Brustein & Manasevit, PLLC

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Nov 10, 2013 (4 years and 1 day ago)

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Brustein & Manasevit, PLLC

Tiffany R. Winters, Esq.

Brustein & Manasevit, PLLC

twinters@bruman.com

@
TRWinters

www.bruman.com


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Brustein & Manasevit, PLLC

Roadmap to the Future
of Federal Grants
Management: The
“SuperCircular”

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Brustein & Manasevit, PLLC

Why

“Supercircular”???

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1.
Greater simplicity

2.
Greater consistency

3.
Obama Executive Order on
Regulatory Review


2011


I
ncrease efficiency


S
trengthen oversight


Brustein & Manasevit, PLLC

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Greater “simplicity” means elimination of
several compliance elements in the
Compliance Supplement, including:

1.
Equipment Management

2.
MOE/Ear
-
Marking

3.
Procurement

4.
Program Income

Brustein & Manasevit, PLLC

What

is covered?

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1.
Administrative Requirements (A
-
102, A
-
110)

2.
Cost Principles (A
-
87, A
-
21, A
-
122)

3.
Audit Requirements (A
-
133, A
-
50)

Brustein & Manasevit, PLLC

Who

is covered?

6


All non
-
federal entities expending
federal awards

Brustein & Manasevit, PLLC

When

is it effective?

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Notice of guidelines released on


Proposed guidelines were released on 2/1/13


Comment period closed on 06/02/13


Over 300 comments were submitted (some over 100 pages
long)


Analysis of public comments


Final guidelines released?


OMB hopes this December


Final regulation?


Not likely before 1/1/14 (includes any other EDGAR
revisions)


No splitting FY

Brustein & Manasevit, PLLC

Can a revised EDGAR be inconsistent
with Supercircular?

8


Yes,
but

federal agencies applying more
restrictive requirements need OMB
approval

Section _.108

Brustein & Manasevit, PLLC

If program statute differs from
Supercircular,

statute governs

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Section _.106

Brustein & Manasevit, PLLC

…50 Shades of Change

So what is new?

10

Brustein & Manasevit, PLLC

1.
Federal agencies must evaluate risks to the
program posed by each applicant

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a)
Financial stability

b)
Management system

c)
History of performance

d)
Generally available information

e)
Single audits

f)
Capacity to implement programs

Section _.205

Brustein & Manasevit, PLLC

2.
A
gencies may impose conditions on
grantee based on risk assessed

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Section _.205

Brustein & Manasevit, PLLC

3.
Performance Expectations

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Award includes: timing and scope of expected
performance


as related to intended outcomes

Section _.404

Brustein & Manasevit, PLLC

4.
Subawarding Scope of Work

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Eligible recipients may perform
or

subaward

the performance of all or a portion of the work

Section _.501(a)

Brustein & Manasevit, PLLC

5.
Pass Through Entity: case by case
determination whether pass
-
through
funds are grant or contract

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Section _.501(b)

Brustein & Manasevit, PLLC

6.
Pass Through Agency should consider
imposing risk conditions on
subrecipients in noncompliance

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Section _.501(c)(2)

Brustein & Manasevit, PLLC

7.
Pass Through Agency may impose
“supplemental requirements”

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Section _.501(c)(4)

Brustein & Manasevit, PLLC

8.
Pass Through monitoring shall
include:

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a)
Analyzing financial and programmatic
reports

b)
Ensure
subrecipients

take timely and
appropriate corrective action

c)
Issue management decision on A
-
133
finding at
subgrantee

level

d)
Other


as necessary

Section _.501(c)(5)

Brustein & Manasevit, PLLC

9.
Monitoring Tools of Pass Through

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a)
On
-
site reviews

b)
Provide training and technical
assistance

c)
Arrange for “Agreed Upon Procedures”

Section _.501(c)(5)

Brustein & Manasevit, PLLC

10.

Risk Factors for Pass Through
Monitoring

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a)
P
revious audits

b)
New
subrecipients

c)
New personnel or substantially changed
system

d)
Extent of federal monitoring

Section _.501(c)(6)

Brustein & Manasevit, PLLC

11.

Pass Through must conform timing
of federal award cash to awards to
subgrantees



21

Federal award year July 1 to September 30


(next year)

Section _.501(e)(2)

Brustein & Manasevit, PLLC

12.

