See responses below.
> -----Original Message-----
> From: Lee Wood [SMTP:xxxxxx@LELAND.STANFORD.EDU]
> Sent: Monday, March 15, 1999 1:42 PM
> To: xxxxxx@hrinet.org
> Subject: Materiality Clause in Contracts
>
> 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.
[Baskett, Judith] We view this problem from the standpoint that it
is better to overrun than underspend a grant. At National Jewish the
investigator and then the department chair is responsible for any overdrafts
and have departmental administrative assistants to monitor spending. Any
overruns are transferred either to hospital budgets or discretionary funds.
If your institution does not have this flexibility, the materiality clause
seems reasonable with those sponsors willing to negotiate individual
contract/grant clauses. Good luck.
Judith Baskett
Director, Research Administration
National Jewish Medical and Research Center
1400 Jackson Street, F204
Denver, Colorado 80206
Tel: 303-398-1043
Fax: 303-270-2104
xxxxxx@njc.org
>
> 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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