Account Management Guidelines for SPS Funds (4XXXXXXX)
Updated 10/01/08
Microsoft Word version
Summary
In order to achieve maximum
utilization of Purdue resources, the Account Management Guidelines are
used as a working document to provide more accurate and timely financial
information to appropriate individuals.
Account Management is
accomplished through account establishment; account maintenance,
transaction and document management; cash management; and closeout
management. These procedures highlight the following major issues:
1. OVERDRAFTS
·
The available budget balance should not be less than $0.
·
Business Office staff shall review the overdraft report
monthly and take appropriate action to resolve the overdraft
within the month. For accounts without approved award documentation,
the Business Office must request a Notice to Proceed prior to incurring
expenses for a project.
·
SPS staff should review overdrafts monthly and notify the
Business Office or take appropriate action such as requesting a
Notice to Proceed when there is continuation of funding.
2. EXPIRED PROJECTS/CLOSING
ACCOUNTS:
·
For SPS accounts, the department should have projects
ready in the accounting system for closing by 60 days after
expiration unless the sponsor requires earlier submission. All fiscal,
technical reports and final billings will be submitted in accordance
with sponsor regulations.
3. CASH DEFICITS:
·
Since we are now drawing letter of credit funds on a
reimbursement basis, letter of credit draws should be completed on a
timely basis, which is weekly for most letter of credit projects, to
protect the cash position.
·
For non-federal agreements, a payment schedule will be
negotiated to provide an initial or advance payment, if possible.
·
Collections will be aggressively pursued utilizing the
cash management process identified in the guidelines.
Account Establishment
Is a new account required
or can funding be added to an existing account? (Consult
Sponsored Program Services (SPS) if unsure)
The following issues should
be considered when making this determination:
·
Source of Funding - Federal, State of Indiana, Industrial,
etc.
·
Size of award (dollar amount)/ length (time involved)
·
Sponsor reporting/billing requirements
·
Use of existing account - contract support, voluntary
support
When establishing a new
account the following issues need to be considered:
·
Proper classification:
o
Contract support or voluntary support, who administers the
funds, refer to
Executive Memorandum C-25.
·
Other issues to clarify when establishing a new account
include
o
Correct mission: research, instruction or other sponsored
program
o
F & A: correct rate; on or off campus
·
Timely establishment and notification
·
Award Documentation - award letter/agreement; confirmation
for Notice to Proceed (NTP); regulatory compliance approvals granted, if
applicable; and proposal for SPS accounts (Proposal includes signed
proposal submission form (PSF), statement of work, budget and budget
justification including breakout for internal orders (IO)/sponsored
programs (SP), if applicable, and email addresses of the PI and Business
Office)
Establishment of SPS
accounts
·
Receipt of fully executed approved documentation from
agency: SPS should notify the PI and Business Office immediately
informing them if information is needed to establish the account. If
no additional information is needed or once the additional information
is received, an account will be set up within two days. If the
requested additional information is not provided within five days, SPS
should proceed with the establishment of the Grant and place the funds
in unallocated available until the information is provided by the
business office.
SPS staff should use the
SPS New Grant Checklist to assure issues related to functional
area; reporting; proper F&A rate, base and cost share of F&A;
subcontracting plan; credit split; and billing information are accurate.
It is critical that the account be established according to the
sponsor agreement at award time in order to comply with the terms and
conditions of the award.
·
Without approved documentation from agency: For SPS
accounts, the Business Office must request a
Notice to Proceed prior to incurring expenses for a
project. Upon receipt of completed Form 27 and/or verification from the
sponsor’s finance office for a University backed NTP, SPS should
establish the account within two days and notify by email the PI and
Business Office with the account information. NOTE:
Regulatory compliance approvals must be complete for NTP regardless of
backing.
·
Voluntary support – account established by either
SPS or central master data team, depending on the administration of the
account. Complete the
Form 44, obtain proper signatures and forward the Form 44
and check to the appropriate office.
·
Cost Share – If single account cost share is
applicable, SPS should establish an IO/SP with the appropriate internal
fund. For questions on cost share processes, consult the
Cost Share Guidelines.
