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Costs must be moved within 30 days of notification that they are uncollectible or within 30 days of submission of the final report and/or invoice to the sponsor. The type of transaction that should be processed depends on the type of uncollectible costs, and how old the costs are.

Costs moved prior to submission of the termination report (including reports filed after budget period reports):

• Costs deemed uncollectible for any reason should be moved to the appropriate nonsponsored account by a HSA (for uncollectible payroll expenses) or by a Journal Entry (for non-payroll expenses that are uncollectible).

Costs moved after submission of the termination report:

• Movement of uncollectible costs incurred in the current U of M fiscal year should be done using either a HSA (for uncollectible payroll expenses) or a Journal Entry (for non-payroll expenses that are uncollectible).
• Movement of uncollectible costs from prior U of M fiscal years should be done via nonmandatory transfers. This would require a Journal Entry.

To Move Uncollectible Costs Select One of These Options:

Removing Budget Overruns

• College/Department
• Central Unit

Removing Unallocable and Unallowable Costs

• College/Department
• Central Unit

Removing Other Uncollectible Accounts Receivable

• College/Department
• Central Unit

Subsequent Payment of Uncollectibles

A. Removing Budget Overruns

1. Department Instructions:

   • Within 30 days after submission of any financial report or invoice that was submitted, process necessary documents (in accordance with guidelines set forth at the beginning of this procedure) to remove budget overruns from the sponsored project to a departmental non-sponsored program with the correct function code.
   • If budget overruns are the result of pre-award costs, a re-budgeting request that is in process, or similar circumstances, notify the appropriate SFR accountant that the costs should not be removed.
   • If SFR removes the costs to the default write-off program, transfer resources to cover the deficit before the next assessment of TIP interest following appropriate approval process.

2. Sponsored Financial Reporting Instructions:

   • 30 days after submission of any financial report or invoice that was submitted, determine if the department has transferred the uncollectible costs associated with a budget overrun to a departmental non-sponsored program.
   • If the department has removed the uncollectible costs:
     • Continue with procedures to inactivate the project.
   • If the department has not removed the uncollectible costs:
     • Prepare the journal entry (in accordance with guidelines set forth at the beginning of this procedure) to remove uncollectibles associated with a budget overrun from the sponsored project to a departmental non-sponsored program with the correct function code and charge the department a fee to process the removal if applicable.
     • Keep a copy of the documents for the SFR work file and forward a copy of the documents to the Unit Administrator for the project file.
     • Continue with procedures to inactivate the project.

   Do not perform these procedures during the last week of October, February, or June. Delay them until the first day of the following month. This will ensure that departments have sufficient time to transfer funds into the default write-off programs and so avoid being assessed TIP charges.

3. Budget Office Instructions:
   • On an on-going basis, monitor deficits in the default write-off programs.

B. Removing Unallocable and Unallowable Costs

1. Department Instructions:

   • Immediately upon identification / notification of unallocable / unallowable costs, process a journal entry to remove the costs from the sponsored project to a departmental non-sponsored program with the correct function code.
   • Transfer resources into the nonsponsored program to cover the deficit to avoid assessment of TIP interest.

2. Sponsored Financial Reporting Instructions:
   • After unallocable / unallowable costs have been removed from the sponsored project, continue with procedures to inactivate the project.
   • If the department has not removed the uncollectible costs:
     • Prepare the journal entry (in accordance with guidelines set forth at the beginning of this procedure) to remove uncollectibles associated wth a budget overrun from the sponsored project to a departmental non-sponsored program with the correct function code, and charge the department a fee to process the removal if applicable. Keep a copy of the documents for the SFR work file and forward a copy of the documents to the Unit Administrator for the project file.
     • Continue with procedures to inactivate the project.

C. Removing Other Uncollectible Accounts Receivable

1. Department Instructions:
   • Ensure that technical and all other reports and deliverables have been submitted to the sponsor according to the terms of the grant / contract.
   • Be proactive in assisting SFR to facilitate collection process, where appropriate.
   • Forward pertinent payment-related information to SFR and grant administrators.
   • If it appears that a sponsor is not paying invoices timely because of financial difficulties or other complications, consider suspending expenditures until issues can be resolved.
   • Within 30 days of determination of uncollectibility, process a journal entry (in accordance with guidelines set forth at the beginning of this procedure) to remove uncollectibles from the sponsored project to a departmental non-sponsored program with the correct function code.

2. Sponsored Financial Reporting Instructions:
   • Follow reporting / invoicing deadlines agreed to in the grant / contract.
   • Follow Late Payment Procedures to facilitate collection of receivables.
   • At 120 days from the date of the invoice, make a determination, per the internal collection processes, if the Office of the General Council should be consulted. If the Office of the General Council is consulted, SFR will act as a liason between the Office of the General Council and the academic department to decide on the best course of action. If the Office of the General Council is not consulted and it is determined that the uncollectible resulted from problems at the department level (i.e., agency terms and conditions have not been fulfilled)
     • Remove any uncollected costs to the default write-off program or the program the academic department identified with the appropriate function code, and charge the department a fee to process the removal if applicable.
     • Continue with procedures to inactivate the project.

D. Subsequent Payment of Uncollectibles

1. Sponsored Financial Reporting Instructions:
   • If the uncollectible costs (or portion thereof) are subsequently collected from the sponsor (bankruptcy settlement, legal settlement, repayment plan, etc), the collected revenue will be applied to the sponsored project. A proportionate amount of direct and facilities and administrative (F&A) costs will be charged back to the sponsored project from the original nonsponsored program and/or F&A pool.