Guidance related to the uniform grant guidance can be found in Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards: CFR 200 Full Text - ecfr Code of Federal Regulations Evaluate/develop the following systems/policies (Concise written policies can improve our school district s internal controls by creating enforceable rules which reduce the instance of fraud, waste and abuse) for consistency with Uniform Grant Guidance: 1. Capitalization Policy ( 200.33 Equipment) Tangible property with a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes, or $5,000. A computing device is a supply if the acquisition cost is less than the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000, regardless of the length of its useful life. Capitalization policies of less than $5,000 could potentially require additional effort monitoring and completing physical inventories every two years. 2. Conflict of Interest ( 200.112 Conflict of interest) The school district must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. (note: differs from conflict of interesting in 200.318) 3. Mandatory disclosures ( 200.113 Mandatory disclosures) Procedures must exist to identify and disclose, in a timely manner, in writing to the Federal awarding agency or pass-through entity all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. 4. Financial Management ( 200.302 Financial Management) Assess your financial management system, including records documenting compliance, to prepare reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Furthermore, the financial management system must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the CFDA title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. Note: Wisconsin school districts following the WUFAR should have an adequate account structure to satisfy the needs of ( 200.302 Financial Management Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. The non-federal entity must adequately safeguard all assets and assure 1
that they are used solely for authorized purposes. See 200.303 Internal controls. (see internal control section) Comparison of expenditures with budget amounts for each Federal award. Written procedures to implement the requirements of 200.305 Payment. (see task no. 5) Written procedures for determining the allowability of costs in accordance with Subpart E Cost Principles of this part and the terms and conditions of the Federal award. (see task no. 6) 5. Cash Management Policy ( 200.305 Payment) Federal grant payments could be cost-reimbursement or advance basis payments. The Uniform Grant Guidance requires written procedures detailing how you minimize the time elapsing between the transfer of funds and disbursement as a condition for advance payments, in addition to maintaining a financial management system that meet the standards for fund control and accountability. Advance payments must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements in carrying out the purpose of the approved program or project. You must also make timely payment to contractors in accordance with the contract provisions. 6. Procedures for determining the allowability of costs in accordance with Subpart E Cost Principles of the Uniform Grant Guidance. You must have written procedures for determining the allowability of costs. These procedures should include the following items: Identification of specific individuals and their responsibilities within the school district who will be responsible for carrying out certain actions: Determination of allowable costs Review of determination of allowable costs Signing required certifications (must be an officer who is authorized to legally bind the entity) Appropriate training/cross training All individuals identified need to receive appropriate training on cost principles and allowable costs, including reading Uniform Grant Guidance, Subpart E, Cost Principles Reference grant documents Cross train for all responsibilities Criteria used to determine allowable costs Be necessary and reasonable ( 200.404) Be allocable thereto under these principles ( 200.405). Conform to any limitations or exclusions Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Be determined in accordance with GAAP 2
Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. Be adequately documented. See also 200.300 Statutory and national policy requirements through 200.309 Period of performance of this part. Determine if prior written approval is necessary Documentation procedures Procedures that will be used to document that consideration have been given to determine if cost is allowable and that the determination has been reviewed. Stamp invoices with customized stamp such as cost allowable that allows for appropriate sign offs for allowable cost determination and review of determination Procedures regarding electronic authorizations 7. Record Retention and Access ( 200.333-200.337) policies Financial records, property purchased, supporting documents, statistical records, and all other records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report. In accordance with the May 2013 Executive Order on Making Open and Machine Readable the New Default for Government Information, you should, whenever practicable, collect, transmit, and store Federal award-related information in open and machine readable formats rather than in closed formats or on paper. When original records are electronic and cannot be altered, there is no need to create and retain paper copies. When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided that they are subject to periodic quality control reviews, provide reasonable safeguards against alteration, and remain readable. From a risk perspective, need to evaluate how any changes in computer systems may mean you need to maintain the old financial systems for the 3 years to allow reproduction of the financial information necessary to recreate financial records. 8. Procurement (DELAYED FOR TWO FISCAL YEARS) December 31 st fiscal year grace period ends December 31, 2016 June 30 th fiscal year grace period ends June 30, 2017 You will need to update your internal procurement policies to reflect the changes described in the uniform guidance. It is important that your procurement policies identify the five allowable methods outlined in Section 200.320, as discussed later. 200.318 General procurement standards Your current procurement procedures are adequate as long as they reflect applicable State and local laws and regulations, and conform to applicable Federal law and standards. In addition, you must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. Section 200.318 further describes mandatory conflict of interest language each non-federal entity must have within its procurement policies. The new guidance created a language discussing organizational conflict of interest. The two types of conflict of interest policies must be maintained: 3
