Theory and Practice: Changes to OMB Single Audit

©2015 Sikich LLP. All rights reserved.

Theory and Practice – Changes to OMB Single Audit Guidance and Guide for Implementation

March 18, 2015Ray Krouse, CPA & Marc DeVries, CPA


Welcome to Uniform Single Audit Guidance Training» Introductions

» Ray Krouse, CPA, Partner, Not-for-Profit Services Team» Marc DeVries, CPA, Director of Government Services -

Wisconsin» About Sikich


Objectives» Learn about important changes to the Single Audit guidance that will

affect your organization» Learn what you can do to effectively implement the new guidance

and avoid audit findings


History of the Single Audit» First Single Audit Act became law in 1984

» Prior to 1984, all federal programs were audited separately» Standardized audit requirements for states, local governments

and Indian tribes» Issued OMB A-128 “Audits of State and Local Governments”

» In 1990, OMB extended the Single Audit requirements to not-for-profit agencies with OMB A-133, superseded A-128

» In 1996, Single Audit Act was revised» In 2013, Uniform Single Audit Guidance supersedes eight OMB

Circulars


Uniform Guidance» Drafted by the Council on Financial Assistance Reform (COFAR)

created in 2011 » Combines eight previously separate sets of OMB guidance into one

comprehensive document:» A-21, A-87, A-89, A-102, A-110, A-122, A-133,

portions of A-50» Cost principles, common rule, program information,

audit requirements» Eliminates conflicting and overlapping guidance» Results in consistency and efficiency

» Focuses on performance instead of compliance» Improves the integrity of financial management» Reduces audit burden for approx. 5,000 entities while maintaining

coverage of more than 99% of federal dollars awarded


Application» As a general rule:

» Federal agencies that make federal awards» Non-federal entities (NFE)

» Definition: “…a state, local government, Indian tribe, institution of higher education or nonprofit organization that carries out a federal award as a recipient or subrecipient.”

» May apply to for-profit entities, foreign public entities or foreign organizations (federal agency discretion)

» 200.101(d) details exceptions to the general rule» 200.102 explains the process for case-by-case exceptions


Implementation Date for Uniform Guidance» Effective immediately for all federal agencies that make awards to

non-federal entities» For recipients of federal funds, effective for grants initiated by

federal government after December 26, 2014» Implementation TIP: Determine which grants are subject to

Uniform Guidance vs. A-133 to determine by which compliance supplement you are governed


Useful InformationQ. Where can I find the Uniform Guidance?A. OMB website: Policy Statementshttp://www.whitehouse.gov/omb/grants_docs/

» Also has crosswalks and text comparisons: Useful for comparing old guidance to new Uniform Guidance; very detailed

» Cost principals text comparison – 174 pages» Audit requirements text comparison – 46 pages» Administrative requirements text comparison – 123 pages» Definitions text comparison – 76 pages

» We can help you implement these requirements – contact information at the end of the presentation

» This presentation and presentation materials will be available at:http://www.sikich.com/develop-an-implementation-plan-for-omb-changes


Administrative Requirements


Conflict of Interest» Section 200.112 requires NFE to disclose in writing any potential

conflict of interest» Implementation TIP: Develop a conflict of interest policy and

implement a process that tracks conflicts of interest. This could be an annual inquiry and reminder to board members and staff to inform management of potential conflict of interest (in fact and appearance)

» Program managers should be aware of contracts entered into under their program(s). This person should be assigned responsibility for notifying the proper staff and/or governing body (i.e. the key decision makers) about these contracts and soliciting written responses regarding conflicts of interest

» Although not required, relationships between those determining eligibility and program applicants should also be disclosed. Conflicts of interest may exist for program participants


Mandatory Disclosures» Section 200.113 – Mandatory Disclosures

» Non-federal entity must disclose in a timely manner in writing to the federal awarding agency or pass-through entity all violations federal criminal law involving fraud, bribery and gratuity violations that could affect the federal award


Performance Measurement» 200.201 – Allows for the use of fixed amount agreements

» Payments are based on meeting specific requirements, not based on costs incurred

» No governmental review of actual costs» 200.301 – Requires recipients to relate financial data to performance

accomplishments» Implementation TIP: Discuss performance reporting requirements

with your granting agencies. Consider building performance measurement and costing processes into your financial reporting systems


