Presentation on theme: "Charter Schools: Grants Management Compliance and OMB Uniform Grants Guidance Changes NYSED – September 2014 Tiffany R. Winters, Esq. Brustein & Manasevit,"— Presentation transcript:
1 Charter Schools: Grants Management Compliance and OMB Uniform Grants Guidance Changes NYSED – September 2014Tiffany R. Winters, Esq.Brustein & Manasevit, PLLC
2 Agenda Background on Uniform Grants Guidance Allowability Basic Cost PrinciplesTime and Effort DocumentationGrants Management SystemsFinancial ManagementProcurementInventory
3 Key Dates: Feb 1, 2013 NPRM Dec 19, 2013 Final Guidance Dec 26, Federal RegisterMay New OMB Compliance SupplementJune 26, ED Draft EDGAR ChangesDec 26, Final EDGAR Published
4 Date of Applicability of Revised Rules OMB stated on 12/20/13 All Drawdowns, after December 26, 2014? ? ?
5 What is Covered? A-21 – Cost Rules – Rules – IHEs A-87 – Cost Rules – State / Local Gov’tA-122 – Cost Rules – NonprofitA-102 – Administrative Rules State / Local Gov’tPart 80 – EDGARA-110 – Administrative Rules IHEsPart 74 – EDGARA-133 – Audit Rules (>$750,000)
6 Who is covered? All “nonfederal entities” expending federal awards Non-Federal Entity
7 Most Significant General Changes Shift from focus on Compliance to focus on PERFORMANCE!!!Auditors (A Federal OIG) and Monitors (Federal and State Pass Through) must look more to “outcomes” than to “process”The Omni Circular adds significant flexibility to way grantees / subgrantees can adopt their own processes
8 Most Significant General Changes (cont.) The Omni Circular has a MAJOR emphasis on “strengthening accountability” by improving policies that protect against waste, fraud and abuse
9 New: Required certifications 200.415 NEW: Official authorized to legally bind the non-federal entity must certify on annual and final fiscal reports or vouchers requesting payment:“By signing this report, I certify to the best of my knowledge and belief that the report is true, complete and accurate and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the federal award. I am aware that any false, fictitious, or fraudulent information or the omission of any material fact, may subject me to criminal civil or administrative penalties for fraud, false statements, false claims, or otherwise.”
10 Financial Management Controls The Key Component to Federal Grants
11 Crosswork Between 34 CFR 80.20 (b) and Omni Circular 200.302(b) Identification of Awards (NEW)Financial ReportingAccounting Records (Source Docs)Internal ControlBudget ControlWritten Cash Management Procedures (NEW)Written Allowability Procedures (NEW)Financial ReportingAccounting RecordsInternal ControlBudget ControlAllowable CostSource DocumentationCash Management
12 1) Identification of Awards (New) All federal “awards” received and expendedThe name of the federal “program”Identification # of awardCFDA Title and NumberFederal Award I.D. #Fiscal Year of AwardFederal AgencyPass-Through (If S/A)
13 New shift to OMB approved performance metrics 2) Financial ReportingNew shift to OMB approved performance metrics
14 2) Financial Reporting (cont.) Accurate, current, complete disclosure of financial results of each award– Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly– Non federal entity must submit performance reports at intervals required by federal agency or pass through.Annual performance reports due 90 days after reporting period; Quarterly performance reports due 30 days after reporting periodand
15 3) Accounting Records (Source Documentation) Combines (b)(2) and (b)(6)Source Documentation on:Federal AwardsAuthorizationsObligationsUnobligated balancesAssetsExpendituresIncomeInterest (New)Eliminated liabilities
16 4) Internal ControlS Essentially same as 80.20 (b) (3) Effective control over and accountability for:All fundsPropertyOther assetsMust adequately safeguard all assetsUse assets solely for authorized purpose
17 5) Budget Control Same as 80.20 (b)(4) Comparison of expenditures with budget amounts for each award
18 6) Written Cash Management Procedures For states, payments are governed by Treasury – State CMIA agreements 31 CFR Part 205No ChangeFor all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation)See Payment
19 6) Written Cash Management Procedures (cont.) Advances must be maintained in insured accountsPass through cannot require separate depository accountsAccounts must be interest bearing unless:Aggregate federal awards under $120,000Account not expected to earn in excess of $500 per yearBank require minimum balance so high, that such account not feasibleInterest amounts up to $500 may be retained by non federal entity for administrative purposesInterest earned must be remitted annually to ED/HHS, etc.
