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Uniform Guidance on Federal Awards

December 3, 2015
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By Brianna Fulginiti, CPA

In an effort to be more efficient, effective, and transparent, the Office of Management and Budget (OMB) has issued guidance that supersedes and streamlines the eight OMB circulars to which federal agencies previously adhered. In developing this new guidance, the OMB published notices of proposed guidance to allow all stakeholders in federal grants insight into the reform ideas being developed and to allow them the opportunity to input additional suggestions for reform. The reform that resulted is titled “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.”

Federal agencies must implement policies and procedures by publicizing regulations effective December 26, 2014, and non-federal entities must implement the new administrative requirements and cost principles for all new federal awards made after December 26, 2014, including any funding increments to existing awards made after that date. For the reform to be applicable, the aforementioned funding increments must include an opportunity to modify award terms and conditions. Non-federal entities are allowed to implement entity-wide system changes to comply with the new requirements.

The new guidance affects the entire lifecycle of federal awards starting with the application process, the administration of federal grants, management of the granted funding, and finally the single audit that may be required depending on the level of federal awards expended by an entity.

The Uniform Administrative Requirements are categorized as follows:
 
  • Subpart A – Acronyms and Definitions
  • Subpart B – General Provisions
  • Subpart C – Guidance for Applying for Federal Awards
  • Subpart D – Post Federal Award Requirements – for both prime recipients and sub-recipients
  • Subpart E – Cost Principles
  • Subpart F – Single Audit Requirements
In an attempt to remove influence or bias on competitive grants, federal agencies are now required to post notices of all grant opportunities online. Applying for a new grant is simplified, as the federal government has moved toward a more uniform application (guidance for the application process can be found in Subpart C). Federal awarding agencies are also prohibited from imposing additional or inconsistent requirements with some exceptions and can only apply more restrictive requirements to a class of federal awards or non-federal entities when approved by the OMB and required by federal statutes or regulations. On a case-by-case basis, certain compliance requirements may be waived.

Subpart A is intended to simplify interpretations of any language found throughout. Financial management requirements, included in Subpart D, provide for more detailed records be kept to identify the source of the federal award and application of the funds. Non-federal entities are required to establish and maintain effective internal control over the federal award and these internal controls should be in compliance with guidance in the Green Book issued by the Comptroller General of the United States and the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Subpart E requires specific support of personnel costs, such as existence of employees, reasonableness of compensation, and assignment and allocation of federal awards, with changes primarily in the area of assignment and allocation of salaries to federal awards. Direct recipients of federal awards, as well as sub-recipients, should familiarize themselves with new standards for documentation of compensation. Budgets alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes provided certain criteria is met. This subpart also requires pass-through entities to provide an indirect cost rate to sub-recipients. Federal agencies and pass through entities will have to accept a non-federal entity’s negotiated indirect cost rate, unless a statute or regulation allows for an exception.

New single audit requirements detailed in Subpart F will be effective for years ended December 31, 2015, and beyond. This section raises the threshold for single audits of entities that expends federal award money from $500,000 to $750,000 per fiscal year. The Government Accountability Office (GAO) estimates that, as a result of the higher threshold, approximately 5,000 non-federal entities will be relieved of the single audit requirement.

All direct recipients and sub-recipients of federal awards should become adept in the new requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and keep this document handy for quick reference.

The 103-page document detailing the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards can be found here.

Notices of all grant opportunities are required to be posted at www.grants.gov. The Green Book can be found at www.grants.gov and COSO guidance on internal controls can be found at www.coso.org/guidance.

For more information on how these changes may affect you or your organization, please contact Adam Reiss at 212.697.1000 or areiss@citrincooperman.com or Kevin Ryan at 215-545-4800 or kryan@citrincooperman.com.