Go to top



The NIH differs greatly from other government agencies: it has its own payment system, its own rules for indirect rate negotiations and its own accounting and reporting mandates. Naturally, Jameson is well-versed in them all.

The National Institutes of Health (NIH) and its parent, the Department of Health and Human Services (HHS) exist to protect and improve our nation’s health. They do this by conducting, supporting and funding research. The vast majority of these funds are awarded as grants, with a smaller portion being awarded through contracts.

All of the awards listed above are “cost reimbursable” type funding vehicles and require the recipient to properly account for all actual project specific costs in accordance with the FAR and NIH Supplemental Regs. including the proportional indirect costs associated with the award, and are subject to several types of audits.



Every government award comes with an assortment of mandatory reports and audits. You can count on the following:

An Annual Incurred Cost Submission

Or “true up” report is due 180 days after the Company’s fiscal year end and must reflect all general ledger expenses on a generally accepted accounting principles (GAAP) basis. This report is used by the Division of Financial Advisory Services (DFAS) located in Bethesda, MD to settle the final accounting for all HHS/NIH grants and contracts, including the negotiation of a final indirect cost rate agreement as well as a provisional indirect cost rate agreement for future government billing and proposal purposes.

Included in the schedules and information, which needs to be submitted to DFAS are:

  • A copy of your financial statements prepared in accordance with generally accepted accounting principles (GAAP).
  • All expenses must be accounted for and reported as either direct, indirect and unallowable based on the Federal Acquisition Regulations (FAR). Additionally, the NIH Supplemental Regulations must be applied – which usually affects the cost recovery of salaries, patent & legal costs, and internal research & development expenses among others.
  • All labor costs must be distributed through the general ledger, on an accrual basis, based on monthly labor distributions derived from employee prepared (and supervisor approved) time sheets, which
    must be reconciled to the quarterly payroll tax returns – a cash basis document.
  • Indirect costs must be proportionally allocated to all grant and non-grant (including commercial) activities based on the methodology agreed to in the annual indirect cost rate negotiation. Care must be taken to ensure that the recovery of indirect costs is properly established to avoid negative cash flow surprises.
  • A schedule detailing all employee salaries costs distributed, as well as an organization chart, which provides DFAS with visibility into the “reasonableness” of your pay methodology as well has how your employees report their time charges.
  • An Accounting Policies and Procedures manual and any Employee Handbooks.
  • Detailed descriptions of all consulting and subcontracting costs.
  • The annual incurred cost submission must be certified by an officer of the Company.

Once the annual incurred cost report is submitted, any over-billing or under-billing of indirect expenses must be proactively remedied on a grant by grant basis.

Uniform Guidance Audit

If an awardee has annual revenue from grants that exceeds $750,000 then it is also subject to an annual Uniform Guidance Audit (fka an OMB A-133 audit). The awardee is required to hire and pay for a CPA firm professionally qualified to conduct this type of audit, which encompasses both financial and compliance components within nine months of the company’s fiscal year-end. The auditor’s report is reviewed by the Inspector General’s Office (IG) for quality control purposes and the CPA firm’s work papers may be audited by the IG.

The annual negotiation of your incurred cost submission will not occur until DFAS is provided a copy of your final Uniform Guidance Audit report.

Form SF-425, Federal Financial Report (FFR)

Filed on a quarterly basis, this report reconciles the funds drawn from the Payment Management System (PMS) to the actual spending from the Company’s accounting system. The form sign-off includes a certification (on line 13) that “any false, fictitious, or fraudulent information may subject me to criminal, civil, or administrative penalties”.

Improper cash draws from the PMS and improper supervision/accountability of subcontractors and consultants are the most common audit findings that require repatriation of funds.


JamesonWorx combines our expertise in NIH grants and regulations with an innovative platform. Explore our four service levels and find the one that fits your company’s needs best.