NIH GRANT ACCOUNTING AND 2 CFR 200, SUBPART F.

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 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:

• 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) Part 31.
• All labor costs must be distributed through the general ledger on an accrual basis – based on monthly labor distributions derived from employee time sheets, which must reconcile to the quarterly payroll tax returns – a cash basis document.
• Indirect costs must be proportionally allocated to all grant and non-grant activities based on the methodology agreed to in the annual indirect cost rate negotiation.
• A schedule detailing all employee salaries costs distributed, as well as an organization chart.
• An Accounting Policies and Procedures manual and any Employee Handbooks.
• Detailed descriptions of all consulting and subcontracting costs.
• The annual incurred cost submission.

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.

2 CFR 200, Subpart F – The 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.