Sponsored Award Deficit Monitoring and Resolution Process
A deficit balance occurs when total expenditures exceed the total, authorized amount for a sponsored agreement or when expenditures are uncollectable from the sponsor due to non-performance. Deficits do not include negative budget balances resulting from un-liquidated encumbrances.
The Principal Investigator (PI) and designated departmental business personnel are responsible for the financial management of the sponsored award. This includes ensuring that deficits or over-expenditures do not occur. When a deficit does occur, Federal cost accounting standards, University procedures and good management practices require that it be cleared in a timely manner.
A budget deficit occurs when the direct expenditures of a project exceed the authorization. These are normally identified at the end of an award during the final financial reconciliation or at interim financial reporting. For all budget deficits the excess costs must be removed from the award within 30 days after the end date of the award. If this transfer is not made within 60 days of the award end date, the Office of Contract & Grant Accounting (OCGA) will transfer the costs to the department’s operating budget or discretionary fund.
In cases where a continuation or additional funding is in process, OCGA will allow over-expenditures if information on the pending amendment is provided by the Office of Sponsored Programs (OSP).
Unallowable or disallowed costs occur when it is determined that expenses charged to a sponsored award are not in compliance with the sponsor spending/costing principles. This situation may arise from a specific cost that is not allowable under award terms or when cumulative costs in a single budget category exceed the maximum amount that can be reimbursed. For example, a sponsor may place a budgetary restriction indicating that costs in any given category cannot exceed 10% of the approved budget. Even though the costs may be reasonable and each individual item is considered allowable, the total amount may not be reimbursed. PI and departmental personnel should monitor the budget as compared to actual expenditures to determine if prior approval for rebudgeting is required. If this situation occurs, OSP should be contacted to assist in obtaining sponsor approval through the rebudgeting process.
A cost may be deemed unallowable or disallowed at any time throughout or after the end of an award. Upon determination an expense is unallowable or disallowed, departments are to promptly transfer the expenditure to a departmental operating budget or discretionary fund. Any resulting positive cash balance will be refunded to the sponsor.
In all cases, if the unallowable/disallowed cost is not removed from the sponsored award within 30 days of notification to the department, OCGA will transfer the costs to the department’s operating budget or discretionary fund.
Uncollectible Invoices – Non-Performance
If a deficit results from a disagreement with the sponsor regarding the scope or performance of work, the deficit will be borne by the PI.
- PI’s and OSP will be notified by OCGA when any invoice is past due for non-performance. It will then be the responsibility of the PI and OSP to resolve non-performance issue with the sponsor.
- All non-performance issues must be resolved within 30 days after the technical report due date or OCGA will transfer the uncollectible amounts to the department’s operating budget or discretionary fund.
Deficits due to cost overrun, unallowable or disallowed costs, or error in allocation must be corrected through a cost transfer to remove relevant expenses from the sponsored award. Non-sponsored funds/budget cannot be transferred into a sponsored award for any reason. Cost overruns are generally transferred to non-sponsored funds. All cost transfers must follow the requirements found in the University’s Cost Transfer Policy.