How do I process a grant or scholarship refund check?

We sent a check to a grantee, and they cashed it.  Since they didn't need all (or part) of it, they sent one of their checks back to us as a refund or reimbursement.  How do I handle that?

Answer:

Often, a check is sent to a grantee who needs to return all or a portion of the money after they have cashed the original check. This frequently occurs with scholarships- a student either doesn't attend that semester or is changing schools.  When some portion of the payment is returned, you will need to process a refund to the grant. 

Best Practice Recommendation: If the grant refund is being recorded during the same year the grant was expensed you should credit the grant expense account.  If the grant refund is being recorded in a subsequent year from when the grant was originally expensed you should use a grant refund account so that the current years grant expense is not incorrectly decreased.

These are the main parts to processing a refund:

• Record the receipt of the check
• Adjust the Grant or Scholarship record

I. Record the receipt of the refund check: 

To Record the receipt of the check, do one of the following. Do not do all three rather pick one of the methods below to record the refund check: 

a. Process a Non-Gift in the Gifts Module

• How to Post a Non-Gift where the Entire Amount is a Non-Gift Amount

OR  

b. Do a simple two-line Journal Entry
 
OR
 
 c. Populate the 'Expense/Revenue Account' and 'Cash Account' fields in the Adjustments window when adjusting the Grant.

Regardless of which method you choose to record the refund check, you will be debiting the cash account that you are depositing the check into and crediting either the Grant Expense account or a Refund Revenue account.

Available to Spend Note: If you need the available to spend on the fund to increase after the refund is processed, you will need to use the correct credit account on the transaction that is the same account type as being used for the ATS code on the fund.

For example, if your ATS code is based on a single fund balance which is a Q3 account, then the credit account you use to record the receipt of the check needs to be a R3 so that the credit will roll to the fund balance.

It is recommended to use a grant refund account and not a contribution account since refunds are not gifts and also you would not want to affect the grant expense account either. This way, all refunds are separated into their own account.

II. Adjust the Grant Record to reflect the refund
 
A. Complete Refund (entire amount is refunded)
 Use this option if you received a refund check for the entire amount of the grant payment(s) that were paid out:

 1. Open the Grants Module and go to the Application History Tab
 2. Open the Grant to be adjusted.
 3. Go to the Adjustments Tab
 4. Select Grant Adjustments and click Run Process
 5. If there is more than one payment line, select the line you would like to adjust.
 6. Enter the apply date of the Refund
 7. Click the arrow in the Status field and select the desired code to apply to the adjusted Grant (for example, RC – Refund Complete). This code will help make identification of refunded Grants easier when you run reports and inquiries.
8. Enter a Reason for Adjustment. This reason will be included on the Grant Cancel / Refunds report and is helpful in tracking trends in your grant adjustment process.
 9. Click the Refund radio button
10. Check the checkbox for 'complete refund' which refunds the entire amount of the grant.
11. (optional) If you have chosen to do the third method of depositing your refund check from step Ic above, Populate the 'Expense/Revenue Account' and 'Cash Account' field . Do not do this step if you recorded the refund check using step Ia or Ib.
12. Either click in a different field or press the Tab key on your keyboard. The system will automatically update the Refund Amount field with the appropriate amount and click the Save button which looks like a small floppy disc on the left side.

NOTE: If no payments have been made on the Grant, the Grant was canceled, or the refund amount is greater than the paid amount on the selected payment line, a message will appear to let you know that the refund amount cannot be greater than the paid amount.

13. Click Process adjustment. The Grant Adjustment Verification report opens in the FIMS Viewer. This report verifies the adjustment information that you entered and provides information about the steps that will be taken if the adjustment is fully processed.
14. Once you have reviewed the report and are sure you want to process the adjustment, click Commit Changes on the FIMS Viewer menu bar.

• A Grant refund will not create a debit memo to be posted in accounts payable.
• If you entered GL accounts in step 11, you will need to go to the general ledger and post the entries that were created. 
• If you chose to do method 1a or 1b to record the receipt of your refund check, then no further action is required.

 
B. Partial Refund (only part of the amount is refunded)
Use this option if you received a refund for only part of the grant payments paid out and the grantee kept and used some of the money and if you do not plan on re-cutting a check again out of the same grant for the refunded amount.

1.  Open the Grants Module and go to the Application History Tab
2. Open the Grant to be adjusted.
3. Go to the Adjustments Tab
4. Select Grant Adjustments and click Run Process
5. If there is more than one payment line, select the line you would like to adjust.
6. Enter the apply date of the Refund
7. Click the arrow in the Status field and select the desired code to apply to the adjusted Grant (for example, RC – Refund Complete). This code will help make identification of refunded Grants easier when you run reports and inquiries.
8. Enter a Reason for Adjustment. This reason will be included on the Grant Cancel / Refunds report and is helpful in tracking trends in your grant adjustment process.
9. Click the Refund radio button.
10. Enter the amount of the partial refund in the Refund Amount field and click the Save button which looks like a small floppy disc on the left side.
11. (optional) If you have chosen to do the third method of depositing your refund check from step 1c above, Populate the 'Expense/Revenue Account' and 'Cash Account' field. Do not do this step if you recorded the refund check using step 1a or 1b.

NOTE: If no payments have been made on the Grant, the Grant was canceled, or the refund amount is greater than the paid amount on the selected payment line, a message will appear to let you know that the refund amount cannot be greater than the paid amount.

12. Click Process adjustment. The Grant Adjustment Verification report opens in the FIMS Viewer. This report verifies the adjustment information that you entered and provides information about the steps that will be taken if the adjustment is fully processed. 

13. Once you have reviewed the report and are sure you want to process the adjustment, click Commit Changes on the FIMS Viewer menu bar.

• A Grant refund will not create a debit memo to be posted in accounts payable.
• If you entered GL accounts in step h, you will need to go to the general ledger and post the entries that were created. 
• If you chose to do method 1a or 1b to record the receipt of your refund check, then no further action is required.