Web and FTP site addresses
·
Request for
Notice to Proceed
·
Sponsor Guidelines
·
SPS New Grant Checklist
Account Maintenance,
Transaction, and Document Management
Every effort should be
made to charge the appropriate account in order to minimize the
processing of correcting documents.
A. Department Account
Set-Up
·
Confirm Coeus budget agrees with sponsor award (include
cost sharing, if applicable). This should also be done with each change
in budget (example, addition of year 2 funding or supplemental funding).
·
We suggest that Business Offices use the
Departmental New Account Set-Up Checklist when setting up a
new IO/SP.
·
SPS staff are expected to set up the account according to
the award documentation and information provided by the Business Office.
·
Special attention should be given by SPS and Business
Office staff when transitioning from a project on NTP to award status to
assure budget is accurate.
Business Office staff should
confirm the account has been established according to the award
documentation and the multidisciplinary credit split is accurate.
B. Department Transaction
and Document Management
·
Business Office staff should confirm charges are being
posted appropriately at various stages of the project. The following are
examples of items to review:
o
F&A costs are being charged at correct percent and base
o
Grad fee remits are being charged if appropriate
o
Effort expended is consistent with proposed amount and if
the variation exceeds sponsor guidelines, appropriate steps are taken to
assure there is not a change in scope of work or if sponsor approval is
needed
o
Sponsor approvals are obtained if budget line item
variations are exceeded
o
Cost sharing is being charged appropriately, if applicable
o
Subcontract expenses are being posted, if applicable.
Note: special sponsor requirements may necessitate
frequent monitoring of expenditures.
Use Management Reports
Summary for Account Transaction and Document Management in the
Tools for SPS funds
to assist in the review process.
C. Procurement and
Account Management
Purchasing requisitions,
purchasing card procurements and direct invoice vouchers should be
reviewed for correct account numbers, correct general ledger (G/L)
account number, funds available, allowability, allocability of the
charge and within project period, before approval.
Review should be completed
by the person with the appropriate signature authorization.
If a commitment is generated
in SAP, it is reviewed against the original requisition to ensure
correct processing. Commitments should be reviewed and issues
investigated within 30-45 days from the date an order has been
placed. Use the Open Purchase Order Summary t-code, ZFIR_SRM_OPEN_PO_SUM
to
verify open commitments.
If issues such as the requester has not received the
item/product, the product has been received but an invoice has not been
submitted to Accounts Payable, or if an invoice has been paid but the
commitment has not been relieved, refer to “GR/IR and Blocked Invoice
Process” (link under construction). For Procurement related
questions please visit the
SRM Instructions Manual or contact the Purchasing
Services helpdesk by phone 4-7279 or email pshelpdesk@purdue.edu.
D.
Review for Allowability of Costs
A thorough review of all
charges should occur to assure unallowable costs are not charged to
IO/SP’s. This review should include the following:
·
Pre-award costs are charged in accordance with
sponsor guidelines
·
Post-award costs are not allowable
Allowability of costs should
also be reviewed according to the following guidelines:
·
Purdue CAS guidelines
·
Specific Sponsor guidelines
E.
Maintain Allocability Supporting Documentation
The department's procurement
process should include documented academic approval for the purchase.
This documentation can be on a departmental request form, Form 12 or
whatever format best suits the department. This documentation serves as
the proof of allocability and should be retained from three years past
the close of the project.
F.
Verify Appropriate Signature Approval
If signature approval by the
PI to his or her research group is delegated, an appropriate
authorization form for each project account should be
completed and maintained with the project account. The form must be
completed by the P.I. and should verify who is authorized to purchase on
the account.
The authorization form
should include: P.I. name, project account title, fund, IO/SP, date of
form completion, list of individuals authorized, any restriction on what
an individual can purchase (dollar limit, capital equipment), any other
restrictions on the IO/SP.
Each purchase request should
be reviewed for the appropriate authorizing signature. (The signature
could be on the department request form or the Form 12 itself, depending
upon the department system.) If the requestor doesn’t have first hand
knowledge, they should verify that appropriate allocability
documentation (email, etc.) is included as back-up.
G. Maintain Appropriate
Balances
It is the
responsibility of all areas to ensure overdrafts are managed
appropriately.
