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Notice

Financial Reporting for Grants and Cooperative Agreements: Federal Financial Report (FFR)

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCY:

Office of Management and Budget, Office of Federal Financial Management.

ACTION:

Comment request; final notice.

SUMMARY:

The Office of Management and Budget is consolidating and replacing four existing financial reporting forms (SF-269, SF-269A, SF-272, and SF-272A) with a single Federal Financial Report (FFR). The purpose of the FFR is to give recipients of grants and cooperative agreements a standard format for reporting the financial status of their grants and cooperative agreements (hereby referred to collectively as awards). Federal awarding agencies developed the FFR as part of their implementation of the Federal Financial Assistance Management Improvement Act of 1999 (Pub. L. 106-107).

DATES:

Comments must be received by January 7, 2008.

ADDRESSES:

Comments should be addressed to Marguerite Pridgen, Office of Federal Financial Management, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503; telephone 202-395-7844; fax 202-395-3952; e-mail mpridgen@omb.eop.gov. Due to potential delays in OMB's receipt and processing of mail sent through the U.S. Postal Service, we encourage respondents to submit comments electronically to ensure timely receipt. We cannot guarantee that comments mailed will be received before the comment closing date. Please include “FFR comments” in the subject line of the e-mail message; please also include the full body of your comments in the text of the message and as an attachment. Include your name, title, organization, postal address, telephone number, and e-mail address in your message.

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FOR FURTHER INFORMATION CONTACT:

Marguerite Pridgen at the addresses noted above.

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SUPPLEMENTARY INFORMATION:

I. Background

On April 8, 2003, OMB announced in the Federal Register its intent to establish a new Federal Financial Report (FFR) (68 FR 17097). This new report would consolidate into a single report the current Financial Status Report (SF-269 and SF-269A) and the Federal Cash Transactions Report (SF-272 and SF-272A). This consolidation, consistent with government-wide grant streamlining efforts being carried out under the Federal Financial Assistance Management Improvement Act of 1999 (Pub. L. 106-107), is intended to streamline and simplify award-reporting requirements. This form was an undertaking of the interagency Post Award Workgroup that supports the Federal Grants Streamlining Initiative. Additional information on the Federal Grants Streamlining Initiative, which focuses on implementing Public Law 106-107, was announced in the Federal Register on September 13, 2006 (71 FR 54098). An overview of the FFR and five other report forms being developed under the Initiative was provided during a webcast of the Grants Policy Committee of the U.S. Chief Financial Start Printed Page 69237Officer Council held on March 8, 2007 (72 FR 7090).

The FFR standardizes reporting information by providing a pool of data elements from which agencies can choose to use for reporting purposes. As a result, Federal agencies are not required to collect all of the information included in the FFR. Instead, they will identify, prior to or at time of award, the data elements that recipients must complete, the reporting frequency, the periods covered by each report, the dates that the reports are due, and the locations to which the reports are to be submitted.

Consistent with Federal efforts to promote standardization while giving agencies more flexibility in post-award administration, agencies may require recipients to submit interim FFR s on a quarterly, semi-annual, or annual basis, all in accordance with standard period end dates. The immediate availability of the FFR may be in a paper format or portable document format (PDF). However, the FFR's data elements are intended to be used in the future for the electronic submission and collection of financial information. Note that the establishment of the government-wide FFR will necessitate amendments to OMB Circulars A-110 (2 CFR 215) and A-102 which OMB will subsequently publish in the Federal Register.

The April 8, 2003 announcement in the Federal Register generated nearly 200 comments from Federal agencies and a wide range of recipients including state and local governments, non-profit entities, institutions of higher education, and associations representing academic institutions. Those comments, which are summarized below, were considered in developing this Federal Register notice.

Due to the number of the comments received and form revisions made, OMB announced that it intended to issue a second 60-day notice (68 FR 44975). However, instead of issuing a second 60-day notice, OMB chose other avenues such as a webcast and posting of the forms on Grants.gov to allow for public viewing and feedback (72 FR 7090). The primary concern raised to OMB through this interaction is that as the draft form was written, different officials could be responsible for the “Federal cash” and the “Federal Expenditures and Unobligated Balances” sections of the form. OMB determined that this was an issue for the submitting organization and therefore, OMB did not make any changes to the form based upon this concern. No other substantive comments were received during the webcast and posting and OMB did not make any changes based upon the posting. We anticipate that this will be the last notice before the form and instructions are finalized.

II. Comments and Responses on 2003 Federal Register Notice

Comment 1: Six comments expressed strong support for the proposed FFR, viewing it as a welcome initiative to simplify and streamline grant-reporting requirements, consistent with the Federal Financial Assistance Management Improvement Act (Pub. L. 106-107).

Response: The government-wide workgroup made a diligent effort to streamline and simplify Federal grant reporting requirements.

Comment 2: Six comments suggested changes to the FFR's format to provide additional clarity.

Response: In response to those comments, a page number block was added to the FFR Attachment, the OMB approval number was moved to the lower right corner of the FFR, section titles such as “Federal Expenditures and Unobligated Balance” are now in bold font, and references to sections of the FFR consistently state the line or box number followed by a reference to specific letters, if applicable.

Comment 3: Ten comments suggested ways to strengthen and clarify the FFR's instructions.

Response: In response to these suggestions, the following modifications were made to the FFR Instructions: (1) Noted the possible impact of the FFR on an agency's internal business processes; (2) Explained how the FFR could be used to provide reporting data on single and multiple awards; (3) Explained how the FFR could be used to report cash management and financial status activity; and (4) Requested additional supplemental pages if recipients needed more space.

Comment 4: One comment indicated that the clearances conducted by OMB's Office of Information and Regulatory Affairs, as required under the Paperwork Reduction Act, were not shown on the FFR.

Response: A burden statement has been added to the bottom of the FFR and the updated FFR has been cleared by the Office of Information and Regulatory Affairs.

Comment 5: Three comments suggested that the frequency of reports should be based on the risk level associated with specific awards.

Response: The FFR allows agencies to determine the frequency that recipients submit reports for each award or program. That frequency can be based on the agency's assessment of the level of risk associated with the award or program. Since agencies can base the frequency of reports on risk levels, no changes were made to either the FFR or its instructions.

Comment 6: Two comments indicated that the timeframes for reporting on the cash management of a grant and the financial status of a grant differ and requested that the instructions provide directions on using the same form to meet these different reporting timeframes.

Response: The workgroup is mindful of the differences between the current SF-269 and SF-272 reporting timeframes as well as the varying size, complexity, and risk associated with grant programs and individual awards. As a result, the FFR allows agencies to determine the cash management and financial status reporting requirements for each award. FFR Instructions have been updated to state: “For a particular award, agencies may require cash management reporting more or less frequently than financial status reporting. Alternatively, agencies may request, for a particular award, the submission of FFR s at a given reporting interval (e.g., quarterly) to reflect cash management activity and a separate FFR at a different reporting interval (e.g., annually) to reflect financial status activity.”

Comment 7: Two comments highlighted that a program's authorizing statutes should require the submission of monthly financial status reports.

Response: The FFR instructions were amended to indicate that agencies requiring more frequent reporting may do so if more frequent reporting is prescribed by statute and/or consistent with the provisions in OMB Circulars A-102 or A-110 dealing with special award conditions and exceptions to standard reporting frequencies. If an agency wants to deviate from any of these requirements, it must obtain approval from OMB.

Comment 8: One comment suggested substituting “funding or grant period” for “project” in the instructions concerning the submission of final reports: “Final reports shall be submitted no later than 90 days after the project end date.” The primary reason for this comment was that each budget period has its own final report.

Response: In accordance with OMB's administrative circulars, agencies should request final reports only at the completion of the project or grant period. The FFR instructions have not changed and continue to state “Final reports shall be submitted no later than 90 days after the project or grant period end date.” If an agency wants to deviate from this requirement by submitting Start Printed Page 69238final reports for each budget period, it must obtain approval from OMB.

