OMB Circulars

1. OMB Circulars NCURA FRA 2013 Pam Whitlock W Scott Erwin

2. Everything we are about to say……. Will Change Soon

3. OK….. • Well, not everything…. But a LOT will….

4. 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 

5. So…. • Here is where we are now….

6. 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.

7. A-21Cost Principles • Guidance on expenditures • Not all inclusive – a guide • Allowable and unallowable

8. The most requested from faculty • Alcoholic beverages • Communication Costs • Compensation for personal services • Employee morale, health and welfare • Meals and Entertainment • Material and supply • Memberships, subscriptions, professional activities • Proposal costs • Publication and printing costs

9. Prudent Person TestThree Questions • Reasonable? • Allowable? • Allocable?

10. 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?

11. A-110Administrative • What we need to manage • Pre-award guidance to agencies • Award instruments • Forms permissible • “Eligible” recipients – debarment… • Special award conditions • Certs and reps – annual basis encouragement

12. 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)

13. Financial Management • Accurate, current and complete disclosure of financial results • Source documents • Identify source and application of funds • Control over and accountability for funds • Written procedures – cash management • Written procedures – reasonable, allocable, allowable

14. 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

15. 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

16. 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

17. 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 Authorities • 90 day pre-award spending • One time NCX >12 months • Carryforward of $ • For research automatically waived unless specifically in award

18. 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

19. 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

20. 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

21. 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

22. Types • 424 – Proposal related • 425 – Financial Report • Combines 269, 269A, 270, 272, others

23. Record Retention • Three years from date of submission of final expenditure report unless • Litigation, claim, or audit is started prior to that • Real property and equipment – 3 years after disposition • Records transferred to federal agency • IG, CG, agency – access at any time • Public access mostly If you HAVE the records, they can be audited

24. 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

25. Closeout • Ninety days • Liquidate all obligations • Refund any balances • Account for real and personal property • Fiscal and programmatic reports

26. 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

27. 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

28. Sub recipient Monitoring • Audit findings • Compliance with flowed T&C’s • Access to records • Fiscal reports • Programmatic reports

29. Increased Risk • Current/prior experience • Subrecipients • Technology • Prior audit findings • Oversight exercised by agencies/prime • Phase of a program in life cycle

30. 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

31. Now to the good stuff…. Changes to the Circulars

32. 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

33. 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

34. 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.

35. 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.

36. 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.

37. 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

38. 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

39. 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.

40. New Circular CHaNges • For more information: http://www.regulations.gov/#!docketDetail;D=OMB-2013-0001

41. Questions

42. Thank You! Pam Whitlock, Director Emeritus, UNC Wilmington W Scott Erwin, Director, Texas State University-San Marcos we10@txstate.edu 512-245-2102