Transcript Omni Circular Powerpoint

OMB GRANT REFORM:
THE OMNI CIRCULAR
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New Regulations: “OMB Uniform
Administrative Requirements, Cost
Principles and Audit Requirements
for Federal Awards”
 Also known as the OMB Omni Circular (or “Super
Circular”).
 Published in the Federal Register on December 26,
2013 at 2 CFR Part 200.
 Federal Agencies (e.g. HUD) were supposed to
publish their implementing regulations and
guidance effective one year from the publication
date – December 26, 2014.
 Single audit changes effective 12/31/2015.
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Status of HUD Implementation
 As of the date of this writing, March 30, 2015, HUD
has not published their conforming regulations as
required.
 Jason Casterline of Casterline Associates PC and
PHADA conducted a conference call with HUD on
March 20, 2015, and they indicated regs are coming
soon.
 HUD did publish a notice, SD 2015-01 on February
26, 2015, which will be discussed in detail in this
session.
 Also expected: FAQs and other clarifying material.
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Objectives of Omni Circular
 Reduce administrative burden for those
receiving federal awards, while also reducing risk
of waste, fraud and abuse.
 Improve the integrity of financial management
and operation of federal programs.
 Strengthen accountability for federal dollars by
improving policies that protect against waste,
fraud, and abuse.
 Increase impact and accessibility of programs by
minimizing time spent complying with
unnecessarily burdensome administrative
requirements.
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Objectives (continued)
 Reorient recipients toward achieving program
objectives.
 Grants awarded based on merit.
 Increased management focus on performance
outcomes.
 Streamlined rules governing federal funds.
 Single audit oversight tool is better focused to
reduce waste, fraud, and abuse.
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Includes Streamlining and
Consolidation of Circulars
A-21 Cost Principles for Educational Institutions
A-50 Audit Follow-Up, related to Single Audit
A-87 Cost Principles for State, Local, and Indian Tribal
Governments
A-89 Federal Domestic Assistance Program Information
A-102 Awards and Cooperative Agreements with State and
Local Governments
A-110 Uniform Administrative Requirements for Awards and
Other Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations
A-122 Cost Principles for Non-Profit Organizations
A-133 Audits of States, Local Governments and Non-Profit
Organizations
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Three Major Areas of Change
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Reforms to administration requirements
Reforms to cost principles
Audit requirements
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Specific Content
 Subpart A: Acronyms and Definitions
 Subpart B: General Provisions
 Subpart C: Pre-Federal Award Requirements
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and Contents of Federal Awards
Subpart D: Post-Federal Award Requirements
Standards for Financial & Program Mgmt
Subpart E: Cost Principles
Subpart F: Audit Requirements
Note: we will first discuss a variety of topics
and changes, and then dig into more detail
with a review of HUD Notice SD 2015-01
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Shift in Focus
 The Omni Circular shifts focus from compliance
to performance.
 Compliance is still important of course but
auditors and regulators are supposed to
emphasize outcomes more than process (at
least this is the idea).
 There is major emphasis on accountability with
enhanced policies designed to protect again
waste, fraud, and abuse (with new certification
requirements – see next page).
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Certification 200.208
 Certification for all annual financial reports and
requests for payments: “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.”
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Focus on Performance
Changes
 200.102 Authority for OMB to waive certain
compliance requirements and approve new
strategies for innovative program designs that
improve cost-effectiveness and encourage
effective collaboration across programs.
 200.201 Fixed amount awards focused on
meeting performance milestones.
 200.301 Emphasis on performance goals and
performance reporting.
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Performance Measurement - More
 200.301: Recipients must use standard
government wide (i.e. PHA wide) information
collection when providing financial and
performance information and to related the
data to performance.
 Recipients must also provide cost information
to demonstrate cost effective practices.
 Federal awarding agency should provide
recipients with clear performance goals,
indicators, and milestones to report.
