13-1 January 2013
III - Financial Requirements and Payments
The acceptance of an award from NSF creates a legal duty on the part of the awardee organization to use the funds or property made available in accordance with the conditions of the award. Payments may be made in advance of work performed or as a reimbursement for work performed and/or costs incurred by the awardee. However, payments may not be made in advance of an award being signed by a Grants and Agreements Officer for the project period. NSF has a reversionary interest in the unused balance of advance payments, in any funds improperly applied (whether or not received as an advance payment), and in property acquired through the award, to which NSF specifically either retains title or reserves the right to require title transfer.
The provisions of this chapter cover all NSF assistance awards (grants and cooperative agreements). Graduate fellowship agreements with domestic colleges and universities are included, but individual fellowships and contracts are excluded. All categories of awardees (academic, non-academic, profit and non-profit) are covered by this chapter. The procedures in this chapter apply primarily to the comptroller’s office or business office.
A. Standards for Financial Management
NSF awardees are required to have financial management systems that meet the requirements of Section .21 of OMB Circular A-110. (2 CFR §215.21)
The following definitions are either not included elsewhere in the Guide or are repeated in this section because of their special applicability to this chapter.
BUSINESS OFFICER - the financial official of the awardee organization who has primary responsibility for the accountability for and reporting on NSF award funds.
CASH ON HAND - an organization’s cash position relative to the funds received from NSF minus the costs incurred for the award.
DISBURSEMENTS/OUTLAYS/EXPENDITURES - charges made to the project during a given period for:
a. Goods and other tangible property received;
b. Services performed by employees, subawardees, contractors and other payees.
FINANCIAL FUNCTIONS - NSF systems and services used by awardees to transmit financial information to NSF. Awardees must access Financial Functions through Research.gov. Research.gov is NSF’s modernization of FastLane and provides access to a menu of services in one location. The primary Financial Functions used by awardees are:
- Federal Financial Report Function - electronic version of the standard “Federal Financial Report”. Used by awardees to report the financial activity of NSF awards on a quarterly basis. The expenditure reporting function of the FFR will be phased out by the successful implementation of the Award Cash Management $ervice (ACM$). (See AAG Chapter III.E.1)
- Cash Request Function - used by awardees to request funds until successful implementation of ACM$. (See AAG Chapter III.C.1)
- Award Cash Management $ervice (ACM$) - NSF’s award payment process under which awardee institutions provide award level detail at the time of the payment request. ACM$ will replace the expenditure reporting on the FFR and the Cash Request Function.
- Grantee EFT Update Function - used by awardees to provide NSF with their banking information. (See AAG Chapter III.C.6)
AWARDEE - the organization or other entity that receives an award and assumes legal and financial responsibility and accountability both for the awarded funds and for the performance of the award-supported activity. NSF awards are normally made to organizations rather than to individual PI/PD(s).
NSF OBLIGATIONS - funds authorized by an NSF Grants Officer for a specific NSF award creating a balance payable to a grantee.
AWARDEE OBLIGATIONS - the amounts of orders placed, subawards issued, contracts awarded, services received and similar transactions during a given period that will require a future payment by the grantee.
PAYMENTS - funds transferred from NSF to the awardee by electronic funds transfer (Automated Clearing House (ACH)) and on some rare occasions by check or by wire for same day electronic funds transfer or international payments.
UNLIQUIDATED OBLIGATIONS - expenses incurred but not paid. Such obligations are included in reports prepared by awardees whose financial records are maintained on an accrual basis.
UNOBLIGATED BALANCE - the portion of the funds authorized by the award that have not been obligated by the awardee. It is determined by deducting outlays and unliquidated obligations from the funds authorized.
C. Payment Requirements
1. Requesting Payments
NSF's awardees, except for Special Payment awardees, AAG Chapter III.C.4, and some foreign grantees, are required to request payments electronically through the Cash Request Function until successful implementation of ACM$. When ACM$ is implemented NSF will discontinue payments under the “cash pooling” method where awardee institutions request funds on a lump sum basis to cover the cash requirements for their awards and NSF will implement requirements for awardees to provide award level detail at the time of the payment request.