Comment 9: One comment pertained to the instructions on due-date extensions: “Extensions of reporting due dates may be approved by the Federal awarding agency upon request of the recipient.” Specifically, the comment expressed concern that requesting extensions past a 30-day timeframe would be an additional burden.

Response: Due dates are necessary, but circumstances may dictate that due dates be extended to help ensure the submission of complete and accurate reports. As a result, the workgroup did not limit the extension period to 30 days.

Comment 10: One comment recommended that the second bullet entitled “Instructions to Federal Agencies, Reporting Frequency,” be removed because the language “may be used” is confusing when compared to the language in the three other bullets that is more prescriptive because the word “shall” is used.

Response: The section called “Instructions to Federal Agencies, Reporting Frequency” has been removed; however, we have reviewed language in other parts of the instructions to ensure that the wording on reporting frequency is consistent.

Comment 11: One comment suggested changing “30 days” to “one month” and “90 days” to “three months.”

Response: Days were used instead of months because of the need to establish consistent report submission periods. The periods are now 45 days and 90 days.

Comment 12: Several comments objected to reducing the timeframe for submission of interim annual reports from 90 days to 30 days. One comment requested 120 days to submit the FFR.

Response: The instructions have been changed to state: “Quarterly, semi-annual, and annual interim reports are due 45 days after the end of the reporting period. Final reports are due no later than 90 days after the project or grant period end date. Extensions of reporting due dates may be approved by the Federal agency upon request by the recipient.” The due dates for submitting interim reports allow for standardization. The workgroup concluded that sound fiscal grant management throughout the annual reporting period, combined with the use of electronic systems to collect and transmit data, would allow recipients sufficient time to complete the annual reports within the 45 day timeframe. The shortened timeframe for the submission of annual interim reports would also allow Federal agencies to obtain financial data in a more timely manner. Additionally, the timeframe for submission of quarterly and semi-annual reports was increased from 30 days to 45 days. The workgroup further concluded that 120 days for submission of annual and final reports was too lengthy and would not provide agencies with the data necessary to monitor projects or grants effectively and to make timely funding decisions. Moreover, recipients are provided the opportunity to request extensions for submitting reports in both OMB Circular A-110 (2 CFR 215) and FFR Instructions.

Comment 13: One comment noted that under existing timelines, the SF-269 Financial Status Report is due no later than 45 days after the end of each reporting period and requested that this existing 45-day timeline remain in place. Another comment requested reinstatement of the 90-day due date for interim reports, while still another disagreed with reducing the due date from 90 days to 30 days for final reports.

Response: The existing timelines for submission of the SF-269, as stated in OMB Circular A-110 (2 CFR 215), are 30 days for quarterly and semi-annual reports and 90 days for annual and final reports. As a result, there currently is no provision for submission of interim reports 45 days after the reporting period end date. Moreover, only annual interim reports (not quarterly or semi-annual) are allowed to be submitted 90 days after the reporting period end date. The proposed notice stated: “Final reports shall be submitted no later than 90 days after the project end date.” The due date for final reports has not been reduced to 30 days in the final notice.

Comment 14: One comment expressed concern regarding the costs of system, policy, and other changes associated with revised due dates.

Response: In an effort to be responsive to public comments regarding grants streamlining and ensuing legislation, Federal agencies and recipients may need to make several system, policy, and other changes. The costs of these changes, which will be borne by both Federal agencies and recipients, are necessary to achieve long-term grants streamlining efficiencies and promote greater customer service. In some instances, provisions have been made to accommodate financial hardships that may be experienced by recipients with the advent of government-wide grants streamlining. For example, recipients may still be given the option of submitting forms and reports on paper rather than having to create or modify electronic systems that may be cost prohibitive. Also, Federal agencies that use grants data systems that are maintained by OMB-approved Grants Management Line of Business consortium leads will not be updating their agency's legacy systems to accommodate the receipt of the forms. Federal agencies that have not yet migrated to an OMB-approved Grants Management Line of Business consortium are required to coordinate with OMB prior to performing enhancements or interim improvements to legacy systems.

Comment 15: One comment noted that the requirement to submit final reports no later than 90 days after the project end date conflicts with the instruction in section 23, “Grants Management Common Rule,” that requires grantees to liquidate all obligations incurred no later than 90 days after the end date.

Response: No conflict exists. Recipients should strive to liquidate obligations within 90 days of the project or grant period end date before they submit the final FFR, which is also due within 90 days after the project or grant period end date. If, however, the timing of liquidating obligations precludes submission of the final FFR within 90 days of the project or grant period end date, recipients can request an extension.

Comment 16: Seven comments requested that reporting period end dates be based on award dates, consistent with current practice, rather than on the proposed reporting period end dates: 3/31, 6/30, 9/30, or 12/31.

Response: The decision to adopt calendar quarters for the reporting period end dates was made to promote standardization, thereby reducing the current reporting burden associated with different reporting period end dates among different grants. If a Federal agency wants to use reporting period end dates other than 3/31, 6/30, 9/30, or 12/31, it must obtain approval from OMB.

Comment 17: Eight comments requested greater standardization. Some of the comments suggested using one standardized format that could not be changed or modified. Others indicated that allowing agencies to determine the data elements to be submitted would diminish the objective of standardization and suggested having one set of data elements that all recipients must complete. Still other comments suggested that the FFR simply combines the data elements contained in the current SF-269, SF-269A, SF-272, and SF-272A, so it does not advance streamlining objectives.

Response: The proposed FFR advances standardization by providing a Start Printed Page 69239pool of data elements from which agencies can customize their reporting requirements without imposing an undue burden on recipients by adding or modifying elements. In addition, agencies cannot add or modify FFR data elements unless they submit compelling requests to OMB for approval. OMB will evaluate all requests for changes and modifications, and exercise utmost prudence in approving exceptions in order to prevent the proliferation of multiple financial reporting forms.

Requiring agencies to use all of the data elements in the proposed FFR is not practical. As an example, “Recipient Share and Program Income” does not apply to some programs and awards. Furthermore, the FFR is designed to accommodate reporting on the cash management of single or multiple awards and on the financial status of a single award, so this flexibility is not conducive to mandating the completion of a required set of elements. Finally, the data that each agency needs to adequately monitor awards differ greatly because of the wide variety of governing statutes, regulations, and policies. As a result, requiring recipients to report on all data on a standardized FFR could actually result in the submission of data that would not be useful or required, while increasing the reporting burdens to recipients.

In developing the standard pool of data elements, the workgroup assessed the SF-269, SF-269A, SF-272, and SF-272A, eliminating or combining many of the existing data elements. The FFR also promotes standardization through the development of one set of instructions and definitions for reports submitted to a single location within an agency, and the use of standardized timeframes for reporting period end dates and due dates.

Comment 18: Five comments suggested that OMB follow a standard frequency for report submissions.

Response: The degree to which monitoring is needed varies in view of the risks, statutes, regulations, and policies governing programs and awards, so the frequency of reporting should be commensurate with these factors. In addition, adopting a standardized frequency for report submissions could be detrimental to an agency's ability to adequately monitor a program or award.

The FFR promotes standardization by requiring the use of reporting period end dates for quarterly, semi-annual, and annual interim reports: 3/31, 6/30, 9/30, or 12/31. It further requires the submission of quarterly, semi-annual, and annual interim reports 45 days after the end of each reporting period and final reports no later than 90 days after the project or grant period end date. Extensions of reporting due dates may be approved by the Federal agency upon request by the recipient.

Comment 19: Eleven comments questioned use of the FFR to report on single and multiple awards. Some comments indicated that reporting financial status information for multiple awards on one report would be meaningless and an administrative burden. Other comments questioned why detailed data were required for individual awards, but not for multiple awards. One comment asked whether the Federal agency could require a recipient to report all Federal and recipient expenditures for a single award rather than multiple awards. Another comment stated that the FFR Attachment does not provide reporting for “Cash Receipts” or “Cash on Hand,” so the FFR cannot be used to determine if a recipient has excess cash on hand.