Financial Management Systems

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Section 502 essentially same as 80.20(b)

a)
Accurate reporting

b)
Records identifying source and use of funds

c)
Effective internal controls to safeguard assets

d)
Comparison of outlays and budgets

e)
Cash management

f)
Written procedures for
allowability
,
allocability

and
reasonableness

g)
Source documentation

Section _.502

Brustein & Manasevit, PLLC

13.

Cash Management

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Recipients
shall

maintain advances of
federal funds in interest bearing accounts
unless…

a)
Recipient receives less than $120,000
in federal $ per year

b)
Interest will not exceed $500

c)
Bank requires minimum balance


Section _.502(e)(3)(k)

Brustein & Manasevit, PLLC

14.

Cash Management

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Unrecovered indirect costs may be
included as
match

only with approval of
federal agency

Section _.502(f)(2)

Brustein & Manasevit, PLLC

15.

Cash Management

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Calculation of match based on A
-
110, not
A
-
102


Clear rules on fair market value, etc.

Section _.502(f)

Brustein & Manasevit, PLLC

16.

Cash Management

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G
eneral rule on program income
“program income shall be deducted from
total allowable costs” unless federal
agency allows addition

Section _.502(g)

Brustein & Manasevit, PLLC

17.

Cash Management

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Changes to Budget




S
cope, Objective


Key person changes


Absence of manager

Section _.502(h)

Brustein & Manasevit, PLLC

18.

Inventory Management

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2 year inventory requirement remains



Equipment


Definition same

a)
Acquisition cost of $5,000

b)
Useful life greater than one year

Section _.503(d)

Brustein & Manasevit, PLLC

19.

Inventory Management

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Use/Management/Disposition


Same as EDGAR 80.32

Section _.503(d)

Brustein & Manasevit, PLLC

20.

“Costs of Computing Devices” =
“Supplies”

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But


When no longer needed for any other federally
sponsored project, recipient may

a)
Retain them

b)
Sell
them


But compensate federal government if per unit
value exceeds $5000


But


Conflicts with C
-
31(6)


“total aggregate
value” of $5000

Section _.503(e) and Section _ .620

Brustein & Manasevit, PLLC

21.

Procurement Management

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States must follow same procurement rules
it uses for procurements from nonfederal
funds


All others must follow Section 504

Section _.504

Brustein & Manasevit, PLLC

22.

Procurement Management

32


Section 504 Procurement Standards
derived from A
-
110, EDGAR Part 74 and
A
-
102, EDGAR Part 80

Section _.504(d)(4)

Brustein & Manasevit, PLLC

23.

Record Retention Management

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Same as EDGAR: 3 years from date of
submission of final expenditure report
BUT



5 year S/L

Section _.506

Brustein & Manasevit, PLLC

24.

Cost Principles


Basic
Considerations

34


Similar to A
-
87 but restructured to look
more like A
-
21 and A
-
122

Section _.605

Brustein & Manasevit, PLLC

25.

Cost Shifting

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Grantee cannot shift cost from one award
to another to overcome shortfall, unless
costs are allowable under both awards

Section _.607(c)

Brustein & Manasevit, PLLC

26.

Cost Allocation

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If a cost benefits two or more projects in
a proportion easily determined, cost
allocated on proportional benefit

Section _.607(d)

Brustein & Manasevit, PLLC

27.

Cost Allocation

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If proportion cannot be easily
determined, allocate on any reasonable
documented

basis

Section _.607(d)

Brustein & Manasevit, PLLC

28.

Set
-
Asides

38


If program statute contains reserves,
limitations, amount not used cannot be
charged to other federal awards

Section _.611

Brustein & Manasevit, PLLC

29.

Administrative Costs

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Salaries of administrative and clerical staff should
be treated as
indirect
,
unless

a)
Services are integral to project,
and

b)
Individuals can be specifically identified,
and

c)
Costs are explicitly set out in budget,
and


d)
Costs not recovered as indirect

Section _.615(d)

Brustein & Manasevit, PLLC

30.

Indirect Costs

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A federally approved negotiated rate
shall be accepted by all federal agencies


Exception: If required by law/regulation
(restricted rate)

Section _.616(c)(1)

Brustein & Manasevit, PLLC

31.

Indirect Costs

41


Pass through entities must abide by the
federally recognized indirect cost rate
negotiated between the federal agency
and
subrecipient

Section _.501(c)(1)(D)

Brustein & Manasevit, PLLC

32.

Indirect Costs

42


But if no such rate exists, the pass through
must negotiate the rate, or a de
minimis

indirect cost rate equal to 10% of total
modified direct costs (But what about
restricted rates? Most LEAs have restricted
rates in single digits.)

