Policy RA90 FINALIZATION AND CLOSURE (Formerly RAG05 and RAG08)

Policy Steward: Vice President for Research, and Corporate Controller

Contents:

  • Purpose
  • Definitions
  • Responsibilities
  • Closing Sponsored Awards
  • Close-Out Timeline and Checklist
  • Fixed-Price Agreements- Residual Balance
  • Property Control
  • Audits, Reviews and Investigations
  • Record Retention
  • Further Information
  • Cross References

  • PURPOSE:

    To establish policy for finalization and closeout of sponsored awards.

    DEFINITIONS:

    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:

    Many projects also require submission of the following:

    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

    30 days BEFORE budget/project end date

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

    Within 90 days AFTER budget/project end date - EXCEPTIONS

    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 at least annually to discuss reporgramming of 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 RA70 - Property & 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:

    Revision History (and effective dates):

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