20 7) Written Allowability Procedures (New) Written procedures for determining allowability of costs in accordance with Subpart E – Cost Principles
22 Cost Principles: “Factors Affecting Allowability of Costs” 200.403 All Costs Must Be:Necessary, Reasonable and AllocableConform with federal law & grant termsConsistent with state and local policiesConsistently treatedIn accordance with GAAPNot included as matchNet of applicable credits (moved to )Adequately documented
23 New: Prior Written Approval 200.407 In order to avoid subsequent disallowance:Non-Federal entity may seek prior written approval of cognizant agency (for indirect cost rate) or Federal awarding agency in advance of the incurrence of special or unusual costs
24 Program IncomeNon-Federal entities are encouraged to earn income to defray program costs where appropriate.Costs of generating program income may only be deducted if:Authorized by federal regulations or the Federal award;Costs are incidental and not charged to the Federal award.Property from the sale of real property or equipment is not program income – apply post award property rules.NEW: Program Income Must Be Deducted from Total Allowable CostsWith prior approval may Add to Federal Award.
25 New: Direct v. Indirect Costs 200.413 Salaries of administrative and clerical staff should be treated as “indirect” unless all of following are met:Such services are integral to the activityIndividuals can be specifically identified with the activitySuch costs are explicitly included in the budgetCosts not also recovered as indirect
26 The “Omni” now has 55 specific items of cost! Selected Items of CostThe “Omni” now has 55 specific items of cost!
27 Selected Items of Cost Examples Advertising/PR (Clarified)Allowable for programmatic purposes including:RecruitmentProcurement of goodsDisposal of materialsProgram outreachPublic relations (in limited circumstances)AlcoholNot allowable
28 Selected Items of Cost (cont) Conferences (Changed)Prior Rule: Generally allowableIncludes Meals / Conferences / Travel and Family Friendly PoliciesAllowable conference costs include rental of facilities, costs of meals and refreshments, transportation, unless restricted by the federal awardCosts related to identifying, but not providing, locally available dependent-care resourcesBut “travel” allows costs for “above and beyond regular dependent care”Conference hosts must exercise discretion in ensuring costs are appropriate, necessary and managed in manner than minimizes costs to federal award
29 Selected Items of Cost (cont) Collections of Improper Payments (New)The costs incurred by the non-Federal entity to recover improper payments are allowable as either direct or indirect costs, as appropriate.
30 Selected Items of Cost (cont) Entertainment Costs (Clarified)Cost of entertainment are unallowableAmusement, Diversion, Social ActivitiesExcept where costs might otherwise be considered programmatic and are authorized or have prior written approval of the Federal awarding agency.Fines, Penalties, Damages and other SettlementsIf related to violation, alleged violation or failure to comply with Federal, state, tribal, local or foreign law and regulations then unallowable.Except with prior written approval of Federal awarding agency.
31 Selected Items of Cost (cont.) Travel Costs (Changed)Prior rule: allowable with certain restrictionsTravel costs may be charged on actual, per diem, or mileage basisTravel charges must be consistent with entity’s written travel reimbursement policiesGrantee must retain documentation that participation of individual in conference is necessary for the projectTravel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR (a)
32 Selected Items of Cost (cont.) Travel Costs (Changed)Prior rule: allowable with certain restrictionsTravel costs may be charged on actual, per diem, or mileage basisTravel charges must be consistent with entity’s written travel reimbursement policiesGrantee must retain documentation that participation of individual in conference is necessary for the projectTravel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR (a)
33 OMB Circulars Time and Effort Rule Time Distribution Records “Standards for Documentation of Personnel Expenses”If federal funds are used for salaries, then time distribution records are required.How staff demonstrate allocabilityPaid in whole or in part with federal funds (i)(1)Used to meet a match/cost share requirement (i)(4)
34 Cost ObjectivesWhat is a cost objective? (slightly changed)Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc.
36 OCFO GuidanceIt is possible to work on a single cost objective even if an employee works on more than one Federal award or on a Federal award and a non-Federal award.The key to determining whether it is a single cost objective is whether the employee’s salary and wages can be supported in full from each of the Federal awards on which the employee is working or from the Federal award alone if the employee’s salary is also paid with non- Federal funds.Insert an example after this slide?
