8.4 Monitoring

NIH Grants Policy Statement

Revised November 2016. This document applies to all NIH grants and cooperative agreements for budget periods beginning on or after October 1, 2016.

8.4 Monitoring

Recipients are responsible for managing the day-to-day operations of grant-supported activities using their established controls and policies, as long as they are consistent with NIH requirements. However, to fulfill their role in regard to the stewardship of Federal funds, NIH awarding ICs monitor their grants to identify potential problems and areas where technical assistance might be necessary. This active monitoring is accomplished through review of reports and correspondence from the recipient, audit reports, site visits, and other information available to NIH. The names and telephone numbers of the individuals responsible for monitoring the programmatic and business management aspects of a project or activity will be provided to the recipient at the time of award.

Monitoring of a project or activity will continue for as long as NIH retains a financial interest in the project or activity as a result of property accountability, audit, and other requirements that may continue for a period of time after the grant is administratively closed out and NIH is no longer providing active grant support (see Administrative Requirements-Closeout).

8.4.1 Reporting

NIH requires that recipients periodically submit financial and progress reports. Other required reports may include annual invention utilization reports, lobbying disclosures, conflict of interest reports, audit reports, reports to the appropriate payment points (in accordance with instructions received from the payment office), and specialized programmatic reports. Recipients also are expected to publish the results of research in peer-reviewed journals and to provide information to the public on the objectives, methodology, and findings of their NIH-supported research activities, as specified in Administrative Requirements-Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources.

The GMO is the official receipt point for most required reports. However, NIH has centralized the submission of annual progress reports; details are provided below. In addition, electronic submission through the eRA Commons is required for some annual progress reports and available for all closeout documents (final grant progress reports, final invention statements and certifications, and final financial status reports). When a paper non-competing continuation progress report is submitted, only a signed original is required; no copies are required. Submission of these reports to an address other than the centralized one may result in delays in processing of the non-competing continuation award or the submission being considered delinquent. FFRs must be electronically submitted to OFM (see Financial Reports below) through the eRA Commons eFFR feature unless otherwise indicated in the award's terms and conditions.

Recipients are allowed a specified period of time to submit required financial and final progress reports (see 45 CFR Parts 75.341 and 75.342, and the discussion in this subsection). Failure to submit complete, accurate, and timely reports may indicate the need for closer monitoring by NIH or may result in possible award delays or enforcement actions, including withholding, removal of certain NIH Standard Terms of Award, or conversion to a reimbursement payment method (also see Administrative Requirements-Enforcement Actions). The schedule for submission of the non-competing continuation progress report is discussed in the next subsection.

8.4.1.1 Non-Competing Continuation Progress Reports

Progress reports usually are required annually as part of the non-competing continuation award process. NIH may require these reports more frequently. The "Non-Competing Continuation Progress Report" (PHS 2590) or equivalent documentation (e.g., Research Performance Progress Report [RPPR]) must be submitted to, and approved by, NIH to non-competitively fund each additional budget period within a previously approved project period (competitive segment). Except for awards subject to SNAP, the progress report includes an updated budget in addition to other required information. Effective October 17, 2014, NIH requires use of the RPPR for all Type 5 progress reports, including accessing a link to the Inclusion Management System from Section G.4.b of the RPPR, if applicable, that will allow reporting of inclusion enrollment data. (Note: As of October 17, 2014, recipients can access their inclusion enrollment data through the Inclusion Management System in the eRA Commons and can update their inclusion data as often as needed. NIH has migrated inclusion enrollment data from the Population Tracking System into the Inclusion Management System.)

Recipients should routinely query and review the list of pending grant progress reports and due dates available at the NIH Web site (https://public.era.nih.gov/chl/public/search/progressReportByIpf.era). Late submission of a grant progress report will result in delaying the issuance and funding of the non-competing continuation award and may result in a reduced award amount.

Recipients also have an obligation to submit a complete and accurate progress report. NIH program or grants management staff may require additional information to evaluate the project for continued funding. Failure to provide this information will result in a delayed award. Incomplete or inadequate progress reports may result in a delay of continued support.

