4 FAH-3 H-620
FINANCIAL TERMS AND CONDITIONS FOR AWARDS
(CT:FMP-89; 07-24-2015)
(Office of Origin: CGFS/FPRA/FAFM)
4 FAH-3 H-621 FINANCIAL TERMS AND
CONDITIONS FOR OTHER THAN COST-REIMBURSEMENT TYPE ASSISTANCE
(CT:FMP-89; 07-24-2015)
For other than cost reimbursement awards, financial terms
and conditions must be at the discretion
of the authorized signatory (Grants Officer) and the
awarding bureau. Note that these requirements
may not apply to Foreign Public Entities. However, when the
Departments relationship permits, the following terms and conditions must be included in the agreement. In addition,
the Department strongly encourages the awarding bureaus to incorporate the
terms and conditions in 4 FAH-3 H-622
in other than cost-reimbursement assistance agreements, whenever possible:
(1) The recipient, or the embassy for a bilateral
agreement, must maintain at its principal
offices complete records and books of accounts covering financial details
applicable to the activities funded under the agreement;
(2) The Department of State, the Inspector General of
the Department of State, the Comptroller General of the United States, and any
of their authorized representatives must have
the right to examine, audit, and copy, at any reasonable time, all records and
books of accounts referred to in this section;
and
(3) Financial reports showing amounts expended by the
recipients in fulfilling the purposes of the agreement must be submitted annually. A final financial
report must be submitted 90 days after the
expiration of the agreement period.
4 FAH-3 H-622 FINANCIAL TERMS AND
CONDITIONS FOR COST REIMBURSEMENT ASSISTANCE
(CT:FMP-89; 07-24-2015)
a. Basic guidelines
for determining allowable costs that are eligible for reimbursement are
presented in 2 CFR 200, Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for Federal
Awards. The regulation requires that such costs must be:
(1) Necessary,
reasonable, and allocable;
(2) Conform to any
expressed limitations or exclusions;
(3) Consistent with
policies and procedures;
(4) Consistently treated;
(5) In accordance
with generally accepted accounting principles (GAAP) (It is noted that 2 CFR 200.403(e), when different, takes precedent over GAAP.);
(6) Excluded from cost
share requirements; and
(7) Adequately
documented.
b. Cost reimbursement awards must have, at a minimum,
terms that provide for the following sections that address eligible costs and
other financial-related matters.
4 FAH-3 H-622.1 Recipients Direct
Costs
(CT:FMP-89; 07-24-2015)
Awards must either identify specifically the types of
costs that may be incurred or be predicated on a budget plan submitted by the
recipient during the application process. In the latter case the award must
define allowable costs by reference to 2 CFR 200. Allowable cost provisions
for Department awards will reference 2 CFR 200
Subpart E, Cost Principles; or for profit organizations, Federal
Acquisition Regulation (FAR), Subpart 31.2, Contracts with Commercial
Organizations.
4 FAH-3 H-622.2 Recipients
Indirect Costs
(CT:FMP-89; 07-24-2015)
a. Indirect costs are the costs of an organization that
cannot be specifically identified as having been incurred in support of a
particular award. Paragraph 200.414(a),
Facilities and Administration Classification, of 2 CFR 200 recognizes two broad categories of indirect
costs:
(1) Facilitiesdepreciation on buildings, equipment
and capital improvement, interest on debt associated with certain buildings,
equipment and capital improvements, and operations and maintenance expenses.
(2) Administrationgeneral administration and general
expenses such as the directors office, accounting, personnel, and all other
types of expenditures not listed specifically under one of the subcategories in
subparagraph (1) above. For nonprofit
organizations, library expenses are included in the Administration category;
for institutions of higher education, they are included in the Facilities
category.
b. FAR 31.2
provides requirements for indirect costs for contracts with commercial
organizations.
(1) An indirect cost is any cost not directly
identified with a single, final cost objective, but identified with two or more
final cost objectives or an intermediate cost objective. It is not subject to
treatment as a direct cost. After direct costs have been determined and
charged directly to the contract or other work, indirect costs are those
remaining to be allocated to the several cost objectives. An indirect cost must not be allocated to a final cost objective
if other costs incurred for the same purpose in like circumstances have been
included as a direct cost of that or any other final cost objective.
