Transcript Office of Management and Budget (OMB) Guidance on Uniform

Office of Management and Budget (OMB)
Guidance on Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal
Awards
IMPACT OF CHANGING REGULATIONS
UNIVERSITY OF ARKANSAS, FAYETTEVILLE
What is the Uniform
Guidance?
The Office of Management and Budget (OMB),
consolidated the federal government’s guidance on
Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for Federal Awards, The
Uniform Guidance supersedes OMB Circulars A-21, A87, A-122, A-89, A-102, A-110, A-133, and the guidance
in Circular A-50 on Single Audit Act follow-up.
The new guidance can be found in 2 CFR Chapter I
and Chapter II, Part 200, et al.
The new guidance became effective on 12/26/2014
(section 200.110).
COFAR & COGR,
Who Are They?
COFAR - Council on Financial Assistance Reform is an
interagency group of Executive Branch officials to coordinate
financial assistance. Established by an OMB Memorandum
these Federal officials have worked closely with OMB in
developing the Uniform Guidance. They maintain a website
https://cfo.gov/cofar/ that contains resources related to the
Uniform Guidance.
COGR – Council on Governmental Relations – is an
association of research universities and is the national
authority on the financial and regulatory infrastructure and
the corresponding compliance requirements, associated with
managing federal research grants and contracts within
research institutions. They frequently lobby the Federal
government on behalf of research institutions.
COFAR’s FAQs
The following are frequently asked questions presented by
the COFAR on OMB’s Uniform Guidance at 2 CFR 200.
Please note that in case of any discrepancy, the actual
guidance at 2 CFR 200 governs. If there is a question
pertaining to the application of the guidance to a
particular Federal award, that question should be
addressed to the Federal awarding agency or passthrough entity in the case of a subrecipient. This document
is intended to provide additional context and background
for the guidance as Federal and non-Federal entities seek
to understand the policy changes and will be referenced
as an addition to the Uniform Guidance at 2 CFR 200 in the
2015 issuance of Appendix XI to Part 200 - Compliance
Supplement.
Will the new uniform guidance apply only to awards
made after the effective date, or does it apply to
awards made earlier?
The Uniform Guidance applies to awards or funding
increments made after the effective date of 12/24/2014. It
will not retroactively change the terms and conditions for
funds or awards that a non-Federal entity has already
received.
Outline of Uniform
Guidance
Subpart A – Definitions 200.0 – 200.99
Subpart B – General Provisions 200.100 - 200.113
Subpart C – Pre-Award 200.200 - 200.211
Subpart D – Post Award 200.300 - 200.345
Subpart E – Cost Principles 200.400 - 200.475
Subpart F – Audit Requirements 200.500 - 200.520
Appendix I – Full Text of Notice of Funding Opportunity
Appendix II – Contract Provisions for Non-Federal Entity
Appendix III – Indirect (F & A) Costs Identification and
Assignment , and Rate Determination for Institutions of
Higher Education
Definitions & General
Provisions
Sections 200.1 through 200.99 provide definitions of
terms used in Federal awards.
The General provisions contained in sections 200.100
through 200.113 explain general provisions for
uniform standards, requirements, applicability,
exceptions, authorities, responsibilities and related
information for all Federal grants and cooperative
agreements.
Disclosure
Requirements
Section 200.113 & 180.335 - Before you enter into a covered transaction
at the primary tier, you as the participant must notify the Federal agency
office that is entering into the transaction with you, if you know that you
or any of the principals for that covered transaction:
 Are presently excluded or disqualified;
 Have been convicted within the preceding three years of any of the
offenses listed in §180.800(a) or had a civil judgment rendered against
you for one of those offenses within that time period;
 Are presently indicted for or otherwise criminally or civilly charged by a
governmental entity (Federal, State or local) with commission of any of
the offenses listed in §180.800(a); or
 Have had one or more public transactions (Federal, State, or local)
terminated within the preceding three years for cause or default.
These same provisions must be passed down to lower tier participants
with whom you intend to do business per Section 180.330.
Pre-Federal Award
Requirements and Contents
of Federal Awards
This section, 200.2XX requires Federal agency
publication of certain information in
announcements of funding opportunities and
notices of awards. It also requires Federal
agencies to publish terms and conditions of grants
and to be responsible for informing recipients of
national policy requirements as applicable. It
includes a standard set of data elements to be
included in all federal awards (200.210).
