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45.07 - Cost Transfers on Sponsored Projects


  • Position: Office of Sponsored Programs Director
  • Email:

Last updated: February 13, 2024

A. Purpose. The purpose of this policy is to provide guidelines for the movement of sponsored project posted Banner expenses between indexes/funds.

B. Scope. This policy applies to all cost transfers and labor redistributions which involve one or more sponsored projects.

C. Cost transfer defined. A cost transfer is a Banner transaction that moves an expense either from one index/fund to another, or from one expense code to another, as a correcting entry to the original posting.

D. Policy. This policy establishes the proper procedures and internal controls required for cost transfers in general, as well as specifically for sponsored projects. A cost transfer signals to an auditor that a transaction requiring correction has occurred and that further investigation may be needed. In particular, when a cost transfer is processed onto a sponsored project budget near the project’s termination date, an auditor may interpret it to mean that the Principal Investigator (PI) is trying to simply expend the balance remaining in the project budget rather than charging only appropriate project-specific expenses.

While ideally all expenses are processed and posted to the correct project index/fund, the University recognizes that errors occur and cost transfers to correct those errors may be necessary. Cost transfers are to be used when an expense is incorrectly processed on one index/fund and the expense needs to be transferred to the correct index/fund. Cost transfers may also be used when correcting an expense code used for a particular item of cost to a more appropriate expense code. Cost transfers may not be used to transfer revenue from one account to another. (Note: The rule code IDG [See APM 75.30] should only be used either to record revenue for a service provided, such as lab testing, or for cost transfers that are internal to the University.)

E. Procedure. The following guidelines are provided to ensure cost transfers are proper and authorized. All types of cost transfers should be completed in Banner with adequate explanatory text.

E-1. Timely corrections. The likelihood of a cost transfer onto a sponsored project being approved improves when the error is corrected within a reasonable time period (i.e. within 90 days from when the charge first posted). Cost transfers at the end of the project period require strong justifications, and cost transfers onto a project in excess of 90 days after the project termination date are allowed only in extenuating circumstances and as approved by OSP.

E-2. Proper explanation required. PIs and Department Grant Administrators (DGAs) are responsible for fully justifying the cost transfer. The justification must address the following in detail: A) how the error occurred; B) why the transfer is required; and C) how the expenditure benefitted the project scope of work. Statements such as 'to correct error' or 'clerical error' are not sufficient to withstand an audit. Cross-referencing text (cost transfer document number, date, explanation, and name of person entering cost transfer) must be added to the original posting transaction document in order to be able to track the expense’s path and to reduce the chances of the same expense being moved more than once.

E-3. Required supporting documentation. All supporting documentation for cost transfers must be maintained as per the requirements of the project, but at a minimum for three years from project financial closeout. See APM 45.12.

E-4. Guidelines for non-payroll cost transfers. All cost transfers onto a sponsored project budget should include the following steps.

  1. Prior to initiating a transfer document, review financial records to ensure that the receiving budget is not overdrawn and that the account category receiving the transferred expense, and any associated F&A, has adequate funds to cover these costs. Account categories with insufficient funds will require a budget transfer, reviewable by OSP for allowability and determination of whether sponsor approval is required.
  2. Ensure that the expense being transferred is within the project period of the receiving sponsored project, as defined in the Banner form FRAGRNT.
  3. Ensure that any transferred expense is an allowable expense on the receiving budget. Refer all allowability questions to the Cost Accounting Unit of OSP.
  4. Prior to transferring an expense, review FOATEXT for the transaction to preclude the transfer of a previously transferred cost. See E-2, above.

E-5. Labor redistributions (payroll cost transfers). The Banner Labor Redistribution process is used to correct labor when it has been determined that labor has been incorrectly expensed on one index/fund and needs to be transferred to another index/fund. Prior to starting the process the following steps should be completed.

  1. Determine the employment dates involved (multiple pay cycles are allowed) and the amount of salary to be transferred. Verify that all of the dates fall within the project period.
  2. If the change is retroactive and ongoing, complete an EPAF for processing through the normal approval and Banner posting cycle. In the Remarks section of the EPAF, indicate that you have requested a cost transfer for $xx.xx (amount) from XX/XX/XX to XX/XX/XX (employment dates).
  3. If the labor redistribution is for a graduate student, ensure that any tuition remission is appropriately transferred in proportion to the change, if tuition remission is an allowable cost on the project.
  4. Complete the Banner Labor Redistribution process and include the following comments:
    • The grant code(s).
    • Justification for how the employee’s effort relates to the index/fund the costs are being transferred to.
    • How the error occurred.
    • Specific internal controls to be implemented to avoid future issues.
    • If request is over 90 days from the original payroll posting, include the extenuating circumstances causing the delay in processing. OSP will normally only allow the movement of effort off a sponsored project to a non-sponsored project that is over 90 days from the original payroll posting date.

E-6. Cost transfer limitation. A cost should not be transferred more than once, unless it was disallowed.

F. Contact information. Any questions regarding cost transfers should be addressed to the Office of Sponsored Programs at 208-885-6651 or

G. Related policies

  • APM 45.06 — Allowable and Unallowable Sponsored Project Expenditures
  • APM 45.12 — Sponsored Projects Record Retention
  • APM 75.30 — Interdepartmental Charges (IDs)

Version History

Updated Feb. 13, 2024

Campus Locations

Physical Address:
Bruce M. Pitman Center
875 Perimeter Drive MS 4264
Moscow, ID 83844-4264

Phone: 208-885-6111

Fax: 208-885-9119