SUBTLE AND NOT-SO-SUBTLE UNIFORM GUIDANCE CONTENT - THAT WILL ROCK YOUR GRANT WORLD - Grants ...
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SUBTLE AND NOT-SO-SUBTLE UNIFORM GUIDANCE CONTENT THAT WILL ROCK YOUR GRANT WORLD FEBRUARY 25, 2019 / SESSION 1 P R E S E N T E D BY E L I Z A B E T H G O M B A S H © Thompson Grants, a division of CBIS | 1
Learning Objectives ◆ Understand major similarities and differences between the Uniform Grant Guidance and previous regulations. ◆ Take a guided walk through UGG to learn recurring themes and key areas that are currently attracting a lot of attention from grantees and auditors. ◆ Understand subtle and not-so-subtle changes in grant regulations that are likely to impact operational management. Open your copy of UGG, and get your highlighters, pens, and post-it flags ready! © Thompson Grants, a division of CBIS | 2
A Show of Hands - Between Us…? ◆ I have been working with Federal grants less than 5 years. ◆ I believe that new and changed requirements in UGG warrant overhauling our previous/existing practices in order to be compliant. ◆ My organization’s accounting and administrative records are audit-ready today. ◆ My organization’s programmatic performance records are audit-ready today. Your attendance here is already a sign of stronger internal controls! © Thompson Grants, a division of CBIS | 3
Compliance Challenges ◆Never as clear as you want them to be • Regulatory jargon • Multiple info sources ◆Interpretations continuously evolve • Most of the “rules” haven’t changed significantly over the years – they are just clarified, interpreted differently, or treated more consistently • Influence of published audit reports • Agency guidance • Updates to UGG, agency policies, and program guidelines Caution: Today’s interpretation may change tomorrow – when making compliance decisions, consider following the most restrictive rule/interpretation to reduce risk. © Thompson Grants, a division of CBIS | 4
Compliance Challenges ◆ Rarely are there absolute answers – “it depends” on organizational policies and procedures as well as the individual situation in question. ◆ To be “audit ready,” organizations need to be able to justify (and document in writing) the decisions they have made in terms of interpreting the regs. ◆ Organizations need to have the collective knowledge to understand what the regs say (and what they don’t say) in order to make compliant decisions. Are your policies and procedures set up to seek out and leverage your organization’s collective knowledge? © Thompson Grants, a division of CBIS | 5
What You Should Already Know About UGG 2 CFR 200 ◆ Issued 12/26/13; in effect at the start of the first organizational fiscal year following 12/26/14. • If your organization took advantage of the previous procurement implementation waiver that was allowed, that waiver period is over - UGG procurement standards are now fully in effect! ◆Supersedes previous OMB-based guidance/rules/regs on pre-award, post-award, closeout, and audit (e.g., OMB Circulars A-133, A-21, A-110). © Thompson Grants, a division of CBIS | 6
Recurring Themes in UGG ◆ Consistency of terminology and regulations impacting state and local governments, institutions of higher education, nonprofits, and Indian tribes. ◆ Increased emphasis on improving performance, in addition to financial and administrative compliance (ensuring integrity). ◆ Increased decision-making and subaward task responsibility placed on grant recipients. ◆ More “must,” less “shall.” © Thompson Grants, a division of CBIS | 7
Come, Take a Brisk Walk With Me… ◆ Subpart A – 200.0 – 200.99 - Acronyms and Definitions ◆ Subpart B – 200.100 – 200.113 - General Provisions ◆ Subpart C – 200.200 – 200.213 – Pre-Federal Award Requirements and Contents of Federal Awards ◆ Subpart D – 200.300 – 200.345 – Post-Federal Award Requirements (replaced OMB Circulars A-102, A-110) ◆ Subpart E – 200.400 – 200.475 - Cost Principles (replaced OMB Circulars A-21, A-87, A-122). Note: Cost Principles for Hospitals are addressed in UGG Appendix IX ◆ Subpart F – 200.500 – 200.520 - Audit Requirements (replaced OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations) See Section 314 of the Federal Grants Management Handout © Thompson Grants, a division of CBIS | 8
