The Uniform Guidance for Federal Awards

Outline

• Background and Overview of Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 CFR 200 (UG or Uniform Guidance)

• Overview of Auditor Responsibilities

• Overview of Auditee Responsibilities

• Resources

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Understanding the Effective Dates is Key!

2

Implement policies and procedures by

promulgating regulations to be effective

December 26, 2014

Implement the new administrative requirements and cost principles for all new Federal awards made on or after

December 26, 2014, and to incremental funding made after that date

Effective for audits of fiscal years beginning on or after December 26, 2014 Not permitted to early implement any of

the audit provisions

Audit Requirements

Federal Agencies

Non-federal Entities

Implementation Challenges

• It will take couple of years for a full implementation of UG requirements

• Additional efforts will be needed in early years of implementation by auditors and auditees

• Staff training needs for auditors and auditees will increase training

• Collaborative effort will be needed to enhance audit quality

• Applicability of administrative and cost principles is dependent on the adoption and implementation by a federal agency. Hence, a full adoption of UG is not uniform

– Means that a portion of award expenditures will be under the requirements of OMB Circular A-133 and some will be under UG

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Status of Final Agency Adoption – Federal Register Notices as of 01/14/2016

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Federal RegisterNotice Date

Corporation for National and Community Service (CNCS) November 17, 2015Department of Agriculture (USDA) February 16, 2016Department of Commerce July 28, 2015Department of Education November 2, 2015Department of Energy September 24, 2015Department of Health and Human Services 12/19/2014 (Interim)Department of Homeland Security (FEMA) October 2, 2015Department of Labor December 30, 2015Department of State June 2, 2015Department of Transportation December 17, 2015Department of Treasury January 27, 2016Environmental Protection Agency (EPA) October 9, 2015Housing and Urban Development (HUD) December 7, 2015Institute of Museum and Library Services (IMLS) September 21, 2015National Aeronautics and Space Administration (NASA) September 16, 2015National Archives and Records Administration August 25, 2015National Endowment for the Humanities (NEH) September 16, 2015National Endowment for the Arts (NEA) June 29, 2015National Science Foundation (NSF) November 27, 2015Office of National Drug Control Policy (ONDCP) September 23, 2015Small Business Administration January 11, 2016Social Security Administration November 10, 2015US Agency for International Development (USAID) September 17, 2015Department of Veteran’s Affairs (VA) December 1, 2015

Agency

• Six (6) Subparts as follows: – Subpart A: Acronyms and Definitions

– Subpart B: General Provisions

– Subpart C: Pre-Federal Award Requirements and Contents of Federal Awards

– Subpart D: Post Federal Award Requirements

– Subpart E: Cost Principles

– Subpart F: Audit Requirements

• Twelve (12) Appendices covering a variety of other items, including:

– Appendix X: Data Collection Form (available on FAC website)

– Appendix XI: Compliance Supplement (available on OMB website)

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Basic Structure of Uniform Guidance

Summary of Basic Changes

• Non-federal entities expending $750,000 or more (previously $500,000) in federal awards during their fiscal year

• Must be performed annually (applicable to most auditees; for exceptions see § 200.504)

• Audit must be performed under GAGAS (Yellow Book)

• Reinforcement of responsibilities:

– Auditee

– Auditor

– Federal agency

– Pass-through entity

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Understanding Key Terms

• Non-Federal Entities means: – States

– Local governments (includes county, city, municipality, town, special district, school district, etc.)

– Indian tribes

– Institutions of higher education

– Not-for-profit organizations

• Federal Award means: – Federal financial assistance (receives directly or indirectly) in the form of

grants, co-operative agreements, non-cash contributions or donations of property (including donated surplus property, direct appropriations, food commodities, and other financial assistance

– Cost-reimbursement contract under FAR (receives directly or indirectly)

– Loans, loan guarantees, interest subsidies and insurance

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Overview of Auditor Responsibilities

8

Determine if financial statements

fairly presented

Report on Schedule of Expenditures of

Federal Awards (SEFA)

Understand and test internal control over

compliance

Follow-up on prior audit

findings

Determine whether auditee

complied

Complete and sign specified section of

Data Collection Form

Report findings

Low Risk Auditee Status

• Must meet all of the following for each of the two preceding years:

