For an expense to be considered an allowable direct charge to a federal award, the cost must:
- Be reasonable and necessary — the type of action that a prudent person would take under similar circumstances
- Be required to satisfy the project scope
- Be allocable to the sponsored project
- If an expense benefits two or more projects in clear proportions, allocate it based on the proportions.
- If an expense benefits two or more projects but the proportions are not clear, use sound reasoning and good judgment to assign the proportions.
- Receive the same treatment that similar expenses would receive in similar circumstances
- Conform to limitations or exclusions set forth by federal or campus policy
- Be budgeted into the award or receive permission from the agency to rebudget to allow charging the cost
A transfer may not be made for reasons of convenience such as:
- To cover overdraft
- To avoid restrictions in the original sponsored agreement
- To dispose of leftover funds
Transfers must be timely: Federal agencies dictate varying timeframes by which expense tranfers must be made. As a general rule of thumb, transfer requests made 90 to 120 days beyond the date of the original expense will require further justification and may be denied.
For more details on allowable direct costs in federal contracts and grants, please see the following references:
Questions? Please see Payroll Expense Transfer Contacts.
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