Pass-Through Entities» Section 220.330 - Contractor vs. Subrecipient

Subrecipient (must list award on Schedule of Expenditures of Federal Awards (SEFA))1. Determines who is eligible to receive what federal financial

assistance 2. Has its performance measured against whether the objectives

of the federal program are met3. Has responsibility for programmatic decision-making 4. Has responsibility for adherence to applicable federal program

compliance requirements5. Uses the federal funds to carry out a program of the

organization as compared to providing goods or services for a program of the pass-through entity


Pass-Through EntitiesContractor (does not list award on SEFA)1. Provides the goods and services within a normal business operation 2. Provides similar goods and services within normal business

operation 3. Operates in a competitive environment 4. Provides goods or services that are ancillary to the operation of the

federal program 5. Is not subject to compliance requirements of the federal program


Pass-Through Entities» Section 200.210 - If you pass grants through to another subrecipient

(not contractor), you must communicate specific information» Implementation TIP: Establish internal controls that ensure you are

communicating the following information to all subrecipients:» Recipient name (must match name registered in DUNS)» Recipient DUNS number» Unique Federal Award Identification Number (FAIN)» Federal award date» Period of Performance of Grant including starting and ending

date


Pass-Through Entities» Information Contained in a Federal Award from Pass-Through

» Amount of federal funds obligated and awarded» Budget approved by federal awarding agency» Approved cost sharing or matching (if applicable)» Federal award project description» Name of federal awarding agency» CFDA number and name» Identification on whether award is R&D» Indirect cost rate (if applicable) or if the de minimis rate of 10% is

charged» General terms and conditions of grant


Pass-Through Entities» Section 200.331 – Subrecipients

» Ensure that subawards are clearly identified to subrecipient by including all the required federal award identification (CFDA, amount, term, etc.)

» Communicate all applicable federal requirements to subrecipients and any additional requirements necessary to fulfill your responsibilities to the federal government as a pass-through

» Communicate federally recognized indirect cost rate» Subrecipient must allow access to records


Pass-Through Entities» Subrecipient monitoring

» Monitoring the subrecipient includes:» Ensure that the subaward is being used or authorized

purposes» Review financial and programmatic reports» Follow-up on deficiencies noted in prior reviews» Verify that audit is conducted (and Single Audit if applicable)

on subrecipient» Consider agreed upon procedures if necessary

» Implementation TIP: Establish processes for monitoring and calendar deadlines for each monitoring requirement and build into this process a method to track progress throughout the year (i.e. checklist, etc.). Subrecipient monitoring should be documented.


Financial Management» Section 200.302 – Changes to financial management policy are highlighted

in red italics:» Financial management system of the recipient of grant award must be

able to:» Identify, in its accounts, all federal awards received by CFDA#,

federal award ID # and year, name of federal agency and pass-through

» Financial results of each federal award» Records that identify source and application of federal funds» Effective control over assets acquired with federal funds» Comparison of expenditure and budgeted amount of federal awards» Written procedures for determining allowability of costs

» Implementation TIP: Design your chart of accounts to accommodate the required information. Design and document internal controls over determining the allowability of costs.


Financial Management» Section 200.302 also includes a requirement for written procedures

to implement the requirements of Section 200.305 – Payment:» For pass-through entities, payment methods must minimize the

time between receipt of funds and transfer to subrecipient» For advance funding requests, the same applies, time between

receipt and disbursement must be minimal» For reimbursement requests, federal awarding agency or pass-

through agency must make payment within 30 days of receipt of request, unless there is a reasonable belief that the request is improper

» All program and program related income must be used prior to requesting funds

» Implementation TIP: Establish written procedures for cash management requirements contained in Section 200.305.


Internal Control» Section 200.303 – moves guidance on internal controls previously

discussed in audit requirements (which are typically considered after the fact) to administrative requirements

» NFE must establish and maintain effective internal control over awards in order to be in compliance with all provisions of award

» In accordance with COSO (Committee on Sponsoring Organizations) and the Standards for Internal Control in the Federal Government

» Must take prompt action when instances of non-compliance are identified

» Take reasonable measures to safeguard protected personally identifiable information

» Implementation TIP: Design IC in accordance with 200.303 and train your employees.


