a. The acceptance of a grant from NSF creates a legal duty on the part of the grantee organization to use the funds or property made available in accordance with the conditions of the grant. Payments may be made in advance of work performed or as a reimbursement for work performed and/or costs incurred by the grantee. However, payments may not be made in advance of a grant being signed by a grants official 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 grant, to which NSF specifically either retains title or reserves the right to require title transfer.

b. The provisions of this chapter cover all NSF grants. Graduate Fellowship agreements with domestic colleges and universities are included, but contracts are excluded. All categories of grantees (academic, nonacademic, profit and non-profit) are covered by this chapter. The procedures in this chapter apply primarily to the comptroller's office or business office.

410 STANDARDS FOR FINANCIAL MANAGEMENT

NSF grantees are required to have financial management systems which meet the requirements of Section .21 of OMB Circular A-110.

420 DEFINITIONS

The following definitions are either not included elsewhere in the manual or are repeated in this section because of their special applicability to this chapter.

a. BUSINESS OFFICER is the financial official of the grantee organization who has primary responsibility for the accountability for and reporting on NSF grant funds.

b. CASH ON HAND includes NSF funds on deposit, imprest funds and undeposited Treasury checks.

c. DISBURSEMENTS/OUTLAYS/EXPENDITURES are charges made to the project during a given period for:

1. goods and other tangible property received;

2. services performed by employees, subawardees, contractors and other payees; and

3. amounts becoming owed for which no current services or performance is required.

d. A GRANTEE is the organization or other entity that receives a grant and assumes legal and financial responsibility and accountability both for the awarded funds and for the performance of the grant-supported activity. NSF grants are normally made to organizations rather than to individual PI/PD(s).

e. NSF OBLIGATIONS are funds authorized by an NSF Grants Officer, in writing, for payment to a grantee.

f. GRANTEE OBLIGATIONS are the amounts of orders placed, subawards issued, contracts awarded, services received and similar transactions during a given period that will require payment by the grant during the same or a future period.

g. PAYMENTS are moneys transferred from NSF to the grantee by direct deposit (Automated Clearing House (ACH) Vendor Express) and in some rare occasions by check.

h. UNLIQUIDATED OBLIGATIONS, for financial reports prepared on a cash basis, represent the amount of obligations incurred by the grantee that have not been paid. For reports prepared on an accrued expenditure basis, unliquidated obligations represent the amount of obligations incurred by the grantee for which an outlay has not been recorded.

I. UNOBLIGATED BALANCE is the portion of the funds authorized by the grant that has not been obligated by the grantee. It is determined by deducting outlays and unliquidated obligations from the cumulative funds authorized.

430 PAYMENT REQUIREMENTS

431 General

Federal grant and other programs involving advances to various organizations outside the Federal government constitute a significant portion of the Federal budget. Advances of cash from the U.S. Treasury to such organizations for the purpose of financing current operations under Federal programs have a substantial impact on Treasury financing costs and the level of the public debt. The purpose of this section is to prescribe the timing of such advances and the procedures to be observed to assure that cash withdrawals from the Treasury occur only when essential to meet the needs of a grantee for its actual disbursements.

432 Payment Policies

a. Timing of Payments. Advances to a grantee shall be limited to the minimum amount needed and shall be timed to be in accordance with the actual, immediate cash requirements of the grantee in carrying out the purpose of the approved program or project. The timing and amount of cash advances 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. Cash advances made by primary grantees (those which receive advances directly from NSF) to others (subawardees) shall conform to the same standards of timing and amount as apply to advances by NSF to primary grantees, 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:

1. fails to comply with the conditions of an NSF grant, including the reporting requirements; or

2. 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, agent of the grantee; nor will any of these funds be deposited in personal bank accounts for disbursement by personal check.

433 Request for Advance

a. Grantees may receive payments from NSF in advance of cost incurred provided that the following conditions exist:

1. funds for the project period have been obligated by a Grants Officer in the form of a signed grant;

2. the grantee 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 grantee; and

3. the grantee's financial management system meets the standards for fund control and accountability prescribed in Section .21 of OMB Circular A- 110.

b. The grantee's designated official (Accounting Officer, Business Officer, Treasurer, etc.) must submit an SF 270, Request for Advance or Reimbursement, to NSF on a periodic basis (monthly, biweekly or other regular cycle) depending on 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. Grantees qualified to receive advance payments, are instructed to use the "Alternate Computation for Advance," section 12 of SF 270, instead of section 11. SF 270 along with preparation instructions is included in Exhibit IV-1.

c. Grantees shall maintain advances of NSF funds in interest bearing accounts as specified in GPM 443, "Interest Earned on Advance Payments."

