SBIR 301-3: OMB A-133 Findings

A standard Notice of Grant Award (NGA) issued by the National Institutes of Health (NIH) typically contains hundreds of pages of boilerplate terms and conditions found in the NIH Grants Policy Guide.

While government contracts are quite literal as to their period of performance, NIH Grants tend to be more liberal as to whether a cost is “allowable” or “recoverable” outside the stated period of performance. However, it´s important for Grantees to have a firm understanding of these regulations, as improper drawing of funds from the Payment Management System (PMS) is one of the top OMB A-133 audit findings.

Pre-Award Costs

Rules for allowable pre-award costs are described in the NIH Grants Policy Statement:

Allowable – a grantee may, at its own risk and without NIH prior approval, incur obligations and expenditures to cover costs up to 90 days before the beginning date of the initial budget period of a new or competing continuation award if such costs:

• are necessary to conduct the project, and

• would be allowable under the grant, if awarded, without NIH prior approval.

If specific expenditures would otherwise require prior approval, the grantee must obtain NIH approval before incurring the cost. NIH prior approval is required for any costs to be incurred more than 90 days before the beginning date of the initial budget period of a new or competing continuation award.

Post-Award Costs

Once the period of performance has ended, NIH grantees have a 90 day period to liquidate any obligations incurred under the grant (i.e. to pay out incurred costs to vendors or subcontractors in cash).

Use It or Lose It

It is important to note that any remaining funds must be withdrawn from a grantee´s Payment Management System (PMS) account once the 90 days has elapsed – so pay attention, and grab your funds once you earn them!

No Cost Extensions

One year, no cost extension requests are given automatically for grants containing ´expanded authorities´ unless the NGA specifically states otherwise, so long as the request is made timely. The extension is automatically granted once requested online in your NIH ERA Commons account.

Carryover of Unspent Funds

For multi-year awards, expanded authorities also include the ability to carry over any funds not spent in a grant year to the next year of that same grant. However, note that this does not apply in certain SBIR accounting and STTR accounting for R43 and R41 grants unless specifically stated.

Spending of Subsequent Year Grant Funds in Advance

This is allowed, however, it is done at the grantee´s risk. When subsequent year funds are released, the grantee can draw for the expenses already incurred, even if greater than 90 days. If subsequent year funds are for some reason not made available, the grantee will not be able to recover amounts already spent.

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NIH Grants Policy for Period of Performance in SBIR Accounting Can Lead to OMB A-133 Audit Finding
UBMI Publications
November 02, 2009
www.jamesoncpa.com