Research Administration Policies

RA90 Finalization and Closure

Policy Status: 

Active

Policy Steward: 

Vice President for Research, and Corporate Controller

 

Contents:

PURPOSE:

To establish policy for finalization and closeout of sponsored awards.

DEFINITIONS:

  • End Date: The period of performance end as established by the agreement. Modification of the end date can only be done with approval of the sponsor. Requests for extensions must be processed through Office of Sponsored Programs via the College Research Office. Research Accounting will revise the end date following receipt of agency approval from Sponsored Programs.
  • Hold-Close Date: The hold-close date is the last day on which allowable expenditures can be posted to the account. The hold-close date will be automatically set by the system at 45 calendar days after the end date of the award. Research Accounting will be the only office authorized to change the hold-close date. In the case of subawards, subcontracts, and publications and printing costs, adjustments to the hold-close date may be authorized to allow posting of these expenditures beyond the 45-day hold-close date.
    • Note: If the sponsor requires the final invoice in less than the standard 90 days, Research Accounting will set the hold-close date at less than 45 days after the end date. For example, if the final invoice is due in 60 days, the hold-code date will be set at 30 days after the end date.
  • Expense-Close Date: The expense-close date will be automatically set by the system as 90 calendar days after the end date of the award. Only Research Accounting has the authority to change the expense-close date. Between the period of the hold-close date and expense-close date, the system will only allow postings to expenditures for journal vouchers approved by Research Accounting, credit adjustments, and fringe/overhead calculations.
  • Income-Close Date (Account Close Date): This will be the date when final income is received and Research Accounting does the final close on the account. Both income and budget details may be posted between the expense-close date and the income-close date. This date will be controlled and set by Research Accounting.

RESPONSIBILITIES:

Principal Investigator (PI): Responsible for checking the award document for all pertinent details about closeout procedures and dates as well as for performing a full review of costs, including effort, to ensure all costs are reasonable, allowable and allocable. The PI is also responsible for preparing and submitting technical reports as well as patent reports, if applicable.

Department: Responsible for assisting the PI as appropriate with award closing and for preparing final property reports and verifying if patent reports are required.

Research Accounting: Responsible for preparing and submitting the final financial reports to the sponsor based on information provided by the College Research Administrator via the Account Close or Extension (ACE) form. 

Property Inventory: Responsible for reviewing and submitting final property reports.

Office of Technology Management: Responsible for reviewing and submitting final patent reports.

CLOSING SPONSORED AWARDS:

Awards are considered completed when all work is finished or on the date the award expires or terminates. If, at the end of the award period, the PI has not received a renewal or no-cost extension and one is not anticipated, closeout of the award must be initiated. The Corporate Controller's Office requires the submission of the Account Close or Extension (ACE) form to close the award.

Most federal grants require awards to be closed within 90 days of the award end date (Uniform Guidance 2 CFR 200.343 Closeout). Certain federal agencies (NSF and NIH) have specified a 120-day closeout period for final financial disbursements. Closeout requirements for federal contracts and other awards will be specified in the terms and conditions of individual awards.

The closeout period (whether 90 days, 120 days, or some other prescribed period) is provided only to correct errors, post charges that were incurred and actualized before the end date, and address other close-out requirements such as final reports. However, transfers of costs and the confirmation of final effort must be done within the period prior to the hold-close date. See below for the definitions of various critical time periods related to fund closeout.

In terms of costs, closeout procedures primarily focus on achieving the following in accordance with sponsor and Penn State requirements:

  • Removal of any costs found to be unallowable, unallocable, or unreasonable. (See RA10 for additional guidance.)
  • Preparing final financial reports (including cost-share reports) and invoices for submission to the awarding agency
  • Securing final payment from sponsor
  • Inactivating the account(s) in IBIS

Many projects also require submission of the following:

  • Final Technical Report
  • Patent Report
  • Property Report
  • Other reports as required by the terms and conditions of the award

Many sponsors will not remit final payment until all final technical and financial reports have been received and accepted. Once final payment is received by PSU and all reports submitted, the fund will be marked closed in IBIS and no further expenditures can be charged to the restricted account.

Once an award is closed, the associated accounts will not be reopened. However, per federal regulations, the federal awarding agency maintains the right to disallow costs and recover funds on the basis of a later audit or review. Such audits and reviews must be completed within the record retention period.

CLOSE-OUT TIMELINE AND CHECKLIST:

The following timeline is based on the standard 90-day closeout requirements specified above. If a sponsor requires an earlier closeout period or grants additional time to complete closeout, the timeline below will be adjusted accordingly.

90 days BEFORE budget/project end date – Pre-closeout review

  • If the PI needs more time to complete sponsored activities or reporting requirements, a request must be made to the agency. Research Accounting cannot extend the end date of an award. The end date will change when Research Accounting receives the modification from OSP.
  • All direct cost categories (salaries, equipment, supplies, tuition, etc.,) must be reviewed by the PI and Department staff for completeness, accuracy and allowability before the end date or budget period.
  • The PI and Department staff also must review cost-sharing (if applicable) to ensure all cost-sharing requirements will be met prior to the end date of the award.
  • All necessary adjustments should be made before the close of the budget period or if this is not possible, during the 90-day adjustment period.
  • Equipment purchases within the last 90 days of the budget period are generally not permitted, and, if done, must be fully documented and justified.
  • If award has sponsor-titled equipment, contact Property Inventory to plan for disposition or transfer to another award.

30 days BEFORE budget/project end date

  • Research Accounting will send an Account Close and Extension (ACE) form to the College Research Office.
  • If the final invoice for a subaward has not been received, the College Research Office should contact the subawardee.