Employee Conflict of Interest You must maintain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts. The grants reform includes the following provisions: "No employee, officer, or agent must participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, you may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents." Ensure your school district's current employee conflict of interest policies include the required language! Organizational Conflict of Interest (New requirement) Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, you are unable or appears to be unable to be impartial in conducting a procurement action involving the related organization (non-profit organizations). Ensure the mandatory organizational conflict of interest policy is written, if applicable! 200.319 Competition All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, and invitations for bids or requests for proposals must be excluded from competing for such procurements. Specific examples of restrictive requirements hindering competition are discussed. Written procedures for procurement transactions are still required. (See 200.319c). Ensure your policies encourage competition! 200.320 Competition Five Allowable Procurement Methods Procurement by micro-purchases (new procurement method): The acquisition of supplies or services when the aggregate dollar amount does not exceed $3,000 (or $2,000 in the case of acquisitions for construction subject to the Davis-Bacon Act). To the extent practicable, the non-federal entity must distribute micro-purchases equitably among qualified suppliers. Micropurchases may be awarded without soliciting competitive quotations if you consider the price to be reasonable. Procurement by small purchase procedures: Procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold (currently $150,000; adjusted periodically). If used, price or rate quotations must be obtained from an adequate number of 4
qualified sources. The standards do not define how many quotations constitute an "adequate number"; this will be a matter of judgment. Procurement by sealed bids - Bids are publicly solicited and a firm-fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. Procurement by competitive proposals The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. A new requirement under this method is that you must have a written method for conducting technical evaluations of the proposals received and for selecting recipients. Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: - The item is available only from a single source; - The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; - The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non- Federal entity; or - After solicitation of a number of sources, competition is determined inadequate. Procurement Documentation The Uniform Grant Guidance doesn't substantially change the documentation requirements under Circular A-102. However, those previously subject to A-110 will want to closely look at these requirements. A school district must maintain records to sufficiently detail the history of procurement. At a minimum, this includes: The rationale for the method of procurement, Selection of the contract type, Contractor selection or rejection, and Basis for the contract price. 200.326 Contract provisions The non-federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200 Contract Provisions for non-federal Entity Contracts Under Federal Awards. 9. Subrecipient Monitoring and Management 200.330 Subrecipient and contractor determination In determining whether your purchase of service contract provider is subrecipient or a contractor (formerly a vendor), the substance of the relationship is more important than the form of the agreement. All of the characteristics listed may not be present in all cases, and you must use your judgment. Also, you must use judgment in classifying each agreement as a subaward or a procurement contract by making case-by-case determinations (see sample determination worksheet) of whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. 5
200.331 Requirements for pass-through The grants reform expanded the elements that are required to be included in each subrecipient agreement. You will need to ensure their standard subrecipient agreements contain all the required data elements (Please refer to 200.331 for an all-inclusive list of the 15 specific data elements). Must clearly identify the agreement as a subaward Must provide the following information, and if not available provide the best available information: - Federal award identification - Subrecipient s name and DUNS number - Federal award identification number and date - Subaward period of performance, start and end - Amount of Federal funds obligated and total amount of Federal funds obligated to the subrecipient - Federal award project description - Name of Federal awarding agency, and other PTEs - CFDA number and name for each payment at the time of disbursement - Identify whether the award is R&D - Indirect cost rate (ICR) - Approved federally recognized ICR - Rate negotiated between the PTE and subrecipient - A de minimis ICR Subrecipient Monitoring Previously, the level of monitoring procedures, although clearly required, was not very explicit on what needed to be done. Under the Uniform Grant Guidance, you are required to do the following: Perform risk assessments to determine appropriate subrecipient monitoring. Perform appropriate and ongoing monitoring of each subrecipient. On-site reviews, training, technical assistance, and contracting for an agreed-upon procedure engagement for monitoring are all examples of various monitoring efforts you may employ. Review reports that the pass-through entities require of the subrecipient Review subrecipient s audits, as considered necessary Consider how to address subrecipient noncompliance Issue a management decision for audit findings of the subrecipient within six months The Uniform Grant Guidance identifies some monitoring examples, but generally leaves it to you to develop your own risk assessment process. Risk assessments will generally allow you to tailor your monitoring procedures based on risk. Those subrecipients with higher assessed risk presumably would be monitored more than subrecipients with lower assessed risk. Some examples of items pass-through entities may want to consider when performing these risk assessments include: General Assessment Maturity of subrecipient to managing grant funds? 6
Has there been staff turnover at the subrecipient, either in the fiscal or programmatic areas? To what extent has the subrecipient developed or implemented new or substantially changed systems? How long has the subrecipient been in business? Monitoring & Audit Assessment What did prior audits report with respect to internal control or noncompliance findings? Has any on-site monitoring been performed in the recent years and, if so, what were the results of those monitoring visits? Financial System Assessment Does the subrecipient have an effective financial management system in place? Does the accounting system identify the receipts and expenditures of program funds separately for each award? Overall Fiscal Assessment How material is your funding in terms of overall funding for the subrecipient? Has the subrecipient been untimely in the drawdown of funds? Financial Stability Assessment What does the current and prior year financial statements report as far as financial strength? Has the subrecipient been able to meet its cash needs? Program Assessment What is case manager s assessment of the services from a programmatic perspective? Has the subrecipient been meeting its current reporting requirements? Does the subrecipient also subcontract funds to other providers? The aforementioned risk considerations are not all inclusive; additional considerations may be necessary to document key risks, the assessment of these risks, and how the identified risks affect the extent of monitoring to be performed. Evaluate/document internal controls in relation to the school district, department and particular grants. The documentation should be in accordance with the COSO and Green Book Frameworks, concentrating on documentation assessments on the following areas: Centralized systems (budgeting, financial systems, payroll, disbursements, receipts and external financial reporting) Decentralized grant management (significant) Overall and department control environments Risk assessment process Individual grant internal controls, including identification of key controls over compliance 7