Contracts & Grants Accounting

Cost Transfer Justification

To assist departments in providing sufficient information to support an expenditure transfer, the following questions should be addressed by the initiator of the appropriate expenditure transfer document (Kuali Financial System (KFS) Distribution of Income and Expense (DI), General Error Correction (GEC), or Salary Expense Transfer (SET)) and included in the notes section of the document:

  1. Why was the expense not originally charged to the account/fund to which it is being transferred? Please explain fully with appropriate justification. (An explanation that merely states that the adjustment being made is "to correct an error" or "to transfer to correct project" or "expenditure inadvertently charged to incorrect account" is insufficient.)
  2. Is this transfer of expense within 120 days of original expense? If it is over 120 days, the transfer is unallowable unless it can be documented that there were unavoidable circumstances (e.g. late receipt of award). For all transfers over 120 days, contact Contracts & Grants Accounting (CGA) and provide a full explanation including a well-documented account of all events leading to the late adjustment. CGA approval is required even if transfers can be processed at the department (i.e. EDLR).
  3. Have you indicated a correct document number associated with the original charge in the reference document number field (pertains to non-payroll transactions only)? This information is required for a proper audit trail.
  4. What action is being taken to prevent the necessity for this type of transfer in the future?

Following are several examples of scenarios that would require an expenditure transfer to be initiated with sample responses to the above questions that would be considered sufficient in detail for an appropriate review of the transaction by the approver. Please note that these hypothetical scenarios and responses are provided for illustrative purposes only.

Scenario 1: Sponsored project ended March 31, 2011. Payroll expenses for SRA continued to be charged to expired project.
  • Sample Responses to Above Questions:
    1. Department was waiting for new funding for research project where this SRA will be employed. Department continued to charge SRA salary to expired account inappropriately because the new research project was not fully executed until May 1, 2011. Department did not utilize the appropriate mechanism to expend in advance of receipt of an award as outlined in Section 325 of the UCD Sponsored Research Manual.
    2. Transfer is within 120 days of original expense.
    3. No response necessary. Information related to original entry is basis of initiating payroll transfer through KFS Salary Expense Transfer (SET) document.
    4. Department will process an account advance request for all future pending awards when PI needs to begin research project prior to receipt of executed award. This will prevent the necessity for transferring charges in the future. See the policy for more information.
Scenario 2: Wrong billing ID provided to service unit
  • Sample Responses to Above Questions:
    1. Technician in lab cited wrong billing ID on order form. These items were budgeted for and benefit the project account that is being charged on the transfer.
    2. Transfer is within 120 days of original expense.
    3. Document number related to original expense cited in the appropriate field of transfer document.
    4. A list of billing IDs with the associated accounts has been provided to the appropriate sponsored project personnel to prevent this error from occurring in the future.
Scenario 3: Travel charged to wrong account
  • Sample Responses to Above Questions:
    1. Upon review of ledgers by department staff, it was discovered that travel had been charged to the wrong account. Traveler had originally provided incorrect account number for travel charges. Traveler has funding for travel on several sponsored project accounts and inadvertently confused the account number when preparing the travel expense voucher. This travel was budgeted for and benefits the project account that is being charged on the transfer.
    2. Transfer is within 120 days of original expense.
    3. Document number related to original expense cited in the appropriate field of transfer document.
    4. Traveler has been informed of importance of citing correct account number when providing documentation for travels expenditures.
Scenario 4: Supplies charged to wrong account
  • Sample Responses to Above Questions:
    1. PI has multiple research projects. This charge should have been initially split with another project.
    2. Transfer is within 120 days.
    3. Document number related to original expense cited in the appropriate field of transfer document.
    4. Before ordering supply items, the department staff will work closely with PI to determine the correct accounts to charge expense to when multiple sponsored research projects are involved.
Scenario 5: Overdraft on Extramural fund
  • Sample Responses to Above Questions:
    1. Expense benefits the sponsored project; however, exceeds the approved budget for this expense category.
    2. Transfer within 120 days.
    3. Document number related to original expense cited in the appropriate field of transfer document.
    4. Department staff will review/reconcile ledgers in a timely manner and adhere to budget allocations in the future. When an overdraft does occur, department will transfer the cost overruns as soon as the expense appears on the ledgers.

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