– Performance of annual single audits

– Timely filing of data collection form

– Unmodified opinion of financial statements in accordance with US GAAP or basis of accounting required by state law

– Unmodified opinion on SEFA and on compliance with major programs

– No going concern matter was reported by the auditor

– No material weakness in internal control

– Known or likely questioned costs must not exceed five (5)% of the total federal awards expended for a Type A program during the audit period

9

Major Program Determination

• Minimum threshold for Type A Program increased to $750,000 (from $300,000)

• Exclusion of large loan and loan guarantee programs (loans) that exceeds 4 times the largest non-loan program still applies, however, a program is considered to be a program providing loans only if the value of the awards expended for loans within that program is 50% or more of the total awards expended

• Tweaking of risk assessment criteria for the auditor to determine a low-risk Type A and high-risk Type B programs

• Threshold for assessing high-risk Type B program which was previously $100,000, is now based on Type A threshold (>25% of Type A threshold)

• Minimum % of testing is now 20% (from 25%) for low-risk auditee

• Minimum % of testing is now 40% (from 50%) for high-risk auditee

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• Following three (3) components:

– Summary of Auditor’s Results

– Findings Related to Financial Statements under GAGAS

– Findings and Questioned Costs for Federal Awards

• Major changes as follows:

– Format for reference number for an audit finding must meet the requirements of data collection form

– Specific identification of a repeat audit finding with prior audit finding number

– In providing contact or perspective of an audit finding, specific identification of whether the sampling was a statistically valid sample

– Threshold for known and likely questioned costs was increased from $10,000 to $25,000

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Summary Schedule of Findings and Questioned Costs

UG Finding Elements

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Finding Elements

Program information

Criteria

Condition Found

Context

Questioned Costs

Whether Sampling was Statistically

Valid

Repeat Finding From

Prior Year

Cause & Effect

Recommendation

Views of Responsible

Officials

Submission of a Single Audit

• Reporting package consists of the following: – Financial statements – Schedule of Expenditure of Federal Awards – Auditor’s reports – Summary Schedule of Findings and Questioned Costs (including

corrective action plan) – Summary Schedule of Prior Audit Findings

• NOTE: Management letter is not part of the reporting package

• NOTE: Do not include protected personally identifiable information

13

Submission of a Single Audit (cont’d)

• Reporting package must be submitted to the Federal Audit Clearinghouse within 9 months of the auditee’s fiscal year or 30 days after receipt of auditor’s report, whichever is earlier

• If the due date falls on a Saturday, Sunday, or a federal holiday, the reporting package is due the next business day

14

Overview of Auditee Responsibilities

15

Arrange for Single Audit in Accordance

with ˛ 200.509

Prepare Financial Statements

Prepare Schedule of Expenditures of Federal Awards

(SEFA)

Provide the Auditor with

Access

Prepare Corrective Action Plan

Prepare Summary Schedule of Prior

Audit Findings

Follow-Up and Take Corrective

Action on Findings

What do I need to consider when selecting an auditor?

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Auditor Selection

• Adherence to procurement standards

• Make positive efforts to utilize small business, minority-owned firms, and women’s business enterprises, whenever possible

• Evaluate the audit organization’s competency

• Review results of the audit organization’s peer review report

• Evaluate qualifications and skills of the assigned personnel

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How can I strengthen my financial and federal program management?

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• Maintaining records in such a way that you could easily: – Segregate federal and nonfederal awards activity

– Safeguard authorized use of assets acquired from federal funds

– Comply with reporting disclosure requirements

• Prepare budget to actual comparison for each federal award

• Develop polices to determine allowability of costs

• Implement cash management requirements

NOTE: Non-federal entity is responsible for complying with ALL requirements of the federal award

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Subpart D – Standards for Financial and Program Management

How can I improve my procurement practices?

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Subpart D – Procurement Standards

• Must use one of the following methods: – Micro-purchases – Small purchase procedures – Sealed bids – Competitive proposals – Non-competitive proposals

• Maintain records sufficient to detail history of procurement

• Maintain written standards of conduct covering conflicts of interest

• Provision of full and open competition

• Take all necessary affirmative steps to assure that small business, minority businesses, and women’s business enterprises are used, when possible

Key Deferral:

• Adoption of Procurement Standards for two (2) fiscal years including the year when audit requirements for UG was first implemented

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What are some of the changes related to subrecipient management?

