Deficit Process for Sponsored Program Awards

Definition & Video

Sponsored Program Award Deficit: The amount by which allowable expenditures exceed the authorized funding amount or cash received on a sponsored program award or award line. Deficits do not include negative balances resulting from encumbrances or pre-encumbrances.

Deficits & Surpluses videoWatch the Video! Click on the video for a brief presentation on Deficits & Surpluses. Keep in mind that this same video will be used as part of the requirements to complete CORE’s Certificate in Research Administration. You may be required to watch the video again in order to obtain the necessary CORE credit. Note: This video has not been updated since Workday Finance went live in July 2023.

Departmental Monitoring

GCA encourages campus partners to monitor balances on sponsored program awards on a quarterly basis and to promptly clear any deficits.

The Grant and Award Line Summary R1202 Workday report allows users to view unspent balances on sponsored program awards within an organization.

Use the following prompts when running this report:

  • Period: Current and Prior Periods → select the Current Month
  • Time Period: Award Time Period → Award Life to Date (Award)
  • Grant Hierarchy: Sponsored Grants

During Closeout

If future award funding will be used to clear the deficit, the department is to provide GCA with a written plan for project expenditures and/or additional funding that will result in the deficit being cleared within the total award period. Send the plan to gcahelp@uw.edu.

If a deficit has not been resolved, or an approved deficit resolution plan is not in place when GCA begins closing the award line, GCA will contact the department for a worktag to transfer the deficit to.

If the deficit is not cleared within 90 days of the award line end date or GCA has not received an approved deficit resolution plan, GCA will contact the relevant Shared Environment and/or Dean’s Office for assistance in clearing the deficit. The PI, Chair, Department Administrator, and the Office of Planning & Budgeting will be copied.

Clearing Deficits

There are two ways to clear a deficit on a sponsored program award:

  1. Deficit transfer journal (lump sum)
  2. Accounting adjustment (individual expenses)

Deficit Transfer Journal

At this point in the closing process, the Award Line Lifecycle Status is Closeout in Progress which means that only GCA can post expenditures to the grant worktag. Once an allowable worktag has been identified, send an Award Portal ticket to GCA under the Deficit Transfer Request topic. GCA will review the request and submit the journal to transfer the deficit from the grant worktag and proceed with the closing process.

Accounting Adjustment

Deficits may be cleared by processing accounting adjustments which require identifying specific transactions to be transferred and may be transferred to other sponsored program awards with the proper justification. Send an Award Portal ticket under the Deficit Transfer Request topic to let GCA know that you plan to transfer expenses. GCA will then change the Award Line Lifecycle Status to Pending Adjustment so the accounting adjustments can post to Workday. See GIM 15 –  Accounting Adjustments on Sponsored Awards.

Allowable Worktags for Deficits

The following are allowable worktags to transfer a sponsored program deficit to:

  • Cost Center (prefix: "CC")
  • Gift (prefix: "GF")
  • Program (prefix: "PG")
  • Activity (prefix: "AC")
  • Stand-alone grants (prefix: "GR") including Startup, Retention, CoMotion-Royalty, Departmental Research Support, Residual Balance

Closing the Final Year of a Competitive Segment (for DHHS awards)

Deficits (referred to as “cost overruns” by DHHS) are allowed to be transferred within a competitive segment. However, per DHHS and NIH policy states that “Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.”

GCA cannot transfer a deficit between competing segments but the department can prepare an accounting adjustment to transfer expenditures to the competing continuation as long as the sponsor allows pre-award spending and the expenses meet the four cost principles.

Deficits cannot be transferred to another sponsored program award without written sponsor approval.

Cash Deficits

When a sponsor does not fully reimburse the University for all allowable costs, a cash deficit occurs. This happens for a variety of reasons:

  • Changing financial position of the sponsor (e.g. bankruptcy)
  • Non-performance by the Principal Investigator
  • Disputes over the results of the project

GCA is often not aware of these situations until well after the end of an award period, making it difficult to apply the standard deficit process.

The process for resolving a cash deficit is as follows:

  • GCA will exhaust all attempts to collect payment from the sponsor.
  • Once the sponsor has confirmed that they will not remit payment, GCA will notify the department that the sponsor refuses to pay and provide the resulting deficit balance.
  • If the deficit is not cleared within 30 days of notification, GCA will contact the relevant Shared Environment and Dean’s Office for assistance in clearing the deficit.

Deficit Resources