Office of the New York State Comptroller  
      Home || Press Releases || Audits || Retirement || State Finances || Local Government || Reports || NYC Oversight || Pension Fund

New York State Accounting System User Procedures Manual

Volume Name
Volume XI Date
Section Name
Accounting for Federal Grants - Refunds and Returns
Purpose and Scope
Amounts received by State agencies that represent a return of moneys paid from State appropriated funds are to be immediately documented and transmitted to the State's Treasury pursuant to §121 of the State Finance Law. Such amounts are to be credited to the fund from which the original payment was made.

Since all federal fund payments are charged to appropriation records which contain grant award expenditure data, any refunds of such expenditures must be credited back to the appropriation and segregation (provided the appropriation hasn't lapsed) that was charged when the initial payment was made (see exception below). Doing this reduces federal grant award expenditures and increases the undrawn grant award authority. Under no circumstances should a State agency return such refunds directly to the U.S. Treasury or the federal cognizant agency without first recording the refund in the Central Accounting System as described in these procedures. Notwithstanding any statutory provision to the contrary, a payment to a local government from a federal fund appropriation that is later returned to the State because of an audit disallowance must be credited back to the federal fund appropriation from which the local assistance payment was originally made.

Open Grant Awards - Refund of Appropriation Expenditure (AC1286)
When a state agency receives a refund for a grant award and a Final Grant Award Status Report (Final Report) has NOT been filed with the Federal awarding agency, the remittance must be submitted with a Refund of Appropriation Expenditure form (AC1286) following the procedures provided in New York State Accounting System User Procedure Manual - Revenue, Volume IV, Section 5.0100. In addition, the agency must also clearly state on the AC1286 that, “A Final Grant Award Status Report has not been filed for this grant award”. The refund recorded by this transaction will reduce appropriated expenditures and will increase the federal fund cash and the unspent appropriation balance(s). To the extent possible, the cash balance will be used to finance disbursements. If the Office of the State Comptroller (OSC) performs the draw, OSC will adjust the daily draw accordingly. Refunds and returns must be offset by disbursements within 3-5 days to minimize potential CMIA interest liabilities and ensure compliance with Single Audit requirements. Those refunds that cannot be offset by immediate program disbursements MUST be refunded to the U.S. Treasury. If an agency uses an electronic system to draw funds, the refund should be processed within that draw system if the account is still open on the draw system. Otherwise refunds should be processed following the Special Charge Voucher procedures outlined below.

Closed Grant Awards - Report of Monies Received (AC909)
When a state agency receives a refund for a grant award and a Final Report has been filed with the Federal awarding agency, the remittance must be credited in the subfund where the original payment was made by submitting the remittance with a Report of Monies Received form (AC909) using a federal grant (36200) object code. At the same time the AC909 is submitted, the agency MUST also submit a completed Special Charge Voucher (AC916) for returning the funds to the Federal government.

Exception to Completing an AC909 on a Closed Award
In some instances, when the Final Report has been filed and the award is closed, the Federal awarding agency permits recovered funds to be credited to an open year award and used for approved program purposes. Refunds will be processed on an AC1286 as an appropriation credit to an ‘active’ federal fund State appropriation provided for identical program purposes when the State agency:

  • Provides a copy of the federal authorization that permits recovered funds (attributable to a closed award) to be applied as a refund credit to current year grant award authorizations and used for program purposes, and
  • Ensures that the State appropriation language permits refunds, credits or audit disallowances to be credited, OR
  • Provides a special certification in the basis for the requested refund as follows:

“The requested grant award refund represented by this document is permissible under Federal and State rules, regulations and/or statutes governing the receipt and disposition of federal grant funds.”

The agency is responsible for maintaining documentation to support this transaction.

Special Charge Voucher for Refunds to the U.S. Treasury
The procedures that follow, pertain to the refund or return of federal funds to the U.S. Treasury due to:

  • Excessive cash balances on deposit that are not needed for program purposes
  • Unspent ‘advance' funds for awards that are closed
  • Moneys returned by grant recipients due to audit disallowances
  • Cost reallocations - Journal Voucher (JV) federal fund(s) expenditures to State funds
  • Any other accounting adjustment that results in an increase in federal fund cash that will not be immediately disbursed for program purposes and therefore must be returned to the U.S. Treasury.

Amounts that are to be returned to the U.S. Treasury must never be charged to an appropriation that was provided to control grant expenditures since such charges are reported to the government as a use of grant funds. Refunds and returns are not expenditures and, therefore, must be recorded as a reduction of federal grant revenues.

To generate a refund of federal funds to the U.S. Treasury it is necessary for agencies to prepare and submit a Batch Transmittal (AC2387) using batch type ‘CRA' {Comptroller's Refund Account} and a Special Charge Voucher (AC916). Any questions concerning the required return of monies to the Federal government not addressed in this section should be directed to the General Ledger Section - Federal Unit.

Refund Voucher - Required Information
Payee Name - For most federal grant refunds, the following payee name and addresses are used. It is suggested that the cognizant state agency contact their federal program liaison to determine if another mailing address is appropriate.

Dept. of Education
P.O. Box 952023
St. Louis, MO 63195-2023
Dept. of Health & Human Svcs
The Div. of Payment Mgmt
PO Box 6021
Rockville, MD 20852
Follow SF270

Description or Reason Box - At a minimum, please the following information must be provided:

  • Reason for the refund
  • The federal grant award number to which the refund applies
  • The revenue cost center and fund/subfund where the refund was deposited (from the AC909). 

Expenditure Coding - All refunds of excess or unneeded federal fund balances will be paid from the Comptroller's Refund Account (Fund 650-FG) and are charged to the following expenditure cost center and object.

Dept: 02
Cost Center: 816508
Variable: FG
Year: 44
Object: 59610

The voucher will be audited and, if approved, will be paid from the Comptroller's Refund Account (P- Warrant) and a "Payee List by Agency and Voucher" (VOU065) will be sent to the originating agency. Following the payment, OSC personnel will transfer the refund charges in the CAS by debiting the federal revenue account provided by the agency and crediting the refund expenditure shown above.

Electronic Refunds to U.S. Treasury
In some instances, the Federal government may require that the refund be sent electronically (e.g., wire transfer) to the US Treasury. State agencies should contact OSC's General Ledger Section - Federal Payment Management Unit at (518) 486-1241 for instructions on how to process electronic refunds.

Completed batches of AC1286’s and AC909’s, must be sent to:

Office of the State Comptroller
Bureau of Accounting Operations
Revenue Accounting/Processing Section
110 State Street – 9th Floor
Albany, NY 12236
(518) 474-4018

Where a refund to the US Treasury is necessary, a Refund Voucher (AC916) MUST accompany the revenue accounting source documents cited above.