Fixed Amount Awards
Section 200.201(b) provides for fixed amount awards
defined as “a type of grant agreement under which
the Federal awarding agency or pass-through entity
provides a specific level of support without regard to
actual costs incurred…”(200.45). OMB is encouraging
federal agencies to experiment with this type of
agreement, hoping that the increased flexibility will
result in better outcomes and lower costs for certain
types of projects. Accountability for these awards will
be based primarily on performance and results. Prior
written approval from the Federal awarding agencies
is required to issue fixed amount subawards.
Post – Award
Requirements
Sections 200.300 through 200.309 provides
standards for Financial and Program
Management. This includes a financial
management system that includes
identification of all federal awards and
accurate, current and complete disclosure of
the financial results of each Federal award
(200.302). There is also a directive to funding
agencies to relate financial data to
performance requirements of the federal
award (200.301)
Internal Controls
Section 200.303 requires federal award
recipients to: Take reasonable measures to
safeguard protected personally identifiable
information and other information the
Federal awarding agency or pass-through
entity designates as sensitive or the nonFederal entity considers sensitive consistent
with applicable Federal, state and local laws
regarding privacy and obligations of
confidentiality.
Payment
Section 200.305 has changed the amount of
administrative expense that can be taken from
interest earned on federal advances. Interest in
excess of $500 per year must be remitted annually
to:
Department of Health and Human Services
Payment Management System
Rockville, MD 20852
This process is managed by Research Accounting
Cost Sharing or
Matching
Section 200.306 - Voluntary committed cost
sharing cannot be used as a factor during the
merit review of applications or proposals, but
may be considered if it is both in accordance
with Federal awarding agency regulations and
specified in a notice of funding opportunity.
Criteria for considering voluntary committed
cost sharing must be explicitly described in the
notice of funding opportunity.
Program Income
Section 200.307 – For Federal awards made to IHEs and
nonprofit research institutions, if the awarding agency
does not specify how program income is to be used,
paragraph (e) (2) of this section must apply: (e)(2)
Addition. With prior approval of the Federal awarding
agency, program income may be added to the
Federal award by the Federal agency and the nonfederal entity. The program income must be used for
the purposes and conditions of the Federal award.
Note that the definition of program income in section
200.80 includes “license fees and royalties on patents
and copyrights”
Equipment Section
200.313
Title to equipment acquired under a Federal award will
vest upon acquisition with the non-federal entity as a
“conditional title”. Title generally vests subject to these
conditions:
Equipment to be used for the until funding ceases, or
until property is no longer needed for project.
Property cannot be encumbered without approval of
Federal awarding agency.
It should be used for the program as long as needed,
whether or not the program continues to be supported
by the award. When no longer needed for the original
program it may be used in other activities supported by
the Federal awarding agency (first priority), then other
Federal awarding agencies.
Equipment, Section 200.313
(continued)
When acquiring replacement equipment the nonFederal entity may use the equipment to be
replaced as a trade-in or sell the property and use
the proceeds to offset the cost of the
replacement property.
Property records must be maintained that
includes a description of the property, serial
number, source of funding, who holds title,
acquisition date, cost , location and condition of
the equipment as well as any ultimate disposition
data including date of disposal and sales price.
Equipment Disposition Section
200.313 (Continued)
Disposition of equipment where title remains with the Federal
government will be made in accordance with Federal awarding
agency disposition instructions:
 Items with a current per unit FMV of $5,000 or less may be retained,
sold or otherwise disposed of with no further obligation to the
Federal awarding agency.
 If the Federal awarding agency fails to provide requested
disposition instructions within 120 days, items with a FMV in excess of
$5,000 may be retained by the non-Federal entity or sold. The
Federal awarding agency is entitled to an amount calculated by
multiplying the current market value or proceeds from the sale by
the Federal awarding agency’s % of participation in the cost of the
original purchase. When sold the Federal awarding agency may
permit the non-Federal entity to deduct and retain from the federal
share $500 or 10% of the proceeds, whichever is less for its selling
and handling expenses.
Supplies Section 200.314
Title to supplies will vest in the non-Federal entity
upon acquisition. If there is a residual inventory
of unused supplies exceeding $5,000 in total at
the end of the project, and the supplies are not
needed for another Federal award, the nonFederal entity must retain the supplies for use in
other activities or sell them, but must, in either
case, compensate the Federal government for
its share of the cost of the supplies. The amount
of compensation must be computed in the
same manner as for equipment.
Procurement
Section 200.318 requires non-Federal entity to maintain
records sufficient to detail the history of procurement.
It also specifies that the non-Federal entity must avoid
acquisition of unnecessary or duplicative items.
Section 200.319
 Requires full and open competition
 Prohibits the use of statutorily or administratively imposed state or local
geographical preferences
 Requires written procedures
 Recipients must ensure that all prequalified lists of vendors are current
and include enough qualified sources to ensure maximum and open
free competition.
