Remitting Interest on Advances
The most common requirement for remitting earned interest on advances involves advance payments provided to covered recipients under OMB Circular A-110. This reference applies to advances received on grant or assistance funded programs with institutions of higher education, hospitals and other nonprofits. Recipients have the option of receiving advances in accordance with the circular or requesting reimbursements on the basis of costs incurred provided they meet the requirements for the selected method as identified in the OMB A-110. For detailed information on the preferred method of payment on grant and assistance programs and the requirements for determining if advances are authorized, please refer to OMB Circular A-110 Section .22 Payments.
Grant and Cooperative agreements subject to OMB Circular A-110
The basic requirement for the payment of interest on advances on grant or assistance programs can be found in OMB Circular A-110 Section .22 (l). An excerpt from this section is reprinted below:
(l) For those entities where [Cash Management Improvement Act (CMIA)] and its implementing regulations do not apply, interest earned on Federal advances deposited in interest bearing accounts shall be remitted annually to Department of Health and Human Services, Payment Management System, Rockville, Md., 20852. Interest amounts up to $250 per year may be retained by the recipient for administrative expense. State universities and hospitals shall comply with CMIA, as it pertains to interest. If an entity subject to CMIA uses its own funds to pay pre-award costs for discretionary awards without prior written approval from the Federal awarding agency, it waives its right to recover the interest under CMIA.
Federal Demonstration Partnership Covered Recipients
Recipients with agreements covered under the Federal Demonstration Partnership (FDP) have the same requirements as those covered under OMB Circular A-110.
CMIA Covered Recipients
For institutions subject to the requirements of the CMIA, you may be subject to interest payments on advances received under that program. CMIA requirements generally pertain only to very limited and select state universities that process funding through state block advance payment programs. In most cases, the state agency responsible for monitoring the program will also be responsible for managing the interest related aspects of the program however, covered institutions should ensure they understand the program interest requirements. Information pertaining to the requirements and applicability of the CMIA can be found in Public Law 101-453.
Please ensure that remittance checks for interest earned on grant and assistance programs are prepared and forwarded in accordance with the instructions contained in OMB Circular A-110 or the CMIA if applicable. Please do not send interest payments to your cognizant ONR Administration Office.
A contractor or recipient receiving an award must always check the clauses, terms and conditions to determine specific and current requirements concerning payment, reporting and interest requirements. In many cases additional agency or other regulations are incorporated by reference concerning payment processing and interest requirements. Recipients and contractors should ensure they have a clear understanding of obligations under the provisions of their specific awards.