3.2 Period of Availability of Funds
Obligation of Funds
An obligation is a program, contract, purchase order, or subaward to which your organization has committed. For example, if you place an order for a piece of equipment to be purchased with award funds, the order is an obligation.
Obligations must occur during the project period stated on your award documents. An obligation occurs when funds are committed, such as in a valid purchase order or requisition to cover the cost of purchasing an authorized item on or after the begin date and up to the last day of the project period.
Financial Management Tip
If you enter into a contract prior to the start of the project period, the entire cost of the contract may not be an allowable expense.
Any funds not obligated by the recipient within the award period will lapse and revert to the awarding agency. The obligation deadline is the last day of the grant award period unless otherwise stipulated. No additional obligations can be incurred after the end of the award. For example, if the award period is October 1, 2009 to September 30, 2011, the obligation deadline is September 30, 2011.
Expenditures paid after the end of the award period but within the expenditure period MUST have documentation to demonstrate that the obligation was incurred BEFORE the end of the award period. For example, an invoice paid 25 days after the end of the award period must have an invoice date, purchase order date, or other documentation showing the date services were rendered prior to the end of the award period.
Recipients and subrecipients must complete performance during the obligation period. Performance as a result of a contract under a block/formula award may be completed during the expenditure period not to exceed 90 days after the end date of the award.