Overview

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This article details the beast practices around Cost Transfers. Cost transfers may be used to correct errors, record a change in how items were used, distribute costs charged to the Department but allocated to specific Projects, and also clear a deficit on an Award by moving charges from the Award to a discretionary source. It is important to note that Cost Transfer functionality in Oracle may not be used for any other purposes which includes: spending down an available balance, clearing a deficit by moving charges from the Award in deficit to another Award, and also to change Expenditure Type. 

Essential Information

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• To change an Expenditure Type, include justification with the request, submit a ticket using the Subledger Transaction Correction Form.
• Understand the Fund Sources of the To and From Cost Transfer. Use the Project COA Lookup report if needed.
• All Cost Transfers are subject to audit by a 3rd party, therefore attach:
  
  • Documentation that clearly justifies what occurred to potential auditor, who has no knowledge of the transaction.
  • Documentation or include in the justification the name and employee ID (EID) of whom the Expense belongs to.
• Sponsored Research Funds will always require a robust detailed explanation by addressing questions required by Cost Transfer Initiator.
• Criteria for High Risk Cost Transfers:
  
  • Note that PPM will only allow 1000 characters.
  • Cost Transfers to federal funds and Federal Flow Through (FFT) Projects/Awards must be recorded within 90 days of the close of the month in which the original Expense posts to the Ledger or 90 days after the Project end date.
    
    • If because of unavoidable circumstances an adjustment has to be made beyond the 90-day period, a full explanation, must be provided, including a well-documented account of all the events leading to the tardy adjustment.
    • Include Dates, Document Numbers, etc to describe what caused the error.
    • If transferring a fractional amount, the transfer request must contain an explanation supporting a reasonable and equitable method of allocation.
• High Risk transfers require more detailed and robust documentation than low-risk transfers, the following are not sufficient explanations:
  
  • To correct an error.
  • To transfer to correct Project.
  • Expenditure inadvertently charged to incorrect Account/Fund.
• Cost Transfers with insufficient documentation may be disallowed by auditors months or years after the close of an Award.
  
  • In these cases, PI’s and Departments will be responsible for covering the disallowed costs.

Next Steps 

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Initiators Completing Cost Transfer Justifications

1. When completing the Cost Transfer in Oracle, please reference KB0033457: How to Initiate a Full or Partial Cost Transfer in Oracle PPM.
2. At the end of the Cost Transfer process, after clicking Submit, enter the following information in the Submit Adjustment for Approval dialog box: 
3. Answer the following questions, considering a 1000 character limit:

a. Why is the Cost Transfer being done?
b. What is the benefit to the Project or other Chart Segment, the Cost Transfer will be sent to?
c. Why is the Cost Transfer untimely, Expense is past 90 days?
d. What action is being taken to avoid the necessity for this type of Cost Transfer in the future?

4. Before answering questions for High Risk Justifications, coordinate with PI to obtain more details on how the item being transferred directly benefits the Contract or Grant that you are moving to:

The goal of the explanation is to have a stand alone justification for the auditors to avoid additional questions of PI or department. For example:

1. If moving a lab Expense such as a chemical, ask the PI how that chemical is used in support of the research.
2.  Attach any documentation or include in the justification the name and employee ID (EID) of whom the Expense belongs to.
3. If it’s High Risk you must address these questions, for reference: Project Transaction Codes - IFIS E Codes High Risk Justifications.
   • Are you moving to a federal fund?
   • Older than 90 days?

Approvers Reviewing Cost Transfer Justifications

1. Review Cost Transfer Guidelines and Resources, especially the ramifications of a disallowance.
2. Review the Initiators’ requirements.
3. If you need additional guidance, work with SPF.
4. The PI and Department will be responsible for covering any disallowances, see Audit Considerations.

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Audit Considerations

      Audit Disallowance Examples 

1. If the Cost Transfer is approved, the following examples won’t pass audit:

1. 1. Laptops that were purchased in the final 90 days of an expiring Award.
   2. Equipment that was transferred in the final 90 days of an expiring Award.
   3. Supplies that were not fully consumed prior to the end date of an expiring Award.
   4. Moving Expenses from research Funds to participant support, consult with OCGA for a re-budget if needed.

      Consequences of Audit Disallowances

1. Extrapolation of the disallowance to the campus:
   
   • For example, if the auditors find a $100 charge that isn't allowed, they will multiply that value against all the funding at UCSD and come up with a figure for UCSD to pay.
2. Disallowances will require the PI or department to cover with Discretionary Funding.
3. PI and Department may not have the Funds to cover the disallowance and will need to request Funds from their VC.
4. Agencies could withhold future Sponsored Research Funding if they believe there is non-compliance.

Supplemental Guides 

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• UCOP Direct Costing Procedures applicable to Expenditure Adjustments
• Cost Transfer Overview
• Project Transaction Controls - IFIS E Codes
• KB0033191: Cost Transfer Guide