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North Carolina Department of Agriculture & Consumer Services New Uniform Guidance 2 CFR 200 and Indirect Costs January 2015 Grants & Contracts Office.

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Presentation on theme: "North Carolina Department of Agriculture & Consumer Services New Uniform Guidance 2 CFR 200 and Indirect Costs January 2015 Grants & Contracts Office."— Presentation transcript:

1 North Carolina Department of Agriculture & Consumer Services New Uniform Guidance 2 CFR 200 and Indirect Costs January 2015 Grants & Contracts Office Training Presented by Kathryn Caler, M.L.S., Grants Administrator

2 What is the new Uniform Guidance?
The result of an effort lead by the Council On Financial Assistance Reform (COFAR) to streamline and eliminate duplicative guidance on federal grants. All Office of Management and Budget (OMB) guidance is now streamlined in 2 CFR Part 200.

3 COFAR Priorities Strengthen program oversight
Target risk and minimize burden on grantees Standardize business processes and data Well trained workforce

4 History There were two executive orders from the President.
Reduce improper payments Reduce administrative burden COFAR was established. One year period for public comment. Final uniform guidance date December 2013 for federal agencies. Uniform guidance became effective for new grants and federal grantees December



7 2 CFR 200 - eCFR Code of Federal Regulations

8 Seven major parts of the 2 CFR Part 200
Acronyms and definitions – Subpart A General provisions – Subpart B Pre-federal award requirements and contents of federal awards – Subpart C Post federal award requirements – Subpart D Cost principles – Subpart E Audit Requirements– Subpart F Appendices

9 Acronyms and definitions – Subpart A
Federal grant dictionary 32 pages of definitions Helpful if unsure of meaning of terminology or acronyms For example: What is the “Federal award date” What is a “Grant agreement” What is the “period of performance”

10 Acronyms and definitions – Subpart A
Federal award date means the date when the Federal award is signed by the authorized official of the Federal awarding agency. Grant agreement means a legal instrument of financial assistance between a Federal awarding agency or pass-through entity and a non-Federal entity that, consistent with 31 U.S.C. 6302, 6304 Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.

11 Acronyms and definitions – Subpart A
§200.94   Supplies. Supplies means all tangible personal property other than those described in § Equipment. A computing device is a supply if the acquisition cost is less than the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000, regardless of the length of its useful life. See also § Computing devices and Equipment. Use NCAS code for Equipment due to fixed asset inventory for computers.

12 Subpart B – General Provisions
This section of 8 pages broadly discusses the purpose, applicability, exceptions, authorities, supersession, effect on other issuances, agency implementation, OMB responsibilities, inquiries, review date, effective date, English language, conflict of interest and mandatory disclosures.

13 Subpart B – General Provisions

14 Subpart B – General Provisions
§    Applicability. (a) General applicability to Federal agencies. The requirements established in this part apply to Federal agencies that make Federal awards to non-Federal entities. These requirements are applicable to all costs related to Federal awards. If you’re not sure if this applies to you, check with your grantor and ask. For food commodities, Subpart E - the cost principles do not apply.

15 Subpart B – General Provisions
Supersession Supersedes the following OMB guidance documents and regulations under Title 2 of the CFR A-21 Cost principles for educational institutions A-87 Cost principles for state, local and Indian tribal governments A-89 Federal domestic assistance program information A-102 Grant awards and cooperative agreements with State and local governments A-110 Cost principles for non-profit organizations A-133 Audits of States, local governments and nonprofit organizations Those sections of A-50 related to auditors performed under Subpart F – Audit requirements

16 Subpart B – General Provisions
Effective /applicability date Awards or amendments implemented by federal agencies after December 26, 2014 New funding as of January 1, 2015 Increases with changes in terms and conditions after January 1, 2015 Audit requirements for fiscal years beginning on or after December 26, 2014.

17 Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards
Subpart C, 9 pages, explains what the federal agency is required to do when posting an opportunity, performing merit reviews of applications, risk reviews, what are the standard application requirements, specific conditions which may be required when a grantee fails to comply with terms and conditions of a grant, certifications required, pre-award costs, and what information must be in any federal award such as the recipient name and DUNS number, total award and approved match or cost share, etc.

