An expense transfer is a reassignment (transfer) of charges within or between cost centers, internal orders, or WBS elements. When expense transfers involve sponsored projects, it is critical that the transfer meets the rules for allowability, allocability, reasonableness, and consistency.
A journal entry (JE) is the SAP document used to process an expense transfer. Although expenses should always be charged to the correct WBS when they are incurred, expense transfers are sometimes necessary. This includes both payroll and non-payroll expenses.
When Are Expense Transfers Allowed?
Expense transfers involving sponsored projects are only allowed in special circumstances, including, but not limited to:
- Error correction
- Transfers between WBSs of the same sponsored project (e.g., child to child, parent to child, child to parent),
- Expenses benefiting more than one sponsored project
- Transfer of retroactive expenses (including pre-award costs) on a project necessitated by a delay in finalizing contract negotiation
Any time you initiate a transfer, you invite the assumption that the initial transaction was not handled properly. If expenses are being transferred to a sponsored project, there will be considerable scrutiny of the reasons for the transfer and of the justification for moving those charges.
If a project has an overrun, there is a presumption that any proposed expense transfer is to alleviate the overrun, and it would not be allowed to another sponsored project — the barrier against this is very high. If you encounter this situation, please contact your OSP grants accounting for guidance.
Criteria for ExpenseTransfers
Expense transfers must be:
- In conformance with Institute and sponsor policies — allowable, allocable, reasonable, and consistent.
- Timely
- Expense transfers should be prepared and submitted as soon as the need for a transfer is identified, but no later than 90 days after the posting is made and/or within 30 days of the project end date, whichever comes first
- Cost transfers exceeding this time frame will require additional documentation as to why the transfer request was not made on a timely basis
- Fully Documented
Expense transfers must contain a justification that clearly shows:
- A benefit to the receiving project
- Allowability and allocability to the new sponsored project
- Reason for transfer
- Systemic causes are corrected so they will not recur
- The reason for any delay in the timely processing of the transfer is if the transfer date exceeds the definition of timely, above.
- It was reviewed by a knowledgeable person such as the PI
A good justification will allow anyone reviewing the cost transfer to understand how the expense benefits the receiving sponsored project.
It should answer: who, what, where, when, and why? It should be easily understood by anyone reviewing the journal entry (think: “If I leave, will an auditor be able to understand this two years from now?”). It may include documentation to support the justification. Some examples of documentation are:
- Allocation methodology
- An invoice or packing slip
- Notes on an expenditure statement, “per PI …”
Journal Entry Procedure
Expense transfers are requested by completing a JE Form (non-payroll) or a Payroll JE Form (payroll). The following information will be needed for the form:
NON-Payroll- Date Prepared
- Fiscal Year
- SAP reference and document header text
- G/L Account, WBS/CC, and amount to be moved and new designation(s)
- Text - explaining the charge (can use what is already in SAP)
- Preparer name and phone number
- Explanation/Justification of expense transfer
- Faculty/staff personnel information
- Pay periods and type of pay (monthly or bi-weekly) covered by the transfer
- Position number
- G/L Account, WBS/CC, and amount to be moved and new designation(s)
- SAP documentation/printouts of the payroll expense
- Preparer name and phone number
- Explanation/Justification of expense transfer
Remember to be thorough in your explanation. See Examples of Journal Entries.
Send the completed form and any other documentation to your assigned grants accountant. They will reach out if any additional information is needed to complete the request.
If you are unsure how to complete the form, contact your assigned grants accountant or grantsaccounting@unomaha.edu.