HARVARD UNIVERSITY
POLICY FOR TEMPORARY INVESTMENT OF SPONSORED FUNDS
There are two methods for temporary investment of nonfederal sponsored funds (250000-299999), Declining Balance and Fixed Amount. The Declining Balance method is used when investment is a sponsor requirement. The Fixed Amount method is used when investment is at the discretion of the Tub and is not required by the sponsor.
Interest income for both methods is posted annually, at the end of the fiscal year, in object code 4530. Thus, if a sponsored account were invested form July 1, 2000 to December 31, 2000, interest income would be posted in June 2001. If an investment period were to cross from one fiscal year to the next, interest income would be posted in the June following expiration of the investment period. For example, if an account were invested from May 1, 2000 to October 31, 2000, interest would be posted only once in June 2001.
A.Declining Balance Investments - Sponsor Required
Declining balance investments earn T-Bill interest on the monthly balance. There is a stated investment period, which typically corresponds to the award period. No minimum investment amount is required.
B.Fixed Amount Investments - Not Required/At Request of PI/Department/Tub
There is a minimum investment requirement of $50,000 for a period of no less than six months. Fixed investments earn interest monthly at T-Bill + 1% based on the amount specified for investment. If the monthly balance drops below the amount of the fixed investment, the department may lose all or a portion of the interest it has earned. When requesting investment, the initiating department must specify both the amount and time period.
For example, a PI/Tub invests $100,000 for six months. If the balance in the account drops below $50,000 at any time during the investment period, the account will "lose" all interest it has earned during the investment period. If the account balance drops to an amount less than $100,000 but greater than $50,000, upon review by the Manager of General Accounting, a pro-rated interest amount or, depending on the circumstances which caused the drop in investment amount, the full interest amount may be credited to the account.
A. Declining Balance Method –Investment Required by Sponsor
1.At the time of the award (or its renewal/continuation), the appropriate sponsored programs office (OSR-AM, HMS-SPA, or SPH-OFS) reviews sponsor terms and conditions noting “requirement to invest” on Award Data Sheet.
2.Upon receipt of the Award Data Sheet, OSR-Operations establishes notification in account set-up process to flag Action Memo. A copy of the Action Memo is sent to the Manager of General Accounting, Joe DeCristoforo, who invests the funds and books interest income to object code 4530 at the close of the fiscal year as required.
B. Fixed Amount Method –Investment Elected by PI/Department/Tub
1.HMS and SPH
a.Department notifies HMS/SPH Financial Office and requests investment specifying amount and investment period. HMS/SPH Financial Office coordinates with local sponsored programs office to confirm that sponsor does not prohibit investment.
b.With sponsored programs signoff, the HMS/SPH Financial Office forwards request, with a copy to the initiating department, to the Manager of General Accounting, who invests funds and books interest income to object code 4530 at the close of the fiscal year as required.
c.The HMS/SPH Financial Office notifies OSR-Operations for notation in HURIS.
d.Continuation of an investment will not occur automatically at the expiration of the initial investment period. Continuation must be initiated by the requesting department in accordance with the procedures noted above.
2. All Other Tubs
a.The Department or Tub Financial Office sends investment request specifying amount and time period to the appropriate OSR-AM Assistant Director for confirmation that sponsor does not prohibit investment. OSR-AM reviews request, confirms allowability, and forwards to OSR-Operations for HURIS notation.
b.After completing HURIS data entry, OSR-Operations forwards the "approved" request, with a copy to the initiating department, to the Manager of University Accounting, for investment and posting of interest income to object code 4530 at the close of the fiscal year as required.
c.Continuation of an investment will not occur automatically at the expiration of the initial investment period. Continuation must be initiated by the requesting department in accordance with the procedures noted above.
Reconciliation and Review
On a quarterly basis the Manager of General Accounting sends a listing of all invested accounts to OSR-Operations for reconciliation/updating of HURIS.
20 Feb 2001