Download Grants Administrative Changes under the New EDGAR

Grants Administrative Changes
under the New EDGAR
Jennifer Castillo, Esq.
[email protected]
Bonnie Graham, Esq.
[email protected]
Brustein & Manasevit
www.bruman.com
October 2015
1
 The Importance and Structure of
the New Uniform Guidance
 Major changes
 Financial management
 Allowability
 Procurement
 Inventory
 Subrecipient monitoring
 Audits
 Drafting Policies and Procedures
2
 Northeastern University (Chicago) agreed to pay $2.7 million
to cover nine years of mishandling federal research funds, in
the largest-ever civil settlement with the National Science
Foundation.
 The university failed to provide necessary oversight, failed to
pay interest due, paid salaries without required
documentation, and paid expense money based on
inadequate or fraudulent documentation.
 Northeastern continued to engage in these practices when it
knew or should have known in 2006, if not before, that the
professor in charge of the grant violated NSF requirements
when he submitted fraudulent claims for personal expenses.
 Altogether the university approved and disbursed at least 26
advances, totaling approximately $8.4 million in NSF funds,
without required verification of need and sufficient oversight.
4
 Over the past 5 years, the OIG has conducted 38 grant
fraud investigations resulting in five prosecutions, $13.5
million in restitution and recoveries, and $15 million in
civil settlements.
 For example, a former executive pleaded guilty to fraud
charges for misrepresenting his firm as a disadvantaged
small business in order to secure more than $2.4 million in
NASA security contracts. The executive was sentenced to 5
years in prison and ordered to forfeit $2.9 million in illgotten gains.
5
 Former Boeing procurement officer and others plead guilty to
federal fraud charges.
 In July 2014, a former Boeing procurement official was
convicted of taking bribes from companies seeking to sell
parts for military aircraft to Boeing in exchange for providing
them with a competitor’s confidential bid information.
 The official admitted to three counts of mail fraud, one count
of wire fraud, and one count of currency structuring for his
role in the scheme.
 As part of the criminal scheme, an accomplice received
confidential financial information through coded language in
phone calls and e-mails and used this information to win
Government contracts from Boeing worth more than $1.5
million.
6
 In December 2014, an OIG investigation led to the
conviction of two North Dakota brothers for defrauding the
Federal Crop Insurance and Federal Crop Disaster
Programs.
 In order to collect Federal crop insurance indemnities and
Federal crop disaster benefits, the brothers perpetrated a
scheme to ruin their potato crops. The brothers were
sentenced to a total of 66 months’ incarceration and
ordered to forfeit $932,776.
7
 Greenville Public School District (Mississippi)
 The former superintendent pled guilty to charges of
bribery, kickbacks, and embezzlement.
 He conspired with the owner of Teach Them To Read, Inc.,
a company that provided reading services for at-risk youth,
to award $1.4 million in district contracts in exchange for
monetary kickbacks.
 The former superintendent was sentenced and the owner of
the company pled guilty for their roles in this scam.
 The former superintendent was sentenced to 76 months in
prison and 3 years of supervised release, and he was
ordered to pay more than $1.2 million in restitution.
8
Formerly know as the “Uniform Grants
Guidance”, the “Omni Circular” and the “Super
Circular”
 A-21 – Cost Rules – Rules – IHEs
 A-87 – Cost Rules – State / Local Gov’t
 A-122 – Cost Rules – Nonprofit
 A-102 – Administrative Rules State / Local Gov’t
 A-110 – Administrative Rules IHEs
 A-133 – Audit Rules
10
 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
11
 Agriculture
 415.1 – Competition in the awarding of discretionary
grants and cooperative agreements
 416.1 – Special procurement provisions
 Prospective contracts cannot develop or draft
specifications, requirements, statements of work,
invitations for bids, RFPs, contract terms or other
documents for use by a state in conducting
procurement under USDA entitlement programs
 Education
 3474.5 – How exceptions are made to 2 CFR part 200
 Secretary will consult with OMB, but not seek
approval, of any exceptions to UGG
 3474.10 – Clarification regarding 2 CFR 200.207
 ED will continue to use the label “high risk”
grantee / subgrantee to describe nonfederal
entities with specific conditions
12
 NASA
 1800.3 – Applicability
 Extends requirements to commercial firms awarded
grants and cooperative agreements by NASA when cost
sharing is not required, and to foreign organizations
awarded grants by NASA
 If cost sharing is required, terms and conditions of
14 CFR part 1274 apply
 Grants to foreign organizations are made on
exceptional basis
 1800.315 – Intangible property
 Title to intellectual property created under a cooperative
agreement by NASA or its contractors will initially vest
with creating party.
 NSF
 Rewrote the Proposal & Award Policies &
Procedures Guide (PAPPG) to conform to UGG
13
 December 26, 2014 – Direct Grants from Federal
Agency
 July 1, 2015 –
State Administered Programs
 July 1, 2016 –
Procurement Rules
 Indirect Cost Rates When Due For Renegotiation
14
1. Focus on Outcomes
6. Micro Purchases
2. Performance Metrics
7. Corrective Action
3. Risk Assessments
8. Family Friendly
4. Financial
Management Policies
5. Equipment Use
Policies
9. False Claims
Certifications
10. Audit Thresholds
15
Part 200 has a MAJOR emphasis on
strengthening accountability by improving
policies that protect against waste, fraud
and abuse
16
Prior Rule 74.21(b)
2 CFR 200.302 (b)
1.Financial Reporting
1.Identification of Awards (NEW)
2.Accounting Records
2.Financial Reporting
3.Internal Control
3.Accounting Records (Source Docs)
4.Budget Control
4.Internal Control
5.Written Cash
5.Budget Control
Management
6.Written Allowable Cost
7.Source Documentation
6.Written Cash Management
Procedures
7.Written Allowability Procedures
18
NEW: 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)
19
 Accurate, current, complete disclosure of financial
results of each award in accordance with 200.327
and 200.328.
