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CHAPTER TWELVE

AWARD CLOSE-OUT

  • Notification to Principal Investigator
  • Technical award close-out
  • Financial award close-out

NOTIFICATION TO PRINCIPAL INVESTIGATOR

As part of its monitoring function, OSP notifies each Principal Investigator within 90, 60 and 30 days when the closing date of an award is approaching. This notice is a reminder that the Principal Investigator must:

  • Notify Personnel whose employment ends with the sponsored project
  • Prepare any Technical reports should be prepared by the Principal Investigator
  • Process all Final charges should be processed before the end of the budget period in order to accurately reflect the complete activity of the project

TECHNICAL AWARD CLOSE-OUT  

This section Describes: 

  • Technical Reports
  • Cost-Sharing Reports
  • Termination of Project Personnel
  • Patents, Copyrights and Inventions
  • Records Retention
  • Property Inventory

Technical Reports

The requirements for technical reports vary among sponsors and are usually set forth in the terms of the grant or contract.

The preparation of technical reports is the Principal Investigator’s responsibility. Because of the varying nature of technical report requirements, OSP urges Principal Investigators to contact OSP and the program officer representing the sponsor for information about technical report requirements. A copy of technical reports, both interim and final, must be submitted to OSP for the grant file.

Delays in filing technical reports may have an adverse effect on applications for new funding or payments of outstanding charges to the account. Principal Investigators should make every attempt to comply with these requirements in a timely fashion.  To avoid jeopardizing their own or the Institution’s ability to seek further funding from the sponsor.

Cost-Sharing Reports

When cost-sharing and/or in-kind contributions are mandatory, a final report documenting that the award terms were met may be required. It is the Principal Investigator’s responsibility to maintain records documenting how this requirement was met. These records will provide the basis for the OSP report to the sponsor. Refer to Chapter 5 of this Guide and Appendix K.  For federally funded projects, additional information is in section .23, subpart C, of OMB Curricular A-110.

Termination of Project Personnel

Personnel whose employment ends with the sponsored project should be notified well in advance of the completion date of the grant or contract. Normally, the Smithsonian recommends one month notice of employment termination.

A "Request for Personnel Action and an Exit Clearance" (From SI 610), indicating the employee’s formal separation from the Smithsonian, must be submitted. The termination date cannot extend beyond the completion date of the sponsored project. Payroll payments automatically cease at the specified termination date. Project personnel interested in continuing at the Smithsonian should be referred to the Office of Human Resources for employment.

Patents, Copyrights, and Inventions

Some sponsors require final reports on these items. OSP, in coordination with Principal Investigators, will complete these reports. Principal Investigators can obtain additional advice on these matters from the Office of the General Counsel.  See also, Appendix P.

Records Retention

OSP maintains the official file of record for non-financial award documents. The Office of the Comptroller and the unit maintain the official files of record for financial documents. All financial records must be retained and available for audit for a period of three years from the date of submission of the final expenditure report, or otherwise specified in section .53 subpart C, of OMB Circular A - 110. In addition, any cost sharing on other project records, which are maintained by the Principal Investigator or unit, obtained or prepared by the Principal Investigator or unit, also must be retained and available for audit.   

Property Inventory

OSP will prepare a property inventory report, listing all property purchased on a sponsored project, if required by the sponsor. This report is prepared on an annual basis and submitted to the sponsor or the Office of Naval Research on most Federal awards.

An annual property inventory may be required from the Principal Investigator by the sponsor for all property purchased on the project. At the end of a project, the Principal Investigator finalizes this inventory according to the terms and conditions of the award. Equipment for which the sponsor holds title requires disposition instructions by the sponsor. OSP may be contacted for information on how to proceed with these equipment issues.

Further details are in SD 315, "Property Management".

FINANCIAL CLOSE-OUT

This section covers:

  • Final Charges
  • Allowable Charges
  • Residual Funds
  • Awards without Definite Termination Dates
  • Deficits
  • Reclassification of Costs
  • Audits

Final Charges

Federal awards may specify a time period during which the non-Federal entity may use the Federal funds. Where a funding period is specified, a non-Federal entity may charge to the award only costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the federal awarding agency. Also, if authorized by the federal program, unobligated balances may be carried over and charged for obligations of the subsequent funding period.

