Cash Management on Sponsored Agreements

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Teachers College Policy Library

Cash Management on Sponsored Agreements

Owner: Controller

URL: http://www.tc.columbia.edu/policylibrary/Cash Management on Sponsored Agreements

Purpose:
To provide guidance for monitoring and collecting sponsored awards cash and account receivable in accordance with the Office of Management and Budget Uniform Guidance (UG) as well as requirements from our federal/non-federal sponsors.

Scope:
This policy is applicable to faculty and staff who are involved in administering sponsored awards. 

Effective Date:
August 24, 2016

Responsibility:
The interpretation and administration of this policy shall be the responsibility of the Grants and Contracts Accounting Office in consultation with the Associate Vice President and Controller.

Policy:
This policy applies to all sponsored awards at Teachers College (TC). The Grants and Contracts Accounting Office (GCA), Principal Investigators (PI’s) and Departmental Administrators (DA’s) share responsibility for payments made to sponsored awards.   PI’s and their staff are required to assist GCA (if requested) to ensure timely receipt of award funding.  GCA is responsible for ensuring all payments received for sponsored programs are accounted for in a manner consistent with sponsor requirements and Generally Accepted Accounting Principles.  This includes payments received electronically (e.g. letter-of-credit-draws) and “wire” or check.

Procedure
The responsibility for cash and accounts receivable management for sponsored programs is shared by GCA, PI’s and DA’s.  GCA performs many of the duties associated with accounts receivable management as a service to the departments.  GCA’s tasks include:

  • Performing letter of credit drawdowns
  • Submission and/or approval of invoices (when Teachers College is a sub-awardee, GCA is also responsible for submitting invoices to the prime)
  • Following up on outstanding receivables and delinquent accounts; identifying issues causing delays in payment
  • Recording payments to sponsored projects
  • Preparing and submitting financial reports to sponsors detailing payments and expenses

An account receivable is established for a sponsored award at the time expenses are recorded.  This receivable is cleared after payment is received and posted to the sponsored index.

For federal sponsored awards, payment is received on a cost reimbursement basis, not at the time funds are authorized.  GCA is responsible for preparing and performing Letter-of-Credit (LOC) draws, which are processed through the respective agencies online payment system.  The federal agencies authorize a line of credit for the college to draw funds that meet the aggregate expenditure activity of the sponsor’s awards to the College.  GCA submits a LOC payment requests every quarter (expect for the DOE agency which is monthly) for reimbursement of expenses based on the general ledger of the previous month.  Payments are made to the College via Automated Clearing House (ACH) the following day.

For non-federal sponsors and federal sponsors with whom Teachers College does not a have letter-of-credit relationship, invoices are submitted periodically, typically monthly (but not later than quarterly) for an award/contract depending on the billing terms and conditions established by the sponsor.  The GCA senior grants accountant processes the invoice and monitors payments to ensure they are timely and accurately.

Other payment methods for a sponsored award may exist and are based upon the terms and conditions noted in the award (such as milestones, deliverables, or scheduled periodic payments).  These types of payments do not usually require invoicing from GCA to the sponsor but there are some exceptions.  GCA will monitor the sponsored award and funding on an on-going basis to ensure that payments are received from the sponsor in a timely fashion, and are in accordance with the terms and conditions of the award/contract.

Electronic Payments
GCA will identify electronic payments recorded in the College’s bank statement and the Controller’s Office or Development Office will apply the payment to the appropriate sponsored index in the College’s financial system.

Payments Received by Mail
GCA occasional receives checks from sponsors.  Payments from federal, state, local government, universities and colleges will be deposited by GCA via the Bursar Office.  All payments from foundations and corporations received by GCA regardless if they are sponsored awards will be forwarded to the Development Office for deposit via the Bursar Office.

Documentation of Bank Deposits
GCA maintains documentation of bank deposits that are processed by GCA.  A copy of the wire and/or check is kept on TC’s document management server (Nolig Web) with the appropriate sponsored award index.  In addition, a backup copy of the daily deposit is also kept in a separate binder.

