10.2 - Federal Payment Policy

It is the policy of the University to maintain written payment and billing procedures. Payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the University whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.

The following policies shall apply to the preparation and submission of payments and billings to Federal awarding agencies under awards made to The University:

Advance Payments

1. To the extent available, the University must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments.
2. The funding agency must not require separate depository accounts for funds provided to the University or establish any eligibility requirements for depositories for funds provided. However, the University must be able to account for funds received, obligated, and expended.
3. Advance payments of Federal funds must be deposited and maintained in insured accounts whenever possible.
4. The University must maintain advance payments of Federal awards in interest-bearing accounts, unless the following apply:
   1. The University receives less than $250,000 in Federal awards per year.
   2. The best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year on Federal cash balances.
   3. The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
5. Interest earned amounts up to $500 per year may be retained by the University for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS).
6. Advance funds will be recorded into the general ledger as cash and deferred revenue. Funds will be considered earned and recognized as revenue when corresponding allowable costs are incurred.

Reimbursement Requests

Reimbursement is the preferred method when the requirements for advance payment cannot be met, when the grant documents specific as such, or when the University requests payment by reimbursement. The following policies shall apply to payments that are made by reimbursement request for federal awards:

1. The University will request reimbursement after expenditures have been incurred when the award specifies this method.
2. Each award normally specifies a particular billing cycle; Therefore, a schedule is established for each grant to ensure that reimbursement is made on a timely basis along with any other reporting that is required.
3. Requests for reimbursement of award expenditures will use the actual amounts as posted to the general ledger as the source for all invoice amounts.

Reimbursement requests are submitted in the format preferred and required by the funding agency.

At the time the request for reimbursement / drawdown is submitted, revenue and accounts receivable shall be recorded.

Adjustments

To the extent the University identifies adjustments to amounts previously reported to federal agencies, revised reports shall be prepared and filed in accordance with the terms of each federal award.

Improper Payment

In accordance with 2 CFR §200.1,”Improper payment” means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.

Proper review of grant expenditures will be made prior to seeking payment in order to detect any unallowable costs. However, when errors or corrections are needed, the University will take prompt and appropriate actions to correct with the appropriate funding agency so that the total amount charged to the Federal grant are accurate, allowable, and properly allocated. The University will track improper payments to ensure that the risk associated with the discovery of an improper payment is not repeated, and to ensure that the risk is mitigated. A review will occur to identify why the error or correction was needed and will consider the following aspects:

• Why did the error occur?
• What is the remedy to correct the error?
• How will this error and correction by documented?
• What is the process for reallocating funds?

The University will implement effective corrective actions based on the root cause analysis.