Justification/Documentation of Cost Transfers (Reissued as
October 10, 1997
(Note: This Important Notice is being sent to Account Managers,
Chairpersons, Deans and Chancellors. Please forward to others who have a need
This Important Notice was previously issued in 1977 (77-4) and 1989 (89-12). Some of the details involved with this notice have changed but the basic principle remains the same. The Department of Health and Human Services which has audit cognizance of all federal programs at Indiana University has always placed a high emphasis on the timeliness and justification of cost transfers. In addition, auditors from the Indiana State Board of Accounts, other state agencies, private CPA and industrial firms share the same concern.
In order to be consistent on the processing of cost transfers, the following procedures must be adhered to on any transfer into or between contract and grant accounts.
- Overdrafts on contract and grant accounts should not be covered from other contract and grant accounts unless specifically allowed by agency guidelines.
- The cost transfer document should provide a full explanation of why the transfer is being made. An explanation of "to correct error" or "to transfer to correct project" will not be sufficient. The explanation should include justification that the person was actually working on the project in the case of a Salary Transfer document, or that materials were consumed on the project in the case of a General Error Correction or Distribution of Income/Expense.
- All Cost transfers with the exception of salary transfers generated from effort reports should be made within 90 days of the original charge. Any transfer after the 90 day period should include and explanation of why the transfer was tardy in addition to the justification outlined above. Transfers exceeding the 90 day limit will receive additional scrutiny concerning the propriety of the transfer.
- All non-salary related cost transfers must be completed in the university fiscal year to which they pertain. Therefore, these transfers must be posted prior to the first close of the year end process. Any transfers crossing fiscal years will require additional justification.
The initiation and justification of transfers is the responsibility of the account manager and any disallowance resulting from improper transfers shall become the responsibility of the project director and/or their department or school.