16.3 Sponsored Programs Cost Transfers

Policy Statement

It is the policy of the University of Illinois System that costs should be charged to the appropriate sponsored project when first incurred. There are circumstances in which it may be necessary to initiate a cost transfer to reallocate or redistribute expenditures to a sponsored project subsequent to the initial recording of the charge. Sponsored program cost transfers should be initiated promptly and supported by documentation justifying the transfer.

Principal investigators (PIs) are responsible for managing their sponsored programs to minimize the need for cost transfers. PIs are also responsible for ensuring that when cost transfers are necessary, the costs transferred to (or between) their sponsored programs represent appropriate corrections of errors, and that cost transfers are completed as soon as the errors are detected.

All cost transfers must comply with federal and state laws, system and university policies, and individual sponsor terms and conditions. Some of the federal requirements are defined by the U.S. Office of Management and Budget (OMB) Uniform Guidance CFR 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (“Uniform Guidance”), applicable for projects funded December 26, 2014 and later.

Reason for the Policy

Proper oversight of sponsored project funds is essential to uphold the system’s fiduciary responsibility to manage the funds in a manner consistent with the conditions specified by external sponsors. Inappropriate cost transfers will result in expenditures being disallowed and may also cause the sponsoring agency to impose additional restrictions or to reduce subsequent funding. Federal agencies and other sponsors regard the following activities as indicative of inadequate control systems:

• Frequent cost transfers
• Late cost transfers
• Inadequately documented or explained transfers, especially those involving sponsored programs with overruns or unexpended balances

Applicability of the Policy

In order to maintain consistency in the treatment of cost transfers, the policy on cost transfers applies to all federal and non-federal sponsored programs. Under this policy, transfers must be submitted within 90 calendar days of the original transaction date in Banner to be considered a current cost transfer. When transfers are not adequately justified, or are made for inappropriate reasons, the university unit is responsible for transferring the expenses to a non-sponsored departmental account.

This policy is not applicable to capacity grants from the United States Department of Agriculture (USDA) National Institute of Food and Agriculture (“fed ag appropriation funding” in fund type 4Y).

Procedure

Types of Cost Transfers

A cost transfer is a reallocation or redistribution of a previously charged expenditure transferred from one system fund to another fund after the charge has been posted in Banner. Consult the exceptions below for transactions that are not considered cost transfers by the system.

Current Cost Transfers are those initiated during the accounting period in which the charges were originally recorded in Banner, or within 90 calendar days of the original transaction date in Banner.

Non-Current Cost Transfers are those processed more than 90 calendar days after the original transaction date in Banner. Non-current transfers require additional documentation.

Cost Transfers Principles and Expectations

In order for cost transfers to be allowable, the expense must be:

• An allowable charge to the project as defined by the system and/or university policy, sponsor’s policy, and the terms and conditions of the award;
• Allocable as a direct charge to the project and provide benefit to the project;
• Incurred during the period of performance;
• Treated consistently across like circumstances; and
• Cost transfers should be completed as soon as the need is detected, and non-current transfers (older than 90 calendar days) should be kept to an absolute minimum.

Examples of cost transfers that may be allowable include:

• Transferring pre-award costs from unit holding funds if pre-award costs are approved by the sponsor.
• Moving costs that were temporarily charged to an unrestricted fund prior to a new or renewal sponsored project being fully executed.
• Correcting clerical or data processing errors.
• Correcting costs charged to the wrong fund due to incorrect posting.
• Correcting chart or fund codes of the C-FOAPAL string.
• Transferring costs to distribute effort (i.e., labor redistributions) to reflect actual effort expended.
• Transferring costs for shared goods and services (e.g., laboratory supplies, long distance telephone costs, or printing/photocopying, etc.) that are allocable to more than one sponsored project.

Cost transfers are not allowed if they are done to:

• Move costs that do not directly benefit the project.
• Intentionally charge the wrong C-FOAP (aka “park the charges”).
• Move costs that are incurred outside of the period of performance (unless specifically allowed by the sponsor).
• Transfer expenses from any source, including institutional funds, solely to spend unused sponsored project balances.
• Transfer costs to another sponsored project for one or more of the following:
  • Eliminate an overdraft caused by overruns or other financial considerations, such as budget constraints, project completion date, or early termination;
  • Avoid restrictions imposed by law or by the terms of the sponsored agreement; or
  • For other reasons of convenience.

Policy Exceptions

Some journal vouchers (JVs) and feeder documents are not subject to the same degree of scrutiny by the system. The following transactions are not considered cost transfers under this policy when the purpose is to:

• Correct data entry errors in the C-FOAPAL string related to the org, account, program, or activity code.
• Reallocate charges between active funds established for the same sponsored project with the same grant code.
• Remove expenditures by transferring charges to a non-sponsored fund.
• Post original intra-university billings.
• Process administrative adjustments such as entries by the sponsored programs office or University Accounting and Financial Reporting (UAFR) to correct Facilities and Administration (F&A) assessments, fringe benefit errors, small balance adjustments, cost of education or administrative allowances, etc.

Although these exceptions are not considered cost transfers and do not need Form GC81: Cost Transfer Justification For Sponsored Programs, units should still provide adequate documentation. Consult Related Policies and Procedures for additional guidance on documentation.

Note: Form GC81: Cost Transfer Justification For Sponsored Programs is not required to be completed by sponsored programs office and other system office units.

Related Policies and Procedures

16.3.1 Process Cost Transfer for Sponsored Programs

Additional Resources

Form GC81: Cost Transfer Justification For Sponsored Programs

Frequently Asked Questions

Uniform Guidance CFR 200

First Published: March 2021 | Last Updated: March 2024 | Last Reviewed: March 2024