omb circulars

OMB CIRCULA

RSNCURA FRA 2013

Pam WhitlockW Scott Erwin

EVERYTHING WE ARE ABOUT TO SAY…….

Will Change

Soon

OK…..

Well, not everything…. But a LOT will….

REWRITE OF THE CIRCULARS Directed by the President Executive Orders delivered January and

July, 2011 OMB created task force of major funding

agencies Initial draft for comment in early 2012 Final draft issued Feb, 2013

More to come

SO….

Here is where we are now….

THE BASIC TRIO A-21 Costs A-110 Systems A-133 Audit

Note: This guidance is directed at the Federal Agencies from OMB. The agencies in turn must require most recipients receiving funding to adhere to these restrictions.

A-21COST PRINCIPLES

Guidance on expenditures

Not all inclusive – a guide Allowable and unallowable

THE MOST REQUESTED FROM FACULTY

Alcoholic beveragesCommunication CostsCompensation for personal servicesEmployee morale, health and welfareMeals and EntertainmentMaterial and supplyMemberships, subscriptions, professional

activitiesProposal costsPublication and printing costs

PRUDENT PERSON TESTTHREE QUESTIONS

Reasonable?

Allowable? Allocable?

AND EVEN MORE IMPORTANT… Can you look yourself in the eye and say it’s necessary and related

Does it pass the “SMELL TEST” What happens if it is on the front page of the newspaper or headlines the local news?Anyone remember Muffin-Gate?

A-110ADMINISTRATIVE What we need to manage Pre-award guidance to agencies

Award instrumentsForms permissible“Eligible” recipients – debarment…Special award conditionsCerts and reps – annual basis encouragement

A-110 ADMINISTRATIVE Post-Award Requirements

Financial /Program Management standards Payment methods Cost sharing guidance Program Income Sponsor approvals Single Audit Period of availability of $$ Property/equipment standards vs supplies Procurement standards Reports and records Termination Closeout (After the Award)

FINANCIAL MANAGEMENTAccurate, current and complete

disclosure of financial resultsSource documents Identify source and application of

fundsControl over and accountability for

fundsWritten procedures – cash

managementWritten procedures – reasonable,

allocable, allowable

CASH MANAGEMENT Minimize time between transfer from

federal government and expenditure Paid in advance – institutional policy

and qualify Reimbursement if not – delinquent,

inadequate systems and procedures Advances in insured accounts if

possible Interest bearing accounts Must pay back interest >$250/year

COST SHARING/MATCHING Verifiable Not included in commitment to

another project Are necessary and reasonable for this

project Allowable under appropriate cost

principles Not federal funds Identified in the budget Valuation Current fair market value

PROGRAM INCOME Additive or Deductive Used to finance the non-Federal

share of the project If not specified, then deductive

EXCEPT RESEARCH Must be used during life of

project No obligation after end of project No obligation from royalties

BUDGETS Prior approval for

Change of scope Change in key personnel Absence >3 months/25%

decrease – PI Need for additional

funding Transfer of F&A/DC IF

REQUIRED BY SPONSOR Inclusion of costs that A-

21 requires approval Training allowances to

other categories New subagreement No other approvals

allowed unless approved by OMB

May be Waived – Expanded Authorities90 day pre-award

spendingOne time NCX

>12 monthsCarryforward of $For research

automatically waived unless specifically in award

PROPERTY Insurance – equal to

what institution does Real property Federally-owned Other

Title to recipient Use fee must be market

rate When no longer needed

That project Same agency Other federal agency Other users

Life of project That project Others – if doesn’t

interfere Same agency Other federal

agencies If federally owned,

need agency approval Program income May use as trade-in

PROPERTY MANAGEMENT Description Serial number, model number, etc Source of funding, including award # Title Acquisition date Information to calculate federal % Location Unit acquisition cost Ultimate disposal data Federally owned identified Physical inventory 2 years Control system to safeguard Adequate Maintenance Title to supplies – university < $5000 worth

REPORTS AND RECORDS Monitor subawards Performance reports – no more than quarterly or less frequent than annual

Annual 90 days after grant year Quarterly/semi annual – 30 days after reporting period

Final 90 days after termination

REPORT CONTENTS Comparison of actual/planned Reasons why established goals not met

Other info: analysis – cost overruns

No more than original and 2, if hard copy

Agencies may make site visits

TYPES 424 – Proposal related

425 – Financial ReportCombines 269, 269A, 270, 272, others

RECORD RETENTION Three years from date of submission

of final expenditure report unlessLitigation, claim, or audit is started prior

to thatReal property and equipment – 3 years

after dispositionRecords transferred to federal agency IG, CG, agency – access at any timePublic access mostlyIf you HAVE the records, they can be

audited

TERMINATION AND ENFORCEMENT Feds for cause Mutual agreement Recipient for convenience but feds

can decide if partial that what’s left won’t accomplish the grant purposes and they can terminate in entirety

