Deposit Of Checks Without Properly Executed Agreement
Purpose/Background
The Accounts Receivables Guidelines (May 2003) specify that the University of Louisville and its related organizations report income on the accrual basis of accounting. Units are expected to ensure that accounts receivable are recorded accurately and on a timely basis. Typically the “rule” is that checks received should be deposited within three business days of receipt.
For Grants and Sponsored Program Receivables and other contracts for Goods and Services a contract should exist which defines the billing and payment terms as well as other provisions. Typically the Purchase Order provides such an agreement for the procurement of most goods and services.
Units sometimes receive a check/income for Grants and Sponsored Programs or other contracts for Goods and Services before a contract has been executed by an authorized signatory of the University or its related organizations. Deposit of this check/income can create risks such as:
- provisions on the check indicating payment in full (when it is only partial payment or there is a dispute over the amount to be paid),
- language on the check indicating that in cashing the check you have waived any further rights of recourse against the payor,
- implied authority that the University or related organization has agreed to accept the terms and conditions of an agreement/purchase order by the payor (when the terms and conditions have not been reviewed or approved), and
- implied authority or implication that an individual employee who signed the agreement was authorized to sign on behalf of the University or related organization (when that was not the case.)
Policy
Checks/Income for Grants and Sponsored Programs or other contracts for Goods and Services should not normally be deposited nor should services be rendered unless there is a signed agreement by an authorized signatory of the appropriate organization. Such checks should be returned to the payor with a note that the check cannot be accepted without a properly executed agreement with the respective organization. Checks/income should be deposited promptly (normally within three business days) when such payment is conformance with a properly executed agreement.
Organizational Responsibilities
Deans, Directors and Department Heads
- Communication to their respective units about this policy and the fact that only specified individuals are authorized to sign documents on behalf of the University.
- Implementation of appropriate disciplinary action, if recommended by Research Administration or the Controller’s office for repeated infractions.
- Institutional Officials (Grants Management, Industry Contracts, Controller’s Office)
- Review of requests for deposit of checks/income without a properly executed agreement.
- Determination of whether the check/income may be deposited or whether it will need to be returned to the payor.
- Recommendation of appropriate action for repeated infractions.
Covered Individuals
- Understanding that they are not authorized to sign agreements on behalf of the University.
- Completion of appropriate paperwork (e.g. Proposal Clearance Form) prior to performing services or telling a sponsor or entity that the individual can perform the services/complete the project.
- Telling a sponsor or entity that they cannot perform services or do research without having an agreement executed by the appropriate University officials.
University Counsel
Consulting with Grants Management, Industry Contracts and Controller’s Office regarding the likelihood of reaching agreement or the risk involved in depositing check/receiving the income without having a properly executed agreement.
Violations of this Policy
Repeated receipt of checks without a properly executed agreement (e.g. not submitting a Proposal Clearance Form for a Sponsored Activity prior to commencing the project or obtaining a check from the sponsor) may result in the individual not being able to submit additional sponsored activities for a period of up to six months and/or a request to the individual’ supervisor for disciplinary action recommended by Research Administration or the Controller’s Office.
Procedure For Policy
If a unit believes that a properly executed agreement is imminent (typically within two-three weeks of receipt of check), a unit may request the check be deposited (1) by requesting the establishment of a chartfield for Grants and Sponsored Programs in advance of the agreement as outlined in the policy for establishment of a chartfield in advance of award/agreement execution or (2) deposit into the appropriate already established program or service center chartfield for the contract for Goods and Services.
For checks received that are related to a Sponsored Activity agreement, the unit should e-mail either (1) the Director, Office of Grants Mangement/Service Account for Grants Management when the payor is a governmental entity or a not for profit organization and the agreement is not a clinical trial or (2) the Director, Office of Industry Contracts/Service Account for Industry Contracts when the payor is a for profit organization or the agreement is a clinical trial. The Director of the respective
Research Administration unit will make a determination based on the status of negotiations with the payor regarding the terms and conditions of the agreement. If the respective Director believes that the agreement will come to a successful conclusion in a reasonable length of time (typically within 2-3 weeks), he/she will authorize the deposit of the check and e-mail the unit and the Bursar/Controller’s Office that is permissible to deposit the check and will see that the appropriate chartfield is established for said deposit.
For checks that relate to other contracts for Goods and Services, which by definition are not a Sponsored Activity, the unit should send an e-mail to the Controller’s Office. The Controller’s office will make the determination, in consultation with University Counsel, as to whether or not to deposit the check without a properly executed agreement based on the status of negotiations with the payor regarding the terms and conditions of the agreement. University Counsel’s office is available to assist the Controller’s office if that office has any questions regarding language on the check or the status of revisions regarding the agreement. If the Controller’s Office believes, in consultation with University Counsel as needed, that the agreement will come to a successful conclusion in a reasonable length of time (typically within 2-3 weeks), he/she will authorize the deposit of the check and e-mail the unit and the Bursar/Controller’s Office that it is permissible to deposit the check.
Definitions For Policy
Sponsored Activity: See http://research.louisville.edu/policies/definitionsponsored.html
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Policy and Procedure |
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Effective Date: 07-01-04 |
Revised Date: |