Re: Materiality Clause in Contracts Judith A. Baskett 15 Mar 1999 16:39 EST
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 > ***************************************** > > > ====================================================================== > Instructions on how to use the RESADM-L Mailing List, including > subscription information and a web-searchable archive, are available > via our web site at http://www.hrinet.org (click on "Listserv Lists") > ====================================================================== ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ======================================================================