10.8 Overdrafts

1. Transferring Expenses to Avoid an Overdraft

Stanford’s expects a project to be managed in accordance with the sponsors terms and conditions and within the established budget. If expenses exceed the approved budget, due to unusual circumstances or unanticipated expenses, and you anticipate an overdraft before the end date of sponsored project the Research Administrator may transfer the expense onto another research-related gift PTA or sponsored project PTA that has benefited from the expense. If this is not the case the expenses must be treated in the same manner as cost sharing.

If you anticipate an overdraft on a sponsored project PTA before the end date, either:

  1. Transfer the cost onto another research related gift PTA or sponsored project which also benefited from the cost and provide documentation. OR
  2. Treat the transfer in the same manner as cost sharing.

View Transfer Before Project Ends Decision Tree

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2. Clearing Overdrafts

If an error is discovered after the end of the award, a transfer of expense should be made by removing the expense prior to award closeout.

If after the end date of an award an expense is determined to be unallowable to the project (but did benefit the project), the expense must be transferred to a Cost Sharing PTA for accounting purposes, although it cannot be counted towards a Cost Sharing commitment.

Documentation

The documentation of a cost transfer made after a project end date will be closely scrutinized. In addition to including all the necessary element of a cost transfer justification large cost transfers that exceed $10K or 10% of the award, and transfers within the first or last 90 days of a project, and transfers that do not meet the timeliness criteria receive additional central review. For the transfer of all non-salary charges subject to the above criteria, a PDF of the general ledger** showing the expenditure(s) requesting to be moved MUST be attached to the cost transfer transaction by the originator.  Attaching detailed documentation for these transfers will facilitate their timely review by the Office of Sponsored Research (OSR).

Examples

These charges are for effort expended before [insert Project Y’s end date] and they are appropriate per the Project Y award agreement.

These charges could not be processed in a timely manner because PI Smith was traveling in Mongolia and was not available to review and approve the charge.

If a Project Ends in Overdraft

An overdraft exists if after the end date of an award expenses exceed funding.

If the award is in overdraft at the end of the project period, remove the overdraft from the award according to rules outlined in Stanford Policy. Federal regulations state an overdraft is unallowable on any other sponsored project, therefore unless there was an error, the overdraft must be treated like cost sharing. This must be done in a timely manner. Expenses removed as a result of an overdraft should have been incurred during the last 6 months of the project.

  • Do it in a timely manner
  • If total overdraft is less than $500, transfer lump sum (net of indirect costs) Expenditure type 56135 (which allows the Cost and Management Analysis group to segregate these costs for purposes of indirect cost calculation)
  • If the overdraft is greater than $500 dollars the overdraft is transferred to a cost sharing PTA.
  • Explain reason for the transfer. For example: Charges are legitimate project expenses, but funds were inadequate. This is accounted for in the same manner as cost sharing.

 

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