The progress report for the final budget period of a competitive segment for which a competing continuation application is submitted will be part of that application; however, if an award is not made or the recipient does not submit an application for continued support, a final progress report is required (see Administrative Requirements-Closeout-Final Reports-Final Progress Report).

The NIH awarding IC will specify the requirements for progress reporting under construction grants or grants supporting both construction activities, including acquisition or modernization, major alteration and renovation, and non-construction activities.

8.4.1.1.1 Requirement for Commons ID

The paper non-competing Progress Report includes an All Personnel Report on which the recipient must report the PD/PI(s) and all individuals who devoted one person month or more effort to the project. The eRA Commons ID must be provided on this report for the PD/PI(s) and those who worked on the project in a postdoctoral role.

For progress reports using the RPPR, the Commons ID requirement is part of the Participants Section and is required for the PD/PI(s) and those who worked on the project in a postdoctoral role. This could include project roles such as Postdoctoral Associate and other similar Postdoctoral positions.

For undergraduate and graduate students supported on a particular research grant, a Commons ID will be required effective with RPRRs submitted October 17, 2014 and beyond. Undergraduate and Graduate Student Roles have been added to the Commons to accommodate this requirement; recipients are encouraged to begin registering these individuals now. For graduate students, this could include project roles of graduate research assistant or graduate student.

When an individual is assigned the Undergraduate, Graduate Student, and/or Postdoctoral Role in the Commons, responses to certain data items in the Personal Profile tab will be required to meet NIH reporting requirements to Congress included in the NIH Reform Act, P.L. 109-482.

Note, the Graduate Student and Postdoctoral eRA Commons Roles should NOT be used for individuals submitting Individual Fellowships; the PD/PI role is used for those submissions. Nor should they be used for individuals supported on institutional training grants and reported using xTrain; the Trainee Role must continue to be used for those individuals.

A Commons ID is strongly encouraged, but currently optional, for all other project personnel. A general Commons Role of Project Personnel is available for those not assigned other Commons Roles.

8.4.1.1.2 Expectation for Institutions to Develop Individual Development Plans for Graduate Students and Postdoctoral Researchers

In an effort to assist graduate students and post-doctoral researchers in achieving their career goals and become contributing members of the biomedical workforce, NIH encourages recipients to develop an institutional policy requiring that an Individual Development Plan (IDP) be implemented for every graduate student and postdoctoral research supported by any NIH grant and reportable on the progress report, regardless of the type of NIH grant that is used for support. This is an expectation that should be broadly implemented by institutions for all graduate students and postdoctoral researchers supported by NIH. The actual reporting of the implementation of this expectation is in the RPPR; recipients must report in RPPR Section B. Accomplishments, Question B.4 the use of the IDP for graduate students and/or postdoctoral researchers included in RPPR Section D. Participants or on a Statement of Appointment Form (PHS 2271). Do not include the actual IDP; instead include information to document that IDPs are used to help manage the training for those individuals.

8.4.1.2 Streamlined Non-Competing Award Process

SNAP includes a number of provisions that modify annual progress reports, NoAs, and financial reports.

The NoA will specify whether an award is subject to SNAP. Awards routinely included in SNAP are "K" awards and "R" awards, except R35. Awards excluded from SNAP are those that generally do not have the authority to automatically carry over unobligated balances (centers; cooperative agreements, Kirschstein-NRSA institutional research training grants, non-Fast Track Phase I SBIR and STTR awards), clinical trials (regardless of activity code), P01, R35, and awards to individuals. However, these grants can be included in SNAP on a grant-specific basis. In addition, specific awards may be excluded from SNAP if:

they require close project monitoring or technical assistance, e.g., high-risk recipients, certain large individual or multi-project grants, or grants with significant unobligated balances, or
the recipient has a consistent pattern of failure to adhere to appropriate reporting or notification deadlines.

