Federal Office of Management and the Uniform Grant Guidance 2 CFR 200 sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations.
Included in the standards are close out procedures.
Section .71 requires that:
- Recipients shall submit, within 90 calendar days after the date of completion of the award, all financial, performance, and other reports as required by the terms and conditions of the award. The Federal awarding agency may approve extensions when requested by the recipient.
- Unless the Federal awarding agency authorizes an extension, a recipient shall liquidate all obligations incurred under the award not later than 90 calendar days after the funding period or the date of completion as specified in the terms and conditions of the award or in agency implementing instructions.
Specific closeout requirements may vary from project to project and sponsor to sponsor. As stated above, most final reports of expenditures, including those from non-federal sources, are due within 90 days of the end date. If the university is a subrecipient, the due date is usually earlier (45 to 60 days is typical) in order to give the prime awardee enough time to file their final expenditure report with the sponsor. All expenditures related to the project must be processed, open encumbrances closed, cost sharing verified, and the account(s) reviewed for errors or necessary changes in order to prepare the final financial report.
In order to facilitate closing an account, attention to closeout requirements should be given throughout the life of the project. Ongoing monitoring of expenditures will help ensure only allowable expenditures are charged to the sponsor.
Prior to the End Date
Approximately two to three months before an award ends, a notice is sent to PIs and their administrators reminding them of the pending end date and suggesting, that if needed, a no cost extension be requested.
The notice includes a summary of the total budget, expenditures to date, open encumbrances and the remaining budget balance.
At this the time the PI should review all open encumbrances and process any remaining purchases to ensure that all required materials are delivered within the time allowed by the project. Most federal awards require items purchased to be received by the end date of the project. Equipment purchases should be timed to ensure there is a benefit to the project. Equipment should not normally be purchased in the last few months of a project.
Salary transfers should be completed as well to ensure payroll is transferred to another account timely.
After the End Date
The SPA will generate a report of expenditures from the PeopleSoft system. Expenditures will be reviewed for adherence to the award terms and conditions. The SPA will send the PI a draft report of expenditures along with any questioned costs. The PI will be asked to review the draft, identify any unrecorded costs and resolve any open items/ questions. Costs identified as unallowable will have to be transferred to an appropriate account. These costs include expenditures after the end date, expenditures in excess of the budget and expenditures deemed not allowable as a direct charge to the grant. Any cost not accepted by ORA as allowable on the project or transferable to another project will have to be transferred to an unrestricted account.
The SPA will also review cost sharing documentation, ensure final technical reports and invoices have been received from subrecipients, patent reports and any other required forms prior to submitting the final report of expenditures.
In closing accounts, the PI should be mindful that transferring expenditures to resolve a deficit or use up a remaining budget balance are not allowable. Once the final costs have been determined, SPA will send the completed final report of expenditures and final invoice to the sponsor. If a refund is due, SPA will process the refund. The PI is responsible for submitting the final technical report.
Upon final payment from the sponsor the PeopleSoft award and contract will be closed.
Fixed Price Account Close Out
Sometimes awards are issued to the University on a task based or fixed price agreement. Rather than reimburse expenditures, the sponsor pays a fixed amount based on the work completed. These awards come with a certain amount of inherent risk because reimbursement is not based on costs - there is a risk of cost overruns. It is important that the budget projections for these awards are accurately priced out so that there is neither a deficit, nor a large residual balance. It is also essential that all applicable expenses are identified and charged to the project. Other projects and institutional accounts should not be used to pay for project specific expenses. If expenditures exceed the awarded amount, the PI must cover them from an unrestricted account. If a surplus remains and the sponsor does not require reimbursement, the residual amount is then available for use by the University once proper accounting has been verified.
Sponsored Projects Administration (SPA) office reviews fixed price accounts with the PI at the end date to ensure that all work has been completed and all expenditures have been charged to the project. The PI is asked to sign off that all requirements have been met and explain any unexpended budget variances. Once all documentation has been submitted and accepted the account is ready for closing.
If there is a cost overrun, the overage will be transferred to an unrestricted account of the PI or Project Director (PD). If there are not enough funds in a PI/PD discretionary account, then the expense will be transferred to a department account and then a dean account, if needed.
If there is a residual balance and the award received a waiver or reduction from the federally negotiated F&A rate, the full F&A rate will be charged to the project prior to determining the residual balance. Salary, fringe benefits and other appropriate adjustments to direct costs will be made in cases when such expenses, for example, certain % effort was committed and certified on a fixed price project, but not properly charged to the grant in the prior fiscal years. The remaining balance will then be available to support research and development at UMassD and will be distributed as follows:
The direct cost balance will be transferred to an unrestricted account of the PI. These funds may only be used to support research and follow the policy on use of indirect costs to determine appropriateness of expenses. Additional 8% will be allocated to the PI’s indirect account respectively to cover administrative costs associated with the miscellaneous accounts management by the University.
The remaining indirect cost balance will go to a central reserve fund held to support Research and Development.
SPA will periodically assess the fixed price awards held by a PI to verify proper costing of expenses. Additional clarifying information may be sought, or corrective actions identified if there appears to be a pattern of large unexpended balances or large overdrafts.
*This guidance is not applicable to student projects, for example, Capstone student projects.
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