Grant Period Ends While Purchase Orders Are Still Open

Distinguish obligation from expenditure and from delivery. If the August purchase order was a binding commitment supported by an approved budget and the goods were not received until after the period of performance, the agency must apply the grant's rules on when an obligation is incurred and whether liquidation is permitted after the end date. A purchase order may create an obligation in the grant year, but that does not automatically make delivery after the end date allowable. Check the award terms, the applicable cost principles, and whether equipment must be received and accepted within the period of performance. If the goods are allowable and the obligation was timely, the agency may be able to liquidate within the permitted liquidation period. If not, the cost may be unallowable to the grant even though it is a valid agency expense. The procurement lead should certify facts, not conclusions: date and terms of the PO, date of receipt, acceptance date, and the grant rule relied on. Finance should not charge the next grant year before that award exists.

A multi-year subscription that spans the end of the period of performance generally cannot be charged entirely to the current grant. Determine whether the subscription is severable into annual or monthly service periods. Charge only the portion that benefits the current period of performance. Prepaying future periods is usually unallowable unless the grant explicitly permits it and the cost is a bona fide obligation of the current period. If the next year's award is not executed, the agency should not assume continuation funding. It may use non-grant funds for the non-grant period or enter a subscription term that matches the current period. Document the allocation method, the service dates, and the approval for any cost sharing. The same logic applies to any license or maintenance renewal that extends beyond September 30.

Probably not without a specific grant authorization. A stipend is generally allowable when paid to an eligible participant for an allowable training or supportive-service purpose during the period of performance. Prepaying stipends before services are delivered or before eligibility is established creates a high risk that the cost will be questioned as not a bona fide obligation or as a payment for future benefits. The agency should first determine whether the $180,000 is truly available and whether the grant allows obligations for stipends in advance. If not, it should not manufacture obligations at year-end. Instead, it can obligate funds for allowable services to be performed by September 30, document eligibility, and track disbursements. If the funds will lapse, report that honestly rather than prepaying. The procurement and finance functions should share a year-end checklist that distinguishes valid obligations from expenditures and prohibits end-of-year spending solely to avoid lapse.