Financial Reporting

What Is Financial Reporting and Why Is It Required?


Financial reporting is the process of preparing and submitting reports to a sponsor that show how grant funds were
spent during a specific period. These reports summarize the actual expenses charged to the award, such as salaries,
travel, supplies, equipment and indirect costs. For federal grants, the most common financial report is the Federal
Financial Report (FFR), which provides a standardized summary of expenditures and remaining funds.

Financial reporting is required to ensure transparency and accountability in the use of sponsored funds. Under
Uniform Guidance (2CFR 200), institutions receiving federal funding must maintain financial systems that accurately
track expenditures and demonstrate that funds are used only for approved project purposes and in compliance with
sponsor requirements. Financial reports also allow sponsors to monitor spending, release payments and verify that
projects stay within budget and within the approved project period. At the end of a grant, a final financial report
confirms the total amount spent, any remaining balance and ensures the award can be properly closed out.

Roles and Responsibilities of Research Accounting (RA) Staff

 

The Research Accounting staff at UNT Health are responsible for preparing and submitting financial reports for
sponsored projects to ensure compliance with sponsor requirements and federal regulations. Their responsibilities
include:

  • reporting expenditures and cash reimbursement by accurately recording and reporting project spending and funding activity throughout the life of the award,
  • performing reviews of award expenditures to verify that costs charged to sponsored projects are allowable, allocable, reasonable and consistent with the approved budget and sponsor terms. 
  • collaborating with the Office of Sponsored Programs (OSP) and departmental staff to ensure that required institutional contributions are properly documented and that indirect costs are calculated and reported in accordance with approved rate agreements and sponsor guidelines.

What are Unallowed Costs?


Unallowable costs are expenses that cannot be charged to a federally sponsored project because they are prohibited
by law, federal regulations or the terms of the award under Uniform Guidance(2CFR 200), Subpart E (Cost Principles).

According to federal cost principles and university policy, a cost maybe considered unallowable if it:

  • does not directly support the sponsored project,
  • violates sponsor rules,
  • occurs outside the project period, or
  • is charged to the wrong award.

Examples can include:

  • personal expenses,
  • entertainment costs,
  • expenses that occur after the grant has expired

Federal standards require that all costs charged to a sponsored project be allowable, allocable, reasonable and properly documented. If a cost fails any of these criteria, it is considered unallowable.

At UNT Health, the Principal Investigator (PI) is responsible for ensuring that only allowable costs are charged to their sponsored projects. If an unallowable cost is identified during award monitoring or closeout, it must be removed from the grant and moved to an appropriate internal funding source, such as the PI’s discretionary account or another departmental account.