434 Request for Reimbursements

When a grantee does not meet the conditions specified in GPM 433, "Request for Advance," or when otherwise considered appropriate by NSF, the grantee shall be required to finance its operations with its own working capital, and payments shall be made to reimburse the grantee for actual cash disbursements based on requests for reimbursement submitted to NSF. The amount requested as reimbursement will be reported on line 11i of the SF 270.

435 Working Capital Advance

In those cases where the reimbursement method described in GPM 434, "Request for Reimbursements," 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 grantee to cover estimated disbursement needs for a given initial period. Thereafter, the grantee 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 grantee's unreimbursed program disbursements. Under this method of payment, SF 270, section 12, will be used for the initial advance; thereafter, reimbursements will be requested on SF 270, line 11i.

436 ACH Vendor Express

a. Electronic Funds Transfer. NSF Grantees will be paid through the ACH Vendor Express System based on submission of a request for funds to NSF. GPM 433-435 describe the conditions for requesting funds from NSF. Whether funds are paid in advance, as a reimbursement, or on a working capital replenishment basis, the actual payment will be made through the Vendor Express System. Vendor Express is an electronic funds transfer (EFT) system which allows the Government to transfer funds to a grantee's financial institution (bank) along with explanatory information about the payment. A grantee and its financial institution will determine how the grantee will be advised of the deposit and the explanatory information.

b. Enrollment. When awarded a grant, new grantees will receive a copy of the SF 3881, ACH Vendor/Miscellaneous Payment Enrollment Form (see Exhibit IV- 2). This form is required to implement the Vendor Express System and to notify NSF of any change or correction to the financial institution information.

c. Requests for Payments. After enrollment in the Vendor Express System, funds may be requested from NSF, as needed, in any of the following three formats:

1. SF 270 (an original only) mailed to NSF, DFM, ILS, Room 575, 4201 Wilson Blvd., Arlington, VA 22230;

2. SF 270, faxed to (703) 306-0287 (DFM). Grantees shall not duplicate their request by mailing a copy of the same form to NSF; or

3. an electronic mail message addressed to "loc@nsf.gov" (Internet). By electing to submit an electronic cash request, grantees are certifying to its truthfulness as stated in the certification in section 13 of SF 270. Under penalties of perjury, a willful false certification is a criminal offense, 18 USC §1001.

d. Review of requests for funds. Daily reviews of requests for funds are performed by DFM by 1 p.m. to ensure that the information provided is correct as follows:

1. the amount requested;

2. the ten-digit organization code (this number can be found on the quarterly SF 272, Federal Cash Transactions Report (FCTR), in the top right corner, directly beneath the organization's name);

3. the full name of the organization;

4. the name and telephone number of the individual making the request;

5. an indication of whether the request for cash is for an advance or for a reimbursement;

6. identification of the period covered by the request; e.g., from 1/2/95 to 1/4/95. Advance requests should be limited to the minimum amounts needed and be timed to meet the anticipated cash requirement for allowable charges to active NSF projects; and

7. SF 3881 is on file at NSF. (See Exhibit IV-2.)

Requests for funds will be rejected for missing or incorrect information. The grantee will be informed by telephone, fax or electronic mail of any rejection. NSF-approved requests are sent via magnetic tape to the U.S. Treasury (Birmingham Regional Finance Center) where payment is transferred via ACH to the grantee's bank account.

437 Use of Women-Owned and Minority-Owned Banks

Recipients of NSF grants 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.

440 CASH REFUNDS AND CREDITS TO NSF

441 Final Unobligated Balance

NSF has a reversionary interest in the unobligated balance of a grant upon expiration or completion of the grant. Based on final disbursements reported on the FCTR, the final unobligated balance will be computed by NSF and reported in the "Final Unobligated Balance" column of the FCTR. (See GPM 452, "Final Disbursement Reporting.") The entry reduces the grantee's "Balance Authorized" as computed on line 17 of the FCTR. (See Exhibit IV-3.)

442 Erroneous Payments

Advances or reimbursements made in error must be refunded by check (payable to the National Science Foundation) if the erroneous payment creates an excess cash on hand condition or a negative "Balance Authorized" as computed on line 17 of FCTR. Excess funds should be promptly refunded and redrawn when needed if the funds are erroneously drawn in excess of immediate disbursement needs. The only exception to the requirement for prompt refunding is when the funds involved will be disbursed within 30 calendar days. This exception to the requirement for prompt refunding should not be construed as approval by NSF for a grantee to maintain excessive funds; it is applicable only to excessive amounts of funds which are erroneously drawn.

