ECC Implementation Update and Reminder on Timely Salary Cost Transfers

Dear Campus Partners,

Business and Financial Services is writing to share an update on the implementation of the campus’s new effort reporting system, Employee Costing Certification (ECC), and to provide guidance on timely review and correction of payroll charges, including salary cost transfers on sponsored projects.

ECC Implementation – Status and Timeline

UC Merced formally began campus planning and engagement for ECC with the project kickoff in December 2025, focusing on certification models, source ledger corrections, and institutional controls around payroll costing. Since that time, ECC readiness and downstream impacts to payroll, compliance, and audit posture have continued to be discussed through governance and steering forums.

As ECC implementation progresses, the importance of timely and accurate payroll review at the department level becomes even more critical. ECC does not replace departmental responsibility for monitoring payroll transactions; rather, it reinforces the expectation that payroll charges are reviewed, corrected, and validated promptly at the source.

Timely Salary Cost Transfers – Required Compliance

Federal awards are subject to Uniform Guidance (2 CFR Part 200), which requires that costs charged to sponsored projects be allowable, allocable, reasonable, and supported by timely review and accurate documentation. Late or retroactive payroll corrections increase audit risk and undermine the integrity of effort and cost certification.

Consistent with these federal requirements, the University of California Contracts & Grants Manual establishes firm timelines for payroll cost transfers:

Payroll transfer requests submitted more than 120 days after the original transaction date are unallowable per the Contracts & Grants Manual, Chapter 7‑430.

Effective immediately and without frequent exception:

• Payroll transactions that are greater than 120 days old (from the accounting date) are ineligible for cost transfer.

• Requests submitted beyond this threshold cannot be approved, regardless of funding availability or project status, unless explicitly approved by sponsor directive or approval from the Controller’s Unit. Approval can be obtained through the ServiceNow Ticket for General Accounting: Accounting Guidance.

This standard is further reinforced by UC Merced Cost Transfer Policy for Sponsored Projects, which emphasizes early detection, timely correction, and clear documentation of payroll errors, with heightened scrutiny applied as transactions age.

Departmental Expectations

To ensure compliance and readiness for our campus’s ECC system transition, departments are expected to:

• Review payroll charges monthly as part of routine reconciliation as outlined in Roles and Responsibilities Matrix.

• Initiate corrections as soon as an error is identified.

• Avoid reliance on late salary cost transfers as a routine management tool.

• Ensure that principal investigators and research administrators understand that delays may result in costs being permanently disallowed and moved to departmental funding sources.

Why This Matters

ECC, federal auditors, and systemwide oversight all rely on the same principle: salary costs must be right the first time or corrected quickly. Untimely payroll adjustments are a recurring audit finding across higher education and represent a material compliance risk that the campus must actively manage.

We appreciate your partnership in strengthening our collective stewardship of sponsored funds and ensuring UC Merced remains compliant, audit-ready, and well positioned as ECC is implemented.

Thank you for your continued collaboration.

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