Transcript New Mexico Public Education Department Perkins CTE

The Omni Circular’s
Impact on Federal
Grants Management
Bonnie Little Graham, Esq.
[email protected]
Brustein & Manasevit, PLLC
www.bruman.com
JANUARY 15, 2015
1
Agenda
2
 Background on Uniform Grants Guidance
 Grants Management Systems
 Financial Management, Procurement, Inventory
 Subrecipient Monitoring
 Allowability
 Basic Cost Principles
 Audits
OMB Revised Administrative, Cost, Audit
Rules Governing All Federal Grants
THE SUPER CIRCULAR –
“OMNI CIRCULAR”
THE ONE-STOP SHOP FOR FEDERAL
ASSISTANCE
Key Dates:
4
 Feb 1, 2013
 Dec 26, 2013
 May 2014
 June 26, 2014
 Dec 26, 2014
NPRM
Federal Register
New OMB Compliance
Supplement
ED Draft EDGAR
Changes Due
Final EDGAR
Published
What is covered?
5
 A-102 – Administrative Rules State / Local
– Part 80 – EDGAR
 A-110 – Administrative Rules
Postsecondary – Part 74 – EDGAR
 A-87 – Cost Rules – State / Local
 A-21 – Cost Rules – Rules – Postsecondary
 A-122 – Cost Rules – Nonprofit
 A-133 – Audit Rules (>$750,000)
Who is covered?
6
 All “nonfederal entities” expending
federal awards
 200.69
Date of Applicability of Revised Rules
7
 COFAR FAQs: New awards and incremental
funding after 12/26/14




Applications for awards made after 12/26/14 should be
developed in accordance with Omni Circular
Indirect cost rates will be developed in accordance with Omni
Circular when due to be re-negotiated
One year grace period for procurement for IHEs
Federal agencies may apply Omni Circular to unobligated
funds as of the Federal award date of the first incremental
funding received after 12/26/14
Reasons for the Change?
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1. Simplicity
2. Consistency
3. Obama Executive Order on Regulatory
Review
 Increase Efficiency
 Strengthen Oversight
Who crafted the changes?
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 Council on Financial Assistance
Reform (“COFAR”), and Key
Stakeholders
www.cfo.gov/cofar
Inconsistency Between Program Statute and
Circular
10
 If federal program statute or
regulation differs from Omni Circular,
then statute / regulation governs.
The Major Themes Impacting
Federal Grants Management
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1. FOCUS ON OUTCOMES
2. PERFORMANCE METRICS
3. RISK ASSESSMENTS
4. FINANCIAL MANAGEMENT POLICIES
5. EQUIPMENT USE
6. MICRO PURCHASES
7. CORRECTIVE ACTION
8. FAMILY FRIENDLY POLICIES
9. FALSE CLAIMS CERTIFICATIONS
10.AUDIT THRESHOLDS
Most Significant Change
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 Shift from focus on Compliance to focus
on PERFORMANCE!!!
Auditors (A-133 + Federal OIG) and Monitors
(Federal and State Pass Through) must look more to
“outcomes” than to “process”
 The Omni Circular adds significant flexibility to way
grantees / subgrantees can adopt their own
processes