Subpart A – Acronyms and Definitions ◆ 200.69 Non-Federal Entity (NFE) – A state, local government, Indian tribe, institution of higher education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient. ◆ 200.74 Pass-Through Entity (PTE) – An NFE that provides a subaward to a subrecipient to carry out part of a Federal program. Why are these terms important? © Thompson Grants, a division of CBIS | 9
More Responsibilities Placed on NFEs and PTEs ◆ In essence, there are now only three broad categories of entities involved in Federal grants: • Federal awarding agency; • NFE; and • Contractor. ◆But old habits die hard…comparable terms are still commonly used, such as: • Grantee/Subgrantee; • Prime Recipient/Lower-tier Recipient; • Vendor. Using the official terms increases consistency, which minimizes the risk of misinterpretation! © Thompson Grants, a division of CBIS | 10
More Responsibilities Placed on NFEs and PTEs ◆ Throughout UGG there is language directing NFEs to act as the Federal awarding agency would. All NFEs must be prepared to assume the same administrative responsibilities as the Federal awarding agency does when overseeing grants and making subawards. ◆ If you are a PTE, you are an NFE, as is any Subrecipient. ◆ NFEs must follow all grant rules and regs. UGG does not apply to Contractors unless the NFE incorporates specific language about UGG into the agreement instrument. © Thompson Grants, a division of CBIS | 11
Speaking of Contractors… ◆ 200.22 Contract – A legal instrument by which an NFE purchases property or services needed to carry out the project or program under a Federal award. ◆ 200.23 Contractor – An entity that receives a contract as defined in 200.22 Contract. The term “Vendor” does not exist in UGG. © Thompson Grants, a division of CBIS | 12
Clarification: Grants vs. Contracts ◆ 200.51 Grant Agreement – A legal instrument of financial assistance between a Federal awarding agency or PTE and an NFE that is used to enter into a relationship the principal purpose of which is to transfer anything of value from the Federal awarding agency or PTE to the NFE to carry out a public purpose authorized by a law of the US, and not to acquire property or services for the Federal awarding agency or PTE’s direct benefit or use. Emphasizes the difference in purpose between a grant and a contract. © Thompson Grants, a division of CBIS | 13
NFE/PTE Subawards ◆ 200.92 Subaward – An award provided by a PTE to a subrecipient for the subrecipient to carry out part of a Federal award received by the PTE. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any form of legal agreement, including an agreement that the PTE considers a contract. Clarifies the difference between a subrecipient and a contractor, no matter what the organization calls the agreement instrument. Avoid risk by being consistent in your use of terms and not issuing “contracts” to subrecipients! © Thompson Grants, a division of CBIS | 14
New Distinctions Impacting Supplies/Equipment ◆ Classify your purchases properly based on definitions • 200.20 Computing devices • 200.33 Equipment • 200.48 General purpose equipment • 200.58 Information technology systems • 200.89 Special purpose equipment • 200.94 Supplies UGG acknowledgement of technological advances finally brought the Federal grants process into the 21st Century! © Thompson Grants, a division of CBIS | 15
Indirect Costs ◆ 200.56 Indirect (facilities & administrative - F&A) costs (“overhead”) • UGG Appendix III addresses indirect cost for institutions of higher education (IHE). • UGG Appendix IV addresses indirect costs for nonprofit organizations (NPO, or sometimes NGO). • UGG Appendix VI addresses indirect costs for state/local government and Indian tribes. © Thompson Grants, a division of CBIS | 16
Internal Controls ◆ 200.61 Internal controls - provide reasonable assurance regarding the achievement of objectives in the following categories: • Effectiveness and efficiency of operations • Reliability of reporting for internal and external use • Compliance with applicable laws and regulations ◆ 200.62 Internal control over compliance requirements for Federal awards • The “backbone” of UGG expectations See Section 316 of the Federal Grants Management Handbook © Thompson Grants, a division of CBIS | 17
