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Expenditure Adjustments (Cost Transfers)

The following information is provided as guidance for the appropriate use of cost transfers, including the required documentation to support the transfers.

A request for adjustment of expenditures shall meet the following tests when the adjustment is to transfer a cost TO an extramural fund source (gift, endowment, grant, or contract):

1. It must relate to individual items of expenditures incurred by the unit requesting the adjustment.

   There must be a logical and documented method for determining the amount of expense to be transferred (e.g., a cylinder of oxygen or fraction thereof, two hours of technical staff when identifiable to a specific cost objective). Transferring an amount equal to the remaining unspent funds for a project with no logical breakdown of items is not acceptable. Documentation of the method of determining the amount to transfer must be kept with the department expense records and available for review or audit.

2. It must contain a reference to the invoice, payroll, or other disbursement document(s) which initiated the original direct charge.

   Reference the original expense document in the transfer document.

3. It should be in the same amount originally recorded in the University general ledger (i.e., the whole amount or the appropriate fraction charged to and/or paid by the unit requesting the adjustment). If transferring a fractional amount the transfer request must contain an explanation supporting a reasonable and equitable method of allocation.

   When transferring part of an expense, it is necessary to document not only the dollar amount to be allocated to each account, but the method used to determine the allocation (e.g. estimated use of item on each project, total personnel time for each project). The method of allocation must be appropriate for the type of expense. Documentation of the method of allocation must be kept with the department expense records and available for review or audit.

4. It must be fully explained, justified, and approved by the unit administrator(s) involved in the transaction. (An explanation which merely states that the adjustment being made is "to correct an error," "to transfer to correct project," or "expenditure inadvertently charged to incorrect account/fund" is not sufficient.)

   Fully document the reason for the incorrect charge and why the charge is allowable and allocable to the new account. Visit the Cost Transfer Justification page for more information on adequate justification for cost transfers. For payroll transfers, complete the Departmental Pre-approval Form, On-line Transfer of Payroll Expense to document the transfer justification. Documentation of the payroll transfer justification must be kept with the department expense records and available for review or audit. For non-payroll transfers, enter the justification in the appropriate DaFIS document (EC, REC, or DI).

5. In the case of adjustments which involve Federal grants and contracts, the certification and approval signatures must include that of the principal investigator, department head, or other academic official. For transfers processed electronically or using on-line systems, the certification and approval of the department head, principal investigator or other academic official must be maintained by the department in accordance with local campus requirements.

   For payroll transfers, complete the Departmental Pre-approval Form, On-line Transfer of Payroll Expense to document the transfer approvals. For non-payroll transfers, complete the appropriate DaFIS document (EC, REC, or DI). Documentation of the payroll transfer approvals must be kept with the department expense records and available for review or audit.

6. It must be recorded via the appropriate hardcopy or electronic form (such as the payroll expenditure adjustment request, the non-payroll expenditure adjustment request, or the financial journal).

   Payroll transfers:

   • Departmental Pre-approval Form, On-line Transfer of Payroll Expense AND
   • OPTRS expense transfer or UPAY 646-3 form
   Non-payroll transfers:
   • EC, REC, or DI

7. If the expense is being transferred to a federal or federal flow-through account, it must be recorded in the general ledger within 120 days from the close of the month in which the original charge posts to the ledger. (For example, the deadline for adjusting a charge which appears in the January ledger will be the May ledger.)

   To help ensure compliance with timely transfers affecting federal and federal flow-through funds, edits in PPS and DaFIS prevent transfers of charges TO federal or federal flow-through accounts after the 120-day limit. The edit will NOT prevent expense transfers involving CREDIT entries where charges are being removed from federal or federal flow-through funds.

   If, in very rare occasions because of unavoidable circumstances, i.e., late receipt of award, a department feels that adjustment TO a federal or federal flow-through fund beyond the 120-day period is justified and supportable, a full explanation including a well-documented account of all the events leading to the tardy adjustment, must be provided to Extramural Funds Accounting for review and final approval. Requests for adjustments beyond the 120-day period should be rare and requests should only be submitted if the department can justify circumstances that were unavoidable.

   To request a late transfer due to unavoidable circumstances, complete the UPAY 646-3 form. Submit the completed form to Extramural Funds Accounting for final approval and processing.

   Additional Reference: Business and Finance Bulletin A-47