Research Administration Policies

RA90 Finalization and Closure

Policy Status: 

Active

Subject Matter Expert: 

Richard Killian, 814-865-7525, rek149@psu.edu

Policy Steward: 

Senior 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 (OSP) via the Business Area Research Office. Research Accounting will revise the end date following receipt of agency approval from OSP.
  • Budget Validity To Date: This is the last day on which allowable expenditures can be posted to the account. This date is set at 60 calendar days after the end date of the award. Research Accounting (all grant types) and Applied Research Lab (ARL) (Y2 grant types) are the only offices authorized to change the "Budget Validity To" date. Any adjustments beyond 60 days may result in late final invoicing and financial reporting and must be approved by the sponsor prior to requesting a data change to allow the adjustment.
    • Note: If the sponsor requires the final invoice in less than the standard 90 days, the Business Area will allow Research Accounting to set the date to less than the standard 60 days after the end date. For example, if the final invoice is due in 60 days, the "Budget Validity To" date will be set at 30 days after the end date. This will allow 30 days for final invoicing and reporting.
  • 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.

Business Area (BA): 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 invoice and financial reports to the sponsor based on the BA's closeout instructions, Authorization to Close (ATC), and the sponsor's payment terms and conditions. 

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 BA on behalf of the PI must submit closeout instructions that include an ATC.

Most federal grants require awards to be closed within 120 days of the award end date (Uniform Guidance 2 CFR 200.343 Closeout). Closeout requirements for federal contracts and other awards will be specified in the terms and conditions of individual awards.

The closeout 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 Budget Validity To date. See above for the definitions of various critical time periods related to award 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 SIMBA

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 SIMBA and no further expenditures can be charged to the sponsored award.

Once a grant is closed, the associated sponsored programs 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 a Closeout Report that provides a Closeout Form to the BA's 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 valdiation date in SIMBA, send an extension request form to Research Accounting with explanation of the necessary adjustment. If the project is not ready to be closed, the PI and College must contact the sponsor to seek a No Cost Extension (NCE).
  • If required, Cost Share and subaward transactions must be finalized in SIMBA.

60 Days After the End Date

  • 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.
  • Submit a Closeout Form with instructions.

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 Budget Validity To date may require approval by the University's Office of Naval Research (ONR) 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. Large residual balances may be an indication of inappropriate accounting practices. If it is determined that the PI engaged in defective pricing (i.e., knowingly inflating the price with an intent of generating a residual balance) and/or inappropriate cost allocation, funds may need to be returned to the sponsor and other corrective actions may need to be taken. (See RA02 Stewardship of Sponsored Programs for more information regarding Reporting Non-Compliance and the False Claims Act.)

If the residual balance is less than 20% of the award amount, and there is no indication of inappropriate accounting, the BA may retain that portion of the balance representing the unused direct costs. If the residual balance exceeds twenty percent (20%) of the award, the Senior Director of Research Administration may approve some portion of the residual direct costs to be returned to the BA. Research Accounting will require the PI to provide a detailed explanation to Research Accounting why the pricing was off by such a large margin. Final approval of the disposition of the residual balance is at the discretion of the Senior Director of Research Administration. If approved, then a journal entry must be prepared by Research Accounting debiting income on the sponsored program to be closed and crediting income on the appropriate unit's Residuals/Royalties/Licenses/Support internal order (IO) 59, for the direct expense portion and cost center 5211110000, University Funds, general ledger account 45500010, for the indirect portion.

For ARL, the total residual balance, including internal overhead and fee, will be creditied to IO 59 and IO 5211110000, University Funds, general ledger account 34400010, for the indirect portion.

If the award was granted an F&A waiver by OSP or the Corporate Controller's Office, the transfer must use the F&A rate that would have been assessed under our rate agreement with ONR. Because the project was successfully completed, the full reimbursement of indirect costs is expected.

To calculate the residual balance, please refer to the Fixed-Priced Residual Balance Worksheet on the Research Accounting website. This worksheet must be attached to the grant.

Sponsored awards 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 sponsored program at the time the cost is incurred. Investigators cannot utilize other funds (general funds or other sponsored awards) to support the project in an attempt to generate a residual balance on the sponsored award 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 cost-sharing 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 Senior 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)

RAG05 - Establishing Research Institutes, Consortia, and Centers

Revision History:

  • July 24, 2021 - Updated guidance on Residual Balances

  • March 11, 2021 - Updated to reflect SIMBA terminology and practice

  • September 19, 2019 - Changed Vice President for Research to Senior Vice President for Research

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

Date Approved: 

July 6, 2021

Date Published: 

July 24, 2021

Effective Date: 

July 24, 2021