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.
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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)
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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
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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
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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
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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)
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Appendix
Compliance Supplement
XI
Effective Date
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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.
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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
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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.
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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
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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
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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
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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
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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
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Goals
Family Friendly
Support for Shared Services
Efficient Use of IT
Strengthen Oversight
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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
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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.
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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
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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
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 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.
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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.
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Percentage of Coverage
Reduces the minimum coverage required as
follows:
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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
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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
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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
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Finding Elements
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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
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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
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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.
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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
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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
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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
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Melisa Galasso – [email protected]
Carlene Kamradt – [email protected]