OFFICE OF THE ASSISTANT VICE CHANCELLOR
FINANCIAL SERVICES
May 19, 1993
KEY ADMINISTRATORS/KEY SUPPORT STAFF
SUBJECT: Policy Covering Disposition of Overdrafts on Terminated
Contract and Grant Awards
Sound fiscal practice prescribes the timely removal of overdrafted
expenditures from contract and grant funds. While this practice is
applicable at any time during the period of an award, it becomes essential
as of the closing date of an award. Until overdrafts are removed from such
funds, the required agency closing expenditure reports cannot be prepared
and submitted. To illustrate the magnitude of the problem, there is
currently a total of 346 accounts which comprise over $3.0 million in
overdrafts.
Delinquent reporting is currently jeopardizing the University's ability to
receive future awards. In addition, when such funds are in overdraft, the
campus loses investment income. Since the University does not have
centrally budgeted funds to pay interest or to cover overdrafts, the
Principal Investigator is responsible for transferring such amounts to
other available funding sources within the department. This policy has
been in effect for many years (see PPM 150-36).
The University finds itself seriously delinquent in delivering final
expenditure reports to the respective funding agencies due, in large part,
to the fact that unresolved overdraft balances prevent the requisite
closing of the financial records. Some reports are more than three years
past due. This situation cannot be allowed to continue.
Effective July 1, 1993, it will be the policy of this campus that any
overdrafts remaining on contract and grant funds sixty days after the
applicable termination date of the award shall be transferred to the
respective available unrestricted departmental funds.
This policy will be administered by the Extramural Funds Accounting
Division of Financial Services. Please refer to the attached guidelines
for the detailed steps supporting this process.
Please ensure that all affected personnel are advised of this policy
change. Any questions regarding this policy may be directed to Margaret
Espino at x43272.
Donald A. Larson
Attachment
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CONTRACT AND GRANT FUNDS
POLICY ON DISPOSITION OF OVERDRAFTS
IMPLEMENTATION GUIDELINES
1. The policy currently applies only to overdrafts existing at the
termination date of the award.
2. Approximately fifteen days after each month-end closing, the
Extramural Funds Accounting Division of Financial Services (EMF) will
issue a "Summary of Cost Overrun by Department" report listing all
contracts and grants in an overdraft status. This report will be sent to
the designated Management Services Officer (MSO), Department Chairperson
(Chair), and cognizant Vice Chancellor. Included with this report, the
Chair also will receive a letter from EMF requesting specific instructions
as to the disposition of the overdraft.
3. The MSO and/or Chair will be responsible for advising the appropriate
Principal Investigator (P.I.) of the overdraft status, and working with the
P.I. in developing a strategy for resolving the overdraft. The letter
annotated with the planned resolution should then be returned to EMF within
fifteen (15) days.
4. If, at the end of the first month following the termination date, the
overdraft still appears in the operating ledgers and no cost transfer has
been received by EMF, the overdraft will again be listed on the cost
overrun.
5. At the time an overdraft is listed for the second time, sixty (60)
days will have elapsed since the award terminated. If no action is taken
by the department within ten (10) days following the second overdraft
report notice, EMF will initiate a document transferring the overdraft to
a unrestricted departmental fund supplied by the Chair or MSO.
6. If no departmental fund is supplied by the Chair or MSO, EMF will use
any available unrestricted account assigned to that department. Should the
department have insufficient funds in unrestricted accounts, the overdraft
balance will be transferred to an appropriate account supplied by the
cognizant Vice Chancellor's office.
7. EMF will mail to the MSO, Chair, and Vice Chancellor a copy of the
financial journal transferring the overdraft within approximately five (5)
working days.
8. The timing described in these guidelines is necessary to enable the
final cost report to be issued within ninety (90) days from the termination
date, as required by agency regulations.
9. Model of timing described above:
Date Action
January 31 Award termination date.
February 15 Report issued showing overdraft existing at
termination date. (Step 2)
March 15 Second report issued showing overdraft after
termination date still in existence, if no
action has been taken by the Chair or MSO.
(Step 4)
March 25 If no action taken by Chair or MSO, EMF
initiates appropriate transfer to eliminate
overdraft. (Step 5)
March 31 EMF advises MSO, Chair, and Vice Chancellor
of accounts impacted by transfer of
overdraft.
April 30 Final cost report issued.