Grants and Funding
Modified Financial Reporting Requirements

NIH GUIDE, Volume 25, Number 22, July 5, 1996
P.T. 34; K.W. 1014006
National Institutes of Health

INTRODUCTION

In FY 1995, the National Institutes of Health (NIH) implemented the Streamlined Non-Competing Award Process (SNAP), which simplified the requirements of the non-competing application process (Phase I). In Phase II of SNAP, which was begun in FY 96, the Notice of Grant Award was changed to reflect only direct and indirect costs, and indirect costs are now included in the future year recommended levels.

In an attempt to further streamline the non-competing process, NIH is implementing Phase III of SNAP by modifying the financial reporting requirements. Effective for grants (competing and non-competing) with July 1, 1995 start dates, a Financial Status Report (FSR) will only be required at the end of the competitive segment rather than annually. If the award which was effective July 1, 1995 was the final award for the competitive segment, an FSR will be required.

SNAP applies to all mechanisms routinely covered under expanded authorities (see NIH Guide for Grants and Contracts, Vol. 23, No. 45, December 23, 1994), except Program Project Grants (P01s) and Outstanding Investigator Grants (R35s). Awards may be specifically included or excluded from SNAP by a term and condition on the Notice of Grant Award. Questions concerning the status of a specific award should be addressed to the Grants Management Officer of the awarding component.

Throughout its efforts to simplify and streamline the policy requirements for Federal grants, NIH has emphasized the importance of continued effective and efficient monitoring of Federal grant funds. Federal grant managers and grantee staff are required to assure that Federal funds are expended for the purpose for which the grant was awarded and in compliance with Federal regulations. Monitoring the financial aspects of grants is a requirement for both grantee and NIH staff and is of paramount importance. This requirement does not diminish because of the modified reporting requirements under this announcement.

IMPLEMENTATION

For all grant awards under SNAP with July 1, 1995 start dates, annual FSRs will no longer be required. FSRs will be required 90 days after the end of the competitive segment. This FSR should reflect cumulative support provided for the entire competitive segment. The FSR must be submitted whether or not the grant receives funding for a competitive renewal. It must also be submitted if a grant terminates early or transfers to a new institution.

NIH staff will use the Federal Cash Transaction Report (FCTR) to continue to monitor the financial aspects of grants. The FCTR provides a quarterly breakdown of cash transactions on a grant record basis. These transactions will be monitored to determine if the pattern of cash expenditures indicates possible problems. For example, if it appears that funds are being drawn too quickly, this could be an indication of an inappropriate acceleration of expenditures; or if funds are not being drawn at all, this could indicate poor progress, delayed hiring, or a significant unobligated balance. If the pattern of cash expenditures appears inappropriate, grants management staff will request additional information (e.g., annual accounting records) from the grantee to determine if there are issues related to the grant that need closer monitoring.

It is incumbent upon grantee organizations to have in place accounting and internal control systems which provide for appropriate monitoring of grant accounts to assure that areas of concern are addressed and communicated to the awarding component's Chief Grants Management Officer. Internal control systems should assure that obligations and expenditures are reasonable, allocable and allowable and provide for identification of large unanticipated unobligated balances, accelerated expenditures, inappropriate cost transfers, and other inappropriate expenditure and obligation of funds. These are all areas that could be indicators of problems with the progress of the project and/or the maintenance of grantee stewardship responsibilities for the funds provided with the grant. It is also incumbent upon the grantee organization to assure that day-to-day financial monitoring is being accomplished at all levels of the organization. Accordingly, appropriate training, support, and internal controls must be available to departmental administrators and other grantee staff who are in a position to assist investigators in the day-to-day management of Federal funds.

WHO WILL BENEFIT

This effort to streamline the financial reporting requirements for most grant mechanisms should benefit NIH and grantee staff. Resources currently focused on compliance with timely financial reports on an annual basis can be reallocated to provide assistance to investigators and administrators and oversight to assure that grants are operated in accordance with Federal regulations.

INQUIRIES

Questions regarding this policy may be directed to the Grants Management Specialist identified on the Notice of Grant Award.

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