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Dynamic Changes Occurring!OMBs Uniform Grant GuidanceAugust 25, 2015Presented by:Adam Roth, StreamLink SoftwareMichelle Watterworth, Plante Moran1AgendaUniform Grant Guidance issued 12/26/2013, effective 12/26/2014:

2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.Cost principlesAdministrative requirementsAudit requirements

Brief overview of the changesDiscuss Implications and practical approachesAdministratorsAuditors

22Cost Principles and Administrative Implications of the Uniform Grant Guidance3UGG Expands on A-87, A133,etc.Target Areas of Improvement from Previous RequirementsEliminating duplicative and conflicting guidanceFocusing on performance over compliance for accountabilityEncouraging efficient use of information technology and shared servicesProviding for consistent and transparent treatment of costsLimiting allowable costs to make the best use of Federal resourcesSetting standard business processes using data definitionsEncouraging non-Federal entities to have family-friendly policiesStrengthening oversightTargeting audit requirements on risk of waste, fraud, and abuse

44Cost Principles. Summarized.5Where to find them:Then & Now6Cost Principles for State, Local, and Indian Tribal Governments Section in Previous CircularSection in Uniform Grant GuidanceA. Purpose and ScopeDirect and Indirect (F&A) costsB. DefinitionsSubpart A - DefinitionsC. Basic GuidelinesBasic Considerations.D. Composition of Cost200.402 Composition of CostsE. Direct Costs200.413 Direct CostsF. Indirect Costs200.414 Indirect (F&A) costsG. Interagency Services200.417 Interagency ServiceH. Required Certifications200.415 Required CertificationsAttachment A General Principles for Determining Allowable CostsSubpart E - Cost PrinciplesAttachment B Selected Items of CostGeneral Provisions for Selected Items of Cost.Attachment C State/Local Wide Central Service Cost Allocation PlansAppendix V - State/Local Government and Indian Tribe - Wide Central Service Cost Allocation PlansAttachment D Public Assistance Cost Allocation PlansAppendix VI - Public Assistance Cost Allocation PlansAttachment E State and Local Indirect Cost Rate ProposalsAppendix VII - States and Local Government and Indian Tribe Indirect Cost Proposals6Accountability of FundsIncrease recipient accountability for performance.

Required CertificationsGoal is to strengthen awardee accountability by providing explicit and consistent language for required certifications that includes awareness of potential penalties under the False Claims Act.

Cost Accounting Standards and Disclosure StatementEvery awardee must meet the threshold in the Federal Acquisition Regulations.Goal is to strengthen accounting standards, while lowering the risk of noncompliance.

77Accountability of FundsTime and Effort Reporting RequirementsStrengthens requirements for awardees internal controls over salaries and wages, while allowing flexibility to meet such requirements.Emphasizes that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed.

88Treatment of CostsDirect CostsMakes consistent the guidance that administrative costs may be treated as direct costs if the awardee demonstrates that such costs are directly allocable to a Federal award. Indirect CostsProvides for an indirect cost rate of 10% of modified total direct costs to awardees that have never had a negotiated indirect cost rate.99Allowable CostsAcceptable costs based on program performance.

ConferencesClarifies allowable conference spending and requires conference hosts/sponsors to exercise judgment in ensuring that conference costs are appropriate.

Idle Facilities and Idle CapacityAllows for the expense of idle facilities when necessary to meet workload fluctuations of an award.

1010Allowable CostsContingency ProvisionsProvides detailed circumstances under which contingency costs may be included in awards.

Travel CostsAllows temporary dependent care costs that result directly from travel to conferences and that meet specified standards.

Indirect Costs Identification and Assignment and Rate Determination for Institutions of Higher Education (IHEs)Extends to all IHEs provisions allowing for recovery of increased utility costs associated with research.

1111Allowable CostsInterest Allows awardees to be reimbursed for financing costs associated with patents and computer software capitalized in accordance with GAAP for fiscal years beginning on or after 1/1/2016.

