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1. Q: Why are my NE and NG funds now earning interest?
A: The Internal Interest Policies group (comprising central FAD and tub staff) met this year to develop equitable policies for paying interest income on many fund types including NE/NG. Beginning July 1, 2002, interest income will be paid automatically on NE/NG fund credit balances, eliminating the need for tubs to submit requests to receive interest on individual funds.
2. Q: How may I use the interest income?
A: The use of interest income must first follow the sponsor's terms and conditions. If there are no terms affecting the use of interest income received from University sources, tubs may use it at their discretion for project-related or other purposes. Before interest income may be used for other purposes, it must be transferred to a non-sponsored fund. Transferring residual income will also facilitate the account's closing. Tub financial officers may independently use income transfer object code 5910 within their own tub to transfer interest income to another fund when appropriate.
3. Q: Do FG (federal grants and contracts) funds earn interest?
A: It is against Federal regulations for grant recipients to retain any interest on Federal funds. The vast majority of our Federal funding is received through a letter of credit reimbursement system, leaving no credit balance in the fund. There are, however, some Federal agencies that pay in advance. These funds are deposited into interest bearing accounts and the interest earned is remitted to our cognizant agency, the Department of Health and Human Services, on an annual basis.
4. Q: How do I identify the different funds?
FG funds are in the 100000-199999 range
NE funds are in the 200000-249999 range
NG funds are in the 250000-299999 range
5. Q: Which of my NE/NG funds will generate interest income?
A: NE/NG funds having a credit balance in the prior month will generate interest income that will be paid in the current month.
6. Q: How is a credit balance determined?
A: A credit balance is determined by the sum of a fund's asset, income and expense amounts, excluding interest income, in the prior closed month as posted in the general ledger.
7. Q: Which object codes are used to determine credit balances?
A: Balances in object codes: 0120, 4000-4529,4531-9509 are summed to derive fund balances. Interest income (object 4530) is excluded because interest paid is simple interest, not compound interest. That is, we won't pay interest on interest.
8. Q: How much interest do I earn?
A: Annual simple interest of 5.1% is paid monthly on the prior month's credit balance, excluding year-to-date interest income. Each month, 1/12 of 5.1% or 0.00425% of a NE/NG fund's prior month's credit balance, net of year-to-date interest income, will be paid back to the fund's non-disabled main account.
9. Q: How is the interest paid on NE/NG fund credit balances?
A: Monthly, OSP will calculate the NE funds' credit balances and interest due. For each fund generating interest income, OSP will identify the main account's 33-digit string to receive the income. OSP then enters the receiving accounts' information and income amounts into an ADI (automated data interface) template file. OSP then sends the ADI file to the FAD-OFS accounting office where Joe DeCristoforo (phone 495-4592) or staff will upload the file which posts the transactions to the General Ledger.
The NG funds will have their interest income paid by an automatic process executed monthly by OFS. OSP will not affect the processing of NG funds' interest.
10. Q: Why does this process require both OSP and OFS?
A: Only OFS (Joe DeCristoforo) may transact to object code 4530, "Interest Income." OSP has the responsibility for calculating the interest income and assigning the appropriate accounts to receive the income.
11. Q: Who in OSP is managing this process?
A: The OSP analysts, directed by Director of Financial Services (phone: 496-2513), will prepare the monthly ADI templates for the NE funds' interest income. The OSP staff will analyze funds to receive interest income and will be in contact with tub/fund administrators if any questions about the funds arise.
12. Q: When does this entry occur for each month?
A: Because interest is calculated on a prior month's credit balance, net of YTD interest income, the transaction is booked after the prior month has closed. For example, June's balances will earn interest to be booked in July; July's balances will earn interest in August, etc. .
13. Q: How may I view or report the interest income booked to my accounts?
A: Use a Detail Listing report or Summary Actuals report in AWS-2 or HUDINI. Select your tub(s), funds in the 200001-299999 range, and object code 4530 for the period of choice. The PER differentiates interest income from other types of income
14. Q: How may I request a correction to an improper income entry?
A: Contact your OSP financial analyst (Director of Financial Services 496-2513), or the team manager assigned to your school or tub. If approved, OSP will submit a correcting journal entry to OFS using object code 4530.
15. Q: What about inactive projects whose funds carry a credit balance?
A: If a NE/NG fund has a credit balance in the prior month and is not disabled, yet its project has ended, interest will continue to be paid until it is disabled.
16. Q: What about a project that had a credit balance last month but is zeroed out this month, e.g. the credit balance was returned to the sponsor?
A: If a fund had a credit balance in the prior month and has a balance of zero this month, no interest will be paid. OSP compares prior/current balances and will assume that the project is no longer functional if it has a zero balance in the current month.
17. Q: What about interest income remaining after a project has expired?
A: If the sponsor has no restrictions on the use of interest income paid from University sources, and all project expenses have been incurred, the remaining interest income should be transferred to a non-sponsored fund for any use and to zero-out the fund's balance to facilitate account closing.
18. Q: Who is paying me the interest income and where does it come from?
A: Interest is paid from the University's "central bank" of funds whose assets are managed to generate income. That income will now be credited to the NE/NG funds that earn it.
19. Q: How may these policies and procedures be amended?
A: Periodically, the process and methods affecting interest paid on non-federal fund credit balances will be evaluated by the Vice President for Finance, tub financial officers and OSP staff. Any proposed changes to policies or processes affecting sponsored funds will be presented to SPOC members for advice and comment prior to their implementation. The interest rates used will be reassessed annually by OFS and the Internal Interest
