Can the grantee now charge Federal programs with the interest incurred on this mortgage?
• No. Interest on debt incurred to finance or refinance assets acquired before or reacquired after June 1, 1998 is not allowable. • When is a grantee required to prepare a cash flow statement prior to claiming interest expense on Federal programs? • A cash flow statement is to be prepared on an annual basis for debt arrangements over $1 million, unless an initial equity contribution to the asset purchase equals 24% or more. A non-profit organization shall reduce claims for interest expense by an amount equal to imputed interest earnings on excess cash flow, which is to be calculated in accordance with Paragraph 23,a(1)(f)(ii) of Circular A-122. • What is required of a grantee that sells its facilities and decides to rent office space in another facility at less cost to its Federal programs? • Substantial relocation of Federally-sponsored activities from a facility financed by indebtedness, the cost of which was funded in whole or part through Federal reimbursements, to another facility
