Transcript Document
OMB Super Circular 101 – Grant
Requirements and Compliance
Melisa F. Galasso, CPA
Carlene Kamradt, CPA
Objectives
At the end of this course, participants should
be able to…
Understand the new single audit requirements.
Describe the changes to administrative and cost
principles.
2
Super Circular
December 26, 2013 – Office of Management
and Budget (OMB) issued the Super Circular
Uniform Administrative Requirements,
Cost Principles, and Audit Requirements
for Federal Awards
December 19, 2014
OMB issued technical corrections
Federal awarding agencies issued
implementing regulations & exceptions
CFR updated 12/26/14 (www.ecfr.gov)
3
Super Circular Purpose
Overarching purposes and impact
Increase efficiency and effectiveness
Eliminate unnecessary and duplicative
requirements
Focus audit efforts
Reduce administrative burden for non-Federal
entities receiving Federal awards while reducing
the risk of waste, fraud and abuse
4
Streamlining 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
5
About the Law
Title 2 in the Code of Federal Regulations (2 CFR) –
Grants and Agreements
Part 200 - Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards
Subpart A Acronyms and Definitions
Subpart B General Provisions
Subpart C
Pre-Federal Award Requirements and Contents of Federal
Awards
Subpart D Post Federal Award Requirements
Subpart E Cost Principles
Subpart F
6
Audit Requirements
Appendices
Appendix I
Full Text of Notice of Funding Opportunity
Appendix II
Contract Provisions for Non-Federal Entity Contracts Under
Federal Awards
Appendix III
Indirect (F&A) Costs Identification and Assignment, and Rate
Determination for Institutions of Higher Education (IHEs)
Appendix IV
Indirect (F&A) Costs Identification and Assignment, and Rate
Determination for Nonprofit Organizations
Appendix V
State/Local Government-wide Central Service Cost Allocation
Plans
Appendix VI
Public Assistance Cost Allocation Plans
Appendix VII
States & Local Government & Indian Tribe Indirect Cost
Proposals
Appendix VIII
Nonprofit Organizations Exempted From Subpart E
Appendix IX
Hospital Cost Principles
Appendix X
Data Collection Form (Form SF-SAC)
7
Appendix
Compliance Supplement
XI
Effective Date
8
Federal Agencies
The regulations just issued by the federal agencies
were required to adopt the guidance and implement
policies and procedures for new awards by the
effective date of December 26, 2014.
All federal agencies were expected to implement the
guidance in unison to provide for a smooth transition
for entities that are required to comply.
Existing Federal awards will continue to be
governed by the terms and conditions of the award.
9
Non-Federal Entities
Non-federal entities will need to implement the new
administrative requirements and Cost Principles for all
new federal awards and to additional funding to
existing awards (funding increments) made after
December 26, 2014.
Some non-federal entities may end up having funding
subject to the old Cost Principles and the new Cost
Principles within the same fiscal year—for several years.
Per 2 CFR 200.110, 1 year delay to comply with
Procurement Standards
10
Single Audits (Subpart F)
The audit requirements in Subpart F will be
effective for fiscal years beginning on or after
December 26, 2014.
Calendar year ends – December 31, 2015
June 30 year ends – June 30, 2016
Early implementation of Subpart F is
not permitted.
11
Administrative & Cost
Principles
Purpose
Purpose – to streamline and establish uniform
administrative requirements, cost principles, and
audit requirements for all types of non-Federal
entities
Try to minimize exceptions to maximize
consistency
13
Pre-Federal Award
Changes
Addition of Conflict of Interest requirements
Incorporates new coverage on fixed amount
awards
Consistency in notices of funding opportunities
Federal awarding agency design and execute a
merit review process
Requirement to have a Risk Review framework
Use of Standard Data Elements in awards
14
Post Federal Award
Moves internal control requirements to administrative
requirements
Creates a new procurement method
Procurement by micro-purchases
Must use standard, OMB-approved data elements for
collection of performance and financial information
Moves determination of subrecipient versus contractor
from auditing to administrative
Standard elements in subawards
Includes a requirement for pass through entities to
perform a subrecipient risk assessment
15
Key Changes to Cost Principles
Listing of items requiring prior written approval
Allows for direct charging of administrative costs in
certain circumstances
Computers – are supplies if under threshold
Depreciation – follows GAAP, not GASB
Exchange rate fluctuations – allowable
Certain Idle Capacity costs - allowable
Foreign taxes (VAT) - allowable
Costs for collections of improper payments allowable
16
Key Changes to Cost Principles
Negotiated indirect cost rates must be accepted
by ALL federal agencies with limited exceptions
Establishes a de minimis rate of 10% of modified
total direct costs (MTDC)
May apply for a one-time extension of current
negotiated indirect cost rates for a period of up
to four years
17
Goals
Family Friendly
Support for Shared Services
Efficient Use of IT
Strengthen Oversight
18
Audit Requirements
Audit Requirements
Subpart F - Audit Requirements
Key Changes
Increases audit threshold
Strengthens risk based approach to Major Program
Determination
Provides for greater transparency of audit results
Strengthens audit findings follow up
20
Audit Requirements
Increase in Single Audit Threshold
Current requirement:
Entities with $500,000 or greater of expenditures
of federal awards in a single year are required to
obtain a single audit.
New requirement:
Entities with $750,000 or greater of expenditures
of federal awards in a single year are required to
obtain a single audit.