8.4.1.2.1 Modified Annual Progress Reports

While a modified, streamlined, progress report is still a feature of grants awarded under the SNAP authorities, a streamlined version of the RPPR has replaced the eSNAP module in the eRA Commons. For all SNAP awards, the progress report is submitted using this streamlined version of the RPPR that does not include detailed budget information.

8.4.1.2.2 Modified NoAs

Under SNAP, the GMO negotiates the direct costs for the entire competitive segment at the time of the competing award or, in the case of modular awards, determines the applicable number of modules for each budget period within the competitive segment. This eliminates the need for annual budget submissions and any negotiations, and reduces the information NIH requires to review, approve, and monitor non-competing continuation awards. SNAP NoAs are issued with only total direct and F&A costs awarded for the budget period. While direct costs categorical breakdowns are not awarded, recipients are required to allocate and account for costs by category in accordance with applicable cost principles. Future year commitments on SNAP awards reflect total cost commitments (direct plus F&A costs).

8.4.1.2.3 Modified Financial Reporting Requirements

For awards under SNAP (other than awards to foreign organizations issued prior to October 1, 2012 or Federal institutions), an FFR is required only at the end of a competitive segment rather than annually. The FFR must be submitted within 120 days after the end of the competitive segment and must report on the cumulative support awarded for the entire segment. An FFR must be submitted at this time whether or not a competing continuation award is made. If no further award is made, this report will serve as the final FFR (see Administrative Requirements-Closeout).

For awards under SNAP (other than awards to foreign organizations and Federal institutions), recipients also are required to submit a quarterly FFR cash transaction data to PMS.

Annual FFRs are required for awards issued to foreign organizations prior to October 1, 2012 and all awards issued to Federal institutions, even if an award is under SNAP. (Also see Administrative Requirements-Monitoring-Reporting-Financial Reports.)

SNAP awards issued to foreign and international organizations after October 1, 2012, will be required to submit FFR expenditure data within 120 days of the end of the competitive segment instead of annually. These awards are not required to submit a quarterly FFR cash transaction data to PMS.

8.4.1.2.4 Submitting SNAP Progress Reports

All SNAP progress reports are due the 15th of the month preceding the month in which the budget period ends (e.g., if the budget period ends 11/30, the due date is 10/15). If the 15th falls on a weekend or Federal holiday, the due date is automatically extended to the next business day. Paper submissions are not acceptable, will not be used for consideration for funding, and will not become part of the official file. If a paper SNAP progress report is submitted, recipients will be required to resubmit the information electronically.

The RPRR module in the eRA Commons that allows recipients to electronically prepare and submit progress reports and supporting documentation. The RPPR module provides the user with dedicated screens to collect the required progress report information, including appropriate uploads for text documents. Data submitted through RPPR for Performance Sites and Participants is retained in the system to assist the recipient in completion of future progress reports.

The RPRR may be routed to authorizing officials at the applicant institution for review and approval prior to submission to NIH. For SNAP awards, the RPPR module provides recipients with the option to delegate to the PD/PI the authority to submit the progress report directly to NIH. This optional authority is managed on a PD/PI basis in the eRA Commons; such authority can be rescinded at any time.

Guidance on RPPR submission is documented in the RPPR Instruction Guide found at: http://grants.nih.gov/grants/RPPR/.

