Cost Transfer Policy for Sponsored Projects

It is the policy of the University of Wisconsin - Madison that costs should be charged to the appropriate sponsored project when first incurred. (For the policy regarding cost transfers on all non-sponsored projects, please see the Business Services Cost Transfer information located here.) There are circumstances in which it may be necessary to transfer expenditures to a sponsored project subsequent to the initial recording of the charge. Those transactions require monitoring for compliance with UW policy, Federal regulations, sponsor specific guidelines, and the cost principles that underlie fiscal activities on sponsored projects.

When the UW accepts Federal research funding, it must comply with the allowability and allocability requirements of the Federal Cost Principles and the Uniform Administrative Requirements. To comply with the allowability and allocability requirements, it is necessary to explain and justify transfers of charges onto federal and non-federal sponsored projects from other federal or non-federal projects. The cost principles prohibit the use of cost transfers for the purpose of "convenience," including a transfer largely for the purpose of using unexpended funds on an award that is ending. Timeliness and completeness of transfers and the accompanying justification for the transfers are important factors in supporting allowability, allocability and cost compliance.

In order to maintain consistency in the treatment of cost transfers, the UW's policy on cost transfers applies to all federal and non-federal sponsored projects. Under the UW's Cost Transfer Policy, all transfers must be submitted within 90 calendar days of the accounting date. When transfers are not adequately justified or are made for inappropriate reasons, the department is responsible for transferring the expenses to a non-sponsored departmental account.

Reason for Policy

Proper management of funds is essential to uphold the fiduciary responsibilities of the University. Federal agencies and other sponsors may regard the following activities as indicative of inadequate control systems:

  • Frequent cost transfers
  • Late cost transfers
  • Inadequately documented or explained transfers, especially those which involve sponsored projects with overruns or unexpended balances

Inappropriate transfers will result in expenditures being disallowed and/or subsequent reduction in funding by the sponsoring agency.

Definition of Cost Transfers

A cost transfer is an after-the-fact reallocation of costs, either salary or non-salary costs, to a sponsored project within a 90-calendar day period from the accounting date. Funding agency requirements concerning the management of awards made to institutions such as the University of Wisconsin - Madison limit the circumstances under which cost transfers are allowed. In contrast, a rebudgeting action involves the reallocation of budgeted funds and not a transfer of expenditures.

Here are some examples of typical circumstances in which cost transfers are allowed:

  • Correction of a clerical error
  • Reallocation of expenses where multiple projects benefited
  • Reallocation of shared resource costs
  • Transfer of pre-award costs from divisional or discretionary project funds to a sponsored project
  • Reallocation of a salary expense

A late cost transfer is an after-the-fact reallocation of costs, either salary or non-salary costs, to a sponsored project more than 90 calendar days from the accounting date.

Here are some examples of typical circumstances in which late cost transfers may not be allowed:

  • Reallocation of expenses because the grant has unexpended funds
  • Reallocation of expenses because the clerical error was not noticed within a 90-calendar day period

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