 NEW: 200.327 – Federal awarding agency can only collect OMB
approved data elements, no less than annually, no more than
quarterly
 NEW: 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
20
 NEW: Performance Metrics
1. Compare actual accomplishments to objectives.
(quantify to extent possible)
2. Reasons goals were not met if appropriate
4. Additional pertinent information (e.g. analysis and
explanation of cost overruns, high unit costs)
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
21
 Source Documentation Must Be Kept On:
1. Federal Awards
2.
3.
4.
5.
6.
7.
8.
Authorizations
Obligations
Unobligated balances
Assets
Expenditures
Income
Interest (New) (Eliminated liabilities)
22
 Effective control over and accountability for:
1. All funds
Property
3. Other assets
2.
 Must adequately safeguard all assets
 Use assets solely for authorized purpose
23
 Internal controls means a process, implemented by
a non-Federal entity, designed to provide
reasonable assurance regarding the achievement of
objectives in the following categories:
a. Effectiveness and efficiency of operations;
b. Reliability of reporting for internal and external use; and
c. Compliance with applicable laws and regulations.
24
a.
Non-Federal entities must establish and maintain
effective internal control over the Federal award
that provides reasonable assurances that the entity
is managing the award in compliance with federal
statutes, regs, and terms of the award.
 NEW: Internal controls “should” be in compliance
with:
 The U.S. Comptroller General’s Standard for
Internal Controls in the Federal Government; and
 Internal Control Integrated Framework issued by
the Committee of Sponsoring Organizations of the
Treadway Commission (COSO)
25
b.Comply with Federal statutes, regs, and the terms and
conditions of the Federal awards.
c.Evaluate and monitor the non-Federal entity's compliance
with statutes, regs and the terms and conditions of Federal
awards.
d.Take prompt action when instances of noncompliance are
identified including in audit findings.
e.Take reasonable measures to safeguard protected personally
identifiable info (PII) and other information designated or
deemed sensitive
26
 NEW: An 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.”
27
 Comparison of expenditures with budget
amounts for each award
28
 NEW: Written Procedures to implement the
requirements of 200.305
29
 For states, payments are governed by Treasury –
State CMIA agreements 31 CFR Part 205
 No Change
 For all other non federal entities, payments must
minimize time elapsing between draw from G-5
and disbursement (not obligation)
30
 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
31
 NEW: Advances must be maintained in insured
accounts
 NEW: Pass through cannot require separate
depository accounts
 NEW: Accounts must be interest bearing unless:
1.
2.
3.
4.
Aggregate federal awards under $120,000
Account not expected to earn in excess of $500 per year
Bank require minimum balance so high, that such account not
feasible
A foreign gov’t or banking system prohibits or precludes interest
bearing accounts.
32
 NEW: Interest amounts up to $500 may be retained
by non federal entity for administrative purposes
 Currently $100 for State and local Gov’ts
 Currently $250 for IHEs and Non-profits.
 NEW: Interest earned must be remitted annually to HHS
Payment Management System.
33
 NEW: Written procedures for determining
allowability of costs in accordance with
Subpart E – Cost Principles
 Procedures can not simply restate the Uniform
Guidance Subpart E
 Should explain the process used throughout
the grant development and budget process
 Training tool and guide for employees
34
 Non-Federal entities are encouraged to earn income to defray
program costs where appropriate.
 Costs of generating program income may only be deducted if:
 Authorized by federal regulations or the Federal award;
 Costs are incidental and not charged to the Federal award.
 Property from the sale of real property or equipment is not program
income – apply post award property rules.
 Program Income Must Be Deducted from Total Allowable Costs
(except for IHEs and Research Non-profits)
 With prior approval may add to Federal award.
35
All Costs Must Be:
1.
2.
3.
4.
5.
6.
7.
8.
Necessary, Reasonable and Allocable
Conform with federal law & grant terms
Consistent with state and local policies
Consistently treated
In accordance with GAAP
Not included as match
Net of applicable credits (moved to 200.406)
Adequately documented
37
 Consideration must be given to:
a. Whether cost is a type generally recognized as ordinary and
b.
c.
d.
e.
necessary for the operation of the non-Federal entity or the
proper and efficient performance of the Federal award;
The restraints or requirements imposed such as:
 Arms length bargaining (hint: procurement processes);
 Federal, state and local laws; and
 Terms of the grant award.
Market Prices for comparable goods or services in the
geographical area;
Whether the individuals acted with prudence under the
circumstances considering their responsibilities; and
No significant deviation from established prices.
38
 Practical Questions
 Do I really need this?
 Is the expense targeted to valid programmatic/
administrative need?
 Is this the minimum amount I need to spend to meet my
need?
 Do I have the capacity to use what I am purchasing?
 Did I pay a fair rate?
 If I were asked to defend this purchase, would I be able
to?
39
 A cost is allocable to a Federal award or cost objective if the
goods or services involved are chargeable or assignable in
accordance with relative benefits received.
 Incurred specifically for the award;
 Benefits both award and other work and can be distributed in
proportions that may be approximated using reasonable methods; and
 Necessary to the overall operation of the entity and assignable to the
award in accordance with this Part.