At the closing date, OSP will contact the Principal Investigator to begin the close-out procedure. Principal Investigators shall liquidate all open obligations within 60 days of the funding period end date. If positive balances remain, they are usually returned to the sponsor.

OSP will prepare and file a final financial report within the deadline set by the sponsor, usually 90 days. Depending on the sponsor, this report may vary from a detailed accounting of each type of expense to a summary document. The financial report will be based on the monthly financial report generated by the Office of the Comptroller. Once the report has been filed with the sponsor and outstanding obligations are cleared, OSP prepares the account to be removed from the Smithsonian accounting system at the beginning of the next fiscal year, when monthly financial reports will cease and all further charges to the designated code will be rejected.

FISCAL YEAR ACCOUNTING
Federal fiscal year period limitations do not apply to sponsored projects, since each project has its own beginning and ending dates designated by the sponsor.

Allowable Charges

Generally, allowable purchases will be based on the receiving date shown on the Receiving Report. If the receiving date falls after an award’s completion date, a purchase may be disallowed. See "Charging Expenses" in Chapter 10 of this Guide for further discussion on allowable charges.

Residual Funds

Occasionally an available balance remains in a project account at the time of the preparation of a final financial report for a project. In such cases, depending on the terms of the award, the Smithsonian will either:

  • Return the unused money to the sponsor;
  • Revert the unused portion to the General Fund of the Institution;
  • Seek approval from the sponsor to use the balance for other purposes

Awards without Definite Termination Completion Dates

In some instances, especially with awards received from private institutions or foundations, a definite completion date for a project is not specified. In such cases, OSP will work with the Principal Investigator and Fund Manager to determine the projected duration of the project.

If more time is needed to complete a project without a specific completion date, Principal Investigators can request an extension of the project period (see Chapter 9 of this guide). After obtaining approval from the unit, Principal Investigators should submit the request to OSP. After reviewing the request, OSP may approve an extension.

When the project is completed, OSP will close out the project account by preparing, in coordination with the Principal Investigator or Fund Manager, a final financial report. If a final financial report is required by the award document, OSP will send this report to the sponsor.

Deficits

While a deficit should never occur, there are circumstances where it does. If a project account is in deficit upon expiration of the term of the award agreement, the Principal Investigator must clear the deficit. Principal Investigators must seek approval from their supervisor and unit director before reclassifying expenses to another appropriate account. The unit is responsible to repay any deficits. 

Adjustment or Reclassification of Costs

It is the responsibility of the Principal Investigator to ensure that expenditures are correctly assigned. There are limited circumstances in which an adjustment or reclassification of direct costs between sponsored project designated codes may be appropriate. All adjustments or reclassifications to federal sponsored projects are subject to federal rules governing allowable and allocated expenses. The standard method for making an adjustment or reclassification in the SIERP (PeopleSoft) is through the source document. The fallback method is through the use of an adjusting journal entry. Requests for adjustment must be timely, fully documented, and submitted to OSP for approval and processing. The appropriate circumstances are to:

  • Correct the incorrect posting of an amount (e.g, $120 posted as $210) or the use of an incorrect source code (e.g., 803 vice 402)  
  • Correct the posting of a correct amount to the wrong designated code (e.g., 677001 vice 677011)
  • Remove the posting of an amount that does not meet the allowability determination factors in OMB Circular A-122, “Cost Principles for Non-Profit Organizations” (e.g., a charge properly categorized as fund raising or entertainment).

Adjustments or reclassifications that occur near or after the end date of an over expended project to an under expended project account may suggest poor planning and management. Federal auditors frequently will assume that such transfers have been made simply to cover a deficit or to use up residual funds. They will disallow these costs unless there is adequate documentation relating the transferred charge.

Audits

Auditors representing sponsors will periodically examine the Smithsonian records for the purposes of:

  • Determining whether contract or grant monies were used in accordance with applicable laws, regulations, procedures, and terms or grants and contracts;
  • Making objective appraisals of the financial accounting system and internal controls to ensure that programs are being charged with appropriate amounts;
  • Determining the accuracy of the financial reports and records.

OSP coordinates all activities with sponsor auditors. Principal Investigators are not normally contacted directly by auditors representing the sponsor as OSP is the administrative contact point for such matters. In the event that the Principal Investigator is contacted, the auditor should be referred immediately to OSP and no information given by the PI.