18 200.204 & 205 Federal awarding agency review merit of proposals and risk posed by applicants
NEW Merit review of proposals for cooperative agreements or competitive grants A risk evaluation will be completed prior to any federal award May include evaluation of these factors: Financial stability Quality of management systems History of performance Reports and findings from audits

19 200.207 Specific conditions May include:
Reimbursement payment rather than advance payment Withholding authority to proceed to next phase, until receipt of evidence of acceptable performance Requiring additional, more detailed financial reports Requiring additional project monitoring Requiring technical assistance training Requiring additional prior approvals

20 Subpart D - Post federal award requirements Standards for financial and program management
Thirty two page section with important information for agencies with pass- through grants or subawards Conformance may involve changes in business practices for both the agency and divisions Emphasis on monitoring and accountability

Standards for Financial and Program Management Property Standards Procurement Standards Performance and Financial Monitoring and Reporting Subrecipient Monitoring and Management Record Retention and Access Remedies for Noncompliance Post Close Out Adjustments and Continuing Responsibilities Collection of Amounts Due

22 Subpart D -200.302 Financial management
Each State must expend and account for their federal award in accordance with state laws and its accounting system must: Identify receipts and expenditures, including the CFDA title and #, FAIN and year, name of federal agency and pass-through entity, if any Disclose accurate, current and complete disclosure of financial results Adequately maintain the source and application of funds and be supported by source documentation Demonstrate adequate control over and accountability of all funds, property and other assets including comparison of budget to expenditures and have written procedures to implement requirements of payment, as well as allowability of costs.

23 Subpart D 200.308 Revision of budget and program plans
Recipients are required to report deviations from budget or project scope or objective and request prior approval for Change in scope or objective Change in key personnel specified in application Disengagement from the project for more than 3 months, or a 25% reduction in time devoted to the project, etc.

24 Subpart D 200.308 Revision of budget and program plans
Federal awarding agencies are authorized to initiate a one-time extension of the period of performance by up to 12 months. For one-time extensions, the recipient must notify the Federal awarding agency in writing with the supporting reasons and revised period of performance at least 10 calendar days before the end of the period of performance specified in the Federal award.

25 Subpart D -200.328 Monitoring and reporting program performance
Strengthen program oversight The non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity.

26 Subpart D Procurement Standards §200.317 -326
Modeled after A-102: State must follow the same policies and procedures it uses for procurements from its non-Federal funds; Others uses procurement standards in sections COFAR FAQ creates a grace period for implementation of the Procurement Standards. For an institution’s FY16, it will have the option to use Circular A-110 or the UG. An institution must document whether it is in compliance with A-110 or UG, and meet documented standard. With FY17, everyone must comply with UG.

27 NCDA&CS Monitoring efforts
eCivis Grant Management - potential new system under review Use of WebGT system to grant applications and other documentation to provide for centralized access and monitoring Development of grant expenditure reports which will compare budget to actual expenditures over the life cycle of the grant for all federal grants

28 NCDA&CS Monitoring efforts
Federal grant expenditure report captures: Life cycle budget Life cycle expenditures Required information, i.e. year of award, CFDA#, FAIN, grantor, etc. Developed with OSC and available to any State agency In accordance with §

29 NCDA&CS Monitoring efforts
Change in cost center and FRCC (placeholder for grant year) for each federal grant to uniquely identify federal grants Budgeting of indirect cost and expenditures of indirect cost in NCAS Department’s NEW grant compliance auditor Grant policy library and online training Standardized grant processes and procedures

30 NCDA&CS changes implemented
All of pass-through requirements have been incorporated into the new federal grant contract for subawards Transition to new contract changes starts as of January 1st, 2015 For all subawards with source of funds awarded prior to January 1st, 2015, the standard policy of no indirect cost allowable will continue Subawards awarded after January 1, 2015 will be identified in database as to whether they belong to new Uniform Guidance or prior guidance for auditing purposes. .

31 Subpart D -200.331 Requirements for pass-through entities NEW Contract Changes
This grant is a subaward of a federal grant. Federal Award Identification Number: Federal Award Date (date signed by federal authorizing official): Total Amount of Federal Award to NCDA&CS: Name of Federal Awarding Agency: CFDA Number and Program Name: Indirect Cost Rate for Federal Award: Agency Name, Awarding Official and Contact Info: Subrecipient Name (must match DUNS name): Subrecipient DUNS:

32 Subpart D -200.331 Requirements for pass-through entities NEW Contract Changes
Subaward Period of Performance: Start Date End Date Amount of Federal Funds Obligated by this Action: Total Amount of Federal Funds Obligated to Subrecipient: (will need to ask in application, prior years funding) Subaward Project Title: Award is R&D: Yes/No All Requirements: See scope of work, Attachment __and federal statutes, regulations and terms and conditions, Attachment __. Additional Requirements: Required financial and performance reports (See Contract Section ____) Subrecipient Indirect Cost Rate (or 10% de minimis):

33 Subpart D -200.331 Requirements for pass-through entities NEW Contract Changes
Access to Subrecipient’s Records and Financial Statements: See Contract General Terms and Conditions Terms and Conditions of Closeout of Subaward: See Code of Federal Regulations Title 2, Subtitle A, Chapter II §    Closeout, adjustments, continuing responsibilities and collection of amounts due Risk Evaluation Complete: Yes/No Specific Conditions, if any: (could be additional reporting, etc.) Subrecipient’s Cumulative Federal awards > $750,000: Yes/No Audit verified?