 Can only charge in proportion to the value received by the
program
 Example: Agency purchases a computer to use 50% on the
Federal grant program and 50% on a state program – can only
charge half the cost to the grant.
40
 Any cost allocable to a particular Federal award under the
principles in Part 200 may not be charged to other Federal
awards to overcome fund deficiencies, to avoid restrictions
imposed by Federal Statutes, regulations, or terms and
conditions of the Federal awards, or for other reasons.
 However, this prohibition would not preclude the non-
Federal entity from shifting costs that are allowable under
two or more Federal awards in accordance with existing
Federal statutes, regulations, or the terms and conditions
of the Federal award.
41
 If a cost benefits two or more projects or activities in
proportions that can be determined without undue effort or
cost, the cost should be allocated to the projects based on
proportional benefit.
 If cost benefits two or more projects or activities in
proportions that cannot be determined because of the
interrelationship of the work involved, then
notwithstanding 200.405(c), the costs may be allocated or
transferred to benefited projects on any reasonable
documented basis.
42
 Be consistent with policies and procedures that
apply uniformly to both federally- financed and
other activities of the non-Federal entity.
 Be accorded consistent treatment
 Can not charge cost as both direct and indirect
 Be determined in accordance with GAAP
 Not be included as a cost or used to meet cost
sharing or matching
43
Adequately documented






Amount of funds under grant
How the funds are used
Total cost of the project
Share of costs provided by
other sources
Records that show
compliance and performance
Other records to facilitate an
effective audit (for ED grants,
see 76.730 page 68)
44
o NEW: 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
Are subject to periodic quality control reviews,
o
Provide reasonable safeguards against alteration; and
o
Remain readable.
BRUSTEIN & MANASEVIT, PLLC
45
 Those receipts or reduction-of-expenditure type
transaction that offset or reduce expense items –
must be credited to the Federal award as either
cost reduction or cash refund, as appropriate.
 Examples: purchase discounts, rebates or allowances,
recoveries or indemnities on losses, insurance refunds or
rebates, adjustments of overpayments
46
 NEW: 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
47
 NEW: 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
48
 NEW: Payments made for costs determined to be
unallowable by either the Federal awarding
agency or pass-through must be refunded
(including interest) to the Federal government in
accordance with instructions from the Federal
agency that determined the costs are
unallowable.
49
Selected Items of Cost
There are 55 specific items of cost!
Listed on page 94.
Starts at 200.420 (pg 150)
 Advertising/PR 200.421 (pg 150)
◦ Allowable for programmatic purposes including:
◦ Recruitment
◦ Procurement of goods
◦ Disposal of materials
◦ Program outreach
◦ Public relations (in limited circumstances)
51
 Alcohol 200.423 (pg 151)
 Not allowable
 Collections of Improper Payments 200.428 (pg
152)
 The costs incurred by the non-Federal entity to
recover improper payments are allowable as either
direct or indirect costs, as appropriate.
52
 Conferences 200.432 (pg 158)
 Prior Rule: Generally allowable
 Includes Meals / Conferences / Travel and Family Friendly
Policies
 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
 Conference hosts must exercise discretion in ensuring costs
are appropriate, necessary and managed in manner than
minimizes costs to federal award
53
 Conferences 200.432
 ED Restrictions on Food
 (1) Is a working lunch necessary?
 (2) Is the portion of the agenda to be carried out during
lunch substantive and integral to the overall purpose of the
conference or meeting?
 (3) Is there a genuine time constraint that requires the
working lunch?
 (4) If a working lunch is necessary, is the cost of the working
lunch reasonable?
 (5) Has the SEA or LEA carefully documented that a working
lunch is both reasonable and necessary?
54
 Defense and prosecution of criminal and civil proceedings, claims,
appeals 200.435
 Generally, legal fees to defend are unallowable
 NEW: Allowable if no monetary penalty or order of corrective action;
costs must be reasonable and necessary, not prohibited, and not
otherwise recovered from Federal gov’t or third party

Employee health and welfare costs 200.437
 Removed “morale”
 Documented policies for improvement of working conditions

Entertainment Costs 200.438
 Cost of entertainment are unallowable
 Amusement, Diversion, Social Activities
 NEW: Except where costs might otherwise be considered
programmatic and are authorized or have prior written approval of the
Federal awarding agency.
55
 Maintenance and Repair Costs 200.452 (pg 170)
 Costs incurred for utilities, insurance, security,
necessary maintenance, janitorial services, repair or
upkeep of buildings and equipment, which neither add
to the permanent value of the property nor appreciably
prolong its intended life, but keep it in efficient
operating condition are allowable.
 If adds to permanent value, etc. must be treated as capital
expenditures and are only allowable to the extent not paid
through rental or other agreement.
56
 Pre-award Costs 200.458 (pg 171)
 Those costs incurred prior to the effective date of
the Federal award directly in negotiation or
anticipation of the award
 Costs must be necessary for efficient and timely
performance of the scope of work
 Allowable to the extent they would have been
allowable if incurred after the effective date and
ONLY with written approval from the Federal
awarding agency.
57
 Participant Support Costs 200.456 (pg 170)
 Means direct costs for stipends, travel, registration
fees paid to or on behalf of participants or trainees
(but not employees) in connection with
conferences, or training projects. 200.75
 Allowable with prior approval of the Federal
awarding agency.
 Training and Education Costs 200.472 (pg
176)
 Costs for employee development are allowable.
