How to Prepare and Reconcile the SF-425 from QuickBooks Online

The Federal Financial Report (SF-425) is a cumulative report on one award, so you cannot copy it from a QuickBooks Online profit and loss report. The current version of the form on Grants.gov is SF-425 version 3.0 (OMB number 4040-0014). Use the form and instructions that your awarding agency or its reporting system provides. Not every federal award requires an SF-425, and the award sets the due dates, accounting basis, submission method, level of detail, and any agency-specific rules.

QuickBooks Online should stay your accounting record. A controlled workbook connects QuickBooks Online to the form, the award records, the payment system you draw funds from, your obligation schedule, and your program records.

Read the award before you open the form

Create a one-page reporting profile from the notice of award, its amendments, and the reporting system's instructions. Include these items:

• The Assistance Listing, award number, period of performance, reporting period, report frequency, and final report deadline
• Whether the award requires an SF-425, and whether you report by award, by program, or on a combined basis
• The cash or accrual basis, the program income method, the required recipient share, the approved indirect cost rate, and any special terms
• How the agency wants you to treat subawards, rebates, refunds, credits, equipment, indirect costs, and unliquidated obligations
• The reporting system's validation rules and required attachments

Do not assume that another agency's instructions apply to your award. Some agencies give their own directions for line 10f or for final reports. The standard form defines line 10f as the federal share of unliquidated obligations, and your award and reporting instructions decide what you report on it. Under 2 CFR 200.344, a recipient must generally submit final reports no later than 120 calendar days after the period of performance ends, unless the agency approves an extension.

What fields 1 through 13 mean

Use the official SF-425 on Grants.gov and its current instructions, not a saved copy of an older form.

Field	What to enter or check
1. Federal agency and organizational element	The awarding agency or office shown in the award or the reporting system.
2. Federal grant or other identifying number	The exact award number. Do not use your internal QuickBooks Online Customer or Project name.
3. Recipient organization	Your legal name and address.
4a. Unique Entity Identifier (UEI)	Your UEI for the award.
4b. Employer Identification Number (EIN)	Your EIN for the award. Follow the reporting system's format rules.
5. Recipient account number or identifying number	An optional internal identifier. Do not repeat the federal award number here by default.
6. Report type	Quarterly, semiannual, annual, or final, as the award requires.
7. Basis of accounting	Cash or accrual, as required and applied consistently. The choice affects how you report expenditures and obligations, so it is more than a QuickBooks Online report setting.
8. Project/grant period	The award period start and end dates, including any amendments.
9. Reporting period end date	The end date of this cumulative report.
10. Transactions	The cumulative cash, federal expenditure and obligation, recipient share, and program income amounts explained below.
11. Indirect expense	The rate type, rate, period, base, amount charged, and federal share for each rate.
12. Remarks	Explanations the agency requires and short descriptions of material reconciling items or attachments.
13. Certification	The name, title, contact information, and signature of the authorized certifying official, and the date the report was submitted. The certification is a control, not a clerical step.

Lines 10a to 10c, federal cash

• 10a, cash receipts, is the cumulative federal cash you received from the start of the award through the reporting date.
• 10b, cash disbursements, is the cumulative federal cash you paid out for program purposes, as the instructions define it. It is not the same as expenses you recorded.
• 10c, cash on hand, is 10a minus 10b. If it is positive, review it under the cash management rules, and explain or resolve it as the instructions require.

Cash is different from expenditures. An accrued allowable cost can be an expenditure before you pay it, and an advance can create cash on hand before you spend it. Tie line 10a to bank deposits and the payment system's draw history, not to revenue accounts.

Lines 10d to 10h, federal funds

• 10d, total federal funds authorized, is the cumulative federal funding authorized for the scope of the report, including amendments.
• 10e, federal share of expenditures, is the cumulative allowable federal share on the accounting basis you selected.
• 10f, federal share of unliquidated obligations, is the federal share of valid obligations you incurred but have not yet paid or recorded as expenditures under your basis and the instructions. Do not count the same amount on 10e and 10f.
• 10g, total federal share, is 10e plus 10f, which the form calculates.
• 10h, unobligated balance of federal funds, is 10d minus 10g.

An internal budget reservation is not automatically an obligation. Keep an obligation schedule for each award that shows the vendor or subrecipient, the evidence of the commitment, the date, the total amount, the amount paid to date, the remaining amount, the federal share, and whether the obligation is allowable and within the period of performance. Treatment of line 10f on a final report depends heavily on the agency, so do not force it to zero or carry it forward without the agency's instructions.

Lines 10i to 10k, recipient share

• 10i, total recipient share required, is the cumulative required match or cost share for the scope of the report.
• 10j, recipient share of expenditures, is the cumulative allowable recipient share you actually contributed, on the basis of the report.
• 10k, remaining recipient share to be provided, is 10i minus 10j.

