University of North Texas 
Cost Transfer
- Effort Reporting
- Advanced Accounts
- Modifications
- Guidance for Sponsored Expenditures
- Training & Guides
- Subaward Information
- Cost Transfer
What is a Cost Transfer?
A cost transfer is the reassignment of an expense from one account to another after the expense has already been recorded in the University's financial system. Cost transfers may involve payroll costs, travel expenses, supplies, equipment, or other expenditures.
On sponsored projects, cost transfers are closely scrutinized because they affect the financial integrity of the award and must comply with sponsor requirements, federal regulations, and University policy.
The expectation is that costs are charged to the appropriate project when they are initially incurred. Cost transfers should be infrequent and made only to correct legitimate errors or to properly allocate expenses to the project that benefited from the expenditure.
Types of Cost Transfers and need Documents
There are three methods for performing a cost transfer at the University. A brief description of each is provided below along with documents needed for each type of transfer and a detailed guide for how to perform each type of transfer.
Electronic
Electronic Cost Transfers are completed in the EIS Finance system. In order to obtain submission and/or approval access for this feature, you must complete the training as provided by Grants and Contracts Administration.
ePAR
When moving payroll transactions that include sponsored projects, all payroll must be completed through the ePAR system. For justification purposes, a Payroll Cost Transfer Form should be completed and attached to the ePAR prior to approval.
Manual
Cost transfers that require a manual journal are done when the expense has crossed the fiscal year. When expenses on a sponsored project must be moved after the close of the fiscal year in which the expense occurred, a manual journal must be completed. The Cost Transfer Form must be signed by the PI and the Post Award Manager for the department.
Key Principles
Before a cost can be transferred to a sponsored project, the expense must meet the following federal cost principles:
Allowable
The cost is permitted under federal regulations, sponsor guidelines, and the terms and conditions of the award.
Allocable
The cost must directly benefit the project being charged. Federal regulations prohibit transferring costs to a sponsored project simply because another account lacks sufficient funding.
Reasonable
The cost reflects what a prudent person would incur under similar circumstances and is necessary to support the project objectives.
Consistent
Costs must be treated consistently across all sponsored and non-sponsored activities in accordance with institutional accounting practices.
When Are Cost Transfers Appropriate?
Examples of acceptable cost transfers may include:
- Correction of clerical or administrative errors.
- Reallocation of charges when an expense benefits a different project than originally charged.
- Transfer of expenses incurred before account setup when the project was known and pending activation.
- Corrections identified through regular financial review and monitoring activities.
All cost transfers must include sufficient documentation explaining:
- Why the original charge was incorrect.
- Why the expense is appropriate for the receiving project.
- How the error occurred.
- What steps have been taken to prevent similar errors in the future, when appropriate.
When Are Cost Transfers Not Appropriate?
Cost transfers are not permitted when they are used to:
- Eliminate cost overruns from one project to another project.
- Spend down remaining balances before an award expires.
- Circumvent sponsor restrictions or budget limitations.
- Correct deficiencies caused by inadequate budget management.
- Move costs between projects solely for convenience.
Federal regulations specifically prohibit charging a cost to one sponsored project when the expense is allocable to another project.
Timeliness Requirements
Cost transfers should be completed as soon as an error is identified. Delayed transfers increase audit risk and may result in additional review, documentation requirements, or disallowance by the sponsor.
Cost transfers that correct clerical or bookkeeping errors should generally be completed within 90 days of discovering the error and must be fully documented.
Frequent, late, or inadequately documented cost transfers may indicate weaknesses in internal controls and can raise concerns during audits or sponsor reviews.
Documentation Requirements
Each cost transfer request should include:
- Description of the expense being transferred.
- Explanation of why the transfer is necessary.
- Justification demonstrating that the cost is allowable, allocable, and reasonable.
- Supporting documentation, such as invoices, payroll records, transaction reports, or other records.
- Required departmental and institutional approvals.
Statements such as "to correct error" or "to move expense to correct project" are not sufficient justification by themselves.
Responsibilities
Principal Investigators (PIs) are responsible for:
- Reviewing project expenditures on a regular basis.
- Ensuring expenditures are allowable, allocable, and reasonable.
- Identifying errors promptly.
- Providing appropriate justification for cost transfers.
GCA Post-Award Managers and Accounting Analysts are responsible for:
- Monitoring financial activity.
- Maintaining adequate supporting documentation.
- Ensuring transfers are processed in a timely manner.
- Following University and sponsor requirements.
Why Cost Transfer Compliance Matters
Improper cost transfers may result in:
- Audit findings.
- Cost disallowances.
- Repayment of sponsor funds.
- Increased oversight from sponsors.
- Damage to the University's reputation and future funding opportunities.
The University is committed to ensuring that all costs charged to sponsored projects are accurate, properly documented, and compliant with federal regulations and sponsor requirements.