Memorandum

To: Solicitor

Inspector General

Assistant Secretaries

Bureau and Office Heads

From: Nina Rose Hatfield

Deputy Assistant Secretary – Budget and Finance

Subject: FINANCIAL ASSISTANCE (GRANTS): FINANCIAL REPORTING

REQUIREMENTS

This is the first of two policy issuances regarding financial and performance reporting associated with grants. For the purpose of this policy, grants are defined as all Federal financial assistance that provides support or stimulation to accomplish a public purpose. “Grant” includes grants, cooperative agreements, and other agreements in the form of money or property in lieu of money, by the Federal Government to an eligible recipient. The second policy issuance (to be issued within the next few months) will cover new Departmentwide performance reporting requirements.

Among the findings and recommendations contained in their Fiscal Year 2002 report to the Secretary and Inspector General, independent auditors, KPMG, stated that, with regard to grant monitoring:

Interior requests grant performance reports and related SF-269, Financial Status

Reports, from grant recipients; however, Interior does not perform sufficient

monitoring to ensure grant recipients submit these reports timely … Interior uses

the SF-269s to help ensure that expenses are recorded in the proper period and

funds are de-obligated at the end of the grant period.

The resulting recommendation to improve the reporting of financial transactions in this area was that “Interior require grant recipients to submit grant performance reports and related SF-269’s prior to receiving new grants.”

In FY 2002, Department of the Interior (DOI) bureaus and offices awarded over $3.8 billion in grants and cooperative agreements. This represents a considerable portion of DOI’s annual budget. As grant-makers, we must be especially vigilant in administering our grants and ensuring that recipients are held accountable for submitting financial status information in a timely manner so that expenses may be recorded in the proper period and funds de-obligated at the end of the grant period.

The attached policy reiterates financial reporting requirements as identified in Office of Management and Budget (OMB) Circular A-102, Grants and Cooperative Agreements with State and Local Governments, and OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Non-Profit Organizations, Title 43 Code of Federal Regulations (CFR), Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, sections 12.80, 12.81, and 12.83. Sanctions for non-compliance by recipients, as provided for by the OMB Circulars and Title 43 CFR Part 12, are also covered.

This policy applies to all DOI grant-making programs, and is effective upon issuance. Bureau and office heads are responsible for appointing a bureau Single Point of Contact for all financial assistance programs within their bureaus; ensuring that this policy is distributed to all of their bureau’s/office’s grant-making programs; preparing supplementary guidance, as appropriate; and implementing the policy’s requirements. Grant programs’ failure to properly monitor grants and hold recipients accountable for the timely receipt of financial status reports may render the programs materially weak.

If you have any questions regarding this policy, please contact Debra Sonderman, Director, Office of Acquisition and Property Management (PAM) on 202-208-6352. Members of your staff may contact Tammy Pataluna, PAM, on 202-208-4080.

United States

Department of the Interior

Policy Regarding Financial Status Reporting Requirements

Related to Grants

1. PURPOSE:

The purpose of this policy issuance is to reiterate and implement Governmentwide policy regarding financial status reporting requirements related to grants to ensure that recipients are held accountable for the timely submission of accurate and complete financial status reports to better enable Department of the Interior bureaus and offices to record grant-related expenses in the proper period and de-obligate funds at the end of the grant period. For the purpose of this policy, grants are defined as all Federal financial assistance that provides support or stimulation to accomplish a public purpose. “Grant” includes grants, cooperative agreements, and other agreements in the form of money or property in lieu of money, by the Federal Government to an eligible recipient.

2. AUTHORITIES:

Office of Management and Budget (OMB) Circular A-102, Grants and Cooperative Agreements with State and Local Governments, and OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Non-Profit Organizations, and Title 43 Code of Federal Regulations (CFR), Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, sections 12.80, 12.81, and 12.83.

3. RESPONSIBILITIES:

A. Bureau Directors are responsible for appointing a Bureau Single Point of Contact for Grants to coordinate data collection and reporting for all financial assistance programs (i.e., grants and cooperative agreements) within their bureaus; ensuring that this policy is distributed to all of their bureau’s/office’s grant-making programs; preparing supplementary guidance to include Financial Status Reporting frequency for each grant project or program sponsored by the bureau; and implementing the policy’s requirements.

B. Grant Program Directors are authorized to waive requirements for SF-269 or SF-269A Financial Status Reports when data provided in SF-270 or SF-272 are determined to be adequate for grant program needs; approve requests for extension of Financial Status Report due dates; and suspending and terminating grant awards and payments, as appropriate. This authority may be delegated to a level above the Grants Administrator.