8.4.1.3 Progress Reports for Multiyear Funded Awards

A limited number of NIH grant awards are multi-year funded, i.e., not funded in budget years but funded in full at the start of the project period from a single fiscal year appropriation. The project period and the budget period are the same in a multi-year funded (MYF) award, and are longer than one year. Progress reports for MYF awards are due annually on or before the anniversary of the budget/project period start date of the award. A progress report is not required if the award is in a no-cost extension period unless specifically required by the IC. The reporting period for a MYF progress report is the calendar year preceding the anniversary date of the award. For example, if an award is made on 04/01/2014, the MYF progress report is due on or before 04/01/2015, and should report on the activities performed under the award between 04/01/2014 and 03/31/2015. For the subsequent year the MYF progress report will be due 04/01/2016, and should report on the activities performed under the award between 04/01/2015 and 03/31/2016. Information on the content of a MYF progress report and instructions on how to submit the report through the eRA Commons are posted at http://grants.nih.gov/grants/policy/myf.htm and http://grants.nih.gov/grants/rppr/rppr_instruction_guide.pdf. The multi-year research performance progress report (MYRPPR) link to upload the report will be available two months before the anniversary date of the award, on the eRA Commons Status search page in the folder "List of Applications/Grants" in the "Action" column. Progress reports for MYF awards must be completed by the PD/PI, and then submitted by a Signing Official (SO) or a PD/PI with delegated authority from the SO to submit a progress report. Information about SO delegation of authority to a PD/PI to submit a progress report appears in the eSNAP User Guide under Section 2. Delegating Authority.

8.4.1.4 Final Progress Reports

A final progress report is required for any grant that is terminated and any award that will not be extended through award of a new competitive segment. See the Final Progress Report Instructions posted at http://grants.nih.gov/grants/forms.htm. Recipients should also review the information found in Administrative Requirements-Closeout-Final Progress Reports.

8.4.1.5 Financial Reports

Two types of financial reports are typically used. Cash transaction data is submitted on a quarterly basis directly to PMS. Expenditure data is submitted directly to the NIH. Historically this data was submitted using 2 separate forms, the SF272 and the SF269. Now the SF425, called the Federal Financial Report (FFR), is used for collecting both types of financial data. For NIH recipients, it is important to note that while the data is now submitted using the same form, there is no change in the actual receipt and processing of data. Cash transaction data continues to be submitted directly to and processed by PMS. Expenditure data continues to be submitted directly to and processed by NIH.

8.4.1.5.1 Cash Transaction Reports

The FFR has a dedicated section to report Federal cash receipts and disbursements. For domestic recipients this information is submitted quarterly directly to the PMS using the web-based tool. Quarterly reports are due 30 days following the end of each calendar quarter. The reporting period for this report continues to be based on the calendar quarter. Questions concerning the requirements for this quarterly financial report should be directed to the PMS.

For awards issued to foreign organizations after October 1, 2012, even though payment is now through PMS, the requirement for quarterly cash reporting does not apply. These awards are now administered in PMS using subaccounts and payments will be specific to each grant at the time the recipient draws funds. (See also Grants to Foreign Organizations - Administrative Requirements - Reporting and Record Retention.)

8.4.1.5.2 Financial Expenditure Reports

Reports of expenditures are required as documentation of the financial status of grants according to the official accounting records of the recipient organization. NIH requires all financial expenditure reports to be submitted using the Federal Financial Report (FFR) system located in the eRA Commons. This includes all initial FFRs being prepared for submission and any revised FSR/FFRs being submitted or re-submitted to NIH. The eRA Commons Federal Financial Report (FFR) system allows participants to view information on currently due and late expenditure reports and to submit these reports electronically to NIH. Paper expenditure reports are not accepted. Expenditure data submitted to NIH is initially reviewed and accepted by OFM. NIH IC grants management staff also review these expenditure reports.

Except for awards under SNAP and awards that require more frequent reporting, the FFR is required on an annual basis. An annual FFR is required for awards to foreign organizations made prior to October 1, 2012 and Federal institutions made prior to October 1, 2013, whether or not they are under SNAP. When required on an annual basis, the report must be submitted for each budget period no later than 90 days after the end of the calendar quarter in which the budget period ended. The reporting period for an annual FFR will be that of the budget period for the particular grant; however, the actual submission date is based on the calendar quarter. Failure to submit timely reports may affect future funding. The report also must cover any authorized extension in time of the budget period. If more frequent reporting is required, the NoA will specify both the frequency and due date.

