To 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 writeoff 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.
Sponsor – External funding agency that makes a commitment to fund university initiatives.
Uncollected Receivable – Unfulfilled financial obligation for expenses incurred on a sponsored project.
Identifying and Reporting Uncollected Sponsored Research Receivables
- In order to properly identify a writeoff, Research Financial Services (RFS) must perform the collection efforts as outlined in closeout award guidelines Section 3.2: Sponsor Nonpayment - Prevention and Remediation.
- 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 listing of the candidates for writeoff 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 listing will be submitted to general accounting for preparation to the Board of Regents by October 31 of every year.
Write-off of Uncollected Sponsored Research Receivables
- All uncollectable receivables eligible for writeoff are 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 writeoff.
- General Accounting will use the sponsored research bad debt reserve cost center to credit the award for the writeoff.
Sponsored Research Bad Debt Reserve
- The Sponsored Research bad debt reserve will be used for the writeoff.
- The Sponsored Research bad debt reserve will be funded from the annual distribution of indirect cost funds.
- A fixed payment of $1,120,000 per year for a five year period will be transferred to the bad debt 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.
Revised: May 31, 2012