August, 2013 Grants Circular Reform Update Office of Management and Budget For more information visit

Increase in Federal Grants Activity $7B $24B $91B $200B $600B The Catalog of Federal Domestic Assistance lists more than 2,000 Federal grant programs In Billions of $

Grants Management Priorities: Strong Controls Yield Better Outcomes 1. Guidance Targets Risk & Minimizes Burden 2. Standardized Business Processes & Data 3. Spending Transparency 4. Well Trained Workforce 5. Strong Program Oversight: Audit Resolution 3 Better Outcomes for Grants Alignment with Performance Community (Evidence) Alignment with Procurement Community (Spending Transparency) Alignment with CIO Community (Systems) Alignment with GATB (Spending Transparency)

How Many Circulars Must One State Use? 4 Awards Received A-102 & A-89 A-87 A-133 &A-50 Subawards to universities A-110 A-21 Subawards to nonprofits A-110 A-122 INSERT YOUR STATE HERE

Grants Circular Reform: Background 5 Presidential Directives for Reform : – November 2009 EO on Reducing Improper Payments – February 2011 Presidential Memorandum Engagement with Stakeholders: – February 2012 Advance Notice of Proposed Guidance (ANPG) in Federal Register (over 350 comments received) – The Council on Financial Assistance Reform developed this Proposed Guidance reflective of stakeholder feedback – February 2013 published Notice of Proposed Guidance – Public comments were due June 2, 2013 Goal: Publish final guidance by December 2013

Summary of Public Comments 360 comments received: – State, local, tribal governments, universities, nonprofits, CPA firms, Federal agencies, OIGs, GAO, members of congress, individuals Broad public support and enthusiasm, momentum for completion Selection of key areas of stakeholder concern: – OMB’s role in ensuring agency compliance with new guidance (e.g. nature of approval needed for deviations from indirect cost rates & reduction of single audit compliance requirements) – Risk-based approach to targeting waste, fraud, and abuse, and use of circular for enforcement (e.g. single audit threshold & time and effort reporting) – Consultation with tribal entities 6

Grants Circular Reform Proposal Administrative Requirements 7 Administrative Requirements (A-110, A-102, A-89) – Require Pre-Award Consideration of Merit/Risk – 30-day notice of funding opportunities – Standard format for notices of funding opportunity – Requirements to use standard information collections – Streamline and Clarify Guidance on Subrecipient Monitoring – Requirement to provide indirect cost rate

Grants Circular Reform Proposal Cost Principles 8 Cost Principles (A-87, A-21, A-122) – Provide Consistency on Negotiated Indirect Cost Rates Allow 4-year extension of negotiated rates Allow de minimis rate of 10% of MTDC for entities without a rate For decisions to deviate from negotiated rates require: – Inclusion of rate policy in all pre-NOFA outreach – Publicly posted policy about how rate decisions are made – Agency head approval – Inclusion of rate policy in NOFA – Notification to OMB – Simplify Reporting Requirements for Time and Effort – Direct charging of allocable administrative Costs

Grants Circular Reform Proposal Audit 9 Single Audit and Audit Follow-up (A-133 & A-50) – Target Audit Resources Based on Risk : Raise Threshold From $500k to $750k Revise Definition of “Major Programs” to Focus Audits on Material Issues Reduce from 14 to 7 the types of compliance requirements audited – Strengthen Audit Follow-up Senior Accountable Official, implement metrics on repeat findings, encourage cooperative audit resolution Make audit reports and management decisions public, allow for reliance on cognizant entity decisions where applicable

Next Steps: Engage With COFAR 10 For More Information Visit: CFO.gov/COFAR Send Questions To