The Uniform Grant Guidance: Background,
Financial Management and Allowability
Changes
Presented by:
Leigh Manasevit, Esq.
lmanasevit@bruman.com
Brustein & Manasevit, PLLC
Fall Forum 2014
Reasons for the Change?
1. Simplicity
2. Consistency
3. Obama Executive Order on Regulatory Review
– Increase Efficiency
– Strengthen Oversight
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Who crafted the changes?
• “COFAR”
–Council on Financial Assistance Reform,
and
–Key Stakeholders
• www.cfo.gov/cofar
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Who is covered?
• All “nonfederal entities” expending
federal awards
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What is included?
• A-102: Administrative Rules - State/Local
– Part 80 – EDGAR
• A-110: Administrative Rules - Postsecondary and
Nonprofits
– Part 74 – EDGAR
•
•
•
•
A-87: Cost Rules - State/Local
A-21: Cost Rules - Postsecondary
A-122: Cost Rules - Nonprofits
A-133: Audit Rules
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Key
Dates
Key
Dates:
February 1, 2013
Notice of Proposed Rulemaking
December 26, 2013
Published Rule in Federal Register
http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/201330465.pdf
June 26, 2014
Draft Regulations Due to OMB
August 29, 2014
COFAR Releases FAQs
December 26, 2014
Final Regulations Published
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Date of Applicability of Revised Rules
 Guidance applies to all new awards and
incremental funding made on or after
12/26/2014
 OMB stated on 12/20/13
December 26, 2014
All additions after
? ? ?
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COFAR Updates – FAQs - August 29,
2014
• Applies to new federal awards if a federal awarding
agency considers its incremental funding actions to be
opportunities to change terms and conditions of
previously made awards.
• Federal awarding agencies may apply the Uniform
Guidance to the entire Federal awards that is
uncommitted or unobligated as of the Federal award
date or first increment after 12/26/14.
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COFAR Updates – FAQs - August 29, 2014
(cont.)
• What about subawards?
– The effective date is the same as the effective date of the
Federal award from which the subaward is made.
• Does not matter when the subaward is made – but the
original Federal award from the Federal awarding agency.
• There Is a Procurement “Grace Period” of 1 year.
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Inconsistency Between Program Statute and Guidance
If federal program statute differs from
Uniform Grant Guidance, then
statute/regulation governs.
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A Significant Change
• Shift from focus on compliance to focus on
PERFORMANCE!!!
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Performance
• Auditors (A-133 + Federal OIG) and Monitors
(Federal and State Pass-Through) must look
more to “outcomes” than to “process”
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Most Significant Change ???
13
 The Uniform Grant Guidance has a MAJOR
emphasis on “strengthening
accountability” by improving policies that
protect against waste, fraud and abuse
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New: Required Certifications 200.415
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• NEW: 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.”
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2 CFR Part 200
STRUCTURE OF UNIFORM GRANT
GUIDANCE
(P. 78608)
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Uniform Grant Guidance Sections (p.
78608)
•
•
•
•
•
•
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
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Key Definitions (Examples)
•
•
•
•
•
•
•
•
Cognizant Agency for Audit 200.18 (78611)
Cognizant Agency for Indirect 200.19 (78611)
Cooperative Audit Resolution 200.25 (78612)
Improper Payment 200.53 (78614)
Internal Control Over Compliance 200.62 (78615)
Major Program 200.65 (78615)
Modified Total Direct Cost 200.68 (78615)
Non-Federal Entity 200.69 (78615)
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FINANCIAL MANAGEMENT CHANGES
200.302(b)
1. (NEW) Identification of Awards
2. Financial Reporting
3. Accounting Records (Source Docs)
4. Internal Control
5. Budget Control
6. (NEW) Written Cash Management Procedures
7. (NEW) Written Allowability Procedures
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Identification of Awards (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)
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Financial Reporting
New shift to OMB approved performance
metrics
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Financial Reporting (cont.)
 Accurate, current, complete disclosure of financial results of
each award
(Old) in accord with the financial reporting reqs of the grant
(New) in accord with 200.327 and 200.328
 200.327 – Federal awarding agency can only collect OMB
approved data elements, no less than annually, no more than
quarterly
 200.328 – Non-federal entity must submit performance reports
at intervals required by federal agency or pass-through.
Annual performance reports due 90 days after reporting
period; Quarterly performance reports due 30 days after
reporting period
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Financial Reporting (cont.)
Performance Metrics:
1. Compare actual accomplishments to
objectives (quantify to extent possible)
2. Reasons goals were not met if appropriate
3. Additional pertinent information (e.g.,
analysis and explanation of cost overruns,
high unit costs)
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Financial Reporting (cont.)
• OMB Allows ED to waive “performance metrics”
not required.
• How will ED reconcile performance metrics with
accountability/performance indicators of ESEA,
IDEA, CTE, AEFLA
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Accounting Records (Source
Documentation)
Combines current requirements:
• Source Documentation Must Be Kept On:
1.
2.
3.
4.
5.
6.
7.
8.