Internal Control» Implementation TIP: It is important to note that a key factor in

establishing IC is monitoring their effectiveness. When designing internal controls, management should consider processes for monitoring them. Where monitoring results prove that IC are not functioning effectively, management should evaluate why and either redesign IC and/or train employees on the IC and the importance of IC.


Examples of Internal Controls» Environment – Board and management demonstrates a commitment to

integrity and ethical values» Education – Communication and training on grant requirements and

internal controls over compliance» Risk assessment – Identifying risks to the achievement of program

objectives» Segregation of duties – Separating authorization, custody and record

keeping roles to prevent fraud or error by one person» Authorization of transactions – Review of particular transactions by an

appropriate person» Retention of records – Maintaining documentation to substantiate

transactions» Supervision or monitoring of operations and controls – Observation or

review of ongoing operational activity and effectiveness of internal controls


Examples of Internal Controls» Physical safeguards – Usage of cameras, locks, physical barriers, etc.

to protect property, such as merchandise inventory» Top-level reviews-analysis of actual results versus organizational goals

or plans, periodic and regular operational reviews, metrics and other key performance indicators (KPIs)

» IT general controls – Controls related to: a) Security, to ensure access to systems and data is restricted to authorized personnel, such as usage of passwords and review of access logs; and b) Change management, to ensure program code is properly controlled, such as separation of production and test environments, system and user testing of changes prior to acceptance, and controls over migration of code into production

» IT application controls – Controls over information processing enforced by IT applications, such as edit checks to validate data entry, accounting for transactions in numerical sequences, and comparing file totals with control accounts


Procurement» Section 200.317-200.326

» Requires procurement procedures to be documented. Section 200.319(c) contains specific requirements for procedures

» Requires non-federal entities to maintain oversight to ensure contractor performance

» Requires written standards of conduct covering conflict of interest. Section 200.318(c) contains specific requirements for policy language

» NFE must avoid acquisition of unnecessary or duplicate items and considering consolidating procurements for more economical purchasing

» NFEs are encouraged to enter into intergovernmental agreements (cooperative purchasing)


Procurement» Encourages use of federal surplus property in lieu of purchasing

new equipment» Must award contracts to only responsible contractors who possess

the ability to perform the contract. Consider contractor integrity, compliance with public policy and past performance

» Must maintain records for the procurement history including rationale for selection of contractor and basis for contract price

» Time and materials contracts are not disallowed, but only used when no other contract is suitable. A ceiling price must be set in such a contract

» Appendix II contains mandatory contract language


Procurement» Must perform cost or price analysis in connection with every

procurement action in excess of the Simplified Acquisition Threshold (currently $150,000)

» Must negotiate profit as a separate element of price for each contract where no price competition and in all cases where cost analysis is performed

» 200.319 – Prohibits the use of statutory imposed state or local geographic preferences in procurement

» Cannot have unreasonable requirements to limit competition


Procurement» Section 200.320 – Methods of Procurement to be Followed (5)

1. Micro-purchases of supplies and services less than $3,000 ($2,000 for purchases subject to Davis-Bacon) do NOT require quotes to be received and effort should be made to distribute evenly these purchases to qualified suppliers

2. Small purchases from supplies and services between $3,000 and $150,000 do require quotes but NO pricing analysis

3. Sealed bids are required for purchases of $150,000 or greater and require public solicitation, firm fixed price contract is awarded, and must include at least two responsible bidders, and bids will be opened publicly and award is usually to lowest bidder (based on fixed price). Section 200.320(c) contains specific requirements for sealed bids


Procurement4. Competitive proposals used for projects over $150,000 and

may be fixed price or cost reimbursement» This method is typical for architectural / engineering

professional services and price is not used, instead contract is awarded to most qualified competitor with compensation subject to negotiation

» Section 200.320(d) contains specific requirements for competitive proposals

5. Noncompetitive proposals (sole source)» Item is only available from one source» Emergency» Failure of competitive proposal process» Express permission granted by federal agency

» There is a ONE YEAR GRACE PERIOD for implementing Procurement Requirements


Procurement» 200.322 – Recovered materials – applies to States and political

subdivisions of states – purchases >$10,000 must contain the highest percentage of recovered materials practicable.