In lieu of the annual FFR expenditure data, NIH will monitor the financial aspects of grants under SNAP by using the information submitted directly to PMS. The GMO may review the report for patterns of cash expenditures, including accelerated or delayed drawdowns, and to assess whether performance or financial management problems exist. For these SNAP awards, FFR expenditure data is required only at the end of a competitive segment. It must be submitted within 120 days after the end of the competitive segment and must report on the cumulative support awarded for the entire segment. An FFR must be submitted at this time whether or not a competing continuation award is made. If no further award is made, this report will serve as the final FFR (see Administrative Requirements-Closeout).

Before submitting FFRs to NIH, recipients must ensure that the information submitted is accurate, complete, and consistent with the recipient's accounting system. When submitting the FFR through the eRA Commons, the AOR or the individual designated to submit this report on behalf of their institution, certifies that the information in the FFR is correct and complete and that all outlays and obligations are for the purposes set forth in grant documents, and represents a claim to the Federal government. Filing a false claim may result in the imposition of civil or criminal penalties.

8.4.1.5.3 Revised Financial Reports and Expenditures

Revisions for F&A Changes. Each Financial Report and Cash Expenditure Report submitted by the recipient shall reflect the proper amount of F&A costs applicable to the grant period. If a provisional or an earlier period's permanent rate is used in the report, a subsequent adjustment to the FSR is necessary if a lower permanent rate(s) applicable to the grant is established, except for Institutions of Higher Education (IHEs) subject to 45 CFR 45.

Revised Expenditure Reports. NIH requires all financial expenditure reports (domestic and foreign) to be submitted using the electronic FFR system located in eRA Commons. This includes the initial FFR and any FSR/FFR revisions being submitted or re-submitted to NIH. In some cases the recipient may have to revise or amend a previously submitted FSR/FFR. The revised report should be submitted in the same format as the original; e.g., if the original was an FSR, the revision will also be submitted using the FSR format. When the revision results in a balance due to NIH, the recipient must submit a revised report whenever the overcharge is discovered, no matter how long the lapse of time since the original due date of the report. Revised expenditure reports representing additional expenditures by the recipient that were not reported to NIH within the 90-day time frame may be submitted electronically through the eFSR/FFR system to OFM with an explanation for the revision. The explanation also should indicate why the revision is necessary and describe what action is being taken by the recipient to preclude similar situations in the future. This should be done as promptly as possible, but no later than 1 year from the due date of the original report for annual FFRs and no later than 60 calendar days from the due date of the original report for final FFRs (i.e., 180 days from the project end date). If an adjustment is to be made, the NIH awarding IC will advise the recipient of actions it will take to reflect the adjustment.

8.4.1.5.4 Unobligated Balances and Actual Expenditures

Disposition of unobligated balances is determined in accordance with the terms and conditions of the award. (See Administrative Requirements-Changes in Project and Budget for NIH approval authorities for unobligated balances.) Using the principle of "first in-first out," unobligated funds carried over are expected to be used before newly awarded funds.

Upon receipt of the annual FSR/FFR for awards other than those with authority for the automatic carryover of unobligated balances, the GMO will compare the total of any unobligated balance shown and the funds awarded for the current budget period with the NIH share of the approved budget for the current budget period. If the funds available exceed the NIH share of the approved budget for the current budget period, the GMO may select one of the following options:

In response to a written request from the recipient, revise the current NoA to authorize the recipient to spend the excess funds for additional approved purposes.
Offset the current award or a subsequent award by an amount representing some or all of the excess.

8.4.1.5.5 Recipient Reporting of Subrecipient Data and Executive Compensation Information for Federal Funding Accountability and Transparency Act (FFATA)

A component of Public Law 109-282, the Federal Funding Accountability and Transparency Act of 2006 as amended (FFATA), requires most recipients of new Federal funds awarded on or after October 1, 2010 to report on subawards/subcontracts/consortiums equal to or greater than $25,000. This includes awards that are initially below $25,000 but subsequent grant modifications result in an award equal to or greater than $25,000.

