the uniform grant guidance: background, financial management and allowability changes presented by:...

The Uniform Grant Guidance: Background, Financial Management and Allowability

Changes

Presented by: Leigh Manasevit, Esq.

[email protected] Brustein & Manasevit, PLLC

Fall Forum 2014

mailto:[email protected]

Reasons for the Change?

1. Simplicity2. Consistency3. Obama Executive Order on Regulatory

Review– Increase Efficiency– Strengthen Oversight

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Who crafted the changes?

• “COFAR”–Council on Financial Assistance Reform,

and –Key Stakeholders

• www.cfo.gov/cofar


http://www.cfo.gov/cofar

Who is covered?

• All “nonfederal entities” expending federal awards


What is included?

• A-102: Administrative Rules - State/Local – Part 80 – EDGAR

• A-110: Administrative Rules - Postsecondary and Nonprofits– Part 74 – EDGAR

• A-87: Cost Rules - State/Local• A-21: Cost Rules - Postsecondary• A-122: Cost Rules - Nonprofits• A-133: Audit Rules



Key Dates:Key Dates

February 1, 2013 Notice of Proposed Rulemaking

December 26, 2013 Published Rule in Federal Registerhttp://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

June 26, 2014 Draft Regulations Due to OMB

August 29, 2014 COFAR Releases FAQs

December 26, 2014 Final Regulations Published

http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

Date of Applicability of Revised Rules

Guidance applies to all new awards and incremental funding made on or after 12/26/2014

OMB stated on 12/20/13 All additions after December 26, 2014

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COFAR Updates – FAQs - August 29, 2014

• Applies to new federal awards if a federal awarding agency considers its incremental funding actions to be opportunities to change terms and conditions of previously made awards.

• Federal awarding agencies may apply the Uniform Guidance to the entire Federal awards that is uncommitted or unobligated as of the Federal award date or first increment after 12/26/14.


COFAR Updates – FAQs - August 29, 2014 (cont.)

• What about subawards?– The effective date is the same as the effective date of the

Federal award from which the subaward is made. • Does not matter when the subaward is made – but the

original Federal award from the Federal awarding agency.

• There Is a Procurement “Grace Period” of 1 year.


Inconsistency Between Program Statute and Guidance

If federal program statute differs from Uniform Grant Guidance, then statute/regulation governs.


A Significant Change

• Shift from focus on compliance to focus on PERFORMANCE!!!


Performance

• Auditors (A-133 + Federal OIG) and Monitors (Federal and State Pass-Through) must look more to “outcomes” than to “process”


Most Significant Change ???

The Uniform Grant Guidance has a MAJOR emphasis on “strengthening accountability” by improving policies that protect against waste, fraud and abuse

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New: Required Certifications 200.415


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• NEW: Official authorized to legally bind the non-federal entity must certify on annual and final fiscal reports or vouchers requesting payment:– “By signing this report, I certify to the best of my

knowledge and belief that the report is true, complete and accurate and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the federal award. I am aware that any false, fictitious, or fraudulent information or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims, or otherwise.”

STRUCTURE OF UNIFORM GRANT GUIDANCE (P. 78608)

2 CFR Part 200


Uniform Grant Guidance Sections (p. 78608)

• Subpart A – Definitions• Subpart B – General Provisions• Subpart C – Pre Award Requirements• Subpart D – Post Award Requirements• Subpart E – Cost Principles• Subpart F – Audit Requirements


Key Definitions (Examples)

• Cognizant Agency for Audit 200.18 (78611)• Cognizant Agency for Indirect 200.19 (78611)• Cooperative Audit Resolution 200.25 (78612)• Improper Payment 200.53 (78614)• Internal Control Over Compliance 200.62 (78615)• Major Program 200.65 (78615)• Modified Total Direct Cost 200.68 (78615)• Non-Federal Entity 200.69 (78615)


FINANCIAL MANAGEMENT CHANGES

200.302(b)1.(NEW) Identification of Awards 2.Financial Reporting3.Accounting Records (Source Docs)4.Internal Control5.Budget Control6.(NEW) Written Cash Management Procedures 7.(NEW) Written Allowability Procedures


Identification of Awards (New)

• All federal “awards” received and expended• The name of the federal “program”• Identification of award– CFDA Title and Number– Federal Award I.D. #– Fiscal Year of Award– Federal Agency– Pass-Through (If S/A)


Financial Reporting

New shift to OMB approved performance metrics


Financial Reporting (cont.)

Accurate, current, complete disclosure of financial results of each award(Old) in accord with the financial reporting reqs of the grant(New) in accord with 200.327 and 200.328

200.327 – Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly

200.328 – Non-federal entity must submit performance reports at intervals required by federal agency or pass-through. Annual performance reports due 90 days after reporting

period; Quarterly performance reports due 30 days after reporting period



Performance Metrics:1. Compare actual accomplishments to

objectives (quantify to extent possible)2. Reasons goals were not met if appropriate3. Additional pertinent information (e.g.,

analysis and explanation of cost overruns, high unit costs)



• OMB Allows ED to waive “performance metrics” not required.

