Colleagues,

[I sent this out to the list about a month ago and didn't get any replies,
except for a couple of other list members who wanted me to share my results
with them. If your organization has a materiality clause in their
contracts, please take a moment and share your information with us.
-- Thanks, Lee]

Our Grant & Contract Accounting shop here at Stanford University is
bedevilled by the necessity of refunding to sponsors trivial balances of
funds remaining after the completion of contracts and some grants. Because
our contracts very seldom contain a materiality clause, we are bound to
send a refund check for even a few cents if that's what remains when we
close the books. On the other hand, we'll absorb a small overdraft just to
avoid the paperwork of fixing it "the hard way". I'm sure our sponsors'
accountants feel the same way.

Let's face it -- the "deal makers" (PIs and sponsors) don't even have that
sort of thing on their radar screen when contracts are solicited and
offered. Contracting officers don't consider it, either, when negotiating
the contracts. Not until 'way down the line does the question come up in
the accounting shop -- and then it's too late. But it can cost both the
paying organization and the collecting organization hundreds of dollars all
together just to process a check for a few dollars or cents.

I want to prepare a suggestion to our Sponsored Projects Office that they
include in our contract negotiations a materiality clause which would agree
that negative or positive balances within some agreed-upon range would be
acknowledged as immaterial and neither billed nor reimbursed. But not being
a trained contract officer, I don't know how that could be best phrased.

Would readers who have such materiality clauses in their standard contract
language (or have seen good examples in other organizations' contracts)
please share with me the language they use?

I'll be eternally grateful if we can find a way to shake off some of this
inconsequential "busy work".

Lee

*****************************************
R. Lee Wood
Team Lead, Medical School Team
Grant and Contract Accounting
Stanford University
651 Serra Street, Room 110
Stanford, CA 94305-6215
Phone: (650)723-5681
Fax:   (650)725-4598
Email: xxxxxx@stanford.edu
*****************************************

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