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.

EXEMPTIONS FROM THIS POLICY

None.

DEFINITIONS USED IN THIS POLICY

Deficit: The condition occurs 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 owed 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) require 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. In collaboration with the 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 their department(s). Responsibilities of cooperators are as follows:

1. Sponsored Programs (SP): - is responsible for the management of invoicing and/or financial reporting. They are also responsible for collections from sponsors and will coordinate with the college/department/unit and PI as needed to resolve outstanding payments.

2. Principal Investigators (or designee) - has fiduciary responsibility for proper and regular financial management of the award to ensure timely and appropriate allocation of expenses. They will also assist SP in determining if an invoice is not being paid due to a non-performance issue as well as help determine an alternative sponsor contact.
   
   
3. Department/college/unit - will be responsible for recovery of funds in the event of uncollectible payment from the sponsor. Will enforce any stop work orders placed on an award.

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 based on the time schedule incorporated in the process documentation.

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 communicate with the fiscal officer to determine the next steps. Possible steps could include issuing a stop work order, transferring Receivable to central Accounts Receivable Operations (ARO) or transfer uncollected Receivable amounts to a college account.

ARO, within the Business and Financial Services Department, will, with direction from the college and Sponsored Programs, attempt collection of the uncollected obligations through in-house collection efforts, or third-party collectors. Departments who choose to manage their own Receivable (not transfer to ARO) will be responsible for ensuring that any outstanding balances are fully reserved against by fiscal year end.

If the College does their own collections, or fully covers uncollected Receivables, 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.

Office of Sponsored Projects Receivables Process

Consideration Matrix

APPROVALS

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

Revision approved by Brendan J. Hanlon, Vice President for University Operations, on December 8, 2023