Response: The FFR Instructions have been clarified to better explain the procedures for reporting on single and multiple awards.

A single FFR will not be used to report totals on the financial status of multiple awards. Instead, a separate FFR must be completed for each award when the financial status (Lines 10d through 10q) for more than one award is requested by the agency. Currently, agencies have the choice between collecting detailed financial status data on a single award (using the SF-269 or SF-269A) or collecting summary cash management data on multiple awards (using the SF-272 or SF-272A). The FFR preserves this flexibility while allowing recipients to submit these data on one form. If an agency wants to obtain detailed financial status data on more than one award, it must instruct recipients to complete a separate FFR (the FFR Attachment would not be required) for each award. Conversely, if less detailed data are needed on multiple awards, agencies should instruct recipients to complete designated lines and boxes on the FFR as well as the FFR Attachment. According to the FFR Instructions, an agency can require a recipient to report cash management activity for a single award and for multiple awards. In doing so, the FFR will capture “Cash Receipts” and “Cash on Hand,” which can be used to determine if a recipient has excess cash on hand. The FFR Attachment does not provide this capability.

Comment 20: Five comments indicated that the FFR does not capture certain data elements that currently exist within agency- or program-specific reports that have been approved by OMB. One comment requested that the final notice clarify that the FFR is intended to replace the SF-269, SF-269A, and SF-270 and that agencies using alternative program-specific forms could continue to do so.

Response: The FFR replaces the SF-269, SF-269A, SF-272 and SF-272A, and OMB-approved agency-specific and program-specific financial forms, but not the SF-270 or SF-271. The FFR Instructions have been clarified to state that the FFR is replacing the SF-269, SF-269A, SF-272, and SF-272A and, in doing so, it is now the standard government-wide financial report that all agencies and recipients will be required to use. Furthermore, the use of new or existing agency-specific or program-specific financial reports will require approval by OMB.

Comment 21: Five comments requested that the FFR be modified to depict “Total Outlays,” which would be the sum of “Total Federal Share,” “Total Recipient Share,” and “Expended Program Income.” Two comments requested that the FFR be modified to include “Total Unliquidated Obligations,” the sum of “Federal Share of Unliquidated Obligations” and “Recipient Share of Unliquidated Obligations.”

Response: The “Total Outlays” and “Total Unliquidated Obligations” line items were not added to the FFR because the agencies and recipients that need this information can do so by performing simple calculations, without imposing additional requirements on all recipients.

Comment 22: One comment noted that additional fields, which are currently not required on the SF-269, may be required by agencies submitting an individual grant expenditure report, thereby increasing the overall number of data elements that must be reported. The additional data elements include the following: “Status of Federal Cash (previous, current, cumulative),” “Total Federal Funds Authorized (previous, current),” “Total Federal Share of Unliquidated Obligations (current),” “Total Recipient Share Required (previous, current, cumulative),” “Required Recipient Share of Unliquidated Obligations (current, cumulative),” “Program Income Expended in Accordance with the Addition Alternative (previous, current),” and “Unexpended Program Income (current).”

Response: The FFR has been modified to only collect cumulative totals. This action eliminates Column I (Previously Reported) and Column II (Current Period) for all line items. The “Federal Start Printed Page 69240Cash” section has been modified to include Line 10a, “Cash Receipts;” Line 10b, “Cash Disbursements;” and Line 10c, “Cash on Hand.” By requiring only cumulative totals, this modification will allow the FFR to highlight activities that took place during the reporting period and facilitate the calculation of cash on hand as of the reporting period end date. With respect to “Total Federal Funds Authorized,” only one entry is required in the cumulative column. Accordingly, the instructions for Line 10d have been changed to state: “Enter the total Federal funds authorized as of the reporting period end date.” “Federal Share of Unliquidated Obligations,” “Recipient Share of Unliquidated Obligations,” “Program Income Expended in Accordance with the Addition Alternative,” and “Unexpended Program Income” are now reported only as cumulative totals. “Total Recipient Share Required” was added to mirror the approach used to account for Federal dollars, while the “Federal Expenditures and Unobligated Balance” section begins with “Total Federal Funds Authorized” and depicts the manner in which authorized funds have been managed. Similarly, the “Recipient Share” section begins with “Total Recipient Share Required” and depicts the manner in which the recipient's required share is managed.

Comment 23: One comment suggested that the proposed FFR cannot serve as a compiled Cash Transactions Report because it does not start with “Cash on Hand, Beginning of Reporting Period,” as does the current SF-272. Another comment suggested an alternative method to report cash management activity for multiple awards and requested an additional column, “Total Obligated,” on the FFR Attachment. Still another comment suggested an alternative method for reporting on the financial management of an award.

Response: By requiring only cumulative totals, the FFR will be more useful in highlighting activity that took place during the reporting period and facilitating the calculation of cash on hand as of the reporting period end date. The alternative methods proposed to report cash and financial management activities for an award are more detailed and require more calculations by recipients than the proposed FFR requirements. As a result, adopting these methods would be counter to grant streamlining and improved customer service efforts.

Comment 24: One comment requested adding a data element with the name of a particular person at each agency to whom the FFR should be submitted. Another comment requested including the recipient's Automated Clearinghouse (ACH) account number, two comments requested including the Catalog of Federal Domestic Assistance (CFDA) number on the FFR, and one comment requested including a glossary and definitions in the final FFR notice.

Response: A data element was not added to identify a particular person at each agency to whom the report should be submitted. During the course of the reporting period for a particular award, contact points may vary and requiring recipients to provide this information prior to the submission of the FFR would be an undue burden. Instead, the required FFR identifying grant information, including the “Federal Agency and Organizational Element to Which Report is Submitted” (Box 1) and “Federal Grant or Other Identifying Number” (Box 2), is sufficient for agencies to route the FFR to the appropriate person. Furthermore, the FFR Attachment includes information on multiple awards, which would make the identification of a point of contact for each award impractical. The ACH account number was not added to the FFR because this report will not be used to facilitate payment or drawdown activity. As a result, including the ACH account number would be extraneous to the FFR's purpose. Furthermore, the information disclosed on the ACH form is considered confidential and if included on the FFR would increase the risk of fraud. The CFDA number was not added to the FFR because it is not needed. The “Federal Grant or Other Identifying Number Assigned by the Federal Agency” (Box 2 of the FFR) and “Federal Grant Number” (Box 5 on the FFR Attachment) provide sufficient information. OMB Circulars A-102, A-110, and A-133, combined with the FFR Instructions, provide sufficient information to facilitate understanding and completion of the FFR. As such, a glossary and definition of terms are not added.

Comment 25: One comment suggested that the policy requiring the submission of one original and two copies of paper-based FFR submission should be retained.

Response: A statement was added that “The Federal agency shall request that the recipient submit the original and no more than two copies of the FFR.”

Comment 26: One comment requested the retention of the instruction on the current SF-272 that requires an explanation when more than 3 days of cash remains on hand at the end of the reporting period. Two comments asked whether there were alternative methods for assessing excess cash, such as OMB Circular A-133 audits, rather than using the FFR. Another comment noted that the requirement for recipients to have no more than 3 days of cash on hand is burdensome because it is difficult to estimate the amount of money needed to meet immediate cash needs. One comment asked how recipients are expected to report on cash advances to subgrantees and subcontractors when they are unable to provide expenditure reports within the timeframe required for the recipient's FFR submission.

Response: A statement was added to the FFR Instructions requiring an explanation if more than 3 days of cash remains on hand at the end of the reporting period.