37 Time and effort (Current A-87 Rule) Semi-Annual CertificationsPersonnel Activity Report (PAR)If an employee works on a single cost objective:After the factAccount for the total activitySigned by employee or supervisorEvery six months (at least twice a year)If an employee works on multiple cost objectives:After the factAccount for total activitySigned by employeePrepared at least monthly and coincide with one or more pay periods
38 NEW: “Standards for Documentation of Personnel Expenses” 200.430 Charges for salaries must be based on records that accurately reflect the work performedMust be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable and properly allocatedBe incorporated into official recordsReasonably reflect total activity for which employee is compensatedNot to exceed 100%
39 NEW: “Standards for Documentation of Personnel Expenses” 200 NEW: “Standards for Documentation of Personnel Expenses” (cont)Encompass all activities (federal and non-federal)Comply with established accounting polices and practicesSupport distribution among specific activities or cost objectives
40 NEW: “Standards for Documentation of Personnel Expenses” 200 NEW: “Standards for Documentation of Personnel Expenses” (cont)Budget estimates alone do not qualify as support for charges to Federal awards (i)(1)(viii)Percentages may be used for distribution of total activities (i)(1)(ix)
41 NEW: “Standards for Documentation of Personnel Expenses” 200 NEW: “Standards for Documentation of Personnel Expenses” (cont)Grantees encouraged to adopt “substitute systems” if approved by cognizant agency for indirect cost (i)(5)Acceptable to allocate sampled employees’ supervisors, clerical and support staffs, based on results of sampled employees
43 Procurement Standards State, Local and Tribal Governments:States may use their own procurement policies and procedures to procure equipment.Other grantees and subgrantees must follow policies and procedures that meet the standards set out in EDGAROmni CircularStill provides flexibility for States; all other nonfederal entities follow policies and procedures under SectionBRUSTEIN & MANASEVIT, PLLC
44 Procurement Standards - NEW Omni Circular : All nonfederal entities must have documented procurement procedures which reflect applicable Federal, State, and local laws and regulations.(a)BRUSTEIN & MANASEVIT, PLLC
45 Open CompetitionAll procurement transactions must be conducted with full and open competition.Must have protest procedures to handle disputesTo eliminate unfair advantage, contractors that develop or draft specifications, requirements, statement of work, and invitations for bids or RFPs must be excluded from competing for such procurements.From EDGAR 74.43; now applicable to all nonfederal entities ( (a))Not really a new requirement just moving itBRUSTEIN & MANASEVIT, PLLC
46 Open Competition Situations that restrict competition: Unreasonable requirements on vendors to qualify to do businessPre-qualified lists should not limit competitionRequiring unnecessary experience or excessive bondingNoncompetitive pricing practicesNoncompetitive awards to consultants on retainerOrganizational conflicts of interestSpecifying a brand nameAny arbitrary action in the procurement processIn-state or local preferencesBRUSTEIN & MANASEVIT, PLLC
47 Conflict of InterestMust maintain written standard of conduct, including conflict of interest policy.A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award:Employee, officer or agentAny member of that person’s immediate familyThat person’s partnerAn organization which employs, or is about to employ, any of the above or has a financial interest in the firm selected for awardInstitutional conflict new to state and localsBRUSTEIN & MANASEVIT, PLLC
48 Conflict of Interest - NEW If the non-federal entity has a parent, affiliate, or subsidiary organization that is not a state or local government the entity must also maintain written standards of conduct covering organization conflicts of interest! (b)(2)All non federal entities must establish conflict of interest policies, and disclose in writing any potential conflict to federal awarding agency in accordance with applicable Federal awarding agency policyBRUSTEIN & MANASEVIT, PLLC
49 Vendor Selection Process Method of procurement:NEW: Micro-purchaseSmall purchase proceduresCompetitive sealed bidsCompetitive proposalsNoncompetitive proposalsBRUSTEIN & MANASEVIT, PLLC
50 Vendor Selection Process: NEW: Micro-Purchase Acquisition of supplies and services under $3,000 or less.May be awarded without soliciting competitive quotations if nonfederal entity considers the cost reasonable.To the extent practicable must distribute micro-purchases equitably among qualified suppliers.(a)BRUSTEIN & MANASEVIT, PLLC
51 Vendor Selection Process: Small Purchase Procedures Good or service that costs $100,000 or less (NEW: $150,000 under )Organization may set lower thresholdMust obtain price or rate quotes from an adequate number of qualified sources“Relatively simply and informal”BRUSTEIN & MANASEVIT, PLLC
