Cost Transfer Policy


This policy applies to cost transfers on federally funded sponsored projects.


The purpose of this policy is to ensure compliance with federal policies and guidelines related to the transfer of expenses to federally funded sponsored projects. As a recipient of federal funding, Mason is responsible for establishing policies that ensure compliance with the requirements of Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (OMB Uniform Guidance) and the terms and conditions of federal sponsors.

OMB Uniform Guidance states, “Any cost allocable to a particular Federal award under the principles provided for in this Part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons.” In order to meet allowability and allocability requirements of OMB Uniform Guidance, timeliness and completeness of justification is required.

In addition, National Institutes of Health (NIH) Grants Policy Statement states, “Cost transfers to NIH grants by grantees…should be accomplished within 90 days… transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the grantee… An explanation merely stating that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient. Transfers of costs from one project… to the next solely to cover cost overruns are not allowable.

Grantees must maintain documentation of cost transfers, pursuant to 45 CFR 74.53 or 92.42, and must make it available for audit or other review. The grantee should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both.”

This policy addresses the reallocation of salary expenses and transfer of other direct costs.


Cost Transfer: A transfer of expenses (salary or non-salary) to a federally funded sponsored project for a charge previously recorded elsewhere.

Federally Funded Sponsored Project: A project where the primary source of funding is federal, including cases where the funding is passed through to Mason from a non-federal organization. Federal awards generally have a fund number (20XXXX) in the Banner Financial System.

Original Charge: The initial posting transaction date of an expense to the Banner financial system for non-salary charges. The pay period start date (effective date) for salary charges. All cost transfers need to be approved by the Office of Sponsored Programs (OSP) less than 120 days after the original charge.


OSP: Available to assist in interpretation of federal requirements and the Mason Cost Transfer Policy. OSP reviews all transfers to sponsored projects and will review and approve Cost Transfer Forms. OSP will retain copies of Cost Transfer Forms and associated backup documentation for audit purposes. OSP will work with Principal Investigators (PIs) and senior departmental officials to determine a non-sponsored source of funding for any disallowed cost transfers.

Principal Investigator (PI): Responsible for reviewing and monitoring sponsored projects on a regular basis to ensure expenditures are charged appropriately. If a transfer is required the PI or designee will process the necessary documentation in a timely manner.

Senior School/Departmental Officials: Will provide a review of cost transfers made 120 days or more after the original charge to ensure appropriateness.


The federal government recognizes there are instances when it is appropriate to transfer expenditures to a federally sponsored project if there is sufficient justification and the transfer is done in a timely manner. Appropriate reasons include:

  • Allocate costs that benefit more than one project;
  • Reallocate planned effort to reflect actual effort;
  • Correct erroneously charged expenses;
  • Transfer pre-award costs

The above are examples of appropriate reasons for a cost transfer less than 120 days after the original charge posting date, but should occur infrequently. There is an expectation that all PIs and responsible departmental staff charge the correct sponsored project initially. At no time should sponsored project funds be used as a holding account for charges that are known to belong elsewhere. When new project funds are established, necessary paperwork should be submitted to allocate the appropriate salary expenses to the award consistent with effort approved in the project budget.

The PI or designee with direct knowledge of the sponsored project must review the account activity on a regular basis to ensure errors are identified in a timely manner and the appropriate corrective actions are taken within the specified time frame. This review includes checking that all expenses processed are posted to the award as intended and the necessary corrective actions are taken to remove an erroneous charge posted to his/her sponsored project.


The policies herein are effective July 1, 2006. This policy shall be reviewed and revised, if necessary, annually to become effective at the beginning of the University’s fiscal year, unless otherwise noted.


Carol D. Kissal
Senior Vice President, Administration and Finance

Mark R. Ginsberg
Provost and Executive Vice President

Date approved: July 14, 2006
Revised: April 1, 2013
Revised: May 11, 2013
Revised: May 18, 2021

Page last updated: August 16, 2023