The FFR is one tool that agencies may use to assess the cash management and financial status of an award. As a result, agencies must determine how they wish to use this tool, in conjunction with other tools, such as OMB Circular A-133 audits and site visits. However, the FFR is considered to be one of the most viable tools, primarily because all recipients are not subject to OMB Circular A-133 audits and conducting site visits may be cost and resource prohibitive. Award recipients are discouraged from having more than 3 days of cash on hand in order to maximize the government's opportunity to collect interest on unspent funds and ensure compliance with the Cash Management Improvement Act. Through the use of automated processes to request funds and facilitate electronic fund transfers, recipients should be able to accurately estimate their funding needs, thereby minimizing instances in which they have more than 3 days of cash on hand. Furthermore, the management of an award does not necessarily preclude having more than 3 days of excess cash on hand; instead, it requires that the reasons for such excess be reported to ensure appropriate stewardship of Federal funds. Recipients are expected to report the amount of cash disbursed, including advances to subrecipients and subcontractors, but they are not expected to report on how these disbursements and advances were actually expended. As a result, determining subrecipient and subcontractor expenditures will not affect the timely completion and submission of the FFR.

Comment 27: Several comments requested clarification on the cash versus accrual basis reporting on the FFR. One comment indicated that the instructions for Line 10f, “Federal Share of Unliquidated Obligations (current period),” states: “For accrual basis reporting, this is the amount of obligations incurred for which an Start Printed Page 69241expenditure has not been recorded.” However, if an organization that accounts on an accrual basis incurred obligations for which an expenditure had not been incurred, it would need to record those expenditures and include them in its total expenditures reported on an accrual basis. The need to report on expenditures that have not been recorded should only exist in an organization that maintains its books on a cash basis. Similarly, another comment stated that it might be advisable to require that reporting be done on an accrual basis even if the organization maintains its accounting on a cash basis because the requirement on Line 10f has the effect of requiring recipients to report an accrual on the FFR regardless whether the accrual is actually entered on its books or only used in producing the FFR. Another comment stated that OMB Circular A-110 defines obligations as “the amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that require payment by the recipient during the same or a future period.” “Orders placed” and “awards” and other obligations for “future periods” are not accrued, so these transactions would not be reported as unliquidated obligations. As a result, the comment requested clarification on whether these future-period obligations would be included in the “Federal Share of Unliquidated Obligations” and “Recipient Share of Unliquidated Obligations.”

Response: The instructions for Line 10f have been clarified to provide one definition for “Federal Share of Unliquidated Obligations,” whether the recipient maintains a cash or accrual basis accounting system. The FFR Instructions have also been updated to indicate that, in accordance with OMB Circulars A-110 and A-102, if the Federal awarding agency requires accrual information and the recipient's accounting records are kept on the cash basis, the recipient shall not be required to convert its accounting system. Instead, the recipient must develop such accrual information through best estimates using available documentation. Consistent with the approach used to develop one definition for “Federal Share of Unliquidated Obligations,” regardless of whether the recipient maintains a cash or accrual basis accounting system, the FFR Instructions have been updated to include common definitions for Line 10e, “Federal Share of Expenditures;” Line10j, “Recipient Share of Expenditures;” and Line 10k, “Recipient Share of Unliquidated Obligations.”

Comment 28: One comment asked why the “Status of Federal Cash” (Lines 10a through 10c) requires totals on a cash basis (Cash Disbursements) while the “Status of Federal Expenditures” (Lines 10e through 10k) require reporting on an accrual basis. Another comment stated that Box 7, “Basis of Accounting,” appears to apply only to Lines 10e through 10h because Lines 10a through 10c require cash basis reporting even if the recipient maintains an accrual basis accounting system. The same comment also asked how it was decided that cash or accrual accounting would be the appropriate basis for FFR reporting purposes.

Response: The “Federal Cash” portion of the FFR enables agencies to determine the amount of a recipient's Federal cash on hand. This portion of the report also enables agencies to reconcile their internal cash receipt and disbursement records with Federal cash receipt and disbursement records maintained by recipients. The “Federal Expenditures and Unobligated Balance” portion of the FFR enables agencies to determine, for a single award, how much money has actually been expended and the expenses that have been incurred but not yet paid. This information gives agencies an overview of the amount of encumbered and unencumbered funds, at a given point in time, which is useful when assessing the financial status of an award. Obtaining cash and accrual information serves different, yet complimentary purposes, and determining the type of information to submit is left to the discretion of the agency. The instructions for Box 7, “Basis of Accounting,” have been clarified to indicate that recipients should specify whether they use a cash or accrual basis accounting system for recording transactions related to the award. The form permits agencies to request cash basis information (Lines 10a through 10c and the FFR Attachment) from recipients maintaining an accrual basis accounting system and accrual basis information (Lines 10f and 10k) from recipients maintaining a cash basis accounting system. If the Federal awarding agency requires accrual information and the recipient's accounting records are kept on a cash basis, the recipient shall not be required to convert its accounting system. Instead, it should develop the required accrual information through best estimates based on available information.

Comment 29: One comment indicated that the FFR duplicates reporting now required for recipients using the Federal government's automated payment systems.

Response: The FFR is used to show the activity of a single award or the amount of funds expended for multiple awards. The information collected through the FFR is required by Federal agencies to aid in monitoring their grant funds. Conversely, payment forms are used to generate disbursements in response to a specific request, and agencies utilize multiple payment systems and forms. The information required on these diverse payment forms may not be adequate for agencies to fulfill their fiscal stewardship responsibilities. Furthermore, agencies should instruct recipients to submit the FFR to a single location within the agency. Each agency will then modify its internal business processes to coordinate the distribution of the FFR to payment and financial offices that require the information.

Comment 30: One comment asked whether using electronic payment mechanisms or receiving funds on a reimbursement basis obviate the need to account for cash disbursements by grant. Three comments questioned the usefulness of the SF-272 and, consequently, the FFR Attachment, given that agencies can obtain cash management information on a grant using the Payment Management System (PMS) and the Automated Standard Application for Payments (ASAP) systems.

Response: Not all electronic payment mechanisms obviate the need to account for cash disbursements by grant because all funds obtained through cash advances may not be expended immediately and agencies may want to monitor cash disbursements and, consequently, cash on hand at a given point in time. Agencies may also want to obtain cash disbursement information by grant, even for recipients on a reimbursement basis, as a means of monitoring cash disbursements for which reimbursement has not been sought. For recipients on an advance payment system and the ASAP, agencies can readily determine the amount of cash advanced but these systems do not capture the amount of cash actually disbursed by recipients. Similarly, for recipients on a reimbursement payment system and ASAP, agencies cannot capture cash disbursements for which recipients have not requested reimbursement. Moreover, not all agencies use PMS or ASAP. Cash disbursement information, as provided on the FFR and the optional FFR Attachment sections which replace the Start Printed Page 69242SF-272A, is deemed useful to many agencies.

Comment 31: One comment noted that the April 8, 2003, notice in the Federal Register did not reference continued use of SF-270. It was suggested that the SF-270 is the source of some of the reporting problems experienced by recipients and that there is a strong relationship between the SF-270 and the new forms. The comment further indicated that the SF-270 was created to meet the need for a paper document on which recipients could request cash, when such payments were also being made by paper check. However, with the required movement by Federal agencies to payment by electronic funds transfer, the form now serves, in some agencies, as a duplicative financial reporting tool.

Response: The SF-269 and SF-272 are used to monitor the financial activity of a single award or multiple awards, while the SF-270 is used to obtain funds. These forms serve different purposes, which were considered in the development of the FFR proposal. Specifically, agencies are currently using various payment systems, some of which may require the submission of the SF-270 if funds cannot be requested electronically. As a result, eliminating the SF-270 through the current FFR proposal could have a negative effect on a recipient's ability to obtain funds, which would be an unacceptable consequence.

