Cost Transfer Guidelines

Applicable to:

    Interdepartmental Payroll Transfer (IPT) Justification Form

    Expense Transfers (IDT)

Background Information:

It is generally accepted by the federal government, sponsoring agencies, and auditors that if direct costs are “easily identified and assigned...with a high degree of accuracy,” as required in OMB Uniform Guidance, the initial charging of a cost to a project constitutes the proper allocation of that cost.

Cost Transfer Fundamentals:

It is critical that all sponsored projects be reviewed on a regular basis (monthly) to ensure that expenditures are accurate and appropriate. Diligent review of financial reports and timely communication between principal investigators and departmental administrators should prevent the necessity for transfers. When errors are discovered, however, they must be corrected as quickly as possible.

  • Cost transfers should be considered “the exception, rather than the rule,” and must be kept to a minimum and require substantial and reasonable justification.                       
  • All expenses that are transferred must meet the same federal tests for allowability –they must be:
    • reasonable,
    • allocable, and
    • consistently treated as a direct cost.

Cost Transfers which are not appropriate:

  • Transfers processed solely to move deficit spending from one sponsored project to another sponsored project.
  • Transfers that are processed solely to use up unexpended balance, but do not appear to be of direct benefit to the project, i.e. transfers of costs during the last months of a project.
  • Transfer of unidentified expense or lump-sum expenses to an award.
  • Transfers of expenses that were not incurred during the project period of performance (POP), unless specifically allowed by the sponsor.
  • Random or regular rotation of costs, absent any information on actual use. i.e., arbitrary charging of pooled costs such as photocopies or lab supplies.
  • It is never permissible to transfer Revenue, Cash, or Facilities & Administrative expense either from a sponsored project or to a sponsored project.

All cost transfers must include a complete and clear explanation, as well as all supporting documentation. 


  • A Cost Transfer Justification form must be completed for all IDT transfers.  
  • Coming Soon....A Interdepartmental Payroll Transfer (IPT) Justification form.    


According to federal guidelines, “an explanation which merely states that the transfer was made ‘to correct error’ or ‘to transfer to correct project’ is not sufficient.”

Pertinent Regulations:

Office of Management and Budget (OMB) Uniform Guidance, Section C.4.b

“Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.”

NIH Grants Policy Statement

“Cost transfers to NIH grants by grantees should be accomplished within 90 days....Transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the grantee.... An explanation merely stating that the transfer was made ‘to correct error’ or ‘to transfer to correct project’ is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42 [record retention requirements] and must make it available for audit or other review... Frequent errors in recording costs may indicate the need for accounting system improvements and/or enhanced internal controls... NIH also may require a grantee to take corrective action by imposing additional terms and conditions on an award(s).”