Overdraft Lock Management Expectations

TO:	Business Managers and SPS Account Managers
FROM:	M. R. Ludwig
DATE:	January 15, 1998
SUBJECT:	Overdraft Lock Management Expectations

The SPS QTL has been modified to identify overdrafted fund/centers as soon as the fund/center goes into overdraft status. Previously a fund/center was not identified as being overdrafted until the overdraft exceeds 5% of the award or $1,000 whichever is the lesser. Earlier identification of overdrafted fund/centers enhances our ability to reduce, consistent with Account Management Expectations, the amount of the financial liability associated with the overdrafted fund/center. Parallel with the expectation of proactively managing and reducing overdrafts is the expectation of managing and minimizing the number of entries processed to suspense fund/centers.When the fund/center is identified as overdrafted, the SPS Account Manager will evaluate the financial condition of the fund/center in conjunction with the appropriate Business Manager. The fund/center will be locked unless the Account Manager and the Business Manager determine that one of the following conditions exist:
 

• A fully executed contract or a notice of grant award providing additional funding has been received by SPS and is being processed. The fund/center should not be locked if the additional funding will be reflected on the University accounting system within the next three (3) working days.
  
   
• If an award document to provide additional funding has not been received by SPS, the Account Manager and the Business Manager should review the status of the fund/center to determine if the criteria for issuing a Notice to Proceed have been met. If the criteria for issuing a Notice to Proceed exist, SPS will issue the Notice to Proceed within two (2) working days.
  
   
• In some cases, the review of the financial status of the fund/center will identify charges that have been improperly and/or incorrectly allocated to that fund/center. If correcting these transactions will return the account to a positive balance, the fund/center will remain unlocked for three (3) working days to permit the preparation of correcting documents (i.e. an encumbrance that was not relieved when the payment was made or a salary was charged to an incorrect account.). The Departmental Business Office will inform SPS by e-mail that a correcting document has been prepared.

If one of the preceding conditions do not exist, the overdrafted fund/center will be locked by the SPS Account Manager. To assist the Business Manager in controlling the number of entries to suspense accounts, the SPS Account Manager will notify the Business Manager by telephone call or e-mail that the fund/center is being locked.

These management expectations previously described should provide the basis for resolving almost all of the issues associated with the management of overdrafted fund/centers.
Conformance with these expectations will result in either the overdraft being eliminated or the fund/center being locked. In no event should the Account Manager and/or the Business Manager make the decision to permit an overdrafted fund/center not meeting the previously described conditions to remain unlocked. If there are circumstances that the Business Manager or the Account Manager believe justify allowing the fund/center to remain unlocked, those circumstances will be brought to the attention of either the Director, Business Administration or the Director, Sponsored Program Administration. They, in conjunction with the Comptroller, will determine if the fund/center should be unlocked and the conditions under which the overdraft will be managed.