financial management system standards

8.3.1 Financial Management System Standards

Recipients are required to meet the standards and requirements for financial management systems. The standards and requirements for a financial management system are essential to the grant relationship. NIH cannot support the research unless it has assurance that its funds will be used appropriately, adequate documentation of transactions will be maintained, and assets will be safeguarded.

Recipients must have in place accounting and internal control systems that provide for appropriate monitoring of grant accounts to ensure that obligations and expenditures are reasonable, allocable, and allowable. In addition, the systems must be able to identify large unobligated balances, accelerated expenditures, inappropriate cost transfers, and other inappropriate obligation and expenditure of funds. Recipients must notify NIH when problems are identified.

A recipient's failure to establish adequate control systems constitutes a material violation of the terms of the award. Under these circumstances, NIH may include specific conditions on awards or take any of the range of actions specified in Administrative Requirements-Enforcement Actions, as necessary and appropriate.