The total cost available
balance for Sponsored Program IO/SP’s should not be less than $0. If
the balance should be less than $0, then the following actions will
occur:
·
SPS staff should review overdrafts monthly and notify the
Business Office or take appropriate action such as requesting a
Notice to Proceed when
there is continuation of funding.
·
According to the 5/1/07
overdraft lock management expectations the Business
Office will run the overdraft report at least monthly. The Business
Manager will review the report monthly and make arrangements to have the
overdraft cleared within the month.
The following actions are to
be taken on overdrafted accounts (whether the account is locked or not):
·
Move charges to an appropriate account. Moving a charge
from an overdrafted account to another Sponsored Program account
requires significant explanation when it is appropriate. Expectations
for satisfactory explanations on correcting documents can be found in
the
Correcting Document Guide
·
Change demurrage, MERS numbers, etc. to prevent further
overdrafting of the account.
·
For accounts with multiple IO/SP’s, if a budget
reallocation is appropriate, it should be prepared immediately. If
unsure how to proceed with the request, consult the SPS Account
Manager/Project Administrator.
There are several reports
and queries that can be used to monitor and assist in the maintenance of
proper account expenditures and balances. These reports and queries can
be referenced in the
Tools for SPS funds.
H. Records Retention
All business offices are
expected to maintain their records in accordance with the University's
record retention policy. As a general rule, documentation over and
above the official policy should not be maintained. For additional
information consult the
Records Retention Guide.
I. Follow Established
University and College/School Policies
All funds need to comply
with University policies as stated in the Sponsored Programs Procedures
Manual (manual under construction).
J. Department Activities
- Account Expiration Procedures
In order to meet the 60 day
(State of Indiana and Subcontracts) and 90 day (Federal projects)
requirement for submission of final financial report and/or invoice, the
timely closing of expiring project accounts must be a Business Services
priority. Activities which will help staff meet this expectation can be
referenced in the
Tools for SPS funds
K. Department Payroll
Default (Fund: 91010000)
The following tools
provide assistance in account management:
·
AIMS (Account Information Management System)
·
CAS (Cost Accounting Standards)
·
P-card manual
Prior Approval:
·
Definition of
Prior Approval
·
Sponsor Guidelines
·
Prior Approval Templates
Cash Management
Cash for Purdue University
will be managed in a method, which maximizes the University’s cash
position and at the same time meets federal and/or other regulations.
Different aspects of program management contribute to the effective
management of cash. These include daily cash management, overdraft
management, cash deficit monitoring, grant/contract negotiation, billing
and accounts receivable management, and effective communications among
University staff.
Sponsored Program
Accounts:
A. Cash Handling
All payments received via
check, cash, lockbox or electronic transfer must be handled in
accordance with the
University Cash handling manual. The University Cash
handling plan will be reviewed and updated annually. Required
separation of duties and internal controls must be established.
B. Cash Balance Review
Since we are now drawing
letter of credit funds on a reimbursement basis, letter of credit draws
should be completed on a timely basis, which is weekly for most letter
of credit projects, to protect the cash position.
C. Cash Deficits
Cash deficits should be
minimized. Identify and follow up on any projects which carry cash
deficits. Cash deficits of over $100,000 must be reviewed and brought
to the attention of the Assistant Director Post Award for Sponsored
Program Administration (SPA). Other cash deficits should be followed up
beginning with the largest deficits.
D. Academic Staff
Academic staff will fulfill
the project reporting requirements. In situations where this does not
occur and impacts funding, appropriate administrative action is
necessary to assure that reporting requirements are met.
E. Management Reports –
Cash Deficits
Cash deficit reports will be
generated monthly for management review. The responsible manager for
each area will review the report, and projects which do not meet the
criteria in Section C above, will be brought to their supervisor’s
attention. Any other situations, which are problems, will also be
brought to the attention of their supervisor. Deficits in excess of
$100,000 that will not be resolved within the next 30 days will be
brought to the attention of the Assistant Director Post-Award for SPA.
F. Management Reports –
Accounts Receivable
Aging reports will provide
necessary information regarding delinquent accounts. These reports are
management tools that will allow for analysis and review of
delinquencies. When an account becomes 120 days delinquent, it should
be reported to the Assistant Director Post-Award for SPA, with the
account history and recommendation to review and act on the approved
recommendation.
