Accounting Services

Deficit Fund Procedures

Scope:
This procedure documents the process for identifying and reporting operating funds that are in a deficit status, either by cash or budget deficit.
Authority:
University Regulations, Article 7, Section 3-7-112, Deficit Accounts
Definitions:
Deficit Fund: A fund is in a deficit status if the commitments exceed the resources. Specific application of this definition varies by the type of fund.

For budget-based funds: The budget at the fund level represents the total resources of the fund. If encumbrances plus expenditures exceed the budget, the fund is in deficit.

For cash-based funds: The primary resource for these funds is cash. If the cash balance becomes negative, the fund is in deficit.

Financial Manager: The financial manager is the individual with primary responsibility for a fund as reflected on the fund application or as amended by written notification. The General Accounting Office retains the official record of the financial manager for each fund.
Procedures:
Financial managers are responsible for reviewing fund balances on a regular basis.

Two Insight reports are available to assist in monitoring deficit fund balances. The reports are located in the Insight Business Manager View, Finance Tab. The reports are updated and available for viewing daily.

FIN028 Cash Deficit Report
– reports cash-based funds with deficit balances

FIN029 General Fund Budget Deficit Report – reports budget-based funds with deficit balances

The General Accounting Office will review these reports for all University funds on the 10th day of every month and will send an email notification to business managers and financial managers with a fund(s) in deficit status.

The business manager is required to provide an explanation, written or email, to the University Controller within 7 days of the date of the notice. The written explanation should address the reason for the deficit position and the plan for eliminating the deficit within the next thirty-day reporting period.

If deficit balances are the result of internal budget or timing issues, an explanation along with the expected date of resolution should be provided by the business manager.

If the deficit cannot be eliminated within the required period, it will be considered an internal loan. Interest will be charged on the deficit balance at the current State Treasury Rate.

The repayment of the deficit and interest shall be made within the shortest time feasible, but in no event past the end of the applicable fiscal year, unless otherwise authorized in writing by the Associate Vice President of Finance.

In the case of amounts owed to the University to which interest is traditionally not charged, such as scholarship and financial aid commitments paid through the UNC Foundation, or other sources at the disposal of the organization, the deficit must be eliminated within thirty days following the written report to the Controller, unless expressly waived in writing by the Ass Vice President of Finance.