THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
TITLE III PROGRAMS
2015 TECHNICAL ASSISTANCE WORKSHOP
UNIFORM GRANT GUIDANCE
(2 CFR, CHAPTERS I & II, PART 200, ET. AL.)
Presented By:
KEITH X. TERRELL, CPA, Cr.FA, FCPA, CGMA
SENIOR VICE PRESIDENT
1
WHAT WILL BE YOUR TAKEAWAYS?
A.
Understand which prior OMB Circulars were consolidated into the Uniform Grant
Guidance (UGG).
B.
Know the applicable effective dates for UGG.
C.
Become familiar with the significant changes made within UGG.
D.
Know what to expect with your first audit under UGG.
E.
Become aware of other possible changes that are on the horizon.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
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THE OBJECTIVE OF THIS REFORM
1. Eliminating duplicative and conflicting guidance.
2. Focusing on performance (Not just on compliance)
3. Encouraging efficient use of information technology and shared services.
4. Providing for consistent and transparent treatment of costs.
5. Limiting allowable costs to make best use of Federal resources.
6. Setting standard business processes using data definition.
7. Encouraging non-Federal entities to have family-friendly policies.
8. Strengthening oversight.
9. Targeting audit requirements on risk of waste, fraud and abuse.
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Helping to Build Stronger Institutions for the Next Generation
3
UGG LAYOUT
Subpart A – Acronyms and Definitions
Subpart B – General Provisions
Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards
Subpart D – Post-Federal Award Requirements
Subpart E – Cost Principles
Subpart F – Audit Requirements
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SUBPART B: GENERAL PROVISIONS
(1 OF 6)
Throughout, both “should” and “must” are used
 “Must” means “required”
 “Should” indicates best practices or recommended approach
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SUBPART B: GENERAL PROVISIONS
(2 OF 6)
Two new requirements that strengthen oversight:
 The Federal awarding agency must establish conflict of interest
policies for their Federal awards. The non-Federal entity must disclose
in writing any potential conflict of interest to the Federal awarding
agency (or pass-through entity) in accordance with applicable Federal
awarding agency policy. (Employee and Company level)
 Non-Federal entities (and applicants) must disclose all violations of
Federal criminal law involving fraud, bribery, or gratuity violations
potentially affecting the Federal award.
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Helping to Build Stronger Institutions for the Next Generation
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SUBPART B: GENERAL PROVISIONS
(3 OF 6)
Effective and applicability dates of UGG:
 The effective date of UGG for Federal entities was December 26, 2013
which is the official publication date.
 Federal agencies had one year after the publication date to implement
the new regulations which was December 26, 2014.
 The administrative requirements and costs principles will apply to new
Federal awards or additional funding on existing awards issued on or
after December 26, 2014.
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Helping to Build Stronger Institutions for the Next Generation
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SUBPART B: GENERAL PROVISIONS
(4 OF 6)
Effective and applicability dates of UGG: (Continued)
 Existing awards will continue to be governed by the regulations in place
at the time of the award.
 The audit requirements are effective for all fiscal years beginning on or
after December 26, 2014 (fiscal year ending June 30, 2016 for most of
you).
 Early implementation of UGG is not allowed.
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Helping to Build Stronger Institutions for the Next Generation
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SUBPART B: GENERAL PROVISIONS
(5 OF 6)
UGG supersedes and streamlines requirements from OMB Circulars:
 A-21 (Cost Principles for Educational Institutions)
 A-50 (Audit Follow-Up)
 A-87 (Cost principles for State, Local and Indian Tribal Government)
 A-89 (Federal Domestic Assistance Program Information)
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
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SUBPART B: GENERAL PROVISIONS
(6 OF 6)
UGG supersedes and streamlines requirements from OMB Circulars:
(Continued)
 A-102 (Grants and Cooperative Agreements with State and Local
Governments)
 A-110 (Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals and Other Non-Profits)
 A-122 (Cost principles for Non-Profit Organizations)
 A-133 (Audits of States, Local Governments and Non-Profit Organizations)
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SUBPART C: PRE-FEDERAL AWARD
REQUIREMENTS AND CONTENTS OF FEDERAL
AWARDS
Pertinent Sections (Brief Summary):
200.201, Use of grant agreements, cooperative agreements & contracts
200.203, Notices of funding opportunities
200.204, Federal agency review of merit
200.205, Federal agency review of risk
200.206, Standard application requirements
200.210, Information contained in a federal award
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SIGNIFICANT CHANGES SUBPARTS D,E & F
There were many areas that did not change with UGG but the most notable
ones that did were:
 Performance measurement
 Internal control – COSO Framework
 Procurement
 Direct costs
 Indirect costs
 Time and effort reporting
 Audit requirements
 Sub-recipient monitoring
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PERFORMANCE MEASUREMENT
 Federal awarding agencies must require recipients to use OMB-approved
standard government-wide information collections to provide financial
and performance information.
