PURPOSE OF THIS POLICY

The timely collection of accounts receivable on all sponsored research (5-3) accounts is a sound financial management practice to ensure that Colorado State University maintains an adequate system of internal control and reduces the risk of audit findings and financial loss. The purpose of this policy is to assign responsibility and provide guidance for managing receivables and for covering bad debt in 5-3 accounts.

APPLICATION OF THIS POLICY

 This policy applies to all campus units having sponsored projects (5-3) accounts.

DEFINITIONS USED IN THIS POLICY

Deficit: The condition occurring when total actual expenditures exceed the total project budget or the final billing amount in a 5-3 fund account.

Bad Debt: Any receivable that is past due more than 180 days and is deemed uncollectable.   A debt is deemed uncollectable after all collection efforts have been exhausted, no payment has been made, or an appropriate repayment plan has not been agreed to with the sponsor.

Receivable: Any amount due and owing to Colorado State University that is booked in a sponsored projects (5-3 fund) account.

POLICY STATEMENT

Sponsored program accounts incur expenditures according to an approved budget. Expenditures are generally cost-reimbursable; i.e., costs are incurred before payments are received from the sponsor. This creates a risk of incurring expenses that, for a number of different reasons, may never be reimbursed. When this occurs, a deficit may result, impacting the project, the individuals and business units involved, and the University. Sponsored Programs (SP) requires correction of the deficit in order to avoid the occurrence of bad debt. Central administration funds are not budgeted and allocated to sponsored account bad debt and cannot absorb it; therefore, bad debt must be covered by the responsible college or department. SP has authority to transfer funds from a 5-3 account to a departmental account to cover bad debt.

SP, Principal Investigators (PIs), colleges and departments all share responsibility for billing and collecting payments from sponsors and others on sponsored accounts. The responsibilities of each of these cooperators are set forth in this policy.

POLICY PROVISIONS

Responsibilities of Cooperators

Sponsored Programs takes the lead in the creation and issuance of invoices and fiscal reports and acts as the primary interface with extramural sponsors in accordance with the terms of the funding agreement. SP relies on the PIs and the departments and colleges for accurate, timely information from which these collection activities are undertaken. However, the accounts receivable process as a whole is a shared responsibility of the PI, Department, College and SP. Uncollected receivables are ultimately the responsibility of the PI and his/her Department(s). Responsibilities of cooperators are as follows:

1. SP:

• Send invoices and make deposits of payments in a timely manner.
• Review late payments on a monthly basis, resolving these whenever possible.
• Contact the PI and department when payment problems exist.
• Notify the PI and department when problems persist.
• Freeze accounts when appropriate for non-payment.
• Develop reports of uncollectible receivables for delivery to the Office of the Vice President for Research, colleges and University Controller.

2. Principal Investigators:

• Overall project financial management.
• Timely submission of progress reports.
• Keep SP Administrator informed of any relevant information.
• Respond promptly to SP’s collection email(s).
• Consider stopping work when necessary.

3. Department Accounting Staff:

• Assist PIs with financial oversight of 5-3 accounts.
• Assist SP with collection process questions.
• Assist PIs with responses to collection process email.
• Stop charges when accounts have been frozen.

4. Deans/College Business Officers/ Department Heads/RADs:

• Encourage timely submission of technical reports.
• Assist with decisions regarding work stoppage due to non-payment.
• Assist SP with collection process questions.

Timeline for Receivables:

SP research administrators will be contacting PIs and/or sponsors to attempt to resolve problems when they first occur.  If non-payment continues, PIs and other interested parties will be contacted as shown on this time schedule:

Duration of payment problem                     Parties to be included in email notification

60+ days past due                                 PI, Dept. Accounting or RPM contact

The PI should respond with any relevant information to assist in collection (i.e. late technical report, delays with deliverables, etc.)

90+ days past due                                 PI, Dept Head, Dept. Accounting or RPM contact,                                                                                                                             College Business Officer, Research Associate Dean

At this stage the Department and College will be asked to decide if work should be stopped or continue at their financial risk.

NOTE:  If no response is made but spending continues, it will be assumed that all parties wish to proceed despite reminder of financial risk.

120+ days past due                        List of problem account(s) will be sent to OVPR for discussion with the Dean(s) regarding next steps.  

Sponsored Programs will administer the list to allow for additional collection activities as deemed appropriate, which include but are not limited to: state collections, legal resources (disputes), alternate repayment plans or promissory notes, and final internal resolution.

180+ days past due                       

Any accounts that remain in a past due status longer than 180 days are those which the University is unlikely to collect. At that time SP will transfer uncollected receivable amounts to a College account through a KFS action.   

Business and Financial Services will, with direction from the College and Sponsored Programs, attempt collection of the uncollected obligations through in-house collection efforts, State of Colorado Central Collection Services or third party collectors.  Departments will be responsible to ensure that any outstanding balances are fully reserved against.

Any funds recovered through the collections process will be credited back to that department as funds are returned to the University.

COMPLIANCE WITH THIS POLICY

Compliance with this policy is required. For compliance assistance, contact the Office of Sponsored Programs.

PROCEDURES, FORMS AND TOOLS

The Office of Sponsored Programs, with assistance from Business & Financial Services, will develop procedures and forms to implement this policy.

APPROVALS

Approved by Anthony A. Frank, President, March 1, 2018