Uniform Grant Guidance Cindy Rhoads UGG Manager Division

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Uniform Grant Guidance Cindy Rhoads UGG Manager Division of Federal Programs

Uniform Grant Guidance Cindy Rhoads UGG Manager Division of Federal Programs

What is UGG? �Guidance for administering federal grant programs �Issued by the Office of

What is UGG? �Guidance for administering federal grant programs �Issued by the Office of Management and Budget �Pertains to the financial management of all federal funds �Who is responsible at your district: �Federal Program Coordinators �Business Managers �Administrators 2

UGG Effective Dates �UGG became effective on December 26, 2014 �Procurement changes go into

UGG Effective Dates �UGG became effective on December 26, 2014 �Procurement changes go into effect July 1, 2017 3

Streamlining Circulars and Guidance The following OMB Circulars are superseded: � A-21, Cost Principles

Streamlining Circulars and Guidance The following OMB Circulars are superseded: � A-21, Cost Principles for Educational Institutions � Sections of A-50, Audit Follow-Up, related to Single Audits � A-87, Cost Principles for State, Local and Indian Tribal Governments � A-89, Federal Domestic Assistance Program Information � A-102, Awards and Cooperative Agreements with State and Local Governments All OMB guidance now streamlined in 2 CFR 200 � A-110, Uniform Administrative Requirements for Awards and Other Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations � A-122, Cost Principles for Non-Profit Organizations � A-133, Audits of States, Local Governments and Nonprofit Organizations 4

Objectives of New Guidance Reduce administrative burden Improve the integrity of financial management Strengthen

Objectives of New Guidance Reduce administrative burden Improve the integrity of financial management Strengthen accountability for federal dollars Increase impact and accessibility of program Reorient recipients toward achieving program objectives Award grants based on merit Increase management focus on performance outcomes Streamline rules governing federal funds Reduce fraud, waste and abuse through single audit tool 5

Three Major Sections Reforms to administration requirements Reforms to cost principles (subparts A-D) (subpart

Three Major Sections Reforms to administration requirements Reforms to cost principles (subparts A-D) (subpart E) Audit requirements (subpart F) Subpart A, 200. XXX – Acronyms and Definitions Subpart B, 200. 1 XX – General Subpart C, 200. 2 XX – Pre-Award – Federal Subpart D, 200. 3 XX – Post Award – Recipients Subpart E, 200. 4 XX – Cost Principles Subpart F, 200. 5 XX – Audit Requirements Plus, 11 Appendices 6

UGG - Auditee Responsibilities Internal Control and Compliance Requirements Establish and maintain internal control

UGG - Auditee Responsibilities Internal Control and Compliance Requirements Establish and maintain internal control over federal programs Comply with federal statutes, regulations, federal awards Take prompt action when non-compliance is identified Evaluate and monitor compliance Safeguard protected personally identifiable information (PPII) 7

Internal Controls Changes Section Required to establish and maintain effective internal controls 200. 303

Internal Controls Changes Section Required to establish and maintain effective internal controls 200. 303 over federal programs (Previously only in single audit requirements) COSO and federal green book tied in although Q&A clarifies usage as “best practice” 8

Internal Controls: Requirements for Written Policy/Procedures: Policy/Procedure Who is Primarily Responsible: Cash Management Procedure

Internal Controls: Requirements for Written Policy/Procedures: Policy/Procedure Who is Primarily Responsible: Cash Management Procedure (200. 302) Business Office Allowability of Costs Procedure (200. 302) Federal Programs Coordinator Business Office Administration Conflict of Interest Policy (200. 318) Administration/Solicitor ALL LEA Employees Procurement Procedures (200. 319) Business Office/Solicitor Federal Programs Coordinator Travel Policy (200. 474) Federal Programs Coordinator Business Office Subrecipient Monitoring Procedures Federal Programs Coordinator 9

Allowability of Costs Procedures �Written procedures that explain the process that the subgrantee uses

Allowability of Costs Procedures �Written procedures that explain the process that the subgrantee uses to ensure that expenditures relating to federal funds are necessary, allowable, reasonable and allocable. �Ensure that checks and balances are in place to eliminate fraud, waste and abuse. 10

Allowability of Costs In order to determine if a grant cost is allowable for

Allowability of Costs In order to determine if a grant cost is allowable for federal grants, the following three tests must be taken into consideration: • Costs must meet the following general criteria in order to be allowable under Federal awards: (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles (2 CFR 200. 403 ). • Necessary costs are those that are required in order to carry out the program and activities contained in an approved grant application. • Reasonable costs. A cost is reasonable if, in its nature and amount it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. … Consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the subgrantee or the proper and 11 efficient performance of the Federal award (2 CFR 200. 404) • Allocable costs. (a) A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received (2 CFR 200. 405). 11