34 Subpart D -200.331 Requirements for pass-through entities NEW
NEW risk assessment and monitoring for each subrecipient will be tracked in the Grant Database and identified on the tracking form Each Division that distributes State or federal funds through subawards will develop a risk assessment and monitoring plan per Department policy, NCDA&CS Monitoring Grant Programs and federal requirement.

35 Divisions must develop a risk assessment and monitoring plan for federal subawards
Risk assessments may include the following factors: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).

36 Divisions must develop a risk assessment and monitoring plan for all federal subawards
Monitoring must include: Review of financial and programmatic reports Follow up and ensuring that subrecipient takes timely action Issuing a management decision for audit findings pertaining to federal award Verification that every subrecipient is audited as required by subpart F when subrecipient’s federal funding meets or exceeds $750,000 in expenditures Consider any adjustments due to audits, reviews or other monitoring Consider taking enforcement action against any noncompliance

37 Documentation of risk assessment and monitoring
Risk assessment starts with the application review and evaluation Monitoring begins with review of the returned contract, continues throughout the life of the grant and ends with the final report Keep additional documentation, i.e. site visits, desk reviews, financial audits, program audits, correspondence, etc. with the grant file. YOU MUST DOCUMENT YOUR MONITORING EFFORTS!

38 Subpart D -200.333 Retention requirements for records
Financial records, supporting documents, statistical records and all other non-Federal entity records pertinent to a federal award must be retained for a period of three years from the date of final expenditure report

39 Subpart D -200.335 Methods for collection, transmission and storage of information
In accordance with the May 2013 Executive Order of Making Open and Machine Readable the New Default for Government information, the federal awarding agency and the non-federal entity should, whenever practicable, collect, transmit, and store federal award related information in open and machine readable formats rather than in closed formats or on paper. NCDA&CS record retention schedule. The Grants and Contracts Office is working with IT to update and revise the current schedule in conformance with the 2013 Executive Order. For now, keep paper and electronic copies…

40 Indirect Costs Agency grants Grants to subrecipients
Cost allocation plan – request for waiver

41 Indirect Costs Agency Grants
Indirect cost is kept by the Department for expenses related to administrative and facilities overhead, like: HR expenses Payroll expenses Building and maintenance expenses Accounting, oversight and fiscal management expenses at the Department level NOT program expenses

42 Indirect Costs Agency Grants
Definition Indirect (F&A) costs means those costs incurred for a common or joint purpose benefitting more than one cost objective and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved.

43 Indirect Costs Agency Grants
Cost allocation plan, annual negotiated rate Currently, 13% (or 28% for Forestry and Soil and Water) on personnel expenses of all federal grants or And for certain grants, limited to no more than 10% of the total grant. The indirect cost rate is still applied to personnel expense, but limited to 10% of total grant.

44 Get clear about Indirect Costs
Federal grants SHOULD ALWAYS have budget for indirect cost, unless there is no salary expense.

45 Get clear about Indirect Costs
If you submit a grant application without Indirect Costs … Indirect Costs will be taken out of your grant anyway when federal funds are received (if there is salary expense). This means you will have less program dollars than you planned for. So start now and plan ahead for indirect costs. Make sure your budget includes indirect costs, as appropriate.

46 Indirect cost and subrecipients
Federal guidelines have changed Non-federal entity (NCDA&CS) must allow indirect costs for subrecipients Approved cost allocation plan (must submit a copy of the plan to NCDA&CS) rate Or At 10% de minimus rate (ten percent of the total subaward) A negotiated rate between the subrecipient and NCDA&CS

47 Indirect cost and subrecipients
Subrecipients may decline F & A reimbursement, but pass through entities may not coerce them to accept a rate lower than that to which they are entitled.

48 Indirect cost and subrecipients
Notices of funding opportunities should include policies related to indirect cost rate reimbursement, matching or cost share. Outreach activities should include discussion, as appropriate, of these policies, especially prior to posting a notice of funding opportunity.

49 Indirect cost and subrecipients
Program directors/managers will need to take into account less funds to accomplish program objectives, since grantees will be allowed to use funds for administrative costs, in addition to program costs in their overall budget. Relates to the objective to reduce administrative burden on grantees/subrecipients.

50 Indirect Cost and Cost Allocation Plans
NEW §    Indirect (F&A) costs. (g) Any non-Federal entity that has a federally negotiated indirect cost rate may apply for a one-time extension of a current negotiated indirect cost rates for a period of up to four years. This extension will be subject to the review and approval of the cognizant agency for indirect costs. If an extension is granted the non-Federal entity may not request a rate review until the extension period ends. At the end of the 4-year extension, the non-Federal entity must re-apply to negotiate a rate.

