1. Brustein & Manasevit, PLLC
The Uniform Grant Guidance: Background, Financial Management and Allowability Changes
Presented by:
Leigh Manasevit, Esq.
Brustein & Manasevit, PLLC
Fall Forum 2014

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Reasons for the Change?
Simplicity
Consistency
Obama Executive Order on Regulatory Review
Increase Efficiency
Strengthen Oversight
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3. Who crafted the changes?
“COFAR”
Council on Financial Assistance Reform, and
Key Stakeholders
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4. Brustein & Manasevit, PLLC
Who is covered?
All “nonfederal entities” expending federal awards
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5. Brustein & Manasevit, PLLC
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
June 26, 2014
Draft Regulations Due to OMB
August 29, 2014
COFAR Releases FAQs
December 26, 2014
Final Regulations Published
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7. 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/ All additions after December 26, 2014
? ? ?
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8. 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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9. 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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10. Inconsistency Between Program Statute and Guidance
If federal program statute differs from Uniform Grant Guidance, then statute/regulation governs.
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11. Brustein & Manasevit, PLLC
A Significant Change
Shift from focus on compliance to focus on PERFORMANCE!!!
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12. Brustein & Manasevit, PLLC
Performance
Auditors (A Federal OIG) and Monitors (Federal and State Pass-Through) must look more to “outcomes” than to “process”
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13. Most Significant Change ???
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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14. New: Required Certifications 200.415
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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15. Structure of Uniform Grant Guidance (p. 78608)
2 CFR Part 200
Structure of Uniform Grant Guidance (p )
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16. 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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17. Key Definitions (Examples)
Cognizant Agency for Audit (78611)
Cognizant Agency for Indirect (78611)
Cooperative Audit Resolution (78612)
Improper Payment (78614)
Internal Control Over Compliance (78615)
Major Program (78615)
Modified Total Direct Cost (78615)
Non-Federal Entity (78615)
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18. Financial Management Changes
(b)
(NEW) Identification of Awards
Financial Reporting
Accounting Records (Source Docs)
Internal Control
Budget Control
(NEW) Written Cash Management Procedures
(NEW) Written Allowability Procedures
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19. 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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20. Financial Reporting New shift to OMB approved performance metrics
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21. 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 and
– Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly
– 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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22. Financial Reporting (cont.)
Performance Metrics:
Compare actual accomplishments to objectives (quantify to extent possible)
Reasons goals were not met if appropriate
Additional pertinent information (e.g., analysis and explanation of cost overruns, high unit costs)
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23. 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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24. Accounting Records (Source Documentation)
Combines current requirements:
Source Documentation Must Be Kept On:
Federal Awards
Authorizations
Obligations
Unobligated balances
Assets
Expenditures
Income
Interest (New) (Eliminated liabilities)
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25. Brustein & Manasevit, PLLC
Internal Controls
Essentially same as current requirements:
Effective control over and accountability for:
All funds
Property
Other assets
Must adequately safeguard all assets
Use assets solely for authorized purpose
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26. Internal Controls (cont.)
Cross reference (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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27. Brustein & Manasevit, PLLC
Budget Control
Same as current rules
Comparison of expenditures with budget amounts for each award
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28. Written Cash Management Procedures (New)
Written Procedures to implement the requirements of
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29. 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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30. Written Cash Management Procedures (cont.)
Written procedures must describe whether non-federal entity uses:
Advance Payments (preferred)
Limited to minimum amounts needed to meet immediate cash needs
Reimbursement
Pass-through must make payment within 30 calendar days after receipt of the billing
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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31. 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:
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
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32. Written Cash Management Procedures (cont.)
Interest earned must be remitted annually to HHS
Interest amounts up to $500 may be retained by non-federal entity for administrative purposes
Currently $250 for IHEs and NonProfits and $100 for State and local governments
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33. Written Allowability Procedures (New)
Written procedures for determining allowability of costs in accord with Subpart E – Cost Principles (see p – 78662)
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34. Factors Affecting Allowability of Costs 200.403
All Costs Must Be:
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 )
Adequately documented
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Applicable Credits
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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36. Brustein & Manasevit, PLLC
Profit (g)
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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37. Prior Written Approval 200.407
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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38. Brustein & Manasevit, PLLC
Program Income
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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39. Direct v. Indirect Costs 200.413
NEW: Salaries of administrative and clerical staff should be treated as “indirect” unless all of following are met:
Such services are integral to the activity
Individuals can be specifically identified with the activity
Such costs are explicitly included in the budget
Costs not also recovered as indirect
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40. Brustein & Manasevit, PLLC
Contract vs. Grant
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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41. Selected Items of Cost The Uniform Grant Guidance has
55 specific items of cost!
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42. Selected Items of Cost Examples
Advertising/PR (Clarified)
Allowable for programmatic purposes including:
Recruitment
Procurement of goods
Disposal of materials
Program outreach
Public relations (in limited circumstances)
Alcohol
Not allowable
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43. Selected Items of Cost (cont.)
Collections of Improper Payments (New)
The costs incurred by the non-Federal entity to recover improper payments are allowable as either direct or indirect costs, as appropriate.
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44. Selected Items of Cost (cont.)
Entertainment Costs (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
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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45. Selected Items of Cost (cont.)
Travel Costs (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 (a)
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46. Brustein & Manasevit, PLLC
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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