58
 Travel Costs 200.474 (Changed) (pg 176)
 Travel costs may be charged on actual, per diem,




or mileage basis
Travel charges must be consistent with entity’s
written travel reimbursement policies
NEW: Allows costs for “above and beyond regular
dependent care”
NEW: Grantee must retain documentation that
participation of individual in conference is
necessary for the project
Travel costs must be reasonable and consistent
with written travel policy / or follow GSA 48 CFR
31.205-46(a)
59
Time and Effort
Documentation
 NEW: Charges to Federal awards for salaries and
wages must be based on records that accurately
reflect the work performed.
 How staff demonstrate allocability
 If employee paid with federal funds, then must
show that the employee worked on that
specific federal program cost objective
200.403(a)
61
 Must be maintained for all employees whose
salaries are:
 Paid in whole or in part with federal funds
 Used to meet a match/cost share requirement
 NOT contractors
62
Semi-Annual
Certifications
 If an employee works on
a single cost objective:
 After the fact
 Account for the total
activity
 Signed by employee or
supervisor
 Every six months (at
least twice a year)
Personnel Activity
Report (PAR)
 If an employee works on
multiple cost objectives:
 After the fact
 Account for total
activity
 Signed by employee
 Prepared at least
monthly and coincide
with one or more pay
periods
63
Plan Confirmation
 Budgeted allocations for
After-the-Fact Activity Reports
 Professional/Professorial staff
keep records every six months
 All other employees keep
monthly records
 Signed by employee, principal
investigator, or responsible
official using suitable means
Multiple Confirmation
of verification.
Records
 Must reflect activity applicable
to each sponsored agreement
 Variety of records kept in
and to each category needed
combination at least
to identify F&A costs
monthly.
professional/professorial
staff
 Updated to reflect any
significant changes in
actual work
64
NEW: These records MUST:
1. Be supported by a system of internal controls
which provides reasonable assurance charges
are accurate, allowable and properly
allocated;
2. Be incorporated into official records;
3. Reasonably reflect total activity for which
employee is compensated;
 Not to exceed 100%
65
4. Encompass all activities (federal and non-
federal);
5. Comply with established accounting polices
and practices; and
6. Support distribution among specific activities
or cost objectives.
66
By focusing more on internal controls, the rule
“mitigates the risk that a non-Federal entity… will
focus on prescribed procedures... which alone may
be ineffective in assuring full accountability.”
 Uncovering weaknesses in internal controls or
instances of fraud is goal. Not audit findings.
67
Program, function, activity, award, organizational
subdivision, contract, or work unit for which cost
data are desired and for which provision is made
to accumulate and measure the cost of processes,
products, jobs, capital projects, etc.
68
Does it still apply?
 It is possible to work on a single cost objective even if an
employee works on more than one Federal award or on a
Federal award and a non-Federal award.
 The key to determining whether it is a single cost
objective is whether the employee’s salary and wages
can be supported in full from each of the Federal
awards on which the employee is working or from the
Federal award alone if the employee’s salary is also
paid with non-Federal funds.
http://www2.ed.gov/policy/fund/guid/gposbul/tim
e-and-effort-reporting.html
69
 Budget estimates alone do not qualify as support
for charges to Federal awards May be used for
interim accounting purposes if:
 Produces reasonable approximations
 Significant changes to the corresponding work
activity are identified in a timely manner
 Internal controls in place to review after-thefact interim charges based on budget estimates
70
 NEW: Because practices vary as to the activity
constituting a full workload, records may reflect
categories of activities expressed as a percentage
distribution of total activities.
71
It is recognized that teaching, research, service,
and administration are often inextricably
intermingled in an academic setting.
When recording salaries and wages charged to
Federal awards for IHEs, a precise assessment of
factors that contribute to costs is therefore not
always feasible, nor is it expected.
72
 NEW: For records which meet the
standards, the non-federal entity will not
be required to provide additional support
or documentation for the work performed.
 DOL regulations for Fair Labor Standards Act must still be
met (i.e. charges must be supported by records indicating
the total number of hours worked each day).
73
 For a non-Federal entity where the
records do not meet these standards:
 Federal agency may require personnel activity
reports (PARs), including prescribed
certifications or equivalent documentation that
support the records as required in this section.
 PARs are not defined!!
74
 NEW: All necessary adjustment must be made
such that the final amount charged to the
Federal award is accurate, allowable, and
properly allocated.
75
States,
local governments and Indian tribes
encouraged to adopt “substitute systems” if
approved by cognizant agency for indirect cost.
No longer applies to nonprofits.
Still
acceptable to allocate sampled employees’
supervisors, clerical and support staffs, based on
the result of the sampled employees.
76
 NEW: Cognizant agencies for indirect costs
are encouraged to accept alternative
proposals based on outcomes and
milestones for program performance.
 These plans are acceptable as alternatives
to the Part 200 standards.
77
 A non-Federal entity may submit
performance plans that incorporate funds
from multiple Federal awards and account
for their combined use based on
performance-based metrics, if approved.
 Must submit a request for a waiver that
includes certain information, including the
method of charging costs.
78
BRUSTEIN & MANASEVIT, PLLC
 No change from the current requirement.
 Entities must clearly determine what is a
subgrant and what is a contract.
80
 Still provides flexibility for States
 All other nonfederal entities follow policies and
procedures under Section 200.318-200.326.
BRUSTEIN & MANASEVIT, PLLC
81
 All nonfederal entities must have documented
procurement procedures which reflect applicable
Federal, State, and local laws and regulations.