The Special Payment and certain foreign awardees without access to a U.S. bank are required to request funds by submitting a "Request for Advance or Reimbursement Form", (SF 270) (see (AAG Exhibit III-1), to NSF either through mail, email or by fax.
2. Payment Policies
The purpose of this section is to prescribe the timing of advances and the procedures to be observed to assure that cash payments occur only when essential to meet the needs of an awardee for its actual disbursements.
a. Timing of Payments. Payments to a awardee shall be limited to the minimum amount needed and shall be timed to be in accordance with the actual, immediate cash requirements of the awardee in carrying out the purpose of the approved program or project. The timing and amount of payment shall be as close as is administratively feasible to actual disbursements for direct program costs and the proportionate share of any allowable indirect costs.
b. Payments to Subawardees. Payments made by primary awardees (those which receive payments directly from NSF) to others (subawardees) shall conform to the same standards of timing and amount as apply to payments by NSF to primary awardees, including the furnishing of reports of cash disbursements and balances.
c. Withholding payments. NSF reserves the right, upon written notice, to withhold future payments after a specified date if the recipient:
(i) Fails to comply with the conditions of an NSF award , including the reporting requirements; or
(ii) Is indebted to the U.S. Government.
d. Safeguarding Funds. In no case will NSF-furnished funds be commingled with the personal funds of, or be used for personal purposes by, any officer, employee, or agent of the awardee; nor will any of these funds be deposited in personal bank accounts for disbursement by personal check.
3. Request for Advance
a. Awardees may receive payments from NSF in advance of cost incurred provided that the following conditions exist:
(i) Funds for the project period have been obligated by a Grants and Agreements Officer in the form of a signed grant;
(ii) The awardee has established or demonstrated to NSF the willingness and ability to establish written procedures that will minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the awardee; and
(iii) The awardee’s financial management system meets the standards for fund control and accountability prescribed in Section .21 of OMB Circular A-110. (2 CFR §215.21)
b. The awardees’ designated official (Accounting Officer, Business Officer, Treasurer, etc.) must submit their cash requests for payment by using the Cash Request Function until successful implementation of ACM$. Awardees submit requests on a periodic basis (monthly, biweekly or other regular cycle) depending on their normal disbursement patterns. Such requests should be limited to the minimum amounts needed and be timed to meet the anticipated cash requirements for allowable charges to active NSF projects.
c. Awardees shall maintain advances of NSF funds in interest bearing accounts as specified in AAG Chapter III.D.3.
4. Special Payment Awardees
When awardees do not meet the conditions specified in AAG Chapter III.C.3, or when otherwise considered appropriate NSF may restrict the capability to request funds electronically through the Cash Request Function or ACM$. NSF will make payments to these awardees on a reimbursable basis only. These awardees are required to request funds by using a “Request for Advance or Reimbursement Form” (SF 270). For a copy of the form see AAG Exhibit III-1. The amount requested is reported on line 11i of the form. Unless instructed otherwise in the NSF award notice, the form should be submitted to the cognizant Grants and Agreements Officer by email, by fax to 703-292-9142, or through the mail to:
National Science Foundation
Division of Grants & Agreements
4201 Wilson Blvd
Arlington, VA 22230
5. Working Capital Advance
In those cases where the reimbursement method described in AAG Chapter III.C.4 is not feasible, arrangements may be made whereby NSF projects are financed on a working capital advance basis. On this basis, funds may be advanced to the awardee to cover estimated disbursement needs for a given initial period. Thereafter, the awardee would be reimbursed for the amount of its actual cash disbursements. The amount of the initial advance shall be geared to the reimbursement cycle so that after the initial period, the advance approximately equals the average amount of the awardees’ unreimbursed program disbursements. Under this method of payment, the NSF award will specify if the awardee is required to use the SF 270. If use of the form is required, section 12 of the SF 270 will be used for the initial advance; thereafter, reimbursements will be requested on the SF 270, line 11i.
