Business Operating Procedures Manual & Uniform Guidance Wednesday, April 18, 2018
Uniform Guidance (UG) What is UG? The U.S. Office of Management and Budget (OMB) has consolidated eight of its existing circulars into one document, entitled 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. It is commonly referred to as the Uniform Guidance. UG became effective on December 26, 2014 for state and other non-federal entities with the exception of the audit requirements, which are effective for audits of fiscal years beginning after December 26, 2014.
Michigan Department of Education In order to comply with updated Federal regulations and guidance, MDE is working to create a consistent monitoring protocol to be followed by all MDE offices. The Department will be updating documentation based on results of internal audits of MDE practices, results of sub-recipient single audits, and results of MDE monitoring visits of Federal grant sub-recipients. Documentation to review: May 26, 2016 MDE Guidance on Federal Grant Programs February 2, 2017 Tangible Personal Property February 2, 2017 Compensation-Personal Services
UG New Requirements: The UG has specific requirements for establishing written policies and procedures. Previous guidance recommended written policies, however sub-recipients are now REQUIRED to have written policies and procedures. Demonstration of proper internal controls to manage grants both programmatically and financially.
UG Written Policies and Procedures Policies should: Address the reasons sub-recipients administer their grant program a certain way Contain goals or objectives Procedures should: Detail how sub-recipients perform the functions necessary to conform to the policies Policies and procedures will pertain to both state-administered grants and those received from Federal agencies. As they are developed, sub-recipient policies and procedures should be specific to the sub-recipient.
Required Policies and Procedures
Written Policy & Procedures Written procedures specified Financial management systems ( 200.302(b)(6)) Written procedures to implement the requirements of 200.305, Payment Allowable costs ( 200.302(b)(7)) Written procedures for determining allowability of costs Written Conflict of Interest Policy ( 200.318(c)) Maintain written standards of conduct covering conflicts of interest Written Procurement Procedure ( 200.319(c)) Written procedures of procurement transactions
Written Policy & Procedures Written Travel Policy ( 200.474(b)) Written procedures for conducting technical evaluations of proposals and selecting participants ( 200.320(d)(3))
Updating your Policies and Procedures Review and revise if necessary Board of Education policies Create new procedures to further define policies Board approval Update Manual Training Staff
Sample Manual Template A sample business office procedures manual is available. If using the template, please take the time to update all sections with district specific information. Board policies may need to be modified to meet new Federal guidance.
Written Cash Management Procedures 2 C.F.R. Part 200, 200.302 (b)(6) Written procedures to implement the requirements of 200.305 Payment 2 C.F.R. Part 200, 200.305(b) For non-federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payment by other means Sample Language: The District will make payments to sub-recipients within 30 calendar days after receipt of billing unless the District reasonably believes the request to be improper.
Compensation-Personal Services Includes all remuneration, paid currently or accrued, for services of employees rendered during their period of performance under the federal award, including but not limited to wages and salaries. May also include fringe benefits
Compensation-Personal Service Standards for Documentation of Personnel Expenses must be supported by a system of internal controls to provide reasonable assurance that charges are accurate, allowable, and properly allocated. Reasonably reflect the total activity for the employee and support the distribution of salary between specific activities/cost objectives if the employee worked on more than one activity. Services must conform to the established written policy for the District and encompass both Federal and non-federal assisted activities.
Compensation-Personal Service (cont d) MDE will monitor and/or determine compliance by: Reviewing if charges to the Federal awards for salaries and wages are based on records that accurately reflect the work performed. Please note: For records that meet the requirements of UG, sub-recipients will not be required to provide additional support or documentation for work performed. Personnel Activity Reports (PARS), including prescribed certifications may no longer be required. However, MDE still recommends the continual use of PARS. Review and approve and/or provide technical assistance in regards to submitted compliance/corrective action plan for sub-recipient. Review and approve completion of evidence as necessary. Follow up and close the monitoring visit activity after the sub-recipient is deemed compliant. Compensation records must be readily available for monitoring.
Written Allowability Procedures 200.302 (b)(7) Written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles and the terms and conditions of the Federal award NOTE: Allowability procedures are not a restatement of Subpart E, but rather a broader guidance the sub-recipient will follow related to the development of the grant application and grant budget. With all Federal grants, costs related to the grant must always be necessary, reasonable, and allocable. Each budget must comply with Federal laws and the terms of the grant. Budget and associated costs should be consistent w/ state and local policies and be adequately documented.
Sample Allowability Language Grant funds will only be used for allowable costs and costs must meet the following general criteria to be allowable under Federal awards: Be reasonable and necessary for the performance of the program and allocable thereto (see detail below); Conform to any limitations or exclusions set forth in applicable regulations or in the award itself; Be consistent with policies and procedures that apply uniformly to federally-financed activities and other activities of the non-federal entity; and 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. 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.