BRUSTEIN & MANASEVIT, PLLC
82
 Nonfederal entities must maintain oversight to
ensure that contractors perform in accordance
with the terms, conditions, and specifications of
the contract
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83
 Must maintain written standard of conduct,
including conflict of interest policy.
 A conflict of interest arises when any of the following
has a financial or other interest in the firm selected
for award:
 Employee, officer or agent
 Any member of that person’s immediate family
 That person’s partner
 An organization which employs, or is about to employ, any of the
above or has a financial interest in the firm selected for award
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84
 Must neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors/
subcontractors.
 However, may set standards for situations in which
the financial interest is not substantial or the gift is
an unsolicited item of nominal value.
 Standards of conduct must
include disciplinary actions
applies for violations.
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 NEW: If the non-federal entity has a parent,
affiliate, or subsidiary organization that is not a
state or local government the entity must also
maintain written standards of conduct covering
organization conflicts of interest
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 The Federal awarding agency must establish
conflict of interest policies for Federal awards.
 NEW: 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.
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 NEW: Must disclose in writing, in a timely
manner:
 All violations of Federal criminal law involving fraud,
bribery, or gratuity violations potentially affecting the
Federal award.
 Failure to make disclosures can result in remedies in
200.338 (remedies for noncompliance) including
suspension and debarment.
88
 Must award contracts only to responsible contractors
possessing the ability to perform successfully:
 Contractor integrity
 Compliance with public policy
 Record of past performance
 Financial and technical resources
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 All procurement transactions must be conducted
with full and open competition.
 Must have protest procedures to handle disputes
 To eliminate unfair advantage, contractors that
develop or draft specifications, requirements,
statement of work, and invitations for bids or RFPs
must be excluded from competing for such
procurements.
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 Situations that restrict competition:
1. Unreasonable requirements on firms to qualify to do business
2. Requiring unnecessary experience or excessive bonding
3. Noncompetitive pricing practices
4. Noncompetitive awards to consultants on retainer
5. Organizational conflicts of interest (see 200.318(c)(2))
6. Specifying a brand name instead of allowing “an equal”
7. Any arbitrary action in the procurement process
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 Must prohibit the use of statutorily or
administratively imposed state or local
geographical preferences in the evaluation of bids
or proposal, except where applicable Federal
statutes expressly mandate or encourage
geographic preference.
 Does not preempt state licensing laws.
 Exception: architectural and engineering services (if
provides appropriate number of qualified firms).
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 Written procedures for procurement must ensure
all solicitations:
 Incorporate a clear and accurate description of the
technical requirements for materials, product or service to
be procured; and
 “Brand name or equivalent” may be used as needed, but the
specific features of the named brand which must be met by the
offers must be clearly states
 Identify all requirements which the offerors must fulfill
and all other factors to be used in evaluating bids or
proposals.
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 Method of procurement:
 NEW: Micro-purchase
 Small purchase procedures
 Competitive sealed bids
 Competitive proposals
 Noncompetitive proposals
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 NEW: Acquisition of supplies and services under $3,000 or
less.
 On October 1, 2015 the micro-purchase threshold will increase
to $3,500.
 $2,000 for construction subject to the Davis-Bacon Act
 May be awarded without soliciting competitive quotations if
nonfederal entity considers the cost reasonable.
 To the extent practicable must distribute micro-purchases
equitably among qualified suppliers.
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 Good or service that costs $150,000 or less
 (NEW: Simplified Acquisition Threshold was raised
under 200.88)
 Organization may set lower threshold
 Must obtain price or rate quotes from an adequate
number of qualified sources
 “Relatively simply and informal”
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 Over $150,000
 Organization may set lower threshold
 Bids are publically solicited.
 Appropriate when:
 A complete, adequate and realistic specification or description
of good or service is available;
 Two or more responsible bidders are willing and able to
compete effectively for the business
 Selection of vendor can be made principally based on price
and it’s a firm fixed price contract.
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 Over $150,000
 Organization may set lower threshold
 Award contract to responsible vendor
whose proposal is most advantageous to the
program, considering price and other factors.
 Generally used when sealed bid is not appropriate.
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 Appropriate only when:
 The item is only available from a single source;
 There is a public emergency that will not permit delay;
 NEW: The Federal awarding agency or pass-through
expressly authorizes noncompetitive proposals in response to
a written request from non-Federal entity; or
 After soliciting a number of sources, competition is
determined inadequate.
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 NEW: Must perform a cost or price analysis in connection with
every procurement action over $150,000, including contract
modifications
 Independent estimate before receiving bids or proposals.
 Cost analysis generally means evaluating the separate cost elements
that make up the total price (including profit)
 Price analysis generally means evaluating the total price
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 Cannot contract with vendor who has been
suspended or debarred
 Excluded Parties List System in the System
for Award Management (SAM)
 2 CFR Part 180 (OMB Debarment
Suspension Rules) and 2 CFR 3485
(USDE Rules)
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 For contracts over $25,000 you must verify that
the person with whom you intend to do business is
not excluded or disqualified.
 This MUST be done by either:
a. Checking System for Award Management
(SAM); or
b. Collecting a certification from that person; or
c. Adding a clause or condition to the covered
transaction with that person.
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 Equipment: tangible, nonexpendible, personal property
having a useful life of more than one year and an
acquisition cost of $5,000 or more per unit.
 Grantee may also use its own definition of equipment as
long as the definition would at least include all equipment
defined above.