Cost Principles Factors Section Costs must be reasonable (prudent person test) 200. 404 Costs

Cost Principles Factors Section Costs must be reasonable (prudent person test) 200. 404 Costs must be allocable (charged in accordance with relative benefit received) 200. 405 Costs must be net of applicable credits (purchase discounts, rebates, allowances, recoveries, refunds, adjustments) 200. 406 Certain costs require prior written approval 200. 407 Unallowable costs (if identified after paid, must be refunded) 200. 410 12 12

Prior Written Approval �Needed for: �Sole Source �Cost Sharing/Matching �Program Income �Revision of Budget

Prior Written Approval �Needed for: �Sole Source �Cost Sharing/Matching �Program Income �Revision of Budget and Program Plans �Entertainment Costs �Equipment and Other Capital Expenditures �Memberships, subscriptions, professional activity costs �Pre-Award Costs �Travel Costs 13

Cost Principles – Time & Effort Changes Section Focus on high standards for maintaining

Cost Principles – Time & Effort Changes Section Focus on high standards for maintaining strong internal controls to justify costs of salaries and wages 200. 430 Flexibility in process used to meet those standards 200. 430 Personnel activity reports not specifically required – focus 200. 430 shifted to appropriate internal controls in place Internal controls must exist to ensure adjustments are made 200. 430 so final amounts charged to federal awards are proper 14 14

Considerations - Time & Effort Time distribution records must be maintained for all employees:

Considerations - Time & Effort Time distribution records must be maintained for all employees: • Paid in whole or in part with federal funds • Used to meet a match/cost share requirement Cannot be based on budgeted distributions alone – needs to be supported by actual hours worked. Budgets may need adjustment. Include all time worked for the organization to calculate what portion relates to federal awards. Nonexempt employees must also prepare records indicating the total number of hours worked each day. In addition to the allocation of time, need to continue to consider controls over existence of employees, reasonableness of compensation If previous system of controls worked well, no changes may be needed. 15

Technology & Record Retention Changes Section Defined that computers are considered supplies, not equipment

Technology & Record Retention Changes Section Defined that computers are considered supplies, not equipment 200. 940 Flexibility in electronic document retention, with associated internal controls 200. 335 Grant documentation should be retained for a minimum of 3 years from date of submission of final reports 200. 333 *DFP’s requirement is 7 years (current + 6) – since DFP is more restrictive than UGG, DFP policy is the one that will be enforced. 16

Procurement Procedures � UGG promotes full and open competition for the costs of goods

Procurement Procedures � UGG promotes full and open competition for the costs of goods and services, including nonpublic services, for federal grant programs. � See Procurement Thresholds for Federal Funds handout � When procuring goods and/or services from an IU or another LEA, you must document that UGG procurement requirements were followed (bids, quotes, etc. ) � See PDE Guidance for Intergovernmental Agreements (IGAs) handout � Because each LEA has unique procurement procedures, consult with your LEA Solicitor to ensure that your procedures are being followed and that your process complies with UGG requirements. 17 For more details on UGG Procurement requirements– Two workshops at conference by PASBO/PSBA reps 17

Common Audit Findings �Lack of written documentation �UGG requires written documentation: � Cash management

Common Audit Findings �Lack of written documentation �UGG requires written documentation: � Cash management � Procurement � Subrecipient monitoring � Conflict of interest � Time and effort reporting � Travel �Payroll time-and-effort reporting �UGG includes strong emphasis on internal controls �Review allocation methodologies for compliance 18

Common Audit Findings � Federally Purchased Capital Assets � Tracking of capital assets required

Common Audit Findings � Federally Purchased Capital Assets � Tracking of capital assets required � Documentation requirements: � Description � Serial number or identifying number � Source of funding � Title � Acquisition date � Cost � % of federal participation � Location � Use and condition � Disposition data 19

Common Audit Findings �Subrecipient Contracts �Missing required data elements in pass-through contracts �Lack of

Common Audit Findings �Subrecipient Contracts �Missing required data elements in pass-through contracts �Lack of risk assessment process � Risk assessment must be documented � Annual evaluation (re-evaluation) �Identification of Uniform Guidance Awards �Separate identification of pre- and post- UG awards 20

Part 2: SEA/LEA Requirements 21

Part 2: SEA/LEA Requirements 21

SEA Requirements �SEA Risk Analysis (200. 331(b)) �SEA Monitoring (200. 331(d )) �SEA Performance