22

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Subpart D – Subrecipient Monitoring and Management

Determine if sub-recipient or contractor

Clearly identify sub-awards to sub-

recipients

Provide certain sub-award information at

time of subaward

Evaluate each sub-recipient’s risk of noncompliance

Consider imposing specific subaward

conditions

Monitor activities of subrecipients

Verify subrecipient audited

Consider results of subrecipient

audits

Consider taking enforcement action

for noncompliant subrecipients

What should I report on SEFA?

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• Determination based on when the activity related to federal award has occurred:

– Incurrence of expenditures

– Disbursement of funds to subrecipients

– Use of loan proceeds under loan and loan guarantee programs

– Receipt of property or surplus property

– Receipt or use of program income

– Cumulative balance of federal awards for endowment funds that are federally restricted

– Distribution or use of food commodities

– Disbursement of amounts entitling NFE to an interest subsidy

– Period when insurance is in force

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Basis for Determining Federal Awards Expended (§200.502)

• How to calculate the value of federal awards expended under loan programs (with few exceptions):

– Value of new loans made or received during the audit period PLUS

– Interest subsidy, cash, or administrative cost allowance received PLUS

– Outstanding loan balance at the beginning of the audit period for which federal government imposes continuing compliance requirements

• Free rent received as part of a federal award to carry out a federal program (at fair market value)

• Value of federal non-cash assistance at fair market value at the time of receipt or assessed value provided by federal agency (such as free rent)

• Program Income (Be cautious and know when to include)

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Basis for Determining Federal Awards Expended (§200.502) (cont’d)

What are the minimum disclosure requirements related to SEFA?

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Minimum Disclosures on the Face of SEFA

• List individual federal programs by federal agency.

• Name of pass-through entity and identifying number assigned by such entity

• Provide name of cluster, list individual federal program within that cluster, and provide applicable federal agency name.

• For R&D, total federal awards expended must be shown either by individual federal award or by Federal agency and major subdivision within that agency

• Total federal awards expended for each individual federal program and the CFDA number or other identifying number

• Total amount provided to subrecipients from each federal program

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New Disclosures in the Notes to SEFA

• Must have significant accounting policies used in preparing SEFA

• Note whether or not the auditee selected to use 10% de minimis cost rate

• For loan or loan guarantee programs, identify the balances outstanding at the end of the audit period

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What should I include in a Corrective Action Plan?

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Corrective Action Plan

• Document separate from the auditor’s findings

• Prepared for each audit finding

• Disagreement with audit findings should be included here and must include an explanation

• Provide: – Name of the contact person responsible for corrective action

– Planned corrective action

– Anticipated completion date

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How do I complete a Summary Schedule of Prior Audit Finding?

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Summary Schedule of Prior Audit Findings

• Include all audit findings (including those reported under GAGAS)

• Identification of reference number and fiscal year of origination

• Indicate whether: – Fully corrected (only list audit findings and state that corrective action was

taken)

– Not corrected or partially corrected (describe reasons for recurrence and planned corrective action as well as any partial action taken)

• Valid reason for determining no further action: – 2 Years have passed since the audit report in which the finding occurred

was submitted to FAC – Grantor is not currently following up with the auditee on the reported

finding

– Management decision was not issued by federal agency or pass-through entity

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What are some of the resources available to auditees?

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Make Use of Available Resources!