Section _.616(e)

Brustein & Manasevit, PLLC

33.

Time and Effort Management

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M
AJOR

O
VERHAUL


Eliminate reference to PARs


Now “Certified Reports”


Reports may be electronic


Semi
-
Annual for single cost objective
-

same

Section _.621 C
-
10(9)

Brustein & Manasevit, PLLC

34.

Time and Effort Management

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Certified Reports on 2 or more cost
objectives certified by employee or
individual responsible for verification

Section _.621 C
-
10(9)

Brustein & Manasevit, PLLC

35.
Time and Effort Management

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All others:


After the fact, unless mutually satisfactory
alternative approved by awarding
agency


Certification periods cannot exceed 12
months:


Activities may be expressed as
percentages

Section _.621 C
-
10(9)

Brustein & Manasevit, PLLC

36.

Time and Effort Management

46


At postsecondary level, “reliance may be
placed on estimates in which a
degree

of
tolerance

is
appropriate


Section _.621 C
-
10(9)

Brustein & Manasevit, PLLC

37.

Time and Effort Management

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No additional support other than
certification is necessary

Section _.621 C
-
10(9)

Brustein & Manasevit, PLLC

38.

Time and Effort Management

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Substitute systems may be used if
approved by cognizant agency


Federal agencies are encouraged to
approve alternative proposals based on
outcomes

Section _.621 C
-
10(9)(F)

Brustein & Manasevit, PLLC

39.

Time and Effort Management

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Awarding agencies may approve
“blended funding” where multiple
programs involved, and “performance
-
oriented metrics” are used

Section _.621 C
-
10(9)(F)

Brustein & Manasevit, PLLC

40.

Cost Principles Changes

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Costs for services of counsel (in
-
house or
Bruman
) for administrative proceedings
(OALJ) may be charged unless the ALJ
imposes a “monetary penalty.” Legal
expenses are allowable if the proceeding
is resolved by consent or compromise.

Section _.621 C
-
14(2)

Brustein & Manasevit, PLLC

41.

Cost Principles Changes

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Cost of Meetings


Costs from meetings and conferences
“beyond the recipient entity” are
allowable

Section _.621 C
-
32

Brustein & Manasevit, PLLC

42.

Cost Principles Changes

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Travel Costs


Grantee must retain documentation

a)
Participation of individual is necessary to
the federal award

b)
Costs are reasonable and consistent with
entity’s established travel policy

Section _.621 C
-
53(2)

Brustein & Manasevit, PLLC

43.

Cost Principles Changes

53


Travel


If no institutional travel policy, GSA
rates apply




-

48 CFR 31.205
-
46(a)

Section _.621 C
-
53(2)(C)

Brustein & Manasevit, PLLC

44.

Single Audits

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Single Audit Threshold is raised from
$500,000 in federal annual expenditures
to $750,000

Section _.701(a)

Brustein & Manasevit, PLLC

45.

Audit Follow
-
Up

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Federal awarding agencies shall use
“cooperative audit resolution mechanisms”
to improve federal program outcomes
through better audit resolution, follow
-
up
and corrective action

Section _.713(c)(5)

Brustein & Manasevit, PLLC

46.

Cooperation Audit Resolution

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Improve communication, foster
collaboration, promote trust, develop
understanding between auditor and
auditee

Appendix I
-

Definitions

Brustein & Manasevit, PLLC

47.

Cooperative Audit Resolution

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This approach is based upon “Federal
Agencies offering appropriate
amnesty

for past noncompliance when audits show
prompt corrective action”

Appendix I
-

Definitions

Brustein & Manasevit, PLLC

48.

Agency Determination Letters

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The federal agency or pass
-
through entity
may request additional information from
auditee

as a way of mitigating
disallowed costs

Section _.714(a)

Brustein & Manasevit, PLLC

49.

Time Requirements

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The federal agency or pass
-
through shall
make the determination within six months
of the acceptance of the audit report

Section _.714(d)

Brustein & Manasevit, PLLC

50.

Audit Findings

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The auditor shall report known questioned costs
greater than $25,000 for major programs


If not a major program (auditor normally will
not find questioned costs) but if auditor
becomes aware of questioned costs greater
than $25,000 for non
-
major programs


must
report

Section _.714(a)

Brustein & Manasevit, PLLC

Questions?

61

Brustein & Manasevit, PLLC

Disclaimer


This presentation is intended solely to provide
general information and does not constitute
legal advice. Attendance at the presentation or
later review of these printed materials 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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