Megan Columbus:          Welcome to another edition of All About Grants.  This is Megan Columbus from NIH’s Office of Extramural Research here today to talk about what administrators need to know about financial closeout of grants.  I have with me Michelle Bullss, Director of OER’s Office for Policy for Extramural Research Administration.  Michelle, can we start today by just explaining exactly what requirements there are for grantee closeout?

Michelle Bulls:                  Absolutely, Megan.  There are three required reports for our consideration of closeout.  There’s the Federal Financial Report, there’s the Scientific Progress Report and the Final Invention Statement.

Megan Columbus:          And today we’re going to be talking about that financial report.

Michelle Bulls:                  Yes.  Today’s focus will be about the Federal Financial Report and the closeout of those and how our administrators need to understand what those requirements are from both the grantee’s perspective and the NIH’s perspective.

Megan Columbus:          Okay, so looking at the Federal Financial Report what does it entail?

Michelle Bulls:                  Looking at the Federal Financial Report that is submitted to the agency, the Federal Financial Report cannot have an unliquidated obligation.  The unobligated balances are okay because lots of times there’s continued support so that money can be carried forward unless there’s a restriction on the award at closeout.  But for the most part there’s no opportunity to have any unliquidated obligations and all of the program income must be reported on the final financial reports.

Megan Columbus:          Can you define for me “unliquidated obligation”?

Michelle Bulls:                  Yes.  An unliquidated obligation is an invoice that the grantee has allotted money to pay, but it has not been paid because the invoice has not come into either from a subcontract support or from any other obligation.  So they’ve obligated, but they haven’t actually allocated that money there.  And so we cannot have any unliquidated obligations showing on that final report.  It has to be zero so all of those final invoices are paid and closed out within the grantee system. 

Megan Columbus:          And so the federal share and the federal outlay must match?

Michelle Bulls:                  The federal share and the federal outlay should match and if it doesn’t on a final report that’s okay.  It’ll show as an unobligated balance, not unliquidated but unobligated balance.  In other words, the federal share was this amount, the grantee outlaid a different amount and the balance is showing as unobligated.

Megan Columbus:          In which case can we close out the grant?

Michelle Bulls:                  Yes.  We actually can close out a grant with an unobligated balance on the books.

Megan Columbus:          And what happens to that balance?

Michelle Bulls:                  The agency deobligates the funds and it goes back to Treasury.

Megan Columbus:          Got it.  So what can get in the way of being able to successfully close out a grant?

Michelle Bulls:                  So it’s very interesting because NIH has been having some really frank and different types of discussions with our grantees, specifically in the area of financial closeout, because a lot of times what grantees and the NIH agency doesn’t really necessarily highlight as a hindrance is the fact that the Expenditure Report that’s submitted to the agency and the Cash Report that’s submitted to the Payment Management System must equal.  In other words they cannot be different.  They must reconcile.  They cannot have different balances on there.  And this is something that has always been in the policy, but had not been highlighted before NIH adopted the HHS requirement for unilateral closeout.  This is a main, main concern for us because if the two balances from both reports don’t equal, NIH can submit a closeout code but in the Payment Management System it stays open.  And that’s a concern for our grantees because at that point we could essentially close the grant out, deobligate it at the cash transaction level and cause the grantee to go into debt status even though they show a zero unobligated balance on their Expenditure Report.  And this has been something that we’ve been really trying to remind our grantees of and especially the administrators when we’re doing, you know, our updates and making sure that everyone understands that, yes, all three reports are required for closeout but that financial report is key to the ability to truly close that grant out in our systems.

Megan Columbus:          If our grantees have questions about, and concerns about, closing out a particular grant who should they be speaking to at NIH?

Michelle Bulls:                  They should be speaking to their grants management official that is outlined on the Notice of Award.  If they have questions about the policy implications of closeout, which are truly generic, for instance, just talking about what does it mean to make sure that these reports are reconciled or what is the policy on that, then they should definitely come to OPERA, the grant’s policy, to address the generic policy.  Before the actual details of what they need to do for a specific award, they definitely need to talk to their grants management official because their grants management official will tell them, you know, what they need to do and walk them through it.

Megan Columbus:          At the end of this we will give the email address for any questions that could go to OPERA.

Michelle Bulls:                  General policies.  We will not answer questions about the details of the award.

Megan Columbus:          Is there anything else our grantees need to know about this?

Michelle Bulls:                  Yes, so one of the things that we have been talking about, Megan, is the adoption of the HHS Unilateral Closeout Policy.  And what that requires the agency to do is to begin closing out grants at least 180 days after the end of the project period.  Lots of times there’s a concern with our grantees, especially our administrators, where they are submitting reports to the agency with a zero balance and lots of times within the institution there’s another side of the house, typically the accounting side that submits the Payment Management Cash Report to the Payment Management System.  And one of the things that we’ve noted is that the grantee really has to have a lot of internal discussion across the table from each side of the house on what the reports look like when they are submitted.  They’re very different reports.  The Expenditure Report captures the expenditures, the federal outlays and what has been obligated or expended by the grantee.  And the Cash Report does focus solely on reporting the cash that was drawn down from the Payment Management System.   The Cash Report is always, always due in a cash quarter.  For our Expenditure Reports, it’s due 120 days after the project period ends.  These two dates don’t necessarily match and that’s where the discrepancies come in.  So grantees need to understand that there may be an instance where they need to either revise their Federal Cash Report to match the Federal Expenditure Report and that’s typically what has to happen otherwise the agency will be forced to close it out at the cash transaction amount which is, most of the time, lower than what was actually submitted on the Expenditure Report.

Megan Columbus:          So what I’m understanding is your strong advice to our community is make sure that everyone who’s submitting those financial reports, whether they be the Cash Transaction Reports or the Expenditure Reports, that they’re talking to each other making sure those are reconciled.

Michelle Bulls:                  As best they can, absolutely.

Megan Columbus:          And so if there’s any problem with that who are they talking to?

Michelle Bulls:                  Yes, so if there’s any problem with reconciling—and there may be some problems with reconciling, but the main takeaway here is that if they’re going to be late or delayed by more than 120 days after the end of the project period they need to begin to contact the agency, their IC official, the grants management official often and early to communicate this delay to them.  Otherwise at that 180th day the grantee will go into unilateral closeout.  And unilateral closeout does not take into account anything other than the agency has made a decision based on our discretion to enter into a closeout without their reports reconciling, which could create a debt for the grantee and we do not want that to happen.

Megan Columbus:          But if they talk to us during the time we may be able to have some wiggle room?

Michelle Bulls:                  If they are talking with us and there’s a justification for why they’re delayed, the agency does have discretion to provide an extension.  However, that is not something that will be considered very often even in a lot of the communications but— because it has to be a strong justification for why.  But we do encourage our grantees to make sure that they stay in touch often and early, contacting the IC official, as well as the Closeout Center.

Megan Columbus:          Good to know.  Thank you for joining us today.

Michelle Bulls:                  Thanks, Megan.

Megan Columbus:          For NIH and OER, this is Megan Columbus.

Announcer:                     If you have questions or concerns about the close out process please contact the grants management Specialist identified on the notice of award. For questions about the policy implications of closeout please contact the Office of Policy for Extramural Research - Division of Grants Policy at 301 435-0949 or you may email them at

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