G. Grant/Contract
Negotiation
·
For non-federal agreements, a payment schedule will be
negotiated to provide an initial or advance payment, if
possible. Agreements will be reviewed to determine if straight-line
payments are appropriate or if the payment schedule should be adjusted
to reflect projected spending patterns including large start-up costs.
Billing schedules with specific due dates will be established as a part
of the payment provisions. All payments should be negotiated and made
in U.S. dollars.
·
Billing requirements should be kept as simple as
possible. It must be emphasized that accounts are audited by State and
Federal auditors on a regular basis and that records are on file for any
other audits. Supporting documentation is on file at the University and
should not be required to be submitted with each billing.
H. Billings
The billing/invoice process
will begin when a project is set up and the payment terms and schedules
are reviewed. Billing information is then entered into the OnePurdue
system. All awards not funded via letter of credit or paid in full must
have a billing set up in the OnePurdue system. The entry of billing data
for an award set up in the OnePurdue system automatically generates
accounts receivable entries in the University accounting system.
Billings are set up in
OnePurdue when the Grant is established. Account Management staff are
responsible for generating billings on a monthly basis by the fifteenth
working day of the month. Due dates for billings will show on the
invoice as “due upon receipt”. All advance payment bills are generated
and mailed the month before the due date
I. Collection
All payments are expected as
per the initial contractual agreement. Delinquencies will be pursued
and collected consistently; following good collection practices,
utilizing various University resources when appropriate. At 150 days
delinquent, if SPS determines it is appropriate, the University
Collections Office (UCO) may become involved in the effort; however, UCO
will become involved earlier upon request.
·
Accounts over 60 days past due:
The Account Management staff will follow-up with the sponsor(s)
regarding the status of the outstanding payment(s) that are over 60 days
past due. If it is determined that work on the project has been delayed
or other actions are required by the University, the Account Manager
will be responsible for coordinating resolution of the issues between
the Sponsor, Sponsored Program Services, the Business Manager, and the
Principal Investigator. The Account Manager will handle cash flow
problems by the sponsor. She/he will develop and recommend a payment
plan for the outstanding receivable and review it with the Assistant
Director Post-Award of SPA for his/her approval.
·
Accounts over 90 days past due:
The Account Management staff will identify outstanding receivables over
90 days past due. The Account Manager will follow-up with the sponsors
on outstanding receivables.
·
Accounts over 120 days past due:
A summary report of the outstanding receivables over 120
days past due identifying accounts that require Purdue actions and those
with cash/billing issues will be sent to the Assistant Director
Post-Award of SPA. She/he will determine if the Business Managers and
the Principal Investigators as well as the University Contracting Group
should be notified of the sponsors with cash/billing issues. If so, the
appropriate Account Manager informs the Business Manager and the
Principal Investigator as well as the University Contract Group of the
sponsor’s delinquent payments.
Based on the information known about the outstanding
receivables it may be decided that the Principal Investigator contact
his/her Program Manager at the sponsor to determine why payment has not
been made. Likewise if the University Contracting Group is reviewing new
agreements with sponsors who have receivables over 120 days past due
they may request information on why payment has not been made.
·
Accounts over 180 days past due:
A summary report of the outstanding receivables over 180 days past due
identifying accounts that require Purdue actions and those with
cash/billing issues will be sent to the Assistant Director Post-Award of
SPA. The Assistant Director Post-Award of SPA and the Cash Manager will
make recommendations and forward to the Associate Director of SPA. The
recommendation may include locking the account or termination of the
project due to nonpayment.
It will also be determined
if referral to UCO is appropriate for those delinquencies that are not a
result of actions required by the University. If referral is
appropriate, copies of the file and correspondence will be sent to UCO.
Upon review of the file and documentation, UCO will either attempt
telephone contact, send out an initial collection letter, or send out a
final demand letter to the sponsor. Within 30-45 days of receiving the
file, UCO will report back to SPS to determine if collection agency
referral or legal action is appropriate. UCO will coordinate the
collection agency referral or legal action as agreed upon by UCO and SPS.