Prior Written ApprovalProvides a single comprehensive list of circumstances under which awardees must seek prior approval from the Federal awarding agency, the cognizant agency or the pass-through entity.Examples could include: Travel costs of dependents, Cost of membership in any civic/community organization, Indirect costs related to severance payments, etc.

1212Prohibitions/LimitationsEmployee Health/Welfare CostEliminates the allowance for morale costs.

Relocation Costs of EmployeesLimits the amount of time for which a Federal award may be charged for the costs of an employees vacant former home to six months.

Student Activity CostsLimits for on student activity costs.For example, costs incurred for intramural activities, student publications, student clubs, and other student activities, are unallowable, unless specifically provided for in the Federal award.

1313Implications to AdministratorsIdentify key performance metrics.Ensure you are equipped to monitor program performance.Be able to product standardized reports.

Eliminate/mitigate program waste.Demonstrate change to risky programs.

Sub-Recipient MonitoringIncreased performance and cost consistency presents greater pressures on real-time knowledge of subs

Negotiate an indirect cost rate.1414Implications to AdministratorsBe familiar with the new conference spending guidelines that are applicable to your programs.

Understand which contingency costs can be included in awards.Risky programs are more likely to have unexpected costs.Know the circumstances under which they can be included as contingencies to protect yourself.

Keep track of your certifications to avoid penalties.1515OMB Circular A-133Compliance Supplement 2015

OMB has released additional information related to compliance requirements of Federal Departments.

The 2015 documentation offers both an in-depth look at each department, as well as a table matrix of Types of Compliance Requirements by CFDA number.

Find more information at: http://bit.ly/compliance-supplement

For a look at the Matrix of Compliance Requirements, visit: http://bit.ly/compliance-matrix1616Audit Implications of the Uniform Grant Guidance17Audit challenges/implicationsIdentifying which rules are applicableMajor program determination**Testing compliance requirements (effective now!)Reporting**Other audit-related considerations

**These changes not effective until 12/31/2015 year ends1818Uniform Grant Guidance Effective Dates1919Funding increments

Where the Federal agency considers funding increments to be an opportunity to modify the terms and conditions of the federal award (COFAR)

Potential issues for auditors and for administrators:Funding increments received but no modification to terms and conditions were made. Does that mean UGG does not apply?Fund increments received with no mention by federal agency of UGG applicability. Does that mean UGG does not apply?

20Effective Dates Incremental funding20Effective Dates - SubawardsSubaward effective date for applying UGG is the same as the effective date of the federal award from which the subaward is madeImplications: Subawards made after 12/26/2014 do not necessarily have to comply with the UGGTo determine effective date for subawards, need to look back to the effective date of the federal award from which the subaward is made21The effective date of the UGG for subawards is the same as the effective date of the federal award from which the subaward is made.

The requirements for a subaward, no matter when made, flow from the requirements of the original Federal award from the Federal awarding agency.

21Implementation of Effective Dates222223Current RulesNew RulesSingle audit threshold

Low risk auditee


Unmodified opinion on basic FS in accordance with GAAPUnmodified SEFA opinionNo material weaknesses at the basic FS level or federal programsNo material non complianceNo questioned costs that exceed 5%Timely filing with the clearing house


Financial statement opinion could be on the basis of accounting required by state lawUnmodified SEFA opinionNo material weaknesses at the basic FS level or federal programsNo modified opinion on complianceNo questioned costs that exceed 5%Timely filing with the clearing houseNo going concern opinion

Major program selection (effective starting with 12/31/2015 year ends)23Major program selection (effective starting with 12/31/2015 year ends)24Current RulesNew RulesCoverage requirements

Type A threshold

Risk assessment for Type As (2 year lookback)

Low risk 25% and no low risk 50%


Sig deficiency OR material weaknessNoncompliance condition reported

Low risk 20% and not low risk 40%


Material weaknessModified opinionQuestioned costs over 5%

So, what does this all mean for you? Higher focus by your auditors on those programs identified in the past with issues MW, questioned costs, modified compliance opinions. Less testing of the programs that dont have any issues.

24Compliance testingInternal co

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