Address the disposition of funds expended but not reimbursed by the sponsor. If all collection and resolution attempts are unsuccessful, underpaid cash balances must be resolved within a maximum of three years of the award expiration. Accounts receivable are eligible for write-off once they have been outstanding for 720 days (two years).
Sponsored research uncollected receivables are written off in accordance with MAPP 05.04.04 section VII - Accounts Receivables, Write-off of an uncollectable account. The Sponsored Research bad debt reserve, funded from the annual distribution of indirect cost funds, will be used for the write-off.
A fixed payment of $1,120,000 per year for a five year period will be transferred to the bad debt reserve cost center. A total amount of $5.6 million will be used to cover all bad debts incurred prior to FY2009. The five year period began in FY2011 and will terminate in FY2015.
The sponsored research bad debt reserve will receive an annual transfer of 3.5% of the distributed indirect cost earned.
UH Internal Audit performed a review of research administration at the University of Houston to determine whether the university has established management practices for externally funded programs as promulgated by the Council on Governmental Relations (COGR) in their Guide to Effective Management Practices.
UH Internal Audit recommended that the Division of Research (DOR) work with the Divisions of Academic Affairs and Administration and Finance to develop procedures to monitor grant cost centers to address budget deficits in a timely manner. In addition, they recommended that DOR work with appropriate departmental management to obtain funds to offset the deficit grant budget balances caused by overspending on sponsored projects.
Budget Balance – The award amount less the total amount expended to date less any encumbered amounts.
Deficit Balance – A negative budget balance (BBA) occurs when a cost center's expenses exceed the budget during the active life of the project, expenses post after the period of availability, or the agency deems expenses as unallowable.
Expired Award – The award end date (period of performance) has passed and no further activity is anticipated.
Closeout – This is the terminal process for an award in research administration. The process involves reducing the remaining budget balance to zero, ensuring that all reports and deliverables have been submitted to and accepted by the sponsor, reconciling revenue to the expended amount, clearing all account codes in the PeopleSoft general ledger, marking the award closed in the research database, and inactivating the cost center in PeopleSoft.
- In order to determine if a project is eligible for a write-off, Research Financial Services (RFS) must take all the necessary collection efforts and the unpaid receivable must be outstanding for at least 2 years.
- RFS will compile a list of individual project cost centers to be written off for initial review by the end of each fiscal year (August 31).
- RFS will maintain the original documentation supporting each award to be written off. RFS will also keep a record log of the activity and all correspondence relating to the collection activities for the award.
- RFS will submit a list of the candidates for write-off to the VC/VP for Research and Technology Transfer, Executive Vice President for Finance & Administration, the Provost, and respective deans annually by September 30.
- The final list will be submitted to general accounting for presentation to the Board of Regents by October 31 of every year.
- The list of write-offs is submitted to the Board of Regents annually during the February board meeting.
- After approval is obtained from the Board of Regents, General Accounting will post a journal entry to complete the write-off.
- General Accounting will use the sponsored research bad debt reserve cost center to credit the award for the write-off.
- The institution will absorb all sponsored award deficit budget balances less than $10.
- If a deficit balance is identified at closeout, DOR will work with the appropriate department to clear the deficit.
- The responsible unit will be given 60 days after the award expiration date to clear the negative balance.
- If a deficit balance remains after the department grace period, DOR will work with Academic Affairs to determine which expenses to transfer from the award and initiate that transaction to department IDC (default) cost centers.
Revised: May 11, 2015