443 Interest Earned on Advance Payments

Grantees shall maintain advances of NSF funds in interest bearing accounts, unless any of the following apply:

a. the grantee receives less than $120,000 in Federal grants 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). Grantees are authorized to retain up to $250 per year for administrative expenses. Interest on advances earned shall be reported on line 11 of the FCTR.

The requirement to annually remit interest does not apply to grantees 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, if a grantee 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.

444 Program Income

If, in accordance with the grant, program income is designated for credit to grant costs, it will be recovered by NSF by crediting costs otherwise chargeable against the grant on the FCTR. (See Exhibit IV-3 and GPM 750, "Program Income.") In these cases, income in excess of the grant will be remitted to NSF by check payable to the National Science Foundation.

445 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 grantee shall be credited against NSF grant costs if the grant has not been financially closed out. A grant is financially closed out when the final net disbursements have been reported on the FCTR. Credits of $300 or more shall be credited against NSF grant costs even if the grant has been closed out. See also GPM 617, "Publication, Documentation and Dissemination."

450 GRANT FINANCIAL REPORTING REQUIREMENTS

451 Quarterly Disbursement Reporting - Federal Cash Transactions Report (FCTR)

Shortly (usually within ten days) after the end of each calendar quarter, NSF will send (via electronic or conventional mail) to each grantee a FCTR to be updated, certified and returned to NSF. This report is required whether funds are provided on an advance or a reimbursable basis. The report elements are in compliance with the uniform Federal standards applicable to financial reporting by grantees. The FCTR with instructions is shown in Exhibit IV-3. The original and one copy of the completed FCTR must be sent in time to reach the DFM by no later than the reporting date specified at the bottom of FCTR. FCTRs that lack a Certifying Official's signature will not be processed. Failure to submit the FCTR to NSF in a timely manner can result in one or more of the following actions:

a. suspension of all future payments;

b. close-out of expired grants based on previously reported disbursements;

c. suspension of unexpired grants; and

d. suspension of review and processing of new proposals.

Electronic submissions of FCTR data is optional at NSF. Grantees may enroll by contacting the DFM, ILS Section, (703) 306-1283. Participating grantees will continue to receive the paper copy of the FCTR each quarter, in addition to an electronic mail (E-Mail) FCTR (see Exhibit IV-4) which contains grant data similar to the paper FCTR. The E-Mail FCTR consists of two messages. The first message contains basic instructions while the second message contains the grant data that is to be updated and returned to NSF. By electronic submission of the FCTR, grantees are certifying to its truthfulness as stated in the certification at the end of FCTR. Additional information on electronic submission of FCTRs may be obtained by calling the cognizant grant accountant (703) 306-1283.

452 Final Disbursement Reporting

NSF does not require grantees to submit individual SF 269, Financial Status Reports, for purposes of final grant accountability. NSF procedures have been designed to extract the final financial data from the entries in the FCTR. This reporting is accomplished as follows:

a. For any grant listed on the FCTR that expired prior to the beginning of the quarter covered by the FCTR, the grantee will enter the final disbursement amount in the "Net Disbursement Reporting Quarter" column.

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 "Net Disbursement Reporting Quarter" column as if they had actually been paid. If subsequent payment differs by $300, plus or minus, from the amount previously reported, the grantee must request the approval of the Cost Analysis/Audit Resolution Branch, CPO. The request should specify the reason for the adjustment. Adjustments will not be approved for amounts less than $300.

c. If by law, regulation 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:

1. the grantee submits to DFM, ILS, a one-time statement of the reason(s) for not reporting unpaid obligations as disbursed;

2. for each grant to be held active, the grantee inserts "unpaid obligations" in the Recipient Remarks column of the FCTR; and

3. the grantee signs the certification printed at the end of the FCTR.

d. The final disbursement amount may not exceed the amount of the grant. If the grantee erroneously reports such an excess, NSF will keep the grant in the FCTR in the subsequent quarter and require the grantee to review its accounting records and make the necessary adjustments so that the disbursement amount does not exceed the grant amount.

e. When the final disbursements have been recorded by NSF, the grant will be financially closed and no additional disbursements shall be shown by the grantee in subsequent reports.

f. When all final reporting requirements have been met, the grant will be deleted from the FCTR. When this is done, the grant will be shown in the next "Schedule of Awards Purged and Subsequent Adjustments During the Quarter," Part IV of the FCTR.

453 Compliance with Financial Reporting Requirements

DFM monitors financial report submissions to assure that the requirements for final disbursement information in the FCTR are fulfilled.