Comment 32: Several comments requested delaying implementation of the FFR until a fully automated version was available, which would provide for calculation macros, carry forward prior period-ending balances to the current period report, automate comparisons between recipient and agency data, and support electronic submissions and Web accessibility.

Response: The workgroup's primary goals included reducing the number of required financial forms and standardizing the resulting product. The FFR achieves these goals by consolidating four existing forms into one report and using standard data elements, instructions, definitions, reporting period end dates, and the due date for report submissions. Given the numerous benefits associated with the FFR, the workgroup does not want to delay its implementation. Instead, it seeks to proceed with implementation to achieve immediate benefits, while concurrently moving forward with automation initiatives. Under OMB's overall direction, the Federal awarding agencies began to address electronic solutions for financial reporting in February 2004. Those solutions include the electronic submission of the FFR through unified and common Federal electronic solutions. In the interim, agencies, using methods similar to those for automating the SF-269 and SF-272, may proceed, once they request and receive approval from OMB, with automating the FFR. This includes incorporating macros for facilitating calculations, linking the FFR to payment systems to facilitate electronic comparisons between recipient-reported figures and those maintained by the agency, allowing for electronic submission to agencies, and providing Web accessibility. As part of the approval request, agencies must confirm if automating the FFR will require either minor system enhancements or interim system improvements, and if development, modernization and enhancement (DME) funding would be necessary. These measures are not anticipated to be costly or time-intensive because the FFR includes only four new data elements that are not currently resident on either the SF-269 or SF-272.

Comment 33: One comment requested that the paper format of the consolidated financial report be made available so that it can be completed using a computer keyboard either in Microsoft Word or “writeable” PDF. The comment further stated that applicants prefer filling out documents and forms using a computer keyboard and that the old-style PDF forms are difficult to use because they must be printed and then completed using a typewriter. Another comment requested that the paper FFR show a Web address that would provide specific instructions and information for completing the FFR.

Response: As described previously, the Federal awarding agencies began addressing electronic solutions for financial reporting in February 2004, including the electronic submission of the FFR through unified and common Federal electronic solutions. The workgroup concluded that URL references should be included on Web sites rather than the FFR forms because the URL references may change.

Comment 34: One comment requested assurance that security controls be established to prevent the electronic submission of an FFR report that had not been approved by the appropriate individuals.

Response: Potential solutions for electronic submissions include submission and electronic authentication by an Authorized Agency Representative. In addition, existing payment systems only allow access by Authorized Agency Representatives. These agency security measures must be supplemented by the recipient's internal security measures to preclude the submission of reports by unauthorized representatives.

Comment 35: One comment stated that there is a need to ensure that subrecipients and subcontractors be subject to the same requirements as recipients for reporting purposes. Another comment noted that States serving in a pass-through capacity should also adopt the FFR, which would then reap the FFR's benefits across the grant community. Another comment stated that the FFR does not contain a line item showing funds disbursed to subrecipients.

Response: The Federal government may not impose prime recipient reporting requirements on subrecipients and subcontractors as a means of securing the contractual relationship between the prime and the sub. Instead, OMB, through its administrative circulars, requires recipients to manage and monitor each project, program, function, and activity supported by the award. Furthermore, agencies may obtain information regarding the subrecipient and subcontractor aspects of an award by requiring recipients to indicate the amount of monies advanced or disbursed to subrecipients and contractors through FFR submissions. Requesting that States adopt the FFR is beyond the scope of the workgroup, but it is considered to be an area worthy of continued exploration. “Cumulative Cash Disbursements,” as shown in the FFR Attachment, include funds disbursed to subrecipients. A separate line item was not added to capture disbursements to subrecipients because, in the interest of streamlining, recipients will only be required to report disbursements without detailing specific types of expenditures.

Comment 36: One comment proposed enlarging Box 1, “Federal Agency and Organizational Element to Which Report is Submitted;” two comments noted the absence of instructions advising on the level to which reports should be submitted within an agency, particularly for multiple grants captured on the FFR; and a fourth comment stated that OMB should establish a single location for submission of the report, which would eliminate the submission of identical reports to multiple locations within an agency.

Response: The size of Box 1 was not changed because recipients may use acronyms to depict the Federal agency and organizational element. The ability to group multiple grants will be at the discretion of the Federal awarding agency. Agencies can provide guidance on identifying “the organizational Start Printed Page 69243element” for recipients reporting on multiple grants. The instructions for Box 1 have been clarified to state “Enter the name of the Federal agency and organizational element identified in the award document or as instructed by the agency.” Even though electronic solutions for the FFR are pending, some recipients may still elect to submit paper-based reports. Agencies will not be required to request submissions to one location. However, the instructions have been modified to state: “Agencies should instruct recipients to submit the FFR to one single location within the agency.” This language states that submission to one location in the agency is not required, but strongly encouraged.

Comment 37: One comment requested that Box 4 be changed from “Universal Identifier” to “DUNS Number.” Another comment asked if “Universal Identifier” is the DUNS Number or the Employer Identification Number (EIN).

Response: The DUNS number is the universal identifier for grants and cooperative agreements. As such, the term “Universal Identifier Number” has been changed to “DUNS Number.” Box 4 on the FFR has been modified to include separate entries of the “DUNS Number” (Box 4a) and “Employer Identification Number (EIN)” (Box 4b). The FFR Instructions have been amended to incorporate this change.

Comment 38: Several comments were raised about the requirement for recipients to provide their DUNS number. One comment requested a reference in the FFR Instructions on how to obtain a DUNS number, another asked what mechanism OMB intends to employ to ensure that recipients use the correct DUNS number. Still another comment requested OMB to provide guidance on how to manage multiple DUNS numbers for organizations and their affiliates. Finally, three comments expressed overall concern with the requirement to obtain a DUNS number.

Response: All of these comments pertain to pre-award activities and are outside of the scope of the FFR proposal. Instead, they should have been submitted in response to OMB's Federal Register notice dated June 27, 2003, “Use of a Universal Identifier by Grant Applicants.” Although these comments did not result in any changes to the FFR, they still warrant some clarification. Use of the DUNS will allow Federal agencies and recipients to readily identify a DUNS “family tree,” allowing for more effective management of multiple grants. Also, a DUNS number is required for registering in the Business Partner Network (BPN), which includes the Central Contract Registry (CCR). The BPN/CCR maintains an applicant and recipient profile, which reduces the amount of data required for electronic submission of information to Grants.gov.

Comment 39: Three comments addressed continued use of the EIN, along with the DUNS number, on the FFR. One comment requested that recipients furnish either the EIN or DUNS number, while another requested that the EIN be added to the FFR. One comment asked if the EIN was actually intended to be dropped.

Response: On June 27, 2003, an OMB notice in the Federal Register, “Use of a Universal Identifier by Grant Applicants,” established the requirement for recipients to obtain a DUNS number when applying for Federal grants and cooperative agreements. This policy has since been revised to apply to all forms of Federal financial assistance pursuant to the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282). It stipulated that Federal agencies could continue to use their EIN or similar vendor identification for their internal use. In response, the FFR has been modified to include both the DUNS number and EIN. The addition of the EIN to the FFR does not preclude furnishing a DUNS number. Instead, recipients providing an EIN (or similar vendor identification number) on the FFR will still be required to provide a DUNS number.

Comment 40: Two comments indicated that basic information about a recipient, including financial information, should be stored in a password protected site that recipients could access to update their information annually or when major changes occur such as the name of a contact person. After the standard application is submitted to the clearinghouse, an applicant or recipient could access the information and submit a new grant application without having to fill out another form with the same information. This practice should be possible because standard information is required with every application, but rarely changes from one application to another.

Response: These comments pertain to pre-award activity, so they are outside the scope of the FFR proposal. Although no changes were made to the FFR in response to these comments, some clarification is warranted. The Federal government is currently using BPN/CCR for grant applicants and recipients to help centralize applicant and recipient information, and to provide a central location for applicants and recipients to change organizational information. Use of BPN/CCR provides one location for applicants and recipients to change information about their organization for use by all Federal agencies. Currently, recipients will use the BPN/CCR template that is in place for vendors and contractors conducting business with the Federal government.