Most Significant Changes (cont.)
 The Omni Circular has a MAJOR emphasis on
“strengthening accountability” by improving policies
that protect against waste, fraud and abuse
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Structure of Omni-Circular
(p. 78608)
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2 CFR PART 200
(p. 78608)
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 Subpart A – Definitions
 Subpart B – General Provisions
 Subpart C – Pre Award Requirements
 Subpart D – Post Award Requirements
 Subpart E – Cost Principles
 Subpart F – Audit Requirements
Key Definitions
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 Cognizant Agency for Audit 200.18 (78611)
 Cognizant Agency for Indirect Costs 200.19 (78611)
 Computing Devices 200.20 (78612)
 Cooperative Audit Resolution 200.25 (78612)
 Cost Objective 200.28 (78612)
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 Internal Control Over Compliance 200.52 (78615)
 Major Program 200.65 (78615)
 Micro Purchase 200.67 (78615)
 Modified Total Direct Cost 200.68 (78615)
 Non-Federal Entity 200.69 (78615)
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 Conflict of Interest
All non federal entities must establish
conflict of interest policies, and
disclose in writing any potential
conflict to federal awarding agency in
accordance with applicable Federal
awarding agency policy
200.112
(78621)
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 Mandatory Disclosures
Nonfederal entities must disclose to the
federal agency or pass-through entity
all violations of Federal criminal law
involving fraud, bribery, or gratuity
violations potentially affecting the
federal award
200.113
(78621)
Financial Management
Controls
The Key Component to
Federal Grants
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 The more attention paid to financial management
controls, fewer headaches down the road!!!
WHY??
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All oversight will examine financial management
controls:
1) OIG Audit
2) Single Audit
3) Federal Program Monitoring
4) “Pass Through” Monitoring
Crosswalk Between 34 CFR 80.20 (b) and
CFR 200.302(b)
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34 CFR 80.20 (b)
1. Financial Reporting
2. Accounting Records
3. Internal Control
4. Budget Control
5. Allowable Cost
6. Source Documentation
7. Cash Management
2 CFR 200.302 (b)
1. Identification of
2.
3.
4.
5.
6.
7.
Awards
Financial Reporting
Accounting Records
(Source Docs)
Internal Control
Budget Control
Written Cash
Management
Procedures
Written Allowability
Procedures
1) Identification of Awards (New)
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 All federal “awards” received and expended
 The name of the federal “program”
 Identification # of award
 CFDA Title and Number
 Federal Award I.D. #
 Fiscal Year of Award
 Federal Agency
 Pass-Through (If S/A)
2) Financial Reporting
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 New shift to OMB approved
performance metrics
2) Financial Reporting (cont.)
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 Accurate, current, complete disclosure of financial




results of each award
(Old) in accord with the financial reporting
requirements of the grant
(New) in accord with 200.327 and 200.328
200.327 – Federal awarding agency can only collect
OMB approved data elements, no less than annually, no
more than quarterly
200.328 – Non federal entity must submit performance
reports at intervals required by federal agency or pass
through. Annual performance reports due 90 days after
reporting period; Quarterly performance reports due 30
days after reporting period
2) Financial Reporting (cont.)
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 Performance Metrics:
1.
2.
3.
Compare actual accomplishments to
objectives. (quantify to extent possible)
Reasons goals were not met if
appropriate
Additional pertinent information (e.g.
analysis and explanation of cost
overruns, high unit costs)
 200.328(a)(2)
2) Financial Reporting (cont.)
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4.

Significant developments
a. Problems, delays. Adverse conditions that
would impair ability to meet objective of the
award
b. Favorable developments. Finishing sooner
or at less cost
200.328(d)
2) Financial Reporting (Cont.)
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 OMB allows ED to waive “performance metrics” not
required.
 How will ED reconcile performance metrics with
accountability / performance indicators of ESEA,
IDEA, CTE, AEFLA ??
3) Accounting Records
(Source Documentation)
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 Combines 80.20 (b)(2) and 80.20 (b)(6)
 Source Documentation on:
1.
Federal Awards
2.
Authorizations
3.
Obligations
4.
Unobligated balances
5.
Assets
6.
Expenditures
7.
Income
8. Interest (New)
 Eliminated
liabilities
4) Internal Control
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 Essentially same as 80.20 (b) (3)
 Effective control over and accountability for:
All funds
2. Property
3. Other assets
 Must adequately safeguard all assets
 Use assets solely for authorized purpose
1.
4) Internal Control 200.303 (cont.)
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 Cross reference 200.303 (New)
 Internal controls “should” be in compliance with guidance in:


“Standards for Internal Control in the Federal Gov’t” by Comptroller
General
“Internal Control Integrated Framework” by Committee of
Sponsoring Orgs of Treadway Commission
 Internal Controls “must” ensure compliance with federal statutes,
regs, terms of the award.
 Entities must:



Evaluate and monitor compliance
Take prompt action when instances of noncompliance are identified;
and
Safeguard protected personally identifiable information (PII)
5) Budget Control
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 Same as 80.20 (b)(4)
 Comparison of expenditures with budget
amounts for each award
6) Written Cash Management Procedures (New)
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 Written Procedures to implement the
requirements of 200.305 (payment)
6) Written Cash Management Procedures (cont.)
35
 For states, payments are governed by
Treasury – State CMIA agreements 31 CFR
Part 205
 No Change
6) Written Cash Management Procedures (cont.)
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 For all other non federal entities, payments
must minimize time elapsing between draw
from G-5 and disbursement (not
obligation)
6) Written Cash Management Procedures (cont.)
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 Written procedures must describe whether non-
federal entity uses:
Advance Payments (preferred)
1)
•
Limited to minimum amounts needed to meet immediate cash
needs
Reimbursement
2)
•
Pass through must make payment within 30 calendar days
after receipt of the billing
Working Capital Advance
3)
•
The pass through determines that the nonfederal entity lacks
sufficient working capital.
Allows advance payment to
cover estimated disbursement needs for initial period
6) Written Cash Management Procedures (cont.)
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 Non federal entity must use existing
resources before requesting an advance:
program income, refunds, rebates, interest
earned
6) Written Cash Management Procedures (cont.)
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 Payments must not be withheld from
nonfederal entities unless finding of
noncompliance debt to the U.S.
(Treasury Offset Program), or
nonfederal entity is withholding
payment to a vendor to assure
satisfactory completion of work
6) Written Cash Management
Procedures (cont.)
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 Advances must be maintained in insured accounts
 Pass through cannot require separate depository
accounts
 Accounts must be interest bearing unless:
1. Aggregate federal awards under $120,000
2. Account not expected to earn in excess of
$500 per year
3. Bank require minimum balance so high, that
such account not feasible
6) Written Cash Management Procedures (cont.)
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 Interest earned must be remitted
annually to HHS
 Interest amounts up to $500 may be
retained by non federal entity for
administrative purposes
7) Written Allowability Procedures (New)
42
 Written procedures for determining
allowability of costs in accord with
Subpart E – Cost Principles (see p.
78639 – 78662)
7) Written Allowability Procedures (Cont.)
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 Not a restatement of Subpart E
 But explanation of the processes for
grant development and budgeting
 Training tool for employees
Equipment (78629)
44
 Significant changes on use and
dispositions (200.313)
 Shared
use allowed if use will not “interfere”
 Clarified: shared use priorities: (1) projects
supported by same federal awarding agency; (2)
projects funded by other federal agencies; (3)
nonfederal programs
 New: may “trade in” when acquiring replacement
equipment without recourse federal agency
45
 Supplies
200.314
(78630)
Covers “computing devices”
Procurement (78631)
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 By states 200.317
 General Procurement Standards 200.318
 Competition 200.319
 Methods of Procurement 200.320
 Cost and Price 200.323
Procurement “Bear Claw”
47
48
 Contract vs. Grant 200.330
Note
the difference!!
Pass-Through Agency
Responsabilities
49
50
 A pass-through entity means a non-federal entity
that provides a subaward to a subrecipient to carry
out part of a federal program.
-200.74
(e.g. ESEA, IDEA, CTE, AEFLA)
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 Under EDGAR / A-102, pass through
responsibilities primarily described in 34 CFR
80.40 – Monitoring of Subgrantees
 Note – Part 76* on state administered programs
will not change significantly
*And Part 75
Monitoring Responsibilities of the Pass-Through 200.328
34 CFR 80.40
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 Non federal entity is responsible for oversight
of the operations of the federally supported
activities
 Must monitor both compliance and
performance
New Risk Management
Requirements for Pass-Throughs
53
54
 Pass-through must evaluate each
subrecipient’s risk of noncompliance
(federal statute / regulations / terms of
award) for purpose of monitoring
200.331
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 Risk Factors:
1.
2.
3.
4.
Subrecipient’s prior experience with the
grant program
Results of previous audits
New personnel or substantially changed
systems
Results of federal monitoring
200.331
56
 Pass-through may impose conditions on subgrant
based on risk assessment:
1. Shift to reimbursement
2. Withhold payments until evidence of
acceptable performance
3. Require more reporting
4. Require additional monitoring
5. Require additional technical or management
assistance
6. Establish additional prior approvals
200.331
57
 Pass-through must monitor its
subrecipients to assure compliance and
performance goals are achieved
200.331
58
 Monitoring must include:
1.
2.
3.
Review financial and programmatic reports
Ensure corrective action
Issue a “management decision” on audit
findings if the award is from the pass-through
200.331
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 Types of monitoring tools (depending on risk
assessment)
1. Providing training and technical assistance
2. On-site reviews
3. Arranging for “agreed upon procedures” (less
than $750,000)
200.331
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 Pass-through must consider taking enforcement
action based on non compliance:
1.
2.
3.
4.
5.
6.
Temporarily withhold cash payments pending
correction
Disallow all or part of the cost
Wholly or partly suspend the award
Recommend to federal awarding agency suspension /
debarment
Withhold further federal awards
Other remedies that may be legally available
200.339
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 The pass-through may terminate the award for
“cause”, notice and opportunity for hearing (200.340
and 200.341)
Methods for collection, Transmission and storage of
information 200.335
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o When original records are electronic and cannot be altered,
there is no need to create and retain paper copies.
o When original records are paper, electronic versions may be
substituted through the use of duplication or other forms of
electronic media provided they:
o
o
o
Are subject to periodic quality control reviews,
Provide reasonable safeguards against alteration; and
Remain readable.
BRUSTEIN & MANASEVIT, PLLC
Subpart E – Cost Principles
(78639)
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Prior Written Approval 200.407
 In order to avoid subsequent disallowance:

Non-Federal entity may seek prior written approval
of cognizant agency (for indirect cost rate) or Federal
awarding agency in advance of the incurrence of
special or unusual costs
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Direct v. Indirect Costs 200.413
 Salaries of administrative and clerical staff should be
treated as “indirect” unless all of following are met:
1.
Such services are integral to the activity
2.
Individuals can be specifically identified with the
activity
3.
Such costs are explicitly included in the budget
4.
Costs not also recovered as indirect
65
Required certifications 200.415
 Official authorized to legally bind the non-federal entity
must certify on annual and final fiscal reports or
vouchers requesting payment:

“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.”
66
Selected Items of Cost (cont)
 Conferences 200.432
 Prior Rule: Generally allowable
 Conference is meeting, seminar, workshop, event for the purpose of
disseminating technical info beyond the nonfederal entity(?)
 Allowable conference costs include rental of facilities, costs of meals and
refreshments, transportation, unless restricted by the federal award
 New: Costs related to identifying, but not providing, locally available
dependent-care resources


New: But 200.474 “travel” allows costs for “above and beyond regular
dependent care”
Conference hosts must exercise discretion in ensuring costs are
appropriate, necessary and managed in manner than minimizes costs to
federal award
67
Selected Items of Cost (cont.)
 Travel Costs 200.474
 Prior



rule: allowable with certain restrictions
Travel charges must be reasonable and consistent with
entity’s written travel reimbursement policies
Grantee must retain documentation that participation
of individual in conference is necessary for the project
New: Dependent care costs above and beyond regular
dependent care that directly result from travel to
conferences may be allowable (consistent with policy)
68
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Audit Requirements
69
Audit requirements
70
Current threshold $500,000.
Threshold increased to $750,000
The federal agency, OIG, or GAO may arrange for
audits in addition to single audit
Federal Agency Responsibilities 200.513
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The federal awarding agency must use cooperative
audit resolution to improve federal program
outcomes

Cooperative Audit Resolution: means the use of audit follow-up
techniques which promote prompt corrective action by improving
communication, fostering collaboration, promoting trust and
developing an understanding between the Federal agency and nonFederal entity 200.25.
Questions?
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Disclaimer
This presentation is intended solely to provide
general information and does not constitute legal
advice. Attendance at the presentation or later
review of these printed materials does not create
an attorney-client relationship with Brustein &
Manasevit, PLLC. You should not take any action
based upon any information in this presentation
without first consulting legal counsel familiar with
your particular circumstances.
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