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Stronger Oversight
Section / Changes
 200.112, 200.113 Emphasis on conflict of interest
policies and procedures
 § 200.112 Conflict of interest. The Federal
awarding agency must establish conflict of
interest policies for Federal awards. The nonFederal entity must disclose in writing any
potential conflict of interest to the Federal
awarding agency or pass-through entity in
accordance with applicable Federal awarding
agency policy.
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Stronger Oversight (cont’d)
 § 200.113 Mandatory disclosures. The non-
Federal entity or applicant for a Federal award
must disclose, in a timely manner, in writing to
the Federal awarding agency or pass-through
entity all violations of Federal criminal law
involving fraud, bribery, or gratuity violations
potentially affecting the Federal award. Failure
to make required disclosures can result in any of
the remedies described in § 200.338 Remedies
for noncompliance, including suspension or
debarment.
 Includes Tenant Fraud? Landlord Fraud? HUD
interpretation not yet known.
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Stronger Oversight (cont’d)
 200.503 Emphasis for federal agencies to build
on single audit results, rather than repeating
procedures: (a) An audit conducted in
accordance with this Part must be in lieu of any
financial audit of Federal awards which a nonFederal entity is required to undergo under any
other Federal statute or regulation. To the extent
that such audit provides a Federal agency with
the information it requires to carry out its
responsibilities under Federal statute or
regulation, a Federal agency must rely upon and
use that information.
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Stronger Oversight (cont’d)
 (b) Notwithstanding subsection (a), a Federal
agency, Inspectors General, or GAO may conduct
or arrange for additional audits which are
necessary to carry out its responsibilities under
Federal statute or regulation... except that the
Federal agency must plan such audits to not be
duplicative of other audits of Federal
awards…Any additional audits must be planned
and performed in such a way as to build upon
work performed, including the audit
documentation, sampling, and testing already
performed, by other auditors.
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Stronger Oversight (cont’d)
 200.331 Subrecipient monitoring
requirements enhanced.
 200.303 Internal control guidance added to
administrative requirements (COSO and
green book tied in).
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Internal Controls 200.303 (more)
 Recipients are required to have internal
controls in place that safeguard assets and
provide reasonable assurance of compliance
with federal statutes and regulations.
 Available resources:
 Comptroller General “Standards for Internal Control”
(also known as the Green Book)
 Internal Control Framework issued by the
Committee on Sponsoring Organizations (COSO)
 Appendix XI Compliance Supplement Part 6 Internal
Control (will follow COSO and Green Book in 2015)
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Technology
Section/Changes
 200.335 The Omni-Circular requires, where
feasible, for federal agencies and recipients
such as PHAs to move toward a paperless
environment with electronic storage rather
than printed paper. Like much of what is
coming from the Omni Circular, it is not clear
yet what HUD will require in this regard.
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Technology (continued)
 § 200.335 “Methods for collection, transmission
and storage of information. In accordance with
the May 2013 Executive Order on Making Open
and Machine Readable the New Default for
Government Information, the Federal awarding
agency and the non-Federal entity should,
whenever practicable, collect, transmit, and
store Federal award-related information in open
and machine readable formats rather than in
closed formats or on paper.”
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Technology (continued)
 200.94 Defined that computers that cost below
capitalization threshold are considered supplies,
not equipment: “Supplies means all tangible
personal property other than those described in
§ 200.33 Equipment. A computing device is a
supply if the acquisition cost is less than the
lesser of the capitalization level established by
the non-Federal entity for financial statement
purposes or $5,000, regardless of the length of
its useful life.”
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Procurement
 200.318: Agencies but have their own written
procurement procedures, which must comply with
both State and Federal laws and regulations.
 Must maintain oversight to ensure contractors
comply with terms and conditions of contracts and
purchase orders.
 Must have written standards of conduct covering
conflicts of interest for employees engaged in
selection / award / administration.
 Must maintain records to detail history of
procurements.
