This mini-narrative addresses the regulations covering federal funds placed in interest-bearing accounts. Grantees will find this information useful when complying with the federal regulations concerning federal funds.
Bank Accounts and Interest
Separate bank accounts for Federal grant funds are not generally required, but the grantee must be able to account for the receipt, obligation, and expenditure of grant funds. Advances of Federal funds must be deposited and maintained in insured accounts whenever possible 45 CFR 74.22(h) through (k).
Interest Bearing Accounts
Non-profit grantees must maintain advances of Federal funds in interest bearing accounts, unless one of the following conditions apply (45 CFR 74.22(l)):
- The grantee receives less than $120,000 in Federal awards per year.
- The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year on Federal cash balances.
- The bank would require an average or minimum balance so high that it would not be feasible within the grantee's expected Federal and non-Federal cash resources.
Reporting Interest Earned
Interest earned on Federal advances deposited in interest bearing accounts must be remitted via the quarterly PSC-272 report. For both non-profit and for-profit organizations, the first $250 of interest earned per year may be retained by the grantee for administrative expense (45 CFR 74.22(l)), and so should not be reported by the grantee on the PSC-272 form [PDF, 42KB]. For governmental organizations, the first $100 of interest earned per year may be retained for administrative expenses (45 CFR 92.21(i)).
Bank Accounts and Interest. Fiscal Assistant. HHS/ACF/OHS. 2007. English.
Last Reviewed: June 2009
Last Updated: August 27, 2014