The procedures that follow pertain to the refund or return of federal funds to the U.S. Treasury or U.S. Department of Education due to:

• Excessive cash balances on deposit that are not needed for program purposes;
• Unspent “advance” funds for awards that are closed;
• Monies returned by grant recipients due to audit disallowances;
• Cost reallocations (Expenditure Adjustment Journal transactions crediting federal funds);
• Any other accounting adjustment that results in an increase in federal fund cash that will not be immediately disbursed for program purposes and therefore must be returned to the U.S. Treasury.

This process should not be used for awards that are open for draws and returns via the federal draw system. Please note that while an agency might consider an award closed, the award may not have been closed by the awarding agency in the applicable draw system. If the award is open in the federal draw system, and OSC draws on your behalf, this return will be processed through the federal draw system, and if the intent is for a refund to be issued separate from the normal draw process, this needs to be communicated to [email protected] prior to entering any transaction that would bill against the award.

SINGLE PAYMENT VOUCHER

To generate a refund of federal funds by check to the U.S. Treasury or U.S. Department of Education, it is necessary for agencies to prepare and submit a Single Payment Voucher. For more information see Chapter XII, Section 6.J – Paying a Refund of this Guide. Before the agency submits the single payment voucher, the agency MUST first ensure the cash related to the refund has been posted in SFS. In some cases, funds to be returned will be recorded via an Adjustment Voucher. In other cases, the funds are excess cash from a previous federal payment or adjustment. Under no circumstances should a refund be paid to the Federal government until the related funds have been posted in SFS.

In the case of an audit disallowance, or any scenario where there is no new cash being posted to SFS, and an expenditure is being moved from a federal funding source to another source, the movement of this expenditure must be done prior to submitting the voucher for the return of cash to the Federal government. This should also be communicated to [email protected] to ensure no returns are mistakenly processed through PMS.

Amounts that are to be returned to the U.S. Treasury must never be charged to an appropriation that was provided to control grant expenditures since such charges are reported to the government as a use of grant funds. Refunds and returns back to the Federal Government are not State expenditures and, therefore, must be recorded as a reduction of federal grant revenues. If returns are charged to expenditure account coding, reported expenditures and disbursements on S1FS reports would be affected.

Any further questions concerning the required return of monies to the Federal government should be directed to the OSC Bureau of State Accounting Operations, Federal Payment Management Team at [email protected].  However, returns of monies to the Federal government should follow federal program guidelines and stipulations.  Agencies should be checking for instructions on their federal payment systems or with their federal program liaisons on how to properly return federal funds.  OSC is not responsible for ensuring federal program guidelines are followed.

Refund Voucher - Required Information

• Payee Name - For all refunds including those to USDOE or DHHS, the cognizant state agency should contact their federal program liaison or check their Federal websites to determine the proper payee name and mailing address.
• Invoice Number Field - the GAD - grant award number should be entered in this field. This field will be printed on the check remittance, indicating to the federal agency what award the refund applies to.
• Payment Note Box on the “Payments” tab - At a minimum, the following information must be provided:
  • Reason for the refund;
  • The revenue chartstring values where the refund/receipt was deposited. (Note the revenue chartstring should include the following fields at a minimum: Fund, Account (36121), PCBU, Project and Activity. This chartstring should represent EITHER where a refund check was deposited via Refund of Appropriation (ROA) OR the corresponding chartstring where expenditures have been moved off an award and the return of funds is unable to be processed through the normal draw process).
  • The voucher ID of the ROA or the journal ID that was used to deposit the refund/receipt into the SFS.
• Distribution Lines Coding - All refunds of excess or unneeded federal fund balances will be paid from the Comptroller's Refund Account (Fund 70200) and are charged to the following statewide ChartField values.

Once the voucher is audited, approved, and paid by OSC – Bureau of State Expenditures, the OSC - BSAO Revenue Unit will debit the federal revenue chartstring as listed in the Payment Note Box, which funds the payment of the voucher out of the Comptrollers Refund Account.

See Chapter XII, Section 6.D - Paying a Single Payment Vendor for additional information.

ELECTRONIC REFUNDS TO THE U.S. TREASURY

In some instances, the Federal government may require that the refund be sent electronically (e.g., wire transfer) to the U.S. Treasury. State agencies should contact the OSC Bureau of State Accounting Operations, Federal Payment Management Team at [email protected] for instructions on how to process electronic refunds.

Guide to Financial Operations

REV. 05/16/2024