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AC 150/5900-13 1/31/79 of the final financial status report, except that they shall be retained beyond the three-year period if audit findings have not been resolved. Records for nonexpendable property acquired with Federal funds shall be retained for three years after its final disposition. Microfilm may be substituted in lieu of original records. 67. FINAL SETTLEMENT. Based upon the final audit, the FAA should determine the total amount of the allowable project costs and will make settlement for any adjustments to the Federal share of the cost. The sponsor should promptly refund to FAA any overpayment. 68. SUSPENSION OR TERMINATION OF A GRANT. A grant may be suspended or terminated, in whole or in part, at any time prior to the date of completion in accordance with the following: a. Suspension of Grant. If the sponsor fails to comply with the conditions of the grant, the FAA may, by written notice, suspend the grant and withhold further payments pending corrective action by the sponsor or a decision to terminate the grant. After receipt of notice of suspension, the sponsor may not incur additional obligations of grant funds during the suspension unless specifically authorized by the FAA. However, all necessary and proper costs which the sponsor could not reasonably avoid during the period of suspension will be allowed if such costs are in accordance with the principles set forth in Appendix 4 of AC 150/5100-10. b. Termination for Cause. If the sponsor fails to comply with the conditions of the grant, the FAA may, by written notice to the sponsor, terminate the grant in whole or in part. The notice of termination will contain the reasons for termination and the effective date of termination. After receipt of the notice of termination, the sponsor may not incur additional obligations of grant funds. Payments to be made to the sponsor or recoveries of payment by the FAA under the grant shall be in accordance with the legal rights and liabilities of the parties. c. Termination for Convenience. When the continuation of the project would not produce beneficial results commensurate with the further expendi- ture of funds, the grant may be terminated in whole, or in part, upon mutual agreement of the FAA and the sponsor. Agreement will be made upon the termination conditions, including the effective date and, in the case of partial terminations, the portion to be terminated. In such case, the sponsor may not incur new obligations for the terminated portion after the effective date and shall cancel as many obligations, relating to the terminated portion, as possible. The sponsor will, however, be allowed full credit for the Federal share of the noncancellable obligations which were properly incurred by the sponsor prior to the effective termination date. 30 Chap 6 Par 66 • •