closeout phase
(CT:FIN-506; 05-13-2025)
(Office of Origin: CGFS/FPRA/FAFM)
4 FAM 651 closeout general
(CT:FIN-506; 05-13-2025)
a. Per 2 CFR 200.344, Closeout must be completed once the period of performance of an award has ended, and the recipient or subrecipient has completed the required work. Even when the work on an award has not been completed, when the period of performance has ended, closeout must ensue. If a recipient anticipates that work will not end prior to the end of the period of performance, then the recipient should request an extension to complete the work. Timely closeout is a priority, especially if funds need to be de-obligated. If the recipient or subrecipient fails to complete the closeout requirements, the Department will proceed to administratively close out the award with the existing information available.
b. When a recipient or subrecipient completes all closeout requirements, the issuing bureau or post must promptly complete all closeout actions for the award. The issuing bureau or post must make every effort to complete closeout actions no later than one year after the end of the period of performance.
c. Closeout actions include issuing post or bureau actions in the grant management and payment systems (Regional Financial Management System/RFMS or Global Financial Management System/GFMS).
(1) All final financial, performance, and other reports are required, no later than 120 calendar days after the end of the award period of performance, as stated in the terms and conditions of the award. The Department may approve extensions when requested by the recipient. In rare instances, an award may not require a final report. However, in those rare instances, the grants management personnel must document the completion of the award activities to the official grant file.
For fixed amount awards the standard performance and financial reports required for grant and cooperative agreements are not required. Instead, the recipient or subrecipient is required to submit a written certification that the project was completed (or not) as agreed to in the award specifics/provisions. This should be a short, written report on the project, and a statement on whether all funds were expended (or not) in accordance with their authorized purpose.
(2) A recipient must expense all obligated funds under the award no later than 120 calendar days after the end of the period of performance.
(3) Issuing post or bureau must make prompt payments to a recipient for allowable reimbursable costs under the award being closed out.
(4) Issuing post or bureau must require the recipient to promptly refund any balances of unobligated cash that the issuing post or bureau has advanced or paid that is not authorized to be retained by the recipient for use in other projects.
(5) Prior to acceptance of the final financial report, all discrepancies must be reconciled by the grants officer and a corrected version, if applicable, must be forwarded to the program office for review or comment.
(6) The grants officer must ensure the recipient has met proposed or required cost sharing.
d. If the recipient does not submit all reports, the Department must report the recipient's material failure to comply with the Contractor Performance Assessment Reporting System (CPARS).
4 FAM 652 closing out in Payment management system
(CT:FIN-506; 05-13-2025)
a. The Department of State uses the Payment Management System (PMS), operated by the Department of Health and Human Services (HHS), to pay most domestic awards to U.S.-based organizations.
b. When awards paid through PMS are closed out, additional steps must be taken to reconcile PMS with the Global Financial Management System (GFMS – for domestic obligations) and the Department's grant management system, if applicable. It is essential to follow the procedures outlined below. At closeout, the grants officer must work with the bureau and relevant financial management officer (FMO)/budget officer (BO) to:
(1) Verify reported information from PMS. Run and review the PMS FCO-E Report or similar report for the award. PMS reports depict information for the award including the financial information for authorized, disbursed, and charged funds, the FFR reported totals, obligation activity (total amount of the obligation), and other award details. Review the information in PMS and to ensure it matches similar information in both GFMS and the Department's grants management system.
NOTE: The authorized, disbursed, and charged amounts must match to close out amounts. If the disbursed/charged totals are less than the obligation amount, a de-obligation amendment may be required to close out the award.
(2) Verify the obligation information in GFMS. Review the header accounting tab in GFMS to ensure that amounts reported are reconciled with the amounts reported in PMS and the Department's grants management system.
(3) If there are discrepancies between the Department's grants management system, GFMS, or PMS, the FMO/BO, the grants management system support team and GO should work to resolve any discrepancies. This step ensures that amounts reported in PMS and the Department’s financial systems agree and may require special action to rectify any systems assurance discrepancies.
(4) After amounts in PMS have been reviewed and reconciled, if unliquidated balances remain on the obligation (i.e., the recipient has unused funds), the GO must process the Closeout Checklist in the current grants management system (currently MyGrants as of date of this subchapter's publication).
(5) If there is an unliquidated obligation (ULO) that needs to be de-obligated, the GO must process a de-obligation amendment in the grants management system to correct the total amount obligated for closeout. This process is part of going through and completing the closeout checklist from the grants management system; the FMO/BO will be notified of any financial action request. The de-obligation action processed from the grants management system will flow through automatically into GFMS to reduce the remaining ULO balance in GFMS, and then the same action will automatically pass through PMS to also reduce the authorized amount in PMS.
(6) Once all amounts are reconciled and de-obligations have been accomplished and verified, the FMO/BO with the issuing bureau or post should close out the obligation in PMS by processing the Transaction Code 059 or TC-059, and this formally closes the PMS payment account associated with the award. The PMS TC-059 is the final process in completely closing out awards in the PMS system. This TC-059 process is not automated from the Department's grants management system, and the user (FMO or BO at the issuing bureau or post) must initiate directly in PMS to formally and finally close the award. This transaction performs four functions:
(a) To close the PMS account and prevent further drawdowns;
(b) To end the monthly service fee for the award or document;
(c) To stop the FFR report notification; and
(d) To prevent the charge redistribution for awards that have multiple open authorizations.
c. A fee is charged per obligation. Failure to close out the PMS account will result in additional charges to the Department from HHS for management of the account, regardless of whether the obligation carries any funding attached to it.