» This area is highly susceptible to audit findings.» Implementation TIP: READ THE GUIDANCE CAREFULLY. Adopt a

written procurement policy that incorporates the specific requirements of Sections 200.317 – 200.326

» Implementation TIP: Establish a written conflict of interest policy that incorporates the specific requirements of Section 200.318(c)

» Implementation TIP: Educate staff and elected officials that are involved with federal grants on these policies

» Implementation TIP: Have elected officials/staff certify that they have received, read, and understand the procurement and conflict of interest policies

» Implementation TIP: Develop a contract template that incorporates all required elements in Appendix II


Cost Principles


Direct Costs» Section 200.413(c)

» Salaries of administrative and clerical staff should normally be treated as indirect costs, unless all of the following are met:

» These salaries are integral to the project or activity» Individuals involved can be specifically identified with the

project or activity» These costs are explicitly included in the budget or have prior

written approval of the federal awarding agency» The costs are not also recovered as indirect costs


Indirect Costs» Written procedures for determining allowability are required

» Section 200.414

» Organizations will use their negotiated rate for indirect costs.

Q. I don’t have a negotiated rate. Do I need one?

A. No. You can elect to use a de minimis rate of 10% of modified total direct costs which may be used indefinitely.

Q. How do I negotiate an indirect cost rate?

A. That will depend on the type of entity you have. See Appendix III-VII of the Uniform Guidance for specific instructions on negotiating IC rates. In most cases you will negotiate with your cognizant agency.

Q. What if I already have a negotiated rate?

A. Then you can apply for a one-time, four-year extension of your current rate.


Compensation – Personal Services» 200.430 (i) – Standards for documentation of Personal Services

» OMB concluded that the standards for documentation were unnecessarily burdensome and outdated, in comparison to the current technology

» OMB is also concerned that findings in this area focus on incorrect documentation rather than internal control weaknesses or instances of fraud.

» So, OMB no longer requires:» Semi-annual certifications for employees that spend 100% of

their time on a single federal program» Signed timesheets for non-exempt employees or exempt

employees that spend less than 100% of their time on a single federal program



» Now requires that records are:» Supported by system of internal controls that provides

reasonable assurance that the charges are accurate, allowable, and properly allocated

» Reasonably reflect the total activity for which the employee is compensated (both grant related and non grant related)

» Incorporated into the official records of the NFE» Comply with established policies of the NFE» Encompass both federally assisted and all other activities


Compensation – Personal Services» If entity does not comply with new internal control standards, the old

documentation rules will apply» Budget estimates – do not qualify as support but may be used on an

interim basis» System of internal controls must include processes to review the

after the fact interim charges and make all necessary adjustments such that the final amount charged is accurate

» Salaries used in meeting matching requirements are subject to the same rules



» Implementation TIP: The decision to change your current system is voluntary. New standards do not disallow the use of signed timesheets and semi-annual certifications. If this is working for you, no change is necessary, provided you meet the requirements of A-21/87/122 for documentation of personal service charges.

» Implementation TIP: For those employees who spend all or a portion of their time on federally funded programs, the decision to eliminate paper should include a system of verifiable approvals for all employees’ time that is both charged to grants and not charged to grants. Segregation of duties and review/approval processes must be designed into the recordkeeping system.


Other New Compensation Principles» 200.430 - Personal Services - other items to note:

» Several additional cost principles related to institutions of higher education:» Incidental activities (h)(1)(ii)» Salary basis (h)(2)» Consulting (h)(3)» Extra service pay (h)(4)» Periods outside the academic year (h)(5)» Part-time faculty (h)(6)» Sabbatical leave (h)(7)

» 200.431 - Fringe benefits:» Cost of personal use of automobiles furnished by the entity is

unallowable (f)» For institutions of higher education:

» Tuition benefits (j)» On-behalf payments of benefits (k)


Advertising and Public Relations» Section 200.421 – Advertising and Public Relations

» Allowable costs:» Recruitment of personnel for performance of federal award» Procurement of goods and service for federal award» Program outreach to meet requirements of federal award» Public relations for communicating with public the specific

activities and accomplishments of the federal award» Unallowable costs

» Advertising to promote the non-federal entity» Promotional items such as gifts and souvenirs


Conferences» Section 200.432 – Conferences

» Only allowable if the meeting, seminar or symposium whose primary purpose is to disseminate technical information and is necessary and reasonable for successful performance of a federal award (i.e. financial aid conference)

» Cost of identifying, but not providing, locally available dependent care for attendees is allowable


Other Changes» 200.428 – Collection of Improper Payments - new

» Costs incurred by NFE to recover improper payments are allowable as either direct or indirect as appropriate

» 200.433 – Contingency Provisions – clarifies allowability of contingency charges:

» Permissible to the extent that improve the precision of cost estimates

» Charges for “contingency reserve” for the occurrence of events of which cannot be foretold with certainty are unallowable.

