Funding agencies have questioned and/or disallowed cost transfers in instances where they were frequent, late (occurring long after the initial charge was recorded) and/or inadequately explained and documented. Transfers of this type, particularly when they occur on projects with significant cost overruns or unexpended balances, cause agencies to question the propriety of the transfers as well as the overall reliability of the administrating unit's accounting system and ability to properly administer sponsored programs.
Cost transfers which represent corrections of clerical or bookkeeping errors must be made promptly after the errors are discovered. Any transfer must be supported by, documentation which contains a full explanation of how the error occurred and a certification of the correctness of the new charge. An explanation which merely states that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. It should be noted that frequent errors in the recording of costs may indicate the need for improvements in the PI's unit accounting system and/or internal controls. Departments may be required to evaluate the need for improvements in these areas and to make necessary changes. Any cost transfer which involves a change in previously certified effort will require a further justification as to why the effort report was not corrected prior to certification.
Cost transfers are to be made within 90 days of the original charge. Any transfer made after this period raises serious questions regarding the propriety of the transfer. If a PI desires to request a transfer after this time, a further explanation of why the transfer is late must accompany a full justification for the transfer. Any transfer of costs on a sponsored program is ultimately the responsibility of the PI, who should retain appropriate documents to support requested changes. Cost transfers are subject to the review and approval of the Division of Grant and Contract Accounting office.
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