Guidance on the appropriate use of cost transfers, including the required documentation to support Cost Transfers (Expenditure Adjustments).
A request for adjustment of expenditures shall meet all of the following tests when the adjustment is to transfer a cost TO an extramural fund source (grant or contract):
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.
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.
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.
It is necessary to document not only the dollar amount to be allocated to each account and the method used to determine the allocation (e.g. estimated use of item on each project, total personnel time for each project) when transferring part of an expense. 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.
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. For payroll transfers to extramural accounts, complete the Departmental Pre-Approval Form: Transfer of Payroll Expense (Extramural Fund Source) form 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 Kuali Financial System (KFS) document (DI or GEC).
- For Federal grants and Contracts: In the case of adjustments which involve federal grants and contracts, the certification and approval signatures must include that of the project director (principal investigator), department head, or other academic officials. For transfers processed electronically or using online systems, the certification and approval of the department head, project director (principal investigator) or other academic officials must be maintained by the department in accordance with local campus requirements. For transfers to federal funds after 120 days, Contracts & Grants Accounting approval is also required.
- For payroll transfers: Complete the Departmental Pre-Approval Form: Transfer of Payroll Expense (Extramural Fund Source) or an equivalent department form to document the transfer approvals. For non-payroll transfers, complete the appropriate KFS document. Documentation of transfer approvals must be kept with the department expense records and available for review or audit.
- It must be recorded via the appropriate hard copy or electronic form (such as the payroll expenditure adjustment request, the non-payroll expenditure adjustment request, or the financial journal).
- Departmental Pre-Approval Form: Transfer of Payroll Expense (Extramural Fund Source) AND KFS Salary Expense Transfer (SET)
- For Non-Payroll Transfers:
- KFS Distribution of Income and Expense (DI) or General Error Correction (GEC)
- 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, system edits in KFS 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, 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 Contracts & Grants Accounting for review and final approval, even if the transfers can be processed at the department (i.e. EDLR). 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, prepare the Departmental Pre-Approval Form: Transfer of Payroll Expense (Extramural Fund Source) and submit it to Contracts & Grants Accounting.
Reference: Business and Finance Bulletin A-47