Deficit Process for Sponsored Program Awards

Definition

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.

GCA also defines a deficit as an over-expenditure of $25.00 or more. GCA will resolve an over-expenditure of less than $25.00.

Overview

There are two kinds of deficits: award deficits and cash deficits.

Award Deficits

An award deficit occurs when the department spends more than what was awarded by the sponsor. There are two different scenarios where this can happen:

  • When the total expenditures exceed the total amount awarded by the sponsor or
  • When expenditures are greater than an award limitation (e.g. restricted funding, budget line item limitation, or rebudgeting limits)

Cash Deficits

A cash deficit occurs when a sponsor does not fully reimburse the University for all allowable costs. This happens for a variety of reasons including but not limited to:

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

The process for resolving a cash deficit is as follows:

  • 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.

Monitoring Deficits During the Award

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 make two attempts to obtain a deficit transfer worktag before transferring the deficit to the school or college’s Indirect Cost Recovery worktag.

Resolving Deficits

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

  1. Submit a request for a deficit transfer journal (lump sum)
  2. Prepare an Accounting Adjustment (individual expenses)

Deficit Transfer Journals

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, submit the deficit transfer journal, and proceed with the closing process.

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

Unallowable Worktags for Deficits

The following worktags are not allowed to receive a sponsored program deficit:

  • Self-sustaining worktags
  • Recharge worktags
  • Deficits cannot be transferred to another sponsored program award without written sponsor approval

Accounting Adjustments

Deficits may be cleared by processing an Accounting Adjustment or Payroll Accounting Adjustment to transfer expenditures from the grant. This requires identifying specific expenditures to be transferred and may be transferred to other sponsored program awards with the proper justification. Refer to the Accounting Adjustment Job Aid  or the Payroll Accounting Adjustments User Guide for details.

Send an Award Portal ticket under the Deficit Transfer Request topic if 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.

Closing the Final Year of a Competitive Segment (for HHS 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.

Deficit Resources

Watch the Video! Watch this 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.

Additional Resources