Sample Allowability Language (cont d) A cost is reasonable if it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In determining reasonableness of a given cost, consideration must be given to: Whether the cost is ordinary and necessary for the proper and efficient performance of the Federal award; The requirements imposed by such factors as: sound business practices; arms-length bargaining; Federal, state, local, tribal and other laws and regulations; and Market prices for comparable goods or services.
Sample Allowability Language (cont d) A cost is allocable to a particular Federal award if the goods or services involved are chargeable or assignable to that Federal award in accordance with the relative benefits received. This standard is met if the cost: Is incurred specifically for the Federal award: Benefits both the Federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and Is necessary to the overall operation of the non-federal entity and is assignable in part to the Federal award.
Sample Allowability Language (cont d) Applicable credits refer to those receipts or reduction of expenditure type transactions that offset or reduce expense items allocable to the Federal award. To the extent that such credits relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. The Federal award may be subject to statutory requirements that limit the allowability of costs. Payments made for costs determined to be unallowable must be refunded (including interest) to the Federal Government unless Federal statute or regulation directs otherwise.
Written Conflict of Interest Policy 200.318 (c) Maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in selection, award, and administration of contracts. NOTE: Conflict of interest arises when an employee, officer, agent, or member of a family has a financial or other interest in the firm selected for award Policy should cover employees and district-wide conflict of interest Policy must discuss the disciplinary actions applied for violations In addition to written policies, the sub-recipient organization must disclose, in writing, any potential conflict to the Michigan Department of Education
Written Conflict of Interest Policy Sample Language: No employee, officer, or agent may 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.
Procurement
Written Procurement Procedure 200.319 (c) Written procedures for procurement transactions Sub-recipients must have written procurement policies that require purchases to be necessary and reasonable, and adequately documented. Policies must include principles for avoiding potential conflicts of interest, identify individual responsible, and include written standards of conduct. Any potential conflicts of interest and any violations of Federal criminal law potentially affecting the award are required to be disclosed in writing. Must also reflect applicable state, local, and tribal laws and regulations.
Procurement (cont d) The UG created new flexibilities permitting grantees to establish more informal procurement procedures for micro-purchases Five types Micro-purchases, small purchases, sealed bids, competitive proposals, sole-source items Other procurements methods are not significantly changed from the requirements in EDGAR Parts 74 and 80
Sample Procurement Language Business Office Procedures. The following procedures will be applied, to the extent that they do not conflict with or contradict the Board policies listed above: 1. The Business Office shall obtain rate quotations for small purchases ($3,500 - $150,000) of supplies or services, sealed bids (state competitive bid threshold - $150,000), or competitive proposals (> $150,000) for goods and services, as specified by Board policy and State law. 2. To the extent practicable, the Business Office shall distribute micro-purchases (not to exceed $3,500) in an equitable fashion among qualified suppliers. 3. For small purchases of supplies and services charged to federal grants (purchases over $3,500 and under the competitive bid threshold), the Business Office shall obtain an adequate number of qualified sources for rate quotations, and no cost or price analysis. 4. If the competitive bid threshold issued by the State of Michigan Department of Education differs with Board policy, the lower threshold will be utilized. This applies to the activities below under the relevant sections of the Revised School Code. The (Job Title) will be responsible for obtaining information on the annual adjustments to these amounts corresponding to changes in the Consumer Price Index (CPI) as published by MDE. a. Contracts will be awarded to the responsible firm whose proposal is most advantageous to the program. b. The organization may only use qualification-based methods, whereby competitor s qualifications are evaluated and the most qualified competitor is selected, in the procurement of the architectural/engineering professional services.
Written Travel Policy 200.474 (b) Lodging and subsistence costs incurred by employees and officers for travel will comply w/ the non-federal entity s written travel policy
Sample Travel Procedures Business Office Procedures: The following procedures will be applied, to the extent that they do not conflict with or contradict the Board policies: 1. Employees must receive pre-approval for conferences and meetings outside of the District. 2. Superintendent or Designee must sign off on conference forms. 3. Allowable reimbursements will follow district guidelines.
Michigan School Business Officials 2. UG Reference Guide: http://www.michigan.gov/documents/mde/ UG_MDE_reference_guide_525140_7.pdf To locate the UG Reference Guide, please follow the steps below, or use the above link 1. 3.
MDE Website Helpful Information http://www.michigan.gov/mde/0,4615,7-140-5236_76204-381289--,00.html
Federal Website Helpful Information https://www.ecfr.gov/cgi-bin/textidx?sid=704835d27377ef5213a51c149de40cab&node=2:1.1.2.2.1&rgn=div5
Contacts For questions please contact - Kevin Walters, Supervisor Grants Coordination and School Support Waltersk5@Michigan.gov; 517-335-0543 Louis Burgess, Assistant Director Office of Financial Management burgessl@michigan.gov; 517-335-3672