Research & Cost Accounting

Cost Transfer

These procedures are issued in accordance with Policy 302, Cost Transfers.


A cost transfer is a reallocation of cost, from one fund to another. Although occasionally necessary, federal regulations discourage and in certain instances disallow the movement of such expenditures. The purpose of this procedure is to ensure compliance with federal policies and guidelines related to transfers of expenses. This procedure is applied consistently to all Rice University sponsored projects.

In the case of a sponsored project, a cost transfer is a reassignment of expenses either between similar sponsored projects, or between a sponsored project and a non-sponsored project.  A cost transfer does not include:

  • Reclassification of costs (e.g., correcting an account code) within an award,
  • Transfer of costs within an award, (e.g., between a parent and sub-fund or between sub-funds),
  • Awards that change fund numbers within a project period (e.g., Welch and some federal flow through awards),
  • Changes in organization within the same award, or
  • An initial allocation of a charge from a clearing (default) fund.

These types of actions are not considered a cost transfer for the purposes of Policy 302.


Cost transfers must be sufficiently documented in accordance with the provisions of the Office of Management and Budget (“OMB”) as part of 2 CFR Part 200, Subpart E. These standards require that accounting records include cost accounting records which are supported by source documentation. This documentation will assist in determining the reasonableness, allocability and allowability of the cost in accordance with the terms and conditions of the award.


The Principal Investigator (PI) is responsible for the management of sponsored projects that are awarded to him/her. These include federal, state, and private grants and other sponsored agreements.

In addition to technical compliance, the responsibility for budgetary compliance rests with the PI. Each PI is responsible for ensuring that charges made to a particular research fund are allowed by the funding source and are directly related to the project or activity supported by that fund. The PI should carefully consider whether an expense is an allowable, allocable and reasonable cost on a given fund before the expense is incurred.  In addition, the PI is responsible for reviewing monthly expenditure reports and time allocation reports on a timely basis.

Cost transfers are sometimes necessary and unavoidable; however, they should not be used as a method for routine funds management. They may be used to correct an error or to allocate expenses between closely related projects if both projects benefit directly from the expense. Cost transfers should not be requested simply to avoid over expenditure in one research fund by transferring expenses to another research fund, nor should they be used as a method to spend money because a project is nearing its end. Unallowable or inappropriate charges that appear on a sponsored project fund must be moved to an appropriate fund promptly.

Frequent, tardy, or insufficiently justified transfers raise serious questions about the propriety of the transfers, the overall reliability of the University’s accounting system, the ability of the Principal Investigator (“PI”) to manage the account and the adequacy of internal controls.


To request a cost transfer for non-salary charges involving an R fund, an Expense and Revenue Correction form should be used. While a data upload is also an acceptable method, this procedure must be followed to ensure compliance with federal policies and guidelines related to transfers of expenses. 


In accordance with the Cost Transfers policy, cost transfers submitted later than 90 days from the end of the month in which the charge first appears on the fund or submitted later than 30 days after the end date of an award are not considered timely. Cost transfers not submitted in a timely manner must also include:

  • Approval of the department chair of each department (see Properly Approved, below).
  • Additional documentation if expenses are to be charged to another Rxxxxx fund (see Well-Documented, below)
  • An explanation of the delay in processing the cost transfer.
    • Include information on what steps are being taken to prevent future similar delays.

In addition to providing information on the original posting in Banner, including entry by Banner transaction amount and Banner document # (see form instructions), a cost transfer request on sponsored project funds must include:

  • A full explanation of how the error occurred.
    • Why the expense was originally charged to the fund from which it is now being transferred?
    • What is known now that wasn’t known at the time of the original charge?

For transfers other than simple corrections of account codes or movements within subfunds of the same project and that involve moving an expenditure to an Rxxxxx fund, also include:

  • How the expenditure directly benefits the fund receiving the charge.
  • A generic statement such as “to correct error” is insufficient and will not be accepted.

See the Cost Transfer Justification Samples for examples.

Properly Approved
  • The PI or designee must approve cost transfer requests before they are submitted. The PI or PI designee approval certifies the correctness of the proposed cost transfer.
  • Cost transfers that are not timely  also require the approval of the chair of each department affected by the cost transfer.
  • If the PI is also the chair, approval from the Dean is required.

To request a cost transfer for salary-related charges involving an R fund, the appropriate payroll form must be submitted. There are several methods for redistributing salary charges, depending on the type of employee or student. The most common methods are the payroll re-distribution form for faculty and staff paid semi-monthly and the graduate student payroll authorization form.  Please contact for assistance with the appropriate method to use for needed changes.  Additionally, labor charges are subject to Effort Reporting requirements.  The Research and Cost Accounting website provides additional information on the Effort Reporting process.

Research and Cost Accounting will contact the department if additional information is needed to approve the cost transfer request.  If the cost transfer cannot be approved, Research and Cost Accounting will notify the department via email of the reason for the action or return the original document to the department with the reason for the action.

The Controller's Office is located in the Cambridge Office Building, also known as COB, at the intersection of S.Main street and Cambridge street.

In this building you will find the the following Departments:

The Cashier's Office is a division of the Controllers Office, however, it is located in the Allen Center, directly behind the Cambridge Office building.

Our Location:

Cambridge Office Building
6100 Main Street MS 70
Houston, Texas 77005-1827