Budget Revisions and Compliance Issues

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The budget plan is the financial expression of the project as approved during the award process. Organizations must report variations from budget and program plans and request prior approvals for budget and program plan revisions. All requests for prior approval for program-related changes should be directed at your program officer. Your grant management officer must give prior approval for any budget-related changes. Compliance issues may occur if an organization does not fulfill the terms and conditions of its award. To avoid noncompliance, it is critical that grantees submit all required reports completely and on time. Open and consistent communication with Federal staff is also essential, especially if extenuating or adverse circumstances arise. The Federal awarding agency has discretion over noncompliance remedies.

Communicate with your grants management and program officers about changes in your project.

Request prior approval for any of the following program- or budget-related reasons:

  • Change in the scope or objective of the project or program (even if there is no associated budget revision requiring prior written approval).
  • Change in a key person specified in the application or award document.
  • The absence for more than three months (or a 25 percent reduction in time devoted to the project) by the approved project director or principal investigator.
  • The need for additional Federal funding.
  • The transfer of amounts budgeted for indirect costs to absorb increases in direct costs.
  • The inclusion of costs that require prior approval in accordance with the governing OMB cost principles circular.
  • The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.
  • Extending the period of your grant project with no additional funding (no-cost extension).

The Federal awarding agency may not permit any budget changes in a recipient's award that would cause any Federal appropriation to be used for purposes other than those consistent with the original purpose of the authorization and appropriation under which the award was funded.

The Federal awarding agency may also restrict the transfer of funds among direct cost categories or programs, functions, and activities for awards. If you have a surplus of funds (but have applied for continuation funding) you do not have to submit notification.

You must communicate with your Federal awarding agency to request changes to the budget.

When requesting approval for budget revisions, you must use the budget forms that were included in the application—unless the Federal awarding agency indicates a letter of request is sufficient. Generally, the Federal awarding agency will review your request and provide notification of approved changes within thirty calendar days, or they will notify you in writing of a date when a decision can be expected.

Click to open interactivity Good communication will help you reach an agreement about project changes.

Good communication will help you reach an agreement about project changes.

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This sample request process can help you with your budget revisions.

This request process was used by a grant program in the Office of Community Services, an office within HHS's Administration for Children and Families.

  1. Ensure that all reporting requirements are up-to-date
  2. Prepare a letter request:
    • Briefly describe the modification request
    • Explain the reason for the modification
    • Print on your official letterhead
    • Include your grant number and name of your organization, and any other relevant identifying information that your funding agency uses to track grants
    • Include the signature of your Authorized Official
  3. Complete the SF-424A Budget Information Form
  4. Prepare your revised budget clearly showing the approved budget and indicating the requested changes.
  5. Prepare a modified budget narrative, following your revised budget table and explaining each item in the budget.
  6. Submit these documents to your program officer or your grants management officer/specialist, as instructed by the awarding office.

The Federal awarding agency has discretion over noncompliance remedies.

If a recipient materially fails to comply with the terms and conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, the Federal awarding agency may (in addition to imposing special conditions) take one or more of the following actions, as appropriate in the circumstances:

  • Temporarily withhold cash payments pending correction of the deficiency by the recipient or more severe enforcement action by the Federal awarding agency.
  • Disallow (deny both use of funds and any applicable cost sharing credit for) all or part of the cost of the activity or action not in compliance.
  • Wholly or partly suspend or terminate the current award.
  • Withhold further awards for the project or program.
  • Take other remedies that may be legally available.

The Federal awarding agency also has discretion to terminate your program's award.

Awards may be terminated in whole or in part (only if one of the following conditions applies):

  • By the Federal awarding agency, if a recipient materially fails to comply with the terms and conditions of an award.
  • By the Federal awarding agency with the consent of the recipient, in which case the two parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated.
  • By the recipient, upon sending to the Federal awarding agency written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. However, if the Federal awarding agency determines in the case of partial termination that the reduced or modified portion of the grant will not accomplish the purposes for which the grant was made, it may terminate the grant in its entirety.
  • By the Federal awarding agency, if deemed in the best interest of the Federal government.

If costs are allowed under an award, the closeout responsibilities of the recipient, including those for property management as applicable, are considered in the termination of the award, and provision is made for continuing responsibilities of the recipient after termination, as appropriate.