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.
The NIH Grants Policy Statement outline the terms and conditions that come with accepting a NIH grant. If you have accepted a NIH Grant, you are subject to the following accounting requirements:
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 to settle the final accounting for all HHS/NIH grants and contracts, including the negotiation of an indirect cost rate agreement or NICRA.
Included in the schedules and information, which needs to be submitted to DFAS are:
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.
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.
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.