UNIFORM GUIDANCE AT K-STATE

2 C F R P A R T 2 0 0 – U N I F O R M A D M I N I S T R A T I V E R E Q U I R E M E N T S , C O S T P R I N C I P L E S , A N D A U D I T R E Q U I R E M E N T S F O R F E D E R A L A W A R D S

OLD 

U.S. Office of Management and Budget (OMB) Circulars –

 OMB Circular A-21, Cost Principles for Educational Institutions, Relocated to 2 CFR, Part 220 .

 OMB Circular A-110 , Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations. Relocated to 2 CFR, Part 215 .

 OMB Circular A-133 , Audits of States, Local Governments and Non Profit Organizations (and the annual Compliance Supplement).  • •

Note: These Circulars will be remain applicable to existing awards (in all but a few very rare situations). If existing awards are continued, modified, or receive additional funding, new guidance could be applied, or some combination of new and old may apply.

NEW!

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2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

• Federal agencies were required to have implementing policies and procedures in place by December 26, 2014.

• This guidance supersedes and streamlines requirements from eight OMB Circulars, including the three listed above for higher education institutions. Written by the Council on Financial Assistance Reform (COFAR). COFAR includes representatives from OMB and ten federal agencies. • • Full text of the guidance can be found in the Electronic Code of Federal Regulations (e-CFR). eCFR — Code of Federal Regulations Frequently Asked Questions (FAQ’s) and other resources can be found on the COFAR website. COFAR | The Chief Financial Officers Council

What’s in a name?

 The official name for the new requirements is pretty long. Some of the shortened versions include Omni-Circular, Super-Circular, Omni-Guidance…  We’ll keep it simple and go with the one that is being used by the Federal agencies and most of the non-Federal entities (universities):

Uniform Guidance (UG)

Format of the Uniform Guidance

     Sections are cited as 2 CFR 200.xxx.

We will shorten to .xxx in most situations.

.0- .99 .100 -.113 Subpart A: Acronyms and Definitions Subpart B: General Provisions .200 -.211 Subpart C: Pre-Federal Requirements and Contents of Federal Awards (previously found in A-110) .300 -.345 Subpart D: Standards for Financial and Program Management (previously found in A-110) .400 -.475 Subpart E: Cost Principles (previously found A-21)  .500 -.521 Subpart F: Audit Requirements (previously A-133)  Appendices I – XI: Appendix III applies directly to Institutions of Higher Education (IHE’s) and contains rules and procedures for F&A rate determination previously found in A-21

Effective Dates of Uniform Guidance

  For new awards issued on or after December 26, 2014.

May be applied to funding increments or continuations of existing awards at the Federal agency’s discretion.

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How will you know which one applies to your department’s awards?

We will include the information in award # e-mails from our office. We are also adding a field in FIS in the Awards module under the “Terms & Conditions” tab.

 Procurement Standards:  Optional grace period for implementation. K-State is using this option and will delay implementation until FY2017. The Purchasing office is working on plans to have everyone ready by then.

 Audit Requirements effective for K-State for FY2016 (first FY beginning on or after 12/26/2014).

Trivia & Jargon

    Should vs. Must  “Must” means it is mandatory – you gotta do it!

 “Should” means it is recommended – if you don’t do it, fine, but you better have a good reason or a better idea.

IHE : Institution of Higher Education Non-federal entity: generic term used to refer to all of the different groups subject to the UG, such as IHE’s, States, Non-Profits, Indian Tribes, etc. Top contender for most-used phrase: Internal Control(s)

Significant Changes?

 Yes and No. Lots of details changed, overall things are much the same. As OMB expert analyst Gil Tran says “same, same but different”.      Prior approvals required for certain costs– long list!

Re-budgeting rules (and related status of Research Terms & Conditions) . Sub-recipients: F&A rates, risk assessment, monitoring . Remember, K-State not only issues sub-awards to others, but ALSO is a sub-recipient of Federal funds.

Close out deadlines .

Equipment purchases and title to equipment.

  Procurement rules. Some fairly painful changes for universities once the grace period for implementation has passed.

Other misc. items of interest: Effort reporting, program income, participant support costs, voluntary committed cost sharing.

Prior Written Approvals (.407)

 This section provides a reference list of all other sections of the UG where prior approvals are required.  Items listed must meet all other direct cost standards (reasonable and allocable), but also need specific prior (written) approval.

 20+ UG sections are listed, but for details you have to go to the referenced section (and hunt!).  We have attempted to put together a table with more details all in one place. This will be incorporated into the SPA PPM and website.  Additional guidance for certain costs has also been developed to assist K-State departments when developing budgets and charging costs to sponsored accounts. We will continue to develop and make additions to this guidance.

Re-budgeting and Prior Written Approvals – Any Waivers?