The recipient share is not all of your non-federal spending. Include only contributions that are allowable, allocable, documented, and accepted under the award, and do not count the same contribution for more than one federal award.

Lines 10l to 10o, program income

• 10l, total federal program income earned, is the cumulative gross program income earned under the award.
• 10m is program income you spent under the deduction method, and 10n is program income you spent under the addition method. Report the amount under the method the award authorizes.
• 10o, unexpended program income, is 10l minus 10m minus 10n.

Under 2 CFR 200.307, program income can use the deduction, addition, or cost sharing method. If the award does not name a method, the deduction method applies. The standard SF-425 has no separate line for program income used under the cost sharing method, so do not put that amount on line 10m or 10n. Follow the award, the agency, and the reporting system's instructions for how it affects lines 10j and 10l to 10o.

Do not treat all grant revenue, donations, refunds, rebates, or credits as program income. Decide what is program income under 2 CFR 200.307 and the award. Under 2 CFR 200.406, applicable credits generally reduce costs, so they are not automatically program income.

Field 11, indirect expense

For each rate and period, report the type of rate (11a), the rate (11b), the period (11c), the base (11d), the amount charged (11e), and the federal share (11f). Recalculate each amount from the approved negotiated rate, your de minimis election, or the award's limit. Reconcile the base to the detail of eligible direct costs, remove excluded items, and use a separate row when the rate or base changes. QuickBooks Online indirect cost entries alone do not prove that you used the correct base and federal share. See Setting Up Indirect Cost Rates.

Reconciling QuickBooks Online to the SF-425

1. Fix the population. Record the QuickBooks Online company, report basis, as-of date, grant fields, accounts, transaction status, and export time. Reconcile bank and credit card accounts first.
2. Export transaction detail. Include the transaction ID, date, account, payee, amount, Class, Customer, or Project, memo, and corrections. Keep an unchanged copy of the export.
3. Map and test the costs. Map each line to the award category, federal share, recipient share, indirect cost base or exclusion, and reporting status. Document your allocation methods, and remove unallowable, out-of-period, duplicate, unsupported, or misclassified items.
4. Add schedules from outside the general ledger. Tie draws to deposits, and build schedules for cash disbursements, unliquidated obligations, recipient share, program income, applicable credits, and indirect costs. You cannot reliably get these amounts from one profit and loss report.
5. Roll the amounts forward. For each line, the beginning cumulative amount plus current-period activity, plus or minus corrections, equals the ending cumulative amount. Tie the beginning amount to the last accepted report and explain any restatement.
6. Check the form's math. Confirm that 10c = 10a - 10b, 10g = 10e + 10f, 10h = 10d - 10g, 10k = 10i - 10j, and 10o = 10l - 10m - 10n. Compare line 11f with the federal indirect cost included in lines 10e and 10f.
7. Resolve differences instead of forcing a match. Keep an exception log with the amount, cause, owner, correction, and retest. Never post a journal entry only to make the form agree.

For tie-out steps at the transaction level, see How to Reconcile a Grant Report to the QuickBooks General Ledger. For mismatches, see Why Your Grant Report Doesn't Match QuickBooks.

Support package for the reviewer

Keep these records with each report:

• The signed or accepted report and the submission receipt, the award and amendments, your reporting profile, and the prior accepted report
• Unchanged QuickBooks Online exports, reconciliation reports, bank reconciliations, and draw and deposit history
• The line mapping and cumulative rollforward, and the cost, obligation, match, program income, credit, and indirect cost schedules
• Support for material invoices, payroll, and allocations, the exception log, the review checklist, and evidence that the preparer and the certifying official approved the report

The reviewer should confirm the award number and dates on their own. The reviewer should also trace samples from the form to QuickBooks Online and from QuickBooks Online to the form, inspect manual adjustments, test formulas, and compare cash with the payment system and the bank. Finally, the reviewer should confirm that all warnings in the reporting system and all agency-specific instructions were resolved. Keep the records as long as the award terms and 2 CFR 200.334 require.

How GrantLink supports this today

GrantLink can help you organize grant activity from QuickBooks Online and the support for your reports. You can upload your agency's SF-425 PDF as a report template on the grant's Reporting > Templates page, and the assistant can fill supported fields from your grant data for you to review. GrantLink does not submit the SF-425. A grant's Money received links point to QuickBooks Online income or revenue records, which are not always deposited cash, so confirm cash amounts against bank and draw records.

Official sources

• Grants.gov post-award reporting forms has the current SF-425 and its instructions.
• 2 CFR 200.328 covers financial reporting.
• 2 CFR 200.1 defines obligations, expenditures, program income, and related terms.
• 2 CFR 200.302 covers financial management, source documentation, and award identification.
• 2 CFR 200.414 covers negotiated and de minimis indirect cost rates.

The guide does not replace the award, the agency's instructions, or professional accounting or legal advice.