C. Grant Administrators are responsible for clearly stating financial reporting requirements in applicable grant notices and award documentation; actively monitoring grants and cooperative agreements to ensure recipient compliance with conditions of the grant; taking timely and effective action to correct non-compliance on the part of recipients; working with Grant Program Directors and Bureau Single Point of contact for Grants in implementing grant reporting requirements; properly documenting and maintaining grant files.

4. EFFECTIVE DATE:

This policy is effective upon issuance and applies to all future and active grants awarded under OMB Circulars A-102 and/or A-110.

5. APPLICABILITY:

This policy applies to all Department of the Interior grant programs and grant recipients. Grantees are not required to apply the forms identified in this policy (i.e., SF-269 and SF-269A) in dealings with their subgrantees.

6. POLICY:

A. SF-269 or SF-269A, Financial Status Report.

Each Department of the Interior bureau/office grant program shall require recipients to use the Standard Form (SF) – 269, Financial Status Report (Long Form) (Appendix A) or SF- 269A, Financial Status Report (Short Form) (Appendix B) to report the status of funds for all non-construction projects or programs.

A Grant Program Director (i.e., a level not lower than Division Chief), or his/her designee, e.g., a Regional Grant Program Director, has the option of not requiring the SF-269 or SF-269A when the SF-270, Request for Advance or Reimbursement (Appendix C), or SF-272, Report of Federal Cash Transactions (Appendix D) is determined in writing to provide adequate information to meet short-term program or interim financial reporting needs. A copy of the written determination/waiver must be maintained in the grant file. A final SF-269 or SF-269A shall be required at the completion of the grant project when the SF-270 is used only for advances.

B. Accounting Basis.

Using the SF-269 or SF-269A, grant recipients will report program outlays and program income on a cash or accrual basis, as prescribed by the grant awarding bureau/office. If the bureau/office requires accrual information and the recipient’s accounting records are not normally kept on the accrual basis, the recipient is not required to convert its accounting system. Rather, they shall develop the necessary accrual information through an analysis of documentation on hand.

C. Financial Status Reporting Frequency.

In supplementary bureauwide policy, Bureau Directors shall determine Financial Status Reporting frequency for each grant project or program sponsored by the bureau, considering the size and complexity of the particular project or program. The bureauwide determination shall be coordinated, prepared and maintained by the bureau Single Point of Contact.

A Financial Status Report shall not be required more frequently than quarterly or less frequently than annually. If a recipient: (a) has a history of poor performance, (b) is not financially stable, (c) has a management system that does not meet the standards prescribed in the applicable OMB Circular, (d) has not conformed to the terms and conditions of a previous award, or (e) is not otherwise responsible, bureau’s/office’s may impose additional requirements as needed, provided that such applicant or recipient is notified in writing as to: the nature of the additional requirements, the reason why the additional requirements are being imposed, the nature of the corrective action needed, the time allowed for completing the corrective actions, and the method for requesting reconsideration of the additional requirements imposed. Any special conditions shall be promptly removed once the conditions that prompted them have been corrected. Bureaus/Offices may require a monthly report from those recipients receiving advances totaling $1 million or more per year.

A final Financial Status Report shall be required when a grant is completed/expires or is terminated.

Grant recipients will not be required to submit more than the original and two copies of the Financial Status Report to the grant-making bureau/office per reporting period.

D. Financial Status Reporting Due Dates.

When reports are required on a quarterly or semiannual basis, they will be due to the grant-making bureau/office 30 calendar days after the reporting period. When required on an annual basis, they will be due 90 calendar days after the grant year (i.e., 12 months after the approved effective date of the grant agreement and every 12 months thereafter until the expiration date of the grant agreement). Final Financial Status Reports will be due 90 calendar days after the expiration or termination of grant support.

E. Reporting Requirement Notice to Recipients.

Grant project or program financial status reporting requirements, e.g., report forms, reporting frequency, due dates, and notices of sanctions for noncompliance with financial reporting requirements, must be clearly stated in applicable pre-award and award notices, and post-award grant documents/notices so that recipients are given ample notice of reporting requirements, due dates, and sanctions for noncompliance with reporting requirements.

F. Monitoring by Recipients and Bureau/Office Grant Administrators.

Grant recipients and their Financial Assistance Coordinators are responsible for managing the day-to-day operations of grant and subgrant supported activities. As such, they must monitor their activities to assure compliance with applicable Federal requirements, e.g., financial status and other reporting.

Bureau/office Grant Administrators are also required to provide sufficient monitoring and oversight to ensure that recipients submit reports in a timely manner. Proper monitoring includes, but is not limited to:

(1) Tracking report due dates;

(2) Reviewing reports for completeness and accuracy, and returning incomplete or inaccurate reports in a timely manner with adequate description of why the information provided appears to be incomplete or inaccurate;

(3) Using reports to determine whether award requirements are met; and

(4) Taking effective action to provide timely notice and obtain overdue reports, with due concern for recipient rights and program needs.

