Cost Transfers 101 and Net Zero Costs. Summary
- A cost transfer is the process of moving a transaction (the financial record) from one funding source (e.g., a specific grant (PPM) or departmental account (COA) to another after the initial transaction has been recorded.
- When you initiate a cost transfer, you are creating an offset transaction in the original location (zeroing out the expense) and generating a corresponding, consistent transaction in the destination location, effectively relocating the expense’s financial record.
- Before transferring a cost check to see if there’s an equivalent opposite polarity cost (either negative or positive) that has the same Expenditure Type and Item Date. If such a cost exists, it might be a Net Zero transaction and thus not transferrable. See the ‘Identification of Net Zero Costs’ below on how to confirm for sure if it is or is not?
Maintaining Financial Compliance
Administrative staff engaged in project financial management occasionally need to adjust and transfer project costs. However, a specific transaction type—the Net Zero Cost—is systematically restricted from further transfers or manipulation.
This restriction is not a system error; it is a critical automated safeguard. The principle of the Net Zero Cost ensures that the Project Portfolio Management (PPM) subledger maintains absolute synchronization and balance with the General Ledger (GL). Identifying the Net Zero Item flag is essential for administrative efficiency, as attempting to adjust these items will result in immediate system rejection, confirming that the transaction’s accounting role has already been fulfilled as a cancellation record
The Three Part Transaction Model
A Net Zero Cost transaction is a specialized, negative accounting entry generated automatically by the system to execute the formal reversal of a prior expenditure item. Its function is cancellation; it does not represent an actual, allocable expense.
Cost corrections in PPM always utilize a three-part transaction model :
- Original Cost: The initial expense containing the incorrect allocation.
- Reversal Cost (The Net Zero Item): The negative entry that mathematically and functionally cancels the Original Cost.
- New Cost: The corrected charge applied to the appropriate project elements.
The Net Zero Item attribute is the field that explicitly identifies the Reversal Cost as True. This confirms that the transaction is the necessary offset, designed to create a zero balance for the pair.
Net Zero Costs cannot be transferred because they are defined as reversed expenditure items and are explicitly disallowed from further adjustment.
Protecting the Audit Trail
The Net Zero transaction’s sole purpose is cancellation. If a transfer were permitted on the Net Zero transaction, the original charge would become effectively uncanceled at its source. The transfer is rejected to maintain the integrity of the audit sequence, as the Net Zero entry is the immutable record linking the cancellation back to the original source charge. Disruption of this linkage results in the system issuing a mandatory rejection message stating that adjustments are not allowed on a reversed expenditure item.
Identification of Net Zero Costs
Right now, there’s only one place in iO where you can confirm the status of a transaction relative to it being part of a net zero pair.
Go to Grants Management/Awards
Click on the Page icon on the right of the page
Search for the award that contains the project that contains the cost. Click on the drop down next to the project that contains the cost. Select Manage Project Costs
If this is the first time that you’ve ever looked at this Project Costs view, you may need to ensure that the net zero column is selected.
When examining the row with the cost that you are considering transferring, you can see the net zero column that indicates if it is or isn’t a net zero transaction.
When you see an x, it is not a net zero transaction and is transferrable. If you see a tick mark, it is a net zero transaction and it is not transferrable.