 Recipients must be required to relate financial data to performance
accomplishments, and must also provide cost information to
demonstrate cost effective practices.
 The Federal awarding agencies are required to provide recipients with
clear performance goals, indicators, and milestones.
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INTERNAL CONTROL – COSO FRAMEWORK
To be effective, this requires that each of the five components of internal control and relevant
principles is present and functioning, and that the five components are operating together in
an integrated manner.
1. Control Environment – The control environment is the set of standards, processes, and
structures that provide the basis for carrying out internal control across the organization.
The control environment comprises the integrity and ethical values of the organization.
2. Risk Assessment – Risk is defined as the possibility that an event will occur and adversely
affect the achievement of objectives. Risk assessment Involves a dynamic and iterative
process for identifying and assessing risks to the achievement of objectives. Risk
assessment forms the basis for how risks will be managed.
3. Control Activities – Control activities are the actions established through policies and
procedures that helps ensure that management’s directives to mitigate risks to the
achievement of objectives are carried out.
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Helping to Build Stronger Institutions for the Next Generation
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INTERNAL CONTROL – COSO FRAMEWORK
4. Information and Communication – Information is necessary for the entity to carry out
internal control responsibilities to support the achievement of its objectives.
Communication is the continual, iterative process of providing, sharing, and obtaining
necessary information.
 Internal communication ‐ the means by which information is disseminated throughout
the organization, flowing up, down, and across the entity.
 External communication – twofold; it enables inbound communication of relevant
external information, and it provides information to external parties in response to
requirements and expectations. i.e.; invoicing and payment provisions in awards.
5. Monitoring Activities – Ongoing evaluations, separate evaluations, or some combination of
the two are used to ascertain whether each of the five components of internal control,
including controls to effect the principles within each component, is present and
functioning.
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Helping to Build Stronger Institutions for the Next Generation
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PROCUREMENT
(1 OF 3)
The non-Federal entity must use one of the following methods of procurement as follows:
1. Micro-purchases (purchases do not exceed $3,000 or $2,000 if for
construction)


Try to distribute distribute equitable between qualified suppliers.
May be awarded without soliciting competitive quotations.
2. Small Purchases


Cost less than Simplified Acquisition Threshold (SAT) of $150,000.
Obtain price or quotes from an adequate number of sources.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
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PROCUREMENT
(2 OF 3)
The non-Federal entity must use one of the following methods of procurement as follows: (Continued)
3. Sealed Bids (Formal Advertising) – Exceeds SAT


Bids are publicly solicited.
Awarded to bidder whose bid is the lowest in price.
4. Competitive Proposal (RFP must be publicized) – Exceeds SAT


Fixed price or cost reimbursement.
Awarded to bidder whose proposal is most advantageous to the
program after considering price and other factors.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
17
PROCUREMENT
(3 OF 3)
The non-Federal entity must use one of the following methods of procurement as follows: (Continued)
5. Non-competitive Proposal




Used only when items are available from a single source.
Public emergency.
Federal agency expressly authorizes non-competitive proposal.
Competition is determined to be inadequate.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
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DIRECT COSTS
 Prior written approval needed in advance of incurring special and unusual costs.
 Salaries of administrative and clerical staff are generally indirect costs except if
all of the following conditions apply:
1.
Administrative and clerical services are integral to the project or activity;
2.
Individual involved can be specifically identified with the project or activity;
3.
Such costs are explicitly included in the budget or have prior approval from
the Federal awarding agency; and
4.
The costs are not also recovered as indirect costs.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
19
INDIRECT COSTS
 Negotiated indirect costs rates must be accepted by all Federal agencies unless
statute or regulation allows for an exception or agency head approves.
 Any non-Federal entity that has never negotiated an indirect cost rate may elect
to charge a de minimis rate of 10% which may be used indefinitely.
 Any non-Federal entity that has a Federally negotiated indirect cost rate may
apply for a one-time extension for a period up to four years. If granted, a new rate
review will not be allowed until the extension period is over.