Internal Controls ◆ 200.79 Personally Identifiable Information (PII) • New in UGG - Requires protection of nonpublic information about individuals, determined on a case- by-case basis How does your organization define PII? What processes does your organization follow when securing the personal information of employees or clients? Is the process in writing? Is it applied consistently? Does everybody know the process? © Thompson Grants, a division of CBIS | 18
Subpart B – General Provisions ◆ 200.104 Supersession • Any new or continuing award issued after UGG should follow UGG; pre-UGG awards should have followed the old OMB circulars. ◆ 200.105 Effect on other issuances • Other than requirements based on statute (law), old requirements are no longer applicable. The record retention window for some older grants (subject to compliance with the old OMB circulars) may still be in effect – who monitors this at your organization? See Section 317 of the Federal Grants Management Handbook © Thompson Grants, a division of CBIS | 19
Subpart B – General Provisions ◆ 200.109 Review date • UGG will be reviewed (and potentially modified) at least every 5 years! ◆ 200.112 Conflict of interest (see also 200.318 & 200.319) • NFEs must have a written conflict of interest policy. Some modifications/clarifications have already been made to UGG; until a revised version is issued, check the UGG FAQs for updated information (the latest update was issued in July 2017: https://cfo.gov/wp-content/uploads/2017/08/July2017- UniformGuidanceFrequentlyAskedQuestions.pdf. © Thompson Grants, a division of CBIS | 20
Exposing the Ugly Stuff ◆ 200.113 Mandatory disclosure (also see 200.328) • NFEs must disclose, in a timely manner, in writing, to the Federal awarding agency or PTE all fraud, bribery, or gratuity violations potentially affecting the Federal award. • Any award with terms and conditions that include reporting integrity and performance (UGG Appendix XII) must report certain civil, criminal, or administrative proceeding in SAM (System for Award Management). https://www.sam.gov/portal/SAM/##11 What is “timely”? © Thompson Grants, a division of CBIS | 21
Subpart C – Pre-Award ◆ 200.203 Notices of funding opportunities • (b) 60 calendar day turn-around...? ◆ 200.207 Specific conditions (formerly called “Special Conditions”) • Based on risk - different from “general terms and conditions” (200.210(b)) ◆ 200.210 Information contained in a Federal award • (d) New in UGG - Federal Award Performance Goals © Thompson Grants, a division of CBIS | 22
Pre-Award Evaluation of Risk ◆ 200.205 Federal Awarding Agency Review of Risk Posed by Applicants • Before an NFE is awarded a grant, a risk review of the organization is conducted by the awarding agency. • Typically conducted by the Grants division, not the program office. Remember: The NFE has the same responsibilities as the Federal awarding agency when dealing with Subawardees. NFE/PTEs should use 200.205 as a guide to conducting an evaluation of risk for any subrecipients, however a PTE risk review is not required to occur prior to issuing a subaward based on the July 2017 UGG FAQ. © Thompson Grants, a division of CBIS | 23
Subpart D – Post-Award ◆ 200.303 Internal controls • Elaborates on definition of internal controls 200.61. ◆ 200.305 Payment • New in UGG – advance payments must be deposited in an insured account. ◆ 200.307 Program income • New in UGG - Addition method is automatic for IHEs. © Thompson Grants, a division of CBIS | 24
Subpart D – Post-Award ◆ 200.308 Revision of budget and program plans • New in UGG - Deleted previous indirect cost to direct cost pre-approval requirement. • New in UGG - Changed language – not just “absence,” but “disengagement” for over 3 months (or 25% reduction in time devoted to the project) by Project Director/Principal Investigator. ◆ 200.313 Equipment • Title normally vests with the NFE (subject to conditions), but the Federal awarding agency may elect to make the title itself conditional. © Thompson Grants, a division of CBIS | 25
Equipment Inventory Control ◆ Not new, but a common risk. ◆ 200.313 Equipment – (d) Management requirements – Procedures for managing equipment, whether acquired in whole or in part under a Federal award, must meet requirements until disposition: • Property records – description, serial or other ID number, funding source (including FAIN), title holder, acquisition date, cost, % of Federal participation, location, use and condition, and disposition data. • Physical inventory at least every two years. © Thompson Grants, a division of CBIS | 26
