**INACTIVE POLICY**

For Current Policies:
Policy Table of Contents

 

                      UNIVERSITY OF VIRGINIA
           FINANCIAL AND ADMINISTRATIVE POLICIES MANUAL



TITLE:  CASH DEFICITS                                POLICY: II.B.6x 
 
                                                                   

BACKGROUND

The University's policy is that all accounts should have a positive
cash balance, unless a deficit is authorized for a given time
period.  This policy states the options under which deficits can be
granted, and the consequences for unauthorized cash deficits.


AUTHORIZED LOCAL FUND CASH DEFICIT AUTHORIZATION - UNLIMITED TIME
PERIOD

Definition:

      Express written authorization granted to general ledger
      accounts that have University-wide significance (e.g., the
      General Fund), in that they are necessary for the day-to-day
      operations of the University of Virginia, as a whole.

All unlimited cash deficit authorizations (i.e., without an end
date) will be reviewed on an annual basis.  To facilitate this
review, each account administrator will be asked to justify the
continued existence of the authorization.  If it is determined that
the unlimited authorization is no longer necessary, one of the
possible actions will be taken:

      The authorization will be downgraded to limited status and
      will then be subject to the policies governing such accounts,
      as well as the authorized deficit amount established for the
      account; or

      The authorization will be removed.


AUTHORIZED CASH DEFICITS -  LIMITED TIME PERIOD

Definition: 

      Express written authorization granted to University general
      ledger accounts that must carry a deficit for a short period
      of time.


AUTHORIZED CASH DEFICITS -  LIMITED TIME PERIOD, CONT'D.

The granting of limited cash deficit authorizations for University
accounts is to be restricted to those accounts for which the
deficit is acknowledged to be unavoidable through error (e.g., late
billing due to failed equipment, etc.)  or operational/timing 
problems (as can occur with endowments, endowed chairs, etc.) and
of a temporary nature.  Accounts which are simply overspent will
not be granted authorizations.

Limited cash deficit authorizations will expire at the end of each
fiscal year.  Each department/organization, at the beginning of
each fiscal year, must request, in writing, that the authorization
be renewed for any subsequent period.  

NOTE: No authorization is needed for certain ranges of accounts in
      which cash deficits may occur during the normal course of
      business.  These accounts include central clearing accounts,
      endowment accounts, sponsored program accounts (ledger five),
      and Health Services Foundation ledger eight accounts.


UNAUTHORIZED CASH DEFICITS

Definition:     

      Accounts that are in deficit without the written
      authorization of the Assistant Vice President for Finance for
      that deficit, or accounts that have exceeded their authorized
      deficit.

At such time that an unauthorized deficit occurs, each
department/school will be asked to identify another local fund
account, approved for similar types of expenditures, which will be
charged should the account remain in deficit for a period greater
than three (3) months.  In the case where a ledger six account is
identified as the backup account, the account donor's restrictions
must also permit the "similar type expenditures."

If the department/school has not identified another local fund
account, or if the designated account is already in deficit, the
account in deficit will be reported to the Dean's Office or
appropriate Vice President who will be asked to provide an
appropriate local fund account number from which funds can be
transferred to cover the deficit.  The account must be approved for
similar types of expenditures.


UNAUTHORIZED CASH DEFICITS, CONT'D.

While the deficit continues, the administration will impose a fine
or interest charges (similar to what is paid out on imputed
interest accounts) against the responsible department.

At the end of the fiscal year, accounts which have incurred an
unauthorized deficit greater than $500.00 for a period of three
months or more will be closed.  Any deficits in these accounts will
be charged to the account designated above to allow the account to
be deleted from the Financial Accounting System (FAS).


NOTIFICATION

Notification of accounts with a cash deficit will be sent to
appointed representatives quarterly.  All accounts with an
unapproved deficit for a period greater than three months will be
closed.


ISSUED BY:                                                04/01/95 
Assoc Comptroller
Accounting Operations         2.2.6.1