Grants Monitoring and Oversight

1. Grants Monitoring and Oversight Gilbert Tran Executive Office of the President Office of Management and Budget Governor’s Grants Conference 2011 1

2. Agenda The Big Grant Picture Grant Basics Grant Monitoring and Oversight

3. Steep Rise in Federal Grants In Billion of $ $600B $24B $7B $91B $200B CFDA lists more than 2,000 Federal grant programs

4. In 1950, Federal grants to states totaled $2.5 billion

5. Distribution of Federal Grants In 2012, Federal grants to states will total $480 billion 2012 US BUDGET - $3.7 TRILLION GRANTS- $600 BILLION

6. Patty, Will you marry me?

7. Patty, Will you marry me? And pay my mortgage My student loan My child support “Grants can’t be taken from granted”

8. The Pyramid of Grant Requirements A&A Program Statutes Appropriations Statutes OMB Circulars Govt.-Wide SuspensionDebarment Regulations Govt.-Wide Davis Bacon Act Drug Free Workplace Regulations Lobbying Act Agency & Programs Policy Manuals Program Regulations Guidance Terms and Conditions • Grant Agreements, Terms and Conditions

9. Layers of Grant Requirements Statutes Authorizations: establish program, define purpose, prescribe eligibility standards and application process, set grant terms and conditions Appropriations: make fund available OMB Circulars – Government-wide guidance adopted by agencies in their regulations Public Policy Requirements (e.g., lobbying, drug-free workplace) Agency Program and Administrative Regulations Other Agency Guidance: policy manuals, award document T&C OOH My head hurts!!

10. OMB Grants Management Circulars Cost Principles (Gilbert Tran) A-21- Colleges & Universities A-87- Governments A-122- Non-Profits Administrative Requirements (Marguerite Pridgen) A-102- Governments A-110- Everyone Else Audit Requirements (Gilbert Tran) A-133- Everyone Compliance Supplement $600 B What’s the LAW ?

11. Relation to Other Circulars Administrative Type of Institution Cost Principles Audit Requirements "Common Rule" State/Local Government A-87 A-133 A-102 Colleges & Universities s A-21 A-110 A-133 Hospitals & Care Various, 45 CFR Various, A-110 Various, A-133 Facilities 74 Other Non-Profits A-122 A-110 A-133 48CFR Part 31 For Profit FAR FAR (commercial)

12. Objectives of the Cost Circulars Provide guidelines for reimbursement requirements Provide uniform standards of allowability Provide uniform standards of allocation Does not supersede limitations imposed by law Simplify intergovernmental relations Encourage consistency in treatment of costs

13. Cost Circulars: To allow or not to allow, that is the question... Sir William Shakesbeare

14. Circular Basic Principles Provide guidelines on cost reimbursements of Federal awards Cost Allowability Direct and indirect costs Allocation of indirect costs Provisions on specific items of costs RAA!!

15. Cost Allowability Reasonable: “incurred by a prudent person”, “necessary for the operation” Allocable: “benefits received” Allowable: Circular, law, T&C, local reg. I just can’t wait to be …KING !!

16. A-133 Single Audit - What is Audited? • Financial Statement audit • Major Program • Compliance with laws and regulations • Internal control over compliance • Major Programs are based on auditor judgment • Major Program Selection • Size of Program • Prior Audit Experience • Federal Guidance

17. Purpose of the Compliance Supplement • Identifies important compliance requirements that the Federal Government expects to be reviewed if it has a direct & material impact on program • CS is required to be used by auditors

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19. 14 Types of Compliance Requirements • Activities allowed or unallowed • Allowable costs/cost principles • Cash management • Davis-Bacon Act • Eligibility • Equipment & real property management • Matching, level of effort, earmarking

20. 14 Types of Compliance Requirements • Period of availability of Federal funds • Procurement & suspension & debarment • Program income • Real property acquisition & relocation assistance • Reporting • Subrecipient monitoring • Special tests and provisions

21. “Spending Stimulus take Money” - $787 Billion “We’re going to operate in a transparent fashion so that taxpayers know this money is not being wasted on a bunch of boondoggles” President Obama, Washington Post, June 12, 2009

25. OMB Guidance -- 02/18/09, 04/03/09, 04/07/09, 05/11/09, 06/22/09, 09/11/09, 09/30/09,10/13/09, 11/30/09, 12/18/09, 3/22/10, 05/04/10, 09/24/10 Agency use SA for program risk assessment Agency use SA for program monitor Separate ARRA CFDA, separate reporting on SEFA and DCF (including subrecipients) Federal Audit Clearinghouse to display summary of all single audits Review of Single Audits Presidential Executive Memorandum 4/26/10 Combating Noncompliance with ARRA reporting requirement 11

26. Appendix VII - 2011 ARRA Effect of ARRA awards on major program determination SEFA & SF-SAC presentation of ARRA awards Separate reporting of audit finding ARRA programs –covered and not covered Non-ARRA Granting of extensions suspended Low-risk auditee criteria clarified Loan program safe harbor

27. Review - Clusters with ARRA Expenditures If new ARRA CFDA added to cluster in 2011 Supplement and new ARRA CFDA has current year expenditures then cluster not qualify as low-risk Cluster with new ARRA CFDA considered new program Therefore cannot qualify as low-risk Type A program as not pass the two-year look-back criteria SFA & R&D Excluded ARRA portion of Pell Grant Program and Work-Study not identified to Grantee - SFA see Part 5-3, Section IV R&D, e.g., CFDA numbers not listed in Supplement

28. Review - Type A Program or Clusters with ARRA Expenditures SFA and R&D Excluded Rule – If ARRA expenditures then not low-risk Inherent risk associated with transparency and accountability requirements for ARRA funds preclude being low-risk Exception if ALL of the following met: Had ARRA expenditures in 2010 Audited as major program in 2010 ARRA expenditures in current audit period less than 20% of total expenditures for program or cluster Otherwise determined low-risk under §___.520(c) and §___.525

29. Review - Type B Programs and Clusters with ARRA Expenditures SFA and R&D Excluded Programs with ARRA expenditures considered programs of higher risk inherent risk ( §___.525(d)) When Type B programs are required to be selected as major under §___.520(e)(2), presumption is the programs with ARRA expenditures would be selected first. However, auditor is not precluded from selecting an especially risky Type B program that does not have ARRA expenditures.

30. Review - Part 3 Updates for ARRA Requirements A, “Activities Allowed or Unallowed” to include limitations on activities funded with ARRA funds. D, “Davis-Bacon Act,” for coverage under ARRA. I, “Procurement and Suspension and Debarment,” to add ARRA Buy American requirements. L, Reporting Added testing 1512 Reporting Award Number Award Amount Total Federal Amount ARRA Funds Received/Invoiced Total Federal Amount of ARRA Expenditures “Best Available Data” Clarification

31. Review - Part 3 Major Changes M, Subrecipient Monitoring updates Requirement for use Central Contractor Registry (CCR) Clarification for timing N, “Special Tests and Provisions,” for ARRA-funded expenditures. Separate accountability for ARRA Funding Presentation on SEFA and Data Collection Form Subrecipient Monitoring

32. Grant Oversight & Streamlining Continues … FFAMIA • IPERA 2010 – Recapture Audits • S.303 – FFAMIA of 2009 • ARRA Internal Control Project Part 3 • ARRA Single Audit Findings Sypnoses • ARRA Single Audit Metrics • Presidential Memorandum on State Flexibility – February 28, 2011 IPERA, July 22, 2010

33. Fall is here…Grants and Recovery Continue…