Federal Awards
Authorizations
Obligations
Unobligated balances
Assets
Expenditures
Income
Interest (New) (Eliminated liabilities)
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Internal Controls
Essentially same as current
requirements:
 Effective control over and
accountability for:
1. All funds
2. Property
3. Other assets
 Must adequately safeguard all
assets
 Use assets solely for authorized
purpose
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Internal Controls (cont.)
• Cross reference 200.303 (New)
• Internal Controls must ensure compliance with
federal statutes, regs, terms of the award
• Entities must:
– Evaluate and monitor compliance;
– Take prompt action when instances of
noncompliance are identified; and
– Safeguard protected personally identifiable
information (PII)
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Budget Control
• Same as current rules
• Comparison of expenditures with budget amounts for each
award
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Written Cash Management Procedures
(New)
• Written Procedures to implement the
requirements of 200.305
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Written Cash Management Procedures
(cont.)
 For states, payments are governed by Treasury –
State CMIA agreements 31 CFR Part 205
 No Change
 For all other non-federal entities, payments methods must
minimize time elapsing between draw from G-5 and
disbursement (not obligation)
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Written Cash Management Procedures (cont.)
 Written procedures must describe whether nonfederal entity uses:
1) Advance Payments (preferred)
• Limited to minimum amounts needed to meet immediate
cash needs
2) Reimbursement
• Pass-through must make payment within 30 calendar days
after receipt of the billing
3) Working Capital Advance
• The pass-through determines that the non-federal entity
lacks sufficient working capital
Allows advance
payment to cover estimated disbursement needs for initial
period
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Written Cash Management Procedures
(cont.)
• Advances must be maintained in insured accounts
• Pass-through cannot require separate depository
accounts
• Accounts must be interest bearing unless:
1. Aggregate federal awards under $120,000
2. Account not expected to earn in excess of $500 per year
3. Bank require minimum balance so high, that such
account not feasible
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Written Cash Management Procedures (cont.)
• Interest earned must be remitted annually to HHS
• Interest amounts up to $500 may be retained by nonfederal entity for administrative purposes
– Currently $250 for IHEs and NonProfits and $100 for State and
local governments
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Written Allowability Procedures (New)
• Written procedures for determining allowability
of costs in accord with Subpart E – Cost
Principles (see p. 78639 – 78662)
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Factors Affecting Allowability of Costs 200.403
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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
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Applicable Credits 200.406
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• 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
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Profit 200.400(g)
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• Non-federal entities may not earn or keep any profit
resulting from federal financial assistance, unless expressly
authorized by the terms and conditions of the federal
award.
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Prior Written Approval 200.407
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• 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
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Program Income 200.307
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• 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.
• NEW: Program Income Must Be Deducted from Total Allowable
Costs
– With prior approval may dd to Federal Award.
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Direct v. Indirect Costs 200.413
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• 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
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Contract vs. Grant 200.330
• No change from the current requirement.
• Entities must clearly determine what is a
subgrant and what is a contract.
– Note the difference!!
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Selected Items of Cost
The Uniform Grant Guidance has
55 specific items of cost!
200.420
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Selected Items of Cost Examples
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• Advertising/PR 200.421 (Clarified)
◦ Allowable for programmatic purposes including:
◦
◦
◦
◦
◦
Recruitment
Procurement of goods
Disposal of materials
Program outreach
Public relations (in limited circumstances)
 Alcohol 200.423
 Not allowable
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Selected Items of Cost (cont.)
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• Collections of Improper Payments
200.428 (New)
– The costs incurred by the nonFederal entity to recover
improper payments are
allowable as either direct or
indirect costs, as appropriate.
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Selected Items of Cost (cont.)
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• Entertainment Costs 200.438 (Clarified)
– Cost of entertainment are unallowable
• Amusement, Diversion, Social Activities
– Except where costs might otherwise be considered programmatic and are
authorized or have prior written approval of the federal awarding agency.
• Fines, Penalties, Damages and other Settlements 200.441
– If related to violation, alleged violation or failure to comply with Federal,
state, tribal, local or foreign law and regulations then unallowable.
– Except with prior written approval of federal awarding agency.
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Selected Items of Cost (cont.)
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• Travel Costs 200.474 (Changed)
• Prior rule: allowable with certain restrictions
– Travel costs may be charged on actual, per diem, or mileage
basis
– Travel charges must be consistent with entity’s written travel
reimbursement policies
– 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)
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Disclaimer
This presentation is intended solely to provide general information and does
not constitute legal advice or a legal service. This presentation does not
create a client-lawyer relationship with Brustein & Manasevit, PLLC and,
therefore, carries none of the protections under the D.C. Rules of
Professional Conduct. Attendance at this presentation, a later review of any
printed or electronic materials, or any follow-up questions or
communications arising out of this presentation with any attorney at
Brustein & Manasevit, PLLC does not create an attorney-client relationship
with Brustein & Manasevit, PLLC. You should not take any action based
upon any information in this presentation without first consulting legal
counsel familiar with your particular circumstances.
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