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 All tangible personal property other than
equipment
 NEW: Computing devices are supplies is less than
$5,000
 NEW: Computing devices 200.20 (pg 97)
 Machines used to acquire, store, analyze, process,
public data and other information electronically
 Includes accessories for printing, transmitting and
receiving or storing electronic information
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 Regardless of cost, grantee must maintain effective
control and “safeguard all assets and assure that
they are used solely for authorized purposes.”
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 NEW: Conditional Title vests with the non-Federal
entity.
 NEW: Cannot encumber the property without
approval of Federal agency or Pass-through agency
But
 NEW: When acquiring replacement equipment, 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.
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 Equipment must be used by the Non-Federal entity in
the program or project for which it was acquired as
long as needed, whether or not the project or program
continues to be supported by the Federal award.
 When no longer needed, may be used in other
activities with the following priority:
1. Projects supported by Federal awarding agency
2. Project funded by other Federal agencies
 When used it may be shared (according to the above priorities)
provided such use will not interfere with work on the original
projects/programs.
 Exception – Private Schools 76.661 (page 61)
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Procedures for managing equipment must meet the
following requirements:
1.
Property records
 Description, serial number or other ID, source of funding, title,
acquisition date and cost, percent of federal participation,
location, use and condition, and ultimate disposition date
including sale price
2.
3.
Physical inventory at least every two years
Control system to prevent loss, damage, theft
 All incident must be investigated
4.
5.
Adequate maintenance procedures
If authorized or required to sell property, proper sales
procedures to ensure highest possible return.
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 When property is no longer needed in any current or previously
Federally-funded supported activity, must follow disposition
rules:
 NEW: Nonfederal entity must request disposition instructions
from the federal awarding agency if required by the terms of
the grant.
 Otherwise, may be retained, sold or otherwise disposed as
follows:
 Over $5,000 – pay federal share
 If equipment is sold: Federal awarding agency may permit non-
Federal entity to deduct and retain $500 or 10% of the
proceeds for selling and handling instructions.
 Under $5,000 – no accountability (still must formally dispose)
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If there is a residual inventory of unused supplies exceeding
$5,000 in total aggregate value upon termination or completion
of the project or program and the supplies are not needed for
any other federal award, must compensate the federal
government for its share.
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112
112
NEW: Must have in place a framework for
evaluating risks posed by applicants, which may
include reviewing:
1.
Financial Stability
2.
Quality of Management System
3.
History of Performance
4.
Audit Reports
5.
Applicant’s ability to effectively implement program
113
Federal agency or pass-through agency may
impose additional Federal award conditions:
 Require reimbursement;
 Withholding authority to proceed until evidence of
acceptable performance;
 Additional detailed reporting
 Additional project monitoring;
 Require grantee to obtain technical or management
assistance; or
 Establish additional prior approvals.
114
Right to Notice:
1. Nature of additional requirements,
2. Reason why imposed,
3. Nature of the action ned to remove the
requirement's;
4. Time for completing actions;
5. Method for requesting reconsideration.
Specific conditions MUST be removed once
corrected.
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116
NEW: All pass-through entities MUST:
a. Ensure subawards are clearly identified with
specific data
b. Evaluate subrecipient’s risk of noncompliance
 Prior experience with same or similar subawards;
 Results of previous audits;
 Whether new personnel or new or substantially changed
systems; and
 Extent and results of Federal monitoring.
116
117
c.
Consider imposing specific conditions
d.
Monitor as necessary to ensure subaward is used for
authorized purposes, which must include:
 Reviewing financial and programmatic reports;
 Ensure timely and appropriate action to correct all deficiencies; and
 Issue management decision for audit findings as required under
200.521.
e.
Depending on assessment of risk, the following monitoring
tools may be useful to ensure proper accountability and
compliance with program requirements and achievement of
performance goals:
 Training + technical assistance on program-related matters;
 On-site reviews; and
 Arranging for “agreed-upon-procedures” engagements (described in
200.425).
117
118
f.
Verify subrecipients have audits as required in
Subpart F
g.
Consider whether results require adjustments to the
pass-through entity’s own records
h. Consider taking enforcement actions 200.338.
118
 NEW: If noncompliance can not be remedied with Specific
Conditions, the entity may take one or more of the
following actions:
 Temporarily withhold cash payment pending correction
 Disallow all of part of the cost
 Wholly or partly suspend or terminate the Federal award (see
200.339 Termination)
 Initiate suspension or debarment proceedings under 2 CFR
Part 180
 Withhold further Federal awards for the project or program
 Take other remedies that may be legally available.
119
120
NEW: Threshold increased to $750,000
The federal agency, OIG, or GAO may
arrange for audits in addition to single
audit
121
122
NEW: 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 non-Federal entity 200.25.
122
123
The auditor must report (for major programs):
Significant deficiencies and material weaknesses in internal
controls
Significant instances of abuse
Material noncompliance
Known questioned costs > $25,000
Auditor will not normally find questioned costs for a program
that is not audited as a “major program”
NEW: But if auditor becomes aware of questioned costs
> $25,000 for non-major program, must report
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124
Developing and revising policies
and procedures
 Why policies and procedures are important?
 Logistics
 Suggested Sections
 Rules and Requirements
 Helpful Questions to Ask
 What to do with completed policies and
procedures?
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 Single Audits
 Monitoring
 Staff Changes and
Transitions
 Uniform Grants Guidance
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 Auditors ask about policies and procedures
 Some tests specifically require written policies and procedures
 E.g. Subrecipient monitoring
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 Compliance Supplement, Part 6: Internal Controls
 “The A-102 Common Rule and OMB Circular A-110 … require
that non-Federal entities receiving Federal awards … establish
and maintain internal control designed to reasonably ensure
compliance with Federal laws, regulations, and program
compliance requirements.”
