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Policy: II.B.6

Issued: April 1, 1995

Owner: University Comptroller

Latest Revision: July 10, 2000

CASH DEFICITS

1.0 Purpose

The University's policy is that all accounts must have a positive cash balance. A deficit cash balance in an account is expressly prohibited unless the deficit is properly authorized.  This policy states the options under which deficits can be granted, and the consequences for unauthorized cash deficits.

2.0 Policy [Top]

2.1 Unauthorized Cash Deficits

Definition: Accounts that are in deficit without the written authorization of the University Comptroller for that deficit, or accounts that exceed 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.


2.2 Authorized Cash Deficits - Limited Time Period

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

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 that are simply overspent will not be granted authorizations.

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

 

2.3 Authorized Local Fund Cash Deficits - 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:


2.4 Notification

Notification of accounts with a cash deficit will be sent to appointed representatives monthly.

3.0 Definitions [Top]

4.0 References [Top]

5.0 Approvals and Revisions [Top]

Previous version in effect from 4/1/1995 to 7/10/2000 available in policy archive.


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