• Uniform Guidance codified in Title 2 of CFR, Subtitle A, Chapter II, Part 200

• OMB Compliance Supplement

• Catalog of Federal Domestic Assistance (CFDA)

• Close interaction with the external auditors

• Frequent interactions with grantors and/or pass through entities

• Access designated federal agency's coordinators for audit and programmatic questions (contact information will be provided in an Appendix in the 2016 OMB Compliance Supplement)

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Single Audit Contacts Information

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# Agency SA Senior Accountable Officials SA Key Management Liaisons National SA Coordinators1 HHS Ellen Murray Amy Haseltine (Amy.Haseltine@hhs.gov), David Baker (David.Baker@hhs.gov) Tammie Brown (tammie.brown@oig.hhs.gov2 DoT Brodi Fontenot Patrick Nemons (Patrick.Nemons@dot.gov) John Sysak (john.r.sysak@oig.dot.gov)3 USAID Steve Tashjian Tashjian, Steve(M/OAA/CAS) <sttashjian@usaid.gov> Steve Shea (Sshea@usaid.gov)4 NSF Dale Bell Alex Wynnyk (awynnyk@nsf.gov) Laura Rainey (lrainey@nsf.gov)5 ED Tom Skelly Phillip Juengst (Phillip.Juengst@ed.gov) Bernie Tymes (Bernie.tymes@ed.gov)6 DHS Chris Cumickey Andrea Brandon (Andrea.Brandon@hq.dhs.gov) Nasr.Fahmy (Nasr.Fahmy@dhs.gov)7 DoD TBD TBD Carol Vogler (carol.vogler@dodig.mil)8 EPA David Bloom Howard Corcoran ( corcoran.howard@epa.gov) Leah Nikaidoh (nikaidoh.leah@epamail.epa.gov)9 USDA Peggy Jannery Peggy Jannery (Peggy.Javery@cfo.usda.gov) Marbie Baugh (marbie.baugh@oig.usda.gov)10 HUD Joe Hungate Richard Robinson (Richard.Robinson@HUD.gov) Karen Cookson (Kcookson@hudoig.gov11 USDoJ Mauneen Hennenberg LeToya Johnson (LeToya.Johnson@usdoj.gov) Carol Taraska (carol.s.taraszka@usdoj.gov)12 DoE Thomas Griffin Robert Myers (Robert.Myers@hq.doe.gov) Darryl Ross (darryl.ross@hq.doe.gov)13 DoL Laura Watson Steve Daniels (Daniels.Stephen@dol.gov) Melvin Reid (reid.melvin@oig.dol.gov)14 State Chris Flaggs Carole Clay (Claycl@state.gov) Zoraymas Torres-Alvarez (Torres-alvarezz@state.gov)15 DoC Barry Borkowitz Gary Johnson (GJohnso3@doc.gov) Patrcia Henry (PHenry@oig.doc.gov)16 NASA Frank Peterson William Roets (William.Roets-1@nasa.gov) Mark Jenson (mark.jenson@nasa.gov)17 DoI Douglas Glenn Debra Sonderman (Debra_Sonderman@ios.doi.gov) Morgan Aronson (morgan_aronson@doioig.gov)18 CNCS Dana Bourne Rhonda Honegger (rhonegger@cns.gov) Stuart Axenfeld (s.axenfeld@cncsoig.gov)19 VA Tom Harker Tom Harker (Tom.Harker@VA.gov) Sunday Okurume (sunday.okurume@va.gov)20 Treasury Danielle Thomas Danielle Thomas (Danielle.Thomas@treasury.gov) Elaine Munroe (Elaine.Munroe@treasury.gov)21 SBA Donna Butler Theodore Holloman (Theodore.Holloman@sba.gov) Karmel Smith (karmel.smith@sba.gov)22 NEA Winona Varnon Nicki Jacobs (jacobsn@arts.gov) Nicki Jacobs (jacobsn@arts.gov)23 NEH Jeff Thomas Robert Straughter (rstraughter@neh.gov) Laura Davis (ldavis@neh.gov)24 IMLS Chris Catignani Mary Estelle Kennelly (MEKennelly@imls.gov) TBD25 SSA Peter D. Spencer Peter D. Spencer (Pete.Spencer@ssa.gov) Shannon Agee (shannon.agee@ssa.gov)26 NARA Kathleen Williams Kathleen Williams (kathleen.williams@nara.gov) TBD27 ONCDCP Lisa Newton Lisa Newton (Lisa_E_Newton@ondcp.eop.gov) Phuong deSear (phuong_deSear@ondcp.eop.gov)28 Denali Com. Corrine Eilo Jennifer Price (Jprice@denali.gov) Corrine Eilo (ceilo@denali.gov)

Questions??

Thank you!