Methods of
Procurement
Section 200.320 elaborates on procurement methods defined in
the definitions section.
 Micro-purchase (200.67) $3,000 or less – does not require
competitive quotations so long as price is reasonable
 Simplified Acquisition Threshold (200.88) $3,000 - $150,000 –
requires price or rate quotations from an adequate number of
qualified sources. (Controversial and delayed implementation)
 Purchases over $150,000 may use the Competitive Proposal or
Sealed Bids method.
 Noncompetitive proposals from only one source may be used
only when the item is only available from a single source, or
public exigency or emergency will not permit delay, or express
authorization from Federal awarding agency.
Contracting with small and
minority businesses, women’s
business enterprises, and labor
surplus area firms
Section 200.321 requires affirmative steps to assure MBE/WBE and labor surplus
firms are used when possible. Affirmative steps must include:
 Placing qualified small and MBE/WBEs on solicitation lists.
 Assuring that small and MBE/WBE are solicited when they are potential
sources.
 Dividing total requirements when economically feasible, into smaller tasks
to permit maximum participation by small and MBE/WBE businesses.
 Establishing delivery schedules when the requirement permits which
encourage participation by small and MBE/WBE businesses.
 Using the services and assistance, as appropriate, of such organizations as
the Small Business Administration and the Minority Business Development
Agency of the Dept. of Commerce.
 Requiring the prime contractor, if subcontracts are to be let, to take the
affirmative steps listed in paragraphs (1) through (5) above.
Subrecipient and Contractor
Determinations Section 200.330
Subrecipient:
 Performance measured against federal award objectives
 Responsible for programmatic decisions
 Adherence to Federal program compliance requirements
 Uses federal funds to carry out a program of the organization, not to
provide goods and services
 May determine who is eligible to receive Federal financial assistance
Contractor:
 Provides goods or services and may provide similar goods or services to
many
different purchasers.
 Operates in a competitive environment
 Is not subject to compliance requirements of Federal program
Federal agencies may require specific support for determinations.
Requirements for passthrough entities
Section 200.331 requires that all pass-through entities must:
 Ensure that every subaward is clearly identified to the subrecipient as a subaward
and includes standard required information. A list of the required information can
be found in this section.
 Evaluate each subrecipient’s risk of noncompliance with Federal statutes,
regulations, and the terms and conditions of the subaward for purposes of
determining the appropriate subrecipient monitoring described in paragraph (e)
of this section, which may include consideration of such factors as:
1.
The subrecipient’s prior experience with the same or similar subawards
2.
The results of previous audits including whether or not the subrecipient
receives a Single Audit in accordance with subpart F
3.
Whether the subrecipient has new personnel or new or substantially
changed systems
4.
The extent and results of Federal awarding agency monitoring (e.g., if the
subrecipient also receives Federal awards directly from a Federal awarding
agency).
 Consider imposing specific subaward conditions upon a subrecipient if
appropriate as described in Section 200.207
Requirements for
pass-through
entities (continued)



Monitor the activities of the subrecipient as necessary to ensure that the subaward is for
authorized purposes, in compliance with Federal statutes, regulations, and the terms and
conditions of the subaward; and that subaward performance goals are achieved. Passthrough monitoring of a subaward must include:
1.
Reviewing financial and programmatic reports required by the pass-through entity.
2.
Follow-up and ensure that the subrecipient takes timely action on all deficiencies
3.
Issue a management decision for audit findings pertaining to the Federal award
provided to the subrecipient.
Depending on the assessment of risk posed by the subrecipient (paragraph b) the following
monitoring tools may be useful to ensure compliance and achievement of program goals:
1.
Provide the subrecipient with training and technical assistance
2.
Perform on-site reviews of the subrecipient’s program operations
3.
Arrange for agreed-upon-procedures engagements as described in 200.425 Audit
Services
Verify that every subrecipient is audited as required by Subpart F – Audit Requirements.
Requirements for passthrough entities (continued)

Consider whether the results of the subrecipient’s audits, on-site reviews, or other
monitoring indicates conditions that necessitate adjustments to the pass-through
entities own records.

Consider taking enforcement action against noncompliant subrecipients as
described in Section 200.338
Section 200.332 Fixed amount subawards – With prior written approval from the
Federal awarding agency, a pass-through entity may provide subawards based on
fixed amounts up to the Simplified Acquisition Threshold (currently $150,000),
provided that the subawards meet the requirements for fixed amount awards in
Section 200.201. Those requirements include payments based on meeting specific
requirements of the Federal award. Such payments can be based on “milestones”,
“unit price basis”, or one payment at Federal award completion.
