It’s an all too familiar dilemma. How do you sort through the pages and pages of grant updates, FAQ’s, White Papers and Webinars and still have time to do your “regular” work. I can relate to this feeling of overwhelm about the job of a grant professional in this day and age where the grant regulations continue to “evolve.”
So how do you sift through all the information and find the golden nuggets that are critical for your grants and your job as a grant professional?
I recently ran across a great tip about how to manage information without stressing out. And this simple idea can make a big difference in how you think about the latest FAQs about changes to 2 CFR Part 200 from the Office of Management and Budget (OMB).
It is simple enough:
- Separate the information between reference materials and action items
This technique shreds the information overload and proves that the new Uniform Guidance FAQ’s from OMB really do provide clarification on many common areas of confusion for grant recipients.
In this first article of my three-part series on changes to the Uniform Guidance, I’m going to focus on three action items for federal grant recipients as a result of recent clarifications from OMB.
Here are my favorite gems in the recently released FAQs:
#1: Extension of the Procurement Standards Implementation –Get It In Writing!
If you’ve been on some of my recent webinars, you know that the full implementation of the procurement standards in the new Uniform Guidance has been a challenge, to say the least. The one year grace period was extended to two years and now to a full three years from the effective date of the Uniform Guidance.
In other words, if you have a September 30th fiscal year end, you now have until September 30, 2018, to have the new procurement standards in place.
But there’s a catch.
You have to operate EITHER under the old procurement standards or the new procurement standards. The Single Audit Compliance Supplement in 2 CFR Part 200, Appendix XI Compliance Supplement-2017 instructs auditors to look for those documented standards, so they understand which set of regulations to use when auditing grant recipients.
>>Action Item: Review your written procurement policies and procedures to make sure that you have listed which set of procurement standards you are using.
Don’t have written procurement procedures? Time to get those in place!
#2: Advance Funds or Reimbursement-Show Me The Money Sooner!
In section § 200.305 Payment, the Uniform Guidance states that:
“The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part.”
Likewise, the recent Uniform Guidance FAQ’s published by OMB in July declare:
“The intent of §200.305(b)(1) is to ensure that if a non-Federal entity requests an advance payment method, the Federal agency must approve this request only if the non-Federal entity maintains financial management systems that meet the standards for fund control and accountability in this section.
In other words, advance payment is available for federal grant recipients who meet the payment standards in the Uniform Guidance. You could even call it the “preferred” method. Now you might be wondering “If this is the case, how come we are on reimbursement for our federal award?”
That’s a great question!
The criteria listed in 2 CFR Part 200 make it relatively simple to qualify for getting federal funds advanced to your organization. Here’s the list:
- Show the willingness to maintain both written procedures that minimize the time between the transfer of funds and disbursement of the funds
- Have the financial management systems in place to ensure control and accountability over the funds you receive from the funding agencies
- Limit advance requests to the minimum amounts needed
- Time requests to coincide with the actual, immediate cash requirements while in support of the approved program.
- Request advance payments as close as reasonably possible to the actual payments for direct federally sponsored costs and the corresponding portion of allowable indirect costs.
- Make timely payments to contractors consistent with the various contract provisions.
>>Action Item: Determine if you have any federal awards that are on reimbursement instead of advance. If you are on reimbursement, find out why. Is it that your organization prefers reimbursement? Or is it because no one asked for something different?
You may also want to talk with your funding agency about switching to advance instead of reimbursement.
3: Subrecipient Monitoring-Ask, Document, Follow-up
When you are working for a pass-through entity with subrecipients, you have lots of responsibilities. You have to monitor subrecipients, make sure that they are following the Uniform Guidance like a “prime” recipient. (This always seems to through grant recipients’ off-balance when they learn that all the rules apply to sub-recipients as well.) And of course, there is lots of documentation required to prove to auditors and funding agencies that you monitored your subrecipients like you were supposed to.
In subsection §200.331 the Uniform Guidance states that pass-through entities must follow-up and ensure that subrecipients take timely and appropriate steps to correct all deficiencies related to their subawards. That sounds good, but what does that mean in practical terms?
The recent FAQ’s clarified some of the requirements for monitoring audits and corrective action plans of subrecipients.
Pass-through entities can ask the subrecipients to provide written confirmation of whether or not they had a single audit and if the audit disclosed findings relating to the subaward provided by the pass-through entity.
>>Action Item: Make sure that someone in your organization is reviewing the audit reports for the subrecipients. Best practices say you should drive accountability back to the subrecipient. Have them report when their single audit is complete. Make sure they disclose whether or not that audit disclosed audit findings that were related to the subaward(s) in question.
Hint: If the subrecipient is not required to have a single audit, document those reasons as well.
One Final Note: Keeping up with your subrecipients has gotten easier than ever because audit reports are publically available in the Federal Audit Clearinghouse (FAC) at https://harvester.census.gov/facweb/. Also, subrecipients now must list the pass-through entity’s identifying number on the Schedule of Expenditures of Federal Awards (SEFA) and the Single Audit Data Collection Form (SF-SAC). This unique identifier will make it easier for pass-through’s to search and locate the various reporting packages for their subrecipients (including audit findings) in the FAC.
In my next article in the series, I’ll do a deep dive into the world of indirect costs and some of the “unintended consequences” that surfaced in the latest FAQs from OMB.
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Author: Lucy M. Morgan, CPA, MBA, GPA Approved Trainer