» 200.436 – Depreciation - new» Depreciation charges are in accordance with GAAP» “Cost” of donated equipment is FMV at the time of donation


Other Changes» 200.438 – Entertainment costs – formerly disallowed

» Costs that are programmatic in purpose and are authorized by the federal agency (budget or prior written permission) are allowed.

» 200.440 – Exchange rates – not previously addressed as cost» Cost increases for fluctuations in exchange rates are allowable

costs – subject to prior federal approval» Gains must also be considered prior to closeout

» 200.444 – General government expenses - new» Indian tribes and Councils of Governments may charge up to

50% of CEO and CEO staff salaries and expenses directly attributable to grant management in their indirect cost plan without documentation


Other Changes» 200.453 – Materials and supplies costs - new

» Now includes computing devices, no requirement for them to be solely dedicated to federal award but must be necessary

» 200.454 – Memberships/subscriptions - clarified» Clarifies that memberships in entities whose primary purpose is

lobbying is unallowable» 200.461 – Publications and printing - new

» Costs of publication of results of research are allowable» 200.463 – Recruiting costs - new

» Costs of short-term travel visas are allowable to the extent that they are necessary and reasonable and directly relate to grant purpose


Other Changes» 200.464 – Relocation costs – clarified

» Continuing costs of ownership of a vacant home is allowable for up to six months following vacancy

» 200.465 – Rental costs - clarified» Defines “family” for less than arm’s length transactions» “Rental” of property owned by persons affiliated with the NFE,

including commercial and residential real estate, for purposes such as home office space is unallowable

» 200.474 – Travel costs – new» Temporary dependent care costs above and beyond regular

dependent care costs that directly results from travel is allowable (with certain provisions)


Cost Principles Revisited» We have now covered almost all changes to cost principles. However:» Implementation TIP: Program managers should review the types of

costs currently charged to their grants and read the new guidance to check for changes in allowability.

» Implementation TIP: Program managers should then educate all grant related staff on the changes to avoid incurring costs that are unallowable and ultimately will fall to the NFE to cover.

» Implementation TIP: Any questions that arise from this review should be directed to the federal or pass-through agency for clarification (preferably written).

» Implementation TIP: If you have already incurred unallowable costs as a result of the guidance changes, reverse them before closeout (you still have time to do this).


Audit Requirements


Audit RequirementsExpenditure Threshold for AuditUnder A-133:

» A non-federal entity that expends $500,000 or more in a year shall have a single or program-specific audit conducted for that year.

Under Uniform Guidance:

» A non-federal entity that expends $750,000 or more in a year shall have a single or program-specific audit conducted for that year.

Q. What if you are a non-federal entity that administered grants initiated both before and after December 26, 2014?

A. Section 200.111 – Subpart F – Audit Requirements are effective for non-federal entities beginning on or after the effective date of this guidance. So if your fiscal year begins before 12/26/14 you are subject to the A-133 threshold ($500k), after that you are subject to Uniform Guidance ($750k).


Audit RequirementsNon Federal Agency’s Responsibility for Contractor Compliance » Subrecipient/contractor definitions do not change.» However, Uniform Guidance clarifies recipient/subrecipient

responsibility for its contractors’ compliance with procurement requirements

» For auditees – the auditee is responsible for ensuring contractor’s compliance with procurement requirements

» For auditors – if a major program includes contractor relationships, the scope of the audit must include determining whether contractor transactions are in compliance with procurement requirements

» Implementation TIP: Pass-through agencies should understand procurement requirements and educate subrecipients on requirements. Pass-through agencies should build procurement monitoring into subrecipient monitoring processes.


