Cost Transfers: How to Do Them Right
A cost transfer moves an expense onto or off of a sponsored award after it posted. They're sometimes necessary, but they're heavily scrutinized, and late or poorly documented transfers are a classic audit finding.
This guide covers when a transfer is defensible and what it needs.
When a transfer is allowable
- The cost benefits the award it's being moved to.
- It corrects a documented error or allocates a shared cost appropriately.
- It is not used to spend down a remaining balance or move an overdraft.
Do it promptly
- Process transfers as soon as the error is found — most policies expect within 90 days.
- Transfers near or after the award end date draw extra scrutiny.
- Don't let unresolved costs sit on the wrong account.
Document it
- Explain why the cost belongs on the receiving award.
- Explain why it posted to the original account and why the correction is timely.
- Keep the supporting records with the transfer.
Common pitfalls
- Waiting past the institution's window, often 90 days, which makes a transfer hard to justify.
- Writing a vague justification that does not explain why the original charge was wrong and the new account is correct.
- Using cost transfers to spend down a remaining balance, which auditors scrutinize closely.
A defensible cost transfer is timely, benefits the receiving award, and explains itself. Anything else invites a finding.
Frequently asked questions
What is a cost transfer?
Moving an expense already charged to one project onto another, usually to correct a genuine error.
How quickly must a cost transfer be made?
Most institutions require it within a set window, commonly 90 days of the original charge, with a written justification.
Why are cost transfers an audit target?
Frequent, late, or poorly documented transfers suggest charges are not managed in real time, so auditors review them closely.
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