Form SF-425, Federal Financial Report (FFR)
Filed within 30 days after each annual budget period and within 120 days after the end of the grant, 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.
2 CFR 200, Subpart F – The Uniform Guidance Audit
If an awardee has annual expenditures from covered grants that exceeds $1M, then it is also subject to an annual Uniform Guidance Audit (UGA). 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 Office of the Inspector General (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 the Division of Financial Advisory Services (DFAS) is provided a copy of your final Uniform Guidance Audit report.
Negotiating a Fringe and F&A Rate
Unless you have elected to use the de minimis indirect cost rate or the SBIR safe rate, you are required to prepare an annual incurred cost submission within 180 days after your company’s fiscal year end that reflects 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 Negotiated Indirect Cost Rate Agreement (NICRA).
To receive a NICRA, the following must be filed:
- A copy of your financial statements prepared in accordance with GAAP.
- All expenses must be accounted for and reported as either direct, indirect and unallowable based on FAR Part 31 and the NIH Supplemental Regulations.
- All labor costs must be distributed through the general ledger on an accrual basis and must reconcile with the quarterly payroll tax returns – a cash-basis document.
- Indirect costs need to be proportionally allocated to all grant and non-grant activities based on the methodology used in your NICRA.
- 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.
- All the fringe and F&A rate-supporting calculations for the year.
Once the annual incurred cost submission is filed, any over-billing or under-billing of indirect expenses must be proactively remedied on a grant-by-grant basis.