4 FAM 653 finalizing Negotiated indirect costs rate agreements
(CT:FIN-506; 05-13-2025)
The following applies only to awards where the recipient has a Negotiated Indirect Costs Rate Agreement (NICRA), but not to awards using the 15 percent de minimis rate, or to awards to Foreign Public Entities (FPEs), which may use fixed indirect rates.
(1) Fixed NICRA Rate: If the recipient has a fixed NICRA rate, the recipient should apply the same fixed rate to indirect costs over the entire award period and submit the final financial report within 120 days after the period of performance ends. The award must be closed within one year after the period of performance end date.
(2) Final NICRA Rate: If the recipient has received its final NICRA rate for all fiscal years covered by the award project period, the recipient must submit the final report within 120 days after the period of performance ends. The award must be closed within one year after the period of performance end date.
(3) Predetermined NICRA Rate: If the recipient’s predetermined NICRA rate covers all fiscal years covered by the award project period, the recipient must submit the final report within 120 days after the period of performance ends. The award must be closed within one year after the period of performance end date.
(4) Provisional NICRA or Predetermined Rate Covering Portion of Award Period: If a recipient has a provisional NICRA rate or a predetermined rate which does not cover the entire award period, the GO must determine which terms and conditions apply to the award.
4 FAM 654 unliquidated obligations
(CT:FIN-506; 05-13-2025)
a. Unliquidated obligations (ULOs) are unexpended/unliquidated funds obligated under Federal assistance awards or contracts, whether on a cash or accrual basis. The Department requires all ULOs be either paid out or returned to the U.S. Department of the Treasury within one year after the end of the performance period for any Federal assistance award.
b. The Department’s ULO process, including closeouts, remains a high priority and is monitored by the Office of Inspector General (OIG). The Bureau of the Comptroller and Global Financial Services' Office of Federal Assistance Financial Management (CGFS/FPRA/FAFM) provides ULO updates to all applicable bureaus on a quarterly basis. CGFS/FPRA/FAFM may request an explanation of open awards in response to the quarterly update notification.
c. Validating ULOs are a legal requirement of 31 U.S.C. 1501 and the Department of State’s Foreign Affairs Manual. The 4 FAM 044, 4 FAM 086, 4 FAM 087.2, 4 FAM 225, 4 FAM 237, and 4 FAM 278, updated in August 2024, address ULO review and management.
4 FAM 654.1 Responsibilities for Unliquidated Obligations
(CT:FIN-506; 05-13-2025)
Financial management officers (FMOs), general service officers (GSOs), and grants officers and their staff members have a crucial role in the review and management of ULOs. GSO responsiveness to FMO validation requests is imperative to the successful performance/completion of the newly implemented quarterly review process. This document provides policy guidance to domestic bureaus and posts worldwide for the review of ULOs. These guidelines apply to the Department of State and serviced agency obligations.
4 FAM 654.2 Review of Unliquidated Obligations
(CT:FIN-506; 05-13-2025)
The FMO or BO, or their designee, must regularly perform systematic reviews at domestic bureaus and posts worldwide. The 4 FAM 87.2, Obligation Validity Criteria, requires performance of periodic reviews not less frequently than quarterly to ensure that unliquidated obligation balances and disbursements are valid. Compliance with these requirements will facilitate the annual ULO certification performed by the bureau financial executives or post deputy chief of mission. The guidance below outlines the procedures posts must follow when determining if ULOs can be de-obligated or if the unliquidated balances should remain.
4 FAM 654.3 Determining Validity of Unliquidated Obligations
(CT:FIN-506; 05-13-2025)
a. The FMO or BO is required to determine the validity of all ULOs. To do so, the FMO or BO should review obligation files, the relevant grants or procurement system, the RFMS/M accounting system, and the Global Business Intelligence (GBI) platform reporting system to check the validity of a given ULO. Any bureau or post officers or staff that had been involved with the obligation should be consulted during the review. For quarterly reviews, the FMO should consult with the GSO to validate the ULOs.
b. A critical component of the ULO review process is confirming that the obligation was created to meet a legal requirement to pay a future liability (i.e., grant, cooperative agreement, contract, etc.).
(1) The bureau or post officer running the review should consider the following:
(a) The period of fund availability for the award;
(b) The timeliness of the performance on the award;
(c) The accuracy and completeness of the information provided by the recipient or subrecipient;
(d) Whether funds have been expended/liquidated in a manner that makes sense given the degree of project or program completion;
(e) Whether the funds remaining on the award are sufficient to complete the award agreement as stated in the term and conditions (and award specifics);
(f) Any justification for an amendment (or amendments) to funding levels on the award;
(g) Any reason(s) stated for a lapse , or lack of recent activity on the award, which could include possible litigation;
(h) Provisions of the award agreement that could allow or restrict de-obligation of project/program funds; and
(i) Any other documentation exists for recorded ULOs, or other relevant factors that could apply in making the determination of validity.
(2) The reviewing officer should take the listed actions below immediately, as indicated, for any ULO that meets the following criteria:
(a) The reviewing officer should de-obligate any ULO balances that do not show a clear legal basis or are not explicitly authorized and supported by the correct documents and files. Further, the reviewing officer should de-obligate ULOs that have already been completed or for which there will be no future payments, but still have not yet been closed out;
(b) The reviewing officer needs to understand and document the reasons that any required payments have not been made under the award(s) being reviewed; and
(c) The reviewing officer should compensate for any accounting errors such as duplicated entries or incorrect amounts listed in financial reports or systems.
4 FAM 655 through 659 unassigned