 At the end of four years, the non-Federal entity must re-apply to negotiate a new
rate.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
20
TIME AND EFFORT REPORTING
(1 OF 3)
Time and effort reporting has plagued many institutions including
erroneous reporting and improper allocation of salaries. The OMB UGG
requires:
1. Charges for salaries must be based on records that accurately reflect
the work performed. Their records must:
 Be supported by a system of internal controls which provides
reasonable assurance charges are accurate, allowable and properly
allocated.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
21
TIME AND EFFORT REPORTING
(2 OF 3)
 Reasonably reflect the total activity for which the employee is
compensated by non-Federal entity, not exceeding 100%.
 Encompass all activities (Federal and non-Federal).
 Comply with established accounting policies and practices.
 Support the distribution of the employee’s salary or wages among
specific activities or cost objectives if the employee works on more
than one Federal award.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
22
TIME AND EFFORT REPORTING
(3 OF 3)
2. Budget estimates alone will not be sufficient. (Often based on grant
budget or percentage allocation on Personnel Action Form)
3. Percentages may be used for distribution of total activities.
4. Time and Effort Reports are an integral part of ensuring records meet
new standards especially for those employees working on multiple cost
objectives.
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
23
AUDIT REQUIREMENTS
(1 OF 9)
Old Audit Requirement
New Audit Requirement
Single Audit Threshold - $500,000
Single Audit Threshold - $750,000
Minimum Type A Program Determination
Threshold - $300,000
Minimum Type A Program Determination
Threshold - $750,000
Threshold for reporting questioned costs Threshold for reporting questioned costs
- $10,000
- $25,000
Risk Assessment Threshold for Type B
Programs - $100,000
Risk Assessment Threshold for Type B
Programs – 25% of Type A Threshold
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Helping to Build Stronger Institutions for the Next Generation
24
AUDIT REQUIREMENTS
(2 OF 9)
Major Program Determination Thresholds:
Federal Awards Expended
Type A/B Threshold
> $750,000 but < $25 Million
$750,000
> $25 Million but < $100 Million
.03 X Federal Awards Expended
> $100 Million but < $1 Billion
$3 Million
> $1 Billion but <$10 Billion
.003 X Federal Awards Expended
> $10 Billion but < $20 Billion
$30 Million
> $20 Billion
.0015 X Federal Awards Expended
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Helping to Build Stronger Institutions for the Next Generation
25
AUDIT REQUIREMENTS
(3 OF 9)
Criteria for a Low-Risk Auditee
Old Audit Requirement
New Audit Requirement
Single audits were performed annually
Single audits were performed annually
including submitting the data collection
form and reporting package to FAC
within the timeframe specified
There were no material weaknesses in
internal controls over financial reporting
No change
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
26
AUDIT REQUIREMENTS
(4 OF 9)
Criteria for a Low-Risk Auditee – (Continued)
Old Audit Requirement
New Audit Requirement
Opinion on the financial statements and
schedule of expenditures of Federal
awards were unqualified
Opinion on whether the financial
statements were prepared in
accordance with GAAP or, a basis of
accounting required by state law and the
schedule of expenditures of Federal
awards were unmodified
THE WESLEY PEACHTREE GROUP, CPAs
Helping to Build Stronger Institutions for the Next Generation
27
AUDIT REQUIREMENTS
(5 OF 9)
Criteria for a Low-Risk Auditee – (Continued)
Old Audit Requirement
New Audit Requirement
Not applicable under OMB Circular A133 (New Requirement)
There is no going concern opinion on the
audited financial statements
There were no material weaknesses in
internal controls over compliance
No change
Opinion on compliance for major
programs must be unmodified
No change
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Helping to Build Stronger Institutions for the Next Generation
28
AUDIT REQUIREMENTS
(6 OF 9)
Criteria for a Low-Risk Auditee – (Continued)
Old Audit Requirement
New Audit Requirement
Known or likely questioned costs does
No change
not exceed 5% of the total Federal award
expended for a Type A program during
the audit period
Audit Coverage Thresholds:
Audit Coverage Thresholds:
Low Risk Auditee – 25%
Non-Low Risk Auditee – 50%
Low Risk Auditee – 20%
Non-Low Risk Auditee – 40%
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Helping to Build Stronger Institutions for the Next Generation
29
AUDIT REQUIREMENTS
(7 OF 9)
Criteria for Program Risk Assessments
Old Audit Requirement
New Audit Requirement
Has Federal and pass-through oversight – Judgment
No change
Results of audit follow-up not progressive – Judgment
No change
Changes in program personnel or system - Judgment
No change
Audited within previous two years
No Change
No material weakness over compliance
No Change
No modified opinion over compliance
No Change
No questioned costs > 5% of Federal awards expended
No Change
Type B programs with larger Federal awards expended
No change
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AUDIT REQUIREMENTS
(8 OF 9)
Criteria for Swapping High Risk Type B Programs for Low Risk Type A Programs
Old Audit Requirement
50% of all High Risk Type B Programs
but not more than Low Risk Type A
Programs;
New Audit Requirement
25% of Low Risk Type A Programs for
High Risk Type B Programs
or
1 High Risk Type B Program for 1 Low
Risk Type A Program
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Helping to Build Stronger Institutions for the Next Generation
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AUDIT REQUIREMENTS
(9 OF 9)
The compliance supplement is published annually with changes under a
separate process.