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Procurement Methods
 Five procurement methods described:
 Micro-purchase (new threshhold is $3,000,
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no competition required)
Small Purchase Procedures
Sealed Bids / Formal Advertising
Competitive Proposal when Sealed Bid not
appropriate
Noncompetitive Proposals / Sole Source
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Standardized Requirements
Section / Changes
 Consistent definitions
 200.203 Notice of Funding Opportunities
 200.210, 200.301, 200.327, 200.328 Award,
Application and Reporting Requirements
 200.305 Payment of interest earned on
federal funds
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Indirect/Direct Costs
Section / Changes
 Appendix VII, Indirect Cost Allocation plans – pg
78688 in the 12/26/2013 federal register –
discusses direct and indirect costs and gives
guidance on allocation of indirect costs,
applicable to those PHAs that do not use the
management fee approach and/or programs that
do not allow that. This also was previously part
of OMB A-87. Generally, indirect costs may still
be allocated based upon the percentage of direct
labor charged to a given program (same as
before).
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Other Items
Actions to Increase Competition in grants: The
Omni Circular requires public notice for grants
through the Catalog of Federal Domestic
Assistance (CFDA). The notice must include:
program description, purpose, goals and
measurement, projected total amount of funds
available for the program, anticipated source of
funds, general eligibility requirements, and
applicability of single audit requirements.
According to OMB HUD must also describe the
merit review process in the corresponding funding
opportunity for each grant application.
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Other Items (continued)
Risk analysis of potential grantees: Prior to making
a federal award, the OMB Omni Circular requires
HUD to have a framework in place to determine
the eligibility and risks of applicants. Risk factors
include: financial stability, quality of management
systems, performance history, audit findings, and
the applicants' effectiveness in implementing
statutory and regulatory requirements. Evaluation
criteria must once again be described in the
announcement of funding opportunity.
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Selected Items of Cost
 One of the areas you should definitely take a look
at is the list of definitions for allowable costs.
“General Provisions for Selected Items of Cost” –
begins at 2 CFR 200.420, also found at pg 78644
in the 12/26/2013 federal register. This used to be
included in OMB A-87 and discusses what costs
are allowable and not allowable.
 There are a couple of items in here that are
strange, but please note the following:
“200.240… In case of a discrepancy between the
provisions of a specific Federal award and the
provisions below, the Federal award governs.”
HUD might issue clarifying rules to allow the
following:
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Selected Items of Cost
§ 200.426 Bad debts (see note bottom of previous slide):
Bad debts (debts which have been determined to be
uncollectable), including losses (whether actual or
estimated) arising from uncollectable accounts and
other claims, are unallowable. Related collection costs,
and related legal costs, arising from such debts after
they have been determined to be uncollectable are also
unallowable. [This was in OMB A-87 prior to the
SuperCircular and generally allowed by HUD previously]
§ 200.431 Compensation/fringe benefits (see note
bottom of previous slide): …(f) Automobiles. That
portion of automobile costs furnished by the entity that
relates to personal use by employees (including
transportation to and from work) is unallowable as
fringe benefit or indirect (F&A) costs regardless of
whether the cost is reported as taxable income to the
employees.
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Single Audit Changes
 Single Audit changes are effective for years ending
on or after December 31, 2015.
 Single audit threshold raised to $750,000.
 Low risk auditee criteria updated.
 Type A program threshold raised to $750,000 (or
still 3% $3M, .3% larger entities).
 Type Bs – not required to identify more high risk
Type Bs than at least 25% low risk type As, and
other changes to Type A / Type B.
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Single Audit Changes
 Questioned costs threshold raised to $25,000
 Questioned costs section requires description
of how calculated
 Findings require “perspective” section
(isolated, prevalent, type of sampling used)
 Repeat findings require identification as
repeat and prior finding reference number
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Single Audit Changes
 Coverage requirements for major programs
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tested changed to 20% for low risk auditees
and 40% for non low risk auditees
Online publication of reports (clearinghouse)
“Next business day” due date
Federal due date still nine months after fiscal
year end
Modification to 14 compliance requirements
will be known with future release of
compliance supplement
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