Comment 41: Three comments pertained to Box 5, “Recipient Account Number or Identifying Number.” One comment requested an example of “any other identifying number,” while another asked that “For Recipient Use Only; Not Required by Federal Funding Agency” be replaced with “This Account Number May be the Same Number as Shown in Item 2, Federal Grant or Other Identifying Number.” One comment suggested that Box 5 does not serve a useful purpose and it should be eliminated.

Response: As stated in the FFR Instructions, Box 5 is intended for recipient use only, such as providing a tracking mechanism for reconciliation purposes. For example, a recipient could assign a number to an award that is automatically generated from its financial system, which would make Box 5 very useful in reconciling the recipient's internal data with that maintained by the Federal government. The language was not modified because the proposed language better depicts the intent and appropriate use of Box 5.

Comment 42: One comment requested that the shading be removed from all the Column II, Current Period, cells because this information could be useful if the FFR is to be used for Current Cash Transactions.

Response: The FFR has been modified to collect only cumulative totals. This action would eliminate Column I (Previously Reported) and Column II (Current Period) for all line items. The overall financial status of the award, as shown in the “Cumulative” column, should serve as the basis from which assessments and decisions are made. The “Federal Cash” section has been modified to include Line 10c, “Cash On Hand.” By requiring only cumulative totals, this modification will allow the FFR to provide a good overview of activity that took place during the reporting period and facilitate the calculation of cash on hand as of the reporting period end date. The FFR Instructions have been amended to show these changes.

Comment 43: One comment suggested revising the last sentence of the instructions for Line 10, “Transactions,” to state: “If you need to adjust amounts entered on previous reports, include a note in Line 12 of the Remarks section.” Start Printed Page 69244

Response: The statement “If you need to adjust amounts entered on previous reports, include a note in Line 12 of the Remarks section” has been added to the instructions for Line 10. Any information deemed necessary to support or explain FFR information should be noted in Line 12, “Remarks.”

Comment 44: One comment noted that recipients are now instructed to report adjustments to prior report periods in Column I (Previously Reported). This instruction is consistent with generally accepted accounting principles, which require publicly traded corporations to report prior period adjustments as revisions to retained earnings rather than as results of current year operations. Nevertheless, the comment requests that recipients be allowed to report adjustments in the period in which they are recognized (Column II, Current Period) because the FFR is a cumulative document. The amount that ultimately is of interest to the agency is the amount captured in Column III (Cumulative) and an adjustment has the same effect on Column III whether the recipient enters it in Column I or Column II.

Response: The FFR has been modified to collect only cumulative totals. This action eliminates Column I (Previously Reported) and Column II (Current Period) for all line items. Since the practice of reflecting adjustments within the period that the error occurred is a generally accepted accounting principle, no changes will be imposed on the recipient community. If an agency has unique reporting situations requiring adjustments in the prior period, it can request an exemption from OMB.

Comment 45: One comment requested that the instructions for Line 10a be changed to read: “Enter the amount of actual cash received to date from the Federal awarding agency.”

Response: The instructions for Line 10a, “Cash Receipts,” have been amended to include the requested language.

Comment 46: One comment asked if Line 10d, “Total Federal Funds Authorized,” includes the amount of Federal increase resulting from program income reported on Line 10o, “Program Income Expended in Accordance with the Addition Alternative.”

Response: Line 10d, “Total Federal Funds Authorized,” does not include program income since, by definition, program income is generated by award activities and not provided by the awarding agency. The instructions for Line 10d have been modified to provide clarification.

Comment 47: One comment noted that recipients are given a total award amount without limitations on when those funds can be spent, other than the restrictions on the start and end dates of each award. However, the instructions for Line 10d, “Total Federal Funds Authorized,” request recipients to report on “Total Federal funds authorized for the current funding period.” This information is currently requested on SF-269 on a cumulative basis for an award, not for the current reporting period. The comment further requests that the same option be available to recipients on the FFR and that this detail be included in the line item instructions.

Response: Columns I and II for “Total Federal Funds Authorized” have been eliminated, requiring a cumulative total entry only. The instructions for Line 10d, “Total Federal Funds Authorized,” have been changed to state: “Enter the total Federal funds authorized as of the reporting period end date.”

Comment 48: One comment noted that the instruction for Line 11e, “Indirect Expense, Federal Share,” should explain that this is the amount of indirect expense that has been combined with direct expenses and reported in Lines 10e, 10f, and 10g.

Response: The FFR instruction at Line 11e was not modified because we felt it would be clearer to the user if we modified the instructions at 10e, f and g. The FFR instructions at Line 10e, “Federal Share of Expenditures,”have been modified to read: “Expenditures are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expenses charged to the award, and the amount of cash advances and payments made to subrecipients and subcontractors, minus program income expended in accordance with the deduction alternative, rebates, refunds or other credits.” The instructions for Line 10f, “Federal Share of Unliquidated Obligations,” have been modified to read: “Unliquidated obligations reflect expenses incurred that have not yet been paid, as of the reporting period end date (cash basis), or expenses that have been incurred but not yet recorded (accrual basis). Enter the Federal portion of unliquidated obligations, which includes direct and indirect expenses incurred but not yet paid or charged to the award, including amounts due to subrecipients and subcontractors. On the final report, this line should be zero unless the awarding agency has provided specific instructions.” The instructions for Line 10g, “Total Federal Share,” were not changed because Total Federal Share is the sum of Line 10e, “Federal Share of Expenditures” and Line 10f, “Federal Share of Unliquidated Obligations,” and the instructions for these two lines have been modified to reflect the treatment of indirect expenses.

Comment 49: One comment noted that it is unclear what resources are contemplated in the instructions for Line 10e, “Federal Share of Expenditures,” particularly the phrase “the value of in-kind contributions applied.” OMB's use of the term “in-kind contributions” in circulars and related documentation is confined to resources related to the non-Federal share and is usually modified by the term “third-party” to indicate that such non-cash contributions come from a party other than the Federal agency and recipient. As a result, such discussion should be included in the section of the report related to “Status of Recipient Share.”

Response: The reference to “the value of in-kind contributions applied” has been removed from the definition of Line 10e, “Federal Share of Expenditures.” The instructions for Line 10j, “Recipient Share of Expenditures,” have been clarified to state: “This amount may include the value of allowable in-kind match contributions * * *.”

Comment 50: One comment stated that the sentence “Do not include any amounts on Line 10f that have been included on Line 10e” in the current SF-269 instructions for reporting unliquidated obligations has been dropped from the FFR Instructions for Lines 10f and 10k. This sentence is needed to control against “double dipping.”

Response: The instructions for Line 10f have been clarified to state: “Do not include any amount in Line 10f that has been reported in Line 10e.” Also, the instructions for Line 10k have been clarified to state: “Do not include any amount in Line 10k that has been reported in Line 10j.”

Comment 51: One comment indicated that the instructions for Line 10i, “Total Recipient Share Required,” on the new FFR requests recipients to report on total recipient share required by reporting period, yet some awards require recipients to agree to a specific match for the entire grant period, which means that recipients would be able to report their required share only on a cumulative basis, rather than on a period-by-period basis. Another comment asked if the recipient share to be provided relates only to mandatory cost sharing amounts or if it also included committed cost sharing. A similar comment requested clarification for Lines 10i through 10m to show that the terms “recipient share” and Start Printed Page 69245“recipient funds” include all matching and cost sharing funds that have been committed to the project by the recipient and other providers. A fourth comment asked whether the amount reported on Line 10i includes level of effort requirements.