21
Type A Threshold
Groupings are based on dollars —
Total Federal Awards Expended
Type A Threshold
$750,000 to $25 million
$750,000
Exceed $25 million and less than or
equal to $100 million
3% of Total Federal Awards
Expended
Exceed $100 million, but less than or
equal to $1 billion
$3 million
Exceed $1 billion, but less than or equal
to $10 billion
0.3% of Total Federal
Awards Expended
Exceed $10 billion, but less than or equal $30 million
to $20 billion
Exceed $20 billion
22
0.15% of Total Federal
Awards Expended
Major Program DeterminationCriteria for Low-Risk Type A Program
Current
New
Audited as a Major program in at
least one of the 2 most recent
audit periods and in the most
recent audit period shall not have
had:
Audited as a Major program in at
least one of the 2 most recent
audit periods and in the most
recent audit period shall not have
had:
Audit findings (Material
Weakness or Significant
Deficiency)
Consider the Sec 525 Risk
Assessment Criteria and apply
professional judgment for Low
Risk program
23
Material weaknesses
Other than an unmodified
opinion on major
programs.
Known or likely
questioned costs that
exceed 5% of total Federal
awards expended for the
program.
Major Program DeterminationType B Program- Risk Assessment Threshold
Current
New
Auditor is required to perform risk
assessments on Type B programs
exceeding:
• Larger of $100,000 or .3% of
federal awards expended if
Federal awards expended are
more than $500,000 and less
than or equal to $100 million.
• Larger of $300,000 or .03% of
federal awards expended if
federal awards expended are
more than $100 million
The auditor is only required to
perform risk assessments on
Type B programs that exceed
25% of the Type A threshold.
24
Major Program DeterminationType B Programs Required for Audit
Current
New
Number of High Risk Type B
programs that must be tested:
Number of High Risk Type B
programs that must be tested:
Option 1- At least ½ of HR
type B programs, but not
more HR Type B programs
than the number of LR Type
A programs
Option 2- One HR Type B
program for each Type A
program identified as LR.
The Type B programs
identified as HR, but not
more HR Type B programs
than at least ¼ of the
number of LR Type A
programs.
Allow the auditor to stop the
Type B program risk
assessment process after
this number of high risk type
B programs are identified.
25
Percentage of Coverage
Reduces the minimum coverage required as
follows:
26
Type of
Auditee
Current
New
Not Low Risk
Low-Risk
50%
25%
40%
20%
Low Risk Auditee
Same
Annual Single Audits
Unmodified SEFA in relation to opinion
No GAGAS material weaknesses
In either of preceding two years, none of the Type A
programs had:
• Material Weaknesses
• Material Non-Compliance
• Questioned Costs that exceeded 5%
Timely filing with FAC
27
Low Risk Auditee
Current
New
Unmodified opinion on
financial statements prepared
in accordance with GAAP
Unmodified opinion on FS
prepared in accordance with
GAAP or a basis of accounting
required by state law.
Auditor reporting a going
concern did not preclude the
auditee from being low risk
No going concern reported.
Waivers were granted from
Federal agencies for entities
that did not file timely with the
FAC
Federal agencies may no
longer issue waivers for filing
with FAC
28
Audit Findings
Increases the threshold for reporting known and likely
questioned costs from $10,000 to $25,000
Requires that questioned costs be identified by CFDA
number and applicable award number
Requires Identification of whether audit finding is a
repeat from the immediately prior audit and if so the
prior year audit finding number
Provides that audit finding numbers be in the format
prescribed by the data collection form
29
Finding Elements
30
Audit Finding Follow-Up
The auditee is responsible for follow-up and
corrective action on all audit findings
Summary schedule of prior audit findings
Status of all prior year audit findings
If not corrected, must describe the reasons for the
finding's recurrence
Clarifies the corrective action plan (CAP) is a
separate document from the auditor’s finding
31
Single Audit Report Submission
All auditees must submit the reporting package and the
data collection form electronically to the Federal Audit
Clearinghouse (FAC)
FAC submission process will be changed to require that
submissions be in text-based PDF and unlocked to
improve accessibility.
FAC responsible to make the reports available on a Web
site
Auditors and auditees must ensure reports do not
include protected personally identifiable information
32 (PPII)
Repository of Record
Federal agencies, pass-through entities, and
others obtain copies by accessing FAC website.
Subrecipient only required to submit report to
FAC and no longer required to submit to passthrough entity.
Pass-through entity no longer required to retain
copy of subrecipient report as available on the
Web.
33
Agency Responsibilities
Requiring agencies to implement audit-risk
metrics
Federal awarding agency must
Ensure that audits are completed and reports are
received in a timely manner
Engage in cooperative audit resolution
Monitor corrective action
Proactive to resolving weaknesses & deficiencies
34
Strengthening Audit Follow-Up
Federal Awarding Agencies must designate a Single
Audit Accountable Official
Typically an agency senior policy official
Held accountable to improve the effectiveness of the single
audit process
Designate Key Management Single Audit Liaison
Key Management Single Audit Liaison
Serve as the Federal awarding agency's management point
of contact for the single audit process both within and
outside the Federal government
Promote interagency coordination
Oversee training
Coordinate agency audit follow up to ensure timely
corrective action on audit findings
35
Compliance Supplement
Now in Appendix XI to Part 200
Supplement is published as separate process so the
final changes are not included in the Guidance
Future changes will be based on available evidence
of past audit findings & potential impact of noncompliance
Further public outreach will be conducted prior to
making structural changes
36
Melisa Galasso – [email protected]
Carlene Kamradt – [email protected]