 “Control activities are the policies and procedures that help
ensure the management’s directives are carried out.”
 Clearly written & communicated
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 Policies and procedures are evidence of compliance under
all program monitoring tools
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 Training tool
 Maintain consistency
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 Emphasis on internal controls
 Written policies and procedures are required!
 Written Cash Management Procedures -
§ 200.305
§ 200.302(b)(6) &
 Written Allowability Procedures -


§ 200.302(b)(7)
Written Conflicts of Interest Policy - § 200.318(c)
Written Procurement Procedures - § 200.319(c)
 Written Method for Conducting Technical Evaluations of
Proposals and Selecting Recipients - § 200.320(d)(3)
 Written Compensation and Fringe Benefits Policies - §
200.430(a), § 200.431(a), § 200.464 (Relocation costs of
employees)
 Written Travel Policy - § 200.474(b)
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 Compliant policies and procedures lead to:
 Administering compliant programs and
complying with grants management
requirements!
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 Where to start?
 Review & collect available policies & procedures from different
offices and websites
 If starting from scratch, get information from people who
perform grant related activities
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 Who should be involved?
 Fiscal AND program staff
 Use team approach to capture entire grant process
 Everyone involved should sit in the same room to review grant
activities, decision making, job responsibilities
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 What is the process?
 Review existing policies and procedures
 Develop questions
 Schedule interviews with relevant staff
 Gather information on actual practices
 Draft policies and procedures
 Review internally with appropriate staff
 Revise
 Formally adopt and implement
 Train staff
Annually review and revise!
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 How long does it take?
 Depends on need
 Review of existing policies and procedures is less time than
starting from scratch
 Set deadlines for actions
Don’t get overwhelmed!
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 State-Administered Grants
 Any grant distributed by formula to eligible States
 Describe the process (hint: follow the money trail)
 Direct Grants
 Any grant other than those distributed by formula to eligible
States
 Review GAN for terms and conditions
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 Organization, Structure and Function
 Grant Application Process
 Financial Management System
 Cash Management
 Allowability








Procurement
Inventory/Property Management
Time and Effort
Record Keeping/Record Retention
Monitoring
Audit Resolution
Programmatic Fiscal Requirements
Programmatic Requirements
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Organization, Structure and
Function
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 Organization Chart
 Offices
 Sections
 Divisions
 Job Descriptions & Responsibilities
 Outside entities with grant
administration responsibilities
 MOU/MOA
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 Do you have an organizational chart?
 What are the offices, sections, divisions or employees that
have responsibility for grant administration?
 What are their responsibilities?
 Are there any entities outside of the agency that have grant
administration responsibilities?
 What are those responsibilities?
 How was relationship created? What are the
terms?
 MOU/MOA?
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 State-Administered Grant vs. Direct Grant
 Decisions regarding what grants to apply for
 Determining organizational capacity to run a compliant
program
 Approvals and Authorizations
 After the grant is awarded
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 State-Administered Grant vs. Direct Grant
 Decisions regarding what grants to apply for
 Determining organizational capacity to run a compliant
program
 Approvals and authorizations
 After the grant is awarded
 If Pass-Through Entity:
 Discuss how subgrantees apply for grants
 Responsible for risk analysis prior to issuing award! (Uniform
Grant Guidance)
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 Best Practices
 Whether or not formal acceptance is required, meet with
appropriate parties to be certain you want to accept the
grant.
 Make acceptance a conscious act. Circumstances may
have changed between submission of application and
notice of award
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 How does the agency determine what grants to apply for?
 What is the process?
 Who reviews and signs off on a grant application?
 What happens after a grant is awarded?
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Financial Management System
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 Required Standards
 (1) Identification of awards
 Procedures
 Overview of financial
 (2) Financial reporting
 (3) Accounting records
 (4) Internal controls
 (5) Budget control
 (6) Cash management
 (7) Allowable costs





management / accounting
system
Budget control,
amendments
Maintaining accounting
records
Journal voucher process
Cash management and
interest remittance
Spending funds,
determining allowability
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 Cover timely obligations of
funds: period of availability,
obligations, carryover, FIFO, etc.
 Process must minimize time
elapsing between draw from G5
and disbursement (not
obligation)
 Describe payment method
(advance, reimbursement,
working capital)
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 Not just a restatement of
Subpart E
 Not required to list out all
allowable costs
 Describe budgeting and
planning process for
determining allowable costs
 Program requirements
 Identified needs
 Selected item of costs
 Frequently asked questions
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 What accounting systems are used?
 What function does each system perform?
 Who is responsible for managing budgets and accounts
payable?
 How are budgets loaded and tracked on the system?
 What is the process for comparing budgets to
expenditures?
 How do you ensure all expenditures are allowable?
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 What is the process for requesting budget revisions?
 How do you ensure that all expenditures are made within
the period of availability?
 What happens to unobligated funds?
 Does the system interface with the procurement and
inventory systems?
 How are vendors paid? What is the process? Who is
involved?
