Transcript Overruns/Deficits PowerPoint

EAST CAROLINA UNIVERSITY
OFFICE OF GRANTS AND CONTRACTS
COST OVERRUNS (DEFICITS)
AT-A-GLANCE
The following is provided as a brief outline of the basic requirements for ECU’s Overrun Policy. For
questions or additional information about the policy, contact your OGC representative or email
[email protected].
[email protected]
Updated 4/26/2010
COST OVERRUNS POLICY: DEFINED
 This policy applies to “true” deficits and overruns- Not claims
on cash caused by timing differences in payments or award
notifications from the sponsor.
 This policy applies whenever expenditures exceed the real or
anticipated total funding from the sponsor for the award.
 PIs/DAs should monitor their awards and review accounting
transactions, on a monthly basis, to avoid deficit spending.
 See also Collection Policy.
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GENERAL REQUIREMENT
 OGC has established a special fund for each School/College that
may be used by OGC for deficit clearing.
 When the PI/DA do not clear deficits on a timely basis, OGC may
unilaterally fund the deficit from this fund.
 OGC will coordinate with the Special Funds Director on fund
availability for any action taken.
 The Dean will coordinate with the Chair and PI to determine a
method of payback to the School fund.
 Once costs have been moved to the overrun fund, they cannot be
transferred, at a later date, to another sponsored fund.
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FUNDING OVERRUN ACCOUNTS
 The PI/Department is responsible for funding the cost overrun
accounts; unless otherwise authorized by the Dean.
 Overrun accounts may not cross a fiscal year in deficit. Overrun
accounts must be fully funded prior to each year-end, 6/30;
unless otherwise authorized by Special Funds.
 Overrun accounts may not be funded by sponsored projects.
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GENERAL ACCOUNTING REQUIREMENTS
 Cost overruns on sponsored projects should be cleared as soon
as possible.
 Routine correction of accounting errors and clearing deficits
should occur no later than 90 days from the time of the deficit
or the budget end date, whichever is first. (See also Cost
Transfer Policy.)
 All deficits must be cleared, one way or another, within 90
days.
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GENERAL ACCOUNTING REQUIREMENTS cont…
 OGC may unilaterally clear overruns if deficits are not cleared
by the department within:
• 60 days of notification from OGC re possible deficit
status or
• 90 days of deficit occurred or
• 90 days of budget end date
• Whichever occurs first.
 Once costs have been cleared to the overrun accounts, the
costs may not be transferred to another fund. The costs must
be funded within the overrun account.
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SPECIAL NOTES
 Pre-award spending or accelerated spending will be reviewed
under this policy.
 Expenditures incurred prior to an authorized pre-award
period may be treated as an overrun, in conformance with
applicable agency terms, as follows.
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SPECIAL NOTES: PRE-AWARD OVERRUN
Pre-Award Overrun:
 For non-NIH/NSF Expanded/FDP – usually applied at new
and annual/continuation 90 day requirement.
 For NIH/NSF Expanded/FDP - 90 day requirement only
applies with new awards and the competitive renewal
period.
 For non-federal and all non-Expanded/FDP - specific agency
authorization normally required for any pre-award spending.
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SPECIAL NOTES
 When the sponsor has specific line-item rebudgeting
requirements (e.g., maximum 10% line-item deviation),
overages are considered overruns.
 When the sponsor has specific line-item budget requirements
(e.g., line category must be approved), expenditures without
approval are considered overruns.
 Line-item deviations/deficits will be reviewed under this
policy.
 Examples: Some State of NC contracts, some Foundations, AHA
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SPECIAL NOTES
When significant rebudgeting or line-item rebudgeting or preaward spending requires agency authorization:
• The authorization request must be submitted within 30 days
of the notification from OGC or the discovery that such a
condition exists.
• If the agency request is not submitted in a timely manner,
OGC may treat the item as an overrun under this policy.
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SPECIAL NOTES
 If the agency subsequently denies the rebudgeting or preaward request, the costs involved in the request may not
be transferred to another sponsored project.
 Upon notification of the denial, the PI/Department must
clear the disallowed cost within 30 days or the costs will
be transferred to the overrun fund.
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PROCEDURES
 A PI/department should voluntarily clear a deficit situation,
upon discovery. The PI/DA should contact OGC to initiate
appropriate cost clearing transactions, as soon as possible.
 OGC will contact the PI/DA upon discovery of what appears
to be a deficit.
 OGC will contact the PI/DA in writing, outlining the situation
and giving the department a 30 day period to respond,
correct/clarify the situation, or authorize a transfer to an
appropriate FOAP.
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IMPLEMENTATION PROCEDURES
 If the costs aren’t cleared within 30 days, OGC may implement the
overrun procedures.
 The PI/DA will be notified and the Chair and the Associate Dean for
Research will be copied whenever OGC initiates a true overrun
notification.
 If there is no response or resolution within the time specified on the
notification, OGC will initiate an overrun transfer in conformance
with this policy. The PI/DA, the Chair and the Associate Dean for
Research will be notified that the transaction is being processed.
 At any time before the transfer, the PI/DA/Chair/Dean or Special
Funds Director may authorize an alternate non-sponsored fund to be
used for clearing the deficit.
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OVERRUN DATA
 All deficits must be cleared (one way or another) within 90 days of
notification or the budget end date; whichever comes first.
 The data (costs) captured in the overrun account must be maintained by
OGC for audit review and for inclusion in the indirect cost proposal.
 Once costs have been moved into the overrun account, they cannot be
transferred to another FOAP. They must remain in the overrun status for
audit and indirect cost purposes.
 The deficit in the overrun account must be funded from non-sponsored
funds.
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QUESTIONS?
For questions about the basic requirements for ECU’s Overrun
Policy, please contact your OGC Representative or email
[email protected].
[email protected]