[Code of Federal Regulations]
[Title 7 Volume 4]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR246.17]

[Page 350-351]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN--Table of Contents
 
                   Subpart E--State Agency Provisions
 
Sec. 246.17  Closeout procedures.

    (a) General. State agencies shall submit preliminary and final 
closeout reports for each fiscal year. All obligations shall be 
liquidated before closure of a fiscal year grant. Obligations shall be 
reported for the fiscal year in which they occur.
    (b) Fiscal year closeout reports. State agencies--
    (1) Shall submit to FNS, within 30 days after the end of the fiscal 
year, preliminary financial reports which show cumulative actual 
expenditures and obligations for the fiscal year, or part thereof, for 
which Program funds were made available;
    (2) Shall submit to FNS, within 150 days after the end of the fiscal 
year, final fiscal year closeout reports;
    (3) May submit revised closeout reports. FNS will reimburse State 
agencies for additional costs claimed in a revised closeout report up to 
the State's original grant level, if costs are properly justified and if 
funds are available for the fiscal year pertaining to the request. FNS 
will not be responsible for reimbursing State agencies for unreported 
expenditures later than one year after the end of the fiscal year in 
which they were incurred.
    (c) Grant closeout procedures. When grants to State agencies are 
terminated, the following procedures shall be performed in accordance 
with 7 CFR part 3016.
    (1) FNS may disqualify a State agency's participation under the 
Program, in whole or in part, or take such remedies as may be legal and 
appropriate, whenever FNS determines that the State agency failed to 
comply with the conditions prescribed in this part, in its Federal-State 
Agreement, or in FNS guidelines and instructions. FNS will promptly 
notify the State agency in writing of the disqualification together with 
the effective date. A State

[[Page 351]]

agency shall disqualify a local agency by written notice whenever it is 
determined by FNS or the State agency that the local agency has failed 
to comply with the requirements of the Program.
    (2) FNS or the State agency may disqualify the State agency or 
restrict its participation in the Program when both parties agree that 
continuation under the Program would not produce beneficial results 
commensurate with the further expenditure of funds. The State agency or 
the local agency may disqualify the local agency or restrict its 
participation in the Program under the same conditions. The two parties 
shall agree upon the conditions of disqualification, including the 
effective date thereof, and, in the case of partial disqualification, 
the portion to be disqualified.
    (3) Upon termination of a grant, the affected agency shall not incur 
new obligations for the disqualified portion after the effective date, 
and shall cancel as many outstanding obligations as possible. FNS will 
allow full credit to the State agency for the Federal share of the 
noncancellable obligations properly incurred by the State agency prior 
to disqualification, and the State agency shall do the same for the 
local agency.
    (4) A grant closeout shall not affect the retention period for, or 
Federal rights of access to, grant records as specified in Sec. 246.25. 
The closeout of a grant does not affect the State or local agency's 
responsibilities regarding property or with respect to any Program 
income for which the State or local agency is still accountable.
    (5) A final audit is not a required part of the grant closeout and 
should not be needed unless there are problems with the grant that 
require attention. If FNS considers a final audit to be necessary, it 
shall so inform OIG. OIG will be resonsible for ensuring that necessary 
final audits are performed and for any necessary coordination with other 
Federal cognizant audit agencies or the State or local auditors. Audits 
performed in accordance with Sec. 246.20 may serve as final audits 
providing such audits meet the needs of requesting agencies. If the 
grant is closed out without the audit, FNS reserves the right to 
disallow and recover an appropriate amount after fully considering any 
recommended disallowances resulting from an audit which may be conducted 
later.