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Procurement
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 Uniform Grant Guidance: All non-federal entities
must have documented procurement procedures
which reflect applicable Federal, State, and local
laws and regulations. § 200.318(a)
 Open competition
 Conflict of Interest
 Solicitation
 Cost/Price Analysis
 Vendor Selection
 Required Contract Provisions
 Contract Administration
 Protest Procedures
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 Include:
 Definition (§ 200.318(c)(1))
 Chain for reporting potential conflicts
 Alternate if reporting to employee involved in
potential conflict
 Definitions and examples of nominal items
 Recusal of interested parties
 Sanctions
 Signed certification that employee received and
understands conflicts policy
 Training on policy
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 Non-federal entities must maintain oversight to ensure that
contractors perform in accordance with the terms,
conditions, and specifications of the contract - § 200.318
 Non-federal entity’s contracts must contain the applicable
provisions in Appendix II to Part 200 - § 200.326
 Examples (not complete list)
 Remedies
 Termination
 Equal Employment Opportunity
 Davis-Bacon Act
 Debarment and Suspension
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 What is your conflict of interest policy?
 What are State and/or agency-specific requirements that
must be followed?
 Approval for contracts?
 Service contracts vs. Contracts for goods?
 Contract thresholds and process for entering into contracts
within each threshold amount?
 What clauses and/or certifications must be in each
contract?
 How do you ensure that the terms of the contract are met?
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Inventory &
Property Management
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 Uniform Grant Guidance § 200.313
 Property Classifications
 Equipment
 Supplies
 Computing Devices
 Shared Use of Equipment
 Inventory Procedure
 Loss, Damage or Theft
 Disposition
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 When property no longer needed, must follow
disposition rules:
 Transfer to another federal program
 Over $5,000 – pay federal share
 Under $5,000 – no accountability
 NEW: Non-federal entity must request disposition
instructions from the federal awarding agency if
required by the terms of the grant
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 How do you classify and define property?
 Equipment, supplies, etc.
 What items must be inventoried and tagged?
 Detailed inventory records
 What is the inventory process?
 How frequently is a physical inventory conducted?
 What is the policy regarding lost, stolen or damaged items?
 Are there procedures to transfer equipment between
programs?
 What are the disposition procedures?
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Time and Effort
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 Personnel activity reports or equivalent documentation –
 Follow old standards: 200.430(i)(8)
 Less frequently? Supervisor signature?
 Allocating effort using basis other than time –
 If inextricably intermingled, appropriate method to allocate
using “any reasonable documented basis”: 200.405(d)
 E.g., Number of accounting transactions processed?
 Substitute systems –
 Cognizant agency for indirect cost approval: 200.430(i)(5)
 Allocating effort for supervisory, clerical and support staff –
 Roll up of employee effort: 200.430(i)(5)(ii)
 Statistically valid sample of employees is required
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 Alternative proposals based on outcomes/performance –
 Federal cognizant agency approval: 200.430(i)(6)
 Alternative proposals based on blended funding –
 Must have blended funding plan approved by all involved
federal awarding agencies: 200.430(i)(7)
 Must describe how costs will be charged and relationship
between charging of costs and the specific activity applicable to
all fund sources
 Indirect cost pool –
 Employees that work on general management activities, such
as accounting, payroll preparation, or personnel management
may be included in indirect cost pool. Recover costs attributed
to federal programs through applying rate: 200.414
 Administrative and clerical staff normally treated as indirect:
200.413(c)
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 How do you document time and effort?
 Employees that work on one cost objective?
 Employees that work on multiple cost objectives?
 Who must sign the forms?
 Where are the forms turned in?
 How often is actual effort compared to budgeted effort?
 How and when are reconciliations completed? Budget
amendments?
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Record Keeping
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 Uniform Grant Guidance §§ 200.333, 200.335
 Statute of Limitations
 5 years
 State Policy
 Agency Policy
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 How long must records be maintained?
 How are records maintained?
 Hard copy, electronic
 Who handles records requests?
 How is personally identifiable
information protected?
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Monitoring
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 Awarding Agency Monitoring
 Self-Assessment
 Performance and compliance
 Monitoring of Subrecipients
 Risk-Based Factors
 Type of Monitoring:
 Onsite Reviews
 Remote Monitorings
 Desk Reviews
 Corrective Actions and Follow-Up
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 What are the risk factors used to determine who is monitored?
 Process for when agency is monitored?
 Notification, preparation, responding, follow-up
 Process for monitoring subrecipients?
 From notification to issuing report and timeline
 Who is responsible for monitoring? Fiscal? Programmatic?
 What gets monitored?
 How do you determine which subrecipients will be monitored?
 How often does monitoring occur?
 Site visits, desk reviews, self-assessments
 How do you ensure findings are resolved?
 Corrective action plan, closeout letter, future monitoring
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Audit Resolution
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 Single Audit
 Uniform Grant Guidance – Subpart F
 Resolution of Findings
 Review of Subrecipients’ Single Audits
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 Who is responsible for overseeing single audit compliance
and resolution?
 What is the audit process?
 How are findings resolved?
 Correct Action Plan, Timeline
 Process for reviewing subrecipients’ single audits?
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Programmatic Fiscal
Requirements
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 Supplement Not Supplant
 Maintenance of Effort
 Matching and Cost Sharing
 Hold Harmless
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 How do you ensure compliance with programmatic fiscal
requirements?
 What documentation is required to be maintained?
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Programmatic Requirements
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 Programmatic Compliance
 Application process
 Allocations to subrecipients
 Allowable costs under the grant program
 Other
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 How does your agency ensure
compliance with the specific
requirements of the grant
program?
 What resources are available to
program staff to help ensure
compliance?
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 Buy-in from those who will be using the policies and
procedures.
 Review for accuracy, completeness and compliance.
 Adoption by board or other governing body.
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Policies and procedures are only useful if they are current,
accurate and regularly used.
 Ongoing professional development and training
 What the requirements are, and how your organization meets
the requirement.
 Continually review and revise
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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. 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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