The FFATA Subaward Reporting System (FSRS) tool can be accessed directly at www.fsrs.gov, and will serve as the collection tool for subaward data which will ultimately be distributed for publication and display on www.USASpending.gov. Recipients are required to register with FSRS, collect the necessary data from subawardees, and file subaward reports by the end of the month following the month in which the prime recipient awards any subaward greater than $25,000.

FFATA specifies the data that should be captured for each prime recipient and first-tier subrecipient of Federal awards, regardless of award type. To promote data consistency and reduce reporting burdens, existing agency data sources will be leveraged to pre-populate reports for prime awardees as well as for subawardees when available. Recipients are responsible for confirming the pre-populated data and providing any additional required information.

Included in these requirements is the need to report the names and total compensation of the five most highly compensated officers of the entity if the entity as part of their registration profile in SAM in the preceding fiscal year: 1) received 80 percent or more of its annual gross revenues in Federal grants, subawards, contracts, and subcontracts; and 2) received $25,000,000 or more in annual gross revenues from Federal grants, subawards, contracts, and subcontracts; and 3) had gross income, from all sources, of $300,000 or more; and 4) the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. See FFATA § 2(b)(1). Additionally, recipient organizations may be required to verify the following information in FSRS:

Organization DUNS number
Name and Address of organization
Parent DUNS number
CFDA number
FAIN
Federal Awarding Agency of the grant

8.4.1.6 Invention Reporting

A complete list of the reporting requirements under the Bayh-Dole Act can be found at 37 CFR 401.14. The requirements also are specified in Administrative Requirements-Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources.

In addition to complying with Bayh-Dole-related regulations, each NIH competing grant application and non-competing continuation progress report must indicate whether or not any subject inventions were made during the preceding budget period. If inventions were made, the recipient must also indicate whether they were reported.

The recipient also must submit an annual invention utilization report for all subject inventions to which title has been elected and inventions that have been licensed but not patented (research tools). The utilization report provides a way to evaluate the extent of commercialization of subject inventions, consistent with the objectives of the Bayh-Dole Act.

A recipient's failure to comply with invention reporting requirements and/or associated NIH policies on intellectual property and resource sharing may result in the loss of patent rights or a withholding of grant funds or other enforcement actions, including the imposition of special terms and conditions.

Bayh-Dole regulations allow recipients to report inventions electronically (37 CFR 401.16). NIH requires electronic reporting through an Internet-based system, Interagency Edison (http://iEdison.gov). To meet the objectives of the Federal Financial Assistance Management Improvement Act of 1999 (P.L. 106-107), recipients should make all reasonable efforts to submit invention reports using iEdison. The system supports confidential transmission of required information and provides a utility for generating reports and reminders of pending reporting deadlines. Further information about the system, including instructions for creating an account needed to submit reports electronically, are on the iEdison site. Recipients also may contact the Division of Extramural Inventions and Technology Resources Branch, OPERA, OER. See Part III for contact information.

8.4.1.7 Financial Conflict of Interest Reports

Information related to FCOI reporting requirements can be found within Public Policy Requirements -- Financial Conflict of Interest.

8.4.2 Record Retention and Access

Recipients generally must retain financial and programmatic records, supporting documents, statistical records, and all other records that are required by the terms of a grant, or may reasonably be considered pertinent to a grant, for a period of 3 years from the date the annual FFR is submitted. For awards under SNAP (other than those to Federal institutions), the 3-year retention period will be calculated from the date the FFR for the entire competitive segment is submitted. Those recipients must retain the records pertinent to the entire competitive segment for 3 years from the date the FFR is submitted to NIH. Federal institutions must retain records for 3 years from the date of submission of the annual FFR to NIH. See 45 CFR 75.361 for exceptions and qualifications to the 3-year retention requirement (e.g., if any litigation, claim, financial management review, or audit is started before the expiration of the 3-year period, the records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken). Those sections also specify the retention period for other types of grant-related records, including F&A cost proposals and property records. See 45 CFR Parts 75.361 and 75.364 for record retention and access requirements for contracts under grants.