Audit RequirementsRemedies available to federal and pass-through entities when a recipient or subrecipient does not have an audit performed (additional sanctions available under Uniform Guidance are in red):» Temporarily withhold cash payments» Disallow overhead costs/the cost of the activity that is not in

compliance» Suspend or terminate the federal award» Initiate suspension and debarment proceedings» Withhold any further federal awards for the project/program» Take other remedies that may be legally available


Audit Costs» Additional regulations placed on audit costs that may be charged to

federal programs:» If auditee is under expenditure threshold, the cost of a financial

statement audit may be part of an indirect cost pool whose costs are allocated to a federal grant

» Costs of agreed-upon procedures engagements that monitor subrecipients and that determine subrecipient compliance with matching, level of effort, earmarking are no longer allowable


Schedule of Expenditures of Federal Awards» Must include a total for clusters of programs» For loan or loan guarantee programs, identify in the notes to the

SEFA the balances outstanding at the end of the audit period. This is in addition to including the total federal awards expended for loan and loan guarantee programs in the schedule

» If entity elected to use the 10% de minimus indirect cost rate, this must be disclosed in the notes to the SEFA

» Implementation TIP: Build the new SEFA requirements into your SEFA.


Audit Findings Follow-Up» Summary of prior year findings must report on status of findings

related to the financial statements which are required to be reported in accordance with GAGAS.

» When audit findings were not corrected or only partially corrected, the summary schedule must now describe the reasons for the finding’s recurrence.


Report Submission» Indian tribes may opt not to submit their Data Collection Form to the

Federal Audit Clearinghouse, instead they would be responsible for making copies of their reporting package available for public inspection.

» Indian tribes may include confidential business information that would be redacted under the FOIA.

» Uniform Guidance eliminates the requirement for a subrecipient to submit its reporting package to the pass-through agency when there are findings related to the grant(s) passed through that agency, or when there are no findings, the requirement to communicate with the pass-through agency that an audit was conducted in accordance with Uniform Guidance and there were no findings.

» Must not include personally identifiable information (PII)


Cognizant Agency Requirements» Non-federal entities expending more than $50 million in federal

assistance will be designated a cognizant agency.» Cognizant agencies will cooperate with OMB to lead a project that

evaluates audit quality.» Audit quality evaluation projects will occur every six years starting in

2018.» The community of independent auditors will be advised of any

noteworthy or factual trends related to Single Audit quality. Significant problems will be reported to State licensing agencies.


Major Program Determination» A/B threshold increases from $300,000 to $750,000» New guidance – only HIGH RISK AUDIT FINDINGS will cause HR

A:» Resulted in modified opinion» Material Weakness in IC» Known or likely questioned costs >5% of total program

expenditures» Perform risk assessments on Type B programs until high-risk Type B

programs have been identified up to at least ¼ of the number of low-risk Type A’s.

» New guidance reduces the audit burden for approximately 5,000 entities nationally while still maintaining coverage of over 99%.


Major Program Determination –Type A/B Thresholds» Type B Threshold = 25% of Type A Threshold

$750,000 or .03 of Federal awards expended < or equal to $100 million$3,000,000 or .003 of Federal awards expended >$100 million and <$10 billion

$30,000,000 or .0015 of Federal awards expended >$10 billion

Federal Award Expenditures Are Larger Of: Total Federal Awards Expended Are

Type A if:


Audit Coverage» Guidance reduces the minimum coverage as follows:

» Coverage for High Risk auditee – 40% (currently 50%)» Coverage for Low Risk auditee – 20% (currently 25%)

» Deviation from use of risk criteria for first year audits – no longer an available option for auditors.

» Also – auditee cannot be low risk if auditor determines there is substantial doubt about the auditee’s ability to continue as a going concern.


Epilogue


2015 Compliance Supplement» 2015 compliance supplement has been drafted and is in review

process now. Expected to be released in April.» What we know so far:

» ARRA programs are removed from the supplement» Davis-Bacon eliminated from compliance requirements

» However, Davis-Bacon requirements may appear in individual grant compliance supplements as Special Tests and Provisions

» Real Property Acquisition and Relocation Assistance is eliminated from compliance requirements

» New Part 3.2 will be used by auditors to audit programs subject to the Uniform Guidance (3.1 for the old guidance). Part used will depend on when the grant was initiated.


