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CBIZ & MHM Executive Education Series™

Uniform Grant Guidance: One Year Later Michelle Spriggs and Marisa Schasel April 28 & May 17, 2016

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About Us

• Together, CBIZ & MHM are a Top Ten accounting provider • Offices in most major markets • Tax, audit and attest* and advisory services • Over 2,900 professionals nationwide

A member of Kreston International A global network of independent accounting firms

*MHM is an independent CPA firm providing audit, review and attest services, and works closely with CBIZ, a business consulting, tax and financial services provider.

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Before We Get Started…

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CPE Credit

This webinar is eligible for CPE credit. To receive credit, you will need to answer periodic participation markers throughout the webinar. External participants will receive their CPE certificate via email immediately following the webinar.

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Disclaimer

The information in this Executive Education Series course is a brief summary and may not include all

the details relevant to your situation.

Please contact your service provider to further discuss the impact on your business.

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Presenters

Michelle is a Shareholder in the Firm’s Not-For-Profit and

Higher Education Audit Practice. Michelle is the not-for-profit

subject matter expert in the Firm’s National Professional

Standards Group. She has over 20 years of audit experience

and is solely dedicated to serving not-for-profit organizations.

Her experience includes managing financial statement and

Single Audits (formerly OMB Circular A-133 audits); assisting

in bond offerings; providing recommendations on internal

controls; and training other accounting and auditing

professionals to provide support to not-for-profit clients.

774.206.8336 • mspriggs@cbiztofias.com

MICHELLE SPRIGGS, CPA, MBA MHM Shareholder

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Presenters

Marisa is a Managing Director in the Office of Sponsored

Projects at Brown University and a 20+ year veteran in the

field of sponsored projects administration. Marisa is also a

subject matter expert on federal award compliance, including

compliance with the Uniform Guidance. At Brown University,

Marisa is responsible for the sponsored project post-award

management and research administration systems. Prior to

joining Brown University Marisa worked in Harvard

University's Office of Sponsored Projects and was responsible

for sponsored system operations and cash management.

401.863.1804 • marisa_schasel@brown.edu

MARISA SCHASEL, CPA Managing Director, Finance,

Operations & Systems Brown University Office of Research

Administration

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Agenda

Uniform Grant Guidance Background

02

01

03

04

Subpart D – Post Award Requirements • Internal Controls • Procurement Standards • Subrecipient Monitoring and Management

Subpart E – Cost Principles

05 What to Do Now & Helpful Resources

06 Questions

Subpart F – Audit Requirements

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UNIFORM GRANT GUIDANCE BACKGROUND

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OMB Grant Reform – Chronology

Presidential Direction

– (Executive Order; Memorandum to

Agencies)

2/28/12 –

Advance Notice of Proposed Guidance

2/1/13 –

Notice of Proposed Guidance

(Rulemaking)

12/26/13 –

Issue of Final Guidance

(2 CFR Part 200)

6/26/14 –

Federal Agency Draft

Regulations to OMB

12/26/14 –

Uniform Adoption by All Federal Agencies

Fiscal years beginning

after 12/26/14

– Single Audit

Requirement (Subpart F)

Applies

2 Phase Implementation

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Key Effective Dates

• Must implement policies and procedures by promulgating regulations

• Effective December 26, 2014

Federal Agencies

• Will need to implement the new Administrative Requirements and Cost Principles

• All NEW Federal awards and ADDITIONAL funding to existing awards made after December 26, 2014

Non-Federal Entities

• Effective for fiscal years beginning on or after December 26, 2014

• December 31, 2015 and June 30, 2016

Audit Requirements

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OMB Grant Reform – Structure

Contents Reference Origin

A – Acronyms and Definitions 200.0 – 200.99 All Circulars

B – General Provisions 200.100 – 200.113 All Circulars

C – Pre-Federal Award Requirements and Contents of Federal Awards

200.200 – 200.211 A-110 and A-89

D – Post-Federal Award Requirements

200.300 – 200.345 A-110 and A-102

E – Cost Principles 200.400 – 200.475 A-21, A-87 and A-122

F – Audit Requirements 200.500 – 200.521 A-133

Appendices

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SUBPART D – POST AWARD REQUIREMENTS

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Subpart D – Post Award Requirements

• Performance measurement • Financial management • Internal controls • Payment • Cost sharing/matching • Program income • Property standards

• Procurement standards • Performance and financial

monitoring and reporting • Subrecipient monitoring and

management • Record retention and access • Remedies for noncompliance • Closeout

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INTERNAL CONTROLS

SUBPART D – POST AWARD REQUIREMENTS

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Internal Controls (200.303)

• The Entity MUST establish and maintain effective internal control over Federal awards

• The internal controls SHOULD be in compliance with guidance in: • “Standards for Internal Control in the Federal

Government” issued by the Comptroller General of the US - Green Book

• “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission - COSO

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INTERNAL CONTROLS THE BROWN PERSPECTIVE

SUBPART D – POST AWARD REQUIREMENTS

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Internal Controls (200.303)