These record retention policies apply to both paper and electronic storage of applicable information, including electronic storage of faxes, copies of paper document, images, and other electronic media. Institutions that rely on an electronic storage system must be able to assure such a system is stable, reliable, and maintains the integrity of the information. When storing electronic images of paper documents, the system must also assure a full, complete, and accurate representation of the original, including all official approvals.

NIH, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the NIH award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The rights of access in this section are not limited to the required retention period but lasts as long as the records are retained. Pass-through entities must not impose any other access requirements upon non-Federal entities.

8.4.3 Audit

An audit is a systematic review or appraisal made to determine whether internal accounting and other control systems provide reasonable assurance of the following:

Financial operations are properly conducted.
Financial reports are timely, fair, and accurately.
The entity has complied with applicable laws, regulations, and other grant terms.
Resources are managed and used economically and efficiently.
Desired results and objectives are being achieved effectively.

NIH recipients (other than Federal institutions) are subject to the audit requirements in 45 CFR Subpart F and in the NIHGPS (for types of organizations to which 45 CFR 75, Subpart F-Audit Requirements does not directly apply). In general, 45 CFR 75, Subpart F- Audit Requirements requires a State government, local government, or non-profit organization (including institutions of higher education) that expends $750,000 or more per year under Federal grants, cooperative agreements, and/or procurement contracts to have an annual audit by a public accountant or a Federal, State, or local governmental audit organization. The audit must meet the standards specified in generally accepted government auditing standards (GAGAS). The audit requirements for foreign recipients and for-profit recipients are addressed in the chapters of this NIHGPS that provide specific requirements for those types of recipients.

As specified in the NoA, all awards issued by NIH meet the definition of "Research and Development" at 45 CFR 75.2. As such, NIH grant awards are subject to the R&D cluster of program requirements in the compliance supplement. NIH recognizes that some awards may have another classification for purposes of indirect costs. The auditor is not required to report the disconnect (i.e., the award is classified as R&D for Federal Audit Requirement purposes but non-research for indirect cost rate purposes), unless the auditee is charging indirect costs at a rate other than the rate(s) specified in the award document(s).

Exhibit 10. Summary of Audit Requirements

Recipient Type	Source of Audit Requirement (Non-Federal Entity Fiscal Years Beginning Prior to 12/16/2014)	Source of Audit Requirement (Non-Federal Entity Fiscal Years Beginning On/After 12/16/2014)	Where to Submit Audit Reports
State & Local Governments	OMB Circular A-133	45 CFR 75.501	Federal Audit Clearinghouse (See contact information in Part III)
Colleges & Universities (IHEs)	OMB Circular A-133	45 CFR 75.501	Federal Audit Clearinghouse (See contact information in Part III)
Non-Profits	OMB Circular A-133	45 CFR 75.501	Federal Audit Clearinghouse (See contact information in Part III)
Hospitals	OMB Circular A-133	45 CFR 75.501(h) through 45 CFR 75.501(k)	Federal Audit Clearinghouse (See contact information in Part III)
For-Profits	45 CFR 74.26(d)	45 CFR 75.501(h) through 45 CFR 75.501(k)	National External Audit Review Center (See contact information in Part III)
Foreign	NIH Grants Policy Statement (same as For-Profits)	NIH Grants Policy Statement (same as For-Profits)	National External Audit Review Center (same as For-Profits, see contact information in Part III)

When a recipient procures audit services, the procurement must comply with the procurement standards of 45 CFR 75, as applicable, including obtaining competition and making positive efforts to use small businesses, minority-owned firms, and women's business enterprises. Recipients should ensure that comprehensive solicitations made available to interested firms include all audit requirements and specify the criteria to be used for selection of the firm. Recipients' written agreements with auditors must specify the rights and responsibilities of each party.