G. Requests for Extensions.

A bureau/office Grant Program Director or his/her designee may extend the due date of a financial status report upon receipt of a justified request from the recipient’s designated Financial Assistance Coordinator, provided that the request for extension is received by the bureau/office Grant Program Director or his/her designee prior to the financial report’s original due date. Requests must be submitted in writing and include the requested revised report due date and a justification for the extension.

H. Overdue Reports.

If a Financial Status Report is not received by the due date identified in the grant or the agreed upon due date (refer to section G., above) the bureau/office Grants Administrator shall contact the recipient’s financial assistance coordinator to:

(1) Notify them that the due date has passed and that the required Financial Status Report has not been received;

(2) Inform them that failure to submit reports in a timely manner renders them noncompliant and may result in the imposition of sanctions including the (a) withholding of cash payments pending receipt of the required reports;

(b) denying both use of funds and matching credit for all or part of the cost of the activity or action not in compliance; (c) whole or partial suspension or termination of the current award for the grantee’s or subgrantee’s program; (d) withholding of further awards for the program until the required reports are received; or other legal remedies.

(3) Request immediate receipt of the report; or

(4) Negotiate a proposed extension date ( in cases where an extension has already been granted, this will be an additional extension) not to exceed 30 calendar days. The proposed extension date must be approved by the bureau/office Grant Program Director or his/her designee before being implemented. Notification to the grant recipient that an approved extension has been granted must be issued in writing, and reiterate the warning regarding remedies for noncompliance identified in H.(2), above.

The Grants Administrator must document the grant file regarding notifications of overdue reports and the results.

I. Remedies for Noncompliance.

(1) Warning Notice Issuance, Suspension, and Termination.

If neither the Financial Status Report nor an acceptable explanation is received by the grant-making bureau/office by the agreed upon extension date (refer to section H.(4), above), the Grants Administrator will advise the bureau/office Grant Program Director or his/her designee, who will issue a written warning notice to the recipient’s Financial Assistance Coordinator stating that the grant recipient is noncompliant with the terms of the grant award regarding financial status reporting, and that unless the required report(s) are received by the grant-making program within the next 10 calendar days, the program shall make no further payments and the grant award will be suspended until all required Financial Status Reports are received. The notice shall also state that (1) the bureau/office grant program reserves the right, without further notice, to convert the suspension to a termination of the grant award if the required report(s) are not received by the bureau/office grant program within 30 calendar days of implementation of the suspension; and (2) further grant awards will be withheld by the grant program until all Financial Status Reports have been received.

If the report or an acceptable explanation is not received by the end of the 10 calendar-day period cited in the notice, the grant award and payments shall be suspended. If the report or an acceptable explanation is not received by the end of 30 calendar days of implementation of the suspension, the suspension shall be converted to a termination, and the grant program will withhold further grant awards until all Financial Status Reports have been received.

No commitment of funds incurred by the grant recipient during the period of suspension will be allowable under the suspended grant, except that a bureau/office grant program manager may, at his/her discretion, allow necessary and proper costs which the grant recipient could not reasonably avoid during the period of suspension and that are otherwise allowable under applicable cost principles.

(2) Final Financial Status Report.

As noted in section 6.D., above, final Financial Status Reports are due to the grant-making program 90 calendar days after the expiration or termination of grant support. Upon written request by the grant recipient, the bureau/office Grant Program Director or his/her designee may extend this timeframe. Bureau/office agreement to extend the timeframe for receipt of the final Financial Status Report must be made in writing and include a notice that if the final Financial Status Report is not received by the agreed upon extension date, the grant recipient shall be considered to be non-compliant with the reporting conditions of the grant and that the grant-making program will withhold further grant awards to the recipient until all Financial Status reporting requirements have been met.

If the final Financial Status Report is not received by the agreed upon extension date, the Grant Administrator shall notify the bureau/office Grant Program Director or his/her designee. The bureau/office Grant Program Director or his/her designee will issue a written notice to the recipient with copies to Grant Program Administrators within the grant program under which award of the grant was made, notifying them that the grant recipient is considered to by non-compliant with the reporting conditions of their grant award and that the grant program will withhold further grant awards to the recipient until final Financial Status reporting requirements have been met.

Upon receipt of delinquent final Financial Status reports, the Grant Administrator shall notify the bureau/office Grant Program Director or his/her designee that the recipient’s final Financial Status reporting requirements have been met, and that further awards to the recipient from the grant program need no longer be withheld. The bureau/office Grant Program Director or his/her designee will, in turn, issue a similar notice to Grant Program Administrators within the program advising them of same.

J. Retention and Access Requirements for Records.

All financial and programmatic records, supporting documents, statistical records, and other grants-related records shall be maintained in accordance with 43 CFR 12.82.