 Individual agencies may waive specific prior approvals listed in the Uniform Guidance. We are working on a list of these as we identify them.  Example: NIH promises that, via their Grants Policy Stmt., they will continue to allow purchases of special purpose equipment over $5,000 and unrecovered indirect costs as cost sharing without prior approvals.

 Institutional prior approvals (“OPAS” or “Expanded Authorities”) that apply to research awards    are still available per .308 (d)(4). Included is approval of 90 day pre-award costs, a one-time no-cost time extension, carryforward of unobligated balances, and re budgeting of many costs. were previously incorporated into federal research awards through the Research Terms and Conditions (RTC). New RTC’s must be developed and approved under UG. Until the new RTC is available these items must be incorporated in the individual awards and/or the agency’s implementation of the UG. Watch new awards carefully! (There is some discussion of making new RTC apply retroactively…)

Prior Approvals – Selected items of interest at K-State   Administrative & Clerical Salaries Four conditions are imposed for direct charging these costs.    Only three of the four are actually of concern to departments.

One of the three conditions is the requirement for prior written approval.

The remaining two conditions require institutional definitions for “integral” and “specifically identifiable”.

 Additional K-State guidance includes     examples of administrative and clerical duties.

a list of common job titles at K-State of employees that perform such duties.

a threshold of 25% time (FTE) devoted to the project in order to be considered specifically identifiable.

a requirement to include in the budget narrative a description of why the duties are integral to the project – significant, unique, unusual in nature and volume, etc.

Prior Approvals – Selected items of interest at K-State  Computing Devices  UG provides definitions along with criteria for direct charging of computing supplies vs. computing equipment.

 Computing supplies allowable when “essential and allocable”.

 Computing equipment (both scientific and general purpose) is allowable only with prior written approval.  Additional K-State guidance includes  Definitions from the UG for computing device, supply vs. equipment, general purpose vs. scientific.

 a list of criteria for direct charging of computing supplies.

 Includes a 75% usage threshold for charging the 100% of the cost to one project.

Prior Approvals – Selected items of interest at K-State  Sub-Awards  Must be described and included in the approved Federal award and any re budgeting to accommodate sub-awards requires prior written approval (.308(c)(6)).

 Additional considerations for Fixed Amount sub-awards:    Limited to the federal Simplified Acquisition Threshold - currently $150,000, and must have prior written approval (.332).  COFAR FAQ’s indicate it is allowable to have multiple sub-awards to the same recipient that total more than $150,000, if each have a distinct statement of work. Fixed amount sub-awards are also included in the prior approval re-budgeting requirements in .308(c)(6).

Other conditions for Fixed Amount awards are found in .201(b). Special items to note include:   Cannot be used in programs that require mandatory cost sharing or match.

Certification is required at the end of the program to ensure that the activity was completed or appropriate level of effort was expended. If not, the Federal award must be adjusted.

Other Sub-award items of interest

 Sub-recipient vs. contractor determinations o o (.201(a) and .330) Case-by-case determination and use of the appropriate type of agreement is the responsibility of the pass-through entity (K-State).

UG emphasizes that substance is more important than form.

o Sub-recipients criteria includes: • • • Performance measured against objectives of Federal program.

Programmatic decision making.

Need for adherence to Federal program requirements.

o Contractor criteria includes: • • • • Provides goods/services within normal business operations.

Provides similar goods and services to many different purchasers.

Operates in a competitive environment.

Not subject to compliance requirements of the Federal program (agreement/contract should not include such).

Other Sub-award items of interest

• o Indirect Cost Rate for Sub-recipients (.331(a)(4)) All pass-through entities must include in each sub-award agreement… • The sub-recipient’s federally recognized, negotiated rate, if they have one • • If not: Negotiate a rate with the sub-recipient or • Use the de minimus rate of 10% MTDC (.414(f))

Other Sub-award items of interest

 Risk assessment of sub-recipients (.331(b)) Evaluate each sub-recipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the sub award . . .

 Office of Pre-Award Services (PAS) • Check suspension and debarment  • Sponsored Programs Accounting (SPA) Is sub-recipient subject to Single Audit (Subpart F—Audit Requirements formerly A-133 Audit)?

Other Sub-award items of interest

 Monitoring of sub-recipients must include reviewing financial and performance reports required by the pass-through entity (.331(d)(1)).

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SPA & department/college business offices review financial reports. PIs receive and review performance indicators, reports.

BEST PRACTICE: You should have the PI approve invoices before payments are issued to subrecipients so that PI can alert us if we need to hold payments for lack of performance. PI certification forms required before final payment will be approved by SPA.

Prior Approvals – Selected items of interest at K-State  Participant Costs    Definition  Direct costs for items such as stipends or travel allowances and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects (.75).