QuestionsThank you for listening and good luck with the implementation!

Please feel free to call us with any questions, of if you need help. We can help you avoid audit findings!

Ray Krouse, CPAPartner

P: (630) 566-8515E: [email protected]

Marc DeVries, CPADirector, Government Services

P: (262) 754-9400 x 352E: [email protected]


Appendix – Implementation TIPS» Successful implementation:

» Understand the new Guidance» Read Guidance, text comparisons, crosswalks

» Develop plan to implement» Modify policies/procedures

» Conflict of interest» Procurement» Payments» Allowable costs

» Train staff

The following TIPS will be useful in implementation!


Appendix – Implementation TIPS» Refer to the above slides for further details about requirements!» Implementation date:

» Determine which grants are subject to Uniform Guidance vs. A-133 to determine which compliance supplement you are governed by.

» Conflict of interest:» Develop a conflict of interest policy and implement a process that tracks

conflicts of interest. This could be an annual inquiry and reminder to board members and staff to inform management of potential conflict of interest (in fact and appearance)

» Program managers should be aware of contracts entered into under their program(s). This person should be assigned responsibility for notifying the proper staff and/or governing body (i.e. the key decision makers) about these contracts and soliciting written responses regarding conflicts of interest.

» Although not required, relationships between those determining eligibility and program applicants should also be disclosed. Conflicts of interest may exist for program participants.


Appendix – Implementation TIPS» Performance measurement:

» Discuss performance reporting requirements with your granting agencies. Consider building performance measurement and costing processes into your financial reporting systems.

» Pass-through agencies:» establish internal controls that ensure you are communicating

the following information to all subrecipients:» Recipient name (must match name registered in DUNS)» Recipient DUNS number» Unique Federal Award Identification Number (FAIN)» Federal award date» Period of Performance of Grant including starting and ending

date


Appendix – Implementation TIPS» Pass-through agencies (continued):

» Amount of federal funds obligated and awarded» Budget approved by federal awarding agency» Approved cost sharing or matching (if applicable)» Federal award project description» Name of federal awarding agency» CFDA number and name» Identification on whether award is R&D» Indirect cost rate (if applicable) or if the de minimis rate of 10% is

charged» General terms and conditions of grant


Appendix – Implementation TIPS» Subrecipient monitoring

» Establish processes for monitoring and calendar deadlines for each monitoring requirement in Section 200.331 and build into this process a method to track progress throughout the year (i.e. checklist, etc.). Subrecipient monitoring should be documented.

» Financial management:» Design your chart of accounts to accommodate the required

information in Section 200.302. Design and document internal controls over determining the allowability of costs.


Appendix – Implementation TIPS» Internal control

» Design IC in accordance with 200.303 and train your employees.» It is important to note that a key factor in establishing IC is

monitoring their effectiveness. When designing internal controls, management should consider processes for monitoring them. Where monitoring results prove that IC are not functioning effectively, management should evaluate why and either redesign IC and/or train employees on the IC and the importance of IC.


Appendix – Implementation TIPS» Procurement:

» READ THE GUIDANCE CAREFULLY. Adopt a written procurement policy that incorporates the specific requirements of Sections 200.317 – 200.326.

» Establish a written conflict of interest policy that incorporates the specific requirements of Section 200.318(c).

» Educate staff and elected officials that are involved with federal grants on these policies.

» Have elected officials/staff certify that they have received, read, and understand the procurement and conflict of interest policies.

» Develop a contract template that incorporates all required elements in Appendix II.


Appendix – Implementation TIPS» Cost principles:

» Program managers should review the types of costs currently charged to their grants and read the new guidance to check for changes in allowability.

» Program managers should then educate all grant related staff on the changes to avoid incurring costs that are unallowable and ultimately will fall to the NFE to cover.

» Any questions that arise from this review should be directed to the federal or pass-through agency for clarification (preferably written).

» If you have already incurred unallowable costs as a result of the guidance changes, reverse them before closeout (you still have time to do this).


Appendix – Implementation TIPS» Audit requirements:

» Pass-through agencies should understand procurement requirements and educate subrecipients on requirements. Pass-through agencies should build procurement monitoring into subrecipient monitoring processes.

» Build the new SEFA requirements into your SEFA

Business

Theory and Practice: Changes to OMB Single Audit