Washington State University
BUSINESS POLICIES AND PROCEDURES MANUAL

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Overdrafts

Budget administrators are responsible for ensuring that total expenditures remain within budgeted amounts. If expenditures exceed budgeted amounts, budget administrators are responsible for promptly initiating procedures to clear overdrafts.

Each department chair is responsible for establishing internal departmental policy for resolving overdrafts. Departmental policy is to conform to University overdraft policies and procedures included in this section.

Overdrafts can be prevented or minimized by careful account monitoring. See 30.07 for guidelines on how to use the Budget Statement. See 85.33 for instructions on how to obtain access to online financial information.

Differing overdraft procedures apply to various types of WSU accounts. Review the section below that applies to the account in question.

The following applies to accounts in programs 01-10.

The area administrator (usually a dean) has the responsibility of ensuring that the area as a whole is not overdrawn.

A budget administrator (usually a chair) who is faced with a potential overdraft is responsible for consulting with his or her area administrator.

The area administrator has at least two options for dealing with overdrawn accounts:

• The budget administrator may be told to cease all expenditures on the account.


• The area administrator may reallocate funds from an appropriate account under his or her jurisdiction by initiating an allocation transfer request to the Budget Office. The allocation transfer request includes:

Account coding of both accounts, and

Signature of an area administrator or designee who has expenditure authority for both accounts.

NOTE: Both accounts must be within the same fund and subfund. In most cases both accounts must be within the same program. Consult with the Budget Office before making transfers between programs.

The following applies to sponsored accounts in programs 11-14.

The principal investigator and department chair are responsible for ensuring that expenditures on a sponsored account do not exceed the amount awarded by the sponsor.

When one of the following conditions occurs, the condition meets acceptable standards of internal controls and accountability if corrected within 60 days of the end of the month. (NOTE: A sponsor's deadline may require earlier correction.)

Occasionally an account is overdrawn because the department or principal investigator has initiated or expects one of the following conditions:

• Receipt of supplemental funding,


• An expenditure transfer to clear an overdraft on a terminated account.


• An expenditure transfer to transfer a charge from a home account to a sub-account or from a sub-account to a home account,


• An Advance Expenditure Authorization (see 40.23).

The above conditions are not all inclusive.

Within the scope and context of this section, short-term overdrafts (up to 90 days) may occur in the following types of accounts:

• Accounts with open-ended termination dates, i.e., 99/99/99,


• Accounts for which the initial award is pending (see 40.23),


• Accounts supported by intermittent funding when receipts automatically allocate.

The Assistant Vice President for Business and Finance or authorized designee may approve other short-term overdrafts caused by unique conditions.

Upon discovery of an overdraft, the department chair identifies an appropriate alternate account to absorb the excess expenditure(s).

Generally, such expenditures are transferred to a departmental state-supported account in programs 01-10. Expenditures are not transferred to another sponsored account unless specifically permitted. See expenditure transfer procedures in 30.25.

Sponsored Programs Services periodically reviews the status of all sponsored accounts.

Sponsored Programs Services sends a notice of each overdraft account to the responsible department chair. Upon such notification the department chair directs the principal investigator to immediately cease making expenditures on the account.

The department chair and/or principal investigator identifies an alternative source of funding and transfers excess expenditures. See 30.25.

The overdraft notice sent to the department chair includes a response due date for clearing the overdraft.

If the department fails to take action by the response due date, Sponsored Programs Services notifies the Executive Budget Director and the Provost. The Provost works with the applicable dean to determine the appropriate source of funding to resolve the overdraft.

Occasionally, circumstances prohibit a department or principal investigator from clearing an overdraft by the response due date. The principal investigator may submit a written extension request explaining the circumstances to Sponsored Programs Services Director or an authorized designee.

Sponsored Programs Services separately monitors the following classes of sponsored accounts and issues overdraft notices when appropriate.

• Accounts with a termination date of 99/99/99.
  (open ended)


• Accounts with a GAR Exception Code.
  (Guarantee Account when funding is pending.)


• Accounts to which receipts automatically allocate and funding is intermittent.

Terminated accounts with an overdraft of $25.00 or less (allowable costs only) are excluded from overdraft review and correction. When there are sub-accounts for an award, the overdraft amount is the total of all sub-accounts and the home account.

The following applies to other accounts in programs 15 and above

Budget administrators are responsible for ensuring that such accounts do not become overdraft. If an overdraft occurs (or is anticipated), the administrator may request that the Controller transfer expenditures or revenues.

The budget administrator may transfer expenditure(s) from the overdraft account. See 30.25 for procedures.

The budget administrator may transfer revenue into the overdraft account.

NOTE: Monies from state-supported accounts (programs 01-10) may not be transferred to accounts in programs 15 and above.

The administrator routes a memorandum to the Controller indicating:

• Names and coding of both accounts.


• Reason for the transfer.

An administrator with authority over both accounts signs the request memorandum.

The transaction is initiated after Controller's Office personnel determine that the transfer is appropriate.

The General Accounting Section of the Controller's Office periodically reviews the status of accounts in programs 15 and above.

The General Accounting Section sends notifications to administrators of overdraft accounts. Administrators are responsible for immediately clearing the overdraft by revenue or expenditure transfer as described above.

If the administrator does not correct the overdraft within two weeks of the first notification, the Controller sends a second notice of overdraft with a copy to the responsible dean.