200.201 (2) A fixed price amount cannot be used in programs that require
mandatory cost share or matching.
200.201 (3) The non-Federal entity must certify in writing to the Federal awarding
agency or pass-through entity that the project or activity was completed or the
level of effort was expended. If the level of activity was not carried out the amount
of the award must be adjusted.
Subrecipients – Indirect
costs
Section 200.331 (a)(4) if the subrecipient has a
Federally negotiated indirect cost use it. If not
the non-Federal entity can either negotiate a
rate with the subrecipient or use a de minimus
rate of 10% of MTDC.
Direct Costs
Section 200.413 – Direct costs are those cost that can be
identified specifically with a particular final cost objective. Costs
incurred for the same purpose in like circumstances must be
treated consistently as either direct or indirect costs. (see also
Fayetteville campus policy 310.1)
The salaries of administrative and clerical staff should normally be
treated as indirect costs. Direct charging of these costs may be
appropriate only if all of the following conditions are met:
 Administrative or clerical services are integral to a project of
activity.
 Individuals involved can be specifically identified with the
project or activity.
 Such costs are explicitly included in the budget or have the
prior written approval of the Federal awarding agency.
 The costs are not also recovered as indirect costs.
Indirect Costs
Section 200.414 (c) – A negotiated indirect
cost rate must be accepted by all federal
awarding agencies except when required by
a federal statute or regulation, or “when
approved by a Federal awarding agency
head or delegate based on documented
justification…The Federal awarding agency
must implement , and make publicly
available, the policies, procedures and
general decision making criteria that their
programs will follow to seek and justify
deviations from negotiated rates.”
Indirect Costs
Section 200.414 (f) - Non-Federal entities that have
never received a negotiated indirect cost rate may
elect to charge a de minimis rate of 10% of MTDC.
Section 200.331 (a) (4) - authorizes pass-through
entities to allow subrecipients to use the 10% de
minimis rate if the subrecipient does not have a
negotiated federal rate.
Record Retention
 Section 200.333 – Records must be retained for a period of three years from
the date of submission of the final expenditure report or for Federal awards
that are renewed quarterly or annually, from the date of the submission of
the quarterly or annual financial report, respectively, as reported to the
Federal awarding agency or pass-through entity in the case of a
subrecipient. Federal awarding agencies and pass-through entities must
not impose any other record retention requirements upon non-Federal
entities.
 Exceptions
(a) If any litigation, claim or audit is started records should be kept until such
action is resolved and final action taken.
(b) When notified in writing by the Federal awarding agency to extend the
period.
(c) Records of real property and equipment acquired with Federal funds
must be retained 3 years after final disposition.
(d) If records are transferred to the Federal awarding agency or passthrough entity, the 3 year requirement is not applicable to the nonFederal entity.
(e) Records of program income after the period of performance if
reportable to the sponsor would be kept 3 years after the end of the nonFederal entities fiscal year in which the program income was earned.
University of Arkansas
Record Retention Policy
Fayetteville campus policy 218.0 has various record
retention requirements for different types of
documents.
Relevant ones include:
Grant Proposals & Source Documents – active plus
3 years
Patent materials – indefinitely
Grant Accounting records - 5 years
Grant Property records – 5 years
Accounting entry records – indefinitely (electronic)
Selected Items of Cost
Sections 200.420 through 200.475 provide guidelines for selected items
of cost which were previously provided in OMB Circular A-21 Section
J.
200.430 Compensation – still requires that the “Non-federal entity’s
system of internal controls includes processes to review after-the-fact
interim charges made to Federal awards based on budget
estimates” (effort reporting).
200.453 Supplies including computing devices – “In the specific case
of computing devices, charging as direct costs is allowable for
devices that are essential and allocable but not solely dedicated, to
the performance of a Federal award.”
200.463 Recruitment costs – Now permits visa costs as allowable direct
costs when “critical and necessary to conduct of the project”.
200.474 Travel Costs – New requirement that there must be
documentation justifying that “participation of the individual (in the
travel) is necessary to the Federal award.” (b)(1)
Subpart F – Audit
requirements
200.501 Raises Single Audit threshold
to expenditures of $750,000 or more in
Federal awards. May impact
whether some of our subrecipients
have a Single audit.
Appendix III – F&A Costs
and Rate Determinations
for Institutions of Higher
Education
This section replaces OMB Circular A21 in defining how IHE’s are to
prepare and submit IDC rate
proposals. It also contains the
definitions of the various direct and
indirect cost bases discussed in the
Function Code presentation.