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UC Merced Cost Transfer Policy for Sponsored Projects

Purpose

The purpose of this policy is to define the principles and procedures for transferring costs associated with sponsored projects at the University of California, Merced (UC Merced). This policy ensures compliance with federal regulations, including Uniform Guidance (2 CFR Part 200), sponsor-specific requirements, and UC policies, while maintaining high standards of fiscal stewardship.

Scope

This policy applies to all UC Merced faculty, staff, and administrators responsible for managing sponsored projects, including federal, state, private, and industry-funded awards.

Definitions

  • Cost Transfer: A reassignment of an expense from one funding source to another after the expense was initially recorded.
  • Timely: Within 90 calendar days from the date the original transaction was posted in the financial system.
  • Late Transfer: A cost transfer request submitted more than 90 days after the original transaction date.

Policy Statement

Cost transfers are used for correcting errors or allocating costs across multiple funding sources, which should be used infrequently and only in specific circumstances. Principal Investigators (PIs) and those who are authorized to approve cost transfers are responsible and accountable for compliance with Federal Cost Principles. Cost transfers must be:

  • Allowable: The cost must be permissible under the terms and conditions of the award.
  • Allocable: The cost must benefit the receiving project.
  • Reasonable: A prudent person would have incurred the cost under similar circumstances.
  • Consistently Treated: The cost must be treated consistently with other costs incurred for the same purpose in like circumstances.
  • Timely: Transfers should occur within 90 days of the original transaction posting.

Documentation Requirements

All cost transfer requests must include:

  • Description of the expense being transferred
  • Explanation of why the charge was not originally posted to the correct account
  • Justification for why the expense is appropriate for the receiving account
  • Description of the steps taken to prevent similar errors in the future
  • Required approvals and certifications from the PI and authorized research administrator

Procedures

  1. Initiation: The Principal Investigator or Research Administrator identifies a cost transfer need and submits a request using the Award Modification Form.
  2. Review and Approval: The request must be reviewed and signed by:
    • The Principal Investigator (PI)
    • The department financial officer or research administrator
    • Sponsored Projects Office or Contracts and Grants Accounting (depending on stage of award)
  3. Late Transfers: Requests made after 90 days require:
    • Written explanation of exceptional circumstances
    • Central office review and approval (Contract and Grant Administration and PPFM)
  4. Payroll Transfers Beyond 120 Days: Additional steps are required for salary cost transfers submitted more than 120 calendar days after the original transaction. These include:
    • Completion of the UC Merced Salary Cost Transfer (SCT) Questionnaire
    • Justification for the delay and a corrective action plan
    • Supporting documentation showing availability of funds and compliance with sponsor requirements
    • Effort report discrepancy explanation (if applicable)
    • Signatures from the Research Administrator and School Finance Office
    • Final approval from the Controller's Office

    See detailed procedures at: New Requirement: High-Risk Salary Cost Transfer Requests

Unallowable Cost Transfer Reasons

Cost transfers are not allowed:

  1. Solely to spend down unexpended funds
  2. To cover a deficit on another project
  3. For convenience (e.g., “Parking” expenses)
  4. Administrative delays without valid justification (e.g., pending continuing award notice)
  5. After an award has closed

Monitoring and Compliance

UC Merced will monitor cost transfers for trends, frequency, and appropriateness. Patterns of excessive or late transfers may result in training requirements, escalated oversight, or restrictions on award spending. Non-compliance may result in disallowed costs, sponsor disapproval, or audit findings.

Related Policies and Resources

  • Uniform Guidance (2 CFR Part 200)
  • NIH Grants Policy Statement
  • UC Policy BFB-A-47: Direct Costing Procedures
  • Award Modification Request Form
  • UC Merced Salary Cost Transfer Questionnaire