(2) Indirect costs must be
accumulated by logical cost groupings with due consideration of the reasons for
incurring such costs. Each grouping should be determined so as to permit
distribution of the grouping on the basis of the benefits accruing to the
several cost objectives. Commonly, manufacturing overhead, selling expenses,
and general and administrative (G&A) expenses are separately grouped.
Similarly, the particular case may require subdivision of these groupings,
e.g., building occupancy costs might be separable from those of personnel
administration within the manufacturing overhead group. This necessitates
selecting a distribution base common to all cost objectives to which the
grouping is to be allocated. The base should be selected so as to permit
allocation of the grouping on the basis of the benefits accruing to the several
cost objectives. When substantially the same results can be achieved through
less precise methods, the number and composition of cost groupings should be
governed by practical considerations and should not unduly complicate the
allocation.
(3) Once an appropriate base for distributing indirect
costs has been accepted, removing individual elements must not fragment it. All items properly
included in an indirect cost base should bear a pro rata share of indirect
costs irrespective of their acceptance as U.S. Government contract costs. For
example, when a cost input base is used for the distribution of G&A costs,
all items that would properly be part of the cost input base, whether allowable
or unallowable, must be included in the
base and bear their pro rata share of G&A costs.
c. Awards must
state whether the recipient is entitled to recovery of indirect costs, and, if
so, the award must state the basis for recovery of indirect costs. Allowable
indirect costs are expressed as a percentage (rate) of a specified base. The
base may be all allowable direct costs, or some subset of direct costs such as
salaries and wages. An agency responsible for negotiating indirect rates is
identified as a cognizant agency. Indirect cost rates may be firm rates
established through negotiation, or rates established on the basis of actual
indirect costs incurred by the recipient for a period of time. The recovery of
actual indirect costs frequently involves making periodic payments based on
provisional rates with later adjustments when the actual or final rates
become known. (Existing provisional rates may be used as final rates by the
adoption of them as negotiated rates.)
d. For educational
institutions, the cognizant agency is either the Department of Health and Human
Services (HHS) or the Department of Defenses (DOD) Office of Naval Research.
State and local governments must submit cost allocation plans or indirect cost
proposals to be eligible to recover indirect costs. Such submissions are
reviewed, negotiated and approved by the cognizant agency as provided in a
listing published by the OMB. For non-profit organizations, generally the
Federal agency with the largest dollar value of awards with an organization is
designated as the cognizant agency for that organization. However, different
arrangements can be made.
4 FAH-3 H-622.3 Payment Terms
(CT:FMP-89; 07-24-2015)
The statutory prohibition on the advance payment of public
funds, 31 U.S.C. 3324, does not apply to grants and the terms and conditions
may allow for advances. Terms and conditions must
provide that recipients who make electronic drawdowns of funds will
limit such drawdowns to amounts needed for expenditure within 10 days of the
receipt of Federal funds. Except in rare instances, recipients whose payment
requests will be manually processed will limit requests to no more than the
expenditure needs of one month. Such requests will be presented on Form SF-270,
Request for Advance or Reimbursement, signed by an authorized official of the
recipient. When circumstances warrant, terms and conditions may permit
recipients to draw advances for amounts greater than the needs of one month.
Instructions to such recipients will provide that whenever the period covered
by a payment request is for more than 30 days, block 12 of Form SF-270 will be
completed.
4 FAH-3 H-622.4 Property and
Equipment
(CT:FMP-89; 07-24-2015)
a. Personal property acquired by the recipient at a
cost of less than $5,000 must be
classified as supplies without regard to its useful life. Property having a
useful life of more than one year, and an acquisition cost of $5,000 or more, must be classified as Nonexpendable Furniture
and Equipment (NEF&E). The Department may permit or prohibit recipients
from acquiring nonexpendable furniture and equipment with award funds.
b. Terms and Conditions should include provisions
calling for one of the following:
(1) No funds must be
used by the recipient to acquire nonexpendable furniture and equipment
(NEF&E);
(2) All NEF&E procured by the recipient with award
funds must remain with the recipient after
completion of the award period; or
(3) Prior to completion of the award period, the
recipient must furnish the Bureau with a list of all NEF&E with an acquisition cost
of $5,000 or greater purchased with award funds. The awarding bureau or post will decide what disposition is to be
made of the property.
4 FAH-3 H-622.5 Financial Reporting
(CT:FMP-89; 07-24-2015)
Generally Terms and Conditions must require recipients to submit a Form SF-269,
Financial Status Report 30 days after the end of each fiscal quarter during the
period of the award. Payments will be suspended if reporting is delinquent.
