2.6. OVERDRAFT APPROVAL

A. Introduction

Overdrafts are used to provide temporary spending authority for an account for various reasons. If the increase in spending authority is due to a change in business model, a transfer document must be processed in the FRMS Transfer System to increase the department’s budget. Generally, overdrafts do not automatically carry over to the new fiscal year.

B. Submitting Overdraft Approval Requests

Requests must include the following information:

• account number
• amount requested
• proposed expiration date
• reason for the overdraft
• date the overdraft will be covered
• how the overdraft will be covered (e.g. new income, transfer from another account, commitment from institutional funds, etc.)

If the request is approved (see each account description below for appropriate approvers), it will be forwarded to the appropriate department for processing. The type of account determines where to submit the overdraft request:

• Educational and General Funds (14- and 20-accounts)
  
  An authorized signer on the budget group (*DEFINE GG5 command) should send a written request via email to the budget director. If the request is approved, the Budget Office sends a request to FAR to add the overdraft to the pool balance and copies the requestor. If the request is not approved, the Budget Office informs the requestor.
• Service Center Funds (18-accounts)
  
  The guarantee account associated with the service center must be used to cover deficits prior to requesting an overdraft. An authorized signer on the budget group (*DEFINE GG5 command) should send a written request via email to Federal Reporting in the Office of Accounting & Financial Management at oa.sc@austin.utexas.edu. In addition to the requirements above, an overdraft request must include the following:
  • prior approval by the unit’s department head or chair
  • forecast for remaining fiscal year income and expenses
  • statement as to whether service center rates will be adjusted to prevent future overdrafts

  Requests are reviewed by C&A with final approval granted by the director of Accounting and Financial Management and the associate vice president. Federal Reporting will send an email to notify the requestor of whether the request is approved or denied. Approved overdraft amounts are added to the pool balance of an account by FAR.

• Noneducational and General Funds (19-, 29-, and 30-accounts)
  
  An authorized signer on the budget group (*DEFINE GG5 command) should send a written request via email to the associate vice president. If the request is approved, the Budget Office sends a request to FAR to add the overdraft to the pool balance and copies the requestor. If the request is not approved, the Budget Office informs the requestor.
• Sponsored Projects Award Administration (26-accounts)
  
  For information about obtaining overdraft approval for Sponsored Projects Award Administration (26-accounts), see the Handbook of Business Procedures  17.3. Origination of Awards and Credit Policy.
• Plant Funds (36-accounts)
  
  Requests for overdraft approval should be sent via email to Plant Funds at oa.plt@austin.utexas.edu. Requests from departments will be submitted to the associate vice president and to the budget director for approval. Plant Funds will send an email to notify the requestor of whether the request is approved or denied. Approved overdraft amounts are added to the pool balance of an account by Plant Funds in Accounting and Financial Management.
  
  Note: Overdrafts for plant-related items are usually only allowed if there is a request for transfer of funds in process in the FRMS Transfer System and timing is critical. However, a short-term overdraft is allowed in some cases.
• Agency Funds (41-accounts)
  
  Overdrafts are not allowed on Agency Funds (41-accounts), which comprise funds held for external parties. As stated in the Texas Constitution, Article 3, Section 50. Loan or Pledge of Credit of State, the university is not permitted to extend credit on behalf of the state.

Part 2. Fund Accounting - Table of Contents