The following is an excerpt from the HHS Grants Policy Statement.
Interest Earned on
Advances of Grant Funds
The Treasury and OMB policies also establish requirements for
recipients to account for interest earned on advances of grant funds and provide
for use of the reimbursement method if cash management requirements are not
met. Except as provided in 45 CFR 74.22(k), any HHS recipient subject to the
requirements of 45 CFR part 74 that receives advance payments must maintain
those advances in an interest-bearing account.
Interest earned on advances of Federal funds must be handled
as follows:
- Nongovernmental recipients. Any interest earned by
nongovernmental recipients on advances of Federal funds under all Federal
grant awards and subawards that, in the aggregate, exceeds $250 per year
(based on the recipient's or subrecipient's fiscal year) must be remitted
annually to PMS (as the government-wide agent for collection). Recipients with
electronic funds transfer (EFT) capability should use an electronic medium to
remit interest.
- Governmental recipients other than States. Except as provided in 45 CFR 92.21(i), any
interest earned by local governments or Indian tribal governments on advances
of Federal funds under all Federal grant awards and subawards that, in the
aggregate, exceeds $100 per year (based on the recipient's or subrecipient's
fiscal year) must be remitted promptly, and at least quarterly, to PMS.
- State governments. State governments operating under Treasury-State agreements are subject to the payment and receipt of interest as specified in their agreements. All other State recipients are expected to follow sound financial management practices that minimize the potential for excessive Federal cash on hand and to comply with the cash management requirements of 45 CFR 92.20 and 21.
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