|Approved by||Chief Financial Officer|
|Date Procedure Took Effect||1 December 2013|
|Last Approved Revision|
|Sponsor||Chief Financial Officer|
|Responsible Officer||Senior Management Accountant|
|Review Date||1 December 2015|
This procedure describes the steps completed when externally funded reciprocal project surplus balances are to be returned to the project funder in conjunction with Research Account Closing Process.
This procedure applies to all University of Otago staff involved in the administration of externally funded research contracts, where there is an obligation to return surplus funds to the funder. Cost centres ensure that the project balances are final and the Research Office prepares the credit note
- P account – reciprocal externally funded research project
- Finance One - University Corporate Financial System
- DMU – Data Management Unit, Financial Services Division
- RMO – Revenue Management Office, Financial Services Division
At the conclusion of a research project a residual balance may exist. This balance may have arisen because the amount funded was different from the amount budgeted; the amount spent was different from the amount budgeted; or a combination of the two. When a project concludes with a surplus, that is the amount spent is less than the amount funded, the surplus may have to be returned to the funder. The project contract should be consulted to determine whether the funder or the University owns the surplus or if the right to retain the surplus must be negotiated with the funder.
All funders should have a Debtors Account created at the time the contract for service is signed. Invoices are issued using the Finance One system for all amounts receivable under the terms of the contract.
Follow the steps below once it has been confirmed that the project surplus is to be refunded.
Step 1: Ensure that the project balance is final
- If the project was funded in foreign currency refer to the procedure Reporting on Foreign Funded Research Projects
- All funding has been invoiced and received
- All supplier invoices have been recorded or amounts accrued
- Annual leave has been accounted for
- Service divisions have been notified that the project is closed
- There are no commitments listed on the project’s financial reports
- If the project is currently active, ask DMU to inactivate the project
Step 2: Determine the refundable amount
- Run the project life-to-date report from the reports menu in Finance One
- Identify the amount in the Operating Surplus (Deficit) line and the Act+Comm column of the report. If the amount is without brackets, the project has finished with a surplus and is the amount to be returned to the funder unless a different lower amount has been negotiated
Step 3: Creation of the credit note
Credit notes are used to cancel invoices either in whole or part. A credit note for the refund is to be linked with the last invoice issued.
- Refer to the Finance One Accounts Receivable Manual for instructions on how to create a credit note
- Create the credit note and attach any supporting documentation that explains why a credit is being entered to the funder’s account. The documentation may include making use of the Notes feature to type a full and complete description of the refund
Use the attachment feature to include any important documents, calculations or emails relating to the refund.
Credit notes must contain sufficient documentation to allow the reviewer in Financial Services to understand both the amount and reason for the refund.
Step 4: Notify the Revenue Management Office
Advise Financial Services Division, Revenue Management Office (RMO) that the credit needs to be repaid to the funder. The RMO will complete an AR Adjustment which transfers the Debtor Account credit to the clearing account 10.BS.C05.8206.00.
Financial Services Division Accounts Payable staff will scan an invoice form prepared by the RMO staff to relieve the clearing account and create a balance to be paid on either the Debtor’s Creditor Account or a Sundry Creditor Account.
The balance is paid out in the next Creditors payment run.
Related Policies, Procedures and Forms
- Research Account Closing Procedure
- Reporting on and Closing Foreign Funded Research Projects Procedure
Contact for Further Information
For further information, contact the Senior Management Accountant, extn 8222 or email email@example.com