New Procurement Standards ◆ 200.318 General Procurement Standards • NFE must follow its own procurement policies • NFE must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts. • NFE must maintain written standard of conduct, including conflict of interest policy. • NFE must neither solicit nor accept gratuities, favors, or anything of monetary value from Contractors/ subcontractors. To be audit-ready, the NFE should have a written policy/procedure that defines monetary value. See Tab 440 of the Federal Grants Management Handbook © Thompson Grants, a division of CBIS | 27
New Procurement Standards ◆ 200.318 (continued) • NFE must avoid acquisition of unnecessary or duplicative items – focus on “economical purchases.” • NFE must award contracts only to responsible contractors possessing the ability to perform successfully. Considerations: contractor integrity, compliance, record of past performance, financial and technical resources. Economical purchase? Responsible contractor? © Thompson Grants, a division of CBIS | 28
Procurement Competition ◆ 200.319 - All procurement transactions must be conducted in a manner providing full and open competition. Situations include but are not limited to: • Unreasonable qualification requirements. • Requiring unnecessary experience and excessive bonding. • Noncompetitive pricing practices. • Noncompetitive contracts to consultants that are on retainer contracts. © Thompson Grants, a division of CBIS | 29
Procurement Competition ◆ 200.319 (continued): • Organizational conflicts of interest. • “Brand name” instead of allowing “an equal” product. • Any arbitrary action in the procurement process. ◆ NFE must have written procedures for procurement transactions. © Thompson Grants, a division of CBIS | 30
Methods of Procurement ◆ 200.320 • Micro-purchases (orig max threshold: $3,000; NEW OMB Memo M-18-18 approved a $10,000 threshold by granting an exception to UGG for FY2018 effective 06/20/18 until UGG is revised to incorporate this change) – no quotes required, but documenting comparison pricing is recommended in order to justify reasonableness/allowability of the expense • Small purchases – (up to the Simplified Acquisition Threshold; NEW OMB Memo M-18-18 approved a $250,000 SAT threshold by granting an exception to UGG for FY2018 effective 06/20/18 until UGG is revised to incorporate this change) - quotes required • Sealed bids (>$250,000 SAT) - award to the lowest price responsive bidder • Competitive proposals (> $250,000 SAT) - price is one of several factors • Noncompetitive proposals - justified sole source based on organizational policy Organizational procurement policies may be more restrictive, but not less © Thompson Grants, a division of CBIS | 31
New Procurement Standards ◆ 200.323 Contract Cost and Price • NFE must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold (200.88) [$250,000], including contract modifications. ◆ 200.324 Federal Awarding Agency or PTE Review • NFE must make available (upon request) technical specs, RFPs, invitations for bids, or independent cost estimates on proposed procurements. Cost analysis = Examining cost data for comparison Price analysis = Deciding if the price is fair and reasonable © Thompson Grants, a division of CBIS | 32
Other Administrative Issues ◆ 200.328 Monitoring and reporting program performance • (d) NFE must report to Federal awarding agency or PTE any “significant” problems or favorable developments “as soon as” they become known. ◆ 200.330 Subrecipient and contractor determinations • NFE should have a written process for making and documenting determinations, with templates for appropriate agreement instruments. Should = Recommended Best Practice - put it in writing to minimize risk © Thompson Grants, a division of CBIS | 33
Other Administrative Issues ◆ 200.335 Methods for collection, transmission and storage of information • New in UGG – Federal grant recordkeeping is officially in the electronic age! ◆ 200.339 Termination • Federal awarding agencies must share terminations via SAM (System for Award Management) – the “ugly stuff” is now visible and accessible by all agencies! © Thompson Grants, a division of CBIS | 34