45 CFR 75, Subpart F- Audit Requirements explains in detail the scope, frequency, and other aspects of the audit. Some highlights of this regulation are as follows:

Covered organizations expending $750,000 or more per year in Federal awards are required to have an audit performed in accordance with the regulation. However, if the awards are under one program, the organization can have either a single organization-wide audit or a program-specific audit of the single program, subject to the provisions 45 CFR 75.507. NIH's research awards may not be considered a single program for this purpose. Covered organizations expending less than $750,000 in any year are exempt from these audit requirements in that year but must have their records available for review as required by Administrative Requirements-Monitoring-Record Retention and Access.
The reporting package must contain the following:
- Financial statements and schedule of expenditures of Federal awards.
- Independent auditor's report, including an opinion on the financial statements and the schedule of expenditures of Federal awards, a report on compliance and internal control over financial reporting, and a report on compliance with requirements applicable to each major program and on internal control over such compliance requirements.
- A schedule of findings and questioned costs.
- If applicable, a summary of prior audit findings and a corrective action plan.
An audit under 45 CFR 75, Subpart F- Audit Requirements is in lieu of a financial audit of individual Federal awards. However, Federal agencies may request additional audits necessary to carry out their responsibilities under Federal law or regulation. Any additional audits will build upon work performed by the independent auditor.
The data collection form (SF-SAC) and a copy of the Single Audit reporting package must be submitted electronically to the FAC at the address provided in Part III.
A senior level representative of the auditee (e.g., state controller, director of finance, chief executive officer, or chief financial officer) must sign a statement to be included as part of the data collection that says that the auditee complied with the requirements of this part, the data were prepared in accordance with this part (and the instructions accompanying the form), the reporting package does not include protected personally identifiable information, the information included in its entirety is accurate and complete, and that the FAC is authorized to make the reporting package and the form publicly available on a Web site. Exception: An auditee that is an Indian tribe or a tribal organization (as defined in the Indian Self- Determination, Education and Assistance Act (ISDEAA), 25 U.S.C. 450b(l)) may opt not to authorize the FAC to make the reporting package publicly available on a Web site, by excluding the authorization for the FAC publication. If this option is exercised, the auditee becomes responsible for submitting the reporting package directly to any pass-through entities through which it has received a Federal award and to pass-through entities for which the summary schedule of prior audit findings reported the status of any findings related to Federal awards that the pass-through entity provided. Unless restricted by Federal statute or regulation, if the auditee opts not to authorize publication, it must make copies of the reporting package available for public inspection.

If the schedule of findings and questioned costs discloses an audit finding related to an HHS or NIH award or if the schedule of prior audit findings reports the status of any audit finding relating to an HHS or NIH award, the FAC will provide copies of the audit report to NEARC, OIG, HHS. NEARC will, in turn, distribute them within HHS for further action, as necessary. Audit reports should not be sent directly to the GMO. (Note: 45 CFR 75.516 raised the threshold for reporting questioned costs to $25,000).

Recipients must follow a systematic method for ensuring timely and appropriate resolution of audit findings and recommendations, whether discovered as a result of a Federal audit or a recipient-initiated audit. Recipients usually are allowed 30 days from the date of request to respond to the responsible audit resolution official (Action Official) concerning audit findings. Failure to submit timely responses may result in cost disallowance or other actions by NIH or HHS. At the completion of the audit resolution process, the recipient will be notified of the Action Official's final decision. The recipient may appeal this decision if the adverse determination is of a type covered by the NIH or HHS grant appeals procedures (see Administrative Requirements-Grant Appeals Procedures). Refunds owed to the Federal government as a result of audit disallowances must be made in accordance with instructions issued by the Action Official or OFM.

It is imperative that recipients submit required 45 CFR 75, Subpart F audits within the time limits specified in the regulation. If recipients are delinquent in complying with the provisions of the regulation, NIH will take one or more actions that may result in the loss of Federal funds. No audit costs will be allowed either as F&A costs or direct costs to Federal awards if the required audits have not been completed or have not been conducted in accordance with the provisions of 45 CFR 75, Subpart F.

See Cost Considerations-Allowability of Costs/Activities-Selected Items of Cost for the allowability of audit costs.