• Internal control assessment working team • Included representatives from Controller’s Office,

Office of Sponsored Projects, Internal Audit, and Human Resources

• Discussed impact of changes • Reviewed policies and procedures • Identified areas where we could strengthen internal

controls and modified processes and procedures • Uniform Guidance website

• Information sessions with department managers

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PROCUREMENT STANDARDS

SUBPART D – POST AWARD REQUIREMENTS

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Procurement (200.320)

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The MUSTs of the New Procurement Rules

1. Must maintain written policies and procedures over procurement

2. Must maintain oversight to ensure contractors perform in accordance with terms and conditions of contract

3. Must maintain written standards of conduct covering conflicts of interest

4. Must maintain records sufficient to detail the history of procurement (i.e., rationale for method of procurement, selection of contract type, contractor selection or rejection, basis for contract type)

5. Must provide full and open competition

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The MUSTs of the New Procurement Rules

6. Must use one of the following methods of procurement:

• Micro-purchases • Small purchase procedures • Procurement by sealed bids • Competitive proposals • Noncompetitive proposals

– sole source

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Procurement “Claw” (Section 200.320)

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Procurement – Effective Dates and Grace Period FAQ 200.110-6

• For compliance with the new procurement standards only, the federal government is providing a grace period of TWO full fiscal years after the effective date of the Uniform Guidance

• For first full fiscal year beginning after December 26, 2014 (i.e., June 30, 2017) MUST document whether in compliance with old or new procurement standard AND MUST meet that documented standard

• Future fiscal years (i.e., June 30, 2018) Must comply fully with procurement standards in UGG

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Contents of Procurement Policy: • Code of conduct • Acceptable methods of

procurement • Features of solicitation • Conduct of competition • Source evaluation and

selection • Records retention • Contract administration

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PROCUREMENT STANDARDS THE BROWN PERSPECTIVE

SUBPART D – POST AWARD REQUIREMENTS

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Procurement – Micro Purchase vs. Small Purchase

• Brown University and other nonprofit research organizations have operated at micro-purchase thresholds of $5,000, $10,000, and in some cases, at higher levels for years • 70% of our purchasing transactions are between $3,000

and $10,000 • These transactions now will be subject to additional

requirements • Obtain and document price and rate quotes

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Significant Concern – Micro Purchase Threshold $3,000

• For example, acquisition of a $4,500 reagent with specific properties to support a precise chemical reaction • No longer an allowable “micro-purchase” under our

current institutional policy • Now would be classified as a “small purchase” and be

subject to 2 CFR 200.320(b)

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Procurement – Micro Purchase Threshold $3,000

• Impact of implementing a $3,000 threshold for grants and cooperative agreements • Counterproductive to grants reform • Force institutions into expensive modifications of

electronic systems and procurement management processes

• Negatively impact Investigator productivity and the quality of the research

• Increase administrative burden

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Impact of Micro Purchase Threshold $3,000

• Need to modify developed procurement policies related to strategic sourcing, sole source, use of purchasing cards, etc.

• Costly redesign of electronic systems • Revamp of training • Budget Implications

• Increased administrative support • Brown estimate - 1 FTE

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Procurement Standards – Moving Forward

• We have made three specific requests: 1. Establish a “Grantee Exemption” process from 2 CFR

200.317-326; similar to the exemption offered to States

2. Fix sections of 2 CFR 200.317-326 that require common-sense improvements

3. Increase the Micro-purchase threshold from $3,000 to $10,000, with an option for a higher threshold

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SUBRECIPIENT MONITORING AND MANAGEMENT

SUBPART D – POST AWARD REQUIREMENTS

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Subrecipient Monitoring (200.330-332)

• Subrecipient Relationship • An assistance relationship • Determines eligibility • Performance measured against

federal program objectives • Responsible for programmatic

decision-making • Adheres to applicable federal

program requirements • Uses federal funds to carry out a

program for a public purpose specified in statute, as opposed to providing goods or services for the benefit of the pass-through entities

• Contractor (Vendor) Relationship • A procurement relationship • Provides goods and services within

normal business operations • Provides similar goods and services

to many purchasers • Normally operates in a competitive

environment • Provides goods or services that are

ancillary to the federal program • Not subject to compliance

requirements of the federal program

Distinguishing Between Subrecipient and Contractor

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Subrecipient Monitoring (200.330-332) – Pre-Award Assessment Requirements

Subrecipients Prior Award Experience

Subrecipients Prior Audit Experience

Subrecipients Staffing and

Systems

Extent of Entity Monitoring

(Fed or Pass-thru)

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Subrecipient Monitoring (200.330-332) – Post-Award Mandatory Monitoring Steps

Review Financial

Performance Reports

Presumably using data gathered

during the pre-award

stage

Verify Single Audit

Compliance

Regardless of how they are

disclosed

Ensure Corrective Action on

Deficiencies

Issue Management Decisions on

Findings

Consider if enforcement actions are necessary

Consider if adjustment to pass-through

entity records is necessary

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SUBRECIPIENT MONITORING AND MANAGEMENT

