found within 90 days from the close of the period in which the cost originally posted, the department will initiate the cost transfer using PeopleSoft eRAF for payroll and a PeopleSoft Finance GL Journal for non-payroll. A “Cost Transfer Justification” form is required for each transfer created by the department.

2. During Clearing Payroll Suspense Accounts: Departments are responsible for clearing costs from the temporary holding Payroll Suspense account. To allocate an allowable, allocable, and reasonable payroll expenditure from suspense to a sponsored project cost center, the department will initiate an eRAF and attached the “Cost Transfer Justification” form and if applicable, prepare the e-PRF to ensure that the payroll post correctly in subsequent months.

3. During Invoicing and Financial Reporting: OCG creates invoices or financial reports based on a time frame according to the terms and conditions of a sponsored award. If an error is found due to an unallowable expenditure, or cost overrun, OCG will initiate the cost transfer to correct the error. These costs will be allocated to the department's IDC return cost center.

4. During Close-outWhen an error or cost overrun OCG will initiate the reallocation to correct the error. These costs will be allocated to the department's IDC return cost center.

The Office of Contracts and Grants has the final approval of cost transfers allocated to or from a sponsored project cost center.

Backup Documentation for Reallocations

Departments are responsible for retaining documentation authorizing expenses on the grants. Cost transfers must contain a justification (form) that clearly shows:

  • Benefit to the receiving project
  • Allowability and allocability to the new sponsored project
  • Reason for transfer
  • Systemic causes are corrected so they will not recur
  • The reason for any delay in the timely processing of the transfer if the transfer date exceeds the definition of timely, below.
  • It was reviewed by a knowledgeable person such as the PI

A good explanation and justification will allow anyone reviewing the cost transfer to understand how the expense benefits the receiving sponsored project. Statements such as “to correct error”,  "clearing suspense", “to used up the remaining funds” or "reallocating from Fund A to Fund B” is not sufficient. Tips for writing the justification can be found here. For reallocations past 90 days, a more comprehensive explanation of why the correction was not done in time is needed.      

Cost Transfers within 90 days 

Cost transfers within 90 days from the close of the month in which the charge post to the general ledger must include the “Cost Transfer Justification” form . Approval from the PI or delegate is needed.

Cost Transfers over 90 days 

Reallocations over 90 days (of the original posting date and effort certification) must include “Cost Transfer Justification” form:

  1. A detail explanation of the delay of

             a) How the error occurred,

              b) How the expenditure is related to the project receiving the
                  expenditure (stressing the benefit to the project receiving the

              c) Why the error was not previously corrected, and

              d) What arrangements or measures have or are being taken to prevent
                   recurrence of the error.

      2. The detailed explanation justification statement or memo must include
          the signature of the Principal Investigator (PI). Attached here is a sample
          justification form that can be used. 


Payroll Reallocations

An online eRAF (electronic reallocation form) in PeopleSoft HR system is prepared and routed via PS. Detail instructions for processing the payroll reallocations can be found here.  The process for eRAFs involving sponsored research is the following:

  • Home department initiates an eRAF and routes it to the certifying signatures at the department and college level. 
  • The eRAF is routed to OCG  and is reviewed for the following:
    1. Earning dates of paycheck are within period of performance of the sponsored project
    2. The position or employee and amount is allowed in the approved budget
    3. “Cost Transfer Justification” form is attached
  • OCG approves and routes the eRAFs to General Accounting for processing

eRAFs initiated by OCG to remove unallowable expenses from a sponsored project is not routed through the department.

Non-payroll Expenditure Reallocations

An online journal or voucher in the PeopleSoft Finance system is prepared and routed via PS. The process for reallocation journals and vouchers involving sponsored research is the following:

  • Home department initiates a PS journal or voucher and route it through the OCG workflow.
  • An OCG RA will review, approve and forward the journal entry or voucher to General Accounting.
  • In the event of a budget-check error, department staff should request that the RA override the error.
  • Department staff is responsible for follow-up and checking to ensure the reallocation is posted to the appropriate cost center.
  • Reallocations initiated by OCG to remove unallowable expenses form a sponsored project is not routed through the department.
  • The Grant Reallocation Matrix (PDF) should be used to assists in identifying the correct account code and backup documentation to be used for this process.


Code of Federal Regulations (Uniform Guidance)

MAPP Policies

Tips for Writing a Justification

90 days Determination Calculator