Presentation Transcript

1. OMB Update, Including Grant Reform

   NSAA Annual Conference Wednesday, June 11, 2014 Saint Paul, Minnesota Tammie S. Brown CPA, CFE DHHS/OIG/OAS
2. Code of Federal Regulations (CFR) Title 2: Grants and Agreements Subtitle A—OFFICE OF MANAGEMENT AND BUDGET GUIDANCE FOR GRANTS AND AGREEMENTS CHAPTER II—OFFICE OF MANAGEMENT AND BUDGET GUIDANCE PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS SUBPARTS A-F
3. Creating Part 200 “Part 200” Administrative Requirements Cost Principles Audit Requirements
4. How did we get here? November 25, 2009 EO Reducing Improper Payments January 18, 2011 EO Improving Regulation and Regulatory Review February 28, 2011 PM Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments February 28, 2012 Advance Notice of Proposed Guidance February 1, 2013 Notice of Proposed Guidance December 26, 2013 Final Guidance
5. OMB - Compliance requirements reduction project Least Critical Elements Real Property Acquisition and Relocation Assistance Davis-Bacon Act Equipment and Real Property Management OMB Working Groups Group 1(Cost Principles) Activities Allowed or Unallowed Allowable Costs/Cost Principles (2 CFR part 225/OMB Circular A-87; 2 CFR part 200/OMB Circular A-21; 2CFR part 230/OMB Circular A-122) Group 2 (Administrative Requirements) Cash Management Equipment and Real Property Management Period of Availability of Federal Funds Procurement and Suspension and Debarment Program Income Reporting Subrecipient Monitoring Group 3 (Other) Davis-Bacon Act Eligibility Matching, Level of Effort, Earmarking Real Property Acquisition & Relocations Assistance Special Tests and Provisions
6. Six Subparts to Part 200A B C D E F A—Acronyms and Definitions B—General Provisions C—Pre-Federal Award Requirements and Contents of Federal Awards D—Post Federal Award Requirements E—Cost Principles F—Audit Requirements
7. Subpart A—Acronyms and Definitions
8. Q III-5: The word “should” is used throughout section 200. Does it really mean “must”? No. The word “must” is used throughout section 200 to indicate requirements. The word “should” is used to indicate best practicesor recommended approaches that the COFAR wanted non-Federal entities to be aware of, but not necessarily required to comply with.
9. Must vs. Should/AICPA vs. Part 200
10. Should by any other Name Presumptively Mandatory Best Practice
11. §200.303   Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statute, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) 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 non-Federal entity considers sensitive consistent with applicable Federal, state and local laws regarding privacy and obligations of confidentiality
12. Subpart A—Acronyms and Definitions Internal controls vs.Internal control over compliance requirements for Federal awards Subrecipient vs. Recipient (only direct) Subawardvs. Federal Award (direct or from pass-through) PPII
13. Subpart A—Acronyms and Definitions §200.82 Protected Personally Identifiable Information (Protected PII). Protected PII means an individual's first name or first initial and last name in combination with any one or more of types of information, including, but not limited to, social security number, passport number, credit card numbers, clearances, bank numbers, biometrics, date and place of birth, mother's maiden name, criminal, medical and financial records, educational transcripts. This does not include PII that is required by law to be disclosed. (See also §200.79 Personally Identifiable Information (PII)).
14. Subpart B—General Provisions §200.100 Purpose. §200.101 Applicability. §200.102 Exceptions. §200.103 Authorities. §200.104 Supersession. §200.105 Effect on other issuances. §200.106 Agency implementation. §200.107 OMB responsibilities. §200.108 Inquiries. §200.109 Review date. §200.110 Effective/applicability date. §200.111 English language. §200.112 Conflict of interest. §200.113 Mandatory disclosures.