Must be provided in any subagreements

CLOSEOUT Ninety days

Liquidate all obligationsRefund any balancesAccount for real and personal property

Fiscal and programmatic reports

CONTINUING RESPONSIBILITIES Right of feds to disallow costs and recover funds on later audit

Obligation to return any funds due as a result of late refunds, corrections, or other transactions

Audit requirements Property management requirements

Records retention

A-133AUDITS Non-federal entities that expend

>$500,000 in a year of federal awards

Can elect under certain circumstances to have programmatic audit

Less than $500K no audit but records must be available for review or audit

State or local – biennially Non-profit – some Can now access

http://harvester.census.gov/sac/to monitor subs

SUB RECIPIENT MONITORING Audit findings Compliance with flowed T&C’s

Access to records Fiscal reports Programmatic reports

INCREASED RISK Current/prior experience Subrecipients Technology Prior audit findings Oversight exercised by agencies/prime

Phase of a program in life cycle

CRITERIA FOR A LOW-RISK AUDITEE Single audits were performed

annually Auditor’s opinions on financials

were unqualified No deficiencies in internal controls

noted None of the federal programs had

audit findings from either internal controls or non-compliance

NOW TO THE GOOD STUFF….

Changes to the

Circulars

NEW CIRCULAR CHANGES (102-110) 1. Creating a consolidated, uniform set of

administrative requirements 2. Requiring pre-award consideration of each

proposal’s merit and each applicant’s financial risk

3. Requiring agencies to provide 90-day notice of funding opportunities

4. Providing a standard format for announcements of funding opportunities

5. Reiterating that information collections are subject to Paperwork Reduction Act approval

6. Additional Suggestions for Administrative Requirements

NEW CIRCULAR CHANGES (21, 87, 122)

1. Consolidating the cost principles into a single document, with limited variations by type of entity

2. For indirect (‘‘facilities and administrative’’ or f&a) costs, using flat rates instead of negotiated rates

3. Exploring alternatives to time-and effort reporting requirements for salaries and wages section

4. Revisions to reimbursements for utility costs to institutions of higher education

NEW CIRCULAR CHANGES (21, 87, 122) 5. Charging directly allocable administrative

support as a direct cost. 6. Including the costs of certain computing

devices as allowable direct cost supplies. 7. Clarifying the threshold for an allowable

maximum residual inventory of unused supplies.

8. Eliminating requirements to conduct studies of cost reasonableness for large research facilities.

9. Eliminating restrictions on use of indirect costs recovered for depreciation or use allowances.

NEW CIRCULAR CHANGES (21, 87, 122) 10. Eliminating requirements to conduct a lease-

purchase analysis for interest costs and to provide notice before relocating federally-sponsored activities from a debt-financed facility.

11. Eliminate requirements that printed ‘‘help-wanted’’ advertising comply with particular specifications.

12. Allowing for the budgeting for contingency funds for certain awards.

13. Strengthening requirements for all recipients to document cost accounting practices and provide necessary paperwork to auditors while eliminating cost accounting standards and requirement for institutions of higher education to file a disclosure statement.

NEW CIRCULAR CHANGES (21, 87, 122) 14. Allowing for excess or idle capacity for

certain facilities, in anticipation of usage increases.

15. Allowing costs for efforts to collect improper payment recoveries.

16. Specifying that gains and/or losses due to speculative financing arrangements are unallowable.

17. Providing non-profit organizations an example of the certificate of indirect costs.

NEW CIRCULAR CHANGES (21, 87, 122)

18. Providing non-profit organizations with an example of indirect cost proposal documentation requirements.

19. Additional ideas for cost principles

NEW CIRCULAR CHANGES (133) 1. Concentrating audit resolution and oversight

resources on higher dollar, higher risk awards. 2. Streamlining the types of compliance

requirements in the Circular A–133 Compliance Supplement

3. Strengthening the guidance on audit follow-up for Federal awarding

4. Reducing burden on pass-through entities and subrecipients by ensuring across-agency coordination.

5. Reducing burdens on pass-through entities and subrecipients from audit follow-up.

6. Additional ideas for audit requirements

NEW CIRCULAR CHANGES One additional idea for reform

suggested by many in the Federal agency and audit community was to reduce the amount of time for audit submission from the current nine months down to three months or six months. OMB supports this idea, but notes that it will require changes to legislation to accomplish.

NEW CIRCULAR CHANGES For more information:

http://www.regulations.gov/#!docketDetail;D=OMB-2013-0001

QUESTIONS

THANK YOU!

Pam Whitlock, Director Emeritus, UNC Wilmington

W Scott Erwin, Director, Texas State University-San Marcos

we10@txstate.edu512-245-2102