Expenditures for a Sponsored Awards uncollectible
If the expenditures for a sponsored award are not collectible, the amount must be funded by the department responsible for the project.  The amount will be transferred to a departmental discretionary or operating index.  If terms and conditions, milestones and deliverables have been met in good faith but sponsor refuses to pay.  GCA will collaborate with the legal team at Teachers College to determine what the next steps are.
If the expenditures for a sponsored award are over-expended, the amount must be funded by the department responsible for the project.  The amount will be transferred to a departmental discretionary or operating index.

Refunds
When closeout procedures are being performed, it may be determined by GCA that there are funds remaining that will not be spent (under-expenditure).

When there are significant funds remaining at the end of the award, it may be possible to request a no-cost extension from the sponsor to allow for the continuance of the project.  The Office of Sponsored Programs (OSP) will work with the PI and/or DA to determine if there is a need to request a no-cost extension.  If there is, then OSP will contact the sponsor and make the request.

When a no-cost extension is not an option and there are funds remaining, GCA will review the terms and conditions of the award/contract and determine the sponsor’s policy on the disposition of the remaining funds.  If the terms specify that the remaining funds must be returned to the sponsor then GCA will process a refund.  GCA will inform the PI and/or DA when GCA initiates the refund to return the remaining funds to the sponsor.

If a sponsored award is a fixed price agreement/contract, then the remaining funds are not refundable to the sponsor.

Roles & Responsibilities

It is the role of each Principal Investigator and/or Departmental Administrator to:

  • Ensure all costs charged to sponsored awards are allowable, allocable, reasonable and consistent
  • Submit progress/technical reports
  • Timely submission of deliverables or milestones
  • Provide support to GCA for preparation, submission and payment collection of invoices
  • Provide departmental index to which uncollectible amounts are transferred

It is the role of the Grants and Contracts Accounting Office to:

  • Review sponsored awards expenditures to ensure all costs are allowable, allocable, reasonable and consistent up to and including final closeout
  • Provide technical support to PI’s and DA’s for the interpretation of regulations and TC’s policies and procedures
  • Prepare invoices, Letter-of-Credit drawdowns and reconciliations of billing and payments
  • Generate and monitor accounts receivable aging reports (in process of creating receivable module in Banner)
  • Initiate invoice follow after 60 days
  • Confirm required deliverables/progress reports have been submitted to sponsor to prevent delays in payment
  • Process journals to apply/correct payments to awards/contracts
  • Notify the department for uncollectible amounts and request a departmental index to which the amount will be transferred


Definitions

  • Accounts Receivable: Is funds owed to Teacher College by another entity based on invoices for goods supplied and services rendered.
  • Allocable: A cost must support meeting a specific project objective.
  • Allowable: A cost must be charged to an index in accordance with the terms and conditions of the award as well as College policy.  
  • Consistent:  Application of the cost is given consistent treatment within established College policies and procedures; costs for the same purpose are treated and classified the same way under like circumstances.
  • Cost Reimbursable:  Is a payment method specified by a sponsor in their award agreement.  Teachers College will receive funds from the sponsor after TC provides the sponsor with documentation (e.g. invoice) evidencing costs/expenses have been incurred.
  • Drawdown:  Is the process for receiving funds from a Letter-of-Credit.
  • Fixed-Price Agreement/Contract: Is a payment method based on which a value (fixed-price) is determined for work to be accomplished.  This is usually tied to performance, deliverables, and milestones. 
  • Invoice: Is a document issued by Teachers College to another entity based on goods and services rendered. 
  • Letter-Of-Credit: Is a payment method specified by a sponsor in their award agreement, which guarantees Teachers College will receive payment in full provided that the sponsor’s terms and conditions of the award have been met.
  • Over-expenditures: Costs charged to an award that exceeded the amount of funds from the sponsor.
  • Reasonable: The nature of the goods or services acquired and amount paid reflect the action that a prudent person would have taken at the time the decision to incur the cost was made.
  • Refund: Is a remittance of funds from Teachers College to a sponsor.
  • Sponsored Awards/Sponsored Programs: May be used in this document interchangeably which mean any agreement, contract, or grant that is funded by a source other than Teachers College.
  • Under-expenditures: Costs charged to an award that is less than the amount of funds from the sponsor.