Response: The FFR has been modified to collect only cumulative totals. This action eliminates Column I (Previously Reported) and Column II (Current Period) for all line items. The instructions for Line 10i, “Total Recipient Share Required,” have been amended to state: “Enter the total required recipient share for budget, funding, and project periods. The required recipient share to be provided includes all matching and cost sharing provided by recipients and third-party providers to meet the level required by the Federal agency. This amount should not include cost sharing and match amounts in excess of the amount required by the Federal agency (such as cost overruns for which the recipient incurs additional expenses and, therefore, contributes a greater level of cost sharing or matching than the level required by the Federal agency).”

Comment 52: One comment indicated that the current long version of SF-269 allows the agency to break the recipient's share of outlays into in-kind and cash matches, while the proposed FFR combines in-kind and cash match totals and reports them as one figure on Line 10i, “Total Recipient Share Required.” The comment further asked that the FFR be revised to show a break in the recipient's share between in-kind and cash matches. Another comment suggested using the term “mandatory” cost sharing instead of recipient's share, while another comment asked that the word “required” used in front of “recipient funds” and “match or cost sharing amount” be deleted because the match actually received may be different than what was committed.

Response: Since documentation requirements for third-party and in-kind contributions and cash matches are virtually the same, no purpose would be served by differentiating between the two on the FFR. If an agency wants to obtain this information, it may do so through progress reporting mechanisms. Recipients may not universally understand the terms “mandatory” and “committed” in reference to cost sharing. As such, introducing these terms may result in greater confusion than the term “required recipient share,” which is currently used. The word “required” was not removed from the line item instructions because it ensures a correct, mutual understanding between the recipient and the agency regarding the precise amount of match required against the funds awarded. The match or cost sharing reported may be different from the required amount, but the amount required has significance for this report because adjustments can be made prior to or during closeout to reconcile differences between actual cost sharing amounts and the amount required by the Federal agency.

Comment 53: One comment requested that the phrases—(current period only) and (This period)—be removed from Line 10k, “Recipient Share of Unliquidated Obligations.” The shaded and unshaded cells for each line item are sufficient for determining the period of time for which the information needs to be reported. As a result, (current period only) and (This period) are redundant.

Response: The two phrases were not on Line 10k of the form but were in the instructions for Line 10k. The two phrases have been removed from the instructions. The FFR has been modified to collect only cumulative totals. The instructions for Line 10k now state: “Unliquidated obligations reflect expenses incurred that have not yet been paid, as of the reporting period end date. Enter the recipient's portion of unliquidated obligations which includes direct and indirect expenses incurred but not yet paid or charged to the award, including amounts due to subrecipients and subcontractors.”

Comment 54: One comment stated that the proposed form includes a new line item, Line 10m, “Remaining Recipient Share to be Provided,” that requires the total recipient share less the total recipient share disbursed and obligated leaving the remaining recipient share to be provided. The comment further indicated that this information is not useful because the recipient frequently does not spend the entire grant award, so it does not need to provide the entire match shown in the grant award.

Response: Even if the entire amount of the award is not spent, the information on Line 10m enables the Federal agency to readily view required and actual recipient share activity and make necessary adjustments prior to or at time of closeout. The information also provides a valuable tool for agencies to assess the sufficiency of the recipient's contributions throughout the project or grant period, enabling agencies to monitor awards, identify deficiencies, and make adjustments, as necessary.

Comment 55: One comment indicated that the FFR does not address the three methods in which program income can be treated. Two comments requested a separate line item for identifying program income that is used to finance the non-Federal share of the project.

Response: The FFR and instructions capture the three ways in which program income can be treated. Specifically, Line 10o is used for program income expended in accordance with the deduction alternative; Line 10p is used for program income expended in accordance with the addition alternative; and Line 10j may include program income expended to meet the recipient's share of the program or project. A separate line item for program income used to finance the recipient's share is not necessary because the instructions for Line 10j state: “This amount may include the value of allowable in-kind match contributions and recipient share of program income used to finance the non-Federal share of the project or program.”

Comment 56: One comment asked whether it would be better to include a question or a pair of boxes to be checked on whether the award in question requires the use of the deduction or the addition alternative. Alternatively, if the award does not include such a provision, indicate whether the recipient should be required to choose one or the other. The form would then be arranged so that if the deduction alternative were indicated, the Federal share of expenditures would be shown in total and the amount of program income would be deducted from the total to arrive at a net, which the federal government would need to reimburse. If the addition alternative were indicated, the recipient would then demonstrate the total program income earned, the total spent on costs of the program, and the amount not used.

Response: The FFR was not modified to ask a question or show boxes indicating whether the deduction or addition method for program income was used because the method used to account for program income should be evident by virtue of the line items completed by the recipient. It should also be noted that if the award is silent with respect to the treatment of program income, the recipient does not have the option of choosing the method to be utilized. Instead, it is the agency's decision regarding which method is used to account for program income and, if applicable, the expenditure of program income. The instructions for Lines 10e and 10o have been modified in response to the portion of the comment regarding the manner in which program income, utilizing the deduction alternative, is reported. The instruction for Line 10e states: “Enter the amount of Federal fund Start Printed Page 69246expenditures. Expenditures are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expenses charged to the award, and the amount of cash advances and payments made to subrecipients and subcontractors, minus program income expended in accordance with the deduction alternative, rebates, refunds, or other credits.” Program Income expended in accordance with the deduction alternative should be reported separately on Line 10o. The instructions for Line 10o state: “Enter the amount of program income that was used to reduce the Federal share of the total project costs.” No change was made regarding the depiction of program income utilizing the addition alternative because the current proposal presents the amount expended and unexpended without requesting extraneous information.

Comment 57: Two comments requested that two phrases—(current period) and (This Period)—be removed from Line 10p,—“Unexpended Program Income,” because the shaded and unshaded cells for each line item are sufficient for determining for what period of time the information needs to be reported. As such, (current period) and (This Period) are redundant.

Response: The phrase (This Period) appeared in the instructions for Line 10p but not on Line 10p of the form. The phrase (current period) appeared on Line 10p of the form. The phrase (current period only) appeared in the instructions for Line 10p. These phrases have been removed from the instructions of the form. The FFR has been modified to collect only cumulative totals. The instructions for Line 10q now state: “Enter the amount of Line 10n minus Line 10o on Line 10p. This is the amount of program income that has been earned but not expended, as of the reporting period end date.”

Comment 58: One comment indicated that the instructions should include a title line for indirect expense; otherwise, it appears that indirect expense falls under program income.

Response: The FFR section for Indirect Expense has not been modified because the separate line number and block formatting of the section makes it stand out from the preceding section.

Comment 59: One comment requested that Box 11a, “Indirect Expense, Type of Rate,” be amended by changing the term “Fixed” to “Fixed with Carry-Forward” to conform to current practices used by Federal agencies. Another comment requested that definitions be provided for the types of rate identified in Box 11a (provisional, predetermined, final, or fixed).

Response: The FFR has not been modified because the terminology “Fixed” is currently used in OMB Circulars. Also, the type of indirect expense rate should be identified in the negotiated indirect cost rate agreement with the Federal agency or identified in the grant agreement. Definitions for each type of rate were not added to the FFR because at this post-award phase of the award cycle, recipients should already be aware of their indirect cost rates and their meanings. If recipients need additional information on indirect cost rates, they should consult the cognizant agency or OMB cost principles circulars.

Comment 60: One comment requested that the instructions for Line 11b, “Indirect Expense Rate,” should be revised to state: “Enter the actual approved rate in effect during this reporting period. This rate should be contained in the grant agreement or otherwise negotiated.” Two comments requested that guidance be added to the instructions for Line 11b advising recipients on how to complete the FFR when multiple indirect cost rates apply to the reporting period.

Response: The FFR instructions have been modified to state “Enter the indirect cost rate in effect during the reporting period. This rate should be contained in the grant agreement or agreement negotiated with the cognizant federal agency.”