SEA Requirements �SEA Risk Analysis (200. 331(b)) �SEA Monitoring (200. 331(d )) �SEA Performance Reporting (200. 328(1)) �Required Policies and Procedures 22

SEA Risk Analysis �SEA MUST evaluate each subrecipient’s risk of noncompliance with federal statutes,

SEA Risk Analysis �SEA MUST evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations and the terms and conditions of the subaward for purposes of subrecipient monitoring. �Must occur prior to making awards 23

Areas of Risk to Consider �Prior experience with same or similar grants �Results of

Areas of Risk to Consider �Prior experience with same or similar grants �Results of previous audits �Single Audits �Changes in personnel or substantially changed systems �Monitoring Findings �Any other fiscal/administrative considerations specific to a particular grant (program office discretion) 24

Specific Risk Factors Used by DFP �Late submission �Applications �Fiscal Reports Program Reports �Funding

Specific Risk Factors Used by DFP �Late submission �Applications �Fiscal Reports Program Reports �Funding Adjustments/Amendments �Excess Carryover �Fiscal/Programmatic Monitoring Findings (more than 5) �Allocation Amount �New Charter Schools 25

Assessment of Risk Monitoring Tools �Additional Technical Assistance �On-site Reviews of Subrecipient Program Operations

Assessment of Risk Monitoring Tools �Additional Technical Assistance �On-site Reviews of Subrecipient Program Operations �Verify every subrecipient is audited as required by Section F of UGG 26

Remedies for Noncompliance �Impose additional conditions to grants (200. 207) � Require payments as

Remedies for Noncompliance �Impose additional conditions to grants (200. 207) � Require payments as reimbursement rather than advanced payments � Provide evidence of acceptable performance within a given performance period � More detailed financial reports � Additional project monitoring � Requiring LEA to obtain technical or management assistance � Establishing additional prior approvals �Must notify subrecipient in writing of the nature, reason, action required and timeline for all additional conditions imposed. 27

Remedies for Noncompliance �If additional conditions do not work: � Temporarily withhold cash payment

Remedies for Noncompliance �If additional conditions do not work: � Temporarily withhold cash payment pending correction of deficiencies � Disallow all or part of the cost of the activity or action not in compliance � Wholly or partly suspend or terminate the Federal award � Initiate suspension or debarment proceedings � Withhold further federal awards for the project or program � Take other remedies that are legally available 28

Subrecipient Monitoring �SEA must monitor the activities of the subrecipient as necessary to ensure

Subrecipient Monitoring �SEA must monitor the activities of the subrecipient as necessary to ensure the subaward is used for authorized purposes, in compliance with Federal statutes, regulations and the terms and conditions of the subaward. Pass-through monitoring must include: � Review of required financial and programmatic reports � Follow up and ensuring that the subrecipient takes action on all deficiencies found through monitoring, audits, onsite reviews or other means. � Issue management decisions for audit findings. 29

Performance Goals �Major change in UGG focuses on performance rather than compliance �Subrecipients will

Performance Goals �Major change in UGG focuses on performance rather than compliance �Subrecipients will be required to submit a performance report for all federal grant programs (Fall 2016) �Focus on progress toward meeting performance measures for federal grants � If not met, why? � Additional information required by Federal awarding agency. 30

Resources OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards �

Resources OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards � � “Uniform Grant Guidance (UGG)” “Uniform Guidance” Document link: https: //www. federalregister. gov/articles/2013/12/26/2013 -30465/uniform-administrativerequirements-cost-principles-and-audit-requirements-for-federal-awards E-CFR link: http: //www. ecfr. gov/cgi-bin/textidx? SID=851 fc 57 edf 5 b 684 e 13 dc 71 eff 5 caaaaf&node=pt 2. 1. 200&rgn=div 5 FAQ link: https: //cfo. gov/wp-content/uploads/2014/08/2014 -08 -29 -Frequently-Asked-Questions. pdf COFAR Agency Exceptions link: https: //cfo. gov/wp-content/uploads/2014/12/Agency-Exceptions. pdf 31

Additional Resources �Uniform Guidance e-CFR � Accessible via ecfr. gov �Council on Financial Assistance

Additional Resources �Uniform Guidance e-CFR � Accessible via ecfr. gov �Council on Financial Assistance Reform (COFAR) webpage � Accessible via cfo. gov �Office of Management and Budget – Policy statements � Accessible via whitehouse. gov � This includes text comparisons for cost principles and audit requirements. �Federal Compliance Supplement � Accessible via whitehouse. gov 32

Questions 33

Questions 33