UCO will provide periodic status reports to the appropriate SPS staff.
·
Write-off:
In accordance with the University’s Accounts Receivable Write-off Policy
dated October 18, 1999, all sponsored program grants that have been
expired for two years with delinquent account receivables will be
identified by the Cash Manager. A list of these grants will be provided
to the Associate Director of SPA for review with the Comptroller for
write-off. This review pertains to both governmental and industrial
sponsored accounts.
Grants that have been
expired for two years as of July 1st of each year will be identified and
reported to UCO in early July. The list will be reviewed and approved by
the Comptroller prior to July 31st and communicated to UCO for inclusion
in the annual write-off report. Accounting transactions to close the
identified grants will be posted prior to October 31st. Collection
activity may continue, even though the account is generally deemed
uncollectible and written off the University books.
Close Out Management
It is expected that Business
Services shall complete the following activities:
·
Departments should have grants ready in the accounting
system for SPS closing entries by 60 days after expiration unless
sponsor requires final fiscal reports to be submitted earlier (charges
reviewed, overdrafts cleared, post termination charges removed).
·
All fiscal reports and final billings will be submitted in
accordance with sponsor regulations.
·
Accounts will be zeroed in the accounting records within 4
months of project expiration except if awaiting income.
·
Follow the management expectations set for OnePurdue
reporting requirements.
Sponsored program grants
must be closed in accordance with sponsor regulations. Sixty days after
account expiration the account should be complete and SPS will
report/invoice based on this information. The SPS staff will contact
department business office to confirm that all expenditures have been
recorded.
There are many tools which
Business Services can utilize to ensure completion of the above
expectations:
Closing Check List for Department Business Office
Closing Check List for SPS
We recommend grants that
cannot be cleared/closed within 90 days after expiration and do not have
an approved plan be handled in the following manner (all dollar amounts
below refer to total costs). The following procedures apply only
to external funds.
1. Overdrafted Accounts:
Overdrafted IO/SP’s
with Compensation charges only:
a.
Overdrafts in excess of $100.00 for IO/SP’s that have only Compensation
charges will always be cleared by the academic department. Once the
correcting documents are processed, see "b" to clear any remaining small
Compensation balances.
b.
IO/SP’s that have small overdrafts ($100.00 or less) due only to salary
issues (e.g., IO/SP’s that have only Compensation expenses, fellowship
accounts that have balances due to rounding) and have no funds
remaining in the overall grant will be cleared to account 21010000
4009022001. A Journal Voucher (FV50) will be prepared by SPS as follows:
Salaries:
DR: 21010000
4009022001 505010
CR: 4XXXXXXX
8XXXXXXXXX 505010 (SPS IO/SP)
Explanation: To clear remaining overdraft per procedures recommended
and approved by Account Management Guidelines.
Overdrafted IO/SP’s
that have S & E charges
a.
IO/SP’s that are overdrafted and have S&E charges will be cleared by the
responsible academic department.
2. Accounts with
Balances:
Accounts that have a balance of less than $5.00, SPS
will follow these guidelines for clearing the balance:
a. The
sponsor has removed the account from their letter of credit funds.
b.
There is no F&A or cost shown on the account to adjust in closing.
c. Non
letter of credit sponsors must be contacted to determine if they want
the amount refunded. If yes, the balance must be refunded.
d. If
the sponsor does not want the balance refunded, the balance will be
cleared as follows:
DR: 4XXXXXXX 8XXXXXXXXX 546445 (SPS
IO/SP)
CR: 21010000 4009022001 546445
Explanation: To clear remaining balance per
procedures recommended and approved by account management guidelines.
Fixed Price
Agreements (where the University is entitled to retain the funds)
a.
For accounts that have unexpended funds after 90 days (all income
has been received and no accounts receivable outstanding; all work,
deliverables and reports have been provided; and all expenditures have
properly booked to the account) and the University is entitled to retain
these funds, the appropriate SPS account clerk will transfer the balance
to the designated department 2201XXXX fund in accordance with
SPS Instruction No. 4.
3. Overdrafts and
balances that do not fit the scenarios described above will be discussed
with the appropriate Business Manager/Account Manager in order to
achieve resolution.
Account
Management Guidelines