New Details on Subrecipient Monitoring ◆ 200.331(d-h) Requirements for PTEs - NFE must conduct Subrecipient monitoring that includes: • Review of financial & performance reports • Follow up on deficiencies (e.g., corrective action) • Issue management decisions • Provide training • Consider results of audits and reviews • Consider taking enforcement action ◆ NFE must have a written policy on Subrecipient monitoring. © Thompson Grants, a division of CBIS | 35
Closeout ◆ 200.343 Closeout (impacts NFEs and NFE/PTEs) • Liquidate all obligations, submit all final financial and programmatic reports no later than 90 calendar days after the end date of the period of performance. • Prompt payments for allowable reimbursable costs. • Promptly refund any balances of unobligated cash paid in advance. • Complete all closeout actions no later than one year after receipt and acceptance of all required final reports (increased pressure based on the GONE Act). See Section 466 of the Federal Grants Management Handbook © Thompson Grants, a division of CBIS | 36
Subpart E – Cost Principles ◆ 200.414– Facilities and Administration (F&A) • (f) New in UGG - Never received a negotiated indirect cost rate? NFEs may use a 10% de minimus rate of modified total direct costs (i.e., base excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $25,000). © Thompson Grants, a division of CBIS | 37
Payroll Certification (Time and Effort, PAR) ◆ 200.430 (i) Compensation – Personal Services – Standards for Documentation of Personnel Expenses ◆ Big changes - Tight internal controls required, but no more signatures or specified time frames! ◆ NFEs must maintain written documentation that accurately reflects the work performed by grant-funded employees. ◆ NFEs must establish a compliant payroll certification process and follow it consistently. © Thompson Grants, a division of CBIS | 38
Payroll Certification ◆ 200.430 (i) Compensation – Personal Services – Standards for Documentation of Personnel Expenses (continued) ◆ Payroll certification includes: • Support by a system of internal controls. • Incorporation into official NFE records. • Reasonable reflection of the total activity for which the employee is compensated by the NFE, not exceeding 100%. • Compliance with established NFE accounting policies and practices. © Thompson Grants, a division of CBIS | 39
Dependent Care ◆ 200.432 Conferences • New in UGG – providing local dependent care for attendees ◆ 200.474 Travel costs • (c) (1) New in UGG – temporary dependent care costs for NFE employees attending grant-related conferences • Must be consistent with NFE policy. © Thompson Grants, a division of CBIS | 40
Subpart F - Audits ◆ 200.519 Criteria for Federal program risk • How auditors identify risk. • Helpful to know to ensure NFE audit readiness, and when developing written procedures to assess risk of subrecipients (200.205), and to monitor subrecipients (200.331). © Thompson Grants, a division of CBIS | 41
Appendices I – NOFO – Notice of Funding Opportunity contents II – Contract Provisions – for NFE contracts made under Federal awards III – IDC for IHEs – Higher education application process for an indirect cost rate IV – IDC for NPOs – Nonprofit application process for an indirect cost rate V – State/Local Cost Allocation – Identifying and assigning central service costs VI – Public Assistance Cost Allocation – separate requirements for grant programs administered by state public assistance agencies VII – IDC for State/Local/Indian Tribes – State & local govt and Indian Tribe application process for an indirect cost rate © Thompson Grants, a division of CBIS | 42
Appendices VIII – NPOs Exempted from Subpart E – List of nonprofits that do not have to follow UGG Subpart E IX – Hospital Cost Principles – Equivalent of UGG Subpart E for hospitals (definition 200.52) X – Data Collection Form – for audit reports https://harvester.census.gov/facweb/default.aspx/ XI – Compliance Supplement – issued annually – link in UGG does not work - 2019 version available at: https://www.whitehouse.gov/wp- content/uploads/2018/05/2018-Compliance-Supplement.pdf XII – Award Term and Condition for Recipient Integrity and Performance Matters – System for Award Management (SAM) reporting required for NFEs with active grants totaling >$10 million © Thompson Grants, a division of CBIS | 43
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