15. Subpart B—General Provisions §200.100 Purpose Establishes uniform administrative requirements, cost principles, and audit requirements Federal awarding agencies must not impose additional or inconsistent requirements Unless specifically required by Federal statute, regulation, or Executive Order
16. Subpart B—General Provisions §200.102 Exceptions OMB may allow exceptions Will be published on the OMB Web site Will be permitted only in unusual circumstances No case-by-case exceptions Subpart F—Audit Requirements
17. Subpart B—General Provisions §200.110 Effective/applicability date Federal agencies must implement the policies and procedures applicable to Federal awards by promulgating a regulation to be effective by December 26, 2014 Unless different provisions are required by statute or approved by OMB Subpart F—Audit Requirementsof this part and any other standards which apply directly to Federal agencies will be effective December 26, 2014 and will apply to audits of fiscal years beginning on or after December 26, 2014.
18. Subpart B—General Provisions §200.110 Effective/applicability date December 2013 – Final Guidance 12 mo. December 2014 – Federal Agency Regulations 6 mo. June 2015 – Start First Full Fiscal Year Under new Regs. 12 mo. July 2016 – First Full Fiscal Year Ends 8 mo. February 2014 – Issue first Single Audit under new requirements No early implementation of Audit Requirements
19. Subpart B—General Provisions §200.111 -§200.113 English language – Use English and U.S. dollars Conflict of interest – Disclose Mandatory disclosures – Violations of Federal criminal law …potentially affecting the Federal award
20. Subpart C—Pre-Federal Award Requirements and Contents of Federal Awards §200.200 -§200.211 Purpose. Use of grant agreements (including fixed amount awards), cooperative agreements, and contracts. Requirement to provide public notice of Federal financial assistance programs. Notices of funding opportunities. Federal awarding agency review of merit of proposals. Federal awarding agency review of risk posed by applicants. Standard application requirements. Specific conditions. Certifications and representations. Pre-award costs. Information contained in a Federal award. Public access to Federal award information.
21. Subpart D—Post Federal Award Requirements §200.300 -§200.345 §200.303   Internal controls. Standards for Financial and Program Management Property Standards Procurement Standards Performance and Financial Monitoring and Reporting Subrecipient Monitoring and Management Record Retention and Access Closeout Post-Closeout Adjustments and Continuing Responsibilities Collection of Amounts Due 200.331Requirements for pass-through entities 
22. §200.330 Subrecipient and contractor determinations. (a) Subrecipients. 1) Determines eligibility; (2) Federal program objectives; (3) Responsibility for programmatic decision making; (4) Complies with program requirements; and (5) carry out a program for a public purpose, as opposed to providing goods or services for the benefit of the pass-through entity
23. §200.330 Subrecipient and contractor determinations. b) Contractors. (1) Provides the goods and services within normal business operations; (2) Provides similar goods or services to many different purchasers; (3) Normally operates in a competitive environment; (4) Provides goods or services that are ancillary to the operation of the Federal program; and (5) Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.
24. §200.330 Subrecipient and contractor determinations. c) Use of judgment in making determination. In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a contractor, the substance of the relationship is more important than the form of the agreement. All of the characteristics listed above may not be present in all cases, and the pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract.
25. If it walks like a subrecipient, if it talks like a subrecipient, it is a… Duck that is non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program; but is not an individual that is a beneficiary of such program. Also the Duck maybe a recipient of other Federal awards directly from a Federal awarding agency.
26. §200.331 Requirements for pass-through entities MUST: (4) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal government or, if no such rate exists, either a rate negotiated between the pass-through entity and the subrecipient (in compliance with this part), or a de minimis indirect cost rate as defined in §200.414 Indirect (F&A) costs, paragraph (b) of this part. What if you have an existing rate of 7%?
27. §200.331Requirements for pass-through entities Must: (b) 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 resultsof previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and resultsof Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).
28. §200.331Requirements for pass-through entities Must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient mustinclude: (1) Reviewing financial and programmatic reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management decision.
29. §200.331Requirements for pass-through entities (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: SEE NEXT SLIDE
30. §200.331Requirements for pass-through entities (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in §200.425 Audit services. (f) Verifythat every subrecipient is audited as required by Subpart F—Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.338 Remedies for noncompliance of this part and in program regulations.