THE BROWN PERSPECTIVE

SUBPART D – POST AWARD REQUIREMENTS

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Subrecipient Monitoring

• New administrative burden has been created with the new rules and requirements applicable to subrecipient monitoring by pass-through entities

• The cumulative impact of these changes means that many institutions will need to add staff/FTEs to comply with the new requirements specified in § 200.331(d)

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Subrecipient Monitoring

• Review population of subrecipients • Assess your current processes and procedures

• Do you have an existing process? • Standardized risk assessment template • Review of subrecipients audit report • Standardized award templates

• Review invoice review and approval process • Payment required within 30 days of receipt

• Work with other organizations

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SUBPART E – COST PRINCIPLES

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Compensation – Personal Services

(200.430)

Purpose: to reduce the administrative burden of documenting time and effort • More principles based

– removed A-21 examples

• Less prescriptive on documentation and places more emphasis on internal controls

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Compensation – Personal Services (200.430)

Based on records that accurately

reflect the work performed

Supported by system of

internal control

Four Standards for documentation of personnel expenses

Be incorporated into official

records

Reasonably reflect total activity for

which employee is compensated

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TIME AND EFFORT REPORTING THE BROWN PERSPECTIVE

SUBPART E – COST PRINCIPLES

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Time and Effort Reporting

• New guidance present an opportunity to make a change, if necessary

• Regulations shift focus to internal controls • Costing allocations • Payroll accounting adjustments • Timely review of labor costs

• Options to consider • Project certification of effort • Quarterly certification of all costs

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SUBPART F – AUDIT REQUIREMENTS

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Changes to Subpart F – Audit Requirements

Final Changes to Single Audits – Effective for December 31, 2015 Year-Ends and later Impact

Single audit threshold to increase from $500,000 to $750,000

Allows for relief for entities doing modest business from federally derived funds

Type A/B program minimum threshold increase from $300,000 to $750,000

May reduce the number of programs considered major in an audit and therefore fewer programs audited

Major program determination focus on areas with internal control deficiencies that have been identified as material weaknesses

Entities with strong internal controls and few audit findings could have fewer high-risk Type A programs and fewer programs audited

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Changes to Subpart F – Audit Requirements

Final Changes to Single Audits – Effective for December 31, 2015 Year-Ends and later Impact

Percentage of audit coverage decrease from 25% to 20% for low-risk auditee and 50% to 40% for high-risk auditee

Could reduce the number of programs considered major in an audit

Changes to SEFA and notes to SEFA Additional reporting requirements to be in compliance with new rules

Threshold for reporting questioned costs to increase from $10,000 to $25,000

Could reduce the number of reported findings but more detail would be required for reported findings

Other changes to reporting Will change auditors’ reports and schedule of findings and questioned costs

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WHAT TO DO NOW

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What To Do Now

Take a step back from what you have done or not done

Assessment of changes to significant processes and internal controls

Make or refine changes as necessary

Ongoing monitoring of compliance

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HELPFUL RESOURCES

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Links to Helpful Documents

• COSO 2013 Internal Control – Integrated Framework • http://www.coso.org/

• OMB Documents

• http://www.whitehouse.gov/omb/grants_docs

• Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards - 2 CFR 200 • http://www.ecfr.gov/cgi-bin/text-

idx?SID=d6d9a62155484b2fb6176d7d01a640cc&node=2:1.1.2.2.1&rgn=div5

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Links to Helpful Documents

• Uniform Guidance Cost Principles Text Comparisons • http://www.whitehouse.gov/sites/default/files/omb/fe

dreg/2013/uniform-guidance-cost-principles-requirements-text-comparison.pdf

• Uniform Guidance Audit Requirements Text

Comparisons • http://www.whitehouse.gov/sites/default/files/omb/fe

dreg/2013/uniform-guidance-audit-requirements-text-comparison.pdf

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Links to Helpful Documents

• Uniform Guidance Administrative Requirements Text Comparisons • http://www.whitehouse.gov/sites/default/files/omb/fedreg

/2013/uniform_guidance_administrative_requirements_text_comparison.pdf

• COFAR’s FAQ for New Uniform Guidance on 2 CFR 200

• https://cfo.gov/wp-content/uploads/2015/09/9.9.15-Frequently-Asked-Questions.pdf

• Subaward Agreement Forms

• http://sites.nationalacademies.org/PGA/fdp/PGA_063626

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? QUESTIONS

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If You Enjoyed This Webinar…

Upcoming Courses: • 5/11 & 6/1: Unclaimed, Unidentified but Undeniable - A Primer on Managing

your Abandoned Property

• 8/10 & 9/15: Win the Not-for-Profit Talent War - Recruitment, Retention, Rewards and Regulation

• 12/7 & 12/15: Put Your Best Face Forward - How to Manage and Learn From Your Not-for-Profit's Publicly Facing Data

Recent Publications: • Technical Agenda Update: FASB Items of Note for Not-for-Profits

• Three Targets of UBIT Scrutiny

• What's In a Name: How Nonprofits Can Protect Their Reputation

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