Vendor refunds occur when an external vendor returns a payment because of a duplicate payment, over/under payment, and/or when merchandise is returned. In the case of grants (i.e., 133, 142, 144), the following information is provided as guidance.1. The only funding which can be placed on an extramurally sponsored project account (e.g., 133, 142, 144) is funding from the sponsor. Therefore, on a 142 Hatch account, the only funding source will be USDA formula funding. On a 144 federal award, the only funding source will be the federal sponsor (e.g., NIH). On a 133 grant account, the only funding source will be the non-federal sponsor (e.g., American Heart Association). On a 133 unrestricted gift account, the only way in which funding may be added to these accounts is as unrestricted gifts.
2. Exception to the above: If an order was placed to a “vendor” such as Scientific Products on an extramurally sponsored project account, and then a “refund” was issued to UW-Madison from Scientific Products, that “vendor refund” could be credited back onto the extramurally sponsored project on which it was paid. This is an example of a true vendor refund. The vendor transaction which appears as a payment to the vendor on the extramurally sponsor project is actually being reversed through crediting back the vendor refund against the payment — it is not a receipt and it directly links to the original payment which was made on the extramurally sponsor project account. The payment was to Scientific Products from UW-Madison and the refund is to UW-Madison from Scientific Products.
3. When allowable expenditures are reimbursed to an individual on an extramurally sponsored project account, application of these expenditures on the award is done with the understanding that these are specific to the project and that the sponsor is appropriately being charged for such costs. To apply expenditures to a federal award and then attempt to cover those expenditures by another funding source is not allowable. Actions of this type would imply that costs have been parked on the extramurally sponsored project. This clearly differs from the exception above, in that the payment is to an individual (e.g., PI for travel), and the funds being placed onto the account are from an alternate source (e.g., non-federal sponsor).
4. When an error occurs such as realizing travel costs reimbursed to an individual have been paid in error an extramurally sponsor project, those costs need to be transferred immediately. In a case where a corporation or organization is providing support for the specific travel differentiated from a corporation or organization providing unrestricted gift support, the support is considered a reimbursement of costs and use of the vendor refund is an acceptable means for offsetting the original payment. However, not onto an extramurally sponsored project. The expenses must be on a source of funding that is not an extramurally sponsored project. If the costs appear on an extramurally sponsored project, they must be moved to an allowable funding source, and then the vendor refund mechanism can be used.