Oregon State University

214: Cash Advances and Interest Calculation on Federally Sponsored Agreements

Grant, Contract and Gift Accounting Manual
Section 214: Cash Advances and Interest Calculation on Federally Sponsored Agreements
Effective: 07/01/2009

Purpose

To ensure that cash advances from federally sponsored agreements are deposited into an interest bearing account and that the interest income is properly recorded and reported in compliance with OMB Circular A-110.

Background Information

Cash advance and interest calculated on federally sponsored agreements are governed by OMB Circular A-110 (C22 Payment).

Definition

Federal regulations define "Cash Advance" as follows:

  • Advance means a payment made by Treasury check or other appropriate payment mechanism to a recipient upon its request either before outlays are made by the recipient or through the use of predetermined payment schedules.

Policy

The following forms shall be authorized for use by the recipients in requesting advances and reimbursements:

  1. SF-270, Request for Advance or Reimbursement
  2. SF-271, Outlay Report and Request for Reimbursement for Construction Programs

Payment

Per OMB Circular A-110, "Cash advances to a recipient organization shall be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient organization in carrying out the purpose of the approved program or project. The timing and amount of cash advances shall be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and the proportionate share of any allowable "Facilities and Administrative" costs."

  • "Whenever possible, advances shall be consolidated to cover anticipated cash needs for all awards made by the Federal awarding agency to the recipient.
    1. Advance payment mechanisms include, but are not limited to, Treasury check and electronic funds transfer.
    2. Advance payment mechanisms are subject to 31 CFR part 205, "Withdrawal of Cash from the Treasury for Advances under Federal Grant and Other Programs."
    3. Recipients shall be authorized to submit requests for advances and reimbursements at least monthly when electronic fund transfers are not used.
    4. Requests for Treasury check advance payment shall be submitted on SF-270, "Request for Advance or Reimbursement," or other forms as may be authorized by OMB. This form is not to be used when Treasury check advance payments are made to a recipient automatically through the use of a predetermined payment schedule or if precluded by special Federal awarding agency instructions for electronic funds transfer."
  • Recipients shall maintain advances of Federal funds in interest bearing accounts, unless (1), (2) or (3) apply.
    1. The recipient receives less than $120,000 in Federal awards per year.
    2. The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year on Federal cash balances.
    3. The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.

Procedures for Calculation of Interest

Federal Funds

Funds awarded in advance from a federal agency will be subject to interest calculation. These funds are distinguished from reimbursable agreements by a separate bank code (BV) in the Financial Information System.

Funds drawn on agreements with a Letter of Credit are on a reimbursable basis; not advance payment.   Advance payments are only received on predetermined payment schedules.  Interest will be calculated on indices with a positive cash balance.

Interest will be calculated on the ending cash balance at the close of each month.

Interest

At the close of each quarter the OUS Controller’s Office will provide the Office of Post Award Administration with the daily interest rate used for calculating interest.

The "hard copy" Interest Report is filed in the Office of Post Award Administration and is retained as supporting documentation.

The Controller’s Office prepares a journal voucher to transfer the quarterly interest to index QBA160 (Interest Clearing Federal Advance Payment).

At fiscal year end, the interest earned in index QBA160 is remitted to the Department of Health and Human Services (DHHS) - less $250.00 that is retained for administrative costs as allowed by Federal regulation.

Remitting Interest

Interest 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.

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