Gilbert Tran Office of Management & Budget

Agenda

•The Garden of Grants •Recovery Grants •Grant Reform

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Grants & Recovery

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COFAR

Grant Reform

A-133 Single Audits

GAO

Recovery Act

Data Act

FFATA

Grant Requirements

GRANTS

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0

100

200

300

400

500

600

1960 1970 1978 1986 1994 2002 2010

$7B $24B

$91B

$200B

$600B

CFDA lists more than 2,000 Federal grant programs

In Billion of $

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In 1950, Federal grants to states totaled $2.5 billion

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4%

1%

80%

8%

7%

States

Locals

Universities

Non-Profits

Tribes, For-Profit, Others

2012 US BUDGET - $3.7 TRILLION GRANTS- $600 BILLION

In 2012, Federal grants to states will total $480 billion

“Spending Stimulus take Money”

“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

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The Recovery Continues…

ARRA Effect of ARRA awards on major program determination SEFA & SF-SAC presentation of ARRA awards

Non-ARRA Granting of extensions suspended Low-risk auditee criteria clarified Loan program safe harbor

SFA 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 2009 Audited as major program in 2009 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

Reform of Federal Policies Relating to Grants and Cooperative Agreements; Cost Principles and Administrative Requirements (Including Single Audit Act)

Federal Register Volume 77, Number 39 Tuesday, February 28, 2012 http://federalregister.gov/a/2012-04521

President Obama has continually stressed the necessity to reduce regulatory and administrative burdens while “intensifying efforts to eliminate payment error, waste, fraud, and abuse” in the financial assistance arena.

November 23, 2009, Executive Order 13520 on Reducing Improper Payments and Eliminating Waste in Federal Programs January 18, 2011, Executive Order 13563 on Improving Regulation and Regulatory Review February 28, 2011, Presidential Memorandum on Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments

OMB issued Memorandum M-12-01 on October 27, 2011, Creation of the Council of Financial Assistance Reform

COFAR is tasked with creating a more streamlined and accountable structure to coordinate financial assistance. Co-chaired by OMB Office of Federal Financial Management. Includes 8 largest grant-making agencies plus rotating member to represent the perspectives of other agencies.

Agriculture Housing and Urban Development Education Labor Energy National Science Fdn (rotating member) Health and Human Services Transportation (Co-chair) Homeland Security

Solicit public input on a range of ideas for reforming the requirements that govern the management of financial assistance awards. Federal Register presents the COFAR’s reform ideas

Reforms to audit requirements (Circulars A-133 and A-50) Reforms to cost principles (Circulars A-21, A-87, and A-122, and Cost Principles for Hospitals) Reforms to administrative requirements (Common Rule implementing Circular A-102; Circular A-110; Circular A-89)

Expend < $1M in Federal awards Single audit not required

Expend between $1M and $3M in Federal awards More focused single audit Test only 2 compliance requirements

Allowable / Unallowable costs Agencies would select 2nd requirement for each program

Expend > $3M in Federal awards Full single audit is required Streamlined compliance requirements

Increased testing, larger sample sizes, lower levels of materiality

Optional testing, or smaller sample sizes and higher levels of materiality

Allowable / Unallowable activities and costs Eligibility Period of availability Procurement and suspension and debarment Reporting Subrecipient monitoring Special tests and provisions

Cash management Davis-Bacon Act Equipment and real property management Matching, level of effort, and earmarking Program income Real property and relocation assistance

Strengthening audit follow-up for Federal awarding agencies.

Cross-agency coordination to reduce burden on pass-through entities and subrecipients for both additional audits and audit follow-up.

In general terms, how important are Single Audits to your entity or to entities you audit for subrecipient monitoring?

In general terms, what impacts would the following changes to the Single Audit framework have on your organization in administrative burden and in ability to provide oversight to subrecipients?

Increasing the Single Audit threshold to $1 million? Requiring a more focused Single Audit (with only two compliance requirements) for any entity expending between $1 million and $3 million? Requiring full Single Audits for any entity expending more than $3 million?

Should the Single Audit threshold(s) be increased, and if so, to what extent?

Which types of currently universal Single Audit compliance requirements do you think are most essential to identifying and mitigating waste, fraud, and abuse?

What processes or tools should the Federal Government implement in order to ensure better coordination in the Single Audit oversight by Federal agencies and pass-through agencies, including in the resolution of audit findings that cut across multiple agencies’ programs?

Consolidate cost principles into single document with limited variations:

– OMB Circular A-21 – Educational Institutions – OMB Circular A-87 – Governments – OMB Circular A-122 – Nonprofit Organizations – Health and Human Services at 45 CFR Part 74 Appendix E – Hospitals

Establish mandatory flat rate that is discounted from the recipient’s already negotiated rate:

– Recipients with a previously negotiated rate may have the additional option of accepting a discounted rate from their already negotiated rate. – Discounted rates could be maintained for up to a four-year period with minimal documentation, or raised through negotiation with full documentation.

Exploring alternatives to time and effort reporting requirements for salaries and wages

Three current pilots: FDP Department of Labor’s Workforce Innovation Fund ED’s Request for Ideas

Expansion of UCA Direct Administrative Support Costs Computing devices Unused supplies Large research facilities Depreciation Interest

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Other Specific Costs: Publications and Printing

Contingency Funding

DS-2 Requirement Threshold

Excess and Idle capacities

Improper payments collection

Gain and losses on financing arrangements

Certificate and examples of IDC for non-profits

Due to OMB no later than 5PM (ET) on April 30, 2012. Electronically http://www.regulations.gov Follow instructions under the “more Search Options” tab

Express or overnight mail Office of Management and Budget 725 17th Street, NW Washington, DC 20025 Attn: Office of Federal Financial Management “Grant Reform”

Regular mail Office of Management and Budget 725 17th Street, NW Washington, DC 20500 Attn: Office of Federal Financial Management “Grant Reform”

Let’s Get Busy