As such, the 14 compliance requirements including activities allowed;
allowable costs; cash management; Davis-Bacon Act; eligibility; equipment;
matching, level of effort, earmarking; period of availability; procurement,
suspension, debarment; program income; real property; reporting; subrecipient monitoring; and special tests and provisions will be consolidated
(reduced) in the new compliance supplement to be issued soon. Only real
property and relocation program requirement is slated to be deleted.
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Old Compliance Requirements
Proposed Compliance Requirements
Activities allowed or unallowed (A)
Consolidate into B
Allowable costs/cost principles (B)
Allowable costs/cost principles/activities (B)
Cash management (C)
Cash management (C)
Davis-Bacon Act (D)
Consolidate into N
Eligibility (E)
Eligibility (E)
Equipment and real property management (F)
Consolidate into B
Matching, level of effort and earmarking (G)
Consolidate into B
Period of availability of Federal funds (H)
Consolidate into B
Procurement and suspension and debarment (I)
Consolidate into B
Program income (J)
Consolidate into N
Real property and relocation assistance (K)
Delete
Reporting (L)
Reporting (L)
Sub-recipient monitoring (M)
Sub-recipient monitoring (M)
Special tests and provisions (N)
Special tests and provisions (N)
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SUB-RECIPIENT MONITORING
(1 OF 6)
A.
Evaluate each sub-recipient’s risk of noncompliance with Federal
statues, regulations and terms and conditions of the sub-award.
 Risk factors to consider are:
1. Prior experience with same or similar sub-award
2. Results of previous audits
3. Whether they have new personnel or new or substantially changed
systems
4. Results of Federal monitoring (if they receive Federal awards
directly)
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SUB-RECIPIENT MONITORING
(2 OF 6)
B. Consider imposing specific sub-award conditions upon the subrecipient, if appropriate, such as:






Shift to reimbursement basis awards
Withhold authority to proceed pending acceptable performance
Require additional, more detailed financial reports
Require additional project monitoring
Require additional technical and management assistance
Establish additional prior approvals
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SUB-RECIPIENT MONITORING
(3 OF 6)
C. Monitor the activities of the sub-recipient as necessary including:
1. Reviewing financial and programmatic reports required by the
pass-through entity
2. Ensuring timely and appropriate action on all deficiencies
3. Issuing a management decision for audit findings pertaining to the
Federal award provided to the sub-recipient
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SUB-RECIPIENT MONITORING
(4 OF 6)
D. Depending on the pass-through entity’s assessment of risk posed by
the sub-recipient, consider the following monitoring tools:
1. Provide sub-recipient with training and technical assistance on
program-related matters
2. Perform on-site reviews of the sub-recipients operations
3. Arrange for agreed-upon procedures engagement performed in
accordance with GAGAS, paid for and arranged by pass-through
entity and limited in scope to one or more of the following:
Allowable or unallowable activities or costs, eligibility and reporting
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SUB-RECIPIENT MONITORING
(5 OF 6)
E.
Verify that every sub-recipient is audited as required by the thresholds
(minimally $750,000 spent in Federal awards) established in the new
UGG
F.
Consider whether the results of the sub-recipient’s audits, on-site
reviews or other monitoring indicate conditions that necessitate
adjustments to the pass-through entity’s own records
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SUB-RECIPIENT MONITORING
(6 OF 6)
G. Consider taking enforcement action against noncompliant subrecipients such as:
 Temporarily withhold cash payments pending correction of the
deficiency
 Disallow all or part of the cost of the activity or action not in
compliance
 Wholly or partly suspend or terminate the Federal award
 Initiate suspension or debarment proceedings
 Withhold further Federal awards for the project or program
 Take other remedies that may be legally available
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Helping to Build Stronger Institutions for the Next Generation
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QUESTIONS?
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Helping to Build Stronger Institutions for the Next Generation
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THANK YOU!
WEBSITE FOR UGG (2 CFR, CHAPTERS I & II, PART 200, ET. AL.):
HTTP://WWW.GPO.GOV/FDSYS/PKG/FR-2013-1226/PDF/2013-30465.PDF
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