31. §200.338 Remedies for noncompliance (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available.
32. Subpart E—Cost Principles §200.400 -§200.475 General Provisions Basic Considerations Direct and Indirect (F&A) Costs Special Considerations for States, Local Governments and Indian Tribes Special Considerations for Institutions of Higher Education General Provisions for Selected Items of Cost
33. Subpart F—Audit Requirements §200.500 -§200.521 General Audits Auditees Auditors Management Decisions
34. Subpart F—Audit Requirements §200.501 Audit Requirements $750,000 $500,000 What does this mean?
35. Audit Coverage
36. Dollars Covered
37. Subpart F—Audit Requirements §200.502 Basis for determining Federal awards expended The determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards
38. Subpart F—Audit Requirements §200.503 (a)-(e) Relation to other audit requirements Federal agency must rely Others can do non-duplicate audits – Must Review FAC for recent audits Does not limit authority of others Federal agency to pay for additional audits. Request major program, 180 days
39. Subpart F—Audit Requirements §200.504 -§200.507 §200.504 Frequency of audits. §200.505 Sanctions. §200.506 Audit costs. (See §200.425) §200.507 Program-specific audits.
40. Subpart F—Audit Requirements §200.508 (a)-(d) Auditee responsibilities. Arrange audit, and ensure properly performed and submitted Prepare F/S and SEFA Take corrective action to findings, prepare schedule of PY findings and CY corrective action plan Provide auditors access…to everything!
41. Subpart F—Audit Requirements §200.509 (a)-(c) Auditor selection. Audit procurement No State auditor carve out??? Maybe 200.508(a) “procure or otherwise arrange” 200.17 a state “must” follow the same policies and procedures it uses for procurements of non-Federal Funds. 200.319 procurement contracts “must” be conducted in a manner providing full and open competition… Restricts auditor from preparing indirect cost proposals >$1M Use of Federal auditors
42. Subpart F—Audit Requirements §200.510 (a)-(b) Financial Statements. Financial statements - GAAP Schedule of expenditures of Federal awards (SEFA) (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included.
43. Subpart F—Audit Requirements §200. 510 (b)(4) Financial Statements. Old (5) To the extent practical, pass-through entities should identify in the schedule the total amount provided to subrecipients from each Federal program. (4) Include the total amount provided to subrecipients from each Federal program.
44. Subpart F—Audit Requirements §200.511 Audit findings follow-up. Make list, number findings, include fiscal year Summary schedule of prior audit findings, list a finding until it is listed as “resolved” for one year Corrective action plan, in a document separate from the auditor's findings
45. Subpart F—Audit Requirements §200.512. Report submission (b)(1)&(2) A senior level representative of the auditeemust sign a statement…that says…the reporting package does not include protected personally identifiable information, …and that the FAC is authorized to make the reporting package and the form publicly available on a Web site. (2) Exception for Indian Tribes
46. Subpart F—Audit Requirements §200.512. Report submission (g) FAC responsibilities. The FAC must make available the reporting packages…to the public…and follow up with known auditeesthat have not submitted the required data collection forms and reporting packages.
47. Subpart F—Audit Requirements §200.512. Report submission (b) Data Collection. The FAC is the repository of record for...Audits… All Federal agencies, pass-through entities and others interested in a reporting package and data collection form must obtain it by accessing the FAC.
48. Federal Agencies §200.513 Responsibilities What do the feds have to do and how will it affect the rest of us?
49. Federal Agencies §200.513 Responsibilities The cognizant agency for audit must: (ii) Obtainorconductquality control reviews on selected audits made by non-Federal auditors, and provide the results to other interested organizations. Audit the Auditors
50. Federal Agencies §200.513 Responsibilities …audit quality project must be performed once every 6 years beginning in 2018 or at such other interval as determined by OMB, and the results must be public.
