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University of Louisville
 OFFICIAL
UNIVERSITY
ADMINISTRATIVE
 POLICY
 
 
University Community (administrators, faculty, and staff)
 
POLICY NAME
DEPOSIT OF CHECKS WITHOUT A PROPERLY EXECUTED AGREEMENT
EFFECTIVE DATE
July 1, 2004
POLICY NUMBER
RES-2.03
 
POLICY STATEMENT

Checks/Income for 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 payer 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.

 
REASON FOR POLICY

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 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 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:

(1) 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),  (2) language on the check indicating that in cashing the check you have waived any further rights of recourse against the payer, (3) implied authority that the University or related organization has agreed to accept the terms and conditions of an agreement/purchase order by the payer (when the terms and conditions have not been reviewed or approved), and (4) 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.)

 
 
DEFINITIONS
 
PROCEDURES
 

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 Award, the unit should e-mail either (1) the Director, Office of Sponsored Programs Administration/Service Account for SPA when the payer is a governmental entity or a not for profit organization or (2) the Director, Office of Industry Engagement/Service Account for OIE when the payer is a for-profit organization or the agreement is an industry funded clinical trial.  The Director of the respective EVPRI unit will make a determination based on the status of negotiations with the payer 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 Award, 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 payer 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.

 
RESPONSIBILITIES
 

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 the SPA, the CCD or the OIE for repeated infractions.

 

Institutional Officials: Sponsored Programs Administration (SPA), Clinical Contracts Division (CCD) or Office of Industry Engagement (OIE)

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 payer.

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 SPA, CCD or OIE 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 the SPA, the CCD or the OIE.

 
HISTORY
 
Revision Date(s): 12/03/2013
Reviewed Date(s):
 
ADMINISTRATIVE AUTHORITY 
Executive Vice President for Research and Innovation
 
RESPONSIBLE UNIVERSITY DEPARTMENT/DIVISION
Sponsored Programs Administration
Clinical Contracts Division
Industry Engagement

Sponsored Programs Administration
J.D. Nichols Campus for Innovation & Entrepreneurship
Louisville, KY 40292
Phone:  1-502-852-3788

Email:  grntmgmt@exchange.louisville.edu

The University Policy and Procedure Library is updated regularly.  In order to ensure a printed copy of this document is current, please access it online at http://louisville.edu/policies.

 
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