6. Grantee EFT Update
Grantee Electronic Funds Transfer (EFT) Update is a Financial Function used by awardees to provide NSF with their electronic banking information. This service enables NSF to transfer funds electronically to an awardees’ bank account by using the banking information provided by the awardee. All NSF awardees, with the exception of certain non-U.S. awardees noted in paragraph C.1.above, must provide banking information through Grantee EFT Update in order to request and/or receive payments.
7. Use of Women-Owned and Minority-Owned Banks
Recipients of NSF awards are encouraged by the Federal government to use banks which are owned (at least 50 percent) by women or minority groups such as Asian, Black, Hispanic, Native Americans and Pacific Islanders. This action is consistent with the national goal of expanding the opportunities for women-owned and minority owned business enterprises.
D. Cash Refunds and Credits to NSF
1. Final Unobligated Balance
NSF has a reversionary interest in the unobligated balance of an award upon expiration or completion of the award. Based on final disbursements reported on the FFR, the final unobligated balance will be computed by NSF and reported in the “Unobligated Balance” column of the FFR. (See AAG Chapter III.E.2.) The entry reduces the awardees’ “Balance Authorized” as computed on the report page, section 10 (Transactions) of the FFR. (Detailed instructions for submission of the FFR are available on the Research.gov website.)
Upon implementation of ACM$, the final unobligated balance of awards will be based on the final payment request submitted for each award. The final unobligated balance will be computed by NSF and reported in the Net Funds Available column of the ACM$ payment request screen.
2. Erroneous Payments
Advances or reimbursements made in error must be refunded to the National Science Foundation. Excess funds should be promptly refunded electronically or by check. Electronic remittances should be submitted through Pay.gov at https://pay.gov/paygov/forms/formInstance.html?agencyFormId=10506005. Checks shall be mailed to NSF, Attn. Cashier, 4201 Wilson Boulevard, Arlington, VA 22230. Contact the NSF Division of Financial Management at (703) 292-8280 for additional information.
The only exception to the requirement for prompt refunding is when the funds involved will be disbursed immediately. This exception for prompt refunding should not be construed as approval by NSF for an awardee to maintain excessive funds on hand.
3. Interest Earned on Advance Payments
Awardees shall maintain advances of NSF funds in interest bearing accounts, unless any of the following apply:
a. The awardee receives less than $120,000 in Federal awards per year;
b. The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year on Federal cash balances; or
c. The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources. Interest earned on NSF advances deposited in interest bearing accounts shall be remitted annually to the Department of Health and Human Services (DHHS), Payment Management System, P.O. Box 6021, Rockville, MD 20852 (telephone number: (301) 443-9247). Awardees are authorized to retain up to $250 per year for administrative expenses.
The requirement to annually remit interest does not apply to awardees subject to the Cash Management Improvement Act (CMIA) and its implementing regulations (i.e., State agencies and instrumentalities). State universities and hospitals shall comply with the CMIA, as it pertains to interest. In accordance with Section .22 of OMB Circular A-110 (2 CFR §215.22) if an awardee subject to CMIA uses its own funds to pay pre-award costs without prior written approval from NSF, it waives its right to recover the interest under CMIA.
4. Program Income
If, in accordance with the award terms and conditions, program income is designated for standard (additive) treatment, efforts should be made to avoid having unexpended program income remaining at award expiration. Program Income earned during the project period should be expended prior to requesting reimbursement against the award. In the event an awardee has unexpended program income remaining at award expiration, it will be remitted to NSF by crediting costs otherwise chargeable against the award. If it is not possible to record the credit via the electronic system, the excess program income will be remitted to NSF electronically or by check payable to the National Science Foundation. (See paragraph D.2 above for further information.)
