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Fiscal Updates

• Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

• Department of Health and Human Services Implementing Regulations

• SF-429 Real Property Status Report

Panelists

Ann Linehan Acting Director,

Office of Head Start

Terry Ramsey Senior Technical Advisor

Department of Health and Human Services

Belinda Rinker Senior Policy Analyst

Office of Head Start

Jim Belanger, CPA Director of Fiscal Operations

Head Start Monitoring Contract

Danya International

Regulations & Guidance

Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards◦2 CFR 200

Department of Health and Human Services Implementing Regulations◦45 CFR Part 75

SF-429 Real Property Status Report◦ ECLKC:

http://eclkc.ohs.acf.hhs.gov/hslc/standards/im/2015/resour_ime_001_012715.html

PanelistsOpening Remarks

Eliminating Duplicative and Conflicting Guidance

AwardsReceived

• A-102 & A-89• A-87• A-133 &A-50

Subawards to

universities

• A-110• A-21

Subawards to

nonprofits

• A-110• A-122

INSERT YOUR NFE OR

AGENCY HERE

Now: All OMB guidance streamlined in 2 CFR 200.

Then:

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Uniform Guidance Implementation

• December 26, 2013 FR Notice – 2 CFR 200– Guidance to Federal agencies– Preamble provides discussion on changes

• December 19, 2014 FR Notice– Adopted by Federal agencies as requirements for non-

Federal entities– Lists technical corrections to 12/26/2013 Notice– HHS adopted and published as 45 CFR Part 75

• Lists HHS amendments to Uniform Guidance

• Effective December 26, 20147

Audit Requirements – Subpart F

• Audit reports still due date of 9 months after end of fiscal year– Removed provision for Agencies to provide extensions

• Federal Audit Clearinghouse will post audit reports on their web page

• Subrecipient monitoring requirements moved to Administrative requirements – 2 CFR 200.330 - 200.331

• Increases audit threshold from $500,000 to $750,000• No early implementation of Audit requirements

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PanelistsOpening Remarks

OBJECTIVES OF THE UNIFORM GUIDANCE

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

GENERAL RESOURCES

Uniform Administrative Requirements, Cost Principles, and Audit Requirements◦ 2 CFR Part 200

Frequently Asked Questions for New Uniform Guidance at 2 CFR 200 (COFAR/OMB)

Council on Financial Assistance Reform (COFAR) website

Link to the HHS implementing regulations◦ 45 CFR Part 75 (full explanation) and

regulations only American Institute of Certified Public

Accountants (AICPA) Government Accounting Quality Center (GACQ) website

A thorough reading of the guidance is required to understand the changes!

OHS RESOURCES

IM for adoption of fiscal regulations by HS programs◦ ACF-IM-HS-14-07: New Uniform Administrative

Requirements, Cost Principles, and Audit Requirements for Federal Awards

IM for use of the SF-429◦ ACF-IM-HS-15-01: Real Property Reporting and

Request Requirements

Questions and Answers

Question

Are all Head Start and Early Head Start grantees covered by the Uniform Guidance?

Question

Does the Uniform Guidance supersede the Head Start Act and Performance Standards?

Question

Do all grantees have to make changes in their fiscal policies and procedure in order to be compliant with the Uniform Guidance?

Employee Health and Welfare

New Uniform Guidance

• § 75.437 Employee health and welfare costs.

• (a) Costs incurred in accordance with the non-Federal entity's documented policies for the improvement of working conditions, employer-employee relations, employee health, and employee performance are allowable.

Old Guidance

• §230, Appendix B(13)(a) -- The costs of employee information publications, health or first- aid clinics and/or infirmaries, recreational activities, employee counseling services, and any other expenses incurred in accordance with the non-profit organization's established practice or custom for the improvement of working conditions, employer-employee relations, employee morale, and employee performance are allowable.

Question

When does the new Uniform Guidance take effect?

Uniform Grant Guidance Effective Dates

• Federal agencies implemented by promulgating regulations effective December 26, 2014.

• Non-federal entities will need to implement the new administrative requirements and cost principles for all new Federal awards made after December 26, 2014 and funding increments after that date where Federal agencies change award terms and conditions – FAQ .110-6 - Effective Dates and Grace Period for Procurement.– FAQ .110-7 – Effective Dates and Incremental Funding.– NFE may implement entity-wide system changes to comply with the UG

without penalty.– Head Start IM-14-07 provides for program level effective date

• Audit requirements effective for fiscal years beginning on or after December 26, 2014:– No early implementation of audit provisions.

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A Closer Look at Effective Dates

• All 2014 year ends: – No impact from the UG for NFE and auditors.

• Quarters ending March 31; June 30; and Sept 30, 2015:– NFE use new Administrative Requirements and Cost Principles for

all new awards and funding increments with changed terms and conditions.

– OMB Circular A-133 audit requirements remain.– NFE likely have awards subject to the old requirements and

awards subject to the new requirements. • December 31, 2015, fiscal year-ends and beyond:

– New Single Audit requirements apply.– Audits are still due 9 months after fiscal year ends

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Question

Are there parts of the regulations grantees should really focus on?

Individual Cost Items for Wages, Benefits and Professional Services

§75.430 Compensation—personal services. §75.431 Compensation—fringe benefits. §75.432 Conferences. §75.437 Employee health and welfare costs. §75.438 Entertainment costs. §75.445 Goods or services for personal use. §75.447 Insurance and indemnification. §75.459 Professional service costs. §75.463 Recruiting costs. §75.464 Relocation costs of employees. §75.466 Scholarships and student aid costs. §75.472 Training and education costs. §75.474 Travel costs.

