Cost Transfers

Once an expense has been recorded in the PGM Costs, it is only appropriate to make cost transfers in the following four situations:

• To correct an erroneous recording, such as when the original source document (e.g., invoice, payroll) refers to an incorrect Account or Project number.
• To reflect a change in the decision originally made as to how the goods or services would be used (e.g., a case of beakers originally ordered for and charged to a teaching program but subsequently used by a research project).
• To redistribute certain high quantity but small value charges (e.g., paper costs, telephone charges, mailing charges) when allowed by the sponsor which are billed to departmental funds.
• To redistribute payroll costs based on after-the-fact verification.

A cost transfer must pass the following tests when the transfer is to a Federal or Federal-Flow-Through sponsored award:

• It must contain a reference to the invoice, payroll journal, or other documents that initiated the original charge.
• It should typically be for the exact amount originally recorded in PGM Costs. If transferring a fractional amount, the transfer must contain an explanation supporting a reasonable method of allocation.
• It must be fully explained, justified, and approved by the Cost Transfer Approver involved in the transaction. An explanation which states that the transfer is being made “to correct an error”, “to transfer to correct award”, or “expenditure inadvertently charged to incorrect award” is not sufficient.
• The approvals must include the Principal Investigator.
• Transfers must be processed within 120 days from when the original charge was posted.

If there are unavoidable circumstances that necessitate a transfer after 120 days, a full explanation is required, including a well-documented account of the events that led up to the late adjustment.

Approval of requests for late cost transfers to a Federal or Federal-Flow-Through fund source will be rare and only granted in unusual and unique circumstances that generally result from actions outside the control of the originating department. If granted, this approval does not relieve the originating department from the financial responsibility for the untimely recognition of these expenses. If disallowed by the federal agency, the originating department will be held responsible for any disallowance, fine, or penalty resulting from negative audit findings relating to any cost transfers processed as a result of an escalation request.

In general, the following situation will be considered for an escalation:

• Cost transfers resulting from late notification of award by the sponsor when a Request for Approval to Spend Funds (RAS) would not have been possible. A RAS should be used whenever possible.

Transfers with the following situations that do not fall under the escalation requirement:

• Transfers between Projects within the same Sponsored Award.
• Transfers correcting Account Codes within the same Sponsored Award.
• Transfers from active Federal or Federal-Flow-Through Sponsored Award to a NON-Federal fund source will be processed even after the 120 day limitation.

Escalations will generally not be granted in the following situations:

• Failure of staff to prepare cost transfers in a timely manner. A department being short-staffed is not a valid reason to grant exception to UC policy.
• Failure of Principal Investigators to timely inform department administration of needed cost transfers.

A Late Cost Transfer Policy Escalation Request is required for all expenditure transfers that meet the following criteria:

• To be processed 120 days or later from the accounting date of the original charge(s)
• Transfer results in a new charge (debit) to a federal or federal flow-thru Sponsored Award

Late cost transfers are closely reviewed before being approved or denied. As a result, the review and processing of late cost transfers take significantly longer than non-exceptional cost transfers. Reviewing time increases when the Late Cost Transfer Policy Escalation Request package submitted is incomplete, requiring further requests and additional response time.

To ensure timely processing of your late cost transfer request, follow the steps corresponding to Payroll and Non-Payroll expenditure transfers below.

A salary cost transfer ("direct retro") is a reversal of payroll expenses (salary and benefits) charged to an original CCOA combination and a re-posting to a new CCOA combination. Campus departments will perform salary cost transfers directly in UCPath online.

The designated departmental Transactor/Preparer will prepare the payroll cost transfer in the UCPath system. The designated departmental Approver for all SCTs plus EMF Manager for high risk SCTs, but cannot be the initial transactor/preparer who submitted request, will approve the transaction, which will then get processed in the UCPath system as follows:

1. Complete all late payroll transfers using the UCPath salary cost transfer Direct Retro process.
2. Salary Cost Transfer Initiators must complete the Questionnaire section in UCPath to include the following:
   • Explain how the error occurred and why the transfer is being requested. If partial transfer, explain the basis for proration and/or split.
   • Who approved the transfer of funds? (e.g. Name of PI and RFA)
   • How does the transfer benefit or impact the new funding source being charged?
   • Explain the untimeliness if transfer is later than 120 days after original transaction date.
3. Obtain approval from the Principal Investigator via email, which should detail the amounts and Projects involved, the Questionnaire responses, any supporting documentation, and the UCPath Direct Retro number.
4. If the RFA is not the Salary Cost Transfer Initiators they should approve the transfer before the PI.
5. Submit the PI email, including supporting documentation, via email to EMF Compliance via emfawards@bfs.ucsb.edu.

The Transfer of Expenditures (TOE) module in OFC allows for the transfer of non-payroll expenditures recorded in the OFC ledgers.

Authorization to the application is based on the user’s level of responsibility. There are Preparers and various levels of Reviewers.

The TOE system defines late cost transfers as “High Risk” transfers as “Any transfers to Federal or Federal Flow-Through funds.” These transfers will require additional explanation, supporting documentation and reviewers. Follow the following steps to process a late cost transfer in TOE.

1. Complete all late payroll transfers using the Transfer of Expense (TOE) module in OFC.
2. Non-Payroll Cost Transfer Initiators must complete the Questionnaire section in TOE to include the following:
   • How does the transfer benefit or impact the new funding source being charged? And explain how the error occurred and why the transfer is being requested. If partial transfer, explain the basis for proration and/or split.
   • Detail the role or contribution that the goods/services provided to this project, OR submit the budget proposal showing that the goods/services were planned for the project.
   • Explain the untimeliness if transfer is later than 120 days after original transaction date.
3. Attach any supporting documentation and submit for approval. TOE will automatically route the cost transfer to all required approvers, including the PI and EMF.