52 Vendor Selection Process: Noncompetitive Proposals Appropriate only when:The good or services is available only from a single source (sole source)There is a public emergencyThe awarding agency authorizesNEW: awarding agency or pass-through must expressly authorize noncompetitive proposals in response to written requires from nonfederal entity (f)(3)After soliciting a number of sources, competition is deemed inadequateBRUSTEIN & MANASEVIT, PLLC
53 Vendor Selection Process: Noncompetitive Proposal As a practical matter, noncompetitive contract raises “red flags”Ensure persuasive and adequate documentation to facilitate auditBRUSTEIN & MANASEVIT, PLLC
54 Vendor Selection Process Cannot contract with vendor who has been suspended or debarredAppendix II(I)BRUSTEIN & MANASEVIT, PLLC
55 Contract Administration Must maintain a contract administration system that ensures contractors perform in accordance with the terms, conditions, and specifications of the contract(b): Nonfederal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of the contractBRUSTEIN & MANASEVIT, PLLC
57 Inventory ManagementMust have adequate controls in place to account for:Location of equipmentCustody of equipmentSecurity of equipmentBRUSTEIN & MANASEVIT, PLLC
58 What is equipment?Equipment: tangible, nonexpendible, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.Grantee may also use its own definition of equipment as long as the definition would at least include all equipment defined above.EDGAR 74.2 and 80.3Omni CircularBRUSTEIN & MANASEVIT, PLLC
59 Supplies Anything that is not equipment is considered supplies. 200.94 “Highly Walkable” ItemsNEW: Computing devicesMachines used to acquire, store, analyze, process, public data and other information electronicallyIncludes accessories for printing, transmitting and receiving or storing electronic informationComputing devices are supplies is less than $5,000BRUSTEIN & MANASEVIT, PLLC
60 Internal ControlsRegardless of cost, grantee must maintain effective control and “safeguard all assets and assure that they are used solely for authorized purposes.” (b)(4)BRUSTEIN & MANASEVIT, PLLC
61 OwnershipGenerally, title to equipment purchased with federal funds vests in the organization that made the purchase.BRUSTEIN & MANASEVIT, PLLC
62 Inventory Management Must have inventory management system Property recordsDescription, serial number or other ID, title info, acquisition date, cost, percent of federal participation, location, use and condition, and ultimate dispositionPhysical inventoryAt least every two yearsControl system to prevent loss, damage, theftAll incident must be investigatedBRUSTEIN & MANASEVIT, PLLC
63 Inventory Management Must protect against unauthorized use May use for other projects as long as use is incidental and does not interfereBRUSTEIN & MANASEVIT, PLLC
64 Use of Grant-Acquired Equipment Use on the grant project or program that helped pay for the equipment.Use on federally-funded projects funded by the federal agency that funded the original project.Use on other federally-funded activities.Use on other activities.BRUSTEIN & MANASEVIT, PLLC
65 Use of Grant-Acquired Equipment - Clarified Clarified: shared use is allowed if such use will not “interfere”:1st preference – projects supported by federal awarding agency2nd preference – project funded by other federal agencies3rd preference – use for non federally funded programsNEW: Cannot “encumber” the property without approval of Federal agency or Pass-through agency(c)(1)BRUSTEIN & MANASEVIT, PLLC
66 Inventory Management - NEW When grantee acquiring replacement equipment, the equipment to be replaced may be used as a “trade-in” without recourse to federal agency(c)(4)BRUSTEIN & MANASEVIT, PLLC
67 Disposition-Equipment When property no longer needed, must follow disposition rules:Transfer to another federal programOver $5,000 – pay federal shareInstitutions of Higher Education, Hospitals and Other Nonprofits must request disposition instructions from the Secretary of the before disposal of equipment.Under $5,000 – no accountability(e): Nonfederal entity must request disposition instructions from the federal awarding agency if required by the terms of the grant.BRUSTEIN & MANASEVIT, PLLC
68 Disposition - Supplies If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federal award, must compensate the federal government for its share.BRUSTEIN & MANASEVIT, PLLC
70 Methods for collection, Transmission and storage of information - NEW When original records are electronic and cannot be altered, there is no need to create and retain paper copies.When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided they:Are subject to periodic quality control reviews,Provide reasonable safeguards against alteration; andRemain readable.BRUSTEIN & MANASEVIT, PLLC
72 This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC 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.