Comment 61: One comment asked whether the amount reported in Box 11e, “Indirect Expense, Federal Share,” was also included in Line 10e, “Federal Share of Expenditures,” and Line 10f, “Federal Share of Unliquidated Obligations.”

Response: The FFR instructions have been modified to explain that the amount of indirect expense is combined with the Federal share of direct expenses and is to be reported on Lines 10e and 10f.

Comment 62: One comment noted that the language associated with Box 13, “Certification,” does not convey that civil or criminal penalties exist for making a knowingly false statement or willful misrepresentation in regards to the reported information including cash receipts and disbursements, and expenditures and unliquidated obligations. Including such a certification would ensure that recipients are aware of their responsibilities and provide a stronger basis for the Federal government to take legal action if recipients knowingly make a false certification or willful misrepresentation. Another comment indicated that the instructions should state who qualifies as an “authorized certifying official.” Still another comment asked that the instructions for Box 13e, “Date Report Submitted,” prescribe the date format to be used (for example, month, day, year).

Response: Determining who qualifies as an “authorized certifying official” should be made by the recipient, not the Federal agency. In general, the “authorized certifying official” has the authority to commit the recipient to a course of action and agreement, and ensure compliance with that action and agreement. The FFR has been modified to specify a date format and instructions for Box 13e have been modified to state: “Enter the date the FFR is submitted to the Federal agency in the format of month, day, year.”

Comment 63: One comment requested that Box 2, “Federal Grant or Other Identifying Number Assigned by the Federal Agency,” also ask for the name of the Federal grant. A second comment asked that the legal name of the recipient be provided in Box 3, “Recipient Organization,” while a third comment asked that the agency be identified on the FFR. A fourth comment asked that the recipient's fax number be provided on the FFR.

Response: Box 2 is intended for the award number or other identifying number that the Federal awarding agency assigns to the grant or cooperative agreement. This unique number precludes the need to ask recipients to provide additional identifying information, such as the name of the grant program. In addition, the recipient's legal name and fax number should be obtained in the pre-award phase, if that information is pertinent. There is no need to impose an undue burden on recipients by requesting this information again during the reporting phase.

Comment 64: One comment requested that the instructions for Box 8, “Project/Grant Period,” and Box 9, “Period Covered by the Report,” be clarified to indicate that the two reporting periods may not agree since awards are sent out late and project activities are often not completed by the project or grant period end date. Another comment asked that the instructions for Box 9 be revised to state: “Enter beginning and ending dates of the current reporting period * * *.”

Response: The first comment most likely pertains to the submission of final FFRs, in which case the “Reporting Period End Date” (Box 9) end date should be the same as the “Project/Grant Period” (Box 8) end date. If project activities are not completed by the project or grant period end date, then the recipient should request an Start Printed Page 69247extension. If the extension is approved, the project or grant period end date (Box 8) would be extended and the reporting period end date (Box 9) on the final FFR would be the same as the extended project or grant period end date. The instructions for Box 9 have been revised to state: “Enter the ending date of the reporting period.”

Comment 65: One agency stated that the existing financial reporting forms are not inherently burdensome, but they often become so because of misuse and misinterpretation of their instructions by some Federal agencies. One comment indicated that the current SF-269 and SF-272 function well on their own since the recipients for each report are distinct and the combined FFR merely combines the information requested on the current forms into one form, which does not decrease the amount of time required to submit financial data. Another comment indicated that several opportunities for streamlining were missed. They included eliminating interim financial status reports and relying on nearly identical data submitted quarterly on the Federal Cash Transactions Report, reducing the frequency with which agencies may require reports, and standardizing reporting requirements like those for outstanding obligations and carry forward of unobligated balances. One comment asked whether a standardized report comparing budgets to actual expenditures will be required or will this function continue to be left to individual program officials.

Response: Four individual financial reports have been combined into one FFR with standardized informational reporting requirements. Agencies may require recipients to provide all of the information included on the FFR, but no agency can require recipients to provide additional information, without approval from OMB. The FFR allows for flexibility in the frequency of reporting, but it establishes uniform reporting period end dates and uniform due dates for the submission of interim reports. Furthermore, the FFR Instructions provide clarification and standardization with respect to reporting on the cash management activity and financial status of single or multiple awards. Use of the FFR and its instructions across the government will minimize instances of misuse and misinterpretation. Some recipients currently complete the SF-269; others complete the SF-272, while others complete both forms, depending on agency reporting requirements. These forms serve both distinct and overlapping populations. As such, having an FFR that encompasses both financial status activity (currently resident on the SF-269) and cash management activity (the SF-272) allows agencies to preserve reporting flexibilities while serving distinct and overlapping populations with one form. Furthermore, completing the FFR reduces the number of data elements that are currently required on the current SF-269 and SF-272. Interim FFRs were not eliminated because the information submitted on those reports depicts information that does not appear on the Federal Cash Transaction Report. Many agencies need that information during interim timeframes throughout the project or grant period to adequately monitor the financial status of their awards. The frequency with which agencies may require submission of FFRs remains flexible because their needs differ in terms of the related risks associated with a particular program or award. The scope of the FFR proposal was not designed to address an agency's internal policies regarding financial management of grant and cooperative agreement funds, nor was it designed to be used as a tool to compare budgets to actual expenditures. Instead, the FFR provides a standardized format through which recipients report on the cash management and financial status of grants and cooperative agreements in accordance with each agency's existing internal policies.

Comment 66: One comment indicated that the proposed change does not contain information about OMB's plans to revise Circulars A-102 and A-110. Those circulars prescribe the use of the current forms that would be replaced by the FFR.

Response: OMB issued the proposed revisions to Circulars A-102 and A-110 as a way of initiating changes associated with several government-wide grant streamlining initiatives.

III. Paperwork Reduction Act

Submission for OMB Review; Comment Request.

Title: Federal Financial Report (FFR).

OMB No.: New Collection.

Description: In furtherance of Public Law 106-107, and its goal of streamlining the Federal grant process, the Federal Financial Report (FFR) will reduce the burden and reporting effort on recipients by consolidating four forms into one. The purpose of the FFR is to give recipients of grants and cooperative agreements a standard format for reporting the financial status of their grants and cooperative agreements (hereby referred to collectively as awards).

Respondents: Federal agencies and their assistance recipients.

Estimated Total Annual Burden Hours: 2.00.

Estimated Cost: There is no expected cost to the respondents or to OMB.

Annual Burden Estimates

InstrumentNumber of respondentsNumber of responses per respondentAverage burden hours per responseTotal burden hours
Federal Financial Report (FFR)111.501.50
Federal Financial Report (FFR) Attachment110.500.50
Total2.00

Agencies and the public are asked to comment on:

  • Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
  • The accuracy of the agency's estimate of the burden of the collection of information;
  • Ways to enhance the quality, utility, and clarity of the information to be collected;
  • Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and
  • Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Start Printed Page 69248

IV. Summary of Actions

OMB, through this Federal Register publication, is establishing the government-wide FFR. The FFR provides a standard format from which agencies can determine data elements that recipients must complete to report on the cash management and financial status of single or multiple awards. Consistent with government-wide grant streamlining objectives, the FFR will result in the use of standard reporting period end dates and due dates for the submission of cash management and financial information.

This establishment of the government-wide FFR requires amendments to OMB Circulars A-110 (2 CFR part 215) and A-102. Those amendments will be published under a separate notice. We also recognize that a transition period will be necessary to provide agencies and grantees with time to adapt their processes to the new form and phase out the use of old ones. When the FFR is approved by OMB, the SF-269, SF-269A, SF-272 and SF-272A may continue to be accepted by agencies until September 30, 2008. Agencies must determine the earliest practical time that their recipients will transition to using the FFR on or before September 30, 2008.

Start Signature

Danny Werfel,

Acting Controller.

End Signature

Attachments

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[FR Doc. 07-5941 Filed 12-6-07; 8:45 am]

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