51. Subpart B—General Provisions §200.110 Effective/applicability date December 2013 – Final Guidance December 2014 – Federal Agency Regulations June 2015 – Start Spending Under new Regulations July 2016 – First Full Fiscal Year Ends February 2017 – Issue first Single Audit under new req. 10 mos. Some Month in 2018 – First Study of Single Audits
52. Federal Agencies §200.513 Responsibilities (b)(3)(iv) Develop a baseline, metrics, and targets to track, over time, the effectiveness of the Federal agency's process to follow-up on audit findings and on the effectiveness of Single Audits in improving non-Federal entity accountability and their use by Federal awarding agencies in making award decisions.
53. New Federal Management Single Audit Accountable Official Senior policy official Appoints KMSAL Key Management Single Audit Liaison Day to Day Operations of Single Audit They are NOT OIG Single Audit Coordinator
54. Federal Agencies §200.513 Responsibilities (5) Name a singleaudit accountable official (i) Responsible §200.513 (ii) Held accountable for use of single audits (iii) Designates key management key management single audit liaison.
55. Federal Agencies §200.513 Responsibilities (6) Key management single audit liaison must: (i) point of contact for the single audit…within and outside the Federal government.
56. Auditors§200.514-(c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
57. Auditors§200.515 Audit Reporting. The dollar threshold used to distinguish between Type A and Type B programs, as described in § 200.518 Major program determination paragraph (b)(1), or (b)(3) when a recalculation of the Type A threshold is required for large loan or loan guarantees;
58. Auditors§200.516 Audit Findings. Old, report questioned cost over $10,000 (a)(3)&(4) Report questioned cost over $25,000
59. Auditors§200.516 Audit Findings. (b) Audit finding detail and clarity. (4) A statement of cause that identifies the reason or explanation for the condition or the factors responsible for the difference between the situation that exists (condition) and the required or desired state (criteria), which may also serve as a basis for recommendations for corrective action.
60. Auditors§200.516 Audit Findings. (5) The possible asserted effect to provide sufficient information to the auditee and Federal agency, or pass-through entity in the case of a subrecipient, to permit them to determine the cause and effect to facilitate prompt and proper corrective action. A statement of the effect or potential effect should provide a clear, logical link to establish the impact or potential impact of the difference between the condition and the criteria.
61. Auditors§200.516 Audit Findings. (7)…The auditor should report whether the sampling was a statistically valid sample. (8) Identification of whether the audit finding was a repeat of a finding in the immediately prior audit and if so any applicable prior year audit finding numbers.
62. Auditors§200.517 Audit Documentation. Same, keep for 3 years Same, let the feds see them, does not say anything about pass-throughs?
63. Auditors§200.518 Major program determination Low risk Type A No audit findings Questioned costs >$10k Type B, 1 for 1 low-risk Type A Type B floor, various %’s, VA $4M Low Risk Auditee 25% High Risk Auditee 50% Low risk Type A Material weaknesses Questioned costs >5% Type B, 1/4 low-risk Type A Type B Floor, 25% of Type A threshold, VA $7.5M Low Risk Auditee 20% High Risk Auditee 40% Old
64. Auditors§200.519-§200.520 §200.519 Criteria for Federal program risk. §200.520 Criteria for a low-risk auditee. Not Much Changed
65. Auditors§200.521 Management decision. While not required, the Federal agency or pass-through entity may also issue a management decision on findings relating to the financial statements which are required to be reported in accordance with GAGAS. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC.
66. Appendixes I—Full Text of Notice of Funding Opportunity II—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards III—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs) IV—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations V—State/Local Government and Indian Tribe-Wide Central Service Cost Allocation Plans VI—Public Assistance Cost Allocation Plans VII—States and Local Government and Indian Tribe Indirect Cost Proposals VIII—Nonprofit Organizations Exempted From Subpart E—Cost Principles of Part 200 IX—Hospital Cost Principles X—Data Collection Form (Form SF-SAC) XI—Compliance Supplement
67. Tammie S. Brown, CPA, CFE Questions? Tammie.Brown@oig.hhs.gov