Uniform Guidance Jeremy Dunn Senior Manager November 4, 2015
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Uniform Guidance December 26, 2013 - Office of Management and Budget (OMB) issued guidance that makes significant changes to federal grants management Uniform Guidance AKA Super Circular - Streamlines requirements and supersedes eight existing OMB Circulars Changes - In response to the administrative burden of the existing procurement standards Language revisions - To require "oversight" rather than a "system" to ensure that contractors comply with contract terms
Uniform Guidance Objective Reducing Administrative Burden and Waste, Fraud and Abuse - Eliminating Duplicative and Conflicting Guidance - Focusing on Performance over Compliance for Accountability - Encouraging Efficient Use of Information Technology and Shared Services - Providing For Consistent and Transparent Treatment of Costs - Limiting Allowable Costs to Make Best Use of Federal Resources - Setting Standard Business Processes Using Data Definitions - Encouraging Non-Federal Entities to Have Family-Friendly Policies - Strengthening Oversight - Targeting Audit Requirements on Risk of Waste, Fraud, and Abuse
Codification This uniform guidance codifies the following circulars into the Code of Federal Regulations: - Administrative Requirements A-102, Grants and Cooperative Agreements with State and Local Governments A-110, Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations A-89, Catalog of Federal Domestic Assistance - Cost Principles A-21, Cost Principles for Educational Institutions A-87, Cost Principles for State, Local, and Indian Tribal Governments A-122, Cost Principles for Non-Profit Organizations - Audit Requirements A-133, Audits of States, Local Governments, and Non-Profit Organizations A-50, Audit Follow-up
Codification Organization - 2 CFR 200-200.XX Definitions - 200.1XX General Provisions - 200.2XX Pre Award Requirements - 200.3XX Post Award Requirements - 200.4XX Cost Principles - 200.5XX Audit Requirements
Effective Dates For Recipients: The new administrative requirements and cost principles apply to all new federal awards and incremental funding received on December 26, 2014 and after. For Auditors: For fiscal years beginning before December 26, 2014 we must use the appropriate compliance supplement for our compliance testing based on date of the award. ie. 6/30/2015 audits The new single audit requirements apply to audits of fiscal years beginning on or after December 26, 2014. ie. 6/30/2016
Streamlining Effects Direct Costs - Administrative costs may be charged directly when they are specifically allocated to one award, with prior approval from the awarding agency. The approval may be obtained after the initial budget approval. Indirect costs - Approved indirect cost rates may be extended on a one-time basis without further negotiation, for up to four years. De Minimis rate of 10%. Salaries and Wages - Old guidance did not consider technology. Time sheets and activity reports were required. New guidance allows for electronic reports and other systems to be used to track salaries and wages as long as good internal controls are in place. Allowable costs - Costs for conferences, morale, relocations, student activities, etc. allowable costs are more clearly defined.
Major Changes to Administrative Requirements Internal Controls - CFR 200.303 The non-federal Entity Must: Establish and maintain effective internal control of the Federal award that provides reasonable assurance that the non-federal entity is managing the aware in compliance with statutes, regulations, and terms and conditions of the award Comply with Federal statutes, regulations, and terms and conditions of the award Evaluate and monitor the non-federal entity s compliance with statute, regulations, and the terms and conditions of the award Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings - Appear to be most concerned about three areas Subrecipients Procurement Time and effort reporting
Major Changes to Administrative Requirements Subrecipient vs. Contractor - Subaward An award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward my be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. - Contract A legal instrument by which a nonfederal entity purchases property or services needed to carry out the project or program under a federal award. The term does not include a legal instrument, even if the nonfederal entity considers it a contract, when the substance of the transaction meets the definition of a federal award or subaward.