If, in accordance with the award terms and conditions program income is designated for deductive treatment, it will be remitted to NSF by crediting costs otherwise chargeable against the award. Program Income in excess of the award will be remitted to NSF electronically or by check payable to the National Science Foundation.
See AAG Chapter VI.F for additional information regarding Program Income.
5. Other Cost Credits
Purchase discounts, rebates, allowances, credits resulting from overhead rate adjustments and other credits relating to any allowable cost received by or accruing to the awardee shall be credited against NSF award costs if the award has not been financially closed out. Credits of $300 or more shall be credited against NSF award costs even if the award has been closed out. See also AAG Chapter V.B.7.
Upon implementation of ACM$, awards will be financially closed three months after the award expiration date, Cost credits of $1.00 or more shall be credited against NSF award costs even if the award has been closed out.
E. Grant Financial Reporting Requirements
1. Quarterly Disbursement Reporting – Federal Financial Report (FFR)
Awardees are required to report the status of funds received from NSF on a quarterly basis through the submission of a Federal Financial Report (FFR). The reports are prepared and submitted electronically to NSF through the Federal Financial Report Function on Research.gov.
Within three to five business days after the end of a calendar quarter, NSF will create and make the FFR’s available to awardees through the Financial Functions on Research.gov. E-mail notices are sent to each awardee announcing the report's availability and its due date. Awardees are required to update, certify and submit the FFR to NSF by the due date even if funds have not been drawn during the reporting period. Awardees certify the report’s truthfulness as stated in the Certification page of the FFR. The FFR elements are in compliance with the uniform Federal standards applicable to financial reporting by awardees.
Failure to submit the FFR to NSF in a timely manner can result in one or more of the following actions:
a. Suspension of all future payments;
b. Closeout of expired awards based on previously reported disbursements;
c. Suspension of unexpired awards; or
d. Suspension of review and processing of new proposals.
NSF will end the requirement to report expenditures on the FFR when the individual awardee converts to use of ACM$ for payments. Upon implementation of ACM$, awardee payment requests will be recorded as award expenses at the time of the payment.
2. Final Disbursement Reporting
NSF does not require awardees to submit individual FFR’s for each award for purposes of final award accountability. NSF procedures have been designed to extract the final financial data from the entries in the FFR. This reporting is accomplished as follows:
a. For any award listed on the FFR that expired prior to the beginning of the quarter covered by the FFR, the awardee will enter the final disbursement amount in the Cumulative Cash Disbursements column on the FFR Attachment.
b. If there are valid unpaid obligations outstanding at the time final disbursements are due, the obligations must be charged against the NSF cash advance and reported in the Cumulative Cash Disbursements column on the FFR as if they had actually been paid. If subsequent disbursements differ by $300 or more from the amount previously reported, the awardee must report the amount as an “Adjustments to Financially Closed Awards” and specify the reason for the adjustment under the remarks section of the FFR Adjustments Worksheet
c. If by law, regulation, and/or accounting system limitations, valid unpaid obligations cannot be charged against the NSF advance and reported as disbursed in accordance with b. above, closeout by NSF will be deferred provided that:
(i) awardee identifies grants with “unpaid obligations” in the Remarks section of the FFR;
(ii) awardee submits the FFR before the quarterly financial closeout procedure is run; and
(iii) The appropriation that funds the award has not cancelled as noted under Title 31 USC Sec. 1552.
d. The final disbursement amount may not exceed the amount of the award.
e. When the final disbursements have been recorded by NSF, the award will be financially closed and no additional disbursements shall be shown by the awardee in subsequent reports. When all final reporting requirements have been met, the award will be deleted from the FFR. When this is done, the award will be shown in the next "Schedule of Awards Purged and Subsequent Adjustments during the Quarter," of the FFR.
f. Upon implementation of ACM$, awardees will be required to submit final payment requests for awards within three months after the expiration date. NSF will financially close awards three months after the award expiration date and the award will be removed from the ACM$ payment screen for active awards.