Question

Will grantees need to change their procurement policies and procedures?

Question

Are all grantees required to obtain a negotiated indirect cost rate? How is the cognizant agency for indirect cost rate purposes identified?

Negotiated Indirect Cost Rate Agreements

◦ Appendix III to Part 75—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs);

◦ Appendix IV to Part 75—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations;

◦ Appendix V to Part 75—State/Local Government and Indian Tribe-Wide Central Service Cost Allocation Plans;

◦ Appendix VI to Part 75—Public Assistance Cost Allocation Plans;◦ Appendix VII to Part 75—States and Local Government and

Indian Tribe Indirect Cost Proposals; and◦ Appendix IX to Part 75—Principles for Determining Costs

Applicable to Research and Development Under Grants and Contracts with Hospitals.

◦ §75.416 and §75.417: Special Considerations for States, Local Governments and Indian Tribes.

◦ §75.418 and §75.419: Special Considerations for Institutions of Higher Education

De Minimis Indirect Rate

De Minimis Rate◦Available to NFE’s that have never

received a negotiated indirect rate.◦10% of modified total direct costs (direct

salaries and wages, fringe, materials, supplies, services, travel, and the first $25,000 of each subaward).

◦Costs must be consistently treated as either direct or indirect.

◦Once elected, must be used consistently until the NFE chooses to negotiate for a rate.

Direct Allocation

Joint costs are prorated using a base which accurately measures the benefits provided to each Federal award or other activity.

Bases must be established in accordance with reasonable criteria and supported by current data.

Cognizant Agencies

Cognizant agency for indirect costs means the Federal agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals on behalf of all Federal agencies. The cognizant agency for indirect cost is not necessarily the same as the cognizant agency for audit. For assignments of cognizant agencies see the following:

(1) For institutions of higher education: Appendix III to part 75 C.11.

(2) For nonprofit organizations: Appendix IV to part 75 C.1.

(3) For state and local governments: Appendix V to part 75 F.1.

(4) For Indian tribes: Appendix VII to part 75 D.1.

Question

Are the individual items of cost that used to be in Appendix B for most grantees different in the new regulations?

Fundraising

New Uniform Guidance• §75.442 Fund raising and

investment management costs.• (a) Costs of organized fund raising,

including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions are unallowable. Fund raising costs for the purposes of meeting the Federal program objectives are allowable with prior written approval from the Federal awarding agency.

Old Guidance• §230, Appendix B(17)

(a) -- Costs of organized fundraising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred solely to raise capital or obtain contributions are unallowable.

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Proposal Costs

• §75.460 Proposal costs.• Proposal costs are the costs of preparing bids,

proposals, or applications on potential Federal and non-Federal awards or projects, including the development of data necessary to support the non-Federal entity's bids or proposals. Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as indirect (F&A) costs and allocated currently to all activities of the non-Federal entity. No proposal costs of past accounting periods will be allocable to the current period.

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Question

Is cost allocation a thing of the past?Didn’t the new regulations do away with the requirement for personnel activity reports?

Sec. 200.430, Compensation – Personal Services – New language!

• Purpose was to reduce the administrative burden of documenting time and effort.

• More principles based (e.g., removed A-21 examples).

• Less prescriptive on documentation and places more emphasis on internal controls over personnel-related costs.

• Requires that charges must be based on records that accurately reflect the work performed and there are requirements for such records. 33

Standards for Documentation of Personnel Expenses

• System of internal controls• Official records of the entity• Reflect 100% of employee activity• Include both Federal and other activities• Comply with entity’s accounting practices• Support distribution to all activities

34

35

Charges Based Upon Budget

• Reasonable estimates• Timely recording of significant changes• Processes to ensure review interim charges

after-the-fact and make adjustments to ensure final charges are accurate, allowable, properly allocated

Question

What is the status of delegate agencies under the Uniform Guidance and Part 75?

Question

Is permission still required for purchase and sale of equipment? If so, what are the associated dollar amounts? Are the equipment inventory requirements the same as before?

Prior Approval: Equipment Purchase

New Uniform Guidance• § 75.439(b)(1) Capital

expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity.

Old Guidance• §230, Appendix B(15)(b)(1)

-- Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except where approved in advance by the awarding agency.

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Prior Approval: Equipment Purchase

New Uniform Guidance§ 75.2 Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.

Old Guidance• §230, Appendix B(15)(a)(2) --

"Equipment" means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-profit organization for financial statement purposes, or $5000.

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Prior Approval: Equipment Purchase

New Uniform Guidance§ 75.2 Prior approval means written approval by an authorized HHS official evidencing prior consent before a recipient undertakes certain activities or incurs specific costs.

Old Guidance§230.25(b) -- Prior approval means securing the awarding agency's permission in advance to incur cost for those items that are designated as requiring prior approval by the part and its Appendices. Generally this permission will be in writing. Where an item of cost requiring prior approval is specified in the budget of an award, approval of the budget constitutes approval of that cost.

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Questions

Is the SF-429 form required of all grantees, even if they have no real property or no real property bought with Federal funds?  Is an inventory of real property at the program level also required? How is the disposition of real property handled?