• How will ED reconcile performance metrics with accountability/performance indicators of ESEA, IDEA, CTE, AEFLA


Accounting Records (Source Documentation)

Combines current requirements:•Source Documentation Must Be Kept On:

1. Federal Awards2. Authorizations3. Obligations4. Unobligated balances5. Assets6. Expenditures7. Income8. Interest (New) (Eliminated liabilities)


Internal Controls

Essentially same as current requirements: Effective control over and accountability for:

1. All funds2. Property3. Other assets

Must adequately safeguard all assetsUse assets solely for authorized purpose


Internal Controls (cont.)

• Cross reference 200.303 (New)• Internal Controls must ensure compliance with

federal statutes, regs, terms of the award• Entities must:– Evaluate and monitor compliance;– Take prompt action when instances of

noncompliance are identified; and – Safeguard protected personally identifiable

information (PII)


Budget Control

• Same as current rules• Comparison of expenditures with budget amounts for each

award


Written Cash Management Procedures (New)

• Written Procedures to implement the requirements of 200.305


Written Cash Management Procedures (cont.)

For states, payments are governed by Treasury – State CMIA agreements 31 CFR Part 205

No Change

For all other non-federal entities, payments methods must minimize time elapsing between draw from G-5 and disbursement (not obligation)



Written procedures must describe whether non-federal entity uses:1) Advance Payments (preferred) • Limited to minimum amounts needed to meet immediate

cash needs 2) Reimbursement• Pass-through must make payment within 30 calendar days

after receipt of the billing3) Working Capital Advance• The pass-through determines that the non-federal entity

lacks sufficient working capital Allows advance payment to cover estimated disbursement needs for initial period



• Advances must be maintained in insured accounts• Pass-through cannot require separate depository

accounts• Accounts must be interest bearing unless:

1. Aggregate federal awards under $120,0002. Account not expected to earn in excess of $500 per year3. Bank require minimum balance so high, that such

account not feasible



• Interest earned must be remitted annually to HHS

• Interest amounts up to $500 may be retained by non-federal entity for administrative purposes– Currently $250 for IHEs and NonProfits and $100 for State and

local governments


Written Allowability Procedures (New)

• Written procedures for determining allowability of costs in accord with Subpart E – Cost Principles (see p. 78639 – 78662)


Factors Affecting Allowability of Costs 200.403


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All Costs Must Be:1. Necessary, Reasonable and Allocable2. Conform with federal law & grant terms3. Consistent with state and local policies 4. Consistently treated5. In accordance with GAAP6. Not included as match7. Net of applicable credits (moved to 200.406)8. Adequately documented

Applicable Credits 200.406


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• Those receipts or reduction-of-expenditure type transaction that offset or reduce expense items – must be credited to the Federal award as either cost reduction or cash refund, as appropriate.– Examples: purchase discounts, rebates or allowances, recoveries

or indemnities on losses, insurance refunds or rebates, adjustments of overpayments

Profit 200.400(g)


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• Non-federal entities may not earn or keep any profit resulting from federal financial assistance, unless expressly authorized by the terms and conditions of the federal award.

Prior Written Approval 200.407


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• NEW: In order to avoid subsequent disallowance:– Non-federal entity may seek prior written approval of

cognizant agency (for indirect cost rate) or Federal awarding agency in advance of the incurrence of special or unusual costs

Program Income 200.307


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• Non-Federal entities are encouraged to earn income to defray program costs where appropriate. – Costs of generating program income may only be deducted if:

• Authorized by federal regulations or the federal award; • Costs are incidental and not charged to the federal award.

– Property from the sale of real property or equipment is not program income – apply post award property rules.

• NEW: Program Income Must Be Deducted from Total Allowable Costs– With prior approval may dd to Federal Award.

Direct v. Indirect Costs 200.413


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• NEW: Salaries of administrative and clerical staff should be treated as “indirect” unless all of following are met:1. Such services are integral to the activity2. Individuals can be specifically identified with the activity3. Such costs are explicitly included in the budget4. Costs not also recovered as indirect

Contract vs. Grant 200.330

• No change from the current requirement. • Entities must clearly determine what is a

subgrant and what is a contract.– Note the difference!!


Selected Items of Cost

The Uniform Grant Guidance has 55 specific items of cost!

200.420


Selected Items of Cost Examples


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• Advertising/PR 200.421 (Clarified) ◦ Allowable for programmatic purposes including:

◦ Recruitment◦ Procurement of goods◦ Disposal of materials◦ Program outreach◦ Public relations (in limited circumstances)

Alcohol 200.423Not allowable

Selected Items of Cost (cont.)


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• Collections of Improper Payments 200.428 (New)– The costs incurred by the non-

Federal entity to recover improper payments are allowable as either direct or indirect costs, as appropriate.



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• Entertainment Costs 200.438 (Clarified)– Cost of entertainment are unallowable

• Amusement, Diversion, Social Activities

– Except where costs might otherwise be considered programmatic and are authorized or have prior written approval of the federal awarding agency.

• Fines, Penalties, Damages and other Settlements 200.441– If related to violation, alleged violation or failure to comply with Federal,

state, tribal, local or foreign law and regulations then unallowable. – Except with prior written approval of federal awarding agency.



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• Travel Costs 200.474 (Changed)• Prior rule: allowable with certain restrictions

– Travel costs may be charged on actual, per diem, or mileage basis

– Travel charges must be consistent with entity’s written travel reimbursement policies

– Grantee must retain documentation that participation of individual in conference is necessary for the project

– Travel costs must be reasonable and consistent with written travel policy/or follow GSA 48 CFR 31.205-46(a)

Disclaimer

This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.


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