When a recipient has been determined to be delinquent in filing reports, the grants officer must send notices every 30
days indicating the delinquency. After the third notice has been sent, the bureau or post will suspend all payments until
the overdue reports are filed. If the recipient is paid through PMS, the bureau will contact HHS and request that all
payments be held until further notice. A final Form SF-269 must be submitted within 90 days after the
expiration of the award period. When appropriate, bureaus may require a
financial report annually instead of quarterly and may prescribe a format other
than that of the Form SF-269.
4 FAH-3 H-622.6 Financial Records
and Federal Audits
(CT:FMP-89; 07-24-2015)
All cost reimbursement awards must contain provisions calling for the
following:
(1) The recipient must maintain
at its principal offices in the United States and/or abroad, full and complete
records and books of accounts in accordance with accounting principles
generally accepted in the United States or agreed to in the terms and
conditions covering financial details applicable to the activities funded under
this agreement.
(2) All records required to be kept, including bid
solicitations, evidence of shipment for commodities procured in the United
States and procurement and service contracts, must
be maintained for a period of three years from the date of the
submission of the final expenditure report, in a manner that will permit
verification of the recipients compliance with its representations,
warranties, and obligations contained in this agreement. If any litigation,
claim or audit is started before the expiration of the 3-year period, the
records must be retained until all open
matters have been resolved.
(3) The Department of State, the Inspector General of
the Department of State, the Comptroller General of the United States, and any
of their authorized representatives, must have
the right to examine, audit, and copy, at any reasonable time, all records and
books of accounts referred to in this section.
4 FAH-3 H-622.7 2 CFR 200 Subpart F Audit Requirements
(CT:FMP-89; 07-24-2015)
Awards to domestic organizations will, in addition to the
records and audit provisions above, also contain provisions indicating the
recipient is subject to the audit requirements found in 2 CFR 200.501, Audit Requirements. Recipients should be
advised that a single or program-specific audit must be obtained when they
expend $750,000 or more in a year in
Federal funds. For audits performed in accordance with the CFR, completed audit packages must be
submitted to the Federal Audit Clearinghouse (FAC). Completed audit packages
must consist of:
(1) A reporting package as specified in 2 CFR
200.512(c), which includes financial
statements and a schedule of expenditures of Federal
awards; a summary schedule of prior audit findings; the auditors
report; and a corrective action plan.
(2) A completed Form SF-SAC, Data Collection Form as described in 2 CFR 200.512(b)(1). This form is based on information in
the reporting package, signed by both the auditor and auditee, and used by the
FAC as the basis for developing and maintaining the Government-wide audit database.
4 FAH-3 H-622.8 Provisions for
Refunds
(CT:FMP-89; 07-24-2015)
Terms and conditions must include
provisions addressing the following:
(1) Interest in excess of $250 annually, earned by
non-state agencies and instrumentalities on Federal advances must be remitted annually to the Department of
Health and Human Services (DHHS), Payment Management System, Rockville, MD
20852. Interest on Federal advances to state agencies and instrumentalities is
governed by the Cash Management Improvement Act (CMIA) of 1990, Public Law 101-453.
(2) Funds obligated by a bureau but not disbursed to
the recipient at the time the award expires or is terminated must revert to the bureau, except for such funds
encumbered by the recipient by a legally binding transaction applicable to this
award. Any funds advanced to but not expended by the recipient within 90 days
after the time of expiration or termination of the award must be refunded to the bureau.
(3) If at any time during the life of the award, or as
a result of final audit, it is determined that the bureaus funds provided
under this award have been expended for purposes not in accordance with the
terms and conditions of the agreement, the recipient must refund such amounts to the bureau.
4 FAH-3 H-622.9 Project Income
(CT:FMP-89; 07-24-2015)
If the possibility exists that the project being funded
may generate income, provisions consistent with the provisions of 2 CFR 200.307, Program Income, must be included in the
agreement.
4 FAH-3 H-622.10 Period of
Availability of Funds
(CT:FMP-89; 07-24-2015)
Each award must specify
a funding period and provide that a recipient may charge to the award only
allowable costs resulting from obligations incurred during the funding period
and any pre-award costs authorized by the Department.
4 FAH-3 H-623 THROUGH H-629 UNASSIGNED