In our last blog, we discussed internal controls, and how they are tested during the Uniform Guidance Audit (UGA). In our next three blogs, we’ll go into greater depth about how to avoid specific UGA findings. This blog is dedicated to the Federal Financial Report (FFR), also known as the SF-425.
When you receive a federal grant, it comes with regulatory strings attached. One critical requirement is the accurate reporting of revenue recognized on your grant in accordance with the Federal Acquisition Regulations (FAR) as well as funding agency’s supplemental regulations. That’s where the SF-425 comes in.
If you have an NIH grant and are using the Payment Management System (PMS) or making ASAP draw-downs for your DOE grant, you must submit a SF-425 every quarter. This report should detail the revenue recognized on your grant(s) in accordance with FAR Part 31 and the applicable agency supplemental regulations.
Drawing down the full amount of funding.
We occasionally see this with new grantees, and there are a few (false) reasons it happens:
Whatever the motivation, this is a serious problem as well as an audit finding that will trigger a phone call for the government looking for immediate resolution.
There are regulations about how quickly you must release funds once they are drawn down. In most cases, within three days, but be sure to check the regs. for your award type and funding agency.
If you have multiple government awards, it’s essential for you to account for each project separately. The costs (and funds) should not be co-mingled. That means separate job cost reports, with properly allocated indirect costs and fee for each project. Robbing Peter to pay Paul will not make Peter happy, especially if you have multiple funding agencies.
Some people believe that as long as a cost is valid that they can draw down funds to cover the expenditure. For most direct cost spending, this is true. However, when drawing down funds to cover indirect expenses, be careful. Indirect costs are capped at the proportional indirect costs allocated to the project based on the indirect cost recovery methodology that you proposed. The only way to avoid this limitation is to negotiate an indirect cost rate without a cap with your funding agency.
The most common mistakes we see with SF-425 reports is grantees simply reporting amounts drawn down to equal the amount earned without having the reporting to know it’s true.
You have to recognize revenue and draw against revenue earned based on the rules and regulations. Simply plugging the form is a recipe for disaster!
The quarterly SF 425 is due thirty days past the report period end date. If you are one day late, it’s a UGA finding. For most agencies, the FFR is due:
To get through the SF-425 portion of the UGA, make sure you’re handling the government’s funds properly. You must maintain a FAR-compliant accounting system, produce monthly job cost reports, maintain good record-keeping, and only draw down funds to reimburse expenses that you can prove are related to your award.
If you need help with your SF-425 and FAR-compliant accounting system, Contact Us to schedule a time to speak to one of our government funding experts, and we will follow up within 48 hours!
To better understand the strings attached to your grant award, read our white paper.
This is the fourth of our seven-part series about the Uniform Guidance Audit:
Not all government contracts and grants are the same. Your funding agency, type of award, and funding stage require unique accounting requirements. Provide your information below to schedule a time to speak with one of our government funding experts!
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Received A Pre-Award Notification
Received A Funding Award
National Institute of Health / HHS
Department of Defense (DOD)
National Science Foundation
Department of Energy (DoE)
SBIR/STTR Phase I
SBIR/STTR Phase II
R01, U01, Carb-X, HEAL or Pioneer Grant
EERE or ARPA-E Award
One of our government funding experts will contact you within 48 hours to schedule a phone call.