When are cost transfers permitted and what controls exist?

• A. Cost transfers are allowed to reallocate funds between projects.
• B. Cost transfers are prohibited once funds are obligated.
• C. Cost transfers are allowed to correct errors; require justification, timely processing, and prior approvals if co-mingled with ineligible costs.
• D. Cost transfers require only supervisor notification with no documentation.

Answer: (C)

Cost transfers are a mechanism to keep financial records accurate by correcting errors in how costs were charged. The key is that any transfer must be properly justified and processed in a timely manner so the accounting remains current and auditable. If a transfer would mix eligible and ineligible costs, or otherwise obscure proper compliance, it requires prior approvals before proceeding. This approach prevents using transfers as a loophole to reallocate funds freely or to mask ineligible charges, and it emphasizes the need for documentation and oversight rather than just informal notification.