Prior approvals  Required in order to be an allowable cost (.456).  Once approved, prior approval is also required to re-budget/use these funds for other project purposes (.308 (c)(5)). Excluded from MTDC base (.68)  Not new at K-State! Participant costs are recorded in the E56xx object code range. We have always excluded those from the MTDC base. Many of our sub-recipients haven’t done this, however.

Prior Approvals – Selected items of interest at K-State  Equipment: Purchasing and Title   Prior approval is required for purchases of scientific and general purpose equipment to be allowable  Special purpose is defined in .89. Examples include microscopes, spectrometers, x-ray machines.

 General purpose is defined in .48. Examples include office equipment, information technology equipment, motor vehicles.

Title is conditional per .313. Property-trust relationship explained in .316.

  Not new, just more apparent! Title continues to vest upon acquisition in most cases and is conditional on meeting the requirements for use.

Generally need to request disposition instructions (including ability to retain title) at the end of the project.

 K-State procedures need to be better defined – we are working on it!

Prior Approvals – Selected items of interest at K-State  Additional Faculty Salary (Excess Service Pay) (.430)    Definition: any amount that exceeds the proportionate share of the Institutional Base Salary (IBS). IBS is the annual compensation paid for an individual’s appointment.

Prior approval is needed for Excess Service Pay (overload) in order to be allowable, including   Excess pay for the period during which the faculty member worked on the award. Excess pay for intra-institutional consulting. Approval is dependent on meeting the criteria for “unusual” circumstances described in this section.

A number of other standards for allowability are outlined in this section. Enough for a separate training session!

Other Items of Interest

 Program Income    Not really any changes here, but initially drew some attention due to some changes in wording. FAQ’s clarified that there were no new requirements for reporting, etc. BUT - Do you know what Program Income is?

 Gross income earned by the non-Federal entity that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance. (.80) Do you understand how program income can/must be used?

 Need to identify early - at the proposal stage if possible. Need to account for it separately and understand allowable usage.  The “addition” method of usage is the default treatment for IHE’s and non-profit research institutions.  Other methods include using it for cost sharing or matching (with prior approval) or deducting it from total project costs.

Other Items of Interest

 Effort Reporting   Some language in these sections was removed and modified but the overall requirement for effort reporting remains. The intent was to allow IHE’s more flexibility in implementation of individual systems. The audit community, however, is a driving force in what is ultimately deemed as acceptable. The Federal Demonstration Partnership (FDP) is working on a simplified approach that could serve as a model for all, but it is still in the testing phase.

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No changes at K-State at this point in time.

Other Items of Interest

 Voluntary committed cost sharing is defined in   OMB’s M-01-06 as cost sharing specifically pledged in the proposal’s budget or award that must be properly documented for cost accounting purposes.

.99 as cost sharing specifically pledged on a voluntary basis in the proposal’s budget or the Federal award on the part of the non-Federal entity and that becomes a binding requirement of the Federal award.

 .306 states that for Federal research proposals, voluntary committed cost sharing    is not expected.

cannot be used as a factor in merit review process.

may be considered if it is both in accordance with Federal agency regulations and specified in notice of funding opportunity.

 Problems with Voluntary Committed Cost Sharing    Creates additional administrative burden.

Eliminates flexibility in the use of limited institutional funds. Can create a negative effect on K-State’s next proposed F&A Cost Rate.

Other Items of Interest  Closeout Deadlines  There has been a longstanding requirement for closeout (financial, performance, property, other reports, cash draws or invoices, etc.) 90 days after the end date. Language has been strengthened and pressure has been put on the Federal agencies to make sure this happens.  Many agencies have or are implementing related technology changes.  For example, many agencies are closing the Letter of Credit for individual awards immediately after the 90-day limit.

 One federal agency has removed awards from our Letter of Credit whenever there has been no activity for 90 days. We can get it back, but SPA staff must provide justification...ugh!

 Food for thought:  How often do you have all costs for an award submitted for payment within 90 days? If not submitted in that timeframe, have you provided us with an accurate outstanding obligations list in that timeframe?

 And if you take the full 90 days (to submit expenditures for posting OR prepare the outstanding obligations list), no time is left for Sponsored Programs Accounting office to request final payments, review and submit reports, etc. before the agency closes the account.

 And what about our sub-recipients? Or when we are the sub-recipient and our sponsor has to meet the 90-day limit?

That’s all folks! (Well, for now anyway…)

   There should be many opportunities for learning as the agencies, auditors and our flow-through sponsors each interpret and apply the rules. Sponsored Programs Accounting staff are available by phone, e-mail or open door, as always! Updates and lessons learned will be provided through the SPA list-serve (KSUSPA), monthly newsletters, and training events.