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Payments to Hospitals or Other Institutions to Recover Costs

In carrying out its academic and research mission, the University is involved in financial arrangements with other institutions such as hospitals, Federated Colleges, etc.

This section addresses institutional billings to the University for recovering costs incurred on behalf of the University.

The recoveries generally relate to:

  • salaries for staff with cross-appointments
  • various expenses incurred by University researchers whose usual place of business is the other institution, but whose research is funded from a grant administered by the University. This most frequently occurs in the Faculty of Medicine where a researcher may have a hospital appointment and a cross-appointment or status only appointment with the University.

When a researcher’s primary appointment and place of business is not with the University, it may be impractical to process expenditures through the University.

The following sub-sections cover the guidelines and practices relating to payment to institutions for the recovery of costs:

Expenditure Recoveries from Hospitals

Invoicing Schedule

Detailed Invoicing Requirements

Invoice Review and Approval

Recoveries for Equipment Purchases

Processing Payment in FIS

Expenditure Recoveries from Hospitals

The majority of billings for expenditure recoveries come from hospitals. The objective of the billing institution in these cases is to avoid financing expenditures incurred on behalf of the University, i.e. to have the necessary funds on hand when expenditures occur. Accordingly, the institution wishes prepayment.

The objective of the University is to avoid prepaying expenditures which the institution has not yet incurred, thereby effectively financing other expenditures of that institution. Accordingly, the University wishes to pay the institution after expenditures have been incurred.

Recommendation:
The optimum solution should minimize financing costs to each institution and should not favour one institution over another.

In the case of annual expenses, the University department or principal investigator should arrange to have the other institution issue invoices at the beginning of the quarter for the first two quarters and at the end of the quarter for the two final quarters. Where total annual expenses must be estimated for the two advance billings, adjustments to actual expenses should be reflected in the final invoice. Avoid annual invoicing as this will significantly disadvantage the University if done in advance and will disadvantage the other institution if done at the end of the year.

Invoicing Schedule

The customer, e.g. principal investigator or University department, should request that the invoice schedule give due regard to ensuring that expenditures are recorded in the correct University fiscal year, i.e. the year in which the expenditures are incurred, and that financing costs to the University are avoided or minimized (as discussed in the previous section).

Where expenditures are being funded from research awards (restricted funds), ensure:

  • the invoicing schedule takes into account the sponsor’s financial reporting requirements and award ending date. It is important:
    • to avoid loss of funds arising because expenditures were not recorded prior to the expiry date for the award,
    • to report expenditures to sponsors in the period in which they are incurred.
  • the invoice provides sufficient detail to satisfy the sponsor’s requirements (see next section).

Detailed Invoicing Requirements

The billing document from the institution should:

  • be identified as an invoice
  • be issued in the name of the institution
  • be addressed to the person in the department with authority to approve the invoice for payment
    Note: If the invoice is to recover expenditures made on behalf of a researcher and the researcher will be authorizing it for payment, it should be addressed to the researcher at his/her usual place of business.
  • specify the institution as the payee
    Note: payment will be made to the institution. Payment will not be made to an individual.
  • be dated
  • specifically identify the expenditures made on behalf of the University and the date or period the expenditures were incurred

There should be sufficient detail to allow:

  • proper identification and verification of the expenditures by the person authorized to approve the invoice for payment, e.g. in the case of salaries, identification of employee name and job title.
  • accurate recording of expenses by object of expense. As a minimum provide the following cost breakdown:
    • salaries
    • benefits
    • supplies
    • equipment
    • travel

All expenditures are subject to audit. Auditors may require that the institution’s documentation associated with the expenditures, e.g. pay forms, vendor invoices, be made available for review. The likelihood of such a requirement increases where insufficient detail has been provided on the institutional invoice.

Invoice Review and Approval

The invoice should be mailed directly to the office of the person with authority to approve payment of the invoice.

Recoveries for Equipment Purchases

Equipment purchased with grant funds is the property of the University. Information is required to validate the existence and value of the property, some of which is extracted from the supplier’s invoice (see GTFM: Capital Assets). Therefore, the institution should submit copies of equipment invoices if billing for such costs.

If the invoice includes amounts to recover the cost of expenditures for equipment, such invoices will be recorded to adjust the costs of the equipment. For this purpose enter the following information on the invoice or otherwise provide equipment:

  • equipment name
  • equipment serial number
  • location
  • custodian

Processing Payment in FIS

Use the reference guide Invoice Create for instructions on paying institutional invoices through FIS.

Last revision: April 4, 2006