Within 60 days AFTER budget/project end date – Post-closeout review

  • The PI and College Research Office will confirm that all expenditures were incurred prior to the end date of the award. (The one exception to this can be found in Uniform Guidance 2 CFR 200.461, which permits charging of publication and printing costs between the end date of the award and the closeout of the award. See RA65 for additional guidance regarding the charging of these costs.) All payroll adjustments must be posted either during the budget period or in the adjustment period. For payroll adjustments that are beyond the end date in IBIS, send an extension request form to Research Accounting with explanation of the necessary adjustment.
  • If required, Cost Share reports should be sent to Research Accounting with the ACE.
  • The PI should verify that the final technical report has been submitted to sponsor. It is considered a best practice to provide the College Research Office with a copy of the report cover page and transmittal.
  • A signed Account Close and Extension (ACE) form must be forwarded to Research Accounting for final invoicing.

Within 90 days AFTER budget/project end date - EXCEPTIONS

  • For federally funded awards, any exception to posting expenditures incurred during the period of performance to restricted accounts beyond the expense-close date must be approved by the University's Office of Naval Research Administrative Contracting Officer (ACO) or appropriate federal official. Requests for such exceptions must be initially made through Research Accounting. Based on their review and approval of the request, it will be forwarded to the ACO or appropriate federal official for consideration and approval.

FIXED-PRICE AGREEMENTS- RESIDUAL BALANCE:

Fixed-price agreements are expected to be based on the best estimate of the funds needed to complete a project. In some cases, a small residual balance may remain at the end of the project.

At the time the fund is to be closed, the academic unit may retain that portion of the balance representing the unused direct costs; however, the indirect portion must be transferred to the central indirect cost income account. The amount of the residual balance shall not exceed twenty percent (20%) of the award. This is accomplished by the preparation of a Journal Voucher - Departmental (JVDP), debiting income on the account to be closed, and crediting income in the unit's Miscellaneous General Research Account for the direct expense portion and 00-001-69 UP 10010, Originating Object Code, for the indirect portion.

Accounts should be closed within a reasonable period after the termination date, but no later than six months after the termination date (or approved extensions).

All costs related to a project must be charged to the account at the time the cost is incurred. Investigators may not utilize other funds (general funds or other restricted funds) to support the project in an attempt to generate a residual balance in the restricted account at the end of a project.

In cases of significant balances on Industry Member Programs, it is generally advisable to consult with your industrial advisory board on how best to utilize the residual balance. (See RAG05 for more information on Industry Membership Programs.)

Detailed information may be found at: http://www.research.psu.edu/osp/manage-awards/cost-reimbursable.

PROPERTY CONTROL:

At the end of a sponsored award, the PI should review all property and equipment acquired or fabricated under the award. All such property and equipment must be properly tagged. Property and equipment acquired with Federal and Commonwealth funds are often subject to certain requirements, even after the awards have ended. For example, even when Penn State has clear title to property and equipment acquired with Federal funds, Penn State may still be subject to rules or additional conditions imposed by the sponsor regarding the equipment (such as not charging depreciation, amortization or use charges on the equipment for any present or future government contract, grant, subcontract, subgrant or similar agreement). In other cases, title to property and equipment will be "conditional," subject to final disposition instructions of the sponsor. In yet other cases, the Federal government will retain title to property and equipment acquired with federal funds. For further guidance regarding ownership and use of property and equipment, see RA70Property & Equipment.

BS15 - Disposal and Purchase of Obsolete, Surplus or Scrap University-Owned Equipment, Supplies and/or Materials contains additional guidance regarding government-owned property.

AUDITS, REVIEWS AND INVESTIGATIONS:

If a PI receives notice of an audit, review or investigation from any sponsoring agency or independent auditor, the Corporate Controller's Office must be notified immediately through the Financial Officer. PIs and others involved in a sponsored award should not discuss or respond to any inquiries related to an audit, review or investigation unless told to do so by the Corporate Controller's Office.

If any costs are, or have been, questioned as a result of a federal audit, review or investigation, none of these costs shall be transferred between any other federally sponsored accounts, including costsharing accounts, unless and until expressly approved by the University's Office of Naval Research Administrative Contracting Officer after a formal Government determination as to the allowability of those questioned costs. This applies even if the contract has not yet reached its end date.

RECORD RETENTION:

The requirement to retain records does not end with closeout, nor does the sponsor's right to audit the records. See Policy AD35 – University Archives and Records Management. According to the Uniform Guidance:

Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient (2 CFR 200.333).

If Penn State is notified that an account will be audited, all records must be held until the audit is completed, even if they will be held past the normal record retention period.

FURTHER INFORMATION:

For questions, additional detail, or to request changes to this policy, please contact the Office of the Vice President for Research, or the Office of the Corporate Controller.

CROSS REFERENCES:

Other Policies may have specific application and should be referred to, especially;

AD35 - University Archives and Records Management

BS15 - Disposal and Purchase of Obsolete, Surplus or Scrap University-Owned Equipment, Supplies and/or Materials

RA10 - Costing Principles for Sponsored Awards (Formerly RA01)

RA65 - Non-Personnel Costs

RA70 - Use of Equipment Purchased on Federally Sponsored Projects (Formerly RA07)

Effective Date: September 20, 2017
Date Approved: September 18, 2017
Published Date: September 19, 2017

Most recent changes:

  • September 11, 2017 - Revisions to the Fixed-Price Agreements - Residual Balance section

Revision History (and effective dates):

  • February 26, 2016 - This new policy (incorporating parts of RAG05 and RAG08) has been created as part of the policy reorganization brought about by the implementation of the Uniform Guidance (2 CFR 200).
  • March 7, 2005 - Editorial changes to put in links to OMB Circular A-110
  • October 28, 2004 - Editorial change: Under the HOLD CLOSE DATE section the term "end date" was changed to "close date".
  • December 1, 2000 - New Policy