Major Changes to Administrative Requirements Subrecipients - A risk assessment must be performed Prior award experience Prior audit experience Extent of any federal or pass-through entity monitoring - Award agreement must contain Subrecipient name and DUNS number Federal award identification number Subaward period of performance start and end date Amount of funds obligated to the subrecipient Total amount of federal award Name of federal awarding agency, pass-through entity and contact info for awarding official CFDA # and name Identification of whether the award is R&D Indirect cost rate information
Major Changes to Administrative Requirements Subrecipients - Oversight- 6 mandatory steps provided in UG Review financial and performance reports Verify single audit compliance Ensure corrective action on any deficiencies (regardless of how they are identified) Issue management decisions on relevant subrecipient audit findings Consider whether audit results or other factors affect the pass-through entities records Consider any needed enforcement activities
Major Changes to Administrative Requirements Subrecipients - Supplement monitoring, UG also suggests: Site visits Agreed upon procedures Or other steps - Also the passthrough entity must retain subrecipient report submissions for 3 years from the date of receipt
Major Changes to Administrative Requirements Procurement changes - Prior to the UG no general standard related to conflicts of interest existed. - Now non-federal entities must maintain written conflict of interest standards covering employees who deal with procurement contracts and if it has a related nongovernmental organization it must also maintain written standards covering organizational conflicts of interest. Appendix II Contract Provision for Non-Federal Entity Contracts Under Federal Awards
Major Changes to Administrative Requirements Procurement methods - Micro-purchases - Small purchase procedures - Sealed bids - Competitive proposals - Non-competitive proposals Threshold for small purchase procedure raised to $150,000
Major Cost Principle Changes Allowability was more clearly defined - Necessary - Reasonable - Allocable - Conform to imposed limitations - Consistent with organizational policies uniformly applied to all activities - Consistently treated - Determined in accordance with GAAP - Not charges anywhere else - Adequately documented
Major Cost Principle Changes Regarding reasonableness, consider: - Ordinary and necessary expense - Use of sound business practices - Arm s length bargaining - Adherence to federal, state, and local laws and regulations - Facts and circumstances surrounding the cost - Unjustified exceptions May seek prior written approval of the cognizant agency for indirect costs or federal awarding agency in advance for incurrence of special or unusual costs.
New Requirements for Recipients Review of Risk - Recipients to be evaluated for financial stability; the quality of management systems; performance history; reports and findings from audits; and ability to effectively implement statutory, regulatory, or other broad compliance requirements Procurement standards - Emphasis on policies to prevent conflicts of interest and protect the integrity of procurements under federal awards Performance Measurement - Recipients will be required to provide financial information demonstrating cost-effective practices Internal Controls - Institutions must establish and maintain effective internal controls over federal awards Personal info protection - Nonfederal entities must take reasonable measures to safeguard protected personally identifiable information
Single Audit Changes Thresholds - The single audit threshold will increase to $750,000 from $500,000 - Audit oversight over 99.7 percent of federal award dollars and 81 percent of the entities subject to the requirement - Audit oversight will be eliminated for approximately 5,000 of the 37,500 entities that currently undergo a single audit Findings - The types of findings reported in the Schedule of Findings and Questioned Costs will remain substantially the same - The threshold for reporting questioned costs, will increase from $10,000 to $25,000
Major Program Determination
Major Program Determination High Risk Type A Programs - To be considered low-risk, the program must have not had: Internal control deficiencies identified as material weaknesses A modified opinion on compliance Known or likely questioned costs that exceed five percent of the total federal awards expended for the program High Risk Type B Programs - A material weakness finding will be the primary trigger for high risk - The number of high-risk Type B s to be audited will reduced from ½ to ¼ the number of low-risk Type A s - The Type B threshold to be omitted for risk assessment will be a flat 25 percent of the Type A threshold - The threshold to not perform risk assessment on Type B s increases from 100,000 to 187,500
Low-Risk Criteria Low-Risk Auditee - Must meet the following conditions for the two prior audit periods to qualify as low-risk: Single audits were performed annually Audit opinion on the financial statements and the schedule of expenditures of awards were unmodified No material weakness findings No substantial doubt about the auditee's ability to continue as a going concern No material weaknesses, questioned costs that exceeded five percent or a modified opinion on a major program Percentage of Coverage rule - The minimum percentage of total federal awards to be tested as major programs will decrease: 25% to 20% for low-risk auditees 50% to 40% for all others
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