51 Subpart E – Cost Principles
About 54 pages long (Must = Requirement) Discusses allowability of costs Must be necessary and reasonable Must conform to any limitations or exclusions in these cost principles or federal award Must be consistent

52 Subpart E – Cost Principles
Discusses allowability of costs… (Must = Requirement) Must not be both direct and indirect Must conform to GAAP (Generally Accepted Accounting Principles) Cannot be used as match for another federal grant Must be adequately documented

53 Subpart F – Audit Requirements
Twenty two pages long NEW Changes the audit threshold to $750,000 in federal funds expenditures in FY NEW Changes major program threshold to $750,000 New Single Audit requirements applicable to entities starting with fiscal year beginning January 1, 2015 or later and ending December 31, 2015, or later

54 Subpart F – Audit Requirements
The final guidance right-sizes the footprint of oversight and Single Audit requirements to strengthen oversight and focus audits where there is greatest risk of waste, fraud, and abuse of taxpayer dollars. It improves transparency and accountability by making single audit reports available to the public online, and encourages Federal agencies to take a more cooperative approach to audit resolution in order to more conclusively resolve underlying weaknesses in internal controls.

55 Subpart F – Audit Requirements Basic Structure of Single Audit Process Unchanged
Audit threshold ( ). •Subrecipient vs. Contractor ( (f) & ). •Biennial ( ) & Program-specific ( ) audits. •Non-Federal entity selects auditor ( ). •Auditee prepares financial statements & SEFA( ). •Audit follow-up & corrective action( & ). •9 month due date (set in law) ( (a)). •Reporting to Federal Audit Clearinghouse ( ). •Major programs determined based on risk ( ). •Compliance Supplement overall format (Appendix XI).

56 Subpart F – Audit Requirements Audit Threshold Change
Increases audit threshold from $500,000 to $750,000. •Maintains oversight over 99.7% of the dollars currently subject Single Audit and reduces audit burden for approximately 5,000 entities. •Increase of $250,000 is in line with previous threshold increase in 2003.

57 Subpart F – Audit Requirements Single Audit Report Submission
Report Submission requires publication of Single Audit Reports online with safeguards for protected personally identifiable information and an exception for Indian tribes in order to reduce the administrative burden on non-Federal entities associated with transmitting these reports to all interested parties.

58 FAC Repository of Record for Reporting Packages (200.36 & 200.512(b))
Federal agencies, pass-through entities, and others obtain copies by accessing Federal Audit Clearinghouse (FAC) website. Subrecipient only required to submit report to FAC and no longer required to submit to pass-through entity. •Pass-through entity no longer required to retain copy of subrecipient report as available on the Web.

59 Subpart F – Audit Requirements Major Program Determination Type A/B Threshold
Programs are grouped based on dollars. Type A programs are those above the threshold. Type B are those below the threshold. •Type A/B threshold is a sliding scale with minimum. Minimum increases from $300,000 to $750,000. Threshold presented in table to be more easily understood. •Audit threshold and Type A/B minimum threshold will be the same at $750,000.

60 Appendices I through XI
47 pages Provides more details and specifics Other required contract provisions More information about Indirect Costs and Rate Determinations for IHEs, nonprofits and State governments

61 Uniform Guidance 2 CFR 200 - eCFR Code of Federal Regulations
In order to understand the rules, you have to read them. Remember use of “should” and “must” Should = best practices or recommended approach Must = required

62 Resources Electronic Code of Federal Regulations (ECFR) Frequently Asked Questions Frequently-Asked-Questions.pdf Implementation and Readiness Guide for the OMB Uniform Guidance, Prepared by the Council on Governmental Relations (COGR) Administrative Requirements Comparison Chart – 2 CFR Part 215, Circular A-102, and Final Uniform Guidance Subchapters A-E ison.pdf Grant Reform, the New Uniform Guidance Explained: Everything You Need to Know From Now On: The below webinar and accompanying PowerPoint provide an overview of the new guidance (aka “Supercircular”) that every federal grant recipient must know as of December 26, 2014. Webinar: PowerPoint:

63 Resources Additional Resources:
The Maryland Governor’s Grants Office administers a website that offers federal grants information and training. Below are webinars from that website your agency may find helpful. A Federal Grants Primer: The Process for Federal Grants: Best Practices for Grants Management:

64 Resources Properly Prepare for a Grants Audit:
Federal Funds Information for States Presentation: Additionally, the Congressional Research Service (CRS) published the below report which is an overview of the federal grants administration process. CRS is a bipartisan agency that provides policy and legal analysis to committees and Members of both the US House and Senate. Federal Grants-in-Aid Administration: A Primer:

65 